8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)

November 8, 2006

AURIGA LABORATORIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-26013	84-1334687
(State of incorporation)	(Commission File Number)	(I.R.S. Employer
		Identification No.)

5555 Triangle Parkway, Suite 300
Norcross, Georgia	30092
(Address of principal executive offices)	(Zip Code)

(678) 282-1600
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

SECTION 1—REGISTRANT’S BUSINESS AND OPERATIONS

Item 1.01. Entry Into a Material Definitive Agreement.

        The information included under Item 5.02. below is incorporated herein by reference.

SECTION 5—CORPORATE GOVERNANCE AND MANAGEMENT

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.

        On November 13, 2006, Auriga Laboratories, Inc. (the “Company”) issued a press release announcing the appointment of Charles R. Bearchell as chief financial officer (principal financial and accounting officer), effective as of November 20, 2006. The press release announcing the appointment of Mr. Bearchell is attached hereto as Exhibit 99.1.

        In the past year, Mr. Bearchell has served as a financial consultant to a publicly-held California company that designs, develops, markets and services rapid three-dimensional printing, prototyping and manufacturing. In his consulting function, Mr. Bearchell was responsible for the company’s securities and accounting compliance for financial reporting, including preparing reports for filing with the Securities and Exchange Commission. From 2003 to 2005, Mr. Bearchell served as the chief financial officer for YouBet.com, Inc. (NASDAQ SmallCap: UBET), where he managed all accounting, financial and treasury functions for the publicly-held online gaming company with $60 million in revenues and 82 employees. From 2001 to 2003, Mr. Bearchell was the controller for The Plastic Surgery Company, Inc., where he managed a variety of accounting functions for the publicly-held company with $40 million in revenue. Prior to joining The Plastic Surgery Company, Inc., Mr. Bearchell was the chief financial officer for AVTEL Services, Inc., where he managed all accounting and financial operations for the privately-held, $40 million aircraft, maintenance and storage company. Mr. Bearchell also served as a Staff Accountant in the Los Angeles Branch of the Securities and Exchange Commission from 1976 to 1985.

        Mr. Bearchell holds a bachelor of science degree in Business Administration from California State University, Northridge and a juris doctor degree from Southwestern University Law School in Los Angeles.

        Mr. Bearchell succeeds to the position of chief financial officer, replacing Mr. Philip S. Pesin, the Company’s chief executive officer and chairman of the board, who temporarily held the position while searching to fill the post.

        The Company entered into an employment agreement (the “Employment Agreement”) with Mr. Bearchell in connection with his appointment as chief financial officer. Under the Employment Agreement, Mr. Bearchell will receive an annual base salary of One Hundred Ninety-Five Thousand Dollars ($195,000.00). The Employment Agreement also provides that Mr. Bearchell will be eligible to earn a bonus from the Company, with an annual target payout of thirty percent (30%) of his base salary and with a minimum annual payout of ten percent (10%) of his base salary. The minimum annual bonus will be payable by the Company semi-annually commencing with the first full fiscal year following Mr. Bearchell’s appointment. The actual bonus payout in excess of the minimum annual amount shall be determined based upon the Company’s achievement level against certain financial and other performance objectives. Mr. Bearchell will also be eligible to participate in the Company’s employee benefit programs (including medical, dental and other insurance programs) generally available to all full-time employees of the Company.

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        Concurrent with the execution of the Employment Agreement, on November 8, 2006, the board of directors of the Company approved the issuance to Mr. Bearchell of a non-statutory stock option (the “Stock Option Agreement”) to purchase seven hundred fifty thousand (750,000) shares of the Company’s common stock under its 2006 Stock Option Plan. The Stock Option Agreement provides for an exercise price of $1.26 per share, which is equal to the closing price as reported on the OTC Bulletin Board on the date of grant. The option vests as follows: (a) one-third (1/3) of the option is exercisable on the date of grant; and (b) subject to Mr. Bearchell’s continued employment by the Company, 1/36^th of the remaining number of shares of common stock subject to the option shall vest each month thereafter.

        The Employment Agreement also contains severance provisions and other covenants.

        In conjunction with his employment as chief financial officer, Mr. Bearchell has also executed the Company’s standard indemnification agreement for directors and officers of the Company, which provides, among other things, that the Company will indemnify Mr. Bearchell, under the circumstances set forth therein, for defense expenses, damages, judgments, fines and settlements incurred by him in connection with actions or proceedings to which he may be a party as a result of his position as an officer of the Company, and otherwise to the full extent permitted under the Company’s bylaws and state law.

        The foregoing descriptions of the Employment Agreement, Stock Option Agreement and Indemnification Agreement are subject to, and qualified in their entirety by, the Employment Agreement, Stock Option Agreement and Indemnification Agreement, respectively. The Employment Agreement, Stock Option Agreement and Indemnification Agreement are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and the terms thereof are incorporated herein by reference.

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SECTION 9—FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits. The following exhibits are filed herewith:

 Exhibit
Number
Document

    10.1 Employment Agreement dated as of November 8, 2006 entered into between Auriga Laboratories, Inc. and Charles R. Bearchell.

    10.2 Notice of Stock Option Grant issued by Auriga Laboratories, Inc. to Charles R. Bearchell on November 8, 2006.

    10.3 Indemnification Agreement dated November 8, 2006 entered into between Auriga Laboratories, Inc. and Charles R. Bearchell.

    99.1 Press Release of Auriga Laboratories, Inc. dated November 13, 2006.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AURIGA LABORATORIES, INC.
Date: November 13, 2006	By: /s/ Philip S. Pesin
	Philip S. Pesin
	Chief Executive Officer

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EX-10.1

EMPLOYMENT AGREEMENT

        THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of November 8, 2006 by and between AURIGA LABORATORIES, INC., a Delaware corporation (the “Company”), and CHARLES R. BEARCHELL, an individual resident of the State of California (“Executive”).

W I T N E S S E T H

        In consideration of the mutual covenants and obligations herein set forth, the parties hereto agree as follows:

    1.     Engagement; Nature of Duties. The Company hereby engages Executive, for the period hereinafter set forth, to serve as Chief Financial Officer of the Company. In such capacity, Executive shall report to the Chief Executive Officer of the Company (“CEO”) and shall perform the duties and render the services for and on behalf of the Company customarily performed by a chief financial officer of a company, and as may be set forth from time to time in resolutions of, or other directives issued by, the Board of Directors of the Company and/or any committee or designee thereof (the “Board”) or the CEO (the “Services”).

    2.     Term. The term of employment pursuant to this Agreement shall be for a period of one (1) year (the “Term”) commencing on November 20, 2006 (the “Commencement Date”), unless sooner terminated in accordance with the provisions hereof. Thereafter, this Agreement shall automatically renew for successive periods of one (1) year each, unless sooner terminated in accordance with the provisions hereof, or unless notice is given by either party hereto of his or its intent not to renew this Agreement within sixty (60) days prior to the expiration of the then-current term.

    3.     Location. Executive shall not be required to relocate his primary place of employment outside of the greater Los Angeles County metropolitan area. Executive may, however, be required to travel to other locations at such times as may be reasonably necessary for the performance of his duties and responsibilities under this Agreement. Any such travel undertaken by Executive shall be at the Company’s expense and shall be reimbursed in accordance with the Company’s prevailing policy for reimbursing personnel, as the same may, from time to time, be adjusted or revised.

    4.    Performance of Duties. Executive agrees to perform such duties and render the Services to the best of his ability, devoting thereto his entire professional time, attention and energy exclusively to the business and affairs of the Company and its affiliates, as its business and affairs now exist and as they hereafter may be changed, and shall not during the term of his employment hereunder be engaged in any other business activity, whether or not such business activity is pursued for gain or profit; provided, however, that Executive may serve: (a) on civic or charitable boards or committees; and (b) with the prior written approval of the Board, boards of corporations or business enterprises, in each case so long as such activities do not interfere with the performance of Executive’s obligations under this Agreement.

    5.    Compensation and Benefits.

        (a)     Base Compensation. Beginning on the Commencement Date, the Company shall pay to Executive a base compensation (“Base Compensation”) in the amount of One Hundred Ninety-five Thousand Dollars ($195,000.00), payable in periodic installments in accordance with the Company’s prevailing policy for compensating personnel, as the same may, from time to time, be adjusted or revised.

        (b)     Bonus. Executive shall be eligible to earn an annual bonus. Commencing with the Company’s first full fiscal year following the Commencement Date, and for each subsequent fiscal year of the Company, the Board will set specific financial and other qualitative and quantitative performance targets and the amount of Executive’s bonus, when and as declared by the Board in its sole discretion, will range from a minimum of ten percent (10%) to a maximum amount equal to thirty percent (30%) of Executive’s Base Compensation (with a target bonus of thirty percent (30%) of the then-effective Base Compensation) depending on the Board’s (in consultation with the CEO) determination of Executive’s success in achieving the specified targets. The minimum bonus will be paid semi-annually commencing with the first full fiscal year following the Commencement Date. The financial and other quantitative and qualitative performance targets for each fiscal year shall be established in the first month of each fiscal year as part of the Company’s annual financial plan. The bonus payable to Executive for each fiscal year, if any is due, shall be paid to Executive, subject to normal withholding, promptly after the completion of the audit of the Company’s financial statements for such fiscal year. Such bonus shall be paid in the form of cash or registered equity securities of the Company. Nothing in this Section shall be construed as obligating the Company to pay Executive an annual bonus.

        (c)     Equity Incentives. Initially, the Board will grant an option to purchase seven hundred fifty thousand (750,000) shares of the Company’s Common Stock as set forth in a separate Notice of Stock Option Grant. If the Board grants additional stock or other equity incentives to senior executive-level employees of the Company, the Board shall consider granting stock or other equity incentives to Executive (during the Term of this Agreement), and in the amount and upon such terms and conditions as the Board shall, in its sole and absolute discretion, determine.

        (d)     Expense Reimbursement. The Company shall reimburse to Executive any and all reasonable expenses actually incurred by Executive in the performance of the Services during the Term, provided that such expenses are in accordance with any policies or directives of the Company regarding reimbursement of business expenses now or hereafter adopted by the Company, and subject to Executive providing appropriate supporting documentation, reasonably acceptable to the Company. Executive shall be reimbursed for any and all cellular phone expenses actually incurred by Executive in the performance of the Services during the Term, subject to Executive providing appropriate supporting documentation, reasonably acceptable to the Company.

        (e)     Health and Disability Insurance. Executive shall have the right to participate in, and be provided family coverage at the Company’s expense for, any health and disability insurance programs now or hereafter maintained by the Company for the benefit of its senior executive-level employees generally, subject only to any eligibility or membership restrictions of such programs.

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        (f)     Other Benefits. Executive shall have the right to participate in any and all benefit, retirement or insurance programs now or hereafter maintained by the Company for the benefit of its senior executive-level employees generally, including the Company’s 401(k) plan (with matching benefits equal to three percent (3%) of Executive’s contributions thereto), subject only to any eligibility or membership restrictions of such programs.

        (g)     Vacation. During each year of the Term, Executive shall be entitled to vacation leave of four (4) weeks, without deduction of salary. Such vacation leave shall be taken at such time or times during the applicable year as may be mutually determined by Executive and the Company acting reasonably, having regard to the performance of Executive’s essential duties to the Company pursuant to the terms of this Agreement, and subject to the policies or directives of the Company regarding vacation leave now or hereafter adopted by the Company. Executive may accumulate unused vacation time from year to year.

