Document:

PLEDGE AND SECURITY AGREEMENT
                          -----------------------------

         PLEDGE AND SECURITY AGREEMENT (as amended, restated, supplemented or
otherwise modified from time to time in accordance herewith and including all
attachments, exhibits and schedules hereto, this "Agreement"), dated as of
August 11, 2006, made by Manaris Corporation, a Nevada corporation ("Parent"),
and Parent's wholly owned subsidiary, C-Chip Technologies Corporation (North
America), a Canadian corporation ("C-Chip" and together with Parent, the
"Grantor"), in favor of the secured parties listed on Exhibit A to this
Agreement and their permitted successors and assigns (collectively, the "Secured
Parties").

         WHEREAS, the Grantor has issued or will issue separate series B
subordinated secured convertible promissory notes and original issue discount
series B subordinated secured promissory notes (collectively, the "Notes") to
the Secured Parties pursuant to a Note and Warrant Purchase Agreement, dated as
of August 11, 2006 (the "Purchase Agreement"), by and among the Grantor and the
Secured Parties; and

         WHEREAS, C-Chip acknowledges the direct benefit to it of Parent issuing
the Notes to the Secured Parties;

         WHEREAS, the Secured Parties and the Grantor agree that the Grantor
execute and deliver to the Secured Parties a guaranty and security agreement
providing for the guaranty by C-Chip of the obligations of Parent to the Secured
Parties under the Transaction Documents and the grant to the Secured Parties of
a continuing security interest in all personal property and assets of the
Grantor, and the pledge of the capital stock of Parent's other wholly-owned
subsidiary, Avensys Inc., a Quebec corporation ("Avensys"), all in substantially
the form hereof to secure all Obligations (hereinafter defined).

         NOW, THEREFORE, the parties agree as follows:

                               ARTICLE Definitions

         Section 0.0. Definition of Terms Used Herein. All capitalized terms
used herein and not defined herein have the respective meanings provided
therefor in the Purchase Agreement or the Notes, as applicable. All terms
defined in the Uniform Commercial Code (hereinafter defined) as in effect from
time to time and used herein and not otherwise defined herein (whether or not
such terms are capitalized) have the same definitions herein as specified
therein.

         Section 0.0. Definition of Certain Terms Used Herein. As used herein,
the following terms have the following meanings:

         "Collateral" means all accounts receivable of the Grantor and all
personal and fixed property of every kind and nature, including, without
limitation, all furniture, fixtures, equipment, raw materials, inventory, as
extracted collateral, or other goods, accounts, contract rights, rights to the
payment of money, insurance refund claims and all other insurance claims and
proceeds, tort claims, chattel paper, documents, instruments, securities and
other investment property, deposit accounts, rights to proceeds of letters of
credit and all general intangibles including, without limitation, all tax refund
claims, license fees, patents, patent licenses, patent applications, trademarks,
trademark licenses, trademark applications, trade names, copyrights, copyright
licenses, copyright applications, rights to sue and recover for past
infringement of patents, trademarks and copyrights, computer programs, computer
software, engineering drawings, service marks, customer lists, goodwill, and all
licenses, permits, agreements of any kind or nature pursuant to which the
Grantor possesses, uses or has authority to possess or use property (whether
tangible or intangible) of others or others possess, use or have authority to
possess or use property (whether tangible or intangible) of the Grantor, and all
recorded data of any kind or nature, regardless of the medium of recording
including, without limitation, all books and records, software, writings, plans,
specifications and schematics, whether now owned or hereinafter acquired by the
Grantor; and all proceeds and products of each of the foregoing. Notwithstanding
the foregoing, without consent, the Grantor may hereinafter acquire assets,
properties, leases (including corporations, partnerships, and other entities
holding the foregoing) for use in its business, directly or through
subsidiaries, which may be secured by the asset acquired (the "Senior Security
Interest") and financed using cash payments of the Grantor and up to $2,000,000
of secured non-equity linked commercial debt. Said Senior Security Interest
shall rank senior to the Secured Parties' Security Interest granted pursuant to
this Agreement.

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         "Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.

         "Event of Default" has the meaning specified in the Notes.

         "Indemnitees" has the meaning specified in Section 7.5(b).

         "Lien" means: (i) any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes; (ii) to the extent not included
under clause (i), any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other title exception
or encumbrance affecting property; and (iii) any contingent or other agreement
to provide any of the foregoing.

         "Notes" has the meaning assigned to such term in the first recital of
this Agreement.

         "Obligations" means all indebtedness, liabilities, obligations,
covenants and duties of the Grantor to the Secured Parties of every kind, nature
and description, direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation of law
or otherwise, now existing of hereafter arising under or in connection with the
Notes, this Agreement or the other Transaction Documents.

         "Registered Organization" means an entity formed by filing a
registration document with a United States Governmental Authority, such as a
corporation, limited partnership or limited liability company.

         "Security Interest" has the meaning specified in Section 2.1 of this
Agreement.

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                                                                               3

         "Subsidiaries" means C-Chip and Avensys.

         "Uniform Commercial Code" means the Uniform Commercial Code from time
to time in effect in the State of New York.

                          ARTICLE I. Security Interest

         Section 1.1. Guaranty. C-Chip hereby guarantees that the Obligations of
Parent to the Secured Parties under the Transaction Documents will be paid
strictly in accordance with the terms of the Transaction Documents. The
liability of each of C-Chip is absolute and unconditional and C-Chip hereby
waives any defenses it may have in connection therewith. This guaranty is a
guaranty of payment, not merely of collection.

