ex10-6.htm


    Exhibit
10.6

     

    FORM OF SUBSCRIPTION
AGREEMENT

     

     

    THIS 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 Hundred Thousand
Dollars ($100,000) (the “Purchase Price”) of principal
amount of convertible promissory notes of the Company (the “Note” a form of which is
annexed hereto as Exhibit
A, which Notes are convertible into shares of the Company’s common stock,
$.00001 par value (the “Common
Stock”), and in the Note, (ii) shares of the Company’s Common Stock
(“Purchased Shares”),
and (iii) share purchase warrants (the “Warrants”) in the form
attached hereto as Exhibit B,
to purchase shares of the 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 the 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 Price is transmitted by wire transfer or otherwise
credited to or for the benefit of the Company. The consummation of the
transactions contemplated herein shall take place at the offices of Yosef Y.
Manela 5455 Wilshire Blvd. Suite 2123, Los Angeles, CA 90036, upon the
satisfaction or waiver of all conditions to closing set forth in this
Agreement.   Subject to the satisfaction or waiver of the 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 amount 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 of this Agreement.  The aggregate number of the
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 set forth in this
Agreement.  The Warrant exercise price and number of Warrant Shares
issuable upon exercise of the Warrants shall be equitably adjusted to offset the
effect of stock splits, stock dividends, and similar events, as provided for in
the Warrant.

     

    
      
        
        

      

      
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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
the Subscriber.  If such Subscriber is an entity, such Subscriber
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
incorporation or organization.

     

    (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 Documents 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)           The
execution, delivery and performance of this Agreement and the other Transaction
Documents and the consummation by such Subscriber of the transactions
contemplated hereby and thereby or 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) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of any agreement, indenture or instrument or obligation to which
such Subscriber is a party or by which its properties or assets are bound, or
result in a violation of any law, rule, or regulation, or any order, judgment or
decree of any court or governmental agency 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 or governmental
agency in order for 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 10-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 has had an opportunity to ask questions and receive answers from
representatives of the Company, and considered all factors such Subscriber deems
material in deciding 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
the Company a completed and executed Subscriber Questionnaire, the form of which
is attached hereto as Exhibit
D.  Such Subscriber is, and will be at the time of the
conversion of the Notes and exercise of the 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, tax and other
business matters as to enable such Subscriber to utilize the information made
available by the Company to evaluate the merits and risks of and 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 to bear the risk of such
investment for an indefinite period and to afford a complete loss
thereof.  The information set forth in the Subscriber Questionnaire
and on the signature page hereto regarding such Subscriber is
accurate.

     

    
      
        
        

      

      
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    (f)           Purchase of Note, Purchased
Shares and Warrants.  On the Closing Date, the Subscriber will
purchase the Note, Purchased Shares and Warrants as principal for its own
account for 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 of their 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 or any applicable state securities Laws or is
exempt from such registration.

     

    (h)           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
article, 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 concurrently with such communicated offer.

     

    (i)           Restricted
Securities.   Such 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 the 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 terms and conditions
of this Agreement. For the purposes of this Agreement, an “Affiliate” of any person or
entity means any other person or entity 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 firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.

     

    (j)           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 the Securities or the suitability of
the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.

     

    (k)           Correctness of
Representations.  Such Subscriber represents as to such
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 of the Closing
Date.

     

    (l)           Survival.  The
foregoing representations and warranties shall survive the Closing
Date.

     

    
      
        
        

      

      
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    5.           Company Representations and
Warranties.  The Company represents and warrants to and agrees
with each Subscriber that:

     

    (a)           Due
Incorporation.  The Company and each of its Subsidiaries is a
corporation or other entity duly incorporated or 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 qualified as a foreign corporation to do business and
is in good standing in each jurisdiction where the nature of the business
conducted or property owned by 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 the
Company and its Subsidiaries taken as a whole.  For purposes of this
Agreement, “Subsidiary”
means, with respect 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 the board of directors or other
managing body of such entity, (ii) in the case of a partnership or limited
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 through one or more
intermediaries, by such entity.  All the Company’s Subsidiaries as of
the Closing Date and the Company’s ownership interest in such Subsidiaries are
set forth on Schedule
5(a) hereto.

     

    (b)           Outstanding
Stock.  All issued and outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable.

     

    (c)           Authority;
Enforceability.  This Agreement, the Note, Purchased Shares,
the Warrants, Security Agreement, Subsidiary Guaranty, Agreement and the Escrow
Agreement, and any other agreements delivered together with this Agreement or in
connection herewith (collectively, the “Transaction Documents”) have
been duly authorized, executed and delivered by the Company and/or its
Subsidiaries and are 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 of equity.  The Company has full
corporate power and authority necessary to enter into and deliver the
Transaction Documents and to perform its obligations thereunder.

     

    (d)           Additional
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 or exchangeable for, or agreements or understandings with respect to the
sale or issuance of any shares of common stock or equity of the 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 of the Company on a fully diluted basis
outstanding as of the last Business Day preceding the Closing Date is set forth
on Schedule
5(d).

