bodie v marani complaint

8/9/2019 Bodie v Marani Complaint

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Case 8:14-cv-00308-JLS-AN Document 1 Filed 03/03/14 Page 1 of 56 Page ID #:1


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ORRIGAN& MORRIS , LLP

A TTORNEYSA TLAW

201 SANTAMONICA BLVD.

SUITE475

SANTAMONICA, CA. 90401(310) 394-2800

COMPLAINT- 2

Note, a true and correct copy of which is attached hereto at Exhibit 1 (th

“Convertible Note”); Subscription Agreement, a true and correct copy of which i

attached hereto at Exhibit 2; and Common Stock Purchase Warrant, a true and

correct copy of which is attached hereto at Exhibit 3 (the “Warrant”). A disput

has arisen between Bodie and Marani with respect to the proper computation o

Bodie’s debt, conversion rights and Warrant exercise.

2. With respect to the conversions of the Convertible Note, the disput

arises out of the conversion prices applied to Bodie’s conversions of its debt into

Marani stock. Bodie contends that Marani was required to disclose to Bodie any

and all issuances of stock and other securities at prices below Bodie’s conversion

price, and, whenever such an event occurred, that Bodie was automatically entitle

thereafter to the benefit of the lowest price applicable to any third party, if lowe

than Bodie’s conversion prices. Such contention is based on sections 2.1(c) an

2.1(d) of the Convertible Note. Bodie contends that events occurred while th

Convertible Note was outstanding that triggered a conversion price adjustmen

pursuant to section 2.1(c); but because Marani failed to disclose to Bodie th

events, stock issuances and terms thereof that would trigger a conversion price

adjustment under the terms of the Convertible Note, as required by section 2.1(d)Bodie was unaware of such conversion price adjustment events and inadvertently

converted its debt into Marani stock at conversion prices substantially greater than

the prices to which Bodie was entitled under section 2.1(c) of the Convertible

Note. Bodie contends that, computed at the proper adjusted conversion prices

Bodie would be entitled to at least 62 million shares of Marani stock in excess o

what Bodie received upon the exercise of its conversion rights. Based on th

market value of such shares following the conversions, Bodie could have sold such

shares for more than $1 million.

3. In addition, Bodie contends that with respect to two conversions, in

November 2010 and November 2011, respectively, Bodie attempted to convert it

shares at conversion prices well below $.001 and was told by Marani that it could



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A TTORNEYSA TLAW


SUITE475

SANTAMONICA, CA. 90401(310) 394-2800

COMPLAINT- 3

not honor such conversions because its bylaws precluded Marani from issuing

shares below its stated par value of $.001. Accordingly, Marani insisted that Bodi

conversion prices be set at par value, instead of the prices computed under section

2.1(c) of the Convertible Note, resulting in a drastic reduction in the number o

shares issued to Bodie pursuant to such exercise. Bodie contends that Marani wa

not entitled to reduce or limit Bodie’s contract rights based on such self-imposed

restriction and that Bodie is entitled to be made whole for damages suffered as

result of Marani’s improper limitation on Bodie’s conversion rights. Bodi

contends that the damages suffered as a result of the par value restriction exceede

$100,000.

4. Separately, with respect to Bodie’s Warrant exercise on December 5

2013, Bodie claims that Bodie’s own error in computing the number of shares to

which Bodie was entitled when it exercised its cashless warrant exercise to

purchase 4 million shares of Marani common stock under the Warrant, which

number was adopted by Marani, caused Bodie to be shorted by 181,820 shares o

Marani common stock. Bodie suffered damages of at least $3000 as a result o

such discrepancy in the number of shares issued to Bodie.

5.

As a result of all of the foregoing, Bodie has suffered money damagein an amount in excess of this Court’s judicial minimum, and in any event in

excess of $1 million, in an amount to be determined at trial.

6. Bodie is informed and believes that Marani contends that Bodi

converted all of its debt at conversion prices consistent with the prope

interpretation of the Convertible Note and Warrant, and that it owes Bodie no mor

stock and no more debt.

PARTIES

7. Bodie is a Delaware corporation, whose sole officer is located in

Michigan.

8. Bodie is informed and believes and based thereon alleges that Marani

is a Nevada corporation with its principal offices located in Tustin, California.



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A TTORNEYSA TLAW


SUITE475

SANTAMONICA, CA. 90401(310) 394-2800

COMPLAINT- 4

JURISDICTION AND VENUE

9. This Court has jurisdiction over this action pursuant to 28 U.S.C.

1332(a)(2) in that the action is between a plaintiff corporation organized under the

laws of Delaware and managed in the state of Michigan and the defendant is

Nevada corporation with its principal offices in the state of California; and th

matter in controversy exceeds the sum or value of $75,000, exclusive of interes

and costs.

10. Venue is proper in this judicial district pursuant to 28 U.S.C.

§1391(a), in that it is a judicial district in which a substantial part of the events or

omissions giving rise to the claims occurred, or a substantial part of the property

which is the subject of the action is situated. Bodie is informed and believes that

substantially all of the actions of Marani alleged herein took place from its

principal offices formerly located in North Hollywood, California and, thereafter,

in Tustin, California. Although the Convertible Note includes a choice of New

York venue, there appears to be insufficient nexus with the State of New York to

provide a basis upon which to bring this action in its courts. Plaintiff would not

oppose a motion to transfer venue to the District Court for the Southern District of

New York, should the Court deem such a transfer to be warranted and just and provided the District Court for the Southern District of New York would accept

such a transfer.

COMMON ALLEGATIONS

11. Paragraph 2.1 of the Convertible Note provides a mechanism to

compute the conversion price for the debt obligations under that instrument. That

provision provides, in relevant part:

(a) The Holder shall have the right from and after February 14,2010 … and then at any time until this Note is fully paid, toconvert any outstanding and unpaid principal portion of this

Note and accrued interest, at the election of the Holder (the dateof giving of such notice of conversion being a "ConversionDate") into fully paid and nonassessable shares of CommonStock as such stock exists on the date of issuance of this Note,



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A TTORNEYSA TLAW


SUITE475

SANTAMONICA, CA. 90401(310) 394-2800

COMPLAINT- 5

or any shares of capital stock of Borrower into which suchCommon Stock shall hereafter be changed or reclassified, at theconversion price as defined in Section 2.1(b) hereof (the"Conversion Price"), determined as provided herein. Upondelivery to the borrower of a completed Notice of Conversion, a

form of which is annexed hereto, Borrower shall issue anddeliver to the Holder within three (3) business days after theConversion Date (such third day being the "Delivery Date")that number of shares of Common Stock for the portion of the

Note converted in accordance with the foregoing. The numberof shares of Common Stock to be issued upon each conversionof this Note shall be determined by dividing that portion of the

principal of the Note (and any interest) to be converted, by theConversion Price.

(b) Subject to adjustment as provided for in Section 2.1(c)hereof, the Conversion Price per share of Common Stock shall

be $0.04 for 180 days after the Closing Date ("ConversionPrice"). Commencing 180 days after the Closing Date, theConversion Price per share of Common Stock shall be equal tothe lesser of (i) $0.04, or (ii) seventy-five percent (75%) of theaverage of the three lowest closing bid prices of the Company'sCommon Stock for the twenty trading days preceding aConversion Date….

(c) The Conversion Price and the number and kind of shares orother securities to be issued upon conversion of this Note, shall

be subject to adjustment from time to time upon the happeningof certain events while this conversion right remainsoutstanding, as follows: …

D. Share Issuance. So long as this Note is outstanding, if theBorrower shall issue or agree to issue any shares ofCommon Stock other than with respect to any Excepted

Issuances for a consideration less than the ConversionPrice in effect at the time of such issue, then, andthereafter successively upon each such issue, theConversion Price shall be reduced to such other lowerissue price. For purposes of this adjustment, the issuance ofany security carrying the right to convert such security intoshares of Common Stock or of any warrant, right or option



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A TTORNEYSA TLAW


SUITE475

SANTAMONICA, CA. 90401(310) 394-2800

COMPLAINT- 6

to purchase Common Stock shall result in an adjustmentto the Conversion Price upon the issuance of the above-described security and again upon the issuance of sharesof Common Stock upon exercise of such conversion orpurchase rights if such issuance is at a price lower than

the then applicable Conversion Price.