         Section 1.2. Security Interest. As security for the payment and
performance, in full of the Obligations, and any extensions, renewals,
modifications or refinancings of the Obligations, the Grantor hereby bargains,
sells, conveys, assigns, sets over, mortgages, pledges, hypothecates and
transfers to the Secured Parties, and hereby grants to the Secured Parties,
their successors and assigns, a security interest in, all of such Grantor's
right, title and interest in, to and under the Collateral (the "Security
Interest"). In connection with the Security Interest and constituting a part of
the Collateral for all of the Obligations secured by the Security Interest
granted hereunder, the Parent hereby pledges and assigns to the Secured Parties,
and grants to the Secured Parties a continuing security interest in, items (a)
through (h) below, whether now existing or hereafter acquired or arising;
notwithstanding the foregoing, without consent, the Grantor may grant a Senior
Security Interest in hereinafter acquired assets, properties, leases (including
corporations, partnerships, and other entities holding the foregoing) for use in
its business, directly or through subsidiaries, which may be secured by the
asset acquired and financed using cash payments of the Grantor and up to
$2,000,000 of secured non-equity linked commercial debt. Said Senior Security
Interest shall rank senior to the Secured Parties' Security Interest granted
pursuant to this Agreement.

                  (a) all of the Parent's right, title and interest in the
Subsidiaries;

                  (b) all of the Parent's share and interest as shareholders in
the business, assets, capital, profits, goodwill and other property of the
Subsidiaries;

                  (c) all of the Parent's rights, powers and privileges under
the articles of incorporation, bylaws and other organizational documents of the
Subsidiaries;

                  (d) any and all fees, distributions and other payments and
compensation due and to become due to each Grantor from the Subsidiaries;

                  (e) any and all securities, stock, partnership interests,
membership interests, financial assets, founders fees, fees, distributions,
receivables, contract rights, general intangibles and other amounts now or
hereafter payable in respect of the Parent's interest in the Subsidiaries;

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                                                                               4

                  (f) all investment property and securities entitlements in or
arising from any of the foregoing;

                  (g) the proceeds (whether cash or non-cash) to be paid and
payable to the Parent or the Subsidiaries upon any sale or other transfer of any
right, title or interest of the Parent in the Subsidiaries; and

                  (h) any and all cash and non-cash proceeds of any of the
foregoing.

         Section 1.3. Stock Powers. Concurrently with the delivery to the
Secured Parties of each certificate representing the shares of pledged stock of
the Subsidiaries, the Parent in respect of such certificates shall deliver an
undated stock power covering such certificate, duly executed by the Parent in
blank with, if the Secured Parties so request, signature guaranteed.

         Section 1.4. Voting Rights. Unless an Event of Default shall have
occurred and be continuing and the Secured Parties shall have given notice to
the Grantors of the Secured Parties' intent to exercise its rights pursuant to
Article VI hereof, the Parent shall be entitled to receive all cash dividends
paid in the normal course of business of the Subsidiaries and consistent with
past practice and to exercise all voting and corporate rights with respect to
the pledged stock of the Subsidiaries; provided, however, that no vote shall be
cast or corporate right exercised or action taken which, in the reasonable
judgment of the Secured Parties, would impair the Collateral or otherwise be
inconsistent with or result in any violation of any provision of this Agreement.

         Section 1.5. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Secured Parties to, or in any
way alter or modify, any obligation or liability of the Grantor with respect to
or arising out of the Collateral.

         Section 1.6. Additional Subsidiaries. Grantor hereby agrees that any
and all future subsidiaries of the Parent shall be wholly owned by the Parent
and such subsidiaries shall grant security on its assets to the Secured Parties
pursuant to this Agreement and the Parent shall pledge the stock of such
subsidiaries to the Secured Parties in accordance with the terms of this
Agreement.

                   ARTICLE II. Representations and Warranties

         The Grantor represents and warrants to the Secured Parties that:

         Section 2.1. Title and Authority. The Grantor has good and valid rights
in and title to the Collateral with respect to which it has purported to grant a
security interest hereunder and has full power and authority to grant to the
Secured Parties the Security Interest and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other Person other than any consent or approval which has
been obtained.

         Section 2.2. Filings; Actions to Achieve Perfection. Fully executed
Uniform Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations containing
a description of the Collateral have been delivered to the Secured Parties for
filing in each United States governmental, municipal or other office specified
in Schedule A, which are all the filings, recordings and registrations that are
necessary to publish notice of and protect the validity of and to establish a
legal, valid and perfected security interest in favor of the Secured Parties in
respect of all Collateral in which the Security Interest may be perfected by
filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements or with
respect to the filing of amendments or new filings to reflect the change of the
Grantor's name, location, identity or corporate structure. The Grantor's name is
listed in the preamble of this Agreement identically to how it appears on its
certificate of incorporation or other organizational documents.

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                                                                               5

         Section 2.3. Validity and Priority of Security Interest. The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations, (b) subject
only to the filings described in Section 3.2 above and other previously
perfected security interests in the Collateral listed on Schedule 3.3 to this
Agreement ("Existing Liens"), a perfected first priority security interest in
all Collateral in which a security interest may be perfected by filing,
recording or registration in the United States pursuant to the Uniform
Commercial Code or other applicable law in the United States (or any political
subdivision thereof) and its territories and possessions or any other country,
state or nation (or any political subdivision thereof). The Security Interest is
and shall be subordinate to (i) any other Existing Lien on any of the Collateral
and (ii) a Senior Security Interest.