     

    (e)           Consents.  No
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over the Company, or any of its
Affiliates, the OTC Bulletin Board (the “Bulletin Board”) nor the
Company’s shareholders is required for the execution by the Company of the
Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation, the
issuance and sale of the Securities.  The Transaction Documents and
the Company’s performance of its obligations thereunder has been unanimously
approved by the Company’s Board of Directors.

     

    
      
        
        

      

      
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    (f)           No Violation or
Conflict.  Assuming the representations and warranties of such
Subscribers in Section 4 are true and correct and except as set forth on this
Schedule 5(f), neither
the issuance and sale of the 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 time or both would be reasonably
likely to constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of the Company, (B) to the Company’s knowledge,
any decree, judgment, order, law, treaty, rule, regulation or determination
applicable to the Company of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or over the properties or assets
of the Company or any of its Affiliates, (C) to the Company’s knowledge the
terms 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 (D) the terms of any “lock-up” or similar provision of any
underwriting or similar agreement to which the Company, or any of its Affiliates
is a party except for any such the violation, conflict, breach, or default of
which would not have a Material Adverse Effect; or

     

     (g)           The
Securities.  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;

     

    (ii)           have
been, or will be, duly and validly authorized and on the date of issuance of the
Purchased Shares and Shares upon conversion of the Note and the Warrant Shares
and upon exercise of the Warrants, the Shares and Warrant Shares will be duly
and validly issued, fully paid and nonassessable and if registered pursuant to
the 1933 Act and resold pursuant to an effective registration statement will be
free trading and unrestricted;

     

    (iii)           will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company;

     

     (iv)           assuming
the representations and warranties of such Subscribers as set forth in Section 4
hereof are true and correct, will not result in a violation of Section 5 under
the 1933 Act.

     

    (h)           Litigation.  There
is no pending or, to the best knowledge of the Company, 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 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 of the 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.

     

    
      
        
        

      

      
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    (i)           Reporting
Company.  Except as set forth in Schedule 5(i) attached hereto,
the Company is a publicly-held company subject to reporting obligations pursuant
to Section 13 of the Securities Exchange Act of 1934, as amended (“1934 Act”) and has a class of
common stock registered pursuant to Section 12(g) of the 1934
Act.  Pursuant to 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 twelve months.

     

     (j)           Information Concerning
Company.  The Reports contain all material information relating
to the Company and its operations and financial condition as of their 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 or necessary to make the statements
therein, taken as a whole, not misleading in light of the circumstances when
made.

     

    (k)           Stop
Transfer.  The Company has not and will not issue any stop
transfer order or other order impeding the sale, resale or delivery of any of
the Securities, except as may reasonably be believed by the Company required by
any applicable federal or state securities laws or the rules and regulations of
the principal trading market of the Company’s Common Stock and unless
contemporaneous notice of such instruction is given to the
Subscribers.

     

    (l)           Defaults.  The
Company is not in violation of its articles of incorporation or
bylaws.  Except as set froth on Schedule 5(m) attached hereto, the
Company is (i) not in default under or in violation of any other material
agreement or, which default or violation would have a Material Adverse Effect,
(ii) not in default with respect to any order of any court, arbitrator or
governmental body or subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters, and (iii) not in violation of any statute, rule
or regulation of any governmental 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 circumstances
that would cause the offer of the Securities pursuant 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 the Bulletin Board which would impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder.

     

    (n)           No General
Solicitation.  Neither the Company, nor any of its Affiliates,
nor to its knowledge, any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.

     

    (o)           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 such
quotation and the Company satisfies all the requirements for the continued
quotation of the Common Stock on the Bulletin Board.

     

    (p)           Dilution.  The
Company’s executive officers and directors understand the nature of the
Securities being sold hereby and recognize that the issuance of the Securities
will have a potential dilutive effect on the equity holdings of other holders of
the Company’s equity or rights to receive equity of the Company.  The
board of directors of the Company has concluded, in its good faith business
judgment that the issuance of the Securities is in 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 upon exercise of the Warrants is binding upon the
Company and enforceable regardless of the dilution such issuance may have on the
ownership interests of other stockholders of the Company or parties entitled to
receive equity of the Company.

     

    
      
        
        

      

      
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    (q)           No Disagreements with
Accountants and Lawyers.  There are 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.

     

     (r)           DTC
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 of the 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 of the Investment Company Act of 1940,
as amended.

     

    (t)           Foreign Corrupt
Practices.  Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of 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 any contribution made by the Company (or made by
any person acting on its behalf of which the Company is aware) which
is  in violation of law, or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended.

     

    (u)           Subsidiary
Representations.  The Company makes each of the representations
contained in Sections 5(a), (b), (d), (f), (h), (k), (m), (q), (r), (s), (u),
(w), (x) and (y) of this Agreement, as same relate to each Subsidiary of the
Company.  .  The Company represents that it owns the equity
of the Subsidiaries and rights to receive equity of the Subsidiaries as set
forth on Schedule 5(a),
free and clear of all liens, encumbrances and claims, except as set forth on
Schedule
5(d).  No person or entity other than the Company has the right
to receive any equity interest in the Subsidiaries.

