Unassociated Document


    


    EXIBIT
      10.20

    

      Form
        of the 6 % Original Issue Discount Senior Secured Note 

      dated
        September 24, 2007

       

    

    
    

    
      
        
        

      

      
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    Execution
      Copy

    


    THIS
      6%
      ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE NOTE (THIS
“NOTE”) AND
      THE
      SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE
      NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
      OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE OR SOLD UNLESS
      A
      REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
      SHALL
      BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER
      THE
      SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
      WITH SUCH OFFER OR SALE. THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION
      HEREOF
      (I) MAY BE PLEDGED OR HYPOTHECATED IN CONNECTION WITH A BONA FIDE MARGIN LOAN
      OR
      OTHER FINANCING SECURED BY SUCH SECURITIES OR (II) MAY BE TRANSFERRED OR
      ASSIGNED TO AN AFFILIATE OF THE HOLDER HEREOF WITHOUT THE NECESSITY OF AN
      OPINION OF COUNSEL OR THE CONSENT OF THE ISSUER HEREOF.

    


    THE
      OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE
      MAY
      BE LESS THAN THE PRINCIPAL AMOUNT SHOWN BELOW BECAUSE (I) THE PRINCIPAL AMOUNT
      OF THIS NOTE WILL ACCRETE IN VALUE FROM THE DATE HEREOF, AND (II) THIS NOTE
      DOES
      NOT REQUIRE PHYSICAL SURRENDER HEREOF IN ORDER TO EFFECT A PARTIAL PAYMENT,
      REDEMPTION OR CONVERSION HEREOF.

     

    MANARIS
      CORPORATION

     

    6%
      ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE NOTE

     

    
      	Issue
              Date: September 24,
              2007	 	$	$4,708,900	 


    

    


    FOR
      VALUE RECEIVED, MANARIS
      CORPORATION, a
      Nevada
      corporation (the
      “Company”),
      hereby promises to pay to the order of IMPERIUM MASTER FUND, LTD. or its
      permitted successors or assigns (the “Holder”)
      the
      sum of up to FOUR MILLION SEVEN HUNDRED EIGHT THOUSAND NINE HUNDRED AND 00/100
      DOLLARS ($4,708,900) in same day funds, on or before September 1, 2012 (the
      “Maturity
      Date”).
      The
      Holder may convert the principal of this Note into shares (“Conversion
      Shares”)
      of the
      Company’s common stock, par value $0.00001 per share (the “Common
      Stock”),
      on
      the terms set forth herein.

    


    Except
      as
      specifically provided by the terms of Section
      5,
      and the
      Scheduled Principal Payments contemplated in Section
      2(a),
      the
      Company shall not have the right to prepay any principal of this
      Note.

     

    
      
        
        

      

      
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    The
      Company’s obligations under this Note, including, without limitation, its
      obligation to make payments of principal and interest, are guaranteed by the
      Company’s subsidiaries and secured by the assets and properties of the Company
      and its subsidiaries.

    


    The
      Company has issued this Note pursuant to a Securities Purchase and Loan
      Agreement, dated as of the Issue Date (the “Loan
      Agreement”),
      between the Company and the original purchaser of this Note. If this Note is
      partially assigned and divided into two or more notes, such additional notes
      along with the remainder of this Note are collectively referred to herein as
      the
“Notes”.
      

    


    1. DEFINITIONS.

    


    (a) Defined
      Terms.
      The
      following terms shall apply to this Note:

     

    “Assumed
      Variable Market Price” has
      the
      meaning set forth in Section
      4(e)(ii)(B)
      of this
      Note.

     

    “Cap
      Amount”
means
      $4,000,000.

    


    “Change
      of Control”
means
      the existence, occurrence or public announcement of, or entering into an
      agreement contemplating, any of the following: (a) the sale, conveyance or
      disposition of more than twenty-five percent (25%) of the assets of the Company,
      (b) the effectuation of a transaction or series of transactions in which more
      than fifty percent (50%) of the voting power of the Company is transferred
      or
      otherwise disposed of; (c) the effectuation of a transaction or series of
      transactions in which any of the voting power of any Company Subsidiary is
      transferred or otherwise disposed to a Person other than the Company or another
      Company Subsidiary; (d) the consolidation, merger or other business combination
      of the Company with or into any other entity, immediately following which the
      prior stockholders of the Company fail to own, directly or indirectly, at least
      seventy-five percent (75%) of the surviving entity; (e) the consolidation,
      merger or other business combination of any Company Subsidiary with or into
      any
      other entity other than the Company or another Company Subsidiary; (f) a
      transaction or series of transactions in which any Person or group acquires
      more
      than fifty percent (50%) of the voting equity of the Company; (g) a transaction
      or series of transactions in which any Person or group (other than the Company
      or a Company Subsidiary) acquires any of the voting equity of a Company
      Subsidiary; and (h) the Continuing Directors do not at any time constitute
      at
      least a majority of the Board of Directors.

    


    “Common
      Stock”
has
      the
      meaning set forth in the preamble
      to this
      Note.

    


    “Company”
has
      the
      meaning set forth in the preamble
      to this
      Note.

    


    “Continuing
      Director”
means,
      at any date, a member of the Company’s Board of Directors (i) who was a member
      of such board on the Issue Date or (ii) who was nominated or elected by at
      least
      a majority of the directors who were Continuing Directors at the time of such
      nomination or election or whose election to the Company’s Board of Directors was
      recommended or endorsed by at least a majority of the directors who were
      Continuing Directors at the time of such nomination or election or such lesser
      number comprising a majority of a nominating committee if authority for such
      nominations or elections has been delegated to a nominating committee whose
      authority and composition have been approved by at least a majority of the
      directors who were Continuing Directors at the time such committee was
      formed.

     

    
      
        
        

      

      
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    “Conversion”
has
      the
      meaning set forth in Section
      3(a)
      of this
      Note.

     

    “Conversion
      Date”
has
      the
      meaning set forth in Section
      3(b)
      of this
      Note.

     

    “Conversion
      Default”
has
      the
      meaning set forth in Section
      3(e)
      of this
      Note.

     

    “Conversion
      Notice”
has
      the
      meaning set forth in Section
      3(b)
      of this
      Note.

     

    “Conversion
      Price”
      means $0.11,
      subject to adjustment as provided herein.

     

    “Convertible
      Securities” means
      any
      stock or securities (other than Options) of the Company convertible into or
      exercisable or exchangeable for Common Stock.

     

    “Default
      Interest Rate”
means
      the lower of eighteen percent (18%) and the maximum rate permitted by applicable
      law or by the applicable rules or regulations of any governmental agency or
      of
      any stock exchange or other self-regulatory organization having jurisdiction
      over the Company or the trading of its securities.

    


    “Delivery
      Date”
has
      the
      meaning set forth in Section
      3(d)
      of this
      Note.

