EXECUTIVE EMPLOYMENT AGREEMENT
THIS
EXECUTIVE EMPLOYMENT AGREEMENT (“the Agreement”) is effective September 1, 2007
(the “Effective Date”), by and between Auriga Laboratories, Inc., (the
“Company”) and Xxxxx Xxxxxx (“Executive”).
| 1. |
ENGAGEMENT
AND DUTIES
|
1.1 Engagement.
Subject
to the terms and conditions set forth in this Agreement, the Company
will employ Executive as its Chief Financial Officer, pursuant to the terms
of this Agreement. Executive hereby accepts such engagement and employment,
pursuant to the terms of this Agreement.
1.2 Employment
Period.
Unless
terminated earlier pursuant to Section 4, Executive’s term of employment as
Chief Financial Officer under this Agreement shall commence on the Effective
Date and shall continue for a period of one (1) year following the Effective
Date. If the parties mutually agree, the parties shall have the option to extend
the term of this Agreement for an additional one (1) year period upon either
party notifying the other party, in accordance with section 7.2, of intent
to
renew at least ninety (90) days prior to the end of the initial one (1) year
term, subject to acceptance of such renewal by the other party. The initial
one
(1) year term, and any additional renewal period, shall together be referred
to
as the “Employment Period” as such term is used in this Agreement.
1.3 Duties
and Responsibilities.
During
the Employment Period, the duties, authority and responsibilities of Executive
shall be commensurate with the duties, authority and responsibilities
customarily accorded a Chief Financial Officer at comparable companies, and
shall include such duties and responsibilities as may be legally assigned to
Executive by the Chief Executive Officer or Board of Directors of the Company
(the “Board”). During the Employment Period, Executive shall report to the Chief
Executive Officer and the Board. Executive shall exercise such authority and
perform such duties and services, consistent with his position, as may be
assigned to him from time to time by the Chief Executive Officer and the Board
and the Executive hereby agrees to perform well and faithfully such duties
and
responsibilities.
1.4 Devotion
of Time and Best Efforts.
Except
for vacations as provided herein and absences due to temporary illness, under
an
approved leave, or as required by applicable law, Executive agrees to devote
his
best efforts and energies on a full time basis during the Employment Period
to
the performance of his duties hereunder and to advance the Company’s interests.
Notwithstanding the foregoing, Executive acknowledges during his employment
with
the Company, Executive may engage in any other business activity, whether or
not
such business activity is pursued for profit, or other pecuniary advantage,
including, without limitation, personal investments, conducting private business
affairs, participating on boards of nonprofit foundations and similar activities
which, in each such case, do not materially interfere with the services rendered
by Executive under this Agreement.
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Employment Agreement
| 2. |
COMPENSATION
|
2.1 Base
Salary.
During
the Employment Period, in exchange for the services provided by Executive
hereunder, Executive shall receive an annual “Base Salary” of Two Hundred And
Fifty Thousand Dollars ($250,000) commencing on the first day of the Employment
Period, payable in accordance with the Company’s regular payroll practices and
policies which are in effect from time to time. The Board, and/or the
Compensation Committee of the Board, as applicable, shall review the Base Salary
at least once a year to determine whether the Base Salary should be increased
effective January 1st
of any
year during the Employment Period. The amount of the increase shall be
determined no later than two (2) weeks prior to the annual filing of the
Company’s Form 10k and any such increase shall be retroactive until January
1st
of the
year in which the salary increase occurs. The Company shall deduct and withhold
all necessary social security and withholding taxes and any other similar sums
required by law from such Base Salary, bonuses, benefits and other payments
to
the Executive, as applicable.