        (h)     Automobile Allowance; Parking Reimbursement. During the Term, Executive shall receive an automobile allowance of Seven Hundred Fifty Dollars ($750.00) per month. In addition, the Company shall reimburse Executive for up to Three Hundred Dollars ($300.00) per month for parking expenses, to be reimbursed in accordance with the Company’s prevailing policy for reimbursing personnel, as the same may, from time to time, be adjusted or revised.

        (i)     Deduction and Withholding. All compensation and other benefits to or on behalf of Executive pursuant to this Agreement shall be subject to such deductions and withholding as may be agreed to by the Executive or required by applicable law.

    6.     Termination.

        (a)     This Agreement may be terminated by the Company with Cause (as defined below), which termination shall be effective upon written notice to Executive. As used herein, “Cause” shall mean:

            (i)     Executive’s conviction of a felony involving moral turpitude, other criminal acts or illegal acts that are, in the sole and absolute discretion of the Board, injuries to the Company;

            (ii)     Executive’s breach of any other term or provision of this Agreement; or

            (iii)     Executive’s breach of any term or provision of the Company’s then-current employee handbook on corporate policy or any other policy, rule or regulation issued by the Company and intended to be binding on the employees of the Company at any time and from time to time.

        (b)     If, during the term of this Agreement, the Company terminates Executive’s employment for any reason other than Cause, then the Company shall pay Executive his Base Salary for a period of twelve (12) months following his termination. Such Base Salary shall be paid at the rate in effect at the time of his termination of employment and in accordance with the Company’s standard payroll procedures.

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        (c)     If, during the term of this Agreement, the Company terminates Executive’s employment for any reason other than Cause, then the vested portion of the shares of the Company’s Common Stock subject to the stock option referenced in Section 5(c) shall be determined by adding twelve (12) months to the actual length of his service with the Company.

        (d)     If, during the term of this Agreement, the Company terminates Executive’s employment for any reason other than Cause, and if Executive elects to continue health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for himself and, if applicable, his dependents, following the termination of his employment, then the Company shall pay the monthly premium under COBRA for Executive and, if applicable, such dependents, until the earliest of: (i) the first (1^st) anniversary of the termination of employment; (ii) the expiration of Executive’s continuation coverage under COBRA; or (iii) the date at which Executive receives substantially equivalent health insurance coverage in connection with new employment or self-employment.

        (e)     This Agreement shall automatically terminate upon Executive’s permanent disability as a result of a physical or mental injury or disability, or death. As used herein, “permanent disability” shall mean Executive’s substantial inability to perform the Services with or without reasonable accommodations, as reasonably determined by a physician appointed by the Company, which inability continues for more than ninety (90) consecutive days, or for more than one hundred twenty (120) days in any 12-month period.

        (f)     In the event of the Company’s termination of Executive’s employment for Cause, or Executive’s voluntary termination of his employment for any reason, the Company may place Executive on paid administrative leave and/or bar or restrict his access to the Company’s facilities, contemporaneously with or at any time after the delivery of the termination notice.

    7.     Change of Control.

        (a)     Subject to Section 7(b), in the event of a Change of Control (as defined below), if the Company terminates the employment of Executive for any reason other than for Cause, at any time within the twelve (12)-month period immediately following a Change of Control, any and all options (whether incentive or non-qualified) held by Executive shall immediately vest and may be exercised thereafter in accordance with the terms of Executive’s applicable stock option agreement(s).

        (b)     If any portion of any severance benefits (if any) payable to Executive pursuant to this Agreement or any other payments to him in connection with a Change of Control (collectively, the “Total Payments”) constitute an Excess Parachute Payment (as defined below), then the Total Payments to be made to Executive shall be reduced such that the value of the Total Payments that Executive is entitled to receive shall be One Dollar ($1.00) less than the maximum amount that he may receive without becoming subject to the tax imposed by Section 4999 of the United States Internal Revenue Code of 1986, as amended (the “Code”), or which the Company may pay without loss of deduction under Code Section 280G(a).

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        (c)     For purposes of this Agreement, a “Change of Control” of the Company means, and shall be deemed to have taken place, if: (i) a total change in executive management of the Company has occurred; (ii) any person or entity or group of affiliated persons or entities, including a group which is deemed a “person” by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date hereof first acquires in one or more transactions, at least one of which is after the date of this Agreement, ownership of fifty percent (50%) or more of the outstanding shares of any class of stock then entitled to vote in the election of directors of the Company; and (iii) as a result of, or in connection with, any such acquisition or any related proxy contest, cash tender or exchange offer, merger or other business combination, sale of all or substantially all of the assets of the Company or any combination of the foregoing transactions, hereinafter referred to as a “Transaction,” the persons who were directors of the Company immediately before the acquisition shall cease to constitute three-fourths of the membership of the Board or any successor to the Company during the period commencing with the consummation of the Transaction and ending on the first to occur of the first anniversary of such date or the conclusion of the next meeting of shareholders to elect directors, except to the extent that any new directors during such period were elected or nominated by at least three-fourths of such persons (or new directors who were so nominated or elected). “Ownership” means beneficial or record ownership, directly or indirectly, other than: (i) by a person owning such shares merely of record (such as a member of a securities exchange, a nominee, or a securities depositary system); (ii) by a person as a bona fide pledgee of shares prior to a default and determination to exercise powers as an owner of the shares; (iii) by a person who is not required to file statements on Schedule 13D by virtue of Rule 13d-1(b) of the Securities and Exchange Commission under the Exchange Act; or (iv) by a person who owns or holds shares as an underwriter acquired in connection with an underwritten offering pending and for purposes of their public resale or planned private placement in increments of less than such 50% amount. Without limitation, the right to acquire ownership shall not of itself constitute ownership of shares.

        (d)     For purposes of this Agreement, “Excess Parachute Payment” shall have the same meaning as such term has under Code Section 280G and any temporary, proposed or final regulations thereunder, and any Total Payments shall be valued as provided therein.

    8.     Beneficiary Designation. Executive may designate a beneficiary to receive any remaining compensation under Sections 6 and 7 in the event of Executive’s death after he becomes entitled to receive any compensation thereunder (the “Beneficiary”). Such designation shall be made by filing a written designation with the Board in such form as the Board may provide and may be changed by Executive from time to time by similar action. If no such designation is made by Executive or if Executive is not survived by his designated Beneficiary, any remaining compensation under Sections 6 and 7 at the time of Executive’s death shall be paid to Executive’s estate.

    9.     Obligations of Executive – Property Rights.

        (a)     As used in this Agreement, “Confidential Information” means any and all information disclosed to Executive or material proprietary to the Company or designated as Confidential Information by the Company and not generally known by non-Company personnel, which Executive develops or which Executive gains knowledge of or access through as a consequence of or through Executive’s employment by the Company (including information conceived, originated, discovered or developed in whole or in part by Executive, alone or jointly with others). “Confidential Information” includes, but is not limited to, the following types of information and other information of a similar nature (whether or not reduced to writing or placed in any tangible medium of expression): the Company’s products, processes, discoveries, ideas, concepts, techniques and services, including information relating to research, development, inventions, manufacture, purchasing, accounting, engineering, marketing, merchandising, selling, trade secrets, customer lists, price lists, pricing policies, financial information, employee files or any other information that the Company maintains as confidential. “Confidential Information” also includes any information described aforesaid which the Company obtains from another party and which the Company treats as proprietary or designates as Confidential Information, whether or not owned or developed by the Company.

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        (b)     Except as required in Executive’s duties to the Company and then only with the Company’s prior written consent, Executive shall not, directly or indirectly, use for Executive’s own benefit or the benefit of others, lecture upon, publish articles concerning, disseminate, disclose, reveal or transfer to any person or entity, any Confidential Information or any part thereof, or assist or solicit any person or entity other than the Company to secure any benefit from the Confidential Information or any part thereof, either during or at any time after the term of this Agreement.

        (c)     All documents, papers, notes, notebooks, memoranda, computer files and other written or electronic records of any kind made by Executive during and in connection with Executive’s employment by the Company, shall remain the property of the Company at all times.

    10.     Assignment of Inventions.

        (a)     Executive agrees that any inventions, ideas, original works of authorship or other work product in whole or in part conceived or made by Executive which are made through the use of any of the Confidential Information or any of the Company’s equipment, facilities, supplies, trade secrets or time, or which relate to the Company’s business or the Company’s actual or demonstrably anticipated research and development, or which result from any work performed by Executive for the Company, along with any rights in or to any of the foregoing under copyright, patent, trade secret, trademark or other law, shall belong exclusively to the Company and shall be deemed part of the Confidential Information for purposes of this Agreement whether or not fixed in a tangible medium of expression. Without limiting the foregoing, Executive agrees that any such original works of authorship shall be deemed to be “works made for hire” and that the Company shall be deemed the author thereof under the U.S. Copyright Act (Title 17 of the U.S. Code), provided that in the event and to the extent such works are determined not to constitute “works made for hire” as a matter of law or that there are any rights that do not accrue to the Company as a work made for hire, Executive hereby irrevocably assigns and transfers to the Company all right, title and interest in and to such works, including but not limited to copyrights and other intellectual property rights. This Agreement shall be construed in accordance with the provisions of Section 2870 of the California Labor Code (a copy of which is attached as Exhibit “A” hereto) relating to inventions made by Executive, and accordingly this Agreement is not intended and shall not be interpreted to assign to or vest in the Company any of Executive’s rights in any inventions other than those described in the first sentence of this Section 10(a).

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        (b)     At all times during Executive’s employment by the Company, Executive will maintain a complete and detailed current written record of all ideas, concepts, improvements, discoveries or inventions, of any nature (“Inventions”), whether patentable or not, created or made in whole or in part by Executive, either solely or jointly with others, and Executive will promptly disclose any such Inventions to the Company, in writing. Executive further agrees that all such written records shall be and remain the sole and exclusive property of the Company, and Executive shall make such written records available to the Company at any time upon request, for review, inspection or copying by the Company, and shall deliver all copies of such records to the Company upon termination of Executive’s employment, for any reason.

        (c)     With respect to Inventions made or conceived of in whole or in part by Executive, either solely or jointly with others, whether during Executive’s employment by the Company or after termination of such employment if developed using, applying or adapting, in any way, the Company’s equipment, supplies, facilities, Confidential Information or trade secret information, or during Executive’s working hours, or such Invention relates to the Company’s business, or actual or demonstrably anticipated research or development, or results from any work done in whole or part by Executive, either solely or jointly with others, for the Company, or is based on or related to programs, processes, Inventions or information learned by Executive during such employment:

            (i)     Executive shall inform the Company promptly and fully of such Inventions by a written report, setting forth in detail the procedures employed and the results achieved.

            (ii)     Executive hereby expressly transfers and assigns to the Company all of Executive’s right, title and interest in and to such Inventions; and to applications for U.S. and/or foreign letters patent and/or copyrights as well as any and all continuations, continuations-in-part, and divisions thereof, and to U.S. and/or foreign letters patent and/or copyrights issued thereon, as well as any and all reissues, extensions, improvements or further developments thereof.

            (iii)     Executive shall apply, or assist the Company in applying, at the Company’s request and expense, for U.S. and/or foreign letters patent and/or copyrights in the Company’s name, or otherwise as the Company shall desire. The decision to obtain letters patent and/or copyrights shall reside solely with the Company; however, the decision not to obtain or apply for letters patent and/or copyrights at the time of disclosure or at any time thereafter, shall not be construed as a waiver of any rights hereunder.

            (iv)     the Company shall also have the perpetual, royalty-free right to use in its business, to license others to use, and to make, use and sell products, processes and/or services derived from any Inventions, discoveries, designs, improvements, concepts, ideas, whether patentable or not, including but not limited to process, methods, formulae, techniques or know-how related thereto, which are not within the scope of Inventions as defined herein, but which are conceived or made in whole or part by Executive, either solely or jointly with others, during regular working hours or with the use of the Company’s equipment, supplies, facilities, Confidential Information, trade secret information, materials or personnel.