(d) Whenever the Conversion Price is adjusted pursuant toSection 2.1 (c) above, the Borrower shall promptly providenotice to the Holder setting forth the Conversion Price aftersuch adjustment and setting forth a statement of the factsrequiring such adjustment.

Emphasis added.

12.

In late 2013 and early 2014, Plaintiff, through counsel, made several

written demands on Defendant, through its counsel, demanding compliance with

sections 2.1(c) and 2.1(d) of the Convertible Note. Nevertheless, as of the date of

this Complaint, the Defendant has failed and refused to disclose, during the life of

the Convertible Note or thereafter, sufficient facts for Bodie to determine any

adjustment in the Conversion Price and has not set forth a statement of facts that

Defendant has conceded would require an adjustment to the Conversion Price.

13.

On or around February 19, 2014, after Bodie’s final conversion

notice was given and the shares issued to it, Marani disclosed, for the first time, in

a filing with the Securities and Exchange Commission, that “On November 7, 2013

the Company issued 30,000,000 free trading shares at a cost of $0.001, per share,

to Eco Investment Properties, the assignee of a portion of a certain promissory note

in the amount of $30,000.” Because the Marani shares issued on November 7,

2013 were issued at a price that was a small fraction of the Conversion Price

applied to Bodie’s two later conversions, such conversions were executed at

conversion prices inadvertently inflated in computing the shares to which it was

entitled. As a result, Marani issued to Bodie upon such conversions only a fraction

of the number of shares to which Bodie was entitled upon making that conversion.



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A TTORNEYSA TLAW


SUITE475

SANTAMONICA, CA. 90401(310) 394-2800

COMPLAINT- 7

14. On February 19, 2014, upon learning that Marani had issued shares at

$.001 per share as early as November 7, 2013, Bodie made demand on Marani to

disclose all conversion price adjustment events during the pendency of the

Convertible Note, including all facts relevant to the November 7, 2013 issuance to

Eco Investment Properties referenced in Marani’s February 19, 2014 SEC filing

documents, and to re-compute the number of shares due to Bodie pursuant to

corrected conversion prices. Marani failed and refused to do so, and, instead,

unilaterally dictated that the matter was “closed” by Marani. Marani has failed to

comply with section 2(c) of the Convertible Note.

15. Bodie’s conversions of its debt under the Convertible Note were made

on the following dates and conversion prices (the debt includes interest of

$31,907.23 and principal of $100,000.00):

DATE DEBT

CON-

VERTED

CON-

VERSION

PRICE

APPLIED

BY

MARANI

CON-

VERSION

RATE

UNDER

SECTION

2.1(c) OF

CON-

VERTIBL

E NOTE

SHARES

DUE TO

BODIE

UNDER

SECTION

2.1(c) OF

CON-

VERTIBLE

NOTE

NUMBER OF

SHARES MARAN

SHORTED BODIE

UPON

CONVERSION

10/3/2010 $ 9,333.33 .00188741 Unknown Unknown Unknown







9/30/2013 $12,000.00 .0008 Unknown Unknown Unknown

12/2/2013 $50,000.00 .0051 Not morethan .001

At least50,000,000

At least 40,196,079

1/23/2014 $25,566.57 .00705 Not more

than .001

At least

25,566,570

At least 21,940,107

Totals $131,907.23 Unknown At least 62,136,186



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A TTORNEYSA TLAW


SUITE475

SANTAMONICA, CA. 90401(310) 394-2800

COMPLAINT- 8

16. With respect to the conversions on November 2, 2010 and November 2, 2011, the

$.001 exercise price was compelled by Marani on the grounds that the lower conversion price

dictated by section 2.1(c) of the Convertible Note was prohibited by the Company’s bylaws

because the par value was $.001. Such limitation is not supported by the Convertible Note;

Warrant or Subscription Agreement. Indeed, the third paragraph of the Subscription Agreement

represents that Marani’s common stock has a par value of $.00001, not $001. Even if the

Marani’s bylaws would prohibit Marani from issuing shares at below its par value, such

restriction is within the control of Marani’s shareholders, not Bodie. Such a restriction, in the

face of an express representation by Marani to the contrary in the Subscription Agreement,

cannot be wielded as a sword by Marani to avoid its contractual obligations to Bodie. Marani

must make Bodie whole for the damages suffered as a result of its failure and refusal to issue the

number of shares to which Bodie is entitled under the terms of the Convertible Note, regardless

of the true par value of such shares.

FIRST CLAIM FOR RELIEF

Breach of Convertible Note

17. Plaintiff realleges paragraphs 1 through 16, inclusive.

18. On or around February 1, 2010, Bodie entered into a written

agreement with Marani pursuant to the terms of the Convertible Note at Exhibit 1.19. Bodie complied with all of its obligations to Marani under the terms

of the Convertible Note, including, without limitation, paying to Marani $100,000

on or around February 1, 2010.

20. Marani breached its promises and covenants under the terms of the

Convertible Note in at least the ways alleged above, including, without limitation:

a. Marani failed to convert Bodie’s debt into stock at the conversion

prices dictated by section 2.1(c) of the Convertible Note;

b. Marani failed to provide Bodie with notice of conversion price

adjustment events and all facts relevant thereto, pertaining to its

issuances of securities that would cause a conversion price



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A TTORNEYSA TLAW


SUITE475

SANTAMONICA, CA. 90401(310) 394-2800

COMPLAINT- 9

adjustment under section 2.1(c), despite its express obligation to do

so on a timely basis under section 2.1(d) of the Convertible Note.

c. Marani failed and refused to issue to Bodie shares at the

conversion price dictated by sections 2.1(b) and 2.1(c) on the

grounds that such conversion price was less than Marani’s

purported par value of $.001 in November 2010 and November

2011, and, in doing so, failed and refused to make Bodie whole for

such breaches.

21. As a direct and proximate result of such breaches by Marani, Bodie

converted substantially all of its debt at conversion prices that were very

substantially higher than the conversion price mandated by section 2.1(c) of the

Convertible Note and the express promises therein made by Marani.

22. As a direct and proximate result of such breaches by Marani, Bodie

suffered the loss of at least 62,136,186 shares of Marani Brands, Inc. common

stock and the cash proceeds of such stock had such shares been delivered on a

timely basis to Bodie, which Bodie alleges would exceed $1 million.

23. In addition to the recovery of such damages in an amount to be

determined at trial, which Bodie anticipates would be substantially higher than$75,000, Bodie is entitled to interest on all outstanding debt deemed owed prior to

the maturity date of the Convertible Note, January 31, 2011, at the rate of 8% per

annum, and 12% per annum thereafter on all outstanding balances pursuant to

sections 1.2 and 1.3 of the Convertible Note. In addition, Bodie is entitled to

recover its attorneys’ fees and costs in pursuing this action pursuant to section 5.6

of the Convertible Note.

SECOND CLAIM FOR RELIEF

Declaratory Relief re Conversion Price And Shares Due To Plaintiff


25. An actual and justiciable dispute exists between Bodie and Marani

with respect to Bodie’s right to have Marani disclose timely all price and stock



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A TTORNEYSA TLAW


SUITE475

SANTAMONICA, CA. 90401(310) 394-2800

COMPLAINT- 10

issuance data necessary to determine the correct conversion prices applicable to its

conversions of debt under section 2.1(d) of the Convertible Note; as well as what i

owed, in terms of money or stock issuances, to Bodie by Marani as a result of

adjustments to such conversion price under section 2.1(c) of the Convertible Note.

Bodie submits that it is entitled to such disclosure and to application of the correct

conversion prices as to all of its previous conversion, and Marani contends that the

matter is “closed” and that Bodie is entitled to no further information or retroactive

adjustments to its conversion prices.