         Section 2.4. Absence of Other Liens. The Grantor's Collateral is owned
by the Grantor free and clear of any Lien other than Existing Liens. Without
limiting the foregoing and except as set forth on Schedule 3.4 to this
Agreement, the Grantor has not filed or consented to any filing of any financing
statement or similar filing in favor of any Person other than the Secured
Parties, nor permitted the granting or assignment of a security interest or
permitted perfection of any security interest in the Collateral in favor of any
Person other than the Secured Parties. The Grantor's having possession of all
instruments, certificates and cash constituting Collateral from time to time and
the filing of financing statements in the offices referred to in Schedule A
hereto results in the perfection of such security interest. Such Security
Interest is, or in the case of Collateral in which the Grantor obtain rights
after the date hereof, will be, a perfected security interest. Such notices,
filings and all other action necessary or desirable to perfect and protect such
security interest have been duly taken.

         Section 2.5. Valid and Binding Obligation. This Agreement constitutes
the legal, valid and binding obligation of the Grantor, enforceable against the
Grantor in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (iii) to the extent the indemnification
provisions contained in this Agreement may be limited by applicable federal or
state securities laws.

         Section 2.6. Subordination. The Security Interest granted pursuant to
this Agreement shall be subordinated and made junior in all respects to (i) any
other Existing Lien on any of the Collateral and (ii) a Senior Security
Interest.

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                             ARTICLE III. Covenants

         Section 3.1. Change of Name; Location of Collateral; Place of Business,
State of Formation or Organization.

                  (a) The Grantor shall notify the Secured Parties in writing at
         least eleven (11) days prior to any change (i) in its corporate name or
         in any trade name used to identify it in the conduct of its business or
         in the ownership of its properties, (ii) in the location of its chief
         executive office, its principal place of business, any office in which
         it maintains books or records relating to Collateral owned by it
         (including the establishment of any such new office or facility), (iii)
         in its identity or corporate structure such that a filed filing made
         under the Uniform Commercial Code becomes misleading or (iv) in its
         Federal Taxpayer Identification Number. Furthermore, the Grantor shall
         not effect or permit any change referred to in the preceding sentence
         unless all filings have been made under the Uniform Commercial Code or
         otherwise that are required in order for the Secured Parties to
         continue at all times following such change to have a valid, legal and
         perfected security interest in all the Collateral subject to the
         Existing Liens.

                  (b) Without limiting Section 4.1(a), without the prior written
         consent of the Secured Parties in each instance, the Grantor shall not
         change its (i) principal residence, if it is an individual, (ii) place
         of business, if it has only one place of business and is not a
         Registered Organization, (iii) principal place of business, if it has
         more than one place of business and is not a Registered Organization,
         or (iv) state of incorporation, formation or organization, if it is a
         Registered Organization.

         Section 3.2. Records. The Grantor shall maintain, at its own cost and
expense, such complete and accurate records with respect to the Collateral owned
by it as is consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which the Grantor is engaged, but in any event to include
complete accounting records indicating all payments and proceeds received with
respect to any part of the Collateral, and, at such time or times as the Secured
Parties may reasonably request, promptly to prepare and deliver to the Secured
Parties a duly certified schedule or schedules in form and detail satisfactory
to the Secured Parties showing the identity, amount and location of any and all
Collateral.

         Section 3.3. Periodic Certification; Notice of Changes. In the event
there should at any time be any change in the information represented and
warranted herein or in the documents and instruments executed and delivered in
connection herewith, the Grantor shall immediately notify the Secured Parties in
writing of such change (this notice requirement shall be in extension of and
shall not limit or relieve the Grantor of any other covenants hereunder).

         Section 3.4. Protection of Security. The Grantor shall, at its own cost
and expense, take any and all actions reasonably necessary to defend title to
the Collateral against all persons and to defend the Security Interest of the
Secured Parties in the Collateral and the priority thereof against any Lien
other than the Existing Liens.

         Section 3.5. Inspection and Verification. The Secured Parties and such
persons as the Secured Parties may reasonably designate shall, upon reasonable
advanced notice and during normal business hours, have the right to inspect the
Collateral, all records related thereto (and to make extracts and copies from
such records) and the premises upon which any of the Collateral is located, to
discuss the Grantor's affairs with the officers of the Grantor and its
independent accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to, the Collateral, including, in the case of collateral in the
possession of any third Person, by contacting any account debtor or third Person
possessing such Collateral for the purpose of making such a verification.
Out-of-pocket expenses in connection with any inspections by representatives of
the Secured Parties shall be (a) the obligations of the Grantor with respect to
any inspection after the Secured Parties' demand payment of the Notes or (b) the
obligation of the Secured Parties in any other case.

<PAGE>
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         Section 3.6. Taxes; Encumbrances. At their option, the Secured Parties
may discharge, Liens other than Existing Liens at any time levied or placed on
the Collateral and may pay for the maintenance and preservation of the
Collateral to the extent the Grantor fails to do so and the Grantor shall
reimburse the Secured Parties on demand for any payment made or any expense
incurred by the Secured Parties pursuant to the foregoing authorization;
provided, however, that nothing in this Section shall be interpreted as excusing
the Grantor from the performance of, or imposing any obligation on the Secured
Parties to cure or perform, any covenants or other obligation of the Grantor
with respect to any Lien or maintenance or preservation of Collateral as set
forth herein.

         Section 3.7. Use and Disposition of Collateral. Except as my be
permitted pursuant to the Purchase Agreement, the Grantor shall not make or
permit to be made an assignment, pledge or hypothecation of any Collateral or
shall grant any other Lien in respect of the Collateral without the prior
written consent of the Secured Parties. Except as my be permitted pursuant to
the Purchase Agreement, the Grantor shall not make or permit to be made any
transfer of any Collateral other than with respect to Existing Liens and other
liens approved by the Secured Parties and the Grantor shall remain at all times
in possession of the Collateral owned by it except in the ordinary course of
business.

