Document:

REGISTRATION RIGHTS AGREEMENT
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     REGISTRATION  RIGHTS  AGREEMENT (this "Agreement"), dated as of December 8,
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2005,  by  and  between  ZANN  CORP.,  a Nevada corporation (the "Company"), and
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CORNELL  CAPITAL  PARTNERS, LP, a Delaware limited partnership (the "Investor").
                                                                     --------

                                    WHEREAS:

     A.   In  connection  with  the Standby Equity Distribution Agreement by and
between  the  parties  hereto  of  even  date  herewith  (the  "Standby  Equity
                                                                ---------------
Distribution  Agreement"), the Company has agreed, upon the terms and subject to
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the  conditions  of the Standby Equity Distribution Agreement, to issue and sell
to  the  Investor that number of shares of the Company's common stock, par value
$0.001  per  share  (the "Common Stock"), which can be purchased pursuant to the
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terms  of  the  Standby  Equity Distribution Agreement for an aggregate purchase
price  of  up  to  Five  Million  Dollars  ($5,000,000).

     B.   To  induce  the  Investor  to  execute  and deliver the Standby Equity
Distribution  Agreement,  the Company has agreed to provide certain registration
rights  under  the  Securities  Act  of  1933,  as  amended,  and  the rules and
regulations  thereunder,  or  any  similar  successor statute (collectively, the
"Securities  Act"),  and  applicable  state  securities  laws.
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     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
contained  herein  and  other  good  and valuable consideration, the receipt and
sufficiency  of  which  are  hereby  acknowledged,  the Company and the Investor
hereby  agree  as  follows:

     1.   DEFINITIONS.
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     All  capitalized  terms  used  in  this  Agreement  shall  have the meaning
assigned  to them in the Standby Equity Distribution Agreement, unless otherwise
indicated.

     2.   REGISTRATION.
          ------------

          a.     Mandatory  Registration.  The  Company  shall  prepare and file
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with  the  SEC a Registration Statement on Form SB-2 or on such other form as is
available.  The  Company  shall cause such Registration Statement to be declared
effective  by  the  SEC prior to the first sale to the Investor of the Company's
Common Stock pursuant to the Standby Equity Distribution Agreement.  The Company
shall  cause  the  Registration  Statement  to  remain  effective until the full
completion  of  the  Commitment  Period.

          b.     Sufficient  Number  of  Shares  Registered.  In  the  event the
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number  of  shares  available  under  a Registration Statement filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities pursuant
to  the  Standby  Equity  Distribution  Agreement,  the  Company shall amend the
Registration  Statement, or file a new Registration Statement (on the short form
available  therefore,  if  applicable),  or  both,  so  as  to cover all of such
Registrable  Securities pursuant to the Standby Equity Distribution Agreement as
soon as practicable, but in any event not later than fifteen (15) days after the
necessity  therefore  arises.  The Company shall use its reasonable best efforts
to  cause  such  amendment  and/or  new  Registration  Statement  to

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become  effective  as  soon  as  practicable  following the filing thereof.  For
purposes  of  the  foregoing  provision,  the number of shares available under a
Registration  Statement  shall  be  deemed  "insufficient  to  cover  all of the
Registrable  Securities"  if  at  any  time the number of Registrable Securities
issuable  on  an  Advance  Notice  Date  is  greater  than  the number of shares
available  for  resale  under  such  Registration  Statement.

     2.   RELATED  OBLIGATIONS.
          --------------------

          a.     The  Company  shall  keep  the Registration Statement effective
pursuant  to Rule 415 at all times until the completion of the Commitment Period
(as  such  term  is  defined  in the Standby Equity Distribution Agreement) (the
"Registration  Period"),  which Registration Statement (including any amendments
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or supplements thereto and prospectuses contained therein) shall 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, in light of the
circumstances  in  which  they  were  made,  not  misleading.

          b.     The Company shall prepare and file with the SEC such amendments
(including  post-effective  amendments)  and  supplements  to  a  Registration
Statement  and  the  prospectus  used  in  connection  with  such  Registration
Statement,  which  prospectus  is  to  be filed pursuant to Rule 424 promulgated
under  the  Securities  Act,  as  may  be  necessary  to  keep such Registration
Statement  effective  at  all  times during the Registration Period, and, during
such  period,  comply  with the provisions of the Securities Act with respect to
the  disposition  of  all  Registrable Securities of the Company covered by such
Registration  Statement  until  such  time as all of such Registrable Securities
shall  have  been  disposed  of  in  accordance  with  the  intended  methods of
disposition  by  the seller or sellers thereof as set forth in such Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this  Section  3(b))  by reason of the Company's filing a report on Form 10-KSB,
Form  10-QSB  or  Form 8-K or any analogous report under the Securities Exchange
Act  of  1934,  as  amended  (the  "Exchange  Act"),  the  Company  shall  have
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incorporated  such  report  by  reference  into  the  Registration Statement, if
applicable,  or  shall  file  such amendments or supplements with the SEC on the
same day on which the Exchange Act report is filed which created the requirement
for  the  Company  to  amend  or  supplement  the  Registration  Statement.

          c.     The  Company  shall furnish to the Investor without charge, (i)
at  least  one  copy of such Registration Statement as declared effective by the
SEC  and any amendment(s) thereto, including financial statements and schedules,
all  documents  incorporated  therein  by  reference,  all  exhibits  and  each
preliminary prospectus, (ii) ten (10) copies of the final prospectus included in
such  Registration Statement and all amendments and supplements thereto (or such
other  number  of copies as such Investor may reasonably request) and (iii) such
other  documents  as  such  Investor may reasonably request from time to time in
order  to facilitate the disposition of the Registrable Securities owned by such
Investor.

          d.     The  Company  shall  use  its  reasonable  best  efforts to (i)
register  and  qualify  the  Registrable  Securities  covered  by a Registration
Statement  under  such other securities or "blue sky" laws of such jurisdictions
in  the United States as the Investor reasonably requests, (ii) prepare and file
in  those  jurisdictions,  such  amendments  (including  post-effective

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amendments)  and  supplements to such registrations and qualifications as may be
necessary  to maintain the effectiveness thereof during the Registration Period,
(iii)  take  such  other actions as may be reasonably necessary to maintain such
registrations  and qualifications in effect at all times during the Registration
Period,  and  (iv)  take  all other actions reasonably necessary or advisable to
qualify  the  Registrable  Securities  for sale in such jurisdictions; provided,
however,  that the Company shall not be required in connection therewith or as a
condition  thereto to (w) make any change to its certificate of incorporation or
by-laws,  (x)  qualify  to  do  business  in any jurisdiction where it would not
otherwise  be  required to qualify but for this Section 3(d), (y) subject itself
to  general  taxation in any such jurisdiction, or (z) file a general consent to
service  of  process in any such jurisdiction. The Company shall promptly notify
the  Investor  of the receipt by the Company of any notification with respect to
the  suspension  of  the registration or qualification of any of the Registrable
Securities  for sale under the securities or "blue sky" laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or threat
of  any  proceeding  for  such  purpose.

          e.     As  promptly  as practicable after becoming aware of such event
or  development,  the  Company  shall  notify  the  Investor  in  writing of the
happening  of  any  event  as  a  result  of  which the prospectus included in a
Registration  Statement,  as  then  in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which  they  were  made,  not  misleading  (provided that in no event shall such
notice  contain  any  material,  nonpublic  information), and promptly prepare a
supplement  or  amendment  to such Registration Statement to correct such untrue
statement  or  omission,  and  deliver  ten  (10)  copies  of such supplement or
amendment  to each Investor. The Company shall also promptly notify the Investor
in  writing (i) when a prospectus or any prospectus supplement or post-effective
amendment  has  been  filed,  and  when  a  Registration  Statement  or  any
post-effective  amendment  has  become  effective  (notification  of  such
effectiveness shall be delivered to the Investor by facsimile on the same day of
such  effectiveness),  (ii)  of  any  request  by  the  SEC  for  amendments  or
supplements  to  a  Registration  Statement  or  related  prospectus  or related
information,  and  (iii)  of  the  Company's  reasonable  determination  that  a
post-effective  amendment  to  a  Registration  Statement  would be appropriate.

          f.     The  Company  shall use its reasonable  best efforts to prevent
the  issuance  of  any  stop  order  or  other  suspension of effectiveness of a
Registration  Statement,  or  the  suspension of the qualification of any of the
Registrable  Securities for sale in any jurisdiction within the United States of
America  and, if such an order or suspension is issued, to obtain the withdrawal
of  such  order  or suspension at the earliest possible moment and to notify the
Investor of the issuance of such order and the resolution thereof or its receipt
of actual notice of the initiation or threat of any proceeding for such purpose.

          g.     The  Company  shall  make  available  for inspection by (i) the
Investor  and  (ii)  one  firm  of  accountants  or other agents retained by the
Investor  (collectively,  the  "Inspectors")  all  pertinent financial and other
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records,  and  pertinent  corporate  documents  and  properties  of  the Company
(collectively,  the  "Records"), as shall be reasonably deemed necessary by each
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Inspector,  and  cause the Company's officers, directors and employees to supply
all  information  which any Inspector may reasonably request; provided, however,
that  each  Inspector  shall  agree,  and the Investor hereby agrees, to hold in
strict  confidence  and shall

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not  make  any  disclosure (except to an Investor) or use of any Record or other
information  which  the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (a) the disclosure
of  such  Records is necessary to avoid or correct a misstatement or omission in
any  Registration  Statement  or is otherwise required under the Securities Act,
(b)  the  release of such Records is ordered pursuant to a final, non-appealable
subpoena  or order from a court or government body of competent jurisdiction, or
(c)  the  information  in  such Records has been made generally available to the
public  other  than by disclosure in violation of this or any other agreement of
which  the Inspector and the Investor has knowledge. The Investor agrees that it
shall,  upon learning that disclosure of such Records is sought in or by a court
or  governmental  body  of  competent  jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate  action  to  prevent  disclosure of, or to obtain a protective order
for,  the  Records  deemed  confidential.

          h.     The  Company  shall  hold  in  confidence  and  not  make  any
disclosure of information concerning the Investor provided to the Company unless
(i)  disclosure of such information is necessary to comply with federal or state
securities  laws,  (ii) the disclosure of such information is necessary to avoid
or  correct  a misstatement or omission in any Registration Statement, (iii) the
release  of  such  information is ordered pursuant to a subpoena or other final,
non-appealable  order  from  a  court  or  governmental  body  of  competent
jurisdiction,  or (iv) such information has been made generally available to the
public  other  than  by  disclosure  in violation of this Agreement or any other
agreement.  The  Company  agrees that it shall, upon learning that disclosure of
such  information  concerning  the  Investor  is  sought  in  or  by  a court or
governmental  body of competent jurisdiction or through other means, give prompt
written  notice  to  the  Investor  and  allow  the  Investor, at the Investor's
expense,  to undertake appropriate action to prevent disclosure of, or to obtain
a  protective  order  for,  such  information.

          i.     The  Company  shall  use  its reasonable best efforts either to
cause  all the Registrable Securities covered by a Registration Statement (i) to
be  listed  on each securities exchange on which securities of the same class or
series  issued  by  the  Company are then listed, if any, if the listing of such
Registrable  Securities is then permitted under the rules of such exchange or to
secure  the  inclusion  for  quotation on the National Association of Securities
Dealers,  Inc.  OTC Bulletin Board for such Registrable Securities.  The Company
shall  pay  all  fees  and expenses in connection with satisfying its obligation
under  this  Section  3(j).

          j.     The  Company  shall  cooperate  with the Investor to the extent
applicable,  to  facilitate  the timely preparation and delivery of certificates
(not  bearing any restrictive legend) representing the Registrable Securities to
be  offered pursuant to a Registration Statement and enable such certificates to
be  in  such  denominations  or amounts, as the case may be, as the Investor may
reasonably  request  and  registered  in such names as the Investor may request.

          k.     The  Company shall use its reasonable best efforts to cause the
Registrable  Securities  covered  by the applicable Registration Statement to be
registered  with  or approved by such other governmental agencies or authorities
as  may  be  necessary  to  consummate  the  disposition  of  such  Registrable
Securities.

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          l.     The  Company  shall  make  generally  available to its security
holders  as  soon  as  practical,  but not later than ninety (90) days after the
close  of  the  period covered thereby, an earnings statement (in form complying
with  the  provisions  of  Rule  158  under  the  Securities  Act)  covering  a
twelve-month  period  beginning  not  later  than the first day of the Company's
fiscal  quarter next following the effective date of the Registration Statement.

          m.     The  Company shall otherwise use its reasonable best efforts to
comply  with  all applicable rules and regulations of the SEC in connection with
any  registration  hereunder.

          n.     Within  two  (2)  business  days after a Registration Statement
which covers Registrable Securities is ordered effective by the SEC, the Company
shall  deliver, and shall cause legal counsel for the Company to deliver, to the
transfer  agent  for  such  Registrable Securities (with copies to the Investor)
confirmation that such Registration Statement has been declared effective by the
SEC  in  the  form  attached  hereto  as  Exhibit  A.
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          o.     The  Company  shall take all other reasonable actions necessary
to expedite and facilitate disposition by the Investor of Registrable Securities
pursuant  to  a  Registration  Statement.