    


    “Determination
      Date”
has
      the
      meaning set forth in Section
      4(c)
      of this
      Note.

    


    “Dilutive
      Issuance”
has
      the
      meaning set forth in Section
      4(e)(i)
      of this
      Note.

    


    “Dispute
      Procedure”
has
      the
      meaning set forth in Section
      3(b)
      of this
      Note.

    


    “Distribution,”
      “Distribution
      Date”
and
      “Distribution
      Notice”
have
      the respective meanings set forth in Section
      4(c)
      of this
      Note.

    


    “DTC”
has
      the
      meaning set forth in Section
      3(d)
      of this
      Note.

    


    “Event
      of Default”
means
      the occurrence of any of the following events: 

     

    (i) a
      Liquidation Event occurs or is publicly announced;

     

    (ii) the
      Company fails to make any payment of principal or interest on this Note in
      full
      as and when such payment is due, and such payment remains unpaid for two (2)
      Business Days; 

     

    (iii)
       other
      than a breach described in clause
      (ii)
      above,
      the Company breaches or provides notice of its intent to breach any material
      covenant, agreement or condition of this Note, the Loan Agreement, the Security
      Documents, the Warrant or the Registration Rights Agreement (including, without
      limitation, the occurrence of a Conversion Default, an Exercise Default (as
      defined in the Warrants) or a Registration Default (as defined in the
      Registration Rights Agreement); and such breach continues for a period of five
      (5) Business Days following written notice thereof from the Holder;

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    (iv) any
      representation or warranty made by the Company in this Note, the Loan Agreement,
      the Warrant or the Registration Rights Agreement was inaccurate or misleading
      in
      any material respect as of the date such representation or warranty was made;
      or

     

    (v) a
      default
      occurs or is declared, or any amounts are accelerated, under or with respect
      to
      any instrument that evidences Debt of the Company or any of its Subsidiaries
      in
      a principal amount exceeding $100,000 (including, without limitation, any of
      the
      other Notes).

     

    “FAST”
has
      the
      meaning set forth in Section
      3(d)
      of this
      Note.

    


    “Holder”
has
      the
      meaning set forth in the preamble
      to this
      Note.

     

    “Interest”
has
      the
      meaning set forth in Section
      2(b)
      of this
      Note.

    


    “Issue
      Date”
means
      the “Issue Date” stated on the front page of this Note.

    


    “Liquidation
      Event”
means
      where (i) the Company or any Company Subsidiary shall make a general assignment
      for the benefit of creditors or consent to the appointment of a receiver,
      liquidator, custodian, or similar official of all or substantially all of its
      properties, or any such official is placed in control of such properties, or
      the
      Company or any Company Subsidiary shall commence any action or proceeding or
      take advantage of or file under any federal or state insolvency statute,
      including, without limitation, the United States Bankruptcy Code, seeking to
      have an order for relief entered with respect to it or seeking adjudication
      as a
      bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
      liquidation, dissolution, administration, a voluntary arrangement, or other
      relief with respect to it or its debts; or (ii) there shall be commenced against
      the Company or any Company Subsidiary any action or proceeding of the nature
      referred to in clause
      (i)
      above or
      seeking issuance of a warrant of attachment, execution, distraint, or similar
      process against all or any substantial part of its property, which results
      in
      the entry of an order for relief which remains undismissed, undischarged or
      unbonded for a period of sixty (60) days; or (iii) there is initiated the
      dissolution or other winding up of the Company or
      any
      material Company Subsidiary,
      whether
      voluntary or involuntary and whether or not involving insolvency or bankruptcy
      proceedings; or (iv) there is initiated any assignment for the benefit of
      creditors or any marshalling of the material assets or material liabilities
      of
      the Company
      or any
      Company Subsidiary.

    


    “Major
      Transaction”
means
      the existence, occurrence or public announcement of, or entering into an
      agreement contemplating, a merger, consolidation, business combination, tender
      offer, exchange of shares, recapitalization, reorganization, redemption or
      other
      similar event, as a result of which shares of Common Stock shall be changed
      into, or exchanged or tendered for, the same or a different number of shares
      of
      the same or another class or classes of stock or securities or other assets
      of
      the Company or another entity.

     

    
      
        
        

      

      
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    “Mandatory
      Redemption,”
      “Mandatory
      Redemption Date”
and
      “Mandatory
      Redemption Notice”
have
      the respective meanings set forth in Section
      5(a)
      of this
      Note.

    


    “Mandatory
      Redemption Price”
means,
      with respect to a Mandatory Redemption, the greater of:

    


    (A)
      the
      sum of (x) one hundred twenty percent (120%) of the unpaid principal amount
      of
      this Note being redeemed if such Mandatory Redemption is being effectuated
      in
      connection with an Event of Default or Major Transaction (or one hundred ten
      percent (110%) of the unpaid principal amount of this Note being redeemed if
      such Mandatory Redemption is being effectuated in connection with a Change
      of
      Control) plus
      (y) all
      accrued and unpaid Interest (including default interest) thereon; and


    


    (B)
      the
      product of (x) the quotient of (i) the unpaid principal amount of this Note
      being redeemed plus
      all
      accrued and unpaid Interest (including default interest) thereon divided
      by (ii)
      the
      Conversion Price in effect on the applicable Mandatory Redemption Date
multiplied
      by
      (y) the
      greater of (i) the Market Price calculated as of the date on which the
      applicable Mandatory Redemption Notice is delivered and (ii) the
      VWAP
      for the Trading Day occurring immediately prior to the Mandatory Redemption
      Date.

    


    “Market
      Price”
means,
      as of a particular date, the highest daily VWAP during the period of twenty
      (20)
      consecutive Trading Days occurring immediately prior to (but not including)
      such
      date.

    


    “Maturity
      Date”
has
      the
      meaning set forth in the preamble
      to this
      Note.

    


    “Options”
means
      any rights, warrants or options to subscribe for, purchase or receive Common
      Stock or Convertible Securities.

    


    “Purchase
      Rights”
means
      any options, warrants or other rights to purchase or subscribe for Common Stock
      or Convertible Securities.

    


    “Record
      Date”
has
      the
      meaning set forth in Section
      4(c)
      of this
      Note.

    


    “Scheduled
      Monthly Payment Date”
means
      October 1, 2009 and the first day of each calendar month thereafter,
provided,
      that if
      any of such days in any year is not a Business Day, then the Scheduled Monthly
      Payment Date shall be the Business Day immediately following such date.


    


    “VWAP”
on
      a
      Trading Day means the volume weighted average price of the Common Stock for
      such
      Trading Day on the Principal Market as reported by Bloomberg Financial Markets
      or, if Bloomberg Financial Markets is not then reporting such prices, by a
      comparable reporting service of national reputation selected by the Holders
      and
      reasonably satisfactory to the Company. 

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    (b) Terms
      Defined in the Loan Agreement.
      Any
      capitalized term used but not defined herein has the meaning specified in the
      Loan Agreement.