         Section 3.8. Insurance/Notice of Loss. Within a reasonable period of
time following the date of this Agreement, Grantor, at its own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Collateral as described on Schedule 4.8 to this Agreement. In extension of
the foregoing and without limitation, such insurance shall be payable to the
Secured Parties as loss payee under a "standard" loss payee clause, and the
Secured Parties shall be listed as an "additional insured" on Grantor's general
liability insurance. Such insurance shall not be terminated, cancelled or not
renewed for any reason, including non-payment of insurance premiums, unless the
insurer shall have provided the Secured Parties at least 30 days prior written
notice. Grantor irrevocably makes, constitutes and appoints the Secured Parties
(and all officers, employees or agents designated by the Secured Parties) as its
true and lawful agent and attorney-in-fact for the purpose, at any time
following the Secured Parties' demand for payment of the Notes during the
continuance of an Event of Default, of making, settling and adjusting claims in
respect of Collateral under policies of insurance, endorsing the name of Grantor
on any check, draft, instrument or other item of payment for the proceeds of
such policies of insurance and for making all determinations and decisions with
respect thereto. In the event that Grantor at any time or times shall fail to
obtain or maintain any of the policies of insurance required hereby or to pay
any premium in whole or part relating thereto, the Secured Parties may, without
waiving or releasing any obligation or liability of Grantor hereunder, in their
sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Secured Parties
reasonably deem advisable. All sums disbursed by the Secured Parties in
connection and in accordance with this Section, including reasonable attorneys'
fees, court costs, expenses and other charges relating thereto, shall be payable
upon demand, by Grantor to the Secured Parties and shall be additional
Obligations secured hereby. Grantor shall promptly notify the Secured Parties if
any material portion of the Collateral owned or held by Grantor is damaged or
destroyed. The proceeds of any casualty insurance in respect of any casualty
loss of any of the Collateral shall (i) so long as the Secured Parties have not
demanded payment of the Notes during the continuance of an Event of Default, be
disbursed to Grantor for direct application by Grantor solely to the repair or
replacement of Grantor's property so damaged or destroyed, and (ii) in all other
circumstances, be held by the Secured Parties as cash collateral for the
Obligations. The Secured Parties may, at their sole option, disburse from time
to time all or any part of such proceeds so held as cash collateral, upon such
terms and conditions as the Secured Parties may reasonably prescribe, for direct
application by the Secured Parties solely to the repair or replacement of
Grantor's property so damaged or destroyed, or Grantor may apply all or any part
of such proceeds to the Obligations.

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         Section 3.9. Legend. Grantor shall legend, in form and manner
satisfactory to the Secured Parties, its accounts and its books, records and
documents evidencing or pertaining thereto with an appropriate reference to the
fact that such accounts have been assigned to the Secured Parties and that the
Secured Parties have a security interest therein.

         Section 3.10. Equivalent Amount. All payments of any kind whatsoever
made by Grantor (or any other applicable Person) under or in connection with
this Agreement, the Notes or any other Transaction Document shall be made in
U.S. dollars. Notwithstanding the foregoing, the Secured Parties shall use the
Equivalent Amount (as defined below) to determine whether any repayment or any
other payment amount of any kind whatsoever made by Grantor (or any other
applicable Person) to Secured Parties in Canadian dollars equals the equivalent
of the applicable U.S. Dollar amount as determined by the Secured Parties with
regard to such repayment or other payment amount. For purposes of this
Agreement, the term "Equivalent Amount" shall mean the amount of U.S. dollars
into which Canadian dollars may be converted or the amount of Canadian dollars
into which U.S. dollars may be converted at the noon spot buying rate of
[________] in New York, New York, USA as determined by the Secured Parties on
any repayment or any other payment amount date, as the case may be.

         Section 3.11. Judgment Currency. Notwithstanding the foregoing, if for
the purpose of obtaining judgment in any court of competent jurisdiction located
in Canada, it is necessary to convert a sum due or payable of any kind
whatsoever under or in connection with any of these Notes or any other
Transaction Document in U.S. dollars into Canadian dollars (the "Judgment
Currency"), the rate of exchange which shall be applied shall be that at which,
in accordance with normal banking procedures, a party could purchase U.S.
dollars with the Judgment Currency at a bank located in New York, New York, USA
on the business day on which such payment is received. The obligation of a party
in respect of any such sum due or payable from it (the "Obligor Party") to the
other party shall, notwithstanding the rate of exchange actually applied in
rendering such judgment, be discharged only to the extent that any sum adjudged
to be due or payable under or in connection with this Agreement, the Notes or
any other Transaction Document in the Judgment Currency may, in accordance with
normal banking procedures, be used by such other party as and when provided
above to purchase and transfer U.S. dollars with the amount of the Judgment
Currency so adjudged to be due or payable. The Grantor hereby agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
other party against, and to pay such other party on demand, U.S. dollars in the
amount equal to any difference between the sum originally due or payable to such
other party in U.S. dollars and the amount of U.S. dollars so purchased and
transferred.

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                                                                               9

         Section 3.12. Interest Act. For the purposes of only the Interest Act
(Canada) and disclosure thereunder, whenever interest to be paid with respect to
this Agreement, the Notes or any other Transaction Document is to be calculated
on the basis of a year of 360 days or any other period of time that is less than
a calendar year, the yearly rate of interest to which the rate determined
pursuant to such calculation is equivalent is the rate so determined multiplied
by the actual number of days in the calendar year in which the same is to be
ascertained and divided by either 360 or such other period of time, as the case
may be.