2.2 Bonus.
During
the Employment Period, the Executive shall be entitled to receive an annual
bonus based on increases in market capitalization of the Company which occur
subsequent to the Effective Date such that Executive shall be entitled to the
amount of five thousand dollars ($5,000) for every one million dollar
($1,000,000) increase in market capitalization, with the foregoing bonus being
payable each calendar quarter (“Quarterly Bonus”). Such Quarterly Bonus shall be
prorated for any partial increase in market capitalization of the Company
measured each quarter of the year. The first $100,000 of this bonus earned
in
any particular quarter will be paid in cash and the Company shall have the
discretion to pay any part of this Quarterly Bonus over $100,000 earned in
that
same quarter in the equivalent fair market value of the Company’s registered
common stock. By way of example, if, during the first calendar quarter
subsequent to the Effective Date, the market capitalization of the Company
increases from $60 million to $62 million, Executive would be entitled to a
Quarterly Bonus of $10,000. If, however, the market capitalization of the
Company was only to remain at $60 million during the first calendar quarter
subsequent to the Effective Date, Executive would receive no Quarterly Bonus.
Notwithstanding the foregoing, Executive shall not be entitled to any Quarterly
Bonus if the amount of market capitalization of the Company is below any
previous market capitalization amount on which Executive was paid. The amount
of
such Quarterly Bonus shall be payable to Executive within fifteen (15) days
of
the end of each calendar quarter. In addition to and without in any way limiting
Executive rights to receive the Quarterly Bonus, Executive shall also be
entitled to participate in any bonuses provided to senior management personnel
of the Company as determined by the Board in their discretion.
2.3 Equity
Incentive Award.
Concurrently herewith, the Company is granting Executive an award consisting
of
options to purchase One Million Four Hundred Thousand (1,400,000) shares of
common stock of the Company. The exercise price per share will be equal to
the
fair market value per share on the date the option is granted by the Board,
pursuant to the terms of the 2007 Stock Option Plan and Stock Option Agreement
of the Company, or any successor thereto, as applicable. The Board shall grant
said stock options to Executive no later than September 30, 2007. Executive
will
vest in 400,000 of the option shares on the Effective Date, and in 25% of the
remaining 1,000,000 option shares on the first anniversary of the Effective
Date
before the expiration of Executive’s first term of employment with the Company.
The balance will vest in thirty six equal monthly installments over the
following three years of services, as described in the applicable stock option
agreement. Executive shall continue to have the right to exercise any vested
options for a period of at least twelve (12) months after the date of
termination of employment for any of the reasons set forth in paragraph 4,
below, other than for a termination for Cause. Additionally, Executive shall
be
entitled to participate in any equity grants provided to senior management
personnel of the Company under the 2007 Stock Option and Equity Incentive Plans
or any successor thereto as determined by the Board in their discretion.
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Employment
Agreement
2.4 Expense
Reimbursements.
The
Company agrees that during the Employment Period, the Executive shall be
authorized to incur ordinary and necessary expenses in connection with the
promotion, operation and furtherance of the business affairs of the Company,
including reasonable expenses incurred for purposes of entertainment, travel,
business and educational/professional meetings, professional association
membership dues and fees (including but not necessarily limited to AICPA and
NYSSCPA), and expenses associated with continuing education requirements, as
shall be in accordance with normal Company policy approved by the Board and
which are in accordance with Executive’s position as Chief Financial Officer of
the Company. The Executive shall be entitled to reimbursement by the Company
for
such reasonable business expenditures upon presentation by the Executive to
the
Company of an itemized account of such expenditures, together with appropriate
receipts and vouchers or other evidence as shall be required for tax or
accounting purposes.
2.5 Auto
Allowance.
The
Executive shall be entitled to a monthly auto allowance of Seven Hundred Fifty
Dollars ($750) to be paid in accordance with the Company’s standard payroll and
expense practices.
| 3. |
BENEFITS
|
3.1 Health
and Welfare.
During
the Employment Period, Executive shall be eligible to participate in the health
and welfare benefits generally available to other senior management employees
of
the Company and shall have the same rights and privileges to participate in
any
employee benefit plans and arrangements, in accordance with the Company’s
policies in effect from time to time as any other senior management employee
of
the Company. The Executive, at his election, may choose to continue his existing
health insurance in place of participating in the Company’s health insurance
plan and, upon this election, the Company shall reimburse Executive for his
monthly health insurance premiums incurred during the Employment
Period.