    


    (c) Usage. 
      All
      definitions contained in this Note are equally applicable to the singular and
      plural forms of the terms defined. The words “hereof”, “herein” and “hereunder”
and words of similar import refer to this Note as a whole and not to any
      particular provision of this Note.

    


    2. PRINCIPAL;
      INTEREST; SCHEDULED PAYMENTS.
      

    


    (a) Accretion
      of Principal.
      During
      the period commencing on the Issue Date and ending on the two year anniversary
      of the Issue Date (the “Accretion
      Period”),
      the
      outstanding principal of this Note shall accrete in value at an annual rate
      equal to eight and one-half percent (8.5%), computed on the basis of a 360-day
      year and calculated using the actual number of days elapsed since the Issue
      Date. Assuming no principal of this Note is converted or prepaid prior to the
      expiration of the Accretion Period, the outstanding principal of this Note
      shall
      accrete in accordance with the following schedule:

    


    
      	
              September
                24, 2007

            	 	
              $

            	
              4,000,000.00

            	 
	
              October
                24, 2007

            	 	 	
              4,028,333.33

            	 
	
              November
                24, 2007

            	 	 	
              4,056,666.67

            	 
	
              December
                24, 2007

            	 	 	
              4,085,000.00

            	 
	
              January
                24, 2008

            	 	 	
              4,113,333.33

            	 
	
              February
                24, 2008

            	 	 	
              4,141,666.66

            	 
	
              March
                24, 2008

            	 	 	
              4,169,999.99

            	 
	
              April
                24, 2008

            	 	 	
              4,198,333.32

            	 
	
              May
                24, 2008

            	 	 	
              4,226,666.65

            	 
	
              June
                24, 2008

            	 	 	
              4,254,999.98

            	 
	
              July
                24, 2008

            	 	 	
              4,283,333.31

            	 
	
              August
                24, 2008

            	 	 	
              4,311,666.64

            	 
	
              September
                24, 2008

            	 	 	
              4,340,000.00

            	 
	
              October
                24, 2008

            	 	 	
              4,370,741.67

            	 
	
              November
                24, 2008

            	 	 	
              4,401,483.34

            	 
	
              December
                24, 2008

            	 	 	
              4,432,225.01

            	 
	
              January
                24, 2009

            	 	 	
              4,462,966.68

            	 
	
              February
                24, 2009

            	 	 	
              4,493,708.35

            	 
	
              March
                24, 2009

            	 	 	
              4,524,450.02

            	 
	
              April
                24, 2009

            	 	 	
              4,555,191.69

            	 
	
              May
                24, 2009

            	 	 	
              4,585,933.36

            	 
	
              June
                24, 2009

            	 	 	
              4,616,675.03

            	 
	
              July
                24, 2009

            	 	 	
              4,647,416.80

            	 
	
              August
                24, 2009

            	 	 	
              4,678,158.37

            	 
	
              September
                24, 2009

            	 	 	
              4,708,900.00

            	 


    

     

    
      
        
        

      

      
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    (b) Interest.
      Commencing immediately upon the expiration of the Accretion Period, this Note
      shall bear interest on the unpaid principal amount hereof (“Interest”)
      at an
      annual rate equal to six percent (6%), computed on the basis of a 360-day year
      and calculated using the actual number of days elapsed since and including
      the
      day immediately following the expiration of the Accretion Period or the date
      on
      which Interest was most recently paid, as the case may be, and if not timely
      paid as provided herein, compounded monthly. 

    


    (c) Scheduled
      Monthly Payments; Payment of Interest.
      The
      Company shall pay to the Holder, in cash, on each Scheduled Monthly Payment
      Date, an amount equal to the sum of (i) the lesser of (x)
      $130,802.78 and
      (y)
      the then total remaining unpaid principal of this Note plus
      (ii)
      all
      accrued and unpaid Interest. In addition to the Scheduled Monthly Payment Dates,
      the Company shall pay accrued and unpaid Interest (x) on the Maturity Date
      and
      (y) on any other date on which all or any portion of the principal amount of
      this Note is payable (whether through conversion or otherwise).

    


    (d) Method
      of Payments.
      The
      Company shall make all cash payments required under this Note by
      wire
      transfer of immediately available funds. 

    


    (e) Default
      Interest.
      All
      amortization payments, payments of Interest and any other payments required
      under this Note that are not paid as and when due in accordance with this Note
      shall bear interest until paid at the Default Interest Rate.

    


    3. CONVERSION.
      

     

    (a) Right
      to Convert.
      The
      Holder shall have the right, subject to the limitations described in
Section
      3(f),
      at any
      time and from time to time, to convert all or any part of the outstanding and
      unpaid principal amount of this Note into such number of fully paid and
      non-assessable Conversion Shares as is determined in accordance with the terms
      hereof (a “Conversion”).
      The
      Company may not refuse any conversion request by the Holder for any reason
      or no
      reason unless and until the Company obtains an injunction and posts bond with
      respect thereto.

     

    (b)
       Conversion
      Notice.
      In
      order to convert principal of this Note, the Holder shall send by facsimile
      transmission (followed by a telephonic or email confirmation that such facsimile
      was sent), at any time prior to 5:00 p.m., New York City time, on the Business
      Day on which the Holder wishes to effect such Conversion (the “Conversion
      Date”),
      a
      properly completed notice of conversion to the Company, in the form set forth
      on
Annex
      I
      hereto,
      stating the amount of principal to be converted and a calculation of the number
      of shares of Common Stock issuable upon such Conversion (a “Conversion
      Notice”).
      Subject
      to Section
      6(d),
      the
      Conversion Notice shall also state the name or names (with address) in which
      the
      shares of Common Stock that are issuable on such Conversion shall be issued.
      The
      Holder shall not be required to physically surrender this Note to the Company
      in
      order to effect a Conversion. The Company shall maintain a record showing,
      at
      any given time, the unpaid principal amount of this Note and the date of each
      Conversion or other payment of principal hereof. In the case of a dispute as
      to
      the number of Conversion Shares issuable upon a Conversion (including, without
      limitation, as a result of adjustments to the Conversion Price made in
      accordance with Section
      4
      below),
      the Company shall promptly issue to the Holder the number of Conversion Shares
      that are not disputed, the Company and the Holder shall provide each other
      with
      their respective calculations, and the Company shall submit the disputed
      calculations to a certified public accounting firm of national recognition
      (other than the Company’s independent accountants) within two (2) Business Days
      following the later of the date on which the Holder delivers its calculations
      to
      the Company and the receipt of the Holder’s Conversion Notice. The Company shall
      use its best efforts to cause such accountants to calculate the Conversion
      Price
      as provided herein and to notify the Company and the Holder of the results
      in
      writing no later than two (2) Business Days following the day on which such
      accountant received the disputed calculations (the “Dispute
      Procedure”).
      Such
      accountant’s calculation shall be deemed conclusive absent manifest error. The
      fees of any such accountant shall be borne by the party whose calculations
      are
      most at variance with those of such accountant.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    (c) Number
      of Conversion Shares; Reduction of Principal.
      The
      number of Conversion Shares to be delivered by the Company pursuant to a
      Conversion shall be equal to the principal amount of this Note being
      converted divided
      by
      the
      Conversion Price in effect on the Conversion Date.
      Upon the
      valid delivery of the Conversion Shares by the Company, the amounts subject
      to
      such Conversion shall be credited towards the principal amount of this
      Note, provided
      that all
      amounts credited towards future payments of principal shall be credited in
      the
      order that such principal payments are to become due and payable. 