         Section 3.13. Taxes. Any and all payments of any kind whatsoever by the
Grantor under or in connection with any of this Agreement, the Notes or any
other Transaction Document shall be made free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities of any kind whatsoever with respect thereto,
excluding taxes imposed on the net income of the Secured Parties (or any
transferee or assignee thereof, including a participation holder (any such
entity, a "Transferee")) by the jurisdiction in which such person or party is
organized or has its principal office (all such nonexcluded taxes, levies,
imposts, deductions, charges withholdings and liabilities, collectively or
individually, "Taxes"). If the Grantor shall be required to deduct any Taxes
from or in respect of any sum payable under or in connection with any of this
Agreement, the Notes or any other Transaction Document to the Secured Parties
(or any Transferee), (i) the sum payable shall be increased by the amount (an
"additional amount") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under or in
connection with this Section 4.13) the Secured Parties (or such Transferee)
shall receive an amount equal to the sum they would have received had no such
deductions been made, (ii) the Grantor shall make such deductions and (iii) the
Grantor shall pay the full amount deducted to and file any required tax and
information return with the relevant governmental authority in accordance with
applicable law.

                ARTICLE IV. Further Assurances; Power of Attorney

         Section 4.1. Further Assurances. Grantor shall, at its own expense,
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Secured Parties may
from time to time reasonably request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements (including fixture filings) or other
documents in connection herewith or therewith. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Secured Parties, duly endorsed in a
manner satisfactory to the Secured Parties.

<PAGE>
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         Section 4.2. Power of Attorney.

                  (a) Grantor hereby irrevocably (as a power coupled with an
interest) constitutes and appoints the Collateral Agent (as defined in Section
7.14 hereof) and all officers, employees or agents designated by the Collateral
Agent, its attorney-in-fact with full power of substitution, for the benefit of
the Secured Parties,

                           (i) to take all appropriate action and to execute all
         documents and instruments that may be necessary or desirable to
         accomplish the purposes of this Agreement, and without limiting the
         generality of the foregoing, Grantor hereby grants the power to file
         one or more financing statements (including fixture filings),
         continuation statements, filings with the United States Patent and
         Trademark Office or United States Copyright Office (or any successor
         office or any similar office in any other country) or other documents
         for the purpose of perfecting, confirming, continuing, enforcing or
         protecting the Security Interest granted by Grantor, without the
         signature of Grantor, and naming Grantor as debtor and the Collateral
         Agent and/or the Secured Parties as secured party; and

                           (ii) at any time following the Secured Parties'
         demand for payment of the Notes during the continuance of an Event of
         Default (i) to receive, endorse, assign and/or deliver any and all
         notes, acceptances, checks, drafts, money orders or other evidences of
         payment relating to the Collateral or any part thereof; (ii) to demand,
         collect, receive payment of, give receipt for and give discharges and
         releases of all or any of the Collateral; (iii) to sign the name of
         Grantor on any invoice or bill of lading relating to any of the
         Collateral; (iv) to send verifications of accounts to any account
         debtor or any other Person liable for an account; (v) to commence and
         prosecute any and all suits, actions or proceedings at law or in equity
         in any court of competent jurisdiction to collect or otherwise realize
         on all or any of the Collateral or to enforce any rights in respect of
         any Collateral; (vi) to settle, compromise, compound, adjust or defend
         any actions, suits or proceeding relating to all or any of the
         Collateral; and (vii) to use, sell, assign, transfer, pledge, make any
         agreement with respect to or otherwise deal with all or any of the
         Collateral, and to do all other acts and things necessary to carry out
         the purposes of this Agreement, as fully and completely as though the
         Secured Parties were the absolute owner of the Collateral for all
         purposes; provided, however, that nothing herein contained shall be
         construed as requiring or obligating the Secured Parties to make any
         commitment or to make any inquiry as to the nature or sufficiency of
         any payment received by the Secured Parties, or to present or file any
         claim or notice, or to take any action with respect to the Collateral
         or any part thereof or the moneys due or to become due in respect
         thereof or any property covered thereby, and no action taken or omitted
         to be taken by the Secured Parties with respect to the Collateral or
         any part thereof shall give rise to any defense, counterclaim or offset
         in favor of Grantor or to any claim or action against the Secured
         Parties.

                  (b) The provisions of this Article shall in no event relieve
Grantor of any of its obligations hereunder with respect to the Collateral or
any part thereof or impose any obligation on the Secured Parties to proceed in
any particular manner with respect to the Collateral or any part thereof, or in
any way limit the exercise by the Secured Parties of any other or further right
which it may have on the date of this Agreement or hereafter, whether hereunder,
by law or otherwise.

<PAGE>
                                                                              11

                               ARTICLE V. Remedies

         Section 5.1. Remedies upon Default.