     

    (y)           Survival.  The
foregoing representations and warranties shall survive the Closing
Date.

     

    6.           Regulation D Offering/Legal
Opinion.  The offer and issuance of the Securities to the
Subscribers is being made pursuant to the exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
Act and/or Rule 506 of Regulation D promulgated thereunder.  On the
Closing Date, the Company will provide an opinion reasonably acceptable to such
Subscribers from the Company’s legal counsel in the form annexed hereto as Exhibit E opining on the
availability of an exemption from registration under the 1933 Act as it relates
to the offer and issuance of the Securities, and the other matters set forth on
Exhibit E.

     

    
      
         

      

      
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    7.1           Conversion of
Notes.

     

    (a)           Upon
the conversion of a note or part thereof, the Company shall, at its own cost and
expense, take all necessary action, including obtaining and delivering, an
opinion of counsel to assure that the Company’s transfer agent shall issue stock
certificates in the name of a Subscriber (or its permitted nominee) or such
other persons as designated by such Subscriber and in such denominations to be
specified at conversion representing the number of shares of Common Stock
issuable upon such conversion.  The Company warrants that no
instructions other than these instructions have been or will be given to the
transfer agent of the Company’s Common Stock and that the certificates
representing such shares shall contain no legend other than a customary
restrictive legend.  If and when a Subscriber sells the Shares,
assuming (i) a registration statement including such Shares is effective and the
prospectus, as supplemented or amended, contained therein is current and (ii)
such Subscriber or its agent confirms in writing to the transfer agent that such
Subscriber has complied with the prospectus delivery requirements, the Company
will reissue the Shares without restrictive legend.  In the event that
the Shares are sold in a manner that complies with an exemption from
registration, the Company will promptly instruct its counsel to issue to the
transfer agent an opinion permitting removal of the legend (indefinitely, if
pursuant to Rule 144(b)(1)(i) of the 1933 Act, or for 90 days if pursuant to
other provisions of Rule 144 of the 1933 Act, provided Subscriber delivers a
reasonably requested representation in support of such opinion and such other
documentation as may be requested by the Company’s legal counsel.)

     

    (b)A
Subscriber will give notice of its decision to exercise its right to convert the
Note, interest or part thereof by telecopying or otherwise delivering a
completed Notice of Conversion (a form of which is annexed as Exhibit A to the Note) to the
Company via confirmed telecopier transmission or otherwise pursuant to Section
13(a) of this Agreement.  Such Subscriber will not be required to
surrender the Note until the Note has been fully converted or
satisfied.  Each date on which a Notice of Conversion is telecopied to
the Company in accordance with the provisions hereof by 6:00 PM Eastern Time
(ET) (or if received by the Company after 6:00 PM ET, then the next business
day) shall be deemed a “Conversion
Date”.  The Company will itself or cause the Company’s transfer
agent to transmit the Company’s Common Stock certificates representing the
Shares issuable upon conversion of the Note to such Subscriber via express
courier for receipt by such Subscriber within five(5) business days after
receipt by the Company of the Notice of Conversion (such third day being the
“Delivery
Date”).  In the event the Shares are electronically
transferable, then delivery of the Shares must be made by
electronic transfer provided request for such electronic transfer has been made
by such Subscriber.   A Note representing the balance of the Note
not so converted will be provided by the Company to a Subscriber if requested by
such Subscriber, provided such Subscriber delivers the original Note to the
Company. In the event that a Subscriber elects not to surrender a Note for
reissuance upon partial payment or conversion of a Note, such Subscriber hereby
indemnifies the Company against any and all loss or damage attributable to a
third-party claim in an amount in excess of the actual amount then due under the
Note.

     

    (c)           
The Company understands that a delay in the delivery of the Shares in the form
required pursuant to Section 7.1 hereof, or the Mandatory Redemption Amount
described in Section 7.2 hereof, respectively later than the Delivery Date or
the Mandatory Redemption Payment Date (as hereinafter defined) could result in
economic loss to a Subscriber.  As compensation to a Subscriber for
such loss, the Company agrees to pay (as liquidated damages and not as a
penalty) to such Subscriber for late issuance of Shares in the form required
pursuant to Section 7.1 hereof upon Conversion of the Note in the amount of $100
per business day after the Delivery Date for each $10,000 of Note principal
amount (and proportionately for other amounts) being converted of the
corresponding Shares which are not timely delivered.  The Company
shall pay any payments incurred under this Section in immediately available
funds upon demand.  Furthermore, in addition to any other remedies
which may be available to such Subscriber, in the event that the Company fails
for any reason to effect delivery of the Shares within 7 business days after the
Delivery Date or make payment within 7 business days after the Mandatory
Redemption Payment Date (as defined in Section 7.2 below), such Subscriber will
be entitled to revoke all or part of the relevant Notice of Conversion or
rescind all or part of the notice of Mandatory Redemption by delivery of a
notice to such effect to the Company whereupon the Company and such Subscriber
shall each be restored to their respective positions immediately prior to the
delivery of such notice, except that the liquidated damages described above
shall be payable through the date notice of revocation or rescission is given to
the Company.