26. Bodie is entitled to declaratory relief with respect to Marani’s

disclosure obligations under the Convertible Note and the determination by this

Court of such issue is in the interests of judicial economy and the parties.

THIRD CLAIM FOR RELIEF

Breach of Warrant


28. On or around February 1, 2010, Marani issued to Bodie the Warrant

attached hereto at Exhibit 3.

29. Bodie complied with all of its obligations to Marani under the terms

of the Warrant.30. Marani breached its promises and covenants under the terms of the

Warrant by failing to issue to Bodie the correct number of shares after Bodie

exercised its rights under the Warrant pursuant to its cashless exercise provision.

Pursuant to section 2 of the Warrant, Bodie was entitled to exercise its Warrant

based on a cashless exercise notice as to the entire 4 million shares represented by

that Warrant. On or around December 5, 2013, Bodie exercised its Warrant rights,

in their entirety, by sending to Bodie a warrant exercise notice, a true and correct

copy of which is attached hereto at Exhibit 4.

31. Bodie made a computation error in that notice at Exhibit 4. The

Warrants exercise price was $.001. Thus, the 4 million shares generated a $4000

purchase price. To pay that $4000 on a “cashless” basis, a certain number of



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A TTORNEYSA TLAW


SUITE475

SANTAMONICA, CA. 90401(310) 394-2800

COMPLAINT- 11

shares would be deducted from the 4 million total to repay to Marani the $4000.

Because the fair market value of the Marani stock at that time was $.0165 per

share, as that term is defined in the Warrant, the number of shares to be deducted

from the 4 million share issuance was to be calculated as follows: $4000 divided

by $.0165. The result is 242,424 shares. The number of shares to which Bodie

was entitled was 3,757,576 (4 million minus 242,424). Another way of getting to

the same number is to follow the formula set forth at section 2 of the Warrant:

4,000,000 (.0165-.001)/.0165, or 3,757,576.

32. Unfortunately, in Bodie’s own exercise notice, Bodie miscalculated

the cashless exercise formula. As a result, Marani shorted Bodie by 181,820

shares pursuant to Bodie’s exercise of its 4 million Warrant shares, issuing instead

only 3,575,756 shares.

33. Marani breached its obligations to Bodie under the Warrant by failing

to issue to Bodie the additional 181,820 shares to which Bodie is entitled under the

terms of the Warrant.

34. As a direct and proximate result of such breach by Marani, Bodie

suffered the loss of 181,820 shares of Marani Brands, Inc. common stock and the

cash proceeds of such stock had such shares been delivered on a timely basis toBodie.

35. In addition to the recovery of such damages in an amount to be

determined at trial, which Bodie anticipates would be approximately $3,000, Bodie

is entitled to recover its attorneys’ fees and costs in pursuing this action pursuant to

section 14 of the Warrant.

PRAYER FOR RELIEF

WHEREFORE, Bodie prays for relief and judgment against Marani, as

follows:

1. Awarding compensatory damages in favor of Bodie against Marani

for all damages sustained as a result of Marani’s breach of the Convertible Note, in

an amount exceeding $1 million to be proven at trial, including interest together



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C i ~ \ t J ~ l ~ t t ]

NEITHER THE

ISSUANCE AND SALE

OF

TID : SECURITIES REPRESENTED BY

TillS

NOTE NOR TID : SECURITIES INTO Wmcu THESE SECURITIES

RE

CONVERTffiLE

HAVE BEEN REGISTERED UNDER TRE SECURITIES ACT

OF

1933, AS AMENDED, OR

APPLICABLlJ: STATE SECURITIES LAWS

•

THE SECURITIES MAY NOT BE OFFERED

FOR

SALE, SOLD, TRANSFERRED PLEDGED

OR

ASSIGNED

I) IN

THE ABSENCE OF (A)

AN EFFECTIVE REGISTRATION STATEMENT

FOR

THE SECURITIES UNDER THE

SECURITIES ACT OF 1933, AS

AIVIENDED, OR (B)

AN OPINION· OF COUNSEL

ACCEPTABLE

TO

THE COMPANY,

IN

ITS SOLE, BUT REASONABLE DISCRETION, THAT

REGISTRATION IS NOT REQUIRED UNDER SAID ACT

OR II)

UNLESS SOLD

PURSUANT

To

RULE 144 OR RULE 144A UNDER SAID ACT.

Principal

AmoWlt: $100.000

Issue Date:'PebruaryJ, 2010

CONVERtIBLE

NOTE

FOR VALUE RECEIVED, MaraniBrands, hie. a Nevada corporation (hereinafter called

"BOITower"), herehy promises to pay

to

the Bodie Investme)lt Group, we., (the Holder ), without .

demand, the sum of one hWl.dred thousand Dollars {$1

00,000),

with simple and unpaid interest thereon,

on

February 1st, 20

II

(one

year

after

Closing

nate

(the Maturity Date ),

if

110t

paid sooner.

This Note has been entered into pursuant to the terms ofa Subscription Agreemel1t between the

Borrower and the Holder. Unless otherwise separately deflJled herein, all capitalh:ed tetms used in this

Note shall have the same meaning as

is

set forth in the Subscription Agreement. 111e following terms

shall apply to this Nate:

ARTICLE

GENERAL PROVISIONS

·1.1 wterest Rate. Sinlple interest payable On this Note shall accrue at the annual rate of

eight percent

(8%),

Accnled interest

will

be payable on the Maturity Date, accelerated

or

otherwise,

when the principal and remaining accrued but unpaid interest shall be due and payable.

1.2

Default Interest Rate. . After the,Maturity Date, accelerated or otherwise, a default

interest rate of twelve percent (12%) per annum shall apply to the amounts owed hereWlder.

J.3.

Conversion Privjl.. l,ges. The Conversion rights of he Holder as set forth in Articlenof

only this Note shall remain in full force and effect iromediately from the date Ilereof and until the Note is

paid in full regardless of he occurrence· of an Event ofDefault. The principal amowlt of the Note and the

remaiuing accrued but unpaid interest shall be payable. in full 0 the Maturity Date, unless previou.sly paid

Of converted into Common Stock in accordance with Article II hereof.

ARTICLETI

CONVERSION RIGHTS

Tho Holder shall have the right to convert the entire principal amount under this Note and the

accrued but unpaid interest thereon into shares of the Borrower's Coromon Stock as set forth below.

2.1. ~ Conversion into the Borrower's Common Sto\lk.

2/112010,1:31 PM ,

Exhibit 1, p. 000013



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(a) The Holder shall have the right om

and

after February 14,2010 or sooner

upon

the occurrence of an Event of Default

and

then at

any

time until this Note is fully paid, to convert

any

outstanding and unpaid principal portion of this Note and accrued interest, at tbe election of he Holder

(the date of giving of such notice of mnversion being a Conversion Date ) into fully paid Wld

nonassessable shares of Common Stock as such stock exists on the date ofissuWlce of this Note, or lY

shares of capital stock of Bon'ower into which such Cormnon Stock shall hereafter be changed or

reclassified, at the conversion price

as

defmed in Section 2. 1

b)

hereof (tbe Conversion Price ),

determined

as

provided herein.

Upon

delivery

to

the

BOtTower

of a completed Notice of Conversion, a .

form of which is annexed hereto, Borrower shall issue Wld deliver to the Holder within three (3) business

days after the Conversion Date (such third day being the Delivery Date ) that number of shares of

Common Stock

for

the portion of the Note converted in I).ccordance with the foregoing. The number of

shares ofCommon Stock to be issued upon each conversion of this Note shall be determined by dividing

that portion ofthe principal ofthe Note (and any interest) to be converted,

by

the Conversion Price.

il) Subject to adjustment

as

provided

for in

Section 2.1(0) hereof,

the

Conversion

Price per share

ofCommon

Stock shah be

0.Q4

for

180

days after the Closing Date ( Conversion

Price ). Commencing

180 days

after

the Cle>sing

Date, the Conversion Price per share of

Common

Stock

shall be equal to the lesspr of (i) $0.04, or

ii)

seventy-five percent (75%) of he average of the three

lowest closing bid prices

of

the Company's

Cormnon

Stock for the twenty trading

days

preceding a

Conversion Date. Ifthe

Company

files a Registration Statement

for

the Equity Line with

Bodie

Investment Group within 30 days from closing of Note, tben the Investor will agree to not convert for

ninety days from closing.