                  (a) Upon the occurrence and during the continuance of an Event
         of Default, Grantor agrees to deliver each item of its Collateral to
         the Secured Parties on demand, and it is agreed that the Secured
         Parties shall have the right to take any of or all the following
         actions at the same or different times (but at all times subject to any
         Existing Liens): with or without legal process and with or without
         prior notice or demand for performance, to take possession of the
         Collateral and without liability for trespass to enter any premises
         where the Collateral may be located for the purpose of taking
         possession of or removing the Collateral, exercise Grantor's right to
         bill and receive payment for completed work and, generally, to exercise
         any and all rights afforded to a secured party under the Uniform
         Commercial Code or other applicable law. Without limiting the
         generality of the foregoing, Grantor agrees that the Secured Parties
         shall have the right, subject to the mandatory requirements of
         applicable law, to sell or otherwise dispose of all or any part of the
         Collateral, at public or private sale or at any broker's board or on
         any securities exchange, for cash, upon credit or for future delivery
         as the Secured Parties shall deem appropriate. The Secured Parties
         shall be authorized at any such sale (if it deems it advisable to do
         so) to restrict the prospective bidders or purchasers to persons who
         will represent and agree that they are purchasing the Collateral for
         their own account for investment and not with a view to the
         distribution or sale thereof, and upon consummation of any such sale
         the Secured Parties shall have the right to assign, transfer and
         deliver to the purchaser or purchasers thereof the Collateral so sold.
         Each such purchaser at any such sale shall hold the property sold
         absolutely, free from any claim or right on the part of Grantor, and
         Grantor hereby waives (to the extent permitted by law) all rights of
         redemption, stay and appraisal which Grantor now has or may at any time
         in the future have under any rule of law or statute now existing or
         hereafter enacted.

                  (b) The Secured Parties shall give Grantor ten (10) days'
         written notice (which Grantor agrees is reasonable notice within the
         meaning of Section 9-504(3) of the Uniform Commercial Code) of the
         Secured Parties' intention to make any sale of Collateral. Such notice,
         in the case of a public sale, shall state the time and place for such
         sale and, in the case of a sale at a broker's board or on a securities
         exchange, shall state the board or exchange at which such sale is to be
         made and the day on which the Collateral, or portion thereof, will
         first be offered for sale at such board or exchange. Any such public
         sale shall be held at such time or times within ordinary business hours
         and at such place or places as the Secured Parties may fix and state in
         the notice (if any) of such sale. At any such sale, the Collateral, or
         portion thereof, to be sold may be sold in one lot as an entirety or in
         separate parcels, as the Secured Parties may (in their sole and
         absolute discretion) determine. The Secured Parties shall not be
         obligated to make any sale of any Collateral if it shall determine not
         to do so, regardless of the fact that notice of sale of such Collateral
         shall have been given. The Secured Parties may, without notice or
         publication, adjourn any public or private sale or cause the same to be
         adjourned from time to time by announcement at the time and place fixed
         for sale, and such sale may, without further notice, be made at the
         time and place to which the same was so adjourned. In case any sale of
         all or any part of the Collateral is made on credit or for future
         delivery, the Collateral so sold may be retained by the Secured Parties
         until the sale price is paid by the purchaser or purchasers thereof,
         but the Secured Parties shall not incur any liability in case any such
         purchaser or purchasers shall fail to take up and pay for the
         Collateral so sold and, in case of any such failure, such Collateral
         may be sold again upon like notice. At any public (or, to the extent
         permitted by law, private) sale made pursuant to this Section, the
         Secured Parties may bid for or purchase, free (to the extent permitted
         by law) from any right of redemption, stay, valuation or appraisal on
         the part of Grantor (all said rights being also hereby waived and
         released to the extent permitted by law), the Collateral or any part
         thereof offered for sale and may make payment on account thereof by
         using any claim then due and payable to the Secured Parties from
         Grantor as a credit against the purchase price, and the Secured Parties
         may, upon compliance with the terms of sale, hold, retain and dispose
         of such property without further accountability to Grantor therefor.
         For purposes hereof, a written agreement to purchase the Collateral or
         any portion thereof shall be treated as a sale thereof; the Secured
         Parties shall be free to carry out such sale pursuant to such agreement
         and Grantor shall not be entitled to the return of the Collateral or
         any portion thereof subject thereto, notwithstanding the fact that
         after the Secured Parties shall have entered into such an agreement all
         Obligations have been paid in full. As an alternative to exercising the
         power of sale herein conferred upon it, the Secured Parties may proceed
         by a suit or suits at law or in equity to foreclose this Agreement and
         to sell the Collateral or any portion thereof pursuant to a judgment or
         decree of a court or courts having competent jurisdiction or pursuant
         to a proceeding by a court-appointed receiver.

<PAGE>
                                                                              12

         Section 5.2. Application of Proceeds. The Secured Parties shall apply
the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:

                  (a) FIRST, to the payment of all reasonable costs and expenses
incurred by the Secured Parties in connection with such collection or sale or
otherwise in connection with this Agreement or any of the Obligations, including
all court costs and the fees and expenses of its agents and legal counsel, and
any other costs or expenses incurred in connection with the exercise of any
right or remedy hereunder, under the Purchase Agreement, the Notes and the other
Transaction Documents;

                  (b) SECOND, to the payment in full of the Obligations; and

                  (c) THIRD, to Grantor, its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may otherwise direct.

         Subject to the foregoing, the Secured Parties shall have absolute
discretion as to the time of application of such proceeds, moneys or balances in
accordance with this Agreement. Upon any sale of the Collateral by the Secured
Parties (including pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of any such proceeds, moneys or balances by
the Secured Parties or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Secured Parties or such officer or
be answerable in any way for the misapplication thereof.

<PAGE>
                                                                              13

         Section 5.3. Grant of License to Use Intellectual Property. For the
purpose of enabling the Secured Parties to exercise rights and remedies under
this Article at such time as the Secured Parties shall be lawfully entitled to
exercise such rights and remedies, Grantor hereby grants to the Secured Parties
an irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to Grantor) to use, license or sub-license any of the
Collateral consisting of intellectual property now owned or hereafter acquired
by Grantor, and wherever the same may be located, and including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Secured Parties
may be exercised, at the option of the Secured Parties, only following the
Secured Parties' demand for payment of the Notes during the continuance of an
Event of Default.