3.2 Pension
& Retirement Benefits.
During
the Employment Period, Executive shall be eligible to participate in the
qualified and nonqualified pension, profit sharing and retirement plans
generally available to other senior management employees of the Company.
Executive may begin participating in the Company’s 401(k) Plan during the
enrollment period following the first 90 days of employment. Company will match
up to 3% of Executive’s base salary. Executive is eligible to contribute up to
the statutory limits as specified in the Internal Revenue Code.
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Employment
Agreement
3.3 Vacation.
During
the Employment Period, the Executive shall be entitled to five weeks of vacation
each full calendar year in accordance with the Company’s policies and procedures
related to vacation time. Executive may accrue up to a maximum of 2 times his
yearly vacation allotment. However, upon reaching this maximum level of accrual,
Executive will cease to accrue additional vacation time until the level of
accrual falls below this maximum accrual cap. The first year’s vacation will be
prorated based on the Effective Date of September 1, 2007. Executive will also
receive 6 personal/sick days per year. Executive must be employed greater than
90 days to use sick/personal days, which accrue at a rate of 1.85 hours per
bi-weekly pay date.
| 4. |
TERMINATION
OF EMPLOYMENT
|
4.1 Death
or Disability.
If the
Executive dies during the Employment Period, the Executive’s employment shall be
deemed to terminate on or after the date of death, as of the date the
Executive’s death is established by reasonable documentation. If the Executive
is incapacitated or disabled by accident, sickness or otherwise so as to render
him mentally or physically incapable of fully performing the essential functions
of his position with reasonable accommodation for a period of six (6) months
or
more during any consecutive twelve (12) month period or twelve (12) consecutive
weeks, after such twelve (12) month period, the Company, in its reasonable
discretion, may terminate Executive’s employment due to “Disability” by
providing written notice of such termination to Executive. A termination of
Executive’s employment, and the Employment Period, by either Executive or the
Company, for Disability shall be communicated to the other party by written
notice, and shall be effective the thirtieth (30th)
day
after receipt of such notice of Disability by the other party.
4.2 Termination
for Cause.
The
Company may terminate the Employment Period and the Executive’s employment for
“Cause” (such termination being hereinafter called a “Termination For Cause”) by
giving the Executive notice in writing of such termination which sets forth
in
general the grounds for such termination. Such termination shall be effective
immediately upon such notice. For purposes of this Agreement, “Cause” shall
mean: a) Executive’s conviction or plea of guilty or nolo contendere to a felony
or any crime involving dishonesty or moral turpitude, b) his willful failure
to
perform any of his material duties under this Agreement which results in
demonstrable material injury to the Company, or c) commission by Executive
of an
act or omission that could adversely and materially affect the Company’s
business or reputation. If the Company contends the Executive is in violation
of
either subparts (b) and (c) of this paragraph, then it shall provide written
notice to the Executive of its contention and the factual basis therefore and
shall provide Executive a period of thirty (30) days to remedy or cure said
breach.
4.3 Termination
Without Cause.
The
Company may terminate Executive’s employment at any time during the Employment
Period without “Cause” by giving the Executive written notice of such
termination which shall be effective immediately upon such notice.
4.4 Voluntary
Termination.
Executive may terminate the Employment Period and his employment hereunder
by
providing the Company with thirty (30) days written notice of his resignation.
Any termination of the employment of the Executive hereunder by resignation
(or
other voluntary action of the Executive) shall be deemed to be a “Voluntary
Termination.”
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Employment
Agreement
4.5 Termination
by Executive for Good Reason.
Executive’s Employment Period may be terminated by Executive for Good Reason.