(c) The Conversion Price and the number

and

kind of shares or other securities to be

issued upon conversion ofthis Note, shall be subject to adjustment from time to time upon the happening

of certain eveuts while this conversion right remains outstanding,

as

follows:

A. Merger, Sale ofAssets, etc. f he Borrower at any time shall consolidate

with or merge into or sell orconwy all or

substantilj1ly

all its assets to any other corporation, this Note, as

to the unpaid principal portion thereof

and

accmed interest

th.eteo.l1,

shall thereafter be deemed to

evidence the right to purchase such number and kind 'of shares or other securities and property

as

would

have

been issuable

or

distributable

on

account of

such

consolidation,

merger, sale

or conveyance,

upon or

with respect to the securities subject to the conversion or.purchase right immediately prior to

such

consolidation, merger, sale or

conveYance.

The foregoing proviSion shall similarly apply to successive

trWlsactions of a similar natnre by any such successor or purchaser. Without limiting the generality of the

foregoing, the anti-dilution provisions of this Section shall apply to such securities of such successor or

purchaser or surviving entity of the surviving corporation after Wly such consolidation, Inerger, sale or

conveyance.

B. Reclassification, elc. f the Borrower at any time shall,

by

reclassifi.cation or otherwise, change the Common Stock into the same or a different number of securities

OfWlY c.lass or classes of the Borrower's capital stock that may be issued or outstanding, this Note, as to

the unpaid

princ.ipal

amount thereofand accrued interest thereon, shall thereafter be deemed to evidence

the right to purchase an adjusted number ofsuch securities and kind of securities as would have been

issuable as the result of such change with respect to the sbares of Common Stock subject to the

cOl1vel'sion of tbis Note immediately prior to such reclassification Of other change.

C. Stock Splits,. Com.binations and Dividends, Tf the shares of Cormnon

Stock are subdivided or combined into a greater or smaller number of shares of

Cormnon

Stock, or if a

dividelld

is

paid

on

the Common Stock in shares

of

Commoll Stock, the Conversion Price shall be

propo.ctionately reduced in case of subdivision of shares or stock dividend or proportionately increased in

2




15/56

the case of combination·

of

shares, in each such case by the ratio which the total number of shares

of

Common Stock outstanding immediately after such event bears to the total number of shares of Common

Stock outstanding immediately prior to such event.

D. Share Issuance. So long as this Note is outstanding, if the Borrower

shall issue or agree t issue any shares of Common. Stock other than willI respect to any Excepted

Issuances for a consideration less than the Conversion. Priee in effect at the time of such issue,

the n

and

thereafter successively upon each such issue, the Conversion Price shall be reduced to such other lower

issue price. For purposes of this adjustment, the issuance of any security carrying the right t convert

sneh security into sh;tres of Common Stock or of any warrant, right

or

option to purchase Common Stock

shall result in·an adjustment to the Conversion Pri.;e upon the issuance ofthe above-described security

and again upon the issuance of shares of Common Stock upon exercise of such conversion or purchase

rights if such issuance is at a price lqwer than the then applicable Conversion Price.

(d) Whenever the Conversion Price is adjusted pursuant to Section 2.1 (0) above, the

Borrower shall promptly provide notice to the Holder setting forth the Conversion Price after such

adjustment and setting forth a statement

ofthe

facts requiring such adjustment

(e) The Borrower will reserve from its authorized and unissued shares of Common

Stock, 40,000,000 shares

of

Common Stock, for this Note (which will be included ill the shares for the

equity line). The Borrower represents that upon issuance, such shares

of

Common Stock will be duly and

validly issued, fully paid and non-assessable. ·The Borrower agrees that its issuance

of

this Note shall

constitute full authority to its officers, agents, and transfer agents who are charged with the duty of

executing and issuing stock certificates to ex.ecute and issue the nc


16/56

date and

provisions of this Note shall,

at

the request of the

Holder, be

issued

by

the Borrower

to

the

Holder

for

the principal balance of this Note

and

interest which

shall

not have

been

converted or

paid.

2.5 ;tv1 ,1{imum Conversion. The Holder shall not be entitled to convert on a Conversion Date

that amount

of the Note in connection with that number ofshares of

Common

'Stock which would

be

in

excess

of

he sum of (i) the number of shares of CC mmon Stock beneficially owned by the Holder and its

affiliates on a Conversion Date,

and Oi)

the number. of shares of Common Stock issuahle UpOll the

cOllversion

of the Note with respect to which

the

determination

of

his provision

is

being

made on

a

Conversion Date,

which

would result in beneficial ownership

by

the Holder

and its

affiliates ofmore than

9.99%

of

he

issued and outstanding shares

of

Common Stock

of

he BOITower on such Conversion Date.

For

the

purposes of the I?rovision to th.e immediately precedillg sentence, beneficial ownership shall be

detennined in accordance with Section

13(d)

of

he Securities Exchange Act of 1934, as amended, and

Regulation

13d-3

thereunder. Subject to the foregoing, the Holder shall llot be limited Waggregate

conversions

of

only

4.99%

and aggregate conversioll y th.e Holder

may

exceed 4.99%.

The

Holder shall

have the authority and obligation to determine whether

the

restriction contained

ill

this Section

2.5

will

limit any conversion hereunder alld to

the

extent that the Holder determines that the limitation contained

inlhis Section applies, the deteonillation of the

amOUll of

he Note which

is

convertible shall he the

responsibility and obligatioll

of

he Holder.

2.6 Egoily Line Draw.

The

Compauy will

be

obligated to draw

down from

the Equity Lille

provided for in the Trausaction Documents

to

commence

to

redeem the outstanding principal

amonnt

of

this Note within fifteen

(15)

calendar days that the registration statement

for

the equity line declared·

effective. The Company's obligations

pw'Suant

to this Section 2.6 are subject to the terms

and

provisions

of

the agreements governing the equity line.

RTICLE l l

EVENT

OF

DEF ULT

The occurrence

of any

of the followillg events of default ( Event of Default ) shall, at the option

of

the Holder hereof,

make

all sums

of

principal and accnled illterest then remaining unpaid hereon and

all other amounts payable hereunder immediately

due

and

payable, upon

demlllld,

without presentment

or

grace period,

all

of

which

hereby

are expressly waived, except

as

set

forth below:

3.1 Failure to Pay Principal or

I n t e r e ~ t

The Borrower fails to pay any principal, interest or

other sum

due

under this Note when due III1d the

s ~ r n is

not cured within 5 busilless days from the date.

3.2 Breach

of

Covenant.

The

Borrower breaches any material covenant r other material

teon or conditioll

of

the Subscriptioll Agreemellt

or

this Note in any material respect and such breach, if

subject to cure, continues for a period of twellty (20) days after written notice to

the

Borrower from

the

Holder.

3.3

Breach

of

Representatiolls and Warrauties. Any material represelltation or warranty of

the Borrower made herein, in

any

Transaction DocUIIlent, or in

lilly

agreement, or certificate given

in

writing pursuant hereto or

in cOMection

herewith or therewith shall be false

or

misleading

in any

material

respect as

of

the dale made

aud

as of the Closing Date.

3.4 Liquidatioll. Any dissolution,

Jiquidati.oh

or winding up

of

Borrower or any substantial

portion of its busilless.

4




17/56

3.5 Cessation ofOperations. Any c;;ssation

of

operations by Borrower or Borrower is

otherwise generally unable to pay its debts as such debts become due.