                            ARTICLE VI. Miscellaneous

         Section 6.1. Notices. All communications and notices hereunder to the
Grantor and to the Secured Parties shall (except as otherwise expressly
permitted herein) be in writing and delivered to the Grantor or the Secured
Parties, as the case may be, as provided in the Purchase Agreement.

         Section 6.2. Security Interest Absolute. All rights of the Secured
Parties hereunder, the Security Interest and all obligations of Grantor
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Purchase Agreement, the Notes, any Transaction
Document or any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Purchase Agreement, the Notes, any Transaction Document or any other
agreement or instrument, (c) any exchange, release or non-perfection of any Lien
on other collateral, or any release or amendment or waiver of or consent under
or departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Grantor in respect of the Obligations
or this Agreement.

         Section 6.3. Survival of Agreement. All covenants, agreements,
representations and warranties made by Grantor herein and in the certificates or
other instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the Secured Parties
and shall survive the making of the loan and the execution and delivery to the
Secured Parties of the Notes, regardless of any investigation made by the
Secured Parties or on their behalf; and shall continue in full force and effect
until this Agreement shall terminate.

         Section 6.4. Binding Effect; Several Agreement; Successors and Assigns.
This Agreement shall become effective as to Grantor when a counterpart hereof
executed on behalf of Grantor shall have been delivered to the Secured Parties
and a counterpart hereof shall have been executed on behalf of the Secured
Parties, and thereafter shall be binding upon Grantor and the Secured Parties
and their respective successors and assigns, and shall inure to the benefit of
Grantor, the Secured Parties and their respective successors and assigns, except
that Grantor shall not have the right to assign or transfer its rights or
obligations hereunder or any interest herein or in the Collateral (and any such
assignment or transfer shall be void) except as expressly contemplated by this
Agreement, the Purchase Agreement, the Notes or the other Transaction Documents.

<PAGE>
                                                                              14

         Section 6.5. Secured Parties' Fees and Expense; Indemnification.

                  (a) Grantor agrees to pay upon demand to the Secured Parties
         the amount of any and all reasonable expenses, including all reasonable
         fees, disbursements and other charges of its counsel and of any experts
         or agents, which the Secured Parties may incur in connection with (i)
         the administration of this Agreement (including the customary fees and
         charges of the Secured Parties for any audits conducted by them or on
         their behalf with respect to the accounts inventory), (ii) the custody
         or preservation of, or the sale of, collection from or other
         realization upon any of the Collateral, (iii) the exercise, enforcement
         or protection of any of the rights of the Secured Parties hereunder or
         (iv) the failure of Grantor to perform or observe any of the provisions
         hereof.

                  (b) Grantor agrees to indemnify the Secured Parties and the
         agent, contractors and employees of the Secured Parties (collectively,
         the "Indemnitees") against, and hold each of them harmless from, any
         and all losses, claims, damages, liabilities and related expenses,
         including reasonable fees, disbursements and other charges of counsel,
         incurred by or asserted against any of them arising out of, in any way
         connected with, or as a result of, the execution, delivery, or
         performance of this Agreement or any agreement or instrument
         contemplated hereby or any claim, litigation, investigation or
         proceeding relating hereto or to the Collateral, whether or not any
         Indemnitee is a party thereto; provided that such indemnity shall not,
         as to any Indemnitee, be available to the extent that such losses,
         claims, damages, liabilities or related expenses are determined by a
         court of competent jurisdiction by final and nonappealable judgment to
         have resulted from the gross negligence or willful misconduct of such
         Indemnitee.

                  (c) Any such amounts payable as provided hereunder shall be
         additional Obligations secured hereby. The provisions of this Section
         shall remain operative and in full force and effect regardless of the
         termination of this Agreement, the Purchase Agreement, the Notes or the
         other Transaction Documents, the consummation of the transactions
         contemplated hereby, the repayment of any of the Obligations, the
         invalidity or unenforceability of any term or provision of this
         Agreement, the Purchase Agreement, the Notes or the other Transaction
         Documents, or any investigation made by or on behalf of the Secured
         Parties. All amounts due under this Section shall be payable on written
         demand therefor.

         Section 6.6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY OF THE CONFLICTS OF LAW PRINCIPLES WHICH WOULD RESULT IN
THE APPLICATION OF THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION. THIS AGREEMENT
SHALL NOT BE INTERPRETED OR CONSTRUED WITH ANY PRESUMPTION AGAINST THE PARTY
CAUSING THIS AGREEMENT TO BE DRAFTED.

<PAGE>
                                                                              15

         Section 6.7. Waivers; Amendment.

                  (a) No failure or delay of the Secured Parties in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Secured Parties hereunder and under the Purchase Agreement
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement, the Purchase
Agreement, the Notes or the other Transaction Documents or consent to any
departure by Grantor therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice to or demand on Grantor in any case shall entitle Grantor to any other
or further notice or demand in similar or other circumstances.

                  (b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements, in
writing entered into by the Secured Parties and Grantor.

         Section 6.8. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE PURCHASE AGREEMENT OR THE NOTES.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT, THE PURCHASE AGREEMENT AND THE NOTES, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

         Section 6.9. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

         Section 6.10. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract. Each party shall be
entitled to rely on a facsimile signature of any other party hereunder as if it
were an original.

<PAGE>
                                                                              16

         Section 6.11. Jurisdiction; Consent to Service of Process.