For purposes of this Agreement, “Good Reason” shall mean termination by
Executive for any reason on or after a Change in Control, as defined below,
or
the occurrence of any one or more of the following events without Executive’s
prior written consent, unless Company fully cures the circumstances constituting
Good Reason (provided such circumstances are capable of cure) within thirty
(30)
business days of receipt of written notice of such circumstances by Company
from
Executive:
(a) A
material reduction in Executive’s titles, duties, authority and
responsibilities, or the assignment to Executive of any duties materially
inconsistent with Executive’s position, authority, duties or responsibilities
without the written consent of Executive; or
(b) Company’s
reduction of Executive’s annual Base Salary or bonus opportunity, each as in
effect on the date hereof or as the same may be increased from time to time;
or
failure to pay Base Salary or bonus on a timely basis; or the relocation of
Company’s headquarters to a location more than twenty-five (25) miles from
Company’s current headquarters in Los Angeles, California; or
(c) Company’s
failure to cure a material breach of its obligations under this Agreement within
thirty (30) business days after written notice is delivered to the Board by
Executive which specifically identifies the manner in which Executive believes
that Company has breached its obligations under Agreement.
For
purposes of this Agreement, “Change in Control” shall mean (A) the dissolution
or liquidation of the Company; (B) a reorganization, merger or consolidation
of
the Company with one or more corporations as a result of which the Company
is
not the surviving corporation; (C) approval by the stockholders of the Company
of any sale, lease, exchange or other transfer (in one or a series of
transactions) of all or substantially all of the assets of the Company; (D)
approval by the stockholders of the Company of any merger or consolidation
of
the Company in which the holders of voting stock of the Company immediately
before the merger or consolidation will not own fifty percent (50%) or more
of
the voting shares of the continuing or surviving corporation immediately after
such merger or consolidation; or (E) a change of fifty percent (50%) (rounded
to
the next whole person) in the membership of the Board of Directors of the
Company within a twelve (12) month period, unless the election or nomination
for
election by stockholders of each new director within such period was approved
by
the vote of two-thirds (2/3) (rounded to the next whole person) of the directors
then still in office who were in office at the beginning of the twelve (12)
month period.
Any
termination for Good Reason must occur during a pre-determined limited period
of
time not to exceed two (2) years following the initial existence of one or
more
of the above conditions constituting “Good Reason”, as defined above. Executive
is required to provide notice to Company of the existence of any condition
constituting “Good Reason” within a period of ninety (90) days of the initial
existence of any such condition and Company shall have the opportunity to remedy
the condition within thirty (30) days.
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Agreement
| 5. |
EFFECT
OF TERMINATION OF EMPLOYMENT
|
5.1 Termination
of Employment Other Than For Cause.
Upon
the termination of the Executive’s employment hereunder for Death or Disability
(Paragraph 4.1) or Termination Without Cause by the Company (Paragraph 4.3)
or
by Executive for Good Reason (Paragraph 4.5), Executive, or his estate in the
case of Executive’s death, shall have the right to receive: (i) any unpaid
portion of Executive’s accrued Base Salary and prorated annual bonus as of the
date of termination; (ii) payment for any accrued, but unused, vacation pay
and
documented unreimbursed expenses; (iii) severance equal to continuation of
Executive’s then current Base Salary and all insurance benefits provided
hereunder (including those benefits applicable to Executive’s family) for a one
(1) year period from the date of termination; and (iv) acceleration of any
unvested shares of restricted stock or options and no early expiration of
exercise period due to termination of the Employment Period. Such
amounts shall be in addition to any benefits Executive may receive under any
insurance plan provided by the Company or from the State of California or
Workers’ Compensation and the cash portions of the foregoing shall be paid in a
single lump sum severance amount as soon as practicable following such
termination of employment, but in no event later than thirty (30) days after
the
effective date after such termination of employment except for the prorated
annual bonus which shall be paid within fifteen (15) days of the end of the
last
calendar quarter of the applicable Employment Period.
5.2 Voluntary
Termination or Termination For Cause.
Upon
the termination of Executive’s employment hereunder pursuant to a Voluntary
Termination (Paragraph 4.4) or a Termination For Cause (Paragraph 4.2),
Executive shall only have the right to receive (i) any unpaid portion of his
Base Salary and Bonus as of the date of termination; (ii) payment for any
accrued but unused vacation pay and documented unreimbursed expenses; and (iii)
any benefits payable under the provisions of the Company’s benefit
plans.