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    11.     Non-Competition During Term. Executive shall not, either directly or indirectly, during the Term of this Agreement (the “Noncompetition Period”):

        (a)     Own an interest in, operate, join, manage, control, participate in or be connected in any manner as an officer, director, employee, agent, consultant, independent contractor, partner, shareholder, or principal of, or provide any advice or services to, any Conflicting Organization (as defined below). Ownership of less than five percent (5%) of the common stock or equity interest of a public corporation shall not be deemed in violation of this provision.

        (b)     Undertake planning for or organization of any Conflicting Organization or any business activity materially competitive with the Company’s business or combine with other employees or representatives of the Company for the purpose of organizing any such Conflicting Organization or materially competitive business activity.

        (c)     “Conflicting Organization” means any person, business, company or organization engaged in or about to become engaged in a business or activity which is substantially similar to, or would reasonably be deemed to compete with, the business of the Company.

    12.     Non-Solicitation. Executive shall not, during the Term of this Agreement, and for a period of three (3) years immediately thereafter, directly or indirectly:

        (a)     Solicit, interfere, entice, induce or influence or seek to solicit, interfere, entice, induce or influence, any person who is engaged as an employee, consultant, agent, independent contractor or otherwise by the Company to terminate his or her employment or engagement. In addition, Executive shall not authorize, approve or assist any third party to take any action that Executive is prohibited from taking pursuant hereto.

        (b)     Call on, solicit or take away, or attempt to call on, solicit or take away any of the customers or suppliers (for the purpose of obtaining goods or services for a business directly or indirectly in competition with the Company) of the Company, either for the benefit of Executive or any other person, organization or entity. In addition, Executive shall not authorize, approve or assist any third party to take any action that Executive is prohibited from taking pursuant hereto.

    13.     Responsibilities Upon Termination. Upon the termination of his employment by the Company for whatever reason and irrespective of whether or not such termination is voluntary on his part:

        (a)     Executive shall: (i) promptly deliver to the Company all Confidential Information and all other data, designs, drawings, plans, manuals, notes, memoranda, work sheets, specifications, customer lists, supplier lists, computer programs and all other materials which are or have become the property of the Company and all copies or reproductions of any such materials (whether or not such copies or reproductions are the property of the Company); and (ii) sign and deliver to the Company a certificate attesting that he has returned to the Company all materials described in the preceding clause that were in Executive’s possession or control and that Executive is not retaining any duplicate set(s) of such materials;

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        (b)     Executive shall advise the Company of the identity of his new employer within ten (10) days after accepting new employment and shall keep the Company so advised of any change in employment during the Noncompetition Period; and

        (c)     Executive in his sole discretion may notify any new employer of Executive that he has been exposed to Confidential Information, that he has an obligation to the Company not to disclose any Confidential Information and that he is not to compete with the Company during the Noncompetition Period.

    14.     Indemnification; Insurance.

        (a)     In accordance with the provisions of that certain Indemnification Agreement, dated of even date herewith, entered into between Executive and the Company, a copy of which is attached as Exhibit “B” hereto, the Company hereby covenants and agrees to indemnify and hold harmless Executive, to the fullest extent permitted by Delaware law, against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including attorneys’ fees) losses and damages resulting from Executive’s good faith performance of his duties and obligations under the terms of this Agreement.

        (b)     The Company hereby covenants and agrees to have and maintain, during the Term of this Agreement, Director and Officers (D&O) insurance covering Executive in an amount and with such limits as are approved from time to time by the Board.

    15.     Assignment.

        (a)     Assignment By Company. This Agreement may and shall be assigned or transferred to, and shall be binding upon and shall inure to the benefit of, any successor of the Company, and any such successor shall be deemed substituted for all purposes of the “Company” under the terms of this Agreement. As used in this Agreement, the term “successor” shall mean any person, firm, corporation or business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the assets or securities of the Company.

        (b)     Assignment By Executive. This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors and administrators, successors, heirs, distributees, devisees and legatees.

    16.     Separate Agreements. The covenants of Executive contained in Sections 9, 10, 11, 12 and 13 of this Agreement shall be construed as separate agreements independent of any other agreement, claim or cause of action of Executive against the Company, whether predicated on this Agreement or otherwise, and no other agreement, claim or cause of action asserted by Executive shall constitute a defense to the enforcement by the Company of these covenants. The covenants contained in this Agreement are necessary to protect the legitimate business interests of the Company. Damages for the violation of any such covenants will not give full and sufficient relief to the Company. In the event of any violation of any such covenants, the Company shall be entitled to: (a) injunctive relief against the continued violation thereof; and (b) its actual damages. In any dispute concerning whether or not Executive has violated any of such covenants, the prevailing party shall be entitled to payment from the other party for any and all expenses, including attorneys’ fees and expenses, incurred by the prevailing party in connection with such dispute.

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    17.     General Obligations of Executive. Executive agrees and acknowledges that he owes a duty of loyalty, fidelity and allegiance to act at all times in the best interests of the Company, to not knowingly become involved in a conflict of interest and to not knowingly do any act or knowingly make any statement, oral or written, which would injure the Company’s business, its interest or its reputation unless required to do so in any legal proceeding by a competent court with proper jurisdiction. Executive agrees to comply at all times with all applicable policies, rules and regulations of the Company, including, without limitation, the Company’s policy regarding trading in its Common Stock, as is in effect from time to time.

    18.     Life Insurance. To the extent that the Company desires to obtain insurance on Executive’s life for the benefit of the Company, Executive shall cooperate and do all acts reasonably necessary to enable the Company to obtain said insurance.

    19.     Release. If Executive’s employment hereunder shall terminate under Sections 6(b), 6(c) or 7, Executive agrees, as a condition to his entitlement to receive the amounts specified in such Sections to be due to him, to execute and deliver to the Company a release in the form attached hereto as Exhibit “C”. Such release shall be delivered by Executive at the time of termination, but shall become effective only after Executive has received all payments specified in this Agreement to be due to him from the Company in respect of his termination.

    20.     Representations. Executive hereby represents that he is not subject to any restriction of any nature whatsoever on his ability to enter into this Agreement or to perform his duties and responsibilities hereunder, including, but not limited to, any covenant not to compete with any former employer, any covenant not to disclose or use any non-public information acquired during the course of any former employment or any covenant not to solicit any customer or prospective customer of any former employer.

    21.     Notices. Any and all notices which are required or permitted to be given by any party to any other party hereunder shall be given in writing, sent by registered or certified mail, or by electronic communications (including telegram or facsimile) followed by a confirmation letter sent by registered or certified mail, postage prepaid, return receipt requested, or delivered by hand or messenger service, with the charges therefore prepaid, addressed to such party as follows:

(a) Notices to the Company:

Auriga Laboratories, Inc.
5555 Triangle Parkway, Suite 300
Norcross, Georgia 30092
Attn: Chief Executive Officer

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(b) Notices to Executive:

Mr. Charles R. Bearchell
18030 Gauguin Lane
Granada Hills, California 91344

or to such other address as the parties shall from time to time give notice of in accordance with this Section. Notices sent in accordance with this Section shall be deemed effective on the date of dispatch, and an affidavit of mailing or dispatch, executed under penalty of perjury, shall be deemed presumptive evidence of the date of dispatch.

    22.     Entire Agreement and Modifications. This Agreement, including the exhibits hereto and the agreements expressly referred to herein, constitutes the entire understanding between the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. There are no warranties, representations or other agreements between the parties, in connection with the subject matter hereof, except as specifically set forth herein. No supplement, modification, waiver or termination of this Agreement shall be binding unless made in writing and executed by the party thereto to be bound.

    23.     Waivers. No term, condition or provision of this Agreement may be waived except by an express written instrument to such effect signed by the party to whom the benefit of such term, condition or provision runs. No such waiver of any term, condition or provision of this Agreement shall be deemed a waiver of any other term, condition or provision, irrespective of similarity, or shall constitute a continuing waiver of the same term, condition or provision, unless otherwise expressly provided. No failure or delay on the part of any party in exercising any right, power or privilege under any term, condition or provision of this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege.

    24.     Survival of Agreement Provisions. All terms, conditions, provisions, covenants, agreements, representations and warranties made herein shall survive the performance by the parties hereto of their obligations hereunder, and the termination or expiration of this Agreement.

    25.     Severability. In the event any one or more of the terms, conditions or provisions contained in this Agreement should be found in a final award or judgment rendered by any court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining terms, conditions and provisions contained herein shall not in any way be affected or impaired thereby, and this Agreement shall be interpreted and construed as if such term, condition or provision, to the extent the same shall have been held invalid, illegal, or unenforceable, had never been contained herein, provided that such interpretation and construction is consistent with the intent of the parties as expressed in this Agreement. If any term, condition or provision contained in this Agreement shall be determined under applicable law, to be overly broad in duration, geographical coverage or substantive scope, such term, condition or provision shall be deemed narrowed to the broadest terms permitted by applicable law.

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    26.     Headings. The headings of the Sections contained in this Agreement are included herein for reference purposes only, solely for the convenience of the parties hereto, and shall not in any way be deemed to affect the meaning, interpretation or applicability of this Agreement or any term, condition or provision hereof.

    27.     Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, notwithstanding the fact that one or more counterparts hereof may be executed outside of the state, or one or more of the obligations of the parties hereunder are to be performed outside of the state.

    28.     Resolution of Disputes. The parties recognize that claims, controversies and disputes may arise out of this Agreement with respect to Executive’s employment, termination of employment or other terms of this Agreement or based on common law or statute, either during the existence of the employment relationship or afterwards. The parties agree that should any such claim, controversy or dispute arise, the parties will use their best efforts to resolve such dispute informally, between them. In the event that any such claim, controversy or dispute between the Company and Executive cannot be resolved within thirty (30) days after either party first gives notice in writing that any such claim, controversy or dispute exists, either party may then refer the matter to arbitration before the American Arbitration Association pursuant to its National Rules for the Resolution of Employment Disputes. The parties hereby agree that referral to arbitration shall be the sole recourse of either party under this Agreement with respect to any such claim, controversy or dispute and that the decision of the arbitrator shall be binding on the parties in accordance with applicable law; provided, however, that nothing in this Section 28 shall be construed as precluding either party from bringing an action for injunctive relief or equitable relief. The parties shall keep confidential the existence of each such claim, controversy or dispute from third parties (other than arbitrator), and the determination thereof, unless otherwise required by law. Except as provided in the following sentence, such decision rendered by the arbitrator shall be final and conclusive and may be entered in any court having jurisdiction thereof as a basis of judgment and of the issuance of execution for its collection. In rendering his or her decision, the arbitrator shall be bound to follow California or Federal law, as applicable, in the same manner as would a court of law. Any claim that the arbitrator made a mistake or error in determining or applying the appropriate law shall be subject to judicial review.

    29.     Attorneys’ Fees. In the event that any party to this Agreement shall commence any suit, action or other proceeding to interpret this Agreement, or determine or enforce any right or obligation created hereby, including but not limited to any action for rescission of this Agreement or for a determination that this Agreement is void or ineffective ab initio, the prevailing party in such action shall recover such party’s costs and expenses incurred in connection therewith, including attorney’s fees and costs of appeal, if any. Any court shall, in entering any judgment or making any award in any such suit, action or other proceeding, in addition to any and all other relief awarded to such prevailing party, include in such judgment or award such party’s costs and expenses as provided in this Section 29.