     3.   OBLIGATIONS  OF  THE  INVESTOR.
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     The  Investor  agrees  that, upon receipt of any notice from the Company of
the  happening  of  any event of the kind described in Section 3(f) or the first
sentence  of  3(e),  the  Investor  will  immediately discontinue disposition of
Registrable  Securities  pursuant to any Registration Statement(s) covering such
Registrable  Securities  until  the  Investor's  receipt  of  the  copies of the
supplemented  or  amended  prospectus contemplated by Section 3(e) or receipt of
notice that no supplement or amendment is required.  Notwithstanding anything to
the  contrary,  the Company shall cause its transfer agent to deliver unlegended
certificates  for  shares  of  Common  Stock  to a transferee of the Investor in
accordance  with  the  terms  of  the  Standby  Equity Distribution Agreement in
connection  with  any  sale  of Registrable Securities with respect to which the
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any event of the kind described in
Section  3(f)  or  the first sentence of 3(e) and for which the Investor has not
yet  settled.

     4.   EXPENSES  OF  REGISTRATION.
          --------------------------

     All  expenses  incurred  in  connection  with  registrations,  filings  or
qualifications  pursuant to Sections 2 and 3, including, without limitation, all
registration,  listing  and  qualifications fees, printers, legal and accounting
fees  shall  be  paid  by  the  Company.

     5.   INDEMNIFICATION.
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     With respect to Registrable Securities which are included in a Registration
Statement  under  this  Agreement:

          a.     To  the  fullest extent permitted by law, the Company will, and
hereby  does,  indemnify,  hold harmless and defend the Investor, the directors,
officers,  partners,  employees,

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agents,  representatives  of, and each Person, if any, who controls the Investor
within  the  meaning  of  the  Securities  Act  or  the  Exchange  Act (each, an
"Indemnified  Person"),  against  any  losses,  claims,  damages,  liabilities,
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judgments, fines, penalties, charges, costs, reasonable attorneys' fees, amounts
paid  in  settlement  or  expenses,  joint  or  several (collectively, "Claims")
                                                                        ------
incurred  in  investigating,  preparing  or  defending  any action, claim, suit,
inquiry,  proceeding,  investigation  or  appeal  taken from the foregoing by or
before  any  court  or  governmental, administrative or other regulatory agency,
body  or  the  SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
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may  become  subject  insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any  untrue  statement  or  alleged  untrue  statement  of  a material fact in a
Registration  Statement or any post-effective amendment thereto or in any filing
made  in  connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered  ("Blue  Sky  Filing"),  or  the omission or alleged omission to state a
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material  fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue statement of
a  material  fact contained in any final prospectus (as amended or supplemented,
if  the  Company files any amendment thereof or supplement thereto with the SEC)
or the omission or alleged omission to state therein any material fact necessary
to  make  the statements made therein, in light of the circumstances under which
the  statements  therein  were  made,  not misleading; or (iii) any violation or
alleged  violation  by  the Company of the Securities Act, the Exchange Act, any
other  law, including, without limitation, any state securities law, or any rule
or  regulation  there  under  relating  to  the offer or sale of the Registrable
Securities  pursuant  to  a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations").  The Company shall
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reimburse  the  Investor  and  each  such  controlling  person  promptly as such
expenses  are  incurred  and  are  due  and  payable,  for  any  legal  fees  or
disbursements  or  other reasonable expenses incurred by them in connection with
investigating  or  defending  any  such  Claim.  Notwithstanding anything to the
contrary  contained  herein,  the  indemnification  agreement  contained in this
Section  6(a):  (x)  shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with  information  furnished in writing to the Company by any Indemnified Person
expressly  for  use  in  connection  with  the  preparation  of the Registration
Statement  or any such amendment thereof or supplement thereto or as a result of
any  Indemnified  Person's  bad  faith  or  willful misconduct; (y) shall not be
available  to  the  extent  such  Claim is based on a failure of the Investor to
deliver  or  to  cause  to  be  delivered  the  prospectus made available by the
Company, if such prospectus was timely made available by the Company pursuant to
Section 3(e); and (z) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which  consent  shall not be unreasonably withheld.  The Company shall be liable
under  this  Section 6(a) for only that amount of a Claim or Indemnified Damages
as  does not exceed the gross proceeds to the Company as a result of the sale of
its  securities  pursuant  to  the  Transaction Documents.  Such indemnity shall
remain  in  full  force and effect regardless of any investigation made by or on
behalf  of  the  Indemnified  Person.

          b.     In  connection  with  a  Registration  Statement,  the Investor
agrees  to  indemnify,  hold  harmless and defend, to the same extent and in the
same manner as is set forth in Section 6(a), the Company, each of its directors,
each  of  its  officers who signs the Registration Statement and each Person, if
any,  who  controls  the  Company  within  the  meaning  of  the

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Securities  Act  or  the Exchange Act (each an "Indemnified Party"), against any
                                                -----------------
Claim  or Indemnified Damages to which any of them may become subject, under the
Securities  Act,  the  Exchange  Act  or  otherwise,  insofar  as  such Claim or
Indemnified Damages arise out of or is based upon any Violation, in each case to
the  extent, and only to the extent, that such Violation occurs in reliance upon
and  in  conformity  with  written  information  furnished to the Company by the
Investor  expressly for use in connection with such Registration Statement or as
a  result  of  any  Indemnified  Person's  bad faith or willful misconduct; and,
subject to Section 6(d), the Investor will reimburse any legal or other expenses
reasonably  incurred  by  them in connection with investigating or defending any
such  Claim;  provided,  however, that the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in Section
7  shall not apply to amounts paid in settlement of any Claim if such settlement
is  effected  without  the  prior written consent of the Investor, which consent
shall  not  be  unreasonably  withheld;  provided,  further,  however,  that the
Investor shall be liable under this Section 6(b) for only that amount of a Claim
or  Indemnified Damages as does not exceed the gross proceeds to the Investor as
a  result  of  the  sale of Registrable Securities pursuant to such Registration
Statement.  Such  indemnity  shall remain in full force and effect regardless of
any  investigation  made  by  or  on  behalf  of  such  Indemnified  Party.
Notwithstanding  anything  to the contrary contained herein, the indemnification
agreement  contained  in  this Section 6(b) with respect to any prospectus shall
not  inure  to  the  benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the prospectus was corrected and such new
prospectus  was  delivered  to  the  Investor prior to the Investor's use of the
prospectus  to  which  the  Claim  relates.

          c.     Promptly  after receipt by an Indemnified Person or Indemnified
Party  under  this  Section  6  of  notice  of the commencement of any action or
proceeding  (including any governmental action or proceeding) involving a Claim,
such  Indemnified  Person  or  Indemnified  Party  shall,  if a Claim in respect
thereof  is  to  be  made  against  any indemnifying party under this Section 6,
deliver  to the indemnifying party a written notice of the commencement thereof,
and  the  indemnifying party shall have the right to participate in, and, to the
extent  the  indemnifying  party so desires, jointly with any other indemnifying
party  similarly  noticed, to assume control of the defense thereof with counsel
mutually  satisfactory  to  the indemnifying party and the Indemnified Person or
the  Indemnified  Party,  as  the  case  may  be;  provided,  however,  that  an
Indemnified  Person  or Indemnified Party shall have the right to retain its own
counsel  with  the  fees  and  expenses  of  not  more than one counsel for such
Indemnified  Person  or  Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation  by  such  counsel of the Indemnified Person or Indemnified Party
and  the  indemnifying  party  would be inappropriate due to actual or potential
differing  interests  between  such  Indemnified Person or Indemnified Party and
any  other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection  with  any  negotiation or defense of any such action or claim by the
indemnifying  party  and shall furnish to the indemnifying party all information
reasonably  available  to  the  Indemnified  Party  or  Indemnified Person which
relates  to  such  action  or  claim.  The  indemnifying  party  shall  keep the
Indemnified  Party  or  Indemnified Person fully apprised at all times as to the
status  of  the defense or any settlement negotiations with respect thereto.  No
indemnifying  party  shall  be liable for any settlement of any action, claim or
proceeding  effected  without its prior written consent, provided, however, that
the  indemnifying  party shall not unreasonably withhold, delay or condition its
consent.  No

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<PAGE>
indemnifying  party  shall, without the prior written consent of the Indemnified
Party  or Indemnified Person, consent to entry of any judgment or enter into any
settlement  or  other compromise which does not include as an unconditional term
thereof  the  giving  by  the claimant or plaintiff to such Indemnified Party or
Indemnified  Person  of a release from all liability in respect to such claim or
litigation.  Following  indemnification  as  provided  for  hereunder,  the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified  Person  with  respect  to  all third parties, firms or corporations
relating  to  the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability  to  the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend  such  action.

          d.     The indemnification required by this Section 6 shall be made by
periodic  payments  of the amount thereof during the course of the investigation
or  defense, as and when bills are received or Indemnified Damages are incurred.

          e.     The  indemnity agreements contained herein shall be in addition
to  (i)  any  cause  of  action  or  similar  right  of the Indemnified Party or
Indemnified  Person  against  the  indemnifying  party  or  others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

     6.   CONTRIBUTION.
          ------------

     To the extent any indemnification by an indemnifying party is prohibited or
limited  by  law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no seller
of  Registrable  Securities  guilty  of fraudulent misrepresentation (within the
meaning  of  Section  11(f)  of  the  Securities  Act)  or  bad faith or willful
misconduct  shall  be  entitled  to  contribution from any seller of Registrable
Securities  who  was  not guilty of fraudulent misrepresentation or bad faith or
willful  misconduct;  and  (ii)  contribution  by  any  seller  of  Registrable
Securities  shall be limited in amount to the net amount of proceeds received by
such  seller  from  the  sale  of  such  Registrable  Securities.

     7.   REPORTS  UNDER  THE  EXCHANGE  ACT.
          ----------------------------------

     With  a  view  to making available to the Investor the benefits of Rule 144
promulgated  under  the  Securities Act or any similar rule or regulation of the
SEC  that may at any time permit the Investors to sell securities of the Company
to the public without registration ("Rule 144") the Company agrees to:
                                     --------

          a.     make  and keep public information available, as those terms are
understood  and  defined  in  Rule  144;

          b.     file  with  the  SEC  in  a timely manner all reports and other
documents  required of the Company under the Securities Act and the Exchange Act
so long as the Company remains subject to such requirements (it being understood
that  nothing  herein shall limit the Company's obligations under Section 6.3 of
the  Standby  Equity  Distribution  Agreement)  and  the

                                        8
<PAGE>
filing  of  such  reports  and  other  documents  is required for the applicable
provisions  of  Rule  144;  and

          c.     furnish  to  the  Investor  so  long  as  the  Investor  owns
Registrable  Securities,  promptly  upon request, (i) a written statement by the
Company  that  it  has complied with the reporting requirements of Rule 144, the
Securities  Act  and  the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the  Company, and (iii) such other information as may be reasonably requested to
permit  the  Investor  to  sell  such  securities  pursuant  to Rule 144 without
registration.

     8.   AMENDMENT  OF  REGISTRATION  RIGHTS.
          -----------------------------------

     Provisions  of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or  prospectively),  only  by  a  written  agreement between the Company and the
Investor.  Any  amendment  or  waiver effected in accordance with this Section 9
shall  be  binding upon the Investor and the Company.  No consideration shall be
offered or paid to any Person to amend or consent to a waiver or modification of
any  provision  of  any  of this Agreement unless the same consideration also is
offered  to  all  of  the  parties  to  this  Agreement.

     9.   MISCELLANEOUS.
          -------------

          a.     A  Person  is  deemed  to be a holder of Registrable Securities
whenever  such  Person  owns  or  is  deemed  to  own of record such Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two  or  more  Persons  with  respect  to  the same Registrable
Securities,  the  Company  shall  act  upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.

          b.     Any notices, consents, waivers or other communications required
or  permitted  to  be given under the terms of this Agreement must be in writing
and  will  be  deemed  to have been delivered:  (i) upon receipt, when delivered
personally;  (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending  party);  or  (iii)  one  business  day  after deposit with a nationally
recognized  overnight  delivery  service, in each case properly addressed to the
party  to  receive  the  same.  The  addresses  and  facsimile  numbers for such
communications  shall  be:

If to the Company, to:         Zann Corp.
                               1549 N. Leroy Street, Suite D-200
                               Fenton, MI 48430
                               Attention:  Robert Simpson
                               Telephone:  (810) 714-2978
                               Facsimile:  (810) 714-3524

                                        9
<PAGE>
With a copy to:                Wilson Sonsini Goodrich & Rosati
                               12235 El Camino Real, Suite 200
                               San Diego, CA 92130
                               Martin Waters, Esq.
                               Telephone:   858-350-2300
                               Facsimile:   858-350-2399

If to the Investor, to:        Cornell Capital Partners, LP
                               101 Hudson Street - Suite 3700
                               Jersey City, New Jersey 07302
                               Attention:  Mark Angelo
                                           Portfolio Manager
                               Telephone:  (201) 985-8300
                               Facsimile:  (201) 985-8266

With a copy to:                Cornell Capital Partners, LP
                               101 Hudson Street - Suite 3700
                               Jersey City, NJ  07302
                               Attention:  David Gonzalez, Esq.
                               Telephone:  (201) 985-8300
                               Facsimile:  (201) 985-8266

Any  party  may  change  its  address  by  providing written notice to the other
parties  hereto  at  least  five days prior to the effectiveness of such change.
Written  confirmation  of  receipt  (A)  given  by the recipient of such notice,
consent,  waiver  or  other  communication,  (B)  mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile  number  and  an  image  of the first page of such transmission or (C)
provided  by a courier or overnight courier service shall be rebuttable evidence
of  personal  service,  receipt  by  facsimile  or  receipt  from  a  nationally
recognized  overnight  delivery  service  in accordance with clause (i), (ii) or
(iii)  above,  respectively.