3.6 Merger. The merger, consolidation or reorganization ofBorrower with or into another

corporation or person or entity (other than with or into a Wholly-owned subsidiary), or the sale

of

capital

stock ofBorrower y Borrower or the holders thereof, ill any case Ullder circumstances in which the

holders of a majority

of

the voting power ofthe outstanding capital stock ofBon'ower immediately prior

to such transaction shall own less than a majority in voting power

of

he outstanding capital stock

of

Borrower or the surviving or resulting oorporation or other entity, as the case may be, immediately

following such transaction.

3.7 Receiver or Trustee. The Borrower shall make' an assignment for the benefit of creditors,

or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part

of

its

property or business; or such a receiver or trustee shall otherwise be appointed without the consent of the

Borrower jfsuc.h receiver or trustee is not dismissed within thirty (30) days ofappointment.

3.8 Judgments. ny money judgment, writ or similar final process shall be entered or filed

againstthe Borrower or any

of

its property or other assets for more than 100,000 based upon a final

judgment by a court ofcompetent jurisdiction for which no further appeals are possible.

3.9 BauknJt,1:tcy. Banknlptcy, insolvellCy,·reorganization or liquidation proceedings or other

proceedings or relief under any bankruptcy law or any law, or the issuance

of

any notice in relation to

such event, for the relief ofdebtors shall be instituted by or against the Borrower.

3.10 Delisting. Failure of he Borrower's Common Stock to be listed for trading or quotation

on the OTe BB for aoy reason. . ,

3.11 Stop Trade. n SEC or judicial stop trade order or Principal Market trading suspension

with respect to the Borrower's Common Stock that lasts for five (5) or more consecutive trading days.

3.12 Failure to Deliver Common Stock or Replacement Note. The Borrower's failure to

deliver Common Stock to the Holder pursuant to and in the form required by this Note and Sections 7 and

ofthe Subscription Agreement, or,

if

required, a replacement Convertible ~ t e more than five (5)

business days after the required delivery date of such Common Stock or replacement Convertible Note.

3.13 Reservation Default. The failure by the 13orrower to have reserved for issuance upon

conversion of the Note the number of shares

of

Common Stock as required

in

the Suhscription

Agreement.

3.14 Cross Default. A default by the Borro ,,,,r ofa material term, covenant, warranty or

undertaking

of

any other agreement to which the Borrower and Holder are parties, or the occurrence of a

material event of defuult.under any such other agreement which is not cured after any required notice

and/or cure period.

3.15 Reverse Splits. The Borrower effectuates a reverse split

of

its Common Stock, unless

t h ~ Company provides the Holder with written notice

of

the decision of the Company's Board

of

Directors to transmit documelltation to authorize the reverse stock split-within five (5) business days of

sucp.

decision.

5




18/56

3.16 Financial Statement Restatement. A material restatement of any :financial statements filed

by

the Borrower after the date of this Note, if the result of such restatement would,

by

comparison to the

unrestated financial statements, have constituted a Material Adverse Effect.

RTICLElV

Intentionally Omitted

ARTICLE V

MISCELL NEOUS

5.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder hereof in

the .exercise of any power, right r privilege hereunder shall operate as a ~ v r thereof, nor shall any

single or partial exercise of any such power, right or privilege preclude other or further exercise the.reof or

of any other right, power or privilege. All rights and remedies existing hereunder are cumulative

to,

and

not exclusive of, any rights r remedies otherwise available.

5.2 Notices. AU notices, demands, requests, COIlSents, approvals, and other communications

required or permitted hereunder shall be

in

writing

and,

unless otherwise specified herein, shall be a)

personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage

prepaid, (c) delivered by a e p u t a b l e overnight courier service with charges prepaid, or (d) transmitted by

hand delivery, telegram, or facsimile, addressed as s t forth below or to such other address

as

such party

shall have specified most recently by written notice. Any notice r other communication required or

permitted to be given hereunder shall be deemed effective upon

hand

delivery or deliver)' by facsimile,

with accurate

confiI1Ilation

generated

by

the transmitting facsimile machine, at the address or number

designated below

if

delivered on a business day during normal business hours where such notice is to be

received), or the first business day following snch delivery (if delivered other than ona business day

during normal business hOUfS where such notice is to be received), (ii) on the first business

day

following

the date deposited with an overnight courier service with charges prepaid, or

(iii)

on the third business day

following the date of mailing pursuant to subpart (b) above, or upon a ~ u a l receipt of such mailing,

whichever shall first occur. The addresses for such communications shall be: I) if to the Borrower to:

Marani Brands, Inc. 13152 Raymer Street Suite IA North Hollywood, CA 91605, with a copy by

teJecopier only

to:

Martin Eric Weisberg, Esq., Attn: Martin Eric Weisberg, p.e., telecopier: (212) 888·

5025, and (ii) if to the Holder, to the nanle, address and te1ecopy number set orth on the front page ofthis

Note, with a copy by te1ecopier only to YosefY. Manela Esq. 323-782-0828

.

5.3

Amendment Provision. The leon Note and all referenc,< thereto, as used throughout

thiS

instrument, shall mean this instrument as originally executed, or iflater amended or supplemented,

then

as

so amended or supplemented. .

5.4 Assignability. This Note shall be bhlding upon the Borrower and

itg

successors and

assigns, and shall inure to the benefit of the Holder and its successors and assigns. The Borrower may not

assign its obligations under this Note.

.

5.5

Cost of Collection.

If

default is made in the payment of this Note, the Borrower shall pay.

the Holder hereof reasonable out-of-pocket costs

of

collection, including reasonable attorneys' fees

in

an

action in which the Holder prevails.

6




19/56

5.6 Governing Law. This Note shall be governed by and constrned

in

accordance with the

laws ofthe State ofNew York. Any action brought by either party against the other concerning the

transactions contemplated

y

this Agreement shall be brought only in the civil or state courts ofNew

York or

in

the federal courts located

in

the State ofNew York. Both parties and

the

individual signing

this Agreement on behalfof the Borrower agree to submit to the jurisdiction of such courts. he

p ~ v i l i n g party shall be entitled to recover

from

the other party its reasonable attorney's fees and costs.

In

the event that any provision

of

this Note is invalid or unenforceable under

any

applicable statute or mle

oflaw, then such provision shall be deemeq inoperative

to

the extent that it

may

-conflict therewith and -

shall be deemed modified to conform to such statute or ruJe of law. Any such provision which may prove

invalid or unenforceable under any law shall not affect the validity or unenforceability of any other _

provision

of

this Note. Nothing contained herein shall be deemed or operate to preclude the Holder

froin

bringing suit or taking other legal action against the Borrower in

any

other jurisdiction to collect on the

Borrower's obligations to Holder,

arlo

enforce ajudgment or other decision

in

favour ofth" Holder.

5.7

Maximum Payments. Nothing contained herein shall be deemed to establish or require

the payment of a rate of interest or other charges in excess of the maximum rate permitted by applicable

law. In the event that the rate

of

interest required lobe paid or other charges hereunder exceed the

ma l:imum

rate permitted

by

applicable law, any payments in excess of such maximum rate shall

be

credited against amounts owed by the Borrower

to

the Holder and thus refunded to the Borrower.

5.8 Shareholder Status. The Holder shari not have rights as a shareholder

of

he Borrower

with respectto unconverted portions of this Note. 'However, the Holder will have all the rights of a

shareholder of the Borrower with respect to the shares ofCommon Stock to be received by HaIdet after

delivery y the Holder of a Conversion Notioe to

the

Borrower.

5.9

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an

authorized offic6r as ofthelstday

of

February, 2010. -

MARAN BRANDS, INC.

By:

~ R

Name: argnt ud

Title: Chief Executive Officer

WITNESS;

£ ;

:




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&

MORRIS LLP

310 3942825

P.001/020

2-1-2010

SlJBSCRIPTION AGREEMENT

TIDS SUBSCRIPTION AGREEMENT (this Agreement ), dated

as of

February 1 2010

by

and among Marani Brands, Inc., a Nevada corporation (the Company ), and the subscriber identified on

the signature page hereto (each a Subscriber and collectively the Subscriber ).