5.3 Additional
Payments by Company.
In the
event that any payments under this Agreement or any other compensation, benefit
or other amounts payable from the Company for the benefit of Executive are
subject to the tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”) (including any applicable interest and penalties,
the “Excise Tax”), no such payment (“Parachute Payment”) shall be reduced
(except for required tax withholdings) and the Company shall pay to Executive
by
the earlier of the date such Excise Tax is withheld from payments made to
Executive or the date such Excise Tax becomes due and payable by Executive,
an
additional amount (the “Gross-Up Payment”) such that the net amount retained by
Executive (after deduction of any Excise Tax on the Parachute Payments, taxes
based upon the Tax Rate (as defined below) upon the payment provided for by
this
Section 5.3 and Excise Tax upon the payment provided for by this
Section 5.3), shall be equal to the amount Executive would have received if
no Excise Tax had been imposed. A Tax counsel chosen by the Company’s
independent auditors, provided such person is reasonably acceptable to Executive
(“Tax Counsel”), shall determine in good faith whether any of the Parachute
Payments are subject to the Excise Tax and the amount of any Excise Tax, and
Tax
Counsel shall promptly notify Executive of its determination. The Company and
Executive shall file all tax returns and reports regarding such Parachute
Payments in a manner consistent with the Company’s reasonable good faith
determination. For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay taxes at the Tax Rate applicable at the time
of
the Gross-Up Payment. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
a
Parachute Payment is made, Executive shall repay to the Company promptly
following the date that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such reduction
(without interest). In the event that the Excise Tax is determined to exceed
the
amount taken into account hereunder at the time a Parachute Payment is made
(including by reason of any payment the existence or amount of which cannot
be
determined at the time of the Gross-Up Payment), the Company shall pay Executive
an additional amount with respect to the Gross-Up Payment in respect of such
excess (plus any interest or penalties payable in respect of such excess) at
the
time that the amount of such excess is finally determined. The Company shall
reimburse Executive for all reasonable fees, expenses, and costs related to
determining the reasonableness of any Company position in connection with this
paragraph and preparation of any tax return or other filing that is affected
by
any matter addressed in this paragraph, and any audit, litigation or other
proceeding that is affected by any matter addressed in this Section 5.3 and
an amount equal to the tax on such amounts at Executive’s Tax Rate. For the
purposes of the foregoing, “Tax Rate” means Executive’s effective tax rate based
upon the combined federal and state and local income, earnings, Medicare and
any
other tax rates applicable to Executive, all at the highest marginal rate of
taxation in the country and state of Executive’s residence on the date of
determination, net of the reduction in federal income taxes which could be
obtained by deduction of such state and local taxes.”
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Employment
Agreement
5.4 No
Mitigation Required or Allowed.
The
Executive shall not be required to mitigate the amount of any payments provided
for in this section 5 (paragraphs 5.1 through 5.3) of the Agreement by seeking
employment or otherwise, nor shall the amount of any payment or benefit paid
under section 5 of this Agreement be reduced by any income earned by the
Executive as a result of his independent work, as an employee of any other
business, by the receipt of or right to any form of retirement benefit, or
by
any other source of income or benefit.
| 6. |
CONFIDENTIAL
INFORMATION, NON-SOLICITATION, NON-
DISPARAGEMENT.
|
6.1 Confidential
Information.
In the
course of his employment with Company, Executive will have access to
confidential and proprietary information and records, data and other trade
secrets of Company (“Confidential Information”). Confidential Information shall
include, without limitation, the following types of information or material,
both existing and contemplated, regarding Company: Corporate information,
including plans, strategies, policies, resolutions and any litigation or
negotiations; marketing information, including strategies, methods, customers,
prospects or market research data; financial information, including cost and
performance data, debt arrangement, equity structure, investors and holdings;
operational and scientific information, including trade secrets and technical
information; and personnel information, including personnel lists, resumes,
personnel data, organizational structure, compensation structure and performance
evaluations. Executive shall not directly or indirectly disclose Confidential
Information to any person or entity or use any Confidential Information in
any
way except as required in the performance of his duties for the Company. For
purposes of this paragraph, Confidential Information does not include any
publicly available information or any information, prints, patents or other
rights that Executive had or owned prior to employment with
Company.