                  (a) Grantor hereby irrevocably and unconditionally submits,
         for itself and its property, to the nonexclusive jurisdiction of any
         New York State court or Federal court of the United States of America
         sitting in New York City, and any appellate court from any thereof, in
         any action or proceeding arising out of or relating to this Agreement,
         the Purchase Agreement or the Notes, or for recognition or enforcement
         of any judgment, and each of the parties hereto hereby irrevocably and
         unconditionally agrees that all claims in respect of any such action or
         proceeding may be heard and determined in such New York State or, to
         the extent permitted by law, in such Federal court. Each of the parties
         hereto agrees that a final judgment in any such action or proceeding
         shall be conclusive and may be enforced in other jurisdictions by suit
         on the judgment or in any other manner provided by law. Nothing in this
         Agreement shall affect any right that the Secured Parties may otherwise
         have to bring any action or proceeding relating to this Agreement, the
         Purchase Agreement, the Notes or the other Transaction Documents
         against Grantor or its properties in the courts of any jurisdiction.

                  (b) Grantor hereby irrevocably and unconditionally waives, to
         the fullest extent it may legally and effectively do so, any objection
         which it may now or hereafter have to the laying of venue of any suit,
         action or proceeding arising out of or relating to this Agreement, the
         Purchase Agreement, the Notes or the other Transaction Documents in any
         New York State or Federal court. Each of the parties hereto hereby
         irrevocably waives, to the fullest extent permitted by law, the defense
         of an inconvenient forum to the maintenance of such action or
         proceeding in any such court.

                  (c) Each party to this Agreement irrevocably consents to
         service of process in the manner provided for notices in Section 7.1.
         Nothing in this Agreement will affect the right of any party to this
         Agreement to process in any other manner permitted by law.

         Section 6.12. Termination. This Agreement and the Security Interest
shall terminate when all the Obligations have been paid in full, at which time
the Secured Parties shall execute and deliver to Grantor, at Grantor's expense,
all Uniform Commercial Code termination statements and similar documents which
Grantor shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section shall
be without recourse to or warranty by the Secured Parties.

         Section 6.13. Prejudgment Remedy Waiver. Grantor acknowledges that this
Agreement, the Purchase Agreement, the Notes and the other Transaction Documents
evidence a commercial transaction and that it could, under certain circumstances
have the right, to notice of and hearing on the right of the Secured Parties to
obtain a prejudgment remedy, such as attachment, garnishment and/or replevin,
upon commencing any litigation against Grantor. Notwithstanding, Grantor hereby
waives all rights to notice, judicial hearing or prior court order to which it
might otherwise have the right under any state or federal statute or
constitution in connection with the obtaining by the Secured Parties of any
prejudgment remedy by reason of this Agreement, the Purchase Agreement, the
Notes, the other Transaction Documents or by reason of the Obligations or any
renewals or extensions of the same. Grantor also waives any and all objection
which it might otherwise assert, now or in the future, to the exercise or use by
the Secured Parties of any right of setoff, repossession or self help as may
presently exist under statute or common law.

<PAGE>
                                                                              17

         Section 7.14.   Collateral Agent.

                  (a) Each Secured Party hereby appoints Bush Ross, P.A. (the
"Collateral Agent") as the Collateral Agent hereunder and each Secured Party
authorizes the Collateral Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Transaction Documents
as are delegated to the Collateral Agent under such agreements and to exercise
such powers as are reasonably incidental thereto. Without limiting the
foregoing, each Secured Party hereby authorizes the Collateral Agent to execute
and deliver, and to perform its obligations under, each of the documents to
which the Collateral Agent is a party relating to security for the obligations
under the Notes, to exercise all rights, powers and remedies that the Collateral
Agent may have under such Transaction Documents and, in the case of the
Transaction Documents, to act as agent for the Secured Parties under such
Transaction Documents.

                  (b) As to any matters not expressly provided for by this
Agreement and the other document relating thereto (including enforcement or
collection), the Collateral Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Secured Parties, and such instructions shall be
binding upon all Secured Parties; provided, however, that the Collateral Agent
shall not be required to take any action that (i) the Collateral Agent in good
faith believes exposes it to personal liability unless the Collateral Agent
receives an indemnification satisfactory to it from the Secured Parties with
respect to such action or (ii) is contrary to this Agreement or applicable law.
The Collateral Agent agrees to give to each Secured Party prompt notice of each
notice given to it by the Grantor pursuant to the terms of this Agreement or the
other Transaction Documents. If the Collateral Agent receives conflicting
instructions from the Secured Parties it will not be required to act until it
receives instructions from the Secured Parties holding a majority of the Notes
(calculated in dollar amounts rather than noteholders).

                  (c) In performing its functions and duties hereunder and under
the Transaction Documents and the other documents required to be executed or
delivered in connection therewith, the Collateral Agent is acting solely on
behalf of the Secured Parties and its duties are entirely administrative in
nature. The Collateral Agent does not assume and shall not be deemed to have
assumed any obligation other than as expressly set forth herein, in the
Transaction Documents and any other documents required to be executed or
delivered in connection therewith related hereto or any other relationship as
the agent, fiduciary or trustee of or for any Secured Party or holder of any
other obligation under this Agreement or the Notes. The Collateral Agent may
perform any of its duties under any Transaction Document by or through its
agents or employees.

                  (d) None of the Collateral Agent, any of its affiliates or any
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it, him, her or them under or in
connection with this Agreement or the other Transaction Documents, except for
its, his, her or their own gross negligence or willful misconduct.

<PAGE>
                                                                              18

                  (e) Each Secured Party acknowledges that it shall,
independently and without reliance upon the