    30.     Covenant of Further Assurances. All parties to this Agreement shall, upon request, perform any and all acts and execute and deliver any and all certificates, instruments and other documents that may be necessary or appropriate to carry out any of the terms, conditions and provisions hereof or to carry out the intent of this Agreement.

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    31.     Remedies Cumulative. Each and all of the several rights and remedies provided for in this Agreement shall be construed as being cumulative and no one of them shall be deemed to be exclusive of the others or of any right or remedy allowed by law or equity, and pursuit of any one remedy shall not be deemed to be an election of such remedy, or a waiver of any other remedy.

    32.     Compliance with Laws. Nothing contained in this Agreement shall be construed to require the commission of any act contrary to law, and whenever there is a conflict between any term, condition or provision of this Agreement and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail, but in such event the term, condition or provision of this Agreement affected shall be curtailed and limited only to the extent necessary to bring it within the requirement of the law, provided that such construction is consistent with the intent of the parties as expressed in this Agreement.

    33.     Gender. As used in this Agreement, the masculine, feminine or neuter gender, and the singular or plural number, shall be deemed to include the others whenever the context so indicates.

    34.     No Third Party Benefit. Nothing contained in this Agreement shall be deemed to confer any right or benefit on any person who is not a party to this Agreement.

    35.     Construction; Representation by Counsel. The parties hereby represent that they have each been advised by independent counsel with respect to their rights and obligations hereunder. This Agreement shall be construed and interpreted in accordance with the plain meaning of its language, and not for or against either party, and as a whole, giving effect to all of the terms, conditions and provisions hereof.

    36.     Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute only one instrument. Any or all of such counterparts may be executed within or outside the State of California. Any one of such counterparts shall be sufficient for the purpose of proving the existence and terms of this Agreement, and no party shall be required to produce an original or all of such counterparts in making such proof.

[Remainder of page intentionally left blank.]

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        IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above written.

“Company”

AURIGA LABORATORIES, INC.,

a Delaware corporation

By: /s/ Philip S. Pesin

Name:  Philip S. Pesin

Title:    Chief Executive Officer

“Executive”

/s/ Charles R. Bearchell

CHARLES R. BEARCHELL

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EXHIBIT “A”

        Section 2870 of the California Labor Code provides:

    (a)        Any provision in an employment agreement which provides that an employee shall assign or offer to assign any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities or trade secret information except for those inventions that either: (1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for the employer.

    (b)        To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

A-1

ACKNOWLEDGEMENT

        This Acknowledgement is entered into in connection with that Employment Agreement (the “Agreement”) between me and Auriga Laboratories, Inc., a Delaware corporation (the “Company”), dated as of the date hereof.

    1.     I hereby acknowledge that the provisions of the Agreement relating to rights to inventions which I have executed in whole or part, either solely or jointly with others, does not apply to an invention for which no equipment, supplies, facility, Confidential Information (as defined in the Agreement) or trade secret information of the Company was used, applied or adapted in any way, and which was developed entirely on my own time, unless: (a) the invention relates (i) to the business of the Company, or (ii) to the Company’s actual or demonstrably anticipated research or development; or (b) the invention results from any work performed in whole or part, by me either alone or jointly with others, for the Company; or (c) the invention is based on or related to programs, processes, Inventions (as defined in the Agreement) or information learned by me during my employment with the Company. I hereby acknowledge receipt of a copy of California Labor Code Section 2870 (hereinafter referred to as the “Act”) which relates to employer/employee rights to inventions.

    2.     I understand that I have an obligation to disclose to the Company all my inventions, made solely or jointly with others, during the term of my employment with the Company, even though I believe that some fall within the provisions of the Act. I agree that at the time I disclose any such invention to the Company that I shall declare in writing if I believe the invention falls within the provisions of the Act. Failure to provide such written notice shall be construed as an admission that all rights in the invention belong to the Company.

    3.     I understand that the burden is on me to prove that an invention qualifies under the provisions of the Act. I understand that if I fail to prove that an invention qualifies under the Act, the Company shall be entitled to the invention as provided in the Agreement.

    4.     I further agree that the provisions of this Acknowledgement shall not apply if I am transferred to a subsidiary, parent company, office, division or unit of the Company outside of the State of California, and that, as a result, the Company may have greater rights with respect to inventions than those provided in the Agreement or the Act.

DATED: November 8, 2006
	Signature
	/s/ Charles R. Bearchell
	CHARLES R. BEARCHELL

A-2

EXHIBIT “B”

Form of Indemnification Agreement

EXHIBIT “C”

CONFIDENTIAL AGREEMENT AND GENERAL RELEASE

        THIS CONFIDENTIAL AGREEMENT AND GENERAL RELEASE ("Agreement") is between AURIGA LABORATORIES, INC., a Delaware corporation (the "Company") and CHARLES R. BEARCHELL ("Executive").

    1.     Separation From Employment. Executive’s employment with the Company will terminate effective immediately upon his execution of this Agreement.

    2.     Payment to Executive. The Company shall pay to Executive all wages and vacation which would have been due him through the effective date of termination. All appropriate taxes and other deductions will be withheld from this amount in settlement of the Released Matters described in paragraph 3 below. Payment of this amount shall be made within 21 days after all parties have executed this Agreement, pursuant to the provisions of paragraph 4 below.

    3.     Release of All Claims By Executive. Except for the obligations undertaken in this Agreement, Executive hereby fully and forever releases and discharges the Company, and its shareholders, agents, employees, officers, directors, accountants, receivers, advisors, consultants, partners, partnerships, parents, divisions, subsidiaries, affiliates, assigns, successors, heirs, predecessors in interest, joint venturers, commonly controlled corporations, related entities, attorneys, and insurers (“Releasees”) from any and all claims, actions, suits, losses, rights, damages, costs, fees, expenses, accounts, demands, obligations, liabilities, and causes of action of every character, nature, kind or description whatsoever, known or unknown, foreseen or unforeseen, and suspected or unsuspected, arising out of, or relating to, any act or omission, whatsoever arising from, occurring during or related in any manner to Executive’s employment with Company, including without limitation to those arising out of Executive’s employment with, compensation during and separation from Company, including without limitation to Title VII of the Civil Rights Act of 1964, which prohibits discrimination in employment based on race, color, national origin, religion and sex; the California Fair Employment and Housing Act, which prohibits discrimination based on, among other protected classifications, race, color, national origin, ancestry, physical disability, medical condition, marital status, sex, age and sexual orientation; the Equal Pay Act, which prohibits paying men and women unequal pay for equal work; the Family Medical Leave Act; the California Family Rights Act; the Americans with Disabilities Act, which prohibits discrimination based upon disability or handicap; the Age Discrimination in Employment Act; or any other federal, state or local laws or regulations prohibiting employment discrimination. This also includes the release by Executive of any claim for breach of contract (express or implied), emotional distress, bodily or physical injury, wrongful termination, retaliation, interference with contractual relations or economic advantage, defamation, misrepresentation, sexual harassment, sexual assault, violation of Business & Professions Code § 17200, failure to pay wages, violation of the California Labor Code, negligence, loss of consortium, intentional infliction of emotional distress, negligent infliction of emotional distress, or any other claim and any alleged injuries she may have suffered up to and including the effective date of this Agreement (collectively referred to as “Released Matters”).

C-1

    4.     Release of Age Claim. The general release above includes a waiver of rights and claims which Executive may have arising under the Age Discrimination in Employment Act of 1967 (29 U.S.C. § 621 et. seq.) (“ADEA”). Executive is advised to consult with an attorney regarding his waiver his rights and claims under the ADEA. Executive understands that by signing this release, he waives his rights or claims under the ADEA. Executive further understands that he is not waiving rights or claims under the ADEA that may arise after the Effective Date of this fully executed Agreement.

        Executive further understands that:

        (a)     He has a period of up to twenty-one (21) days from receipt of this Agreement to consider whether he wishes to execute this Agreement; and

        (b)     He has a period of seven (7) days, commencing with the day after the date of his signature on this Agreement, to revoke his signature and cancel his agreement to waive his rights under the ADEA. Executive understands that this Agreement will not be effective until the seven-day period has expired. To revoke, Executive must notify Chief Executive Officer, Auriga Laboratories, Inc., 5555 Triangle Parkway, Suite 300, Norcross, Georgia, 30092 of his intent to revoke in writing within the time period specified above.

    5.     Waiver of Unknown Claims. With respect to the Released Matters described above, Executive expressly waives any and all rights under Section 1542 of the California Civil Code, and any like provision or principal of common law in any foreign jurisdiction. Section 1542 provides as follows:

SECTION 1542. [CERTAIN CLAIMS NOT AFFECTED BY GENERAL RELEASE]. A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

    6.     No Actions. Executive represents that he will not file any complaints, charges, or grievances against Releasees with any city, county, state or federal agency or court arising out of or related to his employment with, compensation during, or separation from the Company.

    7.     Full and Independent Knowledge. Executive represents that he has thoroughly read this Release; that he fully understands all of the provisions of this Agreement; that he agrees to the terms of this Release and that he is voluntarily entering into this Agreement.

    8.     Confidentiality. The parties agree to keep confidential, except upon order of any court or except as required by law, the terms of this Release.

    9.     No Modifications Unless In Writing. The parties to this Release agree that any modification of this Release must be in writing and signed by Executive and the Company.

C-2

    10.     No Other Agreements. This Release supersedes any and all agreements, whether written or oral, that may have previously existed between the parties relating to any matter covered herein.

      AGREED TO AS OF THIS ___ DAY OF _____________, ______.

“Company”

AURIGA LABORATORIES, INC.,

a Delaware corporation

By:      _________________________________

Name: _________________________________

Title:   _________________________________

“Executive”

_____________________________________

CHARLES R. BEARCHELL

C-3

EX-10.2

AURIGA LABORATORIES, INC.

2006 STOCK PLAN
NOTICE OF STOCK OPTION GRANT

Charles R. Bearchell,

        You have been granted an option to purchase Common Stock (“Common Stock”) of Auriga Laboratories, Inc. (the “Company”) as follows:

Board Approval Date: 11/8/2006

Date of Grant: 11/8/2006

Vesting Commencement Date: 11/8/2006

Exercise Price Per Share: 1.26

Total Number of Shares Granted: 750,000

Type of Option: NON-STATUTORY STOCK OPTION

Term/Expiration Date: 11/8/2016

Vesting Schedule: One-third (1/3) of the shares shall vest immediately on the Vesting Commencement Date; thereafter, 1/36ths of the shares shall vest in equal monthly installments, commencing one (1) month after the Vesting Commencement Date, and ending on the third (3rd) anniversary of the Vesting Commencement Date.

Termination Period: This Option may be exercised for up to three (3) months following termination of employment, except as set forth in Sections 6 and 7 of the Stock Option Agreement (but in no event later than the Expiration Date).

        By your signature and the signature of the Company’s representative below, you and the Company agree that this option is granted under and governed by the terms and conditions of the 2006 STOCK PLAN and the Stock Option Agreement, both of which are attached and made a part of this document.

GRANTEE	AURIGA LABORATORIES, INC.
/s/ Charles R. Bearchell	By: /s/ Philip S. Pesin
Signature
	Name: Philip S. Pesin
Charles R. Bearchell	Title: Chief Executive Officer
Print Name

AURIGA LABORATORIES, INC.