          c.     Failure of any party to exercise any right or remedy under this
Agreement  or otherwise, or delay by a party in exercising such right or remedy,
shall  not  operate  as  a  waiver  thereof.

          d.     The  corporate laws of the State of New Jersey shall govern all
issues  concerning  the  relative  rights  of the Company and the Investor.  All
other  questions  concerning  the  construction,  validity,  enforcement  and
interpretation  of  this Agreement shall be governed by the internal laws of the
State  of  New Jersey, without giving effect to any choice of law or conflict of
law  provision  or  rule  (whether  of  the  State  of  New  Jersey or any other
jurisdiction)  that  would cause the application of the laws of any jurisdiction
other  than  the  State of New Jersey.  Each party hereby irrevocably submits to
the  non-exclusive  jurisdiction  of  the  Superior  Courts  of the State of New
Jersey,  sitting in Hudson County, New Jersey and the Federal District Court for
the  District  of New Jersey sitting in Newark, New Jersey, for the adjudication
of  any  dispute  hereunder  or  in  connection herewith or with any transaction
contemplated  hereby  or  discussed  herein,  and hereby irrevocably waives, and
agrees  not  to  assert  in  any  suit,  action  or

                                       10
<PAGE>
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.  Each  party 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 party at the address for such notices to it under
this Agreement 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.
If  any  provision  of  this  Agreement shall be invalid or unenforceable in any
jurisdiction,  such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity  or  enforceability  of  any  provision  of this Agreement in any other
jurisdiction.  EACH  PARTY  HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES  NOT  TO  REQUEST,  A  JURY  TRIAL  FOR  THE  ADJUDICATION OF ANY DISPUTE
HEREUNDER  OR  IN  CONNECTION  HEREWITH  OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION  CONTEMPLATED  HEREBY.

          e.     This  Agreement, the Standby Equity Distribution Agreement, the
Escrow  Agreement,  and  the  Placement  Agent  Agreement  constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof.  There are no restrictions, promises, warranties or undertakings, other
than  those  set  forth  or referred to herein and therein.  This Agreement, the
Standby  Equity  Distribution Agreement, the Escrow Agreement, and the Placement
Agent  Agreement  supersede  all  prior  agreements and understandings among the
parties hereto with respect to the subject matter hereof and thereof.

          f.     This  Agreement  shall  inure  to the benefit of and be binding
upon the permitted successors and assigns of each of the parties hereto.

          g.     The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

          h.     This  Agreement may be executed in identical counterparts, each
of  which  shall be deemed an original but all of which shall constitute one and
the  same agreement.  This Agreement, once executed by a party, may be delivered
to  the other party hereto by facsimile transmission of a copy of this Agreement
bearing  the  signature  of  the  party  so  delivering  this  Agreement.

          i.     Each  party  shall  do  and  perform,  or  cause to be done and
performed,  all  such further acts and things, and shall execute and deliver all
such  other  agreements,  certificates,  instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

          j.     The  language  used  in this Agreement will be deemed to be the
language  chosen  by  the parties to express their mutual intent and no rules of
strict  construction  will  be  applied  against  any  party.

                                       11
<PAGE>
          k.     This  Agreement  is  intended  for  the  benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit  of,  nor  may  any  provision  hereof be enforced by, any other Person.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       12
<PAGE>
     IN  WITNESS  WHEREOF,  the  parties  have  caused  this Registration Rights
Agreement to be duly executed as of day and year first above written.

                                        ZANN CORP.

                                        By:
                                           -------------------------------------
                                        Name:  Robert Simpson
                                        Title: President

                                        CORNELL CAPITAL PARTNERS, LP

                                        BY:   YORKVILLE ADVISORS, LLC
                                        ITS:  GENERAL PARTNER

                                        By:
                                           -------------------------------------
                                        Name:  Mark Angelo
                                        Title: Portfolio Manager

                                       13
<PAGE>
                                    EXHIBIT A
                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

Attention:

          Re:     ZANN  CORP.
                  -----------

Ladies  and  Gentlemen:

     We  are  counsel  to  Zann  Corp. (the "Company"), and have represented the
                                             -------
Company  in  connection  with that certain Standby Equity Distribution Agreement
(the  "Standby  Equity  Distribution Agreement") entered into by and between the
       ---------------------------------------
Company  and Cornell Capital Partners, LP (the "Investor") pursuant to which the
                                                --------
Company  issued to the Investor shares of its Common Stock, par value $0.001 per
share  (the  "Common  Stock").  Pursuant  to  the  Standby  Equity  Distribution
              -------------
Agreement,  the  Company  also  has entered into a Registration Rights Agreement
with  the  Investor  (the "Registration Rights Agreement") pursuant to which the
                           -----------------------------
Company  agreed,  among other things, to register the Registrable Securities (as
defined  in the Registration Rights Agreement) under the Securities Act of 1933,
as amended (the "Securities Act").  In connection with the Company's obligations
                 --------------
under the Registration Rights Agreement, on ____________ ____, the Company filed
a  Registration  Statement  on  Form  ________ (File No. 333-_____________) (the
"Registration  Statement")  with  the  Securities  and  Exchange Commission (the
 -----------------------
"SEC")  relating  to  the  Registrable  Securities which names the Investor as a
 ---
selling  stockholder  thereunder.

     In  connection with the foregoing, we advise you that a member of the SEC's
staff  has  advised  us by telephone that the SEC has entered an order declaring
the  Registration Statement effective under the Securities Act at [ENTER TIME OF
EFFECTIVENESS]  on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic  inquiry  of  a  member  of  the  SEC's  staff,  that  any stop order
suspending  its  effectiveness  has been issued or that any proceedings for that
purpose  are  pending  before,  or  threatened  by,  the SEC and the Registrable
Securities  are  available  for  resale under the Securities Act pursuant to the
Registration  Statement.

                                        Very truly yours,

                                        By:
                                           -------------------------------------

cc:   CORNELL CAPITAL PARTNERS, LPSTANDBY EQUITY DISTRIBUTION AGREEMENT
                      -------------------------------------

     THIS  AGREEMENT  dated as of the 8th day of December 2005 (the "Agreement")
                                                                     ---------
between  CORNELL  CAPITAL  PARTNERS,  LP,  a  Delaware  limited partnership (the
"Investor"), and ZANN CORP., a corporation organized and existing under the laws
 --------
of  the  State  of  Nevada  (the  "Company").
                                   -------

     WHEREAS,  the  parties  desire  that,  upon  the  terms  and subject to the
conditions  contained  herein, the Company shall issue and sell to the Investor,
from  time  to time as provided herein, and the Investor shall purchase from the
Company  up  to Five Million Dollars ($5,000,000) of the Company's common stock,
par  value  $0.001  per  share  (the  "Common  Stock");  and
                                       -------------

     WHEREAS,  such  investments will be made in reliance upon the provisions of
Regulation D ("Regulation D") of the Securities Act of 1933, as amended, and the
               ------------
regulations  promulgated  thereunder  (the  "Securities  Act"), and or upon such
                                             ---------------
other  exemption from the registration requirements of the Securities Act as may
be available with respect to any or all of the investments to be made hereunder.

     WHEREAS,  the  Company  has  engaged  Monitor Capital, Inc. (the "Placement
                                                                       ---------
Agent"),  to  act  as the Company's exclusive placement agent in connection with
-----
the sale of the Company's Common Stock to the Investor hereunder pursuant to the
Placement  Agent  Agreement  dated the date hereof by and among the Company, the
Placement  Agent  and  the  Investor  (the  "Placement  Agent  Agreement").
                                             ---------------------------

     NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I.
                               CERTAIN DEFINITIONS

     Section  1.1.     "Advance" shall mean the portion of the Commitment Amount
                        -------
that the Company shall sell to the Investor.

     Section  1.2.     "Advance  Date"  shall  mean  the first (1st) Trading Day
                        -------------
after expiration of the applicable Pricing Period for each Advance.

     Section  1.3.     "Advance  Notice" shall mean a written notice in the form
                        ---------------
of  Exhibit  A  attached  hereto  to  the Investor executed by an officer of the
    ----------
Company  and setting forth the Advance amount that the Company requests from the
Investor.

     Section  1.4.     "Advance  Notice  Date"  shall mean each date the Company
                        ---------------------
delivers  (in  accordance with Section 2.2(b) of this Agreement) to the Investor
an  Advance  Notice  requiring  the  Investor  to  advance funds to the Company,
subject  to  the  terms  of  this  Agreement.

     Section 1.5.     "Bid Price" shall mean, on any date, the closing bid price
                       ---------
(as  reported  by Bloomberg L.P.) of the Common Stock on the Principal Market or
if  the  Common  Stock  is  not

<PAGE>
traded  on  a  Principal  Market,  the highest reported bid price for the Common
Stock,  as  furnished  by  the  National Association of Securities Dealers, Inc.

     Section 1.6.     "Closing" shall mean one of the closings of a purchase and
                       -------
sale  of  Common  Stock  pursuant  to  Section  2.3.

     Section  1.7.     "Commitment Amount" shall mean the aggregate amount of up
                        -----------------
to Five Million Dollars ($5,000,000) which the Investor has agreed to provide to
the  Company  in  order  to  purchase the Company's Common Stock pursuant to the
terms  and  conditions  of  this  Agreement.

     Section  1.8.     "Commitment  Period"  shall mean the period commencing on
                        ------------------
the earlier to occur of (i) the Effective Date, or (ii) such earlier date as the
Company  and  the  Investor  may  mutually agree in writing, and expiring on the
earliest  to occur of (x) the date on which the Investor shall have made payment
of  Advances  pursuant to this Agreement in the aggregate amount of Five Million
Dollars  ($5,000,000),  (y)  the  date  this Agreement is terminated pursuant to
Section  2.4,  or  (z)  the  date  occurring  twenty-four  (24) months after the
Effective  Date.

     Section  1.9.     "Common Stock" shall mean the Company's common stock, par
                        ------------
value  $0.001  per  share.

     Section  1.10.     "Condition Satisfaction Date" shall have the meaning set
                         ---------------------------
forth  in  Section  7.2.

     Section  1.11.     "Damages" shall mean any loss, claim, damage, liability,
                         -------
costs  and  expenses  (including, without limitation, reasonable attorney's fees
and disbursements and costs and expenses of expert witnesses and investigation).

     Section  1.12.     "Effective  Date"  shall  mean the date on which the SEC
                         ---------------
first  declares effective a Registration Statement registering the resale of the
Registrable  Securities  as  set  forth  in  Section  7.2(a).

     Section  1.13     "Exchange  Act" shall mean the Securities Exchange Act of
                        -------------
1934, as amended, and the rules and regulations promulgated thereunder.

     Section  1.14     "Knowledge"  shall  mean  the  actual  knowledge  of  the
                        ---------
Chairman  -  Chief  Executive  Officer  and  the  Chief Financial Officer of the
Company.

     Section  1.13.     "Losses"  shall  mean  any  and  all  actions, causes of
                         ------
action,  suits,  claims,  losses,  costs  and  expenses  (including  reasonable
attorneys' fees and disbursements), penalties, fees, liabilities and damages.

     Section  1.14.     "Material Adverse Effect" means any continuing effect on
                         -----------------------
the  business,  operations, properties or financial condition of the Company and
its  consolidated  subsidiaries  that is material and adverse to the Company and
such  subsidiaries,  taken  as  a  whole, and/or any condition, circumstance, or
situation  that  would  prohibit  or otherwise interfere with the ability of the
Company to perform any of its obligations under this Agreement, the Registration
Rights  Agreement or the Warrant in any material respect; provided, that none of
                                                          --------
the  following  shall

                                        2
<PAGE>
constitute  a  "Material  Adverse  Effect": (i) any changes or effects resulting
from  the  announcement or consummation of the transactions contemplated by this
Agreement, including, without limitation, any changes or effects associated with
any  particular  Advance,  and  (ii)  changes  in the market price of the Common
Stock.

     Section 1.15.     "Market Price" shall mean the lowest closing Bid Price of
                        ------------
the Common Stock during the Pricing Period.

     Section  1.16.     "Maximum  Advance  Amount"  shall  be  Two Hundred Fifty
                         ------------------------
Thousand Dollars ($250,000) per Advance Notice.

     Section  1.17.     "NASD" shall mean the National Association of Securities
                         ----
Dealers,  Inc.

     Section  1.18.     "Person"  shall  mean  an  individual,  a corporation, a
                         ------
partnership,  an association, a trust or other entity or organization, including
a  government  or political subdivision or an agency or instrumentality thereof.

     Section  1.19.     "Placement  Agent"  shall  mean Monitor Capital, Inc., a
                         ----------------
registered  broker-dealer.

     Section  1.20.     "Pricing  Period"  shall  mean  the five (5) consecutive
                         ---------------
Trading  Days  after  the  Advance  Notice  Date.

     Section 1.21.     "Principal Market" shall mean the Nasdaq National Market,
                        ----------------
the  Nasdaq SmallCap Market, the American Stock Exchange, the OTC Bulletin Board
or  the  New York Stock Exchange, whichever is at the time the principal trading
exchange  or  market  for  the  Common  Stock.

     Section  1.22.     "Purchase  Price"  shall  be  set at ninety five percent
                         ---------------
(95%) of the Market Price during the Pricing Period.

     Section  1.23.     "Register,"  "registered," and "registration" refer to a
                         --------     ----------        ------------
registration  effected  by  preparing  and  filing  one  or  more  Registration
Statements (as defined below) in compliance with the Securities Act and pursuant
to  Rule  415  under  the  Securities  Act  or  any successor rule providing for
offering  securities  on  a  continuous  or  delayed basis ("Rule 415"), and the
                                                             --------
declaration  or  ordering  of effectiveness of such Registration Statement(s) by
the  SEC.