     

    (d)           The
Company agrees and acknowledges that despite the pendency of a not yet effective
registration statement which includes for registration the Securities, the
Subscriber is permitted to and the Company will issue to the Subscriber Shares
upon conversion of the Note and Warrant Shares upon exercise of the
Warrants.  Such Shares will, if required by law, bear the legends
described in Section 4 above and if the requirements of Rule 144 under the 1933
Act are satisfied be immediately resalable thereunder.

     

    
      
         

      

      
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    7.2           Mandatory Redemption at
Subscriber’s Election.  In the event (a) the Company is
prohibited from issuing Shares, (b) fails to timely deliver Shares on a Delivery
Date, (c) upon the occurrence of any other Event of Default () and if any event
listed in subparagraph (a), (b) or (c) is not cured during any applicable cure
period and an additional twenty (20) days thereafter, then at such Subscriber’s
election, the Company must pay to such Subscriber ten (10) business days after
request by such Subscriber, at such Subscriber’s election, a sum of money
determined by (i) multiplying up to the outstanding principal amount of the Note
designated by such Subscriber by 110%, or (ii) multiplying the number of Shares
otherwise deliverable upon conversion of an amount of Note principal and/or
interest designated by such Subscriber (with the date of giving of such
designation being a “Deemed
Conversion Date”) by either the Conversion Price that would be in effect
on the Deemed Conversion Date or by the highest closing price of the Common
Stock on the Principal Market for the period commencing on the Deemed Conversion
Date until the day prior to the receipt of the Mandatory Redemption Payment,
whichever is greater; together with accrued but unpaid interest thereon and any
other sums arising and outstanding under the Transaction Documents (“Mandatory Redemption
Payment”). The Mandatory Redemption Payment must be received by such
Subscriber within ten (10) business days after request (“Mandatory Redemption Payment
Date”). Upon receipt of the Mandatory Redemption Payment, the
corresponding Note principal and interest will be deemed paid and no longer
outstanding.  “Change
in Control” shall mean (i) the Company no longer having a class of shares
publicly traded or listed on a Principal Market (as hereinafter defined), (ii)
the Company becoming a Subsidiary of another entity or merging into or with
another entity, (iii) a majority of the board of directors of the Company as of
the Closing Date no longer serving as directors of the Company, except due to
natural causes, or (iv) the sale, lease, license or transfer of substantially
all the assets of the Company and its Subsidiaries.

     

    7.3           Injunction.  In
the event the Subscriber shall elect to convert a Note or part thereof, the
Company may not refuse conversion or exercise based on any claim that such
Subscriber or any one associated or affiliated with such Subscriber has been
engaged in any violation of law, or for any other reason, unless, an injunction
from a court, on notice, restraining and or enjoining conversion of all or part
of such Note shall have been sought and obtained by the Company or at the
Company’s request or with the Company’s assistance

     

    7.4           Buy-In.  In
addition to any other rights available to a Subscriber, if the Company fails to
deliver to such Subscriber such shares issuable upon conversion of a Note by the
Delivery Date and if after seven (7) business days after the Delivery Date such
Subscriber or a broker on such Subscriber’s behalf, purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such Subscriber of the Common Stock which such Subscriber was entitled
to receive upon such conversion (a “Buy-In”), then the Company
shall pay in cash to such Subscriber (in addition to any remedies available to
or elected by such Subscriber) the amount by which (A) such Subscriber’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (B) the aggregate principal and/or interest
amount of the Note for which such conversion was not timely honored, together
with interest thereon at a rate of 3% per annum, accruing until such amount and
any thereon is paid in full (which amount shall be paid as liquidated damages
and not as a penalty).  For example, if such Subscriber purchases
shares of Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of $300 of note principal and/or
interest, the Company shall be required to pay  to such Subscriber,
plus interest. The Subscriber shall provide the Company written notice
indicating the amounts payable to such Subscriber in respect of the
Buy-In.

     

    7.5           Adjustments.  The
Conversion Price, Warrant exercise price and the number of Shares issuable upon
conversion of the Notes and Warrant Shares issuable upon exercise of the
Warrants shall be equitably adjusted and as otherwise described in this
Agreement, the Notes and Warrants.

     

    
      
        
        

      

      
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    7.6           Redemption.  The
Note shall be redeemed with the first draw downs of the Equity Line established
pursuant to the Stock Purchase Agreement, if the Company uses the Equity
Line.

     

    8.           Finder/Legal
Fees.

     

    (a)           Finder.  Except
as set forth on Schedule 8(a) attached hereto, the Company on the one hand, and
each Subscriber (for himself, herself or itself only) on the other hand, agrees
to indemnify the other against and hold the other harmless from any and all
liabilities to any persons claiming brokerage commissions or finder’s fees on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby and arising out of such party’s actions.  The
Company and each Subscriber represents that there are no parties entitled to
receive fees, commissions, or similar payments in connection with the Offering
(as such term is defined below) arising out of such party’s
actions.