2006 STOCK PLAN
STOCK OPTION AGREEMENT

    1.     Grant of Option. Auriga Laboratories, Inc., a Delaware corporation (the “Company”), hereby grants to GRANTEE (“Optionee”) an option (the “Option”) to purchase the total number of shares of Common Stock (the “Shares”) set forth in the Notice of Stock Option Grant (the “Notice”), at the exercise price per share set forth in the Notice of Stock Option Grant (the “Exercise Price”) subject to the terms, definitions and provisions of the Auriga Laboratories, Inc. 2006 Stock Plan (the “Plan”) adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Stock Option Agreement (this “Agreement”).

        If designated an Incentive Stock Option, this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code.

    2.     Exercise of Option. This Option shall be exercisable during its Term in accordance with the Vesting Schedule set out in the Notice and with the provisions of Sections 7 and 8 of the Plan as follows:

        (a)     Right to Exercise.

            (i)     This Option may be exercised in whole or in part at any time after the Date of Grant, as to Shares which have not yet vested under the vesting schedule indicated in the Notice; provided, however, that Optionee shall execute as a condition to such exercise of this Option, the Early Exercise Notice and Restricted Stock Purchase Agreement attached hereto as Exhibit A (the “Early Exercise Agreement”). If Optionee chooses to exercise this Option solely as to Shares which have vested under the vesting schedule indicated in the Notice, Optionee shall complete and execute the form of Exercise Notice and Restricted Stock Purchase Agreement attached hereto as Exhibit B (the “Exercise Agreement”). Notwithstanding the foregoing, the Company may in its discretion prescribe or accept a different form of notice of exercise and/or stock purchase agreement if such forms are otherwise consistent with this Agreement, the Plan and then-applicable law.

            (ii)     This Option may not be exercised for a fraction of a share.

            (iii)     In the event of Optionee’s death, disability or other termination of employment or consulting relationship, the exercisability of the Option is governed by Sections 5, 6 and 7 below, subject to the limitation contained in Section 2(a)(iv) below.

            (iv)     In no event may this Option be exercised after the Expiration Date of this Option as set forth in the Notice.

        (b)     Method of Exercise. This Option shall be exercisable by execution and delivery of the Early Exercise Agreement or the Exercise Agreement, whichever is applicable, or of any other written notice approved for such purpose by the Company which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements as to the holder’s investment intent with respect to such shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The written notice shall be accompanied by payment of the Exercise Price. This Option shall be deemed to be exercised upon receipt by the Company of such written notice accompanied by the Exercise Price.

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        No Shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of applicable law, including the requirements of any stock exchange upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee on the date on which the Option is exercised with respect to such Shares.

    3.     Method of Payment. Payment of the Exercise Price shall be by cash, check or any other form approved by the Company, or any other method permitted under the Plan; provided however, that the Administrator may refuse to allow Optionee to tender a particular form of payment (other than cash or check) if, in the Administrator’s sole discretion, acceptance of such form of consideration would not be in the best interests of the Company at such time.

    4.     Restrictions on Exercise. This Option may not be exercised until such time as the Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or other law or regulation, including any rule under Part 207 of Title 12 of the Code of Federal Regulations as promulgated by the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make certain representations and warranties to the Company as may be required by any applicable law, regulation or Company policy.

    5.     Termination of Relationship. In the event of termination of Optionee’s Continuous Status as an Employee or Consultant, Optionee may, to the extent otherwise so entitled at the date of such termination (the “Termination Date”), exercise this Option during the Termination Period set forth in the Notice. To the extent that Optionee was not entitled to exercise this Option at such Termination Date, or if Optionee does not exercise this Option within the Termination Period, this Option shall terminate.

    6.     Disability of Optionee.

        (a)     Notwithstanding the provisions of Section 5 above, in the event of termination of Optionee’s Continuous Status as an Employee or Consultant as a result of his or her total and permanent disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only within twelve (12) months from the Termination Date (but in no event later than the Expiration Date set forth in the Notice and in Section 9 below), exercise this Option to the extent he or she was entitled to exercise it at such Termination Date. To the extent that Optionee was not entitled to exercise the Option on the Termination Date, or if Optionee does not exercise such Option to the extent so entitled within the time specified in this Section 6(a), this Option shall terminate.

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        (b)     Notwithstanding the provisions of Section 5 above, in the event of termination of Optionee’s consulting relationship or Continuous Status as an Employee as a result of a disability not constituting a total and permanent disability (as set forth in Section 22(e)(3) of the Code), Optionee may, but only within six (6) months from the Termination Date (but in no event later than the Expiration Date set forth in the Notice and in Section 9 below), exercise the Option to the extent Optionee was entitled to exercise it as of such Termination Date; provided, however, that if this is an Incentive Stock Option and Optionee fails to exercise this Incentive Stock Option within three months from the Termination Date, this Option will cease to qualify as an Incentive Stock Option (as defined in Section 422 of the Code) and Optionee will be treated for federal income tax purposes as having received ordinary income at the time of such exercise in an amount generally measured by the difference between the Exercise Price for the Shares and the Fair Market Value of the Shares on the date of exercise. To the extent that Optionee was not entitled to exercise the Option at the Termination Date, or if Optionee does not exercise such Option to the extent so entitled within the time specified in this Section 6(b), this Option shall terminate.

    7.     Death of Optionee. In the event of the death of Optionee: (a) during the Term of this Option and while an Employee or Consultant of the Company and having been in Continuous Status as an Employee or Consultant since the date of grant of the Option; or (b) within thirty (30) days after Optionee’s Termination Date, this Option may be exercised at any time within six (6) months following the date of death (but in no event later than the Expiration Date set forth in the Notice and in Section 9 below), by Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that had accrued at the Termination Date.

    8.     Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by him or her. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee.

    9.     Term of Option. This Option may be exercised only within the Term set forth in the Notice, subject to the limitations set forth in Section 6 of the Plan.

    10.     Tax Consequences. Set forth below is a brief summary as of the date of this Option of certain of the federal and state tax consequences of exercise of this Option and disposition of the Shares under the laws in effect as of the Date of Grant. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

        (a)     Exercise of Incentive Stock Option. If this Option qualifies as an Incentive Stock Option, there will be no regular federal or state income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as an adjustment to the alternative minimum tax for federal tax purposes and may subject Optionee to the alternative minimum tax in the year of exercise.

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        (b)     Exercise of Nonstatutory Stock Option. If this Option does not qualify as an Incentive Stock Option, there may be a regular federal income tax liability and a state income tax liability upon the exercise of the Option. Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the fair market value of the Shares on the date of exercise over the Exercise Price. If Optionee is a current or former employee, the Company may be required to withhold from Optionee’s compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

        (c)     Disposition of Shares. In the case of a Nonstatutory Stock Option, if Shares are held for more than one (1) year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal and state income tax purposes. In the case of an Incentive Stock Option, if Shares transferred pursuant to the Option are held for more than one (1) year after exercise and are disposed of by at least two (2) years after the Date of Grant, any gain realized on disposition of the Shares will also be treated as long-term capital gain for federal and state income tax purposes. In either case, the long-term capital gain will be taxed for federal income tax and alternative minimum tax purposes at a maximum rate of 20% if the Shares are held more than one (1) year after exercise. If Shares purchased under an Incentive Stock Option are disposed of within one (1) year after exercise or within two (2) years after the Date of Grant, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of: (i) the Fair Market Value of the Shares on the date of exercise; or (ii) the sale price of the Shares.

        (d)     Notice of Disqualifying Disposition of Incentive Stock Option Shares. If the Option granted to Optionee herein is an Incentive Stock Option, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the Incentive Stock Option on or before the later of: (i) the date two (2) years after the Date of Grant; or (ii) the date one (1) year after the date of exercise, Optionee shall immediately notify the Company in writing of such disposition. Optionee acknowledges and agrees that he or she may be subject to income tax withholding by the Company on the compensation income recognized by Optionee from the early disposition by payment in cash or out of the current earnings paid to Optionee.

    11.     Withholding Tax Obligations.

        (a)     General Withholding Obligations. As a condition to the exercise of the Option granted hereunder, Optionee shall make such arrangements as the Administrator may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the exercise, receipt or vesting of the Option. The Company shall not be required to issue any Shares under the Plan until such obligations are satisfied. Optionee understands that, upon exercising a Nonstatutory Stock Option, he or she will recognize income for tax purposes in an amount equal to the excess of the then Fair Market Value of the Shares over the Exercise Price. If Optionee is an employee, the Company will be required to withhold from Optionee’s compensation, or collect from Optionee and pay to the applicable taxing authorities, an amount equal to a percentage of this compensation income. Additionally, Optionee may at some point be required to satisfy tax withholding obligations with respect to the disqualifying disposition of an Incentive Stock Option. Optionee shall satisfy his or her tax withholding obligation arising upon the exercise of this Option by one or some combination of the following methods: (i) by cash or check payment; (ii) out of Optionee’s current compensation; (iii) if permitted by the Administrator, in its discretion, by surrendering to the Company Shares which (A) in the case of Shares previously acquired from the Company, have been owned by Optionee for more than six (6) months on the date of surrender, and (B) have a Fair Market Value determined as of the applicable Tax Date (as defined in Section 11(c) below) on the date of surrender equal to the amount required to be withheld; or (iv) by electing to have the Company withhold from the Shares to be issued upon exercise of the Option that number of Shares having a Fair Market Value determined as of the applicable Tax Date equal to the amount required to be withheld.

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        (b)     Stock Withholding to Satisfy Withholding Tax Obligations. In the event the Administrator allows Optionee to satisfy his or her tax withholding obligations as provided in Section 11(a)(iii) or (iv) above, such satisfaction must comply with the requirements of this Section (11)(b) and all applicable laws. All elections by Optionee to have Shares withheld to satisfy tax withholding obligations shall be made in writing in a form acceptable to the Administrator and shall be subject to the following restrictions:

            (i)     the election must be made on or prior to the applicable Tax Date (as defined in Section 11(c) below);

            (ii)     once made, the election shall be irrevocable as to the particular Shares of the Option as to which the election is made; and

            (iii)     all elections shall be subject to the consent or disapproval of the Administrator.

        In the event the election to have Shares withheld is made by Optionee and the Tax Date is deferred under Section 83 of the Code because no election is filed under Section 83(b) of the Code, Optionee shall receive the full number of Shares with respect to which the Option is exercised, but Optionee shall be unconditionally obligated to tender back to the Company the proper number of Shares on the Tax Date.

        (c)     Definitions. For purposes of this Section 11, the Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined under the Applicable Laws (the “Tax Date”).

    12.     Market Standoff Agreement. In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing such underwritten offering of the Company’s securities, Optionee agrees not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the Company’s initial public offering.

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        This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one document.

AURIGA LABORATORIES, INC.

By: /s/ Philip S. Pesin

Name: Philip S. Pesin

Title:   Chief Executive Officer

        OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S STOCK PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.

        Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Agreement.

Dated: November 8, 2006	/s/ Charles R. Bearchell
	Signature

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EXHIBIT A

AURIGA LABORATORIES, INC.

2006 STOCK PLAN
EARLY EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT

        This Agreement (“Agreement”) is made as of __________________________, by and between Auriga Laboratories, Inc., a Delaware corporation (the “Company”), and __________________________________ (“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the 2006 Stock Plan.

    1.     Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase _________________ shares of the Common Stock (the “Shares”) of the Company under and pursuant to the Company’s 2006 Stock Plan (the “Plan”) and the Stock Option Agreement dated _________________ (the “Option Agreement”). Of these Shares, Purchaser has elected to purchase _________________ of those Shares which have become vested as of the date hereof under the Vesting Schedule set forth in the Notice of Stock Option Grant (the “Vested Shares”) and ____________ Shares which have not yet vested under such Vesting Schedule (the “Unvested Shares”). The purchase price for the Shares shall be $____________ per Share for a total purchase price of $_______________, which amount shall be paid for by a check in the amount of $____________. The term “Shares” refers to the purchased Shares and all securities received in replacement of the Shares or as stock dividends or splits, all securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other properties to which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.