     Section  1.24.     "Registrable  Securities" means (i) the shares of Common
                         -----------------------
Stock  issued  to  the  Investor  pursuant  to  this Agreement, (ii) the Warrant
Shares,  and  (iii) any securities issued or issuable with respect to any of the
foregoing  by  way  of  exchange, stock dividend or stock split or in connection
with  a  combination of shares, recapitalization, merger, consolidation or other
reorganization  or otherwise.  As to any particular Registrable Securities, once
issued  such  securities  shall  cease to be Registrable Securities when (w) the
Registration  Statement  has  been  declared  effective  by  the  SEC  and  such
Registrable  Securities  have  been  disposed  of  pursuant  to the Registration
Statement,  (x)  such  Registrable Securities have been sold under circumstances
under  which  all  of  the  applicable  conditions  of  Rule 144 (or any similar
provision then in force) under the Securities Act ("Rule 144") are met, (y) such
                                                    --------
time  as  such Registrable Securities have been otherwise transferred to holders
who  may  trade  such  shares  without  restriction  under  the

                                        3
<PAGE>
Securities  Act,  and  the  Company  has  delivered  a  new certificate or other
evidence  of  ownership  for such securities not bearing a restrictive legend or
(z)  such  Registrable  Securities  may be sold without registration and without
any  time,  volume or manner limitations pursuant to Rule 144(k) (or any similar
provision  then  in  effect)  under  the  Securities  Act.

     Section  1.25.     "Registration  Rights  Agreement"  shall  mean  the
                         -------------------------------
Registration Rights Agreement dated the date hereof, regarding the filing of the
Registration  Statement  for  the  resale of the Registrable Securities, entered
into  between  the  Company  and  the  Investor.

     Section  1.26.     "Registration  Statement"  shall  mean  a  registration
                         -----------------------
statement  on  Form  SB-2  (if use of such form is then available to the Company
pursuant  to the rules of the SEC and, if not, on such other form promulgated by
the  SEC  for which the Company then qualifies and which counsel for the Company
shall  deem appropriate, and which form shall be available for the resale of the
Registrable  Securities  to  be  registered  thereunder  in  accordance with the
provisions  of  this  Agreement  and  the  Registration Rights Agreement, and in
accordance with the intended method of distribution of such securities), for the
registration  of  the resale by the Investor of the Registrable Securities under
the  Securities  Act.

     Section  1.27.     "Regulation  D"  shall have the meaning set forth in the
                         -------------
recitals  of  this  Agreement.

     Section  1.28.     "SEC" shall mean the Securities and Exchange Commission.
                         ---

     Section  1.29.     "Securities Act" shall have the meaning set forth in the
                         --------------
recitals  of  this  Agreement.

     Section 1.30.     "SEC Documents" shall mean Annual Reports on Form 10-KSB,
                        -------------
Quarterly  Reports  on  Form  10-QSB,  Current  Reports  on  Form  8-K and Proxy
Statements  of  the  Company  as  supplemented  to the date hereof, filed by the
Company  since  December  1,  2004.

     Section  1.31.     "Trading  Day"  shall  mean any day during which the New
                         ------------
York  Stock  Exchange  shall  be  open  for  business.

     Section  1.32.     "Transaction  Documents"  shall mean, collectively, this
                         ----------------------
Agreement,  the  Warrant, the Registration Rights Agreement, the Placement Agent
Agreement and the exhibits and schedules annexed thereto. .

     Section  1.33.     "Warrant"  shall  mean the Warrant to Purchase 4,000,000
                         -------
shares  of  Company  Common  Stock, dated as of even date herewith, which shall,
inter alia, be for a term of four (4) years, and have an exercise price equal to
----- ----
$0.0388.

     Section  1.34.     "Warrant  Shares"  shall  mean  the  4,000,000 shares of
                         ---------------
Common  Stock  underlying  the  Warrant.

                                        4
<PAGE>
                                   ARTICLE II.
                                    ADVANCES

     Section  2.1.     Advances.
                       --------

          Upon  the  terms  and  conditions set forth herein (including, without
limitation,  the  provisions  of Article VII hereof), the Company may request an
Advance  by  the  Investor  by the delivery of an Advance Notice.  The number of
shares of Common Stock that the Investor shall purchase pursuant to each Advance
shall be determined by dividing the amount of the Advance by the Purchase Price.
No  fractional shares shall be issued. Fractional shares shall be rounded to the
next  higher  whole  number  of  shares.  The  aggregate  maximum  amount of all
Advances that the Investor shall be obligated to make under this Agreement shall
not  exceed  the  Commitment  Amount.

     Section  2.2.     Mechanics.
                       ---------

          (a)     Advance Notice.  At any time during the Commitment Period, the
                  --------------
Company may deliver an Advance Notice to the Investor, subject to the conditions
set  forth  in  Section  7.2;  provided, however, the amount for each Advance as
designated  by  the  Company  in the applicable Advance Notice shall not be more
than  the Maximum Advance Amount.  The aggregate amount of the Advances pursuant
to  this  Agreement  shall  not  exceed  the  Commitment  Amount.  The  Company
acknowledges  that  the  Investor  may sell shares of the Company's Common Stock
corresponding  with  a  particular  Advance  Notice  after the Advance Notice is
received  by  the  Investor.  There  shall be a minimum of five (5) Trading Days
between  each  Advance  Notice  Date.

          (b)     Date  of  Delivery of Advance Notice.  An Advance Notice shall
                  ------------------------------------
be  deemed  delivered  on  (i)  the  Trading  Day it is received by facsimile or
otherwise  by  the  Investor if such notice is received prior to 5:00 pm Eastern
Time,  or  (ii)  the  immediately  succeeding  Trading  Day if it is received by
facsimile  or  otherwise  after  5:00 pm Eastern Time on a Trading Day or at any
time  on  a  day  which  is  not a Trading Day.  No Advance Notice may be deemed
delivered  on  a  day  that  is  not  a  Trading  Day.

     Section  2.3.     Closings.  On  each  Advance  Date  (i) the Company shall
                       --------
deliver  to  the  Investor  such  number of shares of the Company's Common Stock
registered  in  the  name  of  the Investor as shall equal (x) the amount of the
Advance  specified in such Advance Notice pursuant to Section 2.1 herein divided
by (y) the Purchase Price and (ii) the Investor shall deliver to the Company the
amount  of  the  Advance  specified  in  the  Advance Notice by wire transfer of
immediately available funds.  In addition, on or prior to the Advance Date, each
of  the  Company  and  the  Investor  shall  deliver to the other all documents,
instruments  and writings required to be delivered by either of them pursuant to
this  Agreement  in  order to implement and effect the transactions contemplated
herein.  The  extent  the  Company  has  not  paid  the  fees,  expenses,  and
disbursements  of  the  Investor  in accordance with Section 12.4, the amount of
such  fees,  expenses,  and  disbursements  may be deducted by the Investor (and
shall be paid to the relevant party) directly out of the proceeds of the Advance
with  no  reduction  in the amount of shares of the Company's Common Stock to be
delivered  on  such  Advance  Date.

                                        5
<PAGE>
     Section 2.4.     Termination of Investment.  The obligation of the Investor
                      -------------------------
to  make  an  Advance  to the Company pursuant to this Agreement shall terminate
permanently  (including  with  respect  to  an  Advance  Date  that  has not yet
occurred)  in  the event that (i) there shall occur any stop order or suspension
of  the  effectiveness  of  the Registration Statement for an aggregate of fifty
(50)  Trading  Days,  other  than  due  to  the  acts of the Investor, Yorkville
Advisors,  LLC, or any of their respective affiliates, agents or reprenetatives,
during  the  Commitment  Period,  or  (ii)  the  Company  shall at any time fail
materially to comply with the requirements of Article VI and such failure is not
cured  within  thirty (30) days after receipt of written notice thereof from the
Investor,  provided, however, that this termination provision shall not apply to
           --------  -------
any  period  commencing  upon  the  filing of a post-effective amendment to such
Registration  Statement  and  ending  upon the date on which such post effective
amendment  is  declared  effective  by  the  SEC.

     Section  2.5.     Agreement  to  Advance  Funds.  The  Investor  agrees  to
                       -----------------------------
advance the amount specified in the Advance Notice to the Company on the Advance
Date  provided that the following conditions shall have been satisfied or waived
by  the  Investor:

          (a)     the  execution  and delivery by the Company, and the Investor,
of  this  Agreement  and  the  Exhibits  hereto;

          (b)     The Company shall have delivered to the Investor the shares of
Common  Stock  and  certificates representing such shares of Common Stock, which
shall  be  free  of  all  restrictive  legends,  applicable  to  the Advance, as
determined  pursuant  to  Section  2.3;

          (c)     the  Company's  Registration  Statement  with  respect  to the
resale  of  the  Registrable  Securities  in  accordance  with  the terms of the
Registration Rights Agreement shall have been declared effective by the SEC;

          (d)     the  Company  shall  have  obtained  all  material permits and
qualifications  required  by  any applicable state for the offer and sale of the
Registrable  Securities, or shall have the availability of exemptions therefrom,
and  the  sale  and  issuance  of  the  Registrable  Securities  shall be to the
Company's  Knowledge  legally permitted by all laws and regulations to which the
Company  is  subject;

          (e)     the  Company  shall have filed with the Commission in a timely
manner  all  reports,  notices  and  other  documents  required  of a "reporting
company" under the Exchange Act and applicable Commission regulations;

          (f)     the  fees  as  set forth in Section 12.4 a(i), b, and c(ii) of
this  Agreement  shall  have  been  paid  or shall be deemed paid if withheld as
provided  in  Section  2.3;  and

          (g)     the  conditions  set  forth  in  Section  7.2  shall have been
satisfied.

          (h)     the  Company  shall  have  provided  to  the  Investor  an
acknowledgement,  from the Company's independent certified public accountants as
to  its ability to provide all consents required in order to file a registration
statement  in  connection  with  this  transaction;

          (i)     The  Company's  transfer  agent  shall  be  DWAC  eligible.

                                        6
<PAGE>
     Section  2.6.     Lock  Up  Period.  On  the date hereof, the Company shall
                       ----------------
obtain  from each officer and director a lock-up agreement, as defined below, in
the form annexed hereto as Schedule 2.6 agreeing to only sell in compliance with
the  volume  limitation  of  Rule  144.

     Section  2.7.     Hardship.  In  the event the Investor sells shares of the
                       --------
Company's  Common Stock after receipt of an Advance Notice and the Company fails
to  deliver  to  the  Investor  on  the  Advance Date the shares of Common Stock
corresponding  to  the  applicable  Advance,  the  Company acknowledges that the
Investor  shall  suffer  financial  hardship  and therefore the Company shall be
liable  to  the  Investor for the lesser of (x) the amount of any and all Losses
incurred  by Investor as a result of the Company's failure to deliver the shares
of  Common  Stock,  and  (y) $5,000,000.  The parties acknowledge and agree that
this Section 2.7 shall not expand the Company's indemnification and contribution
obligations  set  forth  in  Section  5.1  below.

                                  ARTICLE III.
             REPRESENTATIONS, WARRANTIES, AND COVENANTS OF INVESTOR

     Investor  hereby  represents  and warrants to, and agrees with, the Company
that  the  following  are  true and correct as of the date hereof and as of each
Advance  Date:

     Section  3.1.     Organization  and  Authorization.  The  Investor  is duly
                       --------------------------------
incorporated  or  organized  and  validly  existing  in  the jurisdiction of its
incorporation  or  organization  and  has  all  requisite power and authority to
purchase and hold the securities issuable hereunder.  The decision to invest and
the  execution  and delivery of this Agreement by such Investor, the performance
by  such  Investor  of  its  obligations  hereunder and the consummation by such
Investor  of  the transactions contemplated hereby have been duly authorized and
requires  no other proceedings on the part of the Investor.  The undersigned has
the  right,  power  and  authority to execute and deliver this Agreement and all
other  instruments  (including,  without  limitations,  the  Registration Rights
Agreement),  on  behalf  of the Investor.  This Agreement has been duly executed
and  delivered  by  the Investor and, assuming the execution and delivery hereof
and  acceptance  thereof  by  the  Company,  constitutes  a  valid  and  binding
obligation  of  the Investor enforceable against the Investor in accordance with
its  terms,  except  as  such  enforceability  may  be  limited  by  applicable
bankruptcy,  securities,  insolvency,  or similar laws relating to, or affecting
generally  the enforcement of creditors' rights and remedies, or indemnification
or  by  other  equitable  principles  of  general  application.

     Section  3.2.     Evaluation of Risks.  The Investor has such knowledge and
                       -------------------
experience in financial, tax and business matters as to be capable of evaluating
the  merits  and  risks  of,  and  bearing  the  economic  risks entailed by, an
investment  in  the  Company  and of protecting its interests in connection with
this  transaction.  It  recognizes that its investment in the Company involves a
high  degree  of  risk  and  can  withstand  the effects of a loss of its entire
investment  in  the  Company.

     Section  3.3.     No  Legal  Advice  From  the  Company.  The  Investor
                       -------------------------------------
acknowledges  that  it  had  the  opportunity  to  review this Agreement and the
transactions  contemplated  by  this  Agreement  with  its own legal counsel and
investment  and  tax  advisors.  The  Investor  is  relying

                                        7
<PAGE>
solely on such counsel and advisors and not on any statements or representations
of  the  Company, its legal counsel, or any of its representatives or agents for
legal,  tax  or  investment  advice  with  respect  to  this  investment,  the
transactions  contemplated  by  this  Agreement  or  the  securities laws of any
jurisdiction.