WHEREAS, the Company and the Subscribers are executing and delivering this Agreement

in

reliance upon an exemption

from

securities registration afforded

by

the provisions

of

Section

4(2),

Section 4(6) and/or Regulation D ( Regulation D )

as

promulgated

by

the United States Securities

and

Exchange Commission (the Commission ) under

the

Securities Act

of 1933, as

amended (the 1933

Act );

WHEREAS, the parties desire that. upon the terms and subject

to

the conditions contained

herein, the Company shall issue and sell to such Subscribers, as provided herein, and such Subscribers,

in

the aggregate, shall purchase up

to

(i) One Htmdred Thousand Dollars ($)00,000) (the PUl'chllse Price )

ofprincipa\ amount

of

convertible promissory notes ofthe Company (the Note a form

of

which

is

annexed hereto

as

Exhibit

A,

which Notes are convertible

into

shares

of

he Company's common stock,

.00001

par value (the C()n:lnIOU Stock ), and

in

the Note, (ii) shares ofthe Company's Commcn Stock

( Pun:based Shares ), and (iii) share purchase warrants (the Warrants )

in

the form attached hereto as

Elrhibit B, to purchase shares

cfthe

Company's Common Stock (the

Warrant

Shares ). The Notes,

Purchased Shares, shares

of

Common Stock issuable upon conversion

of

the Notes (the Shares ), the

Warrants and the shares issuable upon exercise

of

the Warrants

are

collectively referred to herein as the

Securities. ; and

NOW, THEREFORE,

in

consideration

of

he mutual covenants

and

other agreements contained

in

this Agreement, the Company and the Subscribers hereby agree

as follows:

1.

Closing Date. The Closing Date shall

be

the date that the Purchase Prioe

is

transmitted

by

wire transfer or otherwise credited to or for the benefit

of

the Company. The consummation

of

he

transactions contemplated herein shall take place

at

the offices ofYosefY. Manela

5455

Wilshire

Blvd.

Suite

2123, Los

Angeks,

CA 90036,

upon the satisfaction or waiver

of

all conditions to closing set forth

in

this Agreement. Subject to the satisfaction or waiver ofthe terms and conditions

of

this Agreement,

on the Closing Date, each Subscriber shall purchase and the Company shall sell to each Subscriber a Note

in

the principal amount designated on the signature page hereto and the anl0unt of Purchased Shares

determined pursuant to Section 2 below for the portion of the Purchase Price indicated, and Warrants as

described in Section 3

of

this Agreement.

2.

Shares. The Subscriber will receive Four Million Five

Hundred (4,500,000)

COmmitment

shares. These shares will have Registration Rights.

3.

Warrants.

On

the Closing Date, the Company will issue and deliver Twelve Million

Five Hundred Thousand (12,500,000) Warrants to the Subscriber. The number

of

Warrant Shares eligible

for purchase

by

the Subscriber

is

set forth

in

the signature page ofthis Agreement. The aggregate number

of

he warrants for purchase

by

the Subscriber is Twelve Million Five Hundred Thousand

(12,500,000).

The Warrants shall

be

exercisable until five (5) years after the issue date of the Warrants. The Warrants

will have and exercise price of $_0.04. Each holder of the Warrants is granted the registration rights s t

forth

in

this Agreement.

Th.e

Warrant exercise price

and

number

of

Warrant Shares issuable upon

exercise

of

he Warrants shall

be

equitably adjusted

to

offset the effect

of

stock splits, stock dividends,

and

similar events,

as

provided

for in the

Warrant.

2/112010 1:18

PM Exhibit 2, p. 000020



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4. Subscriber's Representations and Warranties. The Subscriber hereby represents and

warrants

to

and agrees with the

Company

only

as

to

such

Subscriber that:

a) Organization and Standing

of

he Subscriber.

If

such Subscriber

is an

entity,

such Suhscriber

is

a corporation, partnership or other entity duly incorporated or organized, validly

existing and in good standing under the laws of the jurisdiction of its incorpora.tion or organization.

P 002/020

b)

Authorization

and

power.

Such

Subscriber has the requisite power and authority

to

enter into and

perform

this Agreement and the other Transaction Documents as hereinafter defined)

and to

purchase the Notes, Purchased Shares and Warrants being sold

to

it hereunder. The execution,

delivery

and

performance of this Agreement

and the

other Transaction Docunlents by

such

Subscriber

and

the

consummation by

it of

the

transactions contemplated hereby and thereby

have

been duly authorized

by all

necessary corporate

or

partnership action,. and

no

further consent or authorization

of

such

Subscriber or

its

board

of

directors, stockholders, partners, members,

as

the

case may

be,

is

required.

This Agreement and the other Transaction Documents have been duly authorized, executed and delivered

by

such Subscriber and constitutes, or shall constitute when executed and delivered, a valid and binding

obligation of such Subscriber enforceable against such Subscriber in accordance with the terms thereof

c) No

Conflicts.

The

execution, delivery

and performan.ce

of

this

Agreeme))t and

the other Transaction Documents and the consummation by such Subscriber of he transactions

contemplated hereby and thereby

r

relating hereto do not and will not i) result in a violation of such

Subscriber's charter

documents

or bylaws or other organizational

documents

or ii)

c·onflict

with, Or

constitute a default or

an

event

which

with n9tice or lapse oftime or both

would

become a default)

under, or give to others any rights of termination, anlendment, acceleration or cancellation of any

agreement, indenture or instrument or obligation

to

which such Subscriber is party or by which its

properties or assets are bound, or result in a violation ofany

law,

rule,

Of

regulation, or [my order,

judgment or decree ofany court r governmental

age))cy

applicable

to

such Subscriber or its properties

Such

Subscriber is

not

required

to

obtain any

consent,

authorization or order of; or make

any

filing or

registration with,

any

COurt r governmental agency in order or it

to

execute, deliver or perform

any

of its

obligations

under

this Agreement

and

the other Transaction Documents or

to

purchase the Securities in

accordance

with

the terms hereof.

(d) Information on Company. Such Subscriber has been furnished with or has had

access

at

the EDGAR Website of the Commission to the Company's Form 10-KSB for the year ended

June

30,

2009

as filed

with the

Commission,

together with

all

subsequently

filed

Forms

lO-QSB,

Forms

8-K,

and other reports

and

filings made with the Commission

and made

available

at

the EDGAR website

(hereinafter referred to collectively as the

Reports ). Such

Subscriber

bas

had

an

opportunity to ask

questions

and

receive answers from representatives of the

Company, and

considered all factors such

Subscriber

deems

material

in dec.iding on

the advisability

of

investing

in

the Securities.

The

Subscriber

and its advisors, if any, have been afforded the opportunity to ask questions of the

Company

and to

receive

answers

thereto concerning the Company and the transactions contemplated

herein.

Subscriber

does not: acknowledge that any of such information is material non-public information.

e)

Information

on Subscriber.

Concurrently herewith, Subscriber

is

delivering to

tile

Company

a completed and executed Subscriber Questionnaire, the form of which is attached hereto as

xhibit D. Such

Subscriber

is,

and will be

at

the time of the conversion of he Notes and exercise· ofthe

Warrants,

an

accredited investor , as such

term

is defined in Regulation D promulgated by the

Commission

under

the

1933

Act, is experienced

in

investments and business matters, has made

investments of a speculative nature and has purchased securities of United

States

publicly-owned

companies in private placements in the past and, with

its

representatives, has such

knowledge and

experience

in

financial, tal\

and

other business matters as to enable such Subscriber to utilize the

2 Exhibit 2, p. 000021



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I S LLP

:310

:3942825

P.00:3/020

infonnation made available by the COlupany

to

evaluate the mcrits and risks ofand

to

make an informed

investment decision with respect to the proposed purchase,

which

represents a speculative investment.

Such Subscriber has the authority and is duly and legally qualified to purchase and own the Securities.

Such Subscriber is able t bear the risk of such investment for an indefinite period and

to

afford a

complete loss thereof. The information set forth

in

the Subscriber QuestiOimaire and on the signature

page hereto

regarding such Subscriber is accurate.