    2.     Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the execution and delivery of this Agreement in accordance with the provisions of Section 2(b) of the Option Agreement. On such date, the Company will deliver to Purchaser a certificate representing the Shares to be purchased by Purchaser (which shall be issued in Purchaser’s name) against payment of the purchase price therefor by Purchaser by (a) check made payable to the Company, (b) cancellation of indebtedness of the Company to Purchaser, (c) delivery of shares of the Common Stock of the Company in accordance with Section 3 of the Option Agreement, or (d) a combination of the foregoing.

    3.     Limitations on Transfer. In addition to any other limitation on transfer created by applicable securities laws, Purchaser shall not assign, encumber or dispose of any interest in the Shares while the Shares are subject to the Company’s Repurchase Option (as defined below). After any Shares have been released from such Repurchase Option, Purchaser shall not assign, encumber or dispose of any interest in such Shares except in compliance with the provisions below and applicable securities laws.

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        (a)    Repurchase Option.

            (i)     In the event of the voluntary or involuntary termination of Purchaser’s employment or consulting relationship with the Company for any reason (including death or disability), with or without cause, the Company shall upon the date of such termination (the “Termination Date”) have an irrevocable, exclusive option (the “Repurchase Option”) for a period of 90 days from such date to repurchase all or any portion of the Shares held by Purchaser as of the Termination Date which have not yet been released from the Company’s Repurchase Option at the original purchase price per Share specified in Section 1 (adjusted for any stock splits, stock dividends and the like).

            (ii)     Unless the Company notifies Purchaser within 90 days from the date of termination of Purchaser’s employment or consulting relationship that it does not intend to exercise its Repurchase Option with respect to some or all of the Shares, the Repurchase Option shall be deemed automatically exercised by the Company as of the 90th day following such termination, provided that the Company may notify Purchaser that it is exercising its Repurchase Option as of a date prior to such 90th day. Unless Purchaser is otherwise notified by the Company pursuant to the preceding sentence that the Company does not intend to exercise its Repurchase Option as to some or all of the Shares to which it applies at the time of termination, execution of this Agreement by Purchaser constitutes written notice to Purchaser of the Company’s intention to exercise its Repurchase Option with respect to all Shares to which such Repurchase Option applies. The Company, at its choice, may satisfy its payment obligation to Purchaser with respect to exercise of the Repurchase Option by either (A) delivering a check to Purchaser in the amount of the purchase price for the Shares being repurchased, or (B) in the event Purchaser is indebted to the Company, canceling an amount of such indebtedness equal to the purchase price for the Shares being repurchased, or (C) by a combination of (A) and (B) so that the combined payment and cancellation of indebtedness equals such purchase price. In the event of any deemed automatic exercise of the Repurchase Option pursuant to this Section 3(a)(ii) in which Purchaser is indebted to the Company, such indebtedness equal to the purchase price of the Shares being repurchased shall be deemed automatically canceled as of the 90th day following termination of Purchaser’s employment or consulting relationship unless the Company otherwise satisfies its payment obligations. As a result of any repurchase of Shares pursuant to this Section 3(a), the Company shall become the legal and beneficial owner of the Shares being repurchased and shall have all rights and interest therein or related thereto, and the Company shall have the right to transfer to its own name the number of Shares being repurchased by the Company, without further action by Purchaser.

            (iii)     One hundred percent (100%) of the Shares shall initially be subject to the Repurchase Option. The Unvested Shares shall be released from the Repurchase Option in accordance with the Vesting Schedule set forth in the Notice of Stock Option Grant until all Shares are released from the Repurchase Option. Fractional shares shall be rounded to the nearest whole share.

        (b)     Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section 3(b) (the “Right of First Refusal”).

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            (i)     Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (i) the Holder’s bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the terms and conditions of each proposed sale or transfer. The Holder shall offer the Shares at the same price (the “Offered Price”) and upon the same terms (or terms as similar as reasonably possible) to the Company or its assignee(s).

            (ii)     Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (iii) below.

            (iii)     Purchase Price. The purchase price (“Purchase Price”) for the Shares purchased by the Company or its assignee(s) under this Section 3(b) shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith.

            (iv)     Payment. Payment of the Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within 30 days after receipt of the Notice or in the manner and at the times set forth in the Notice.

            (v)     Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section 3(b), then the Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 60 days after the date of the Notice and provided further that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section 3 shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.

            (vi)     Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(b) notwithstanding, the transfer of any or all of the Shares during Purchaser’s lifetime or on Purchaser’s death by will or intestacy to Purchaser’s Immediate Family (as defined below) or a trust for the benefit of Purchaser’s Immediate Family shall be exempt from the provisions of this
Section 3(b). “Immediate Family” as used herein shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section 3.

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        (c)     Involuntary Transfer.

            (i)     Company’s Right to Purchase upon Involuntary Transfer. In the event, at any time after the date of this Agreement, of any transfer by operation of law or other involuntary transfer (including divorce or death, but excluding, in the event of death, a transfer to Immediate Family as set forth in Section 3(b)(vi) above) of all or a portion of the Shares by the record holder thereof, the Company shall have the right to purchase all of the Shares transferred at the greater of the purchase price paid by Purchaser pursuant to this Agreement or the Fair Market Value of the Shares on the date of transfer. Upon such a transfer, the person acquiring the Shares shall promptly notify the Secretary of the Company of such transfer. The right to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written notice by the person acquiring the Shares.

            (ii)     Price for Involuntary Transfer. With respect to any stock to be transferred pursuant to Section 3(c)(i), the price per Share shall be a price set by the Board of Directors of the Company that will reflect the current value of the stock in terms of present earnings and future prospects of the Company. The Company shall notify Purchaser or his or her executor of the price so determined within 30 days after receipt by it of written notice of the transfer or proposed transfer of Shares. However, if the Purchaser does not agree with the valuation as determined by the Board of Directors of the Company, the Purchaser shall be entitled to have the valuation determined by an independent appraiser to be mutually agreed upon by the Company and the Purchaser and whose fees shall be borne equally by the Company and the Purchaser.

        (d)     Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any shareholder or shareholders of the Company or other persons or organizations.

        (e)     Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject to the provisions of this Agreement, including, insofar as applicable, the Repurchase Option. In the event of any purchase by the Company hereunder where the Shares or interest are held by a transferee, the transferee shall be obligated, if requested by the Company, to transfer the Shares or interest to the Purchaser for consideration equal to the amount to be paid by the Company hereunder. In the event the Repurchase Option is deemed exercised by the Company pursuant to Section 3(a)(ii) hereof, the Company may deem any transferee to have transferred the Shares or interest to Purchaser prior to their purchase by the Company, and payment of the purchase price by the Company to such transferee shall be deemed to satisfy Purchaser’s obligation to pay such transferee for such Shares or interest, and also to satisfy the Company’s obligation to pay Purchaser for such Shares or interest. Any sale or transfer of the Shares shall be void unless the provisions of this Agreement are satisfied.

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        (f)     Termination of Rights. The Right of First Refusal and the Company’s right to repurchase the Shares in the event of an involuntary transfer pursuant to Section 3(c) above shall terminate upon the listing of Common Stock of the Company on a national exchange.

        (g)     Market Standoff Agreement. In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing such underwritten offering of the Company’s securities, Purchaser agrees not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the Company’s initial public offering.

    4.     Escrow of Unvested Shares. For purposes of facilitating the enforcement of the provisions of Section 3 above, Purchaser agrees, immediately upon receipt of the certificate(s) for the Shares subject to the Repurchase Option, to deliver such certificate(s), together with an Assignment Separate from Certificate in the form attached to this Agreement as Attachment A executed by Purchaser and by Purchaser’s spouse (if required for transfer), in blank, to the Secretary of the Company, or the Secretary’s designee, to hold such certificate(s) and Assignment Separate from Certificate in escrow and to take all such actions and to effectuate all such transfers and/or releases as are in accordance with the terms of this Agreement. Purchaser hereby acknowledges that the Secretary of the Company, or the Secretary’s designee, is so appointed as the escrow holder with the foregoing authorities as a material inducement to make this Agreement and that said appointment is coupled with an interest and is accordingly irrevocable. Purchaser agrees that said escrow holder shall not be liable to any party hereof (or to any other party). The escrow holder may rely upon any letter, notice or other document executed by any signature purported to be genuine and may resign at any time. Purchaser agrees that if the Secretary of the Company, or the Secretary’s designee, resigns as escrow holder for any or no reason, the Board of Directors of the Company shall have the power to appoint a successor to serve as escrow holder pursuant to the terms of this Agreement.

    5.     Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:

        (a)     Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for his or her own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act. Purchaser does not have any present intention to transfer the Shares to any other person or entity.

        (b)     Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.

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        (c)     Purchaser understands that the Shares are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, Purchaser must hold the Shares indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Purchaser acknowledges that the Company has no obligation to register or qualify the Shares for resale. Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Shares, and requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.

        (d)     Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice.

    6.     Restrictive Legends and Stop-Transfer Orders.

        (a)     Legends. The certificate or certificates representing the Shares shall bear the following legends (as well as any legends required by applicable state and federal corporate and securities laws):

            (i)     THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

            (ii)     THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

        (b)     Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

        (c)     Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

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        (d)     Removal of Legend. When all of the following events have occurred, the Shares then held by Purchaser will no longer be subject to the legend referred to in Section 6(a)(ii): (i) the termination of the Right of First Refusal; (ii) the expiration or termination of the market standoff provisions of Section 3(g) (and of any agreement entered pursuant to Section 3(g)); and (iii) the expiration or exercise in full of the Repurchase Option. After such time, and upon Purchaser’s request, a new certificate or certificates representing the Shares not repurchased shall be issued without the legend referred to in Section 6(a)(ii), and delivered to Purchaser.

    7.     No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.

    8.     Section 83(b) Election. Purchaser understands that Section 83(a) of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income for a Nonstatutory Stock Option and as alternative minimum taxable income for an Incentive Stock Option the difference between the amount paid for the Shares and the Fair Market Value of the Shares as of the date any restrictions on the Shares lapse. In this context, “restriction” means the right of the Company to buy back the Shares pursuant to the Repurchase Option set forth in Section 3(a) of this Agreement. Purchaser understands that Purchaser may elect to be taxed at the time the Shares are purchased, rather than when and as the Repurchase Option expires, by filing an election under Section 83(b) (an “83(b) Election”) of the Code with the Internal Revenue Service within 30 days from the date of purchase. Even if the Fair Market Value of the Shares at the time of the execution of this Agreement equals the amount paid for the Shares, the election must be made to avoid income and alternative minimum tax treatment under Section 83(a) in the future. Purchaser understands that failure to file such an election in a timely manner may result in adverse tax consequences for Purchaser. Purchaser further understands that an additional copy of such election form should be filed with his or her federal income tax return for the calendar year in which the date of this Agreement falls. Purchaser acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to purchase of the Shares hereunder, and does not purport to be complete. Purchaser further acknowledges that the Company has directed Purchaser to seek independent advice regarding the applicable provisions of the Code, the income tax laws of any municipality, state or foreign country in which Purchaser may reside, and the tax consequences of Purchaser’s death.

        Purchaser agrees that he or she will execute and deliver to the Company with this executed Agreement a copy of the Acknowledgment and Statement of Decision Regarding Section 83(b) Election (the “Acknowledgment”) attached hereto as Attachment B. Purchaser further agrees that he or she will execute and submit with the Acknowledgment a copy of the 83(b) Election attached hereto as Attachment C (for tax purposes in connection with the early exercise of an option) if Purchaser has indicated in the Acknowledgment his or her decision to make such an election.