     Section  3.4.     Investment  Purpose.  The shares of Common Stock, Warrant
                       -------------------
and  Warrant  Shares being purchased in the transactions contemplated herein are
being  purchased  by the Investor for its own account, and solely for investment
purposes.  The  Investor  hereby agrees not to assign or in any way transfer the
Investor's  rights to such shares of Common Stock, Warrant and Warrant Shares or
any  interest  therein  and acknowledges that the Company will not recognize any
purported  assignment  or transfer except in accordance with applicable Federal,
state and foreign securities laws.  No other person has or will have a direct or
indirect  beneficial  interest  in  the  securities.  The Investor agrees not to
sell,  hypothecate  or  otherwise  transfer the Investor's securities unless the
securities  are registered under Federal and applicable state securities laws or
unless, in the opinion of counsel satisfactory to the Company, an exemption from
such  laws  is  available.

     Section  3.5.     Accredited  Investor.  The  Investor  is  an  "Accredited
                       --------------------                           ----------
Investor"  as  that  term  is  defined  in Rule 501(a)(3) of Regulation D of the
--------
Securities  Act.

     Section  3.6.     Information.  The  Company  has  made  available  to  the
                       -----------
Investor  and  its advisors (including its legal counsel), if any, the materials
relating  to  the  business, finances and operations of the Company requested by
them.  The Investor and its advisors, if any, have been afforded the opportunity
to  ask  questions of the Company and its management.  The Investor has reviewed
all information it has deemed material to making an informed investment decision
with respect to the Investor's investment in the shares of Common Stock, Warrant
and  Warrant  Shares  contemplated herein.  Neither such inquiries nor any other
due  diligence  investigations conducted by such Investor or its advisors or its
representatives,  if  any, shall modify, amend or affect the Investor's right to
rely  on  the  Company's  representations  and  warranties  contained  in  this
Agreement.  The  Investor  is  in a position regarding the Company, which, based
upon  employment,  family relationship or economic bargaining power, enabled and
enables  such  Investor  to  obtain  information  from  the  Company in order to
evaluate  the merits and risks of this investment.  The Investor has sought such
accounting,  legal  and  tax  advice,  as it has considered necessary to make an
informed  investment  decision  with  respect  to  this  transaction.

     Section  3.7.     Receipt  of Documents. The Investor and its legal counsel
                       ---------------------
have reviewed in their entirety:  (i) each of the Transaction Documents to which
it  is  a  party;  (ii) all due diligence and other information the Investor has
deemed  necessary  in order to make an informed investment decision with respect
to  Investor's  investment  in  the  shares of Common Stock, Warrant and Warrant
Shares  contemplated  herein; (iii) the Company's Form 10-KSB for the year ended
December  31,  2004 and Form 10-QSB for the period ended June 30, 2005; and (iv)
answers  to  all  questions  the  Investor submitted to the Company regarding an
investment  in  the  Company;  and  the  Investor  has relied on the information
contained  therein  and  has not been furnished any other documents, literature,
memorandum  or  prospectus.

     Section  3.8.     Registration  Rights Agreement.  The parties have entered
                       ------------------------------
into the Registration Rights Agreement dated the date hereof.

                                        8
<PAGE>
     Section  3.9.     No General Solicitation.  Neither the Company, nor any of
                       -----------------------
its affiliates, nor 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 Securities Act) in connection with the offer or sale of
the  securities  contemplated  herein.

     Section  3.10.     Not  an  Affiliate.  The  Investor  is  not  an officer,
                        ------------------
director  or  a  person  that  directly,  or  indirectly  through  one  or  more
intermediaries,  controls  or  is controlled by, or is under common control with
the  Company  or any "Affiliate" of the Company (as that term is defined in Rule
                      ---------
405  of  the  Securities  Act).

     Section  3.11.     Trading  Activities  and  Restrictions.  The  Investor
                        --------------------------------------
covenants that neither the Investor, nor any entity managed or controlled by the
Investor,  nor  any of their respective affiliates, will, or cause or assist any
Person to enter into or execute any "short sale" (including, without limitation,
as  such  term  is  defined in Rule 200 of Regulation SHO promulgated by the SEC
under  the  Securities  Exchange  Act  of  1934, as amended) with respect to any
securities  of  the Company or any similar transaction with similar effect.  The
Company  acknowledges  and  agrees  that  upon  receipt of an Advance Notice the
Investor  has the right to sell the shares to be issued to the Investor pursuant
to  the  Advance  Notice  during  the  applicable  Pricing  Period.

     Section  3.12.     Warrant.  The  Company  has  issued  the  Warrant to the
                        -------
Investor  as  of  the  date  hereof.

                                   ARTICLE IV.
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except  as  stated below, on the disclosure schedules attached hereto or in
the  SEC  Documents  (as  defined  herein),  the  Company  hereby represents and
warrants  to,  and  covenants with, the Investor that the following are true and
correct  as  of  the  date  hereof:

     Section  4.1.     Organization  and  Qualification.  The  Company  is  duly
                       --------------------------------
incorporated  or  organized  and  validly  existing  in  the jurisdiction of its
incorporation  or  organization and has all requisite corporate power to own its
properties  and  to  carry  on its business as now being conducted.  Each of the
Company  and  its  subsidiaries is duly qualified as a foreign corporation to do
business  and  is  in good standing in every jurisdiction in which the nature of
the  business  conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a  Material Adverse Effect on the Company and its subsidiaries taken as a whole.

     Section  4.2.     Authorization,  Enforcement,  Compliance  with  Other
                       -----------------------------------------------------
Instruments.  (i) The Company has the requisite corporate power and authority to
-----------
enter into and perform each of the Transaction Documents to which it is a party,
in  accordance  with  the terms thereof, (ii) the execution and delivery of each
such  Transaction  Document  by  the  Company  and the consummation by it of the
transactions  contemplated  therein,  have been duly authorized by the Company's
Board  of  Directors  and no further consent or authorization is required by the
Company, its Board of Directors or its stockholders, (iii) each such Transaction
Document  has been duly executed and delivered by the Company, (iv) assuming the
execution  and  delivery  thereof  and  acceptance  by  the  Investor  each such
Transaction  Document  and  any  related

                                        9
<PAGE>
agreements  constitute a valid and binding obligation of the Company enforceable
against  the Company in accordance with its terms, except as such enforceability
may  be limited by applicable bankruptcy, securities insolvency, or similar laws
relating  to,  or  affecting generally, the enforcement of creditors' rights and
remedies  or  indemnification  or  by  other  equitable  principles  of  general
application.

     Section  4.3.     Capitalization.  The  authorized  capital  stock  of  the
                       --------------
Company  consists  of  (a)  4,000,000,000  shares  of  Common  Stock,  of  which
31,645,359  shares  are  issued  and outstanding as of December 2, 2005, and (b)
350,000,000  shares  of  Preferred Stock, $0.001 par value per share ("Preferred
                                                                       ---------
Stock"), of which (i) 2,447,700 are issued and outstanding as Series A Preferred
-----
Stock  as of December 2, 2005, (ii) 293,501 are issued and outstanding as Series
B  Preferred  Stock  as of December 2, 2005, and (iii) 10,000,000 are issued and
outstanding  as  Series  C  Preferred Stock as of December 2, 2005.  All of such
outstanding  shares  have  been  validly  issued  and  are  fully  paid  and
nonassessable.  Except as contemplated in the Transaction Documents or disclosed
in  the  SEC  Documents,  as  of  the date hereof, no shares of Common Stock are
subject  to  preemptive  rights  or  any  other  similar  rights or any liens or
encumbrances  suffered  or  permitted by the Company.  Except as contemplated in
the  Transaction  Documents or as disclosed in the SEC Documents, as of the date
hereof,  (i)  there  are  no  outstanding  options,  warrants,  scrip, rights to
subscribe  to,  calls or commitments of any character whatsoever relating to, or
securities  or  rights  convertible  into,  any  shares  of capital stock of the
Company or any of its subsidiaries, or contracts, commitments, understandings or
arrangements  by  which  the Company or any of its subsidiaries is or may become
bound  to  issue additional shares of capital stock of the Company or any of its
subsidiaries  or  options,  warrants,  scrip,  rights  to subscribe to, calls or
commitments  of  any  character  whatsoever relating to, or securities or rights
convertible  into,  any  shares  of  capital  stock of the Company or any of its
subsidiaries,  (ii)  there are no outstanding debt securities (iii) there are no
outstanding registration statements other than on Form S-8 and (iv) there are no
agreements or arrangements under which the Company or any of its subsidiaries is
obligated  to  register the sale of any of their securities under the Securities
Act.  There are no securities or instruments containing anti-dilution or similar
provisions  that  will  be  triggered by any of the Transaction Documents or the
consummation  of  the transactions described herein or therein.  The Company has
made  available  to  the  Investor  true  and  correct  copies  of the Company's
Certificate  of  Incorporation,  as  amended and as in effect on the date hereof
(the "Certificate of Incorporation"), and the Company's By-laws, as in effect on
      ----------------------------
the  date  hereof  (the  "By-laws"), and the terms of all securities convertible
                          -------
into  or  exercisable  for  Common  Stock and the material rights of the holders
thereof  in  respect  thereto.

     Section  4.4.     No  Conflict.  The execution, delivery and performance of
                       ------------
this  Agreement  by  the  Company  and  the  consummation  by the Company of the
transactions  contemplated  hereby  will  not  (i)  result in a violation of the
Certificate of Incorporation, any certificate of designations of any outstanding
series  of  preferred  stock  of the Company or By-laws 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 to which the Company or any of its subsidiaries is a party, or result
in  a  violation  of  any  law,  rule,  regulation,  order,  judgment  or decree
(including  federal  and state securities laws and regulations and the rules and
regulations  of  the  Principal  Market  on  which  the  Common Stock is quoted)
applicable  to  the  Company or any of its subsidiaries or by which any material
property  or  asset  of  the  Company  or  any  of  its

                                       10
<PAGE>
subsidiaries  is  bound  or  affected  and  which would cause a Material Adverse
Effect.  Except  as  disclosed in the SEC Documents, neither the Company nor its
subsidiaries  is in violation of any term of or in default under its Articles of
Incorporation  or  By-laws  or  their  organizational  charter  or  by-laws,
respectively,  or,  except  to  the  extent  such violation or default would not
constitute  a  Material  Adverse  Effect,  any  material  contract,  agreement,
mortgage,  indebtedness, indenture, instrument, judgment, decree or order or any
statute,  rule  or  regulation applicable to the Company or its subsidiaries. To
the Company's Knowledge, the business of the Company and its subsidiaries is not
being  conducted  in violation of any material law, ordinance, regulation of any
governmental  entity.  Except as specifically contemplated by this Agreement and
as  required  under the Securities Act and any applicable state securities laws,
the Company 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 or
contemplated  by  this  Agreement  or  the  Registration  Rights  Agreement  in
accordance  with  the  terms hereof or thereof except where the failure to do so
would  not  constitute  a Material Adverse Effect. All consents, authorizations,
orders,  filings  and  registrations  which  the  Company  is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the  date  hereof.

     Section  4.5.     SEC  Documents;  Financial  Statements.  Since January 1,
                       --------------------------------------
2003,  the Company has filed all reports required to be filed by it with the SEC
under  the Exchange Act.  The Company has made available to the Investor and its
representatives  through  the  SEC's  website  at  http://www.sec.gov,  true and
complete  copies  of  the  SEC  Documents.  As of their respective dates, to the
Company's Knowledge the financial statements of the Company disclosed in the SEC
Documents  (the  "Financial  Statements")  complied  as  to form in all material
                  ---------------------
respects  with  applicable  accounting  requirements and the published rules and
regulations  of  the  SEC with respect thereto.  To the Company's Knowledge such
financial  statements  have  been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved (except
(i)  as  may  be  otherwise  indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may  exclude  footnotes  or  may be condensed or summary statements) and, fairly
present in all material respects the financial position of the Company as of the
dates  thereof  and the results of its operations and cash flows for the periods
then  ended  (subject,  in  the case of unaudited statements, to normal year-end
audit  adjustments).  No  other  information  provided  by  or  on behalf of the
Company  to the Investor which is not included in the SEC Documents contains any
untrue  statement  of  a  material  fact.

     Section  4.6.     10b-5.  The  SEC  Documents  do  not  include  any untrue
                       -----
statements  of  material  fact,  nor  do  they  omit  to state any material fact
required to be stated therein necessary to make the statements made, in light of
the  circumstances  under  which  they  were  made,  not  misleading.

     Section 4.7.     No Default.  Except as disclosed in the SEC Documents, the
                      ----------
Company  is  not  in  default  in  the performance or observance of any material
obligation,  agreement,  covenant  or  condition  contained  in  any  indenture,
mortgage, deed of trust or other material instrument or agreement to which it is
a  party  or  by which it is or its property is bound and neither the execution,
nor  the  delivery  by  the  Company,  nor the performance by the Company of its
obligations  under  this  Agreement or any of the exhibits or attachments hereto
will  conflict  with

                                       11
<PAGE>
or  result  in  the breach or violation of any of the terms or provisions of, or
constitute  a  default  or  result  in the creation or imposition of any lien or
charge  on  any  assets  or  properties  of the Company under its Certificate of
Incorporation, By-Laws, any material indenture, mortgage, deed of trust or other
material  agreement applicable to the Company or instrument to which the Company
is  a  party  or  by which it is bound, or any statute, or any decree, judgment,
order,  rules  or  regulation of any court or governmental agency or body having
jurisdiction  over  the  Company  or its properties, in each case which default,
lien  or  charge  is  likely to cause a Material Adverse Effect on the Company's
business  or  financial  condition.