(I)

Purchase ofNote, Purchased Shares and Warrants. On the Closing Date, the

Subscriber will purchase the Note, Purchased Shares and

Warrants

as principal for its own

ace-ount

fOf

investment

only and

not with a view toward, or for resale

in

connection with, the public sale or

any

distribution thereof.

(g)

Compliance

with

Securities Act. Such Subscriber understands and agrees that

the Securities have not

been

registered

under

the

1933

Act or

any

applicable state securities laws,

by

reason oftheir issuance

in

a transaction that does not

require

registration

under

the 1933 Act (based

in

part on the accuracy of the representations and warranties of such Subscriber contained herein),

and

that

such Securities

must be

held indefinitely

unless

a subsequent disposition is registered

under

the

1933

Act

01' any applicable state securities

Laws

or is exempt

from

such registrntion.

(hl Communication of Offer. The offer to

sell

the Securities was directly

communicated to such Subscriber

by

the Company. At

no

time was such Subscriber presented with or

solicited

by

any leaflet, newspaper or magazine

artic .e,

radio or television advertisement, or any other

form

of

general

advertising or solicited or invited to

attend

a promotional meeting otherwise

than in

connection

and

concun'endy with such communicated offer ..

(i)

Restricted Securities. Slich Subscriber understands that the Securities

have

not

been registered under the 1933 Act and such Subscriber will not sell, offer

to

sell, assign, pledge,

hypothecate or otherwise transfer any of he Securities unless pursuant to

an

effective registration

statement

under

the 1933

Act,

or unless

an

exemption

from

registration is available. Notwithstanding

anything to the contrary contained

in

this Agreement, such Subscriber may transfer (without restriction

and

without the

need for an

opinion of counsel) the Securities to

its

Affiliates

(as

defined below) provided

that

each

such Affiliate

is an

accredited investor under Regulation D and

such

Affiliate agrees to be

bound by the tel1lls and conditions ofthis Agreement. For the purposes of this Agreement, an Affiliate

of any person or entity means any other person or cntity directly or indirectly controlling, controlled by or

under direct or indirect common control

with

such person or entity. Affiliate includes each Subsidiary of

the

Company.

For purposes of this definition, control

means

the power

to

direct the management

and

policies of such

person

or

fll"m,

directly or indirectly, whether through the ownership of voting securities,

by

contract or otherwise.

O

No Governmental

Review.

Such Subscriber understands that

no

United

States

federal

Or

state agency or

any

other governmental or state agency has passed

on

or

made

recommendations or endorsement of he Securities or the suitability of the

investm.ent in

the Securities

nor have such

authorities passed

upon

or

endorsed

the

merits

of

he

offering of the Securities.

(k) CorrectneS§2f Representations. Such Subscriber represents

as to snoh

Subscriber that the foregoing representations and warranties

are

true and correct as of the date hereof and,

unless

a Subscriber otherwise notifies the Company prior

to

the Closing Date shall be true and correct

as

ofthe Closing Date.

1) Survival. The foregoing representations and warranties shall survive the Closing

Date.

3 Exhibit 2, p. 000022



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CORRIGAN & MORRIS LLP

310 3942825

P 004/020

5. C0lllJ \I)Y Representations and Warranties.

The

Company represents and warrants to

and

agrees with each Subscriber

tbat:

(a) Due Incorporation. The

Company

and each

of its

Subsidiaries

is

a corporation or

other entity duly incorporated 0) organized, validly existing and

in

good standing under the laws of the

jurisdiction of its incorporation or organization and

has

the requisite corporate power to

own

its properties

and to

carry

on its

business

as

presently conducted.

The Company

and each of

its

Subsidiaries

is

duly

qualitled as a foreign corporation to do business and is

in

good standing

in

each jurisdiction where the

nature ofthe

business

conducted or property owned

y

it makes

such

qualification necessary,

other

than

those jurisdictions in

which

the failure

to so

qualify

would

not have a Material Adverse Effect

(as

defined

below) on the

Company. For purposes of this

Agreement,

a Material Adverse Effect on the

Company

shall mean a material adverse effect

on

the financial condition, results of operations, properties or

business

of

he Company

and its

Subsidiaries

taken

as a

whole.

For purposes

of

this

Agreement,

Subsidiary means, with resp·ect to any entity at any date, any corporation, limited or general

partnership, limited liability company, trust, estate, association, joint venture or other business entity of

which

more

than 25% of

(i)

the outstanding capital stock having (in the absence of contingencies)

ordinary voting

power

to elect a majority

of

he board

of

directors or other

managing

body

of

such

entity,

OJ

in

the case of a partnership

01"

linlited liability

company,

the interest

in

the capital or profits

of

such

partnership

or

limited liability

company or iii)

in

the

case

of

a trust, estate, association, joint venture

or

.

other entity, the beneficial interest

in such

trust, estate, association or other entity business

is,

at the time

of determination, owned or controlled directly or indirectly througb

Olle

or

more

intermediaries, by such

entity.

AU

the Company's Subsidiaries

as

ofthe

Closing

Date

and

the Company's ownership interest in

such Subsidiaries are set forth 0.0 Schedule 5(a)

he("eto.

(b)

Outstanding

Sto,'k.

AU issued and ontstanding

shares of

capital stock

of

he

Company

have

been duly authorized

and vali( ly

issued lind a( e fully paid and.nonassessable.

(e) Authority; Enforceability. This

Agreement,

the Note, Purchased Shares, the

Warrants, Security Agreement, Subsidiary Guaranty, Agreement and the

Escrow Agreement,

and any

other agreements deJivered together with this

Agreement

or

in

connection herewith (collectively, the

Transaction Docnments )

have been

dnly authorized, executed

and

delivered y

tiN

Company

and/or

its Subsidiaries and a( e valid and binding agreements of the

Company

and its Subsidiaries enforceable

against them in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer,

reorganization, moratorium and similar laws of general applicability relating to or affecting creditors'

rights generally

and to general

principles ofequity. The

Company has full

corporate

power and

authority

necessary

to enter into and deliver

the

Transaction Documents and to perform its obligations thereunder

Cd) Additiopal Issuances.

There are no

outstanding agreements

or

preemptive

or

similar rights affecting the Company's

Common

Stock

or

equity

and no

outstanding

rights,

warrants

or

options

to acquire, or instruments convertible into r exchangeable

for,

or agreements or understandings

with

respect to the sale or issuance of any shares of common stock or equity of he Company or its

Subsidiaries or other equity interest

in

the Company except

as

described in the public filings

and

Schedule 5(d).

The Common

Stock ofthe

Company

on

a fully diluted

basis

outstanding

as

of the last

Business

D.ay

preceding the Closing

Date is set forth

on Schednle 5(d).

(e) Consents. No consent, approval, authorization or

order

of any court,

govemmental agency or

body

or arbitrator having jurisdiction over the Company, or any of its Affiliates,

the OTe Bulletin Board (the Bulletin Board ) nor the Company's shareholders is required for the

execution

by

the

Company of

he Transaction

Documents and complian.ce and

performance

by

the

Company of

its

obligations under the Transaction

Documents,

including, without limitation, the

issWUlce

4 Exhibit 2, p. 000023



24/56

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310 3942825 P 005/020

and sale of the Securities. The Transaction Documents and the Company's perfon:nance of its obligations

thereunder has been unanimously approved by the Company's Board of Directors.