     

    (b)           Legal
Fees.  The Company shall pay out of escrow a cash fee of
$25,000 which will include all legal fees associated with both transactions. The
first $10,000 will come out of escrow from the Bridge Loan funds pursuant to the
Note. The remaining $15,000 will come out of the first tranche of the Stock
Purchase Agreement.

     

    9.           Covenants of the
Company.  The Company covenants and agrees with the Subscribers
as follows:

     

    (a)           Stop
Orders.  The Company will advise the Subscribers, within
twenty-four hours after it receives notice of issuance by the Commission, any
state securities commission or any other regulatory authority of any stop order
or of any order preventing or suspending any offering of any securities of the
Company, or of the suspension of the qualification of the Common Stock of the
Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.

     

    (b)           Listing/Quotation.  The
Company shall promptly secure the quotation or listing of the Purchased Shares,
Shares and Warrant Shares upon the Principal Market each national securities
exchange, or automated quotation system upon which they are or become eligible
for quotation or listing (subject to official notice of issuance) and shall
maintain same so long as any Warrants are outstanding.  The Company
will maintain the quotation or listing of its Common Stock on the American Stock
Exchange, Nasdaq Capital Market, Nasdaq Global Select Market, Nasdaq Global
Market, the Bulletin Board, or New York Stock Exchange (whichever of the
foregoing is at the time the principal trading exchange or market for the Common
Stock (the “Principal
Market”)), and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Principal Market,
as applicable. As of the date of this Agreement and the Closing Date, the
Bulletin Board is and will be the Principal Market.

     

    (c)           Market
Regulations.  The Company shall notify the Commission, the
Principal Market and applicable state authorities, in accordance with their
requirements, of the transactions contemplated by this Agreement, and shall take
all other necessary action and proceedings as may berequired and permitted by
applicable law, rule and regulation, for the legal and valid issuance of the
Securities to the Subscribers and promptly provide copies thereof to the
Subscribers.

     

    
      
        
        

      

      
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    (d)           Filing
Requirements.  From the date of this Agreement and until after
the earlier to occur of eighteen (18) months from the Closing Date, (ii) until
all the Shares have been resold or transferred by all the Subscribers pursuant
to a registration statement or pursuant to Rule 144(b)(1)(i), or (iii) the Notes
are no longer outstanding (the date of such latest occurrence being the “End Date”), the Company will
(A) cause its Common Stock to continue to be registered under Section 12(b) or
12(g) of the 1934 Act, (B) comply in all respects with its reporting and filing
obligations under the 1934 Act, (C) voluntarily comply with all reporting
requirements that are applicable to an issuer with a class of shares registered
pursuant to Section 12(g) of the 1934 Act, if the Company is not subject to such
reporting requirements, and (D) comply with all requirements related to any
registration statement filed pursuant to this Agreement.  Until the
End Date, the Company will continue the listing or quotation of the Common Stock
on a Principal Market and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the
Principal Market.  The Company agrees to timely file a Form D with
respect to the Securities if required under Regulation D and to provide a copy
thereof to each Subscriber promptly after such filing.

     

    (e)           Use of
Proceeds.  The proceeds of the Offering must be employed by the
Company for general corporate purposes and working capital.

     

    (f)           Reservation.  Prior
to the Closing, the Company undertakes to reserve, authorized but unissued
Common Stock, a number of common shares equal to 300% of the amount of Common
Stock necessary to allow the holder of the Note to be able to convert all such
outstanding Notes and reserve the amount of Warrant Shares issuable upon
exercise of the Warrants .   Failure to have sufficient shares
reserved pursuant to this Section 9(f) at any time shall be a material default
of the Company’s obligations under this Agreement and an Event of Default under
the Note.

     

    (g)           Taxes.  From
the date of this Agreement and until the End Date, the Company will promptly pay
and discharge, or cause to be paid and discharged, when due and payable, all
lawful taxes, assessments and governmental charges or levies imposed upon the
income, profits, property or business of the Company; provided, however, that
any such tax, assessment, charge or levy need not be paid if the validity
thereof shall be contested in good faith by appropriate proceedings and the
Company..

     

    (h)           Insurance.  From
the date of this Agreement and until the End Date, the Company will keep its
assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in the Company’s line of business, a
co-insurer and not in any event less than one hundred percent (100%) of the
insurable value of the property insured less reasonable deductible amounts; and
the Company will maintain, with financially sound and reputable insurers,
insurance against other hazards and risks and liability to persons and property
to the extent and in the manner customary for companies in similar businesses
similarly situated and to the extent available on commercially reasonable
terms.

     

    (i)           Books and
Records.  From the date of this Agreement and until the End
Date, the Company will keep records and books of account in which entries will
be made of all dealings or transactions in relation to its business and affairs
in accordance with generally accepted accounting principles.