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    9.    Miscellaneous.

        (a)     Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Georgia, without giving effect to principles of conflicts of law.

        (b)     Entire Agreement; Enforcement of Rights. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

        (c)     Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

        (d)     Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

        (e)     Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by telegram or fax or 48 hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party’s address as set forth below or as subsequently modified by written notice.

        (f)     Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

        (g)     Successors and Assigns. The rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by the Company’s successors and assigns. The rights and obligations of Purchaser under this Agreement may only be assigned with the prior written consent of the Company.

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        (h)     Georgia Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF GEORGIA, OR ANY OTHER STATE, AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

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        The parties have executed this Agreement as of the date first set forth above.

COMPANY:

AURIGA LABORATORIES, INC.

By:_________________________________

Name:_______________________________

Title:________________________________

    Address: 5555 Triangle Parkway, Suite 300

                      Norcross, GA 30092

PURCHASER:

____________________________________

Signature

____________________________________

Print Name

____________________________________

Address

____________________________________

Address

A-10

ATTACHMENT A

ASSIGNMENT SEPARATE FROM CERTIFICATE

        FOR VALUE RECEIVED and pursuant to that certain Early Exercise Notice and Restricted Stock Purchase Agreement between the undersigned (“Purchaser”) and Auriga Laboratories, Inc. (the “Company”) dated _______________, ____ (the “Agreement”), Purchaser hereby sells, assigns and transfers unto the Company _________________________ (________) shares of the Common Stock of the Company, standing in Purchaser’s name on the books of the Company and represented by Certificate No. ____, and does hereby irrevocably constitute and appoint ____________________________________________ to transfer said stock on the books of the Company with full power of substitution in the premises. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND THE ATTACHMENTS THERETO.

Dated: ______________________

Signature:

______________________________________

Signature

______________________________________

Print Name

Instruction: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its Repurchase Option set forth in the Agreement without requiring additional signatures on the part of Purchaser.

A-A-1

ATTACHMENT B

ACKNOWLEDGMENT AND STATEMENT OF DECISION
REGARDING SECTION 83(b) ELECTION

        The undersigned (which term includes the undersigned’s spouse), a purchaser of ___________ shares of Common Stock of Auriga Laboratories, Inc., a Delaware corporation (the “Company”) by exercise of an option (the “Option”) granted pursuant to the Company’s 2006 Stock Plan (the “Plan”), hereby states as follows:

    1.     The undersigned acknowledges receipt of a copy of the Plan relating to the offering of such shares. The undersigned has carefully reviewed the Plan and the option agreement pursuant to which the Option was granted.

    2.     The undersigned either [check and complete as applicable]:

(a) ____ has consulted, and has been fully advised by, the undersigned’s own tax advisor, ______________________, whose business address is ______________________________, regarding the federal, state and local tax consequences of purchasing shares under the Plan, and particularly regarding the advisability of making elections pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”) and pursuant to the corresponding provisions, if any, of applicable state law; or

(b) ____ has knowingly chosen not to consult such a tax advisor.

    3.     The undersigned hereby states that the undersigned has decided [check as applicable]:

(a) ____ to make an election pursuant to Section 83(b) of the Code, and is submitting to the Company, together with the undersigned’s executed Early Exercise Notice and Restricted Stock Purchase Agreement, an executed form entitled “Election Under Section 83(b) of the Internal Revenue Code of 1986;” or

(b) ____ not to make an election pursuant to Section 83(b) of the Code.

    4.     Neither the Company nor any subsidiary or representative of the Company has made any warranty or representation to the undersigned with respect to the tax consequences of the undersigned’s purchase of shares under the Plan or of the making or failure to make an election pursuant to Section 83(b) of the Code or the corresponding provisions, if any, of applicable state law.

Date:____________________	___________________________________
	Signature

A-B-1

ATTACHMENT C

ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986

        The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code, to include in taxpayer’s gross income or alternative minimum taxable income, as applicable, for the current taxable year, the amount of any income that may be taxable to taxpayer in connection with taxpayer’s receipt of the property described below:

    1.     The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

NAME OF TAXPAYER: _______________________________

ADDRESS:     _______________________________________

_______________________________________

IDENTIFICATION NO. OF TAXPAYER: ___________________

TAXABLE YEAR: __________

    2.     The property with respect to which the election is made is described as follows:

_________________ shares of the Common Stock of Auriga Laboratories, Inc., a Delaware corporation (the “Company”).

    3.     The date on which the property was transferred is: _______________

    4.     The property is subject to the following restrictions:

Repurchase option at cost in favor of the Company upon termination of taxpayer’s employment or consulting relationship.

    5.     The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is: $____________________

The amount (if any) paid for such property: $____________________

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated: ____________________	__________________________________
	Signature

A-C-1

RECEIPT AND CONSENT

        The undersigned hereby acknowledges receipt of a photocopy of Certificate No. ______ for __________________ shares of Common Stock of Auriga Laboratories, Inc. (the “Company”).

        The undersigned further acknowledges that the Secretary of the Company, or his or her designee, is acting as escrow holder pursuant to the Early Exercise Notice and Restricted Stock Purchase Agreement Purchaser has previously entered into with the Company. As escrow holder, the Secretary of the Company, or his or her designee, holds the original of the aforementioned certificate issued in the undersigned’s name.

Dated: ____________________	__________________________________
	Name:

EXHIBIT B

AURIGA LABORATORIES, INC.

2006 STOCK PLAN
EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT

        This Agreement (“Agreement”) is made as of ______________, by and between Auriga Laboratories, Inc., a Delaware corporation (the “Company”), and ____________ (“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the 2006 Stock Plan.

    1.     Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase __________ shares of the Common Stock (the “Shares”) of the Company under and pursuant to the Company’s 2006 Stock Plan (the “Plan”) and the Stock Option Agreement dated ______________, (the “Option Agreement”). The purchase price for the Shares shall be $__________per Share for a total purchase price of $_______________. The term “Shares” refers to the purchased Shares and all securities received in replacement of the Shares or as stock dividends or splits, all securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other properties to which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.

    2.     Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the execution and delivery of this Agreement in accordance with the provisions of Section 2(b) of the Option Agreement. On such date, the Company will deliver to Purchaser a certificate representing the Shares to be purchased by Purchaser (which shall be issued in Purchaser’s name) against payment of the purchase price therefor by Purchaser by (a) check made payable to the Company, (b) cancellation of indebtedness of the Company to Purchaser, (c) delivery of shares of the Common Stock of the Company in accordance with Section 3 of the Option Agreement, or (d) a combination of the foregoing.

    3.     Limitations on Transfer. In addition to any other limitation on transfer created by applicable securities laws, Purchaser shall not assign, encumber or dispose of any interest in the Shares except in compliance with the provisions below and applicable securities laws.

        (a)     Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section 3(a) (the “Right of First Refusal”).

            (i)     Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (i) the Holder’s bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the terms and conditions of each proposed sale or transfer. The Holder shall offer the Shares at the same price (the “Offered Price”) and upon the same terms (or terms as similar as reasonably possible) to the Company or its assignee(s).

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            (ii)     Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (iii) below.

            (iii)     Purchase Price. The purchase price (“Purchase Price”) for the Shares purchased by the Company or its assignee(s) under this Section 3(a) shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith.

            (iv)     Payment. Payment of the Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within 30 days after receipt of the Notice or in the manner and at the times set forth in the Notice.

            (v)     Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section 3(a), then the Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 60 days after the date of the Notice and provided further that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section 3 shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.

            (vi)     Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(a) notwithstanding, the transfer of any or all of the Shares during Purchaser’s lifetime or on Purchaser’s death by will or intestacy to Purchaser’s Immediate Family (as defined below) or a trust for the benefit of Purchaser’s Immediate Family shall be exempt from the provisions of this
Section 3(a). “Immediate Family” as used herein shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section 3.

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        (b)    Involuntary Transfer.

            (i)     Company’s Right to Purchase upon Involuntary Transfer. In the event, at any time after the date of this Agreement, of any transfer by operation of law or other involuntary transfer (including divorce or death, but excluding, in the event of death, a transfer to Immediate Family as set forth in Section 3(a)(vi) above) of all or a portion of the Shares by the record holder thereof, the Company shall have the right to purchase all of the Shares transferred at the greater of the purchase price paid by Purchaser pursuant to this Agreement or the Fair Market Value of the Shares on the date of transfer. Upon such a transfer, the person acquiring the Shares shall promptly notify the Secretary of the Company of such transfer. The right to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written notice by the person acquiring the Shares.

            (ii)     Price for Involuntary Transfer. With respect to any stock to be transferred pursuant to Section 3(b)(i), the price per Share shall be a price set by the Board of Directors of the Company that will reflect the current value of the stock in terms of present earnings and future prospects of the Company. The Company shall notify Purchaser or his or her executor of the price so determined within 30 days after receipt by it of written notice of the transfer or proposed transfer of Shares. However, if the Purchaser does not agree with the valuation as determined by the Board of Directors of the Company, the Purchaser shall be entitled to have the valuation determined by an independent appraiser to be mutually agreed upon by the Company and the Purchaser and whose fees shall be borne equally by the Company and the Purchaser.

        (c)     Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any shareholder or shareholders of the Company or other persons or organizations.

        (d)     Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject to the provisions of this Agreement. Any sale or transfer of the Shares shall be void unless the provisions of this Agreement are satisfied.

        (e)     Termination of Rights. The Right of First Refusal and the Company’s right to repurchase the Shares in the event of an involuntary transfer pursuant to Section 3(b) above shall terminate upon the listing of Common Stock of the Company on a national exchange.

        (f)     Market Standoff Agreement. In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing such underwritten offering of the Company’s securities, Purchaser agrees not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the Company’s initial public offering.

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    4.     Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:

        (a)     Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for his or her own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

        (b)     Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.

        (c)     Purchaser understands that the Shares are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, Purchaser must hold the Shares indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Purchaser acknowledges that the Company has no obligation to register or qualify the Shares for resale. Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Shares, and requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.

        (d)     Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice.

    5.     Restrictive Legends and Stop-Transfer Orders.

        (a)     Legends. The certificate or certificates representing the Shares shall bear the following legends (as well as any legends required by applicable state and federal corporate and securities laws):

            (i)     THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

            (ii)     THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

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        (b)     Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

        (c)     Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

        (d)     Removal of Legend. When all of the following events have occurred, the Shares then held by Purchaser will no longer be subject to the legend referred to in Section 5(a)(ii): (i) the termination of the Right of First Refusal; and (ii) the expiration or termination of the market standoff provisions of Section 3(f) (and of any agreement entered pursuant to Section 3(f)). After such time, and upon Purchaser’s request, a new certificate or certificates representing the Shares not repurchased shall be issued without the legend referred to in Section 5(a)(ii), and delivered to Purchaser.

    6.     No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.

    7.     Miscellaneous.

        (a)     Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Georgia, without giving effect to principles of conflicts of law.

        (b)     Entire Agreement; Enforcement of Rights. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

        (c)     Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

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        (d)     Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

        (e)     Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by telegram or fax or 48 hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party’s address as set forth below or as subsequently modified by written notice.

        (f)     Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

        (g)     Successors and Assigns. The rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by the Company’s successors and assigns. The rights and obligations of Purchaser under this Agreement may only be assigned with the prior written consent of the Company.

        (h)     Georgia Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF GEORGIA, OR ANY OTHER STATE, AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

[Signature Page Follows]

B-6

        The parties have executed this Agreement as of the date first set forth above.