     

    (d) Delivery
      of Common Stock Upon Conversion.
      The
      Company shall, no later than the close of business on the third (3rd) Business
      Day following the Conversion Date (the “Delivery
      Date”),
      issue
      and deliver or cause to be delivered to the Holder the number of Conversion
      Shares determined pursuant to Section
      3(c)
      above;
provided,
      however,
      that
      any Conversion Shares that are the subject of a Dispute Procedure shall be
      delivered no later than the close of business on the third (3rd) Business Day
      following the resolution of such dispute in accordance with this Note.
The
      Company shall effect delivery of Conversion Shares to the Holder, as long as
      the
      Transfer Agent participates in the Depository Trust Company (“DTC”)
      Fast
      Automated Securities Transfer program (“FAST”),
      by
      crediting the account of the Holder or its nominee at DTC (as specified in
      the
      applicable Conversion Notice) with the number of Conversion Shares required
      to
      be delivered, no later than the close of business on such Delivery Date. In
      the
      event that the Transfer Agent is not a participant in FAST or if the Holder
      so
      specifies in a Conversion Notice or otherwise in writing on or before the
      Conversion Date, the Company shall effect delivery of Conversion Shares by
      delivering to the Holder or its nominee physical certificates representing
      such
      Conversion Shares, no later than the close of business on such Delivery Date.
      If
      any
      Conversion would create a fractional Conversion Share, such fractional
      Conversion Share shall be disregarded and the number of Conversion Shares
      issuable upon such Conversion, in the aggregate, shall be the nearest whole
      number of Conversion Shares. Conversion Shares delivered to the Holder shall
      not
      contain any restrictive legend unless such legend is required pursuant to the
      terms of the Loan Agreement.

     

    (e) Failure
      to Deliver Conversion Shares.
      If the
      Company fails for any reason to (x) deliver to the Holder the number of
      Conversion Shares specified in a Conversion Notice (without any restrictive
      legend if so required under the Loan Agreement) on or before the Delivery Date
      therefor, or (y) remove any restrictive legend from outstanding Conversion
      Shares at the request of the Holder in accordance with the Loan Agreement on
      or
      before the third (3rd) Business Day following such request (each of the defaults
      described in the preceding clauses
      (x)
      and
(y),
      a
“Conversion
      Default”),
      the
      Holder shall have the right to receive from the Company an amount equal to
      (A)
      (N/365) multiplied
      by
      (B) the
      principal amount of this Note represented by the Conversion Shares which remain
      the subject of such Conversion Default multiplied
      by
      (C) the
      Default Interest Rate, where “N” equals the number of days elapsed between the
      date on which such Conversion Shares were to be delivered (or date on which
      the
      restrictive legend was to be removed from such Conversion Shares) and the date
      on which such Conversion Default has been cured. Amounts
      payable pursuant to the preceding sentence shall
      be
      paid to the Holder in immediately available funds on or before the second (2nd)
      Business Day following written notice from the Holder to the Company specifying
      the amount owed to it by the Company.
      In the
      event that shares of Common Stock are purchased by or on behalf of the Holder
      in
      order to
      make
      delivery on a sale effected in anticipation of receiving Conversion Shares
      upon
      a Conversion (or having the restrictive legend removed from outstanding
      Conversion Shares), and there is a Conversion Default with respect thereto,
      the
      Holder shall have the right to receive from the Company, in addition to the
      foregoing amounts, (1) the aggregate amount paid by or on behalf of the Holder
      for such shares of Common Stock minus
      (2) the
      aggregate amount of net proceeds, if any, received by the Holder from the sale
      of such Conversion Shares as and when such shares are delivered by the Company
      to the Holder. In addition to the foregoing rights, the Holder shall have the
      right to pursue all other remedies available to it at law or in equity
      (including, without limitation, a decree of specific performance and/or
      injunctive relief). 

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    (f) Limitations
      on Right to Convert.
      

    


    (i) In
      no
      event shall the Holder be permitted to convert principal of this Note if, upon
      such conversion, (x) the number of Conversion Shares to be issued pursuant
      to
      such Conversion plus
      (y) the
      number of shares of Common Stock beneficially owned by the Holder (other than
      Common Stock which may be deemed beneficially owned except for being subject
      to
      a limitation on conversion or exercise analogous to the limitation contained
      in
      this Section
      3(f)(i))
      would
      exceed 9.9% of the number of shares of Common Stock then issued and outstanding,
      it being the intent of the Company and the Holder that the Holder not be deemed
      at any time to have the power to vote or dispose of greater than 9.9% of the
      number of shares of Common Stock issued and outstanding at any time. Nothing
      contained herein shall be deemed to restrict the right of the Holder to convert
      such excess principal amount at such time as such Conversion does not violate
      the provisions of this Section
      3(f)(i).
      As
      used
      herein, beneficial ownership shall be determined in accordance with Section
      13(d) of the Exchange Act. The holders of Common Stock are to be deemed
      third-party beneficiaries of the limitation imposed hereby and, accordingly,
      this Section
      3(f)(i)
      may not
      be amended without the consent of the holders of a majority of the shares of
      Common Stock then outstanding; provided,
      however,
      that
      the Holder shall have the right, upon sixty (60) days’ prior written notice to
      the Company, to waive the provisions of this Section
      3(f)(i)
      without
      obtaining such consent.

    


    (ii) The
      Holder acknowledges and agrees that the aggregate amount of principal of this
      Note that may be converted into Common Stock may not exceed the Cap Amount.
      In
      the event that the Holder shall sell or otherwise transfer any portion of this
      Note, the then remaining portion of the Cap Amount shall be allocated between
      the Holder and its transferee pro
      rata
      in
      proportion to the aggregate number of Conversion Shares issuable under the
      portion of this Note so transferred and retained.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    4. ADJUSTMENTS
      TO CONVERSION PRICE.

    


    (a) Stock
      Splits, Stock Interests, Etc.
      If, at
      any time on or after the Issue Date, the number of outstanding shares of Common
      Stock is increased by a stock split, stock dividend, reclassification or other
      similar event, the Conversion Price shall be proportionately reduced, or if
      the
      number of outstanding shares of Common Stock is decreased by a reverse stock
      split, combination, reclassification or other similar event, the Conversion
      Price shall be proportionately increased. 