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Agreement
6.2 Non-Solicitation.
Because
of the nature of Executive’s work for the Company, Executive’s solicitation or
serving of certain customers, clients and vendors related to Executive’s work
for the Company would necessarily involve the unauthorized use or disclosure
of
Proprietary Information, and the proprietary relationships and goodwill of
the
Company. Accordingly, for two (2) years following the termination of Executive’s
employment with the Company for any reason, Executive shall not, directly or
indirectly, solicit, induce, or attempt to solicit or induce, any person or
entity then known to be a customer or client or vendor of the Company to
terminate his, her or its relationship with the Company for any purpose,
including the purpose of associating with or becoming a customer, client or
vendor, whether or not exclusive, of Executive or any entity of which Executive
is or becomes an officer, director, member, agent, employee or consultant,
or
otherwise solicit, induce, or attempt to solicit or induce, any Restricted
Customer/Client/Vendor to terminate his, her or its relationship with the
Company for any other purpose or no purpose.
6.3 Moreover,
during Executive’s employment with the Company and for two (2) years thereafter,
Executive shall not, directly or indirectly, solicit, induce, or attempt to
solicit or induce, any person known to Executive to be an employee or contractor
of the Company to terminate his, her or its employment or other relationship
with the Company.
6.4 Non-Disparagement.
Executive agrees that during his employment and for a period of two (2) years
thereafter, Executive will not disparage the Company nor take any actions or
make remarks or comments that may reasonably be interpreted as disparaging
of
the Company.
6.5 Non-Competition.
Executive agrees that during the term of this Agreement, Executive shall not,
directly or indirectly, engage in, or serve as an officer, director, employee,
partner, agent or consultant, or otherwise hold any ownership or other interest
in any entity which engages in any business which competes with that of the
Company.
| 7. |
MISCELLANEOUS
|
7.1 Severability.
If any
one or more provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement, but this Agreement shall be construed as if such invalid, illegal,
or
unenforceable provision had never been contained herein.
7.2 Notices.
All
notices or other communications required or permitted to be given hereunder
shall be in writing and shall be mailed, telecopied, dispatched by reputable
commercial courier or delivered by hand as follows:
If
to
Executive:
Xxxxx
Xxxxxx
0000
Xxxxxxxxxx Xxxxx
Xxxxxx,
XX 00000
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Xxxxxx Employment
Agreement
If
to the
Company:
00000
Xxxxx Xxxxxx Xxxx. #000
Xxx
Xxxxxxx, XX 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
Attention:
Chief Executive Officer
If
any
notice, request, demand, direction or other communication required or permitted
to be given hereunder is given by mail, it will be effective on the third
calendar day after deposit in the United States mail with first class or airmail
postage prepaid; if given by telecopier during regular business hours of the
recipient, when sent; if given by telecopier outside regular business hours
of
the recipient, at the opening of business on the next business day; if
dispatched by reputable commercial courier, on the scheduled delivery date;
or
if given by personal delivery, when delivered.
7.3 Binding
Agreement.
The
provisions of this Agreement will be binding upon, and will inure to the benefit
of, the respective heirs, legal representatives and successors of the parties
hereto.
7.4 Governing
Law.
This
Agreement and all amendments thereof shall be governed by, and construed and
enforced in all respects in accordance with, the laws of the State of
California.
7.5 Waiver
of Breach.
The
waiver by either party of a breach of any provision of this Agreement by the
other party must be in writing and shall not operate or be construed as a waiver
of any subsequent breach by such other party.
7.6 Entire
Agreement.
This
Agreement contains the entire agreement between the parties with respect to
the
subject matter hereof and supersedes all prior and contemporaneous agreements,
terms sheets, oral or written representations and understandings among the
parties with respect thereto. The parties shall enter into the Company’s
standard indemnification agreement, which shall be binding on the parties;
however, any conflicts between the indemnification agreement and this Agreement
shall be resolved in favor of this Agreement’s terms.