(f)

No Violation or Conflict. Assuming the representations and warranties of

such

Subscribers in Se tion 4 are true and correct and except as set forth on this chedule 5(1), neither the

issuance and sale of he Securities nor the performance by the Company of its obligations under this

Agreement and

all

other Transaction Documents entered into by the Company relating thereto by the

Company will:

(i) violate, conflict with, result in a breach of, or constitute a default (or

an

event which with the giving of notice or the lapse of ime or both would be reasonably likely to constitute

a default) under A) the articles or c·ertificate of incorporation, charter or bylaws of he Company, B) to

the Company's knowledge,

any

decree, judgment, order, law, treaty, rule, regulation or determination

applicable to the Company of any court, govenunental

agency.

or body, or arbitrator having jurisdiction

over h.e Compauy or over the properties or assetsofthe Company or any of its Affiliates, (C) to the

Company's knowledge the tenus of

any

bond, debenture, note or any other evidence of indebtedness for

borrowed money, or any agreement, stock option or other similar plan, indenture, lease, mortgage, deed

of

trust

or

other instrument

to which

the Company

is

a party, by

CD)

the tenus

of

any lock-up or similar

provision

of

any underwriting

01

similar agreement to which the Company,

01

any

of

its Affiliates

is

t

party except for any such the violation, conflict, breach, or default of which would not have a Material

Adverse Effect; or

(g) The SeQyrjties. The Securities upon issuance, conversion and exercise:

i)

are, or will

be,

free and clear

of

any security interests,

liens,

claims or

other encumbrances, granted by the company subject to restrictions upon transfer under the 1933 Act and

any applicable state securities laws;

(il)

have been, or will

be,

duly and validly authorized

and

on the date of

issuance ofthe Purchased Shares and Shares upon conversion ofthe Note and the Warrant Shares and

upon exercise ofthe Warrants, the Shares and Warrant Shares

will

be duly and validly issued, fully paid

and nonassessable and if registered pursuant to the

1933

A ot

and

resold pursuant to

an effecti.ve

registration statement will

be

free trading and unrestricted;

(iii) will not

haw

been issued or sold in violation ofany preemptive or other

similar rights of the holders of any securities ofthe Company;

(iv)

assuming the representations and w8lTanties of such Subscribers

as

set

forth n Section

4

hereof

are

true and c.orrect, will not result

in

a violation of Section

5

under the

1933

Act.

(h) UHgation. There is

no

pending or, to the best knowledge ofthe Company,

threatened action, suit, proceeding or investigation before any court, govermnental agency or body, or .

arbitrator havingjurlsdiction over the Company, or any of its Affiliates that would affect the execution

by

the Company or the performance

by

the Company of its obligations under the Transaction Documents.

Except as disclosed in the Reports or in the schedules hereto, there is

no

pending or, to the best

knowledge ofthe Company, basis for or threatened action, suit, proceeding or investigation before any

court, governmental agency or body, or arbitrator having jurisdiction over the Company, or any of its

Affiliates which litigation if adversely determined

would

have a Material Adverse Effect.

5 Exhibit 2, p. 000024



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310 3942825 P.006/020

i)

Repolting Company. Except

as

set forth

in Schedule

5(i) attached

hereto,

the

Company is a publicly-held company subject to repOlting obligations pursuant

to

Section

13

of he

Securities Exchange Act of 1934, as

amended ( 1934

Act ) and has a class of common stock registered

pursuant to

Section

12 g) of he 1934

Act.

Pursuantto the provisions of the 1934 Act, the Company has

timely filed

all

reports and other materials required to be filed thereunder with the Commission during

the

preceding t\'Ielve

months.

.

G) Information Concerning COmpaIlY. The Reports contain all material information

relating

to

the Company and its operations and financial condition as oftheir respective

dates

which

information is required

to

be disclosed therein. The Reports including the financial statements therein

and do

not contain any untrue statement of a material fact or omit to state a material fact required to

be

stated therein

Of

necessary

to

make the statements therein, taken as a whole,

not

misleading in light of the

circumstances when made.

k) Stop

Tran.sfer.

The

Company

has not and

will

not

issue

any

stop

transfer order or

other order impeding the sale, resale or delivery of any oftbe Secnrities, except as may reasonably

be

believed by the

Company

required

by

any applicable federal or state securities laws or the rules and

regulations ofthe principal trading

market

oftbe Company's Common

Stock

and

unless

contemporaneous notice of such instruction

is

given to

the Subscribers.

1)

Defaults.

The

Company is not

in

violatioll of

its

articles of incorporation or

bylaws. Except

as

sel froth on Schedule S m) attached hereto, the Company is i) not

in

default under or

in

violation of

any

otber material agreement

or, which

default or violation

would

have a Material Adverse

Effect,

(ii)

not

in

default

with

respect

to any

order

ofaily court,

arbitrator or governmental body or subject

to or party to any order of

any

court or governmental authority arising out of any

action, snit

or

proceeding

under

any statute or otber

law

respecting antitrnst, monopoly, restraint of trade, unfair

competition or similar matters, and

iii)

not

in

violation ofany statute, rule or regulation of

any

govemmental authority which violation would have a Material Adverse Effect.

m) Not

an

Integrated Offering. Neither the Company, nor any, nor any person acting

on its or

their behalf,

has

directly

or

indirectly

made any

offers

or

sales of

any

security

or

solicited

any

offers

to

buy any security under circumstallces that would cause the offer ofthe Securities pursuaut

to

this

Agreement to be integrated with prior offerings by the Company for purposes of the

1933

Act or

any

applicable stockholder approval provisions, including, without limitation, under the rules and regulations

of th.e Bulletin Board which would impair the exemptions reHed upon in this Offering or the Company's

ability

to

timely comply wjth its obligations hereunder.

n) No General Sglicitation. Neither the Company, nor any of

its

Affiliates, nor

to

its knowledge, any person acting on its or tbeir behalf,

has engaged

ill

any fonn of general solicitation or

general advertising (within the

meaning

of Regulation D under the

1933 Act) in

connection with the offer

or sale ofthe Securities.

(0)

Listing. The

Common Stock

is

quoted

on

the Bulletin Board under the

symbol

MRIB.OB.

The

Company

has

not received any oral or written

notice

that the Common

Stock

is not

eligible nor will become ineligible for quotation

on

the Bulletin Board nor that the Common Stock does

not meet

all

requirements

for

the continuation

of

sneh quotation and the Company satisfies

all

the

requirements for the continued quotation ofthe Common

Stock

on the Bulletin Board. .

. p) Dilution. The Company's executive officers and directors understand the nature

ofthe Securities

being

sold hereby and recognize that the issuance ofthe Securities will have a potential

dilutive effect on the equity holdings of

other

holders of the Company's equity or rights

to

receive equity

6 Exhibit 2, p. 000025



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CORRIGAN

&

MORRIS

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310 3942825

P.007/020

ofthe Company. The board ofdirectOl"s of the Company has concluded, in its good faith business

judgment that the issuance ofthe Securities

is

jn the best interests of the Company

and

its shareholders.

The

Company specifically acknowledges that its obligation to issue the Purchased Shares, Shares

upon

conversion of the Notes,

and

the Warrant Shares npon exercise ofthe W81Tants is binding upon the

Company and

enforceable regardless of the dilution such

jssuance may have m

the ownership interests

of

otber stockholders of the

Company

or parties entitled

to

receive equity oHhe

Company,

(q)

No Disagreements

with

Accountants

and

1awyers.

There

ar

no

disagreementsof

any kind

presently, between the Company and the accountants

and

lawyers formerly or presently

employed

by

the

Company, which are

required

to be

disclosed

under

applicable securities laws.

(I ) PTC Status. The Company's transfer agent is a participant in and

the Common

Stock

is

eligible for transfer pursuant to the Depository Trust Company Automated Securities Transfer

Program. The name, address, telephone number, fax number, contact person and email address oHhe

Company transfer agent is set forth on SchedUle 5(t) hereto.

(s) Investment

Company.

Neither the

Company

nor any Affiliate

is an

investment

company" within the meaning ofthe Investment Company Act of 1940, as

amended.

(t) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of

he

Company, any agent Or other person acting on behalfo the Company, has

i)

used any funds for unlawful

contributions, gifts, entertainment or other unlawful expenseS related

to

foreign or domestic political

activity,

ii) made

any unlawful payment to foreign

or

domestic government officials

or

employees

or

to

any foreign

or

domestic political parties

or

campaigns

from

corporate funds, (iii) failed to disclose fully