     

    (b) Major
      Transactions.
      If, at
      any time after the Issue Date, any Major Transaction shall occur, then the
      Holder shall thereafter have the right to receive upon Conversion, in lieu
      of
      the shares of Common Stock otherwise issuable, such shares of stock, securities
      and/or other property as would have been issued or payable upon such Major
      Transaction with respect to or in exchange for the number of shares of Common
      Stock which would have been issuable upon Conversion had such Major Transaction
      not taken place (without giving effect to any limitations on such Conversion
      contained in this Note or the Loan Agreement). The Company shall not effect
      any
      Major Transaction unless (i) subsequent
      to the public disclosure by the Company of such Major Transaction, the
Holder
      has been given written notice of such transaction by the earlier of (x) the
      date
      that is thirty (30) days (sixty one (61) days if, without giving effect to
      the
      limitation on conversion contained in Section
      3(f)(i),
      the
      Holder would beneficially owns more than 9.9% of the Common Stock then
      outstanding) prior to the date on which such transaction is consummated, and
      (y)
      the date that is fifteen (15) days prior to the record date for the
      determination of the Company’s stockholders entitled to vote with respect to
      such transaction, and (ii) the resulting successor or acquiring entity (if
      not
      the Company) assumes by written instrument (in form and substance reasonably
      satisfactory to the Holder) the obligations of the Company under this Note
      (including, without limitation, the obligation to make payments of principal
      and
      Interest accrued but unpaid through the date of such consolidation, merger
      or
      sale and accruing thereafter). The above provisions shall apply regardless
      of
      whether or not there would have been a sufficient number of shares of Common
      Stock authorized and available for issuance upon conversion of this Note as
      of
      the date of such transaction, and shall similarly apply to successive Major
      Transactions. Notwithstanding the foregoing, the Holder may, in lieu of
      exercising its rights under this Section
      4(b),
      exercise its rights under Section
      5
      of this
      Note.

     

    (c) Distributions.
      If, at
      any time after the Issue Date, the Company declares or makes any distribution
      of
      cash or any other assets (or rights to acquire such assets) to holders of Common
      Stock, including without limitation any dividend or distribution to the
      Company’s stockholders in shares (or rights to acquire shares) of capital stock
      of a subsidiary) (a “Distribution”),
      the
      Company shall deliver written notice of such Distribution (a “Distribution
      Notice”)
      to the
      Holder at least fifteen (15) days prior to the earlier to occur of (i) the
      record date for determining stockholders entitled to such Distribution (the
      “Record
      Date”)
      and
      (ii) the date on which such Distribution is made (the “Distribution
      Date”)
      (the
      earlier of such dates being referred to as the “Determination
      Date”).
      Upon
      receipt of the Distribution Notice, the Holder shall promptly (but in no event
      later than three (3) Business Days) notify the Company whether it has elected
      (A) to receive the same amount and type of assets (including, without
      limitation, cash) being distributed as though the Holder were, on the
      Determination Date, a holder of a number of shares of Common Stock into which
      this Note is convertible as of such Determination Date (such number of shares
      to
      be determined without giving effect to any limitations on such conversion)
      or
      (B) upon any exercise of this Note on or after the Distribution Date, to reduce
      the Conversion Price in effect on the Business Day immediately preceding the
      Record Date by an amount equal to the fair market value of the assets to be
      distributed divided
      by
      the
      number of shares of Common Stock as to which such Distribution is to be made,
      such fair market value to be reasonably determined in good faith by the Board
      of
      Directors and reasonably acceptable to the Holder. Upon receipt of such election
      notice from the Holder, the Company shall timely effectuate the transaction
      or
      adjustment contemplated in the foregoing clause
      (A) or
      (B),
      as
      applicable. 
      If the
      Holder does not notify the Company of its election pursuant to the preceding
      sentence on or prior to the Determination Date, the Holder shall be deemed
      to
      have elected clause
      (A)
      of the
      preceding sentence.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    (d) Convertible
      Securities; Options.
      If, at
      any time after the Issue Date, the Company issues Convertible Securities or
      Options to the record holders of the Common Stock, whether or not such
      Convertible Securities or Options are immediately convertible, exercisable
      or
      exchangeable, then the Holders shall be entitled, upon any Conversion of this
      Note after the date of record for determining stockholders entitled to receive
      such Convertible Securities or Options (or if no such record is taken, the
      date
      on which such Convertible Securities or Options are issued), to receive the
      aggregate number of Convertible Securities or Options which the Holder would
      have received with respect to the shares of Common Stock issuable upon such
      conversion (without giving effect to any limitations on such Conversion
      contained in this Note or the Loan Agreement) had the Holder been the holder
      of
      such shares of Common Stock on the record date for the determination of
      stockholders entitled to receive such Convertible Securities or Options (or
      if
      no such record is taken, the date on which such Convertible Securities or
      Options were issued). 

     

    (e) Dilutive
      Issuances.

     

    (i) Adjustment
      Upon Dilutive Issuance.
      If the
      Company issues or sells, or in accordance with Section
      4(e)(ii)
      of this
      Note is deemed to have issued or sold, any shares of Common Stock for no
      consideration or for a consideration per share less than the Conversion Price
      in
      effect on the date of such issuance or sale (or deemed issuance or sale) (a
      “Dilutive
      Issuance”),
      then
      effective immediately upon such Dilutive Issuance, the Conversion Price shall
      be
      adjusted so as to equal the consideration received or receivable by the Company
      (on a per share basis) for the additional shares of Common Stock so issued,
      sold
      or deemed issued or sold in such Dilutive Issuance (which, in the case of a
      deemed issuance or sale, shall be calculated in accordance with Section
      4(e)(ii)
      of this
      Note). Notwithstanding the foregoing, no adjustment shall be made pursuant
      hereto if such adjustment would result in an increase in the Conversion
      Price.