     Section  4.8.     Absence  of  Events  of  Default.  Except  for  matters
                       --------------------------------
described  in  the  SEC Documents and/or this Agreement, no Event of Default, as
defined  in  the  respective  agreement  to which the Company is a party, and no
event  which,  with  the  giving of notice or the passage of time or both, would
become  an  Event  of  Default  (as so defined), has occurred and is continuing,
which  would  have  a  Material  Adverse  Effect  on  the  Company's  business,
properties,  prospects,  financial  condition  or  results  of  operations.

     Section  4.9.     Intellectual  Property  Rights.  The  Company  and  its
                       ------------------------------
subsidiaries  own  or  possess  adequate  rights or licenses to use all material
trademarks,  trade  names,  service  marks,  service mark registrations, service
names,  patents,  patent  rights,  copyrights,  inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct their
respective  businesses  as now conducted.   Except as set forth in Schedule 4.9,
the  Company  and its subsidiaries do not have any Knowledge of any infringement
by  the  Company  or  its subsidiaries of trademark, trade name rights, patents,
patent  rights,  copyrights, inventions, licenses, service names, service marks,
service mark registrations, trade secret or other similar rights of others, and,
to  the  Knowledge of the Company, there is no claim, action or proceeding being
made  or  brought  against,  or  to  the  Company's  Knowledge, being threatened
against,  the  Company  or  its  subsidiaries  regarding  trademark, trade name,
patents,  patent  rights,  invention, copyright, license, service names, service
marks,  service  mark registrations, trade secret or other infringement; and the
Company  and  its  subsidiaries  are unaware of any facts or circumstances which
might  give  rise  to  any  of  the  foregoing.

     Section  4.10.     Employee  Relations.  Neither the Company nor any of its
                        -------------------
subsidiaries  is  involved  in  any  labor  dispute nor, to the Knowledge of the
Company or any of its subsidiaries, is any such dispute threatened.  None of the
Company's  or its subsidiaries' employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

     Section  4.11.     Environmental  Laws.  To  the  Company's  Knowledge, the
                        -------------------
Company and its subsidiaries are (i) in compliance in all material respects with
any  and  all  applicable  material  foreign,  federal, state and local laws and
regulations  relating  to  the  protection  of  human  health  and  safety,  the
environment  or  hazardous  or  toxic  substances  or  wastes,  pollutants  or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
               ------------------
other  approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance in all material respects
with  all  terms  and  conditions of any such permit, license or approval except
where  the  failure  to  do  so  would not constitute a Material Adverse Effect.

                                       12
<PAGE>
     Section  4.12.     Title.  Except  as  set  forth in the SEC Documents, the
                        -----
Company  has  good  and  marketable  title to its properties and material assets
owned by it, free and clear of any pledge, lien, security interest, encumbrance,
claim  or equitable interest other than such as are not material to the business
of  the  Company.  Any  real  property  and  facilities  held under lease by the
Company  and  its  subsidiaries  are  held  by  them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with  the use made and proposed to be made of such property and buildings by the
Company  and  its  subsidiaries.

     Section  4.13.     Insurance.  The Company and each of its subsidiaries are
                        ---------
insured  by  insurers of recognized financial responsibility against such losses
and  risks  and  in  such  amounts  as  management of the Company believes to be
prudent  and  customary  in  the  businesses  in  which  the  Company  and  its
subsidiaries  are  engaged  and  in  light  of  the  Company's current liquidity
constaints.  Neither  the  Company  nor any such subsidiary has been refused any
insurance  coverage  sought  or  applied  for.

     Section  4.14.     Regulatory  Permits.  To  the  Company's  Knowledge, the
                        -------------------
Company  and  its subsidiaries possess all material certificates, authorizations
and  permits  issued  by  the  appropriate  federal, state or foreign regulatory
authorities  necessary  to  conduct their respective businesses, and neither the
Company  nor any such subsidiary has received any notice of proceedings relating
to  the  revocation  or  modification  of any such certificate, authorization or
permit.

     Section  4.15.     Internal  Accounting  Controls.  The Company and each of
                        ------------------------------
its subsidiaries maintain a system of internal accounting controls sufficient to
provide  reasonable  assurance  that (i) transactions are executed in accordance
with  management's  general  or  specific  authorizations, (ii) transactions are
recorded  as  necessary  to  permit  preparation  of  financial  statements  in
conformity  with  generally accepted accounting principles and to maintain asset
accountability,  (iii)  access  to  assets  is permitted only in accordance with
management's  general  or  specific  authorization  and  (iv)  the  recorded
accountability  for  assets  is  compared with the existing assets at reasonable
intervals  and  appropriate  action  is  taken  with respect to any differences.

     Section  4.16.     No  Material Adverse Breaches, etc.  Except as set forth
                        ----------------------------------
in the SEC Documents, neither the Company nor any of its subsidiaries is subject
to  any  charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which in the judgment of the Company's officers has or
is  expected  in  the  future to have a Material Adverse Effect on the business,
properties,  operations, financial condition, results of operations or prospects
of  the  Company or its subsidiaries.  Except as set forth in the SEC Documents,
neither  the Company nor any of its subsidiaries is in breach of any contract or
agreement  which  breach,  in  the judgment of the Company's officers, has or is
expected  to  have  a  Material  Adverse  Effect  on  the  business, properties,
operations,  financial  condition,  results  of  operations  or prospects of the
Company  or  its  subsidiaries.

                                       13
<PAGE>
     Section  4.17.     Absence  of  Litigation.  Except as set forth in the SEC
                        -----------------------
Documents, there is no action, suit, proceeding, inquiry or investigation before
or  by  any court, public board, government agency, self-regulatory organization
or body pending against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or finding would
have  a  Material  Adverse  Effect

     Section  4.18.     Subsidiaries.  Except as disclosed in the SEC Documents,
                        ------------
the  Company  does  not  presently  own  or control, directly or indirectly, any
interest  in  any  other corporation, partnership, association or other business
entity.

     Section  4.19.     Tax  Status.  Except  as disclosed in the SEC Documents,
                        -----------
the Company and each of its subsidiaries has made or filed all federal and state
income  and  all  other  tax  returns,  reports and declarations required by any
jurisdiction  to which it is subject and (unless and only to the extent that the
Company  and  each  of  its  subsidiaries  has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) has paid
all  taxes  and  other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except  those  being  contested  in  good  faith  and has set aside on its books
provision  reasonably  adequate  for  the  payment  of  all  taxes  for  periods
subsequent  to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority  of any jurisdiction, and the officers of the Company know of no basis
for  any  such  claim.

     Section  4.20.     Certain  Transactions.  Except  as  set forth in the SEC
                        ---------------------
Documents  none  of  the  officers,  directors,  or  employees of the Company is
presently  a  party to any transaction with the Company (other than for services
as  employees,  officers  and  directors),  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 corporation, partnership, trust or other entity in which any
officer,  director,  or  any  such  employee has a substantial interest or is an
officer,  director,  trustee  or  partner.

     Section  4.21.     Fees  and  Rights  of First Refusal.  The Company is not
                        -----------------------------------
obligated  to offer the securities offered hereunder on a right of first refusal
basis  or  otherwise to any third parties including, but not limited to, current
or  former  shareholders  of the Company, underwriters, brokers, agents or other
third  parties.

     Section  4.22.     Use of Proceeds.  The Company shall use the net proceeds
                        ---------------
from  this  offering  for  general  corporate  purposes,  including,  without
limitation,  the payment of loans incurred by the Company.  However, in no event
shall  the  Company  use the net proceeds from this offering for the payment (or
loan  to  any  such person for the payment) of any judgment, or other liability,
incurred by any executive officer, officer, director or employee of the Company,
except  for  any  liability owed to such person for services rendered, or if any
judgment or other liability is incurred by such person originating from services
rendered  to  the  Company,  or  the  Company  has  indemnified such person from
liability.

     Section  4.23.     Further  Representation  and  Warranties of the Company.
                        -------------------------------------------------------
For  so  long  as  any securities issuable hereunder held by the Investor remain
outstanding,  the  Company

                                       14
<PAGE>
acknowledges,  represents, warrants and agrees that it will maintain the listing
of  its  Common  Stock  on  the  Principal  Market.

     Section  4.24.     Opinion  of  Counsel.  Investor shall receive an opinion
                        --------------------
letter from counsel to the Company on the date hereof.

     Section  4.25.     Opinion  of  Counsel.  The Company will use commercially
                        --------------------
reasonable  efforts  to  obtain  for  the  Investor,  at  the Company's expense,
opinions  of  counsel  which  may  be  reasonably  required in order to sell the
securities  issuable  hereunder  without  restriction.

     Section  4.26.     Dilution.  The  Company  is  aware and acknowledges that
                        --------
issuance  of  shares  of  the  Company's  Common  Stock  could cause dilution to
existing shareholders and could significantly increase the outstanding number of
shares  of  Common  Stock.

                                   ARTICLE V.
                                 INDEMNIFICATION

     The  Investor  and  the  Company  represent to the other the following with
respect  to  itself:

     Section  5.1.     Indemnification.
                       ---------------

          (a)     In  consideration  of the Investor's execution and delivery of
the  Transaction  Documents to which the Investor is a party, and in addition to
all  of the Company's other obligations under the Transaction Documents to which
the  Investor  is a party, the Company shall defend, protect, indemnify and hold
harmless  the  Investor, and all of its officers, directors, partners, employees
and agents (including, without limitation, those retained in connection with the
transactions  contemplated  by  this  Agreement)  (collectively,  the  "Investor
                                                                        --------
Indemnitees")  from  and  against  any and all actions, causes of action, suits,
-----------
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection  therewith (irrespective of whether any such Investor Indemnitee is a
party  to  the  action  for  which  indemnification  hereunder  is  sought), and
including  reasonable  attorneys'  fees  and  disbursements  (the  "Indemnified
                                                                    -----------
Liabilities"),  incurred  by the Investor Indemnitees or any of them as a result
-----------
of,  or  arising  out  of,  or relating to (a) any material misrepresentation or
breach  of  any  material  representation or warranty made by the Company in the
Transaction  Documents,  (b)  any  material breach of any covenant, agreement or
obligation  of the Company contained in the Transaction Documents other than any
breach  resulting  from  any  action  or  inaction  on  the part of any Investor
Indemnitee,  (c) any cause of action, suit or claim brought or made against such
Investor  Indemnitee  not  arising  out of any action or inaction of an Investor
Indemnitee,  and  arising  out  of  or  resulting  from the execution, delivery,
performance  or  enforcement of the Transaction Documents by any of the Investor
Indemnitees,  or (d) any fraud by the Company; provided, that to the extent that
the  foregoing  undertaking  by the Company may be unenforceable for any reason,
the  Company shall make the maximum contribution to the payment and satisfaction
of  each  of  the Indemnified Liabilities, which is permissible under applicable
law.

          (b)     In  consideration  of  the Company's execution and delivery of
the  Transaction  Documents  to which the Company is a party, and in addition to
all of the Investor's other obligations under the Transaction Documents to which
the  Company  is  a  party,  the

                                       15
<PAGE>
Investor  shall defend, protect, indemnify and hold harmless the Company and all
of  its  officers,  directors,  shareholders,  employees  and agents (including,
without  limitation,  those  retained  in  connection  with  the  transactions
contemplated  by  this Agreement) (collectively, the "Company Indemnitees") from
                                                      -------------------
and  against  any  and  all  Indemnified  Liabilities  incurred  by  the Company
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any  misrepresentation  or  breach of any representation or warranty made by the
Investor  in  any  Transaction  Documents  to which any Investor Indemnitee is a
party,  (b)  any  breach  of  any  covenant,  agreement  or  obligation  of  the
Investor(s)  contained  in  any  Transaction  Documents  to  which  any Investor
Indemnitee  is  a  party, (c) any cause of action, suit or claim brought or made
against such Company Indemnitee based on omissions or misrepresentations made or
caused  by any Investor Indemnitee or due to a breach by any Investor Indemnitee
and  arising  out  of  or resulting from the execution, delivery, performance or
enforcement  of the Transaction Documents to which the Company is a party or (d)
any  fraud  by  the  Investor(s); provided that to the extent that the foregoing
undertaking  by  the  Investor may be unenforceable for any reason, the Investor
shall  make  the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities, which is permissible under applicable law.

               (c)     The  obligations  of  the parties to indemnify under this
Section  5.1  shall  survive  termination.

                                   ARTICLE VI.
                            COVENANTS OF THE COMPANY

     Until  the  expiration  of  the  Commitment  Period,  the Company agrees as
follows:

     Section  6.1.     Registration  Rights.  The  Company  shall  cause  the
                       --------------------
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all material respects with the terms thereof.

     Section  6.2.     Listing  of Common Stock.  The Company shall maintain the
                       ------------------------
Common Stock's authorization for quotation on the Principal Market.

     Section  6.3.     Exchange  Act  Registration.  The  Company will cause its
                       ---------------------------
Common  Stock  to  continue to be registered under Section 12(g) of the Exchange
Act, will file in a timely manner all reports and other documents required of it
as  a  reporting  company under the Exchange Act and will not take any action or
file  any  document  (whether  or  not  permitted  by  Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Exchange Act.

     Section  6.4.     Transfer  Agent  Instructions.  Upon effectiveness of the
                       -----------------------------
Registration  Statement  the  Company shall deliver instructions to its transfer
agent  to  issue  shares  of  Common  Stock  to the Investor free of restrictive
legends  on  or  before  each  Advance  Date.