     

    (j)           Governmental
Authorities.  From the date of this Agreement and until the End
Date, the Company shall duly observe and conform in all material respects to all
valid requirements of governmental authorities relating to the conduct of its
business or to its properties or assets ,the failure to do so will not have
Material Adverse Effect..

     

    
      
        
        

      

      
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    (k)           Confidentiality/Public
Announcement.  From the date of this Agreement and until the
End Date, the Company agrees that except in connection with a Form 8-K and the
registration statement or statements regarding the Subscribers’ securities or in
correspondence with the SEC regarding same.

    


     (l)           Negative
Covenants.  So long as a Note is outstanding, without the
consent of the Subscribers, the Company will not and will not permit any of its
Subsidiaries to directly or indirectly:

     

    (i)           Intentionally
Omitted

     

    (i)           repay,
repurchase or offer to repay, repurchase or otherwise acquire or make any
dividend or distribution in respect of any of its Common Stock, preferred stock,
or other equity securities other than to the extent permitted or required under
the Transaction Documents;

     

     (ii)           engage
in any transactions with any officer, director, employee or any Affiliate
(excluding a Subsidiary) of the Company, including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee or partner, in
each case in excess of $100,000 other than (i) for payment of salary and bonuses
or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company, (iii) for other employee benefits, including
stock option agreements under any stock option plan of the Company, and (iv)
pursuant to existing contractual agreements.

     

     Intervening
sections intentionally omitted

     

    (m)  Seniority.  Except
for Permitted Liens and as otherwise provided for herein, until the Notes are
fully satisfied or converted, the Company shall not grant nor allow any security
interest to be taken in the assets of the Company or any Subsidiary; in or to
such assets.

     

    (n)           DTC
Program.  At all times that Notes or Warrants are outstanding,
the Company will employ as the transfer agent for the Common Stock, Shares and
Warrant Shares a participant in the Depository Trust Company Automated
Securities Transfer Program.

     

    10.           Covenants of the Company and
Subscriber Regarding Indemnification.

     

     (a)           Intentionally
Omitted.

     

    11.1.           Piggyback Registration
Rights.  The Company hereby grants the following registration
rights to holders of the Securities.  If the Company at any time
proposes to register any of its securities under the 1933 Act for sale to the
public, whether for its own account or for the account of other security holders
or both, except with respect to registration statements on Forms S-4, S-8 or
another form not available for registering the Purchased Shares and Warrant
Shares (collectively, the “Registrable Securities”) for sale to the public,
provided the Registrable Securities are not otherwise registered for resale by
the Subscribers or Holder pursuant to an effective registration statement, each
such time it will give at least fifteen (15) days' prior written notice to the
record holder of the Registrable Securities of its intention so to do. Upon the
written request of the holder, received by the Company within ten (10) days
after the giving of any such notice by the Company, to register any of the
Registrable Securities not previously registered, the Company will cause such
Registrable Securities as to which registration shall have been so requested to
be included with the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent required to permit the
sale or other disposition of the Registrable Securities so registered by the
holder of such Registrable Securities (the “Seller” or “Sellers”), except to the
extent in an underwritten public offering, the underwritten cuts back the number
of Registrable Securities proposed by the Subscriber. The Seller is hereby given
the same rights and benefits as any other party identified in such
registration.   In the event that any registration pursuant to
this Section 11.1 shall be, in whole or in part, an underwritten public offering
of common stock of the Company, the number of shares of Registrable Securities
to be included in such an underwriting may be reduced by the managing
underwriter if and to the extent that the Company and the underwriter shall
reasonably be of the opinion that such inclusion would adversely affect the
marketing of the securities to be sold by the Company
therein.  Notwithstanding the foregoing provisions, or Section 11.4
hereof, the Company may withdraw or delay or suffer a delay of any registration
statement referred to in this Section 11.1 without thereby incurring any
liability to the Seller due to such withdrawal or delay.

     

    
      
        
        

      

      
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    11.2.           Registration
Procedures.   If and whenever the Company is required by
the provisions of Section 11.1 to effect the registration of any Registrable
Securities under the 1933 Act, the Company will, as expeditiously as
possible:

    


    (a)           subject
to the timelines provided in this Agreement, prepare and file with the
Commission a registration statement required by Section 11, with respect to the
Registrable Securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby (determined as herein provided), and promptly provide to
the holders of the Registrable Securities (i) notice that the Commission has no
comments or no further comments on the Registration Statement, and (ii) the
declaration of effectiveness of the registration statement;

    


    (b)           furnish
to the Sellers, at the Sellers expense, such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or their disposition of the securities covered by
such registration statement;

    


    (c)           use
its best efforts to register or qualify the Registrable Securities covered by
such registration statement under the securities or “blue sky” laws of such
jurisdictions as the Sellers shall request in writing, provided, however, that
the Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction or to subject itself to taxation in any such
jurisdiction;

    


    


    (d)           if
applicable, list the Registrable Securities covered by such registration
statement with any securities exchange on which the Common Stock of the Company
is then listed;

    


    (e)           immediately
notify the Sellers when a prospectus relating thereto is required to be
delivered under the 1933 Act, of the happening of any event of which the Company
has knowledge as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing; and

    


    
      
        
        

      

      
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    11.3.           Provision of
Documents.  In connection with each registration described in
this Section 11, each Seller will furnish to the Company in writing such
information and representation letters with respect to itself and the proposed
distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.