     

    (ii) Effect
      On Conversion Price Of Certain Events.
      For
      purposes of determining the adjusted Conversion Price under Section
      4(e)(i) of
      this
      Note, the following will be applicable:

     

    (A) Issuance
      Of Options.
      If the
      Company issues or sells any Options, whether or not immediately exercisable,
      and
      the price per share for which Common Stock is issuable upon the exercise of
      such
      Options (and the price of any conversion of Convertible Securities, if
      applicable) is less than the Conversion Price in effect on the date of issuance
      or sale of such Options, then the maximum total number of shares of Common
      Stock
      issuable upon the exercise of all such Options (assuming full conversion,
      exercise or exchange of Convertible Securities, if applicable) shall, as of
      the
      date of the issuance or sale of such Options, be deemed to be outstanding and
      to
      have been issued and sold by the Company for such price per share. For purposes
      of the preceding sentence, the “price per share for which Common Stock is
      issuable upon the exercise of such Options” shall be determined by dividing
      (x) the
      total amount, if any, received or receivable by the Company as consideration
      for
      the issuance or sale of all such Options, plus
      the
      minimum aggregate amount of additional consideration, if any, payable to the
      Company upon the exercise of all such Options, plus,
      in the
      case of Convertible Securities issuable upon the exercise of such Options,
      the
      minimum aggregate amount of additional consideration payable upon the
      conversion, exercise or exchange thereof (determined in accordance with the
      calculation method set forth in Section
      4(e)(ii)(B)
      below)
      at the time such Convertible Securities first become convertible, exercisable
      or
      exchangeable, by (y) the maximum total number of shares of Common Stock issuable
      upon the exercise of all such Options (assuming full conversion, exercise or
      exchange of Convertible Securities, if applicable). No further adjustment to
      the
      Conversion Price shall be made upon the actual issuance of such Common Stock
      upon the exercise of such Options or upon the conversion, exercise or exchange
      of Convertible Securities issuable upon exercise of such Options.
      To the
      extent that shares of Common Stock or Convertible Securities are not delivered
      pursuant to such Options, upon the expiration or termination of such Options,
      the Conversion Price shall be readjusted to the Conversion Price that would
      then
      be in effect had the adjustments made upon the issuance of such Options been
      made on the basis of delivery of only the number of shares of Common Stock
      actually delivered.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    (B) Issuance
      Of Convertible Securities.
      If the
      Company issues or sells any Convertible Securities, whether or not immediately
      convertible, exercisable or exchangeable, and the price per share for which
      Common Stock is issuable upon such conversion, exercise or exchange is less
      than
      the Conversion Price in effect on the date of issuance or sale of such
      Convertible Securities, then the maximum total number of shares of Common Stock
      issuable upon the conversion, exercise or exchange of all such Convertible
      Securities shall, as of the date of the issuance or sale of such Convertible
      Securities, be deemed to be outstanding and to have been issued and sold by
      the
      Company for such price per share. If the Convertible Securities so issued or
      sold do not have a fluctuating conversion or exercise price or exchange ratio,
      then for the purposes of the immediately preceding sentence, the “price per
      share for which Common Stock is issuable upon such conversion, exercise or
      exchange” shall be determined by dividing
      (A) the
      total amount, if any, received or receivable by the Company as consideration
      for
      the issuance or sale of all such Convertible Securities,
      plus
      the
      minimum aggregate amount of additional consideration, if any, payable to the
      Company upon the conversion, exercise or exchange thereof (determined in
      accordance with the calculation method set forth in this Section
      4(e)(ii)(B))
      at the
      time such Convertible Securities first become convertible, exercisable or
      exchangeable, by (B) the maximum total number of shares of Common Stock issuable
      upon the exercise, conversion or exchange of all such Convertible
      Securities.
      If the
      Convertible Securities so issued or sold constitutes a Variable Rate Security,
      then for purposes of the first sentence of this Section
      4(e)(ii)(B),
      the
“price per share for which Common Stock is issuable upon such conversion,
      exercise or exchange” shall be deemed to be the lowest price per share which
      would be applicable (assuming all holding period and other conditions to any
      discounts contained in such Variable Rate Security have been satisfied) if
      the
      conversion price of such Variable Rate Security on the date of issuance or
      sale
      thereof were equal to the actual conversion price on such date (or such higher
      minimum conversion price if such Variable Rate Security is subject to a minimum
      conversion price) (the “Assumed
      Variable Market Price”),
      and,
      further, if the conversion price of such Variable Rate Security at any time
      or
      times thereafter is less than or equal to the Assumed Variable Market Price
      last
      used for making any adjustment under this Section
      4(e)
      with
      respect to any Variable Rate Security, the Conversion Price in effect at such
      time shall be readjusted to equal the Conversion Price which would have resulted
      if the Assumed Variable Market Price at the time of issuance of the Variable
      Rate Security had been equal to the actual conversion price of such Variable
      Rate Security existing at the time of the adjustment required by this sentence;
      provided,
      however,
      that if
      the conversion or exercise price or exchange ratio of a Convertible Security
      may
      fluctuate solely as a result of provisions designed to protect against dilution,
      such Convertible Security shall not be deemed to be a Variable Rate Security.
      No
      further adjustment to the Conversion Price shall be made upon the actual
      issuance of such Common Stock upon conversion, exercise or exchange of such
      Convertible Securities.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    (C) Change
      In Option Price Or Conversion Rate.
      If
      there is a change at any time (including, without limitation, a change with
      respect to any Options or Convertible Securities outstanding as of the Issue
      Date) in (x) the amount of additional consideration payable to the Company
      upon
      the exercise of any Options; (y) the amount of additional consideration, if
      any,
      payable to the Company upon the conversion, exercise or exchange of any
      Convertible Securities; or (z) the rate at which any Convertible Securities
      are
      convertible into or exercisable or exchangeable for Common Stock, the Conversion
      Price in effect at the time of such change shall be readjusted to the Conversion
      Price which would have been in effect at such time had such Options or
      Convertible Securities still outstanding provided for such changed additional
      consideration or changed conversion, exercise or exchange rate, as the case
      may
      be, at the time initially issued or sold.

     

    (D) Calculation
      Of Consideration Received.
      If any
      Common Stock, Options or Convertible Securities are issued or sold for cash,
      the
      consideration received therefor will be the amount received by the Company
      therefor. In case any Common Stock, Options or Convertible Securities are issued
      or sold for a consideration part or all of which shall be other than cash,
      the
      amount of the consideration other than cash received by the Company shall be
      the
      fair market value of such consideration. In case any Common Stock, Options
      or
      Convertible Securities are issued in connection with any merger or consolidation
      in which the Company is the surviving corporation, the amount of consideration
      therefor will be deemed to be the fair market value of such portion of the
      net
      assets and business of the non-surviving corporation as is attributable to
      such
      Common Stock, Options or Convertible Securities, as the case may be. The
      independent members of the Company’s Board of Directors shall calculate
      reasonably and in good faith, using standard commercial valuation methods
      appropriate for valuing such assets, the fair market value of any
      consideration.

    


    (iii) Exceptions
      To Adjustment Of Conversion Price.
      Notwithstanding the foregoing, no adjustment to the Conversion Price shall
      be
      made pursuant to this Section
      4(e)
      upon the
      issuance of any Excluded Securities. 