     Section  6.5.     Corporate  Existence.  The  Company  will  take all steps
                       --------------------
necessary to preserve and continue the corporate existence of the Company.

                                       16
<PAGE>
     Section  6.6.     Notice  of  Certain  Events  Affecting  Registration;
                       -----------------------------------------------------
Suspension  of  Right  to Make an Advance.  The Company will promptly notify the
-----------------------------------------
Investor  upon  its  becoming  aware  of  the occurrence of any of the following
events  in respect of a registration statement or related prospectus relating to
an offering of Registrable Securities: (i) receipt of any request for additional
information  by  the  SEC  or  any other Federal or state governmental authority
during  the period of effectiveness of the Registration Statement for amendments
or  supplements  to  the  registration statement or related prospectus; (ii) the
issuance by the SEC or any other Federal or state governmental authority of  any
stop  order  suspending  the  effectiveness of the Registration Statement or the
initiation  of  any  proceedings  for  that  purpose;  (iii)  receipt  of  any
notification  with  respect  to the suspension of the qualification or exemption
from  qualification  of  any  of  the  Registrable  Securities  for  sale in any
jurisdiction  or  the  initiation  of  any proceeding for such purpose; (iv) the
happening  of  any  event  that  makes  any  statement  made in the Registration
Statement  or  related  prospectus  of any document incorporated or deemed to be
incorporated  therein  by  reference  untrue  in  any  material  respect or that
requires  the  making  of  any  material  changes in the Registration Statement,
related  prospectus  or  documents  so  that,  in  the  case of the Registration
Statement,  it  will not contain any untrue statement of a material fact or omit
to  state  any  material fact required to be stated therein or necessary to make
the  statements  therein  not  misleading,  and  that in the case of the related
prospectus,  it will not contain any untrue statement of a material fact or omit
to  state  any  material fact required to be stated therein or necessary to make
the  statements therein, in the light of the circumstances under which they were
made,  not  misleading;  and  (v)  the Company's reasonable determination that a
post-effective amendment to the Registration Statement would be appropriate; and
the  Company will promptly make available to the Investor any such supplement or
amendment  to  the  related  prospectus.  The  Company  shall not deliver to the
Investor  any  Advance  Notice  during  the continuation of any of the foregoing
events.

     Section  6.7.     Restriction  on  Sale  of  Capital  Stock.  During  the
                       -----------------------------------------
Commitment  Period,  the Company shall not, without the prior written consent of
the  Investor,  which consent shall not be unreasonably withheld, conditioned or
delayed,  (i)  issue  or  sell  any  Common  Stock  or  Preferred  Stock without
consideration  or  for  a consideration per share less than the Bid Price of the
Common  Stock  determined  immediately prior to its issuance, (ii) issue or sell
any Preferred Stock warrant, option, right, contract, call, or other security or
instrument granting the holder thereof the right to acquire Common Stock without
consideration or for a consideration per share less than such Common Stock's Bid
Price  determined  immediately  prior  to  its  issuance,  or  (iii)  file  any
registration  statement  on  Form  S-8;  provided  however,  (a)  the  Company's
obligations  pursuant  to  this  Section  6.7  shall  terminate in the event the
Investor  breaches  any  provision  of Article II of this Agreement, and (b) the
prior  written consent of the Investor shall not be required pursuant to (i) the
Company's  issuance  of  shares  of  capital  stock to investors at an aggregate
purchase  price  not  to  exceed  $5,000,000,  (ii) the Company's issuance of an
aggregate of up to 30,000,000 shares of Common Stock issued or issuable pursuant
to  the  acquisition  of another corporation or entity by the Company by merger,
purchase  of  substantially  all  of the assets or other reorganization, or to a
joint  venture  agreement  provided  the Company is not in a Pricing Period; and
(iii)  the  Company's  issuance of shares of Common Stock or grant of options to
purchase  shares  of  Common  Stock,  each as approved by the Company's board of
directors,  pursuant  to  stock  option  plans authorized as of the date hereof.

                                       17
<PAGE>
     Section 6.8.     Consolidation; Merger.  The Company shall not, at any time
                      ---------------------
after the date hereof, effect any merger or consolidation of the Company with or
into,  or  a  transfer  of all or substantially all the assets of the Company to
another  entity  (a  "Consolidation  Event")  unless  either  (i)  the resulting
                      --------------------
successor or acquiring entity (if not the Company) assumes by written instrument
the obligation to deliver to the Investor such shares of stock and/or securities
as  the  Investor  is entitled to receive pursuant to this Agreement or (ii) the
Investor  agrees  in  writing  to  release  the  Company  from such obligations.

     Section  6.9.     Issuance  of the Company's Common Stock.  The sale of the
                       ----------------------------------------
shares  of  Common  Stock  shall  be  made in accordance with the provisions and
requirements of Regulation D and any applicable state securities law.

     Section  6.10.     Review  of  Public  Disclosures.  All  SEC  filings
                        -------------------------------
(including,  without  limitation,  all  filings required under the Exchange Act,
which include Forms 10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc) and other public
disclosures  made  by  the  Company,  including,  without  limitation, all press
releases,  investor  relations  materials,  and scripts of analysts meetings and
calls,  shall  be  reviewed  and approved for release by the Company's attorneys
and,  in  the  case  of  such  filings  under  the  Exchange  Act, if containing
historical  financial  information,  the  Company's independent certified public
accountants.

     Section  6.11.     Market Activities.     The Company will not, directly or
                        -----------------
indirectly,  (i)  take  any  action  designed  to  cause  or  result in, or that
constitutes  or might reasonably be expected to constitute, the stabilization or
manipulation  of the price of any security of the Company to facilitate the sale
or  resale  of  the  Common  Stock  or (ii) sell, bid for or purchase the Common
Stock,  or  pay  anyone  any compensation for soliciting purchases of the Common
Stock.

                                  ARTICLE VII.
                CONDITIONS FOR ADVANCE AND CONDITIONS TO CLOSING

     Section  7.1.     Conditions  Precedent  to the Obligations of the Company.
                       ---------------------------------------------------------
The  obligation  hereunder of the Company to issue and sell the shares of Common
Stock  to  the Investor incident to each Closing is subject to the satisfaction,
or  waiver  by  the  Company,  at  or  before  each such Closing, of each of the
conditions  set  forth  below.

          (a)     Accuracy  of  the  Investor's  Representations and Warranties.
                  -------------------------------------------------------------
The  representations and warranties of the Investor shall be true and correct in
all  material  respects.

          (b)     Performance  by  the  Investor.  The  Investor  shall  have
                  ------------------------------
performed, satisfied and complied in all respects with all covenants, agreements
and  conditions required by the Transaction Documents to be performed, satisfied
or  complied  with  by  the  Investor  at  or  prior  to  such  Closing.

     Section  7.2.     Conditions  Precedent  to  the  Right  of  the Company to
                       ---------------------------------------------------------
Deliver  an Advance Notice and the Obligation of the Investor to Purchase Shares
--------------------------------------------------------------------------------
of  Common Stock.  The right of the Company to deliver an Advance Notice and the
----------------
obligation  of  the  Investor  hereunder  to  acquire  and pay for shares of the
Company's  Common  Stock  incident to a Closing is subject to the fulfillment by
the  Company,  on  (i)  the date of delivery of such Advance Notice and (ii) the

                                       18
<PAGE>
applicable  Advance  Date (each a "Condition Satisfaction Date"), of each of the
                                   ---------------------------
following  conditions:

          (a)     Registration  of  the  Common Stock with the SEC.  The Company
                  ------------------------------------------------
shall  have  filed  with  the  SEC  a Registration Statement with respect to the
resale  of  the  Registrable  Securities  in  accordance  with  the terms of the
Registration  Rights  Agreement.  As  set  forth  in  the  Registration  Rights
Agreement, the Registration Statement shall have previously become effective and
shall  remain  effective on each Condition Satisfaction Date and (i) neither the
Company  nor  the Investor shall have received notice that the SEC has issued or
intends to issue a stop order with respect to the Registration Statement or that
the  SEC  otherwise  has  suspended  or  withdrawn  the  effectiveness  of  the
Registration  Statement,  either  temporarily  or permanently, or intends or has
threatened  to  do  so  (unless  the  SEC's concerns have been addressed and the
Investor  is  reasonably  satisfied  that  the  SEC  no longer is considering or
intends  to  take  such  action),  and  (ii)  no  other suspension of the use or
withdrawal  of  the  effectiveness  of  the  Registration  Statement  or related
prospectus  shall  exist.  The Registration Statement must be declared effective
by  the  SEC  prior  to  the  first  Advance  Notice  Date.

          (b)     Authority.  To  the  Knowledge  of  the  Company  shall  have
                  ---------
obtained  all  permits  and  qualifications  required by any applicable state in
accordance  with the Registration Rights Agreement for the offer and sale of the
shares  of Common Stock, or shall have the availability of exemptions therefrom.

          (c)     Fundamental  Changes.  There  shall  not exist any fundamental
                  --------------------
changes  to  the information set forth in the Registration Statement which would
require  the  Company  to  file  a  post-effective amendment to the Registration
Statement.

          (d)     Performance by the Company.  The Company shall have performed,
                  --------------------------
satisfied  and  complied in all material respects with all covenants, agreements
and  conditions  required  by this Agreement (including, without limitation, the
conditions  specified  in  Section  2.5  hereof)  and  the  Registration  Rights
Agreement to be performed, satisfied or complied with by the Company at or prior
to  each  Condition  Satisfaction  Date.

          (e)     No  Injunction.  To  the  Knowledge of the Company no statute,
                  --------------
rule,  regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental authority
of  competent  jurisdiction  that  prohibits  or  directly  and  materially  and
adversely affects any of the transactions contemplated by this Agreement, and to
the  Knowledge  of the Company, no proceeding shall have been commenced that may
have  the effect of prohibiting or materially and adversely affecting any of the
transactions  contemplated  by  this  Agreement.

          (f)     No Suspension of Trading in or Delisting of Common Stock.  The
                  --------------------------------------------------------
trading  of the Common Stock is not suspended by the SEC or the Principal Market
(if  the  Common Stock is traded on a Principal Market).  The issuance of shares
of  Common  Stock  with  respect  to  the  applicable Closing, if any, shall not
violate  the  shareholder  approval requirements of the Principal Market (if the
Common  Stock  is  traded  on  a  Principal Market).  The Company shall not have
received any notice threatening the continued listing of the Common Stock on the
Principal  Market  (if  the  Common  Stock  is  traded  on  a Principal Market).

                                       19
<PAGE>
          (g)     Maximum Advance Amount.  The amount of an Advance requested by
                  ----------------------
the  Company  shall  not  exceed the Maximum Advance Amount.  In addition, in no
event shall the number of shares issuable to the Investor pursuant to an Advance
cause  the  aggregate number of shares of Common Stock beneficially owned by the
Investor  and  its affiliates to exceed nine and 9/10 percent (9.9%) of the then
outstanding  Common  Stock  of  the  Company.  For  the purposes of this section
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange  Act.

          (h)     No Knowledge.  The Company has no Knowledge of any event which
                  ------------
would  be  more  likely than not to have the effect of causing such Registration
Statement  to  be  suspended  or  otherwise  ineffective.

          (i)     Executed Advance Notice.  The Investor shall have received the
                  -----------------------
Advance  Notice  executed  by  an officer of the Company and the representations
contained  in such Advance Notice shall be true and correct as of each Condition
Satisfaction  Date.

                                  ARTICLE VIII.
         DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION

     Section  8.1.     Due  Diligence  Review.  Prior  to  the  filing  of  the
                       ----------------------
Registration  Statement  the  Company  shall  make  available for inspection and
review  by the Investor, its advisors and representatives, any such registration
statement  or  amendment  or  supplement  thereto or any blue sky, NASD or other
filing,  all  financial  and  other records, all SEC Documents and other filings
with the SEC, and all other corporate documents and properties of the Company as
may  be  reasonably  necessary  for  the  purpose  of such review, and cause the
Company's  officers,  directors  and  employees  to  supply all such information
reasonably  requested  by  the  Investor  or any such representative, advisor or
underwriter  in  connection with such Registration Statement (including, without
limitation,  in response to all questions and other inquiries reasonably made or
submitted  by  any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Investor  and  such  representatives,  advisors  and  underwriters  and  their
respective  accountants  and  attorneys  to  conduct  initial  and  ongoing  due
diligence  with  respect  to  the  Company  and the accuracy of the Registration
Statement.

     Section  8.2.     Non-Disclosure  of  Non-Public  Information.
                       -------------------------------------------

          (a)     The Company shall not disclose material non-public information
to  the  Investor,  its  advisors,  or  its  representatives,  unless  prior  to
disclosure  of such information the Company identifies such information as being
material  non-public  information  and  provides the Investor, such advisors and
representatives with the opportunity to accept or refuse to accept such material
non-public information for review.  The Company may, as a condition precedent to
disclosing  any  material non-public information hereunder, require the Investor
and  its  advisors  and  representatives  to  enter  into  a trading standstill,
non-disclosure  and/or confidentiality agreement in form reasonably satisfactory
to  the  Company, and the Company may refuse to disclose such information if the
Investor  and/or  its  advisors  and  representatives  refuse  to  execute  such
agreement.