COMPANY:

AURIGA LABORATORIES, INC.

By:_________________________________

Name:_______________________________

Title:________________________________

    Address: 5555 Triangle Parkway, Suite 300

                      Norcross, GA 30092

PURCHASER:

____________________________________

Signature

____________________________________

Print Name

____________________________________

Address

____________________________________

Address

B-7

RECEIPT

        Auriga Laboratories, Inc. (the “Company”) hereby acknowledges receipt of (check as applicable):

_____ A check in the amount of $__________

_____ The cancellation of indebtedness in the amount of $__________

_____ Certificate No. ____ representing ______ shares of the Company's Common Stock with a fair market value of $__________

given by ____________ as consideration for Certificate No. ______ for ___________ shares of Common Stock of the Company.

Dated:________________________

AURIGA LABORATORIES, INC.

By:_________________________________

Name:_______________________________

Title:________________________________

EX-10.3

INDEMNIFICATION AGREEMENT

        THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of November 8, 2006, by and between AURIGA LABORATORIES, INC., a Delaware corporation (the “Company”), and CHARLES R. BEARCHELL, an individual resident of the State of California (“Indemnitee”).

RECITALS

        WHEREAS, the Company and Indemnitee have agreed to enter into that certain Executive Employment Agreement, dated of even date herewith, which provides for the appointment of Indemnitee as the Company’s Chief Financial Officer;

        WHEREAS, the Board of Directors of the Company (the “Board”) has adopted Bylaws of the Company (the “Bylaws”) providing for the indemnification of the officers and directors of the Company to the maximum extent authorized by law (“Law”);

        WHEREAS, the Bylaws and the Law, by their nonexclusive nature, permit contracts between the Company and the officers or directors of the Company with respect to indemnification of such officers or directors; and

        WHEREAS, in accordance with the authorization as provided by Law, the Company may purchase and maintain a policy or policies of directors’ and officers’ liability insurance (“D&O Insurance”), covering certain liabilities which may be incurred by its officers or directors in the performance of their obligations to the Company.

AGREEMENT

        NOW, THEREFORE, in consideration of Indemnitee’s service as an officer or director after the date hereof, the parties hereto agree as follows:

    1.     Indemnity of Indemnitee. The Company hereby agrees to hold harmless and indemnify Indemnitee to the full extent authorized or permitted by the provisions of the Law, as such may be amended from time to time, and the Bylaws, as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality thereof:

        (a)     Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(a) if, by reason of his Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful.

        (b)     Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.

        (c)     Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by law against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

    2.     Additional Indemnity. In addition to and without regard to any limitations on the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful under Delaware law.

    3.     Contribution in the Event of Joint Liability.

        (a)     Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

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        (b)     Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the Law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

        (c)     The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

    4.     Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

    5.     Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within ten (10) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free. Notwithstanding the foregoing, the obligation of the Company to advance Expenses pursuant to this Section 5 shall be subject to the condition that, if, when and to the extent that the Company determines that Indemnitee would not be permitted to be indemnified under applicable law, the Company shall be entitled to be reimbursed, within thirty (30) days of such determination, by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Company that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any advance of Expenses until a final judicial determination is made with respect thereto (and as to which all rights of appeal therefrom have been exhausted or lapsed).

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    6.     Procedures and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the Law and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

        (a)     To obtain indemnification (including, but not limited to, the advancement of Expenses and contribution by the Company) under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

        (b)     Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following three methods, which shall be at the election of Indemnitee: (i) by a majority vote of the Disinterested Directors of the Board, even though less than a quorum; (ii) by Independent Counsel in a written opinion; or (iii) by the stockholders of the Company.

        (c)     If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c). The Independent Counsel shall be selected by Indemnitee (unless Indemnitee requests that such selection be made by the Board). Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed.

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        (d)     In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

        (e)     Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise (as hereinafter defined) in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

        (f)     If the person, persons or entity empowered or selected under this Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent: (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification; or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 30-day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.

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        (g)     Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board or stockholder of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

        (h)     The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

    7.     Remedies of Indemnitee.

        (a)     In the event that: (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement; (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement; (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification; (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor; or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his entitlement to such indemnification. Indemnitee shall commence such proceeding seeking an adjudication within one hundred eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication.

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        (b)     In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b).

        (c)     If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent a prohibition of such indemnification under applicable law.

        (d)     In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any D&O Insurance policies maintained by the Company, the Company shall pay on his behalf, in advance, any and all Expenses actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

        (e)     The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.

    8.     Non-Exclusivity; Survival of Rights; Insurance; Subrogation.

        (a)     The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation of the Company, the Bylaws, any agreement, a vote of stockholders, a resolution of directors or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the Law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

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        (b)     To the extent that the Company maintains a D&O Insurance policy or policies providing liability insurance for directors, officers, employees or agents or fiduciaries of the Company or of any other Enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy or policies.

        (c)     In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

        (d)     The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

    9.     Exception to Right of Indemnification. Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification under this Agreement with respect to any Proceeding brought by Indemnitee, or any claim therein, unless: (a) the bringing of such Proceeding or making of such claim shall have been approved by the Board; or (b) such Proceeding is being brought by Indemnitee to assert, interpret or enforce his rights under this Agreement.

    10.     Duration of Agreement. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of his Corporate Status, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.

    11.     Security. To the extent requested by Indemnitee and approved by the Board in its discretion, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

    12.     Enforcement.

        (a)     The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company.

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        (b)     This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

    13.     Definitions. For purposes of this Agreement:

        (a)     “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company.

        (b)     “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

        (c)     “Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary.

        (d)     “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating or being or preparing to be a witness in a Proceeding.

        (e)     “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements); or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

        (f)     “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was an officer or director of the Company, by reason of any action taken by him or of any inaction on his part while acting as an officer or director of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other Enterprise; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce his rights under this Agreement.

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    14.     Severability. If any provision or provisions of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

    15.     Modification and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver.

    16.     Notice By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay prejudices the Company.

    17.     Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if: (a) delivered by hand and received by the party to whom said notice or other communication shall have been directed; or (b) mailed by certified or registered mail with postage prepaid, on the third (3^rd) business day after the date on which it is so mailed:

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            (i)     If to Indemnitee, to the address set forth below Indemnitee’s signature hereto.

            (ii)     If to the Company, to:

Auriga Laboratories, Inc.
5555 Triangle Parkway, Suite 300
Norcross, Georgia 30092
Attn: Chief Executive Officer

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

    18.     Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

    19.     Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

    20.     Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without application of the conflict of laws principles thereof.

    21.     Gender. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.

[Remainder of this page intentionally left blank.]

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        IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

AURIGA LABORATORIES, INC.,

a Delaware corporation

By: /s/ Philip S. Pesin

Name: Philip S. Pesin

Title:   Chief Executive Officer

INDEMNITEE

/s/ Charles R. Bearchell

Charles R. Bearchell

Address:

Mr. Charles R. Bearchell

18030 Gauguin Lane

Granada Hills, California 91344

EX-99.1

Auriga Laboratories Appoints Charles R. Bearchell as Chief Financial Officer

NORCROSS, Ga. — (BUSINESS WIRE) — Auriga Laboratories, Inc. (OTCBB: ARGA), a specialty pharmaceutical company with products designed for the treatment of acute respiratory diseases and xerostomia, announced today that it has appointed Charles R. Bearchell, CPA, JD, as its new Chief Financial Officer. Mr. Bearchell has extensive experience in directing finance and accounting operations for a variety of companies in the medical, aircraft, online service, furniture, consumer products and service industries. Previously, he was the chief financial officer for YouBet.com, Inc. (NASDAQSC: UBET), where he managed all accounting, financial and treasury functions for the publicly-held online gaming company with $60 million in revenues and 82 employees.

Recently, he served as a consultant to a California-based company that designs, develops, markets and services rapid 3-D printing, prototyping and manufacturing. From 2001 to 2003 he was the controller for The Plastic Surgery Company, where he managed a variety of accounting functions for the publicly-held company with $40 million in revenue. Prior to joining The Plastic Surgery Company, Mr. Bearchell served as the chief financial officer for AVTEL Services, Inc., where he managed all accounting and financial operations for the privately-held $40 million aircraft, maintenance and storage company. From 1996 to 1999, he was the chief financial officer of Barn Furniture Mart, Inc., a privately-held furniture retailer, manufacturer and distributor. He also held management positions in the corporate offices of Lockheed Martin and served as a Staff Accountant in the Los Angeles Branch of the Securities and Exchange Commission.

“We are pleased to attract an individual such as Chuck with vast experience and a diverse background,” said Philip S. Pesin, Chief Executive Officer of Auriga Laboratories. “Due to our rapid growth, it has become increasingly important to develop more advanced reporting systems and procedures to monitor sales, receivables, inventory and other important operating metrics. Chuck has extensive experience in this area, and his knowledge of Sarbanes-Oxley and other public company reporting requirements will help us as we seek a listing on a national exchange and expand our presence among the investment community.”

Mr. Bearchell received his Juris Doctor Degree from Southwestern University Law School in Los Angeles and a Bachelor of Science in Business Administration from California State University, Northridge. He has also been an instructor for the paralegal program at the University of California, Los Angeles Extension Office.

About Auriga Laboratories™

Auriga Laboratories™ is a specialty pharmaceutical company capitalizing on high-revenue markets and opportunities in the pharmaceutical industry through proactive sales, integrated marketing and advanced in-house drug development capabilities. The Company’s high-growth business model combines acquisition of proven brand names, powerful product development strategies and rapidly-growing national sales teams and marketing operations. Auriga acquires valuable brand portfolios that are no longer a strategic focus for large pharmaceutical companies, then capitalizes on untapped marketplace opportunities through brand extension and directed sales/marketing programs. The Company’s drug-development pipeline leverages novel material science and advanced drug delivery technologies to produce improved formulations of successful brands to further expand markets, sales and clinical indications for proven, successful products. Auriga’s exclusive product portfolio currently includes the Extendryl® and Levall® families of prescription products, indicated for relief of symptoms associated with a range of acute respiratory diseases, as well as the newly-acquired Aquoral™ product line, indicated for the treatment of xerostomia (or dry mouth). Auriga plans to become a fully integrated pharmaceutical company by acquiring its own manufacturing and development capabilities. Moving forward, the Company will seek to acquire and/or in-license additional products and technologies to further grow revenues. For more information, please visit: www.aurigalabs.com.

Forward-Looking Statements

The information contained herein includes forward-looking statements. These statements relate to future events or to the Company’s future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause its actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company’s control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects the Company’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to its operations, results of operations, growth strategy and liquidity. The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Important factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, those factors that are disclosed under the heading “Risk Factors” and elsewhere in documents filed by the Company from time to time with the United States Securities and Exchange Commission and other regulatory authorities. Statements regarding the Company’s ability to increase its sales force and the success of such sales force in selling its products in light of competitive and other factors, the regulatory status and/or regulatory compliance of its products, the Company’s ability to secure additional financing, its ability to sustain market acceptance for its products, its dependence on collaborators, the Company’s ability to find and execute strategic transactions, its potential exposure to litigation, the Company’s exposure to product liability claims, and the Company’s prices, future revenues and income and cash flows and other statements that are not historical facts contain predictions, estimates and other forward-looking statements. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved and these statements will prove to be accurate. Important factors could cause actual results to differ materially from those included in the forward-looking statements.

Contact:
Auriga Laboratories, Inc.
Philip Pesin, 877-287-4428
investors@aurigalabs.com
or
CEOcast, Inc. for Auriga Laboratories
Josh Reynolds, 212-732-4300
jreynolds@ceocast.com