    


    11.4.
Intentionally omitted.

    


    11.5.           Expenses.  All
expenses incurred by the Company in complying with Section 11, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants for the Company,
fees and expenses (including reasonable counsel fees) incurred in connection
with complying with state securities or “blue sky” laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents
and registrars, costs of insurance and fee of one counsel for the Seller are
called “Registration Expenses.” The Company will pay all Registration Expenses
in connection with the registration statement under Section
11.  Selling Expenses in connection with each registration statement
under Section 11 shall be borne by the Seller. The exception to this is the
$25,000 fee,( $10,000 of  which will be paid out of escrow of this
Bridge Loan and the remainder out of the first tranche of the Equity Line, if
utilized), and will cover all of the Subscriber’s costs for the note and equity
line.

    


    11.6.           Indemnification and
Contribution directly

    


    (a)           In
the event of a registration of any of the Registrable Securities under the 1933
Act pursuant to Section 11, the Seller severally but not jointly will, to the
extent permitted by law, indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of the 1933 Act,
each officer of the Company who signs the registration statement, each director
of the Company, each underwriter and each person who controls any underwriter
within the meaning of the 1933 Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Registrable Securities were registered under the 1933 Act
pursuant to Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Seller will be liable hereunder
in any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such Seller, as such, furnished in
writing to the Company by such Seller specifically for use in such registration
statement.

    


    (b)           Promptly
after receipt by an indemnified party hereunder of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified party other
than under this Section 11.6(c) and shall only relieve it from any liability
which it may have to such indemnified party under this Section 11.6(c), except
and only if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel reasonably
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 11.6(c) for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs.

     

    
      
        
        

      

      
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    (c)           In
order to provide for just and equitable contribution in the event of joint
liability under the 1933 Act in any case in which either (i) a Seller, or any
controlling person of a Seller, makes a claim for indemnification pursuant to
this Section 11.6 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 11.6 provides for indemnification in such case, or (ii)
contribution under the 1933 Act may be required on the part of the Seller or
controlling person of the Seller in circumstances for which indemnification is
under this Section 11.6; provided, however, that, in any such case, (y) the
Seller will not be required to contribute any amount in excess of the public
offering price of all such securities sold by it pursuant to such registration
statement; and (z) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.

    


    11.7.           Delivery of Unlegended
Shares.

    


    (a)           Within
three (3) business days (such third business day being the “Unlegended Shares
Delivery Date”) after the business day on which the Company has received (i) a
notice that Purchased Shares or Warrant Shares have been sold pursuant to a
registration statement or Rule 144 under the 1933 Act, (ii) a representation
that the prospectus delivery requirements, or the requirements of Rule 144, as
applicable and if required, have been satisfied, and (iii) the original share
certificates representing the shares of Common Stock that have been sold, and
(iv) in the case of sales under Rule 144, customary representation letters of
the Subscriber and/or Subscriber’s broker regarding compliance with the
requirements of Rule 144, the Company at the expense of the applicable holder ,
(y) shall deliver, and shall cause legal counsel selected by the Company ,or
legal counsel chosen by the Subscriber who is acceptable to the Company, to
deliver to its transfer agent (with copies to Subscriber) an appropriate
instruction and opinion of such counsel, directing the delivery of shares of
Common Stock without any legends including the legend set forth in Section 4
above, (the “Unlegended Shares”); and (z) cause the transmission of the
certificates representing the Unlegended Shares together with a legended
certificate representing the balance of the submitted Purchased Shares or
Warrant Shares certificate, if any, to the Subscriber at the address specified
in the notice of sale, via express courier, by electronic transfer or otherwise
on or before the Unlegended Shares Delivery Date.

    


    (b)           In
lieu of delivering physical certificates representing the Unlegended Shares, if
the Company’s transfer agent is participating in the Depository Trust Company
(“DTC”) Fast Automated Securities Transfer program, upon request of the
Subscriber, so long as the certificates therefore do not bear a legend and the
Subscriber is not obligated to return such certificate for the placement of a
legend thereon, the Company must cause its transfer agent to electronically
transmit the Unlegended Shares by crediting the account of Subscriber’s prime
Broker with DTC through its Deposit Withdrawal Agent Commission
system.  Such delivery must be made on or before the Unlegended Shares
Delivery Date.

    


    (c)           The
Company understands that a delay in the delivery of the Unlegended Shares
pursuant to Section 11 hereof after the Unlegended Shares Delivery Date could
result in economic loss to Subscriber.  As compensation to Subscriber
for such loss.  If during any 360 day period, the Company fails to
deliver Unlegended Shares as required by this Section 11.7 for an aggregate of
thirty (30) days, then each Subscriber or assignee holding Securities subject to
such default may, at its option, require the Company to redeem all or any
portion of the Purchased Shares or Warrant Shares subject to such default at a
price per share equal to 110% of the Purchase Price of such Purchased Shares or
Warrant Shares (“Unlegended Redemption Amount”).