    


    (f) Notice
      Of Adjustments.
      Upon
      the occurrence of each adjustment or readjustment of the Conversion Price
      pursuant to this Section
      4
      resulting in a change in the Conversion Price by more than one percent (1%),
      or
      any change in the number or type of stock, securities and/or other property
      issuable upon Conversion of this Note, the Company, at its expense, shall
      promptly compute such adjustment, readjustment or change and prepare and furnish
      to the Holder a certificate setting forth such adjustment, readjustment or
      change and showing in detail the facts upon which such adjustment, readjustment
      or change is based. The Company shall, upon the written request at any time
      of
      the Holder, furnish to the Holder a like certificate setting forth (i) such
      adjustment, readjustment or change, (ii) the Conversion Price at the time in
      effect and (iii) the number of shares of Common Stock and the amount, if any,
      of
      other securities or property which at the time would be received upon Conversion
      of this Note.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    (g) Adjustments;
      Additional Shares, Securities or Assets.
      In the
      event that at any time, as a result of an adjustment made pursuant to this
      Section
      4,
      the
      Holder of this Note shall, upon conversion of this Note, become entitled to
      receive securities or assets (other than Common Stock) then, wherever
      appropriate, all references herein to shares of Common Stock shall be deemed
      to
      refer to and include such shares and/or other securities or assets; and
      thereafter the number of such shares and/or other securities or assets shall
      be
      subject to adjustment from time to time in a manner and upon terms as nearly
      equivalent as practicable to the provisions of this Section
      4.
      

     

    5. EVENTS
      OF DEFAULT; MANDATORY REDEMPTION.

     

    (a) Mandatory
      Redemption.
      In the
      event that an Event of Default, a Change of Control or Major Transaction occurs,
      the Holder shall have the right, upon written notice to the Company (a
“Mandatory
      Redemption Notice”),
      to
      have all or any portion of the unpaid principal amount of this Note,
plus
      all
      accrued and unpaid Interest (including default interest (if any)), redeemed
      by
      the Company (a “Mandatory
      Redemption”)
      at the
      Mandatory Redemption Price in same day funds. The Mandatory Redemption Notice
      shall specify (i) the Mandatory Redemption Price and (ii) the date on which
      such
      Mandatory Redemption Price must be paid to the Holder (the “Mandatory
      Redemption Date”),
      which
      date must be at least four (4) Business Days following the Business Day on
      which
      the Mandatory Redemption Notice is delivered to the Company. In order to effect
      a Mandatory Redemption hereunder, the Holder must deliver a Mandatory Redemption
      Notice no later than, in the case of an Event of Default, the close of business
      on the third (3rd)
      Business Day following the date on which an Event of Default is no longer
      continuing and, with respect to a Change of Control or Major Transaction, the
      close of business on the third (3rd)
      Business Day following the date on which the Change of Control or Major
      Transaction is completed.

     

    (b) Payment
      of Mandatory Redemption Price.

     

    (i) The
      Company shall pay the Mandatory Redemption Price to the Holder on the Mandatory
      Redemption Date. In the event that the Company redeems the entire remaining
      unpaid principal amount of this Note, all accrued and unpaid Interest and any
      other amounts due hereunder, and pays such amount to the Holder in cash, the
      Holder shall return this Note to the Company for cancellation.

     

    (ii) If
      the
      Company fails to pay the Mandatory Redemption Price to the Holder on Mandatory
      Redemption Date, the Holder shall be entitled to interest thereon at the Default
      Interest Rate from the Mandatory Redemption Date until the date on which
      Mandatory Redemption Price has been paid in full.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    6. MISCELLANEOUS.

     

    (a) Failure
      to Exercise Rights not Waiver.
      No
      failure or delay on the part of the Holder in the exercise of any power, right
      or privilege hereunder shall operate as a waiver thereof, nor shall any single
      or partial exercise of any such power, right or privilege preclude any other
      or
      further exercise thereof. All rights and remedies of the Holder hereunder are
      cumulative and not exclusive of any rights or remedies otherwise available.
      In
      the event that the Company does not pay any amount under this Note when such
      amount becomes due, the Company shall bear all costs incurred by the Holder
      in
      collecting such amount, including, without limitation, reasonable legal fees
      and
      expenses. 

     

    (b) Notices.
      Any
      notice, demand or request required or permitted to be given by the Company
      or
      the Holder pursuant to the terms of this Note shall be in writing and shall
      be
      deemed delivered (i) when delivered personally or by verifiable facsimile
      transmission, unless such delivery is made on a day that is not a Business
      Day,
      in which case such delivery will be deemed to be made on the next succeeding
      Business Day, (ii) on the next Business Day after timely delivery to an
      overnight courier and (iii) on the Business Day actually received if deposited
      in the U.S. mail (certified or registered mail, return receipt requested,
      postage prepaid), addressed as follows:

    


    If
      to
      the Company:

    


    Manaris
      Corporation

    400
      boul.
      Montpellier

    Montreal,
      Quebec

    Canada
      H4N 2G7

    Attn:
       John
      Fraser, Chief Executive Officer

    Tel:
       514-904-6030

    Fax:
       514-744-2080

    


    with
      a copy (which
      shall not constitute notice) to:

    


    Sichenzia
      Ross Friedman Ference LLP

    61
      Broadway, 32nd
      Floor

    New
      York,
      New York 10006

    Attn: Darrin
      Ocasio, Esq.

    Tel: 212-930-9700

    Fax: 212-930-9725

    


    and
      if to
      the Holder, to such address for the Holder as provided by such Holder under
      the
      Loan Agreement, or as shall be designated by the Holder in writing to the other
      parties hereto in accordance with this Section
      6(b).

    


    (c)
       Amendments
      and Waivers.
      No
      amendment, modification or other change to, or waiver of any provision of,
      this
      Note or any other Note may be made unless such amendment, modification or
      change, or request for waiver, is (A) set forth in writing and is signed by
      the
      Company, (B) consented to in writing by the holders of at least sixty-six
      percent (66%) of the unpaid principal amount of the Notes, and (C) applied
      to
      all of the Notes. Upon the satisfaction of the conditions described in (A),
      (B)
      and (C) above, this Note shall be deemed to incorporate the amendment,
      modification, change or waiver effected thereby as of the effective date
      thereof, even if the Holder did not consent to such amendment, modification,
      change or waiver. Notwithstanding
      the foregoing, the limitation on beneficial ownership set forth in Section
      3(f)(i)
      may not
      be amended without the consent of the holders of a majority of the shares of
      Common Stock then outstanding; provided,
      however,
      that
      such limitation may be waived by the Holder upon sixty (60) days’ prior written
      notice to the Company, and such waiver shall be valid and shall not require
      the
      consent of the Company or any other holder of Common Stock or
      Notes.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    (d)
       Transfer
      of Note.
      The
      Holder may sell, transfer or otherwise dispose of all or any part of this Note
      (including, without limitation, pursuant to a pledge) to any Person as long
      as
      such sale, transfer or disposition is the subject of an effective registration
      statement under the Securities Act of 1933, as amended, and applicable state
      securities laws, or is exempt from registration thereunder, and is otherwise
      made in accordance with the applicable provisions of the Loan Agreement. From
      and after the date of any such sale, transfer or disposition, the transferee
      hereof shall be deemed to be the holder of a Note in the principal amount
      acquired by such transferee, and the Company shall, as promptly as practicable
      (but in no event later than three Business Days from the date it receives notice
      thereof), issue and deliver to such transferee a new Note identical in all
      respects to this Note, in the name of such transferee. The Company shall be
      entitled to treat the original Holder as the holder of this entire Note unless
      and until it receives written notice of the sale, transfer or disposition
      hereof.