                                       20
<PAGE>
          (b)     Nothing  herein shall require the Company to disclose material
non-public  information  to the Investor or its advisors or representatives, and
the  Company  represents  that  it  does  not  disseminate  material  non-public
information  to  any  investors  who  purchase  stock in the Company in a public
offering,  to  money managers or to securities analysts, provided, however, that
notwithstanding  anything  herein  to  the  contrary,  the  Company  will,  as
hereinabove provided, immediately notify the advisors and representatives of the
Investor  and,  if  any,  underwriters,  of  any  event  or the existence of any
circumstance  (without  any  obligation  to  disclose  the  specific  event  or
circumstance)  of  which  it  becomes  aware,  constituting  material non-public
information  (whether  or not requested of the Company specifically or generally
during  the  course of due diligence by such persons or entities), which, if not
disclosed  in  the prospectus included in the Registration Statement would cause
such  prospectus  to  include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein, in light
of the circumstances in which they were made, not misleading.  Nothing contained
in  this  Section  8.2  shall be construed to mean that such persons or entities
other  than  the  Investor (without the written consent of the Investor prior to
disclosure  of  such information) may not obtain material non-public information
in  the  course of conducting due diligence in accordance with the terms of this
Agreement  and  nothing  herein  shall prevent any such persons or entities from
notifying  the Company of their opinion that based on such due diligence by such
persons  or  entities,  that  the  Registration  Statement  contains  an  untrue
statement of material fact or omits a material fact required to be stated in the
Registration Statement or necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading.

                                   ARTICLE IX.
                           CHOICE OF LAW/JURISDICTION

     Section  9.1.     Governing  Law.  This  Agreement shall be governed by and
                       --------------
interpreted  in  accordance  with  the  laws  of the State of New Jersey without
regard  to  the  principles of conflict of laws.  The parties further agree that
any  action  between  them  shall  be  heard  in  Hudson County, New Jersey, and
expressly  consent  to  the  jurisdiction and venue of the Superior Court of New
Jersey,  sitting  in  Hudson  County,  New Jersey and the United States District
Court  of New Jersey, sitting in Newark, New Jersey, for the adjudication of any
civil  action  asserted  pursuant  to  this  paragraph.

                                   ARTICLE X.
                             ASSIGNMENT; TERMINATION

     Section 10.1.     Assignment.  Neither this Agreement nor any rights of the
                       ----------
Company hereunder may be assigned to any other Person.

     Section  10.2.     Termination.  The  obligations  of  the Investor to make
                        -----------
Advances  under  Article II hereof shall terminate twenty-four (24) months after
the  Effective  Date.

                                       21
<PAGE>
                                   ARTICLE XI.
                                     NOTICES

     Section  11.1.     Notices.  Any  notices,  consents,  waivers,  or  other
                        -------
communications  required  or  permitted  to  be  given  under  the terms of this
Agreement  must be in writing and will be deemed to have been delivered (i) upon
receipt,  when  delivered personally; (ii) upon receipt, when sent by facsimile,
provided  a  copy  is  mailed  by U.S. certified mail, return receipt requested;
(iii)  three  (3)  days  after being sent by U.S. certified mail, return receipt
requested,  or  (iv)  one  (1)  day  after  deposit with a nationally recognized
overnight  delivery  service,  in  each  case properly addressed to the party to
receive  the  same.  The addresses and facsimile numbers for such communications
shall  be:

If to the Company, to:        Zann Corp.
                              1549 N. Leroy Street, Suite D-200
                              Fenton, MI 48430
                              Attention:   Robert Simpson
                              Telephone:   (810) 714-2978
                              Facsimile:   (810) 714-3524

With a copy to:               Wilson Sonsini Goodrich & Rosati
                              12235 El Camino Real, Suite 200
                              San Diego, CA 92130
                              Martin J. Waters, Esq.
                              Telephone:   858-350-2300
                              Facsimile:   858-350-2399

If to the Investor(s):        Cornell Capital Partners, LP
                              101 Hudson Street -Suite 3700
                              Jersey City, NJ 07302
                              Attention:   Mark Angelo
                                           Portfolio Manager
                              Telephone:   (201) 985-8300
                              Facsimile:   (201) 985-8266

With a Copy to:               David Gonzalez, Esq.
                              101 Hudson Street - Suite 3700
                              Jersey City, NJ 07302
                              Telephone:   (201) 985-8300
                              Facsimile:   (201) 985-8266

Each  party shall provide five (5) days' prior written notice to the other party
of  any  change  in  address  or  facsimile  number.

                                       22
<PAGE>
                                  ARTICLE XII.
                                  MISCELLANEOUS

     Section  12.1.     Counterparts.  This  Agreement may be executed in two or
                        ------------
more  identical  counterparts, all of which shall be considered one and the same
agreement  and shall become effective when counterparts have been signed by each
party  and  delivered  to  the  other party.  In the event any signature page is
delivered  by  facsimile  transmission,  the  party using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered  to  the other party within five (5) days of the execution
and  delivery hereof, though failure to deliver such copies shall not affect the
validity  of  this  Agreement.

     Section  12.2.     Entire Agreement; Amendments.  The Transaction Documents
                        ----------------------------
supersede  all  other prior oral or written agreements between the Investor, the
Company, their affiliates and persons acting on their behalf with respect to the
matters  discussed  herein,  and  the  Transaction Documents and the instruments
referenced  herein  contain the entire understanding of the parties with respect
to  the matters covered herein and therein and, except as specifically set forth
herein  or  therein,  neither  the  Company  nor  the  Investor  makes  any
representation,  warranty, covenant or undertaking with respect to such matters.
No provision of the Transaction Documents may be waived or amended other than by
an  instrument  in  writing  signed by the party to be charged with enforcement.

     Section  12.3.     Reporting  Entity  for  the Common Stock.  The reporting
                        ----------------------------------------
entity  relied upon for the determination of the trading price or trading volume
of  the Common Stock on any given Trading Day for the purposes of this Agreement
shall  be  Bloomberg, L.P. or any successor thereto.  The written mutual consent
of  the Investor and the Company shall be required to employ any other reporting
entity.

     Section  12.4.     Fees and Expenses.  The Company hereby agrees to pay the
                        -----------------
following  fees:

          (a)     Structuring  Fees.  Each of the parties shall pay its own fees
                  -----------------
and  expenses  (including  the fees of any attorneys, accountants, appraisers or
others  engaged  by  such  party)  in  connection  with  this  Agreement and the
transactions  contemplated  hereby,  except  that  (i)  the  Company shall pay a
structuring  fee  of Twelve Thousand Five Hundred Dollars ($12,500) to Yorkville
Advisors,  LLC,  of  which  Two  Thousand Five Hundred Dollars ($2,500) has been
paid,  and  the  remaining balance shall be paid on the date hereof, and (ii) On
each  Advance  Date,  the Company shall pay Yorkville Advisors Management, LLC a
structuring  fee  of Five Hundred Dollars ($500) directly out the gross proceeds
of  each  Advance.

          (b)     Due  Diligence  Fee.  Company  shall  pay  the  Investor  a
                  -------------------
non-refundable  due  diligence  fee  of Five Thousand Dollars ($5,000) which has
previously  been  paid.

          (c)     Commitment  Fees.
                  ----------------

               (i)     On  each  Advance  Date  the  Company  shall  pay  to the
Investor, directly out of the gross proceeds of each Advance, an amount equal to
five percent (5%) of the amount of each Advance.  The Company hereby agrees that
if  such  payment,  as  is  described

                                       23
<PAGE>
above,  is  not  made  by the Company on the Advance Date, such payment shall be
made  as  outlined  and  mandated  by  Section  2.3  of  this  Agreement.

               (ii)     Upon  the  execution of this Agreement the Company shall
issue  to  the Investor (y) 1,142,857 shares of Common Stock (an amount equal to
Forty  Thousand  Dollars  ($40,000) divided by $0.035) (the "Investor's Shares")
                                                             -----------------
and  (z)  the  Warrant.

               (iii)     Fully  Earned.  The  Investor's  Shares and the warrant
                         -------------
shall be deemed fully earned as of the date hereof.

               (iv)     Registration  Rights.  The  Investor's  Shares  and  the
                        --------------------
Warrant Shares shall have "piggy-back" registration rights.

     Section 12.5.     Brokerage.  Except as contemplated in the Placement Agent
                       ---------
Agreement,  each of the parties hereto represents that it has had no dealings in
connection  with  this  transaction  with  any  finder or broker who will demand
payment  of  any fee or commission from the other party.  The Company on the one
hand,  and the Investor, on the other hand, agree to indemnify the other against
and  hold the other harmless from any and all liabilities to any person 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.

     Section  12.6.     Confidentiality.  If  for  any  reason  the transactions
                        ---------------
contemplated  by  this Agreement are not consummated, each of the parties hereto
shall  keep  confidential  any information obtained from any other party (except
information  publicly  available  or  in  such  party's domain prior to the date
hereof,  and except as required by court order) and shall promptly return to the
other  parties  all  schedules,  documents,  instruments,  work  papers or other
written information without retaining copies thereof, previously furnished by it
as a result of this Agreement or in connection herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       24
<PAGE>
     IN  WITNESS  WHEREOF,  the  parties  hereto have caused this Standby Equity
Distribution  Agreement  to  be  executed  by  the  undersigned,  thereunto duly
authorized,  as  of  the  date  first  set  forth  above.

                                        COMPANY:
                                        ZANN CORP.

                                        By:
                                           -------------------------------------
                                        Name:  Robert Simpson
                                        Title: President

                                        INVESTOR:
                                        CORNELL CAPITAL PARTNERS, LP

                                        BY:    YORKVILLE ADVISORS, LLC
                                        ITS:   GENERAL PARTNER

                                        By:
                                           -------------------------------------
                                        Name:  Mark Angelo
                                        Title: Portfolio Manager

                                       25
<PAGE>
                                    EXHIBIT A
                                    ---------

                                 ADVANCE NOTICE
                                   ZANN CORP.

     The  undersigned, _______________________ hereby certifies, with respect to
the  sale  of  shares  of Common Stock of ZANN CORP. (the "Company") issuable in
                                                           -------
connection  with  this  Advance Notice, delivered pursuant to the Standby Equity
Distribution  Agreement  (the  "Agreement"),  as  follows:
                                ---------

     1.     The  undersigned  is the duly elected ______________ of the Company.

     2.     There are no fundamental changes to the information set forth in the
Registration  Statement which would require the Company to file a post effective
amendment  to  the  Registration  Statement.

     3.     The Company has performed in all material respects all covenants and
agreements  to  be  performed  by  the  Company and has complied in all material
respects  with  all  obligations and conditions contained in the Agreement on or
prior  to the Advance Notice Date, and shall continue to perform in all material
respects all covenants and agreements to be performed by the Company through the
applicable  Advance  Date.

     4.     The  undersigned  hereby  represents, warrants and covenants that it
has  made  all  filings  ("SEC  Filings")  required to be made by it pursuant to
                           ------------
applicable  securities laws (including, without limitation, all filings required
under  the  Securities Exchange Act of 1934, which include Forms 10-Q or 10-QSB,
10-K  or  10-KSB, 8-K, etc.).  All SEC Filings and other public disclosures made
by  the  Company,  including,  without  limitation, all press releases, investor
relation  materials,  and  scripts  of  analyst  meetings  and  calls,  etc.
(collectively,  the  "Public  Disclosures"), have been reviewed and approved for
                      -------------------
release  by  the  Company's  attorneys  and,  if containing historical financial
information,  the  Company's  independent certified public accountants.  None of
the Company's Public Disclosures contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make  the statements therein, in the light of the circumstances under which they
were  made,  not  misleading.

     5.     The  Advance  requested  is  _____________________.

     The  undersigned  has  executed  this  Certificate  this  ____  day  of
_________________.

                                        ZANN CORP.

                                        By:
                                           -------------------------------------
                                        Name:
                                        Title:

If Returning This Advance Notice via Facsimile Please Send To: (201) 946-0851

If by Mail, via Federal Express To:    Cornell Capital Partners, LP 101 Hudson
                                       Street, Suite 3700, Jersey City, NJ 07302

<PAGE>
                                  SCHEDULE 2.6
                                  ------------

                                   ZANN CORP.
                                   ----------

     The  undersigned  hereby agrees that for a period commencing on December 8,
2005  and  expiring  on  the  termination  of  the  Standby  Equity Distribution
Agreement  dated  December  8,  2005  between  the Company and the Investor (the
"Lock-up  Period"),  he, she or it will not, directly or indirectly, without the
 ---------------
prior  written  consent  of  the Investor, issue, offer, agree or offer to sell,
sell,  grant  an  option  for the purchase or sale of, transfer, pledge, assign,
hypothecate,  distribute  or  otherwise encumber or dispose of any securities of
the  Company,  including  common  stock  or  options,  rights, warrants or other
securities  underlying,  convertible  into,  exchangeable  or exercisable for or
evidencing  any  right to purchase or subscribe for any common stock (whether or
not  beneficially  owned by the undersigned), or any beneficial interest therein
(collectively,  the  "Securities")  except  in  accordance  with  the  volume
                      ----------
limitations  set forth in Rule 144(e) of the General Rules and Regulations under
the  Securities  Act  of  1933,  as  amended.

     In  order to enable the aforesaid covenants to be enforced, the undersigned
hereby  consents  to the placing of legends and/or stop-transfer orders with the
transfer agent of the Company's securities with respect to any of the Securities
registered  in  the  name  of  the  undersigned  or  beneficially  owned  by the
undersigned, and the undersigned hereby confirms the undersigned's investment in
the  Company.

Dated: _______________, 2005

                              Signature

                              --------------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Address:
                                      ------------------------------------------
                              City, State, Zip Code:
                                                    ----------------------------

                              --------------------------------------------------
                              Print Social Security Number
                              or Taxpayer I.D. Number

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