     

    
      
        
        

      

      
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    (d)           In
addition to any other rights available to a Subscriber, if the Company fails to
deliver to a Subscriber Unlegended Shares as required pursuant to this
Agreement, within seven (7) business days after the Unlegended Shares Delivery
Date and the Subscriber or a broker on the Subscriber’s behalf, purchases (in an
open market transaction or otherwise) shares of common stock to deliver in
satisfaction of a sale by such Subscriber of the shares of Common Stock which
the Subscriber was entitled to receive from the Company (a "Buy-In"), then the
Company shall pay in cash to the Subscriber (in addition to any remedies
available to or elected by the Subscriber) the amount by which (A) the
Subscriber's total purchase price (including brokerage commissions, if any) for
the shares of common stock so purchased exceeds (B) the aggregate purchase price
of the shares of Common Stock delivered to the Company for reissuance as
Unlegended.  For example, if a Subscriber purchases shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
$10,000 of Purchase Price of shares of Common Stock delivered to the Company for
reissuance as Unlegended Shares, the Company shall be required to pay the
Subscriber $1,000. The Subscriber shall provide the Company written notice
indicating the amounts payable to the Subscriber in respect of the
Buy-In.

     

     (e)           Maximum Exercise of
Rights.  In the event the exercise of the rights described in
Sections 12(a) or 12(b) would or could result in the issuance of an amount of
Common Stock of the Company that would exceed the maximum amount that may be
issued to a Subscriber calculated in the manner described in Section 7.3 of this
Agreement, then the issuance of such additional shares of Common Stock of the
Company to such Subscriber will be deferred in whole or in part until such time
as such Subscriber is able to beneficially own such Common Stock without
exceeding the applicable maximum amount set forth calculated in the manner
described in Section 7.3 of this Agreement.  The determination of when
such Common Stock may be issued shall be made by each Subscriber as to only such
Subscriber.

     

    13.           14.           Miscellaneous.

     

    (a)           Notices.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable overnight courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation 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 such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received), (b) on the first business day following the date deposited with
an overnight courier service with charges prepaid, or (c) on the third business
day following the date of mailing pursuant to subpart (a)(ii) above, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be provided to each Party at
closing.

     

    
      
        
        

      

      
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    (b)           Entire Agreement;
Assignment.  This Agreement and other documents delivered in
connection herewith represent the entire agreement between the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by both parties.  Neither the Company nor the Subscriber have
relied on any representations not contained or referred to in this Agreement and
the documents delivered herewith.   No right or obligation of the
Company shall be assigned without prior notice to and the written consent of the
Subscribers. The Subscriber shall promptly provide the Company with written
notice of the assignment or delegation of any of its rights or obligations under
this Agreement.

     

    (c)           Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by facsimile transmission.

     

    (d)           Law Governing this
Agreement.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York and New York County without
regard to conflicts of laws principles
that would result in the application of the substantive laws of another
jurisdiction.  Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the civil or state courts of New York or in the federal courts located in the
State of New York.  The parties and the individuals
executing this Agreement and other agreements referred to herein or delivered in
connection herewith on behalf of the Company agree to submit to the jurisdiction
of such courts and waive trial by jury.  The prevailing 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 Agreement or any
other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law.  Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any
agreement.

     

     (e)           Captions: Certain
Definitions.  The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.  As used in this Agreement the term
“person” shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.

     

    (f)           Calendar
Days.  All references to “days” in the Transaction Documents
(as hereinafter defined) shall mean calendar days unless otherwise
stated.  The terms “business days” and “trading days” shall mean days
that the New York Stock Exchange is open for trading for three or more
hours.  Time periods shall be determined as if the relevant action,
calculation or time period were occurring in New York City.

     

    (g)           Severability.  In
the event that any term or provision of this Agreement shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by an authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality or
enforceability: (i) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (ii) by or before any other authority of any
of the terms and provisions of this Agreement.

     

    


    
      
        
        

      

      
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    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT (A)

     

     

    


     

    Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

    


    Marani
Brands, Inc.

    


    


                                                                            By:                                                    


    Name:
Margrit Eyraud

    Title:   Chief
Executive Officer

    


    Dated:
February 1, 2010

    


    


    
      	
              SUBSCRIBER

            	
              PURCHASE
      PRICE AND PRINCIPAL AMOUNT OF NOTE

            	
              PURCHASED
      SHARES

            	
              CLASS
      A WARRANTS

            	
              CLASS
      B WARRANTS

            
	
              Name
      of Subscriber:

               

              ____________________________________

               

              Address:
      _____________________________

               

              ____________________________________

               

              Fax
      No.: ______________________________

               

              Taxpayer
      ID# (if applicable): ____________

               

               

              ____________________________________

              (Signature)

              By:

               

            	 
      	 
      	 
      	 
      


    

     

    
 

    
      
        
        

      

      
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