     

    (e) Lost
      or Stolen Note.
      Upon
      receipt by the Company of evidence of the loss, theft, destruction or mutilation
      of this Note, and (in the case of loss, theft or destruction) of indemnity
      or
      security reasonably satisfactory to the Company, and upon surrender and
      cancellation of the Note, if mutilated, the Company shall execute and deliver
      to
      the Holder a new Note identical in all respects to this Note.

     

    (f)
       Governing
      Law; Jurisdiction; Waiver of Jury Trial.
      

    


    (i) This
      Note
      shall be governed by and construed under the laws of the State of New York
      applicable to contracts made and to be performed entirely within the State
      of
      New York. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in the City and County of New York for
      the
      adjudication of any dispute hereunder or any other Transaction Document or
      in
      connection herewith or therewith or with any transaction contemplated hereby
      or
      thereby, and hereby irrevocably waives, and agrees not to assert in any suit,
      action or proceeding, any claim that it is not personally subject to the
      jurisdiction of any such court, that such suit, action or proceeding is brought
      in an inconvenient forum or that the venue of such suit, action or proceeding
      is
      improper. The Holder and the Company hereby irrevocably waives personal service
      of process and consents to process being served in any such suit, action or
      proceeding by mailing a copy thereof to such Person at the address in effect
      for
      notices to it under this Note and agrees that such service shall constitute
      good
      and sufficient service of process and notice thereof. Nothing contained herein
      shall be deemed to limit in any way any right to serve process in any manner
      permitted by law.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    (ii) THE
      HOLDER AND THE COMPANY EACH ACKNOWLEDGES AND AGREES THAT ANY DISPUTE OR
      CONTROVERSY THAT MAY ARISE UNDER THIS NOTE OR THE OTHER TRANSACTION DOCUMENTS
      IS
      LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH PERSON
      HEREBY IRREVOCABLY
      AND
      UNCONDITIONALLY WAIVES ANY RIGHT SUCH PERSON MAY HAVE TO A TRIAL BY JURY IN
      RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
      TO
      THIS NOTE, OR THE BREACH, TERMINATION OR VALIDITY OF THIS NOTE OR THE OTHER
      TRANSACTION DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
      THE
      HOLDER AND THE COMPANY EACH CERTIFIES AND ACKNOWLEDGES THAT (I) NO
      REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
      OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION,
      SEEK
      TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PERSON UNDERSTANDS AND HAS
      CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PERSON MAKES THIS
      WAIVER VOLUNTARILY, AND (IV) EACH SUCH PERSON HAS BEEN INDUCED TO UNDERTAKE
      THE
      OBLIGATIONS SET FORTH IN THIS NOTE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
      AND CERTIFICATIONS IN THIS SECTION
      6(f)(ii).

    


    (g) Successors
      and Assigns.
      The
      terms and conditions of this Note
      shall
      inure to the benefit of and be binding upon the respective successors (whether
      by merger or otherwise) and permitted assigns of the Company and the Holder.
      The
      Company may not assign its rights or obligations under this Note
      except
      as specifically required or permitted pursuant to the terms hereof.

     

    (h) Usury.
      This
      Note
      is subject to the express condition that at no time shall the Company be
      obligated or required to pay interest hereunder at a rate which could subject
      the Holder to either civil or criminal liability as a result of being in excess
      of the maximum interest rate which the Company is permitted by applicable law
      to
      contract or agree to pay.  If by the terms of this Note, the Company is at
      any time required or obligated to pay interest hereunder at a rate in excess
      of
      such maximum rate, the rate of interest under this Note shall be deemed to
      be
      immediately reduced to such maximum rate and the interest payable shall be
      computed at such maximum rate and all prior interest payments in excess of
      such
      maximum rate shall be applied and shall be deemed to have been payments in
      reduction of the principal balance of this Note.  

    


    (i) Taxes .
      Any and
      all payments of any kind whatsoever by the Company under or in connection with
      this Note or any other Transaction Document shall be made free and clear of
      and
      without deduction for any and all present or future taxes, levies, imposts,
      deductions, charges or withholdings, and all liabilities of any kind whatsoever
      with respect thereto, excluding taxes imposed on the net income of the Holder
      (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings
      and liabilities, collectively or individually, the “Taxes”).
      If
      the Company shall be required to deduct or if Holder shall be required to pay
      any Taxes from or in respect of any sum payable under or in connection with
      any
      of this Note or any other Transaction Document to the Holder, (i) the sum
      payable shall be increased by the amount necessary so that after making all
      required deductions (including deductions applicable to additional sums payable
      under or in connection with this Section
      6(i))
      the
      Holder shall receive an amount equal to the sum it would have received had
      no
      such deductions been made, (ii) the Company shall make such deductions if so
      required and (iii) the Company shall pay the full amount deducted to or that
      is
      otherwise required to be paid by the Holder and file any required tax and
      information return with the relevant Governmental Authority in accordance with
      applicable law.

     

    [Signature
      Page to Follow]

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Note to be signed in its name
      by
      its duly authorized officer on the date first above written.

     

    MANARIS
      CORPORATION

    


    


    By: 

    
      
        

      

    

    Name:

    Title:

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    


    ANNEX
      I

    


    


    NOTICE
      OF CONVERSION

    


    The
      undersigned hereby elects to convert principal of the 6% Original Issue Discount
      Senior Secured Convertible Note (the “Note”)
      issued
      by MANARIS CORPORATION (the “Company”)
      into
      shares of common stock (“Common
      Stock”)
      of the
      Company according to the terms and conditions of the Note. Capitalized terms
      used herein and not otherwise defined shall have the respective meanings set
      forth in the Note. 

    


    


    
      	 	
              Date
                of Conversion:
                ____________________________________________

            
	 	 
	 	
              Principal
                Amount of 
                Note
                  to be Converted:
                  ____________________________________________

              

            
	 	 
	 	
              Number
                of Shares of 
                Common
                  Stock to be
                  Issued: ______________________________________

              

            
	 	 
	 	
              Name
                of Holder: 
                ________________________________________________

            
	 	 
	 	
              Address:
                ______________________________________________________

            
	 	 
	 	              ______________________________________________
	 	 
	 	             
              ______________________________________________
	 	 
	 	
              Signature: 

              
                

              

            
	 	
              Name:

            
	 	
              Title:

            


    

     

    Holder
      Requests Delivery to be made:
      (check
      one)

    


    
      	
              ྐྵ

            	
              By
                Delivery of Physical Certificates to the Above
                Address

            


    

    


    
      	
              ྐྵ

            	
              Through
                Depository Trust Corporation

            


    

    (Account
       _____________________)

     

    
      
        
        

      

      
        -20-