7.7 Amendments.
This
agreement may be amended only by an agreement in writing signed by Executive
and
the Chairman of the Board of the Company.
7.8 Assignment.
This
Agreement is personal in its nature and the parties hereto shall not, without
the consent of the other, assign or transfer this agreement or any rights or
obligations hereunder.
7.9 Attorneys’
Fees.
If any
Party brings an action or proceeding involving this Agreement, the prevailing
party in any such proceeding, action, or appeal thereon, shall be entitled
to
reasonable attorneys' fees
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Agreement
7.10 Section
409A.
Unless
otherwise expressly provided, any payment of compensation by Company to
Executive, whether pursuant to this Agreement or otherwise, shall be made within
two and one-half months (2½ months) after the later of the end of the calendar
year of the Company’s fiscal year in which Executive’s right to such payment
vests (i.e.,
is not
subject to a “substantial risk of forfeiture” for purposes of Code Section 409A
of the Internal Revenue Code of 1986, as amended (“Code”)). To the extent that
any severance payments (including payments on termination for “good reason”)
come within the definition of “involuntary severance” under Code Section 409A,
such amounts up to the lesser of two times the Executive’s annual compensation
for the year preceding the year of termination or two times the 401(a)(17)
limit
for the year of termination, shall be excluded from “deferred compensation” as
allowed under Code Section 409A, and shall not
be
subject to the following Code Section 409A compliance requirements. All payments
of “nonqualified deferred compensation” (within the meaning of Section 409A) are
intended to comply with the requirements of Code Section 409A, and shall be
interpreted in accordance therewith. Neither party individually or in
combination may accelerate any such deferred payment, except in compliance
with
Code Section 409A, and no amount shall be paid prior to the earliest date on
which it is permitted to be paid under Code Section 409A. In the event that
Executive is determined to be a “key employee” (as defined in Code Section
416(i) (without regard to paragraph (5) thereof)) of Company at a time when
its
stock is deemed to be publicly traded on an established securities market,
payments determined to be “nonqualified deferred compensation” payable following
termination of employment shall be made no earlier than the earlier of (i)
the
last day of the sixth (6th) complete calendar month following such termination
of employment, or (ii) Executive’s death, consistent with the provisions of Code
Section 409A. Any payment delayed by reason of the prior sentence shall be
paid out in a single lump sum at the end of such required delay period in order
to catch up to the original payment schedule. Notwithstanding anything
herein to the contrary, no amendment may be made to this Agreement if it would
cause the Agreement or any payment hereunder not to be in compliance with Code
Section 409A.
7.11 Arm’s
Length Agreement.
This
Agreement has been negotiated at arm’s length between persons knowledgeable in
the matters dealt with herein. Each of the parties hereto has been represented
by independent legal counsel of its own choice. Accordingly, any rule of law
or
any statute, legal decision, or common law principle of similar effect, that
would require interpretation of any ambiguity in this Agreement against the
party that drafted it, is of no application and is hereby expressly waived.
The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect the intentions of the parties hereto.
7.12 Fees
and Expenses for Negotiating this Agreement.
The
Company will pay the Executive’s attorney’s fees incurred in connection with the
negotiation and execution of this Agreement up to but not in excess of $2,000.
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Xxxxxx
Employment
Agreement
IN
WITNESS WHEREOF, Executive has hereunto set his hand and, pursuant to due
authorization from the Board, the Company has caused these promises to be
executed in its name on its behalf, all as of the day and year first above
written.
|
“COMPANY”
- Auriga Laboratories, Inc.
|
“EXECUTIVE”
|
|
|
By:/s/
Xxxxxx X. Xxxxx
Name:
Xxxxxx
X. Xxxxx
Its:
Chief Executive Officer
Dated:August
27, 2007
|
/s/
Xxxxx Xxxxxx
Xxxxx
Xxxxxx
Dated:August
27, 2007
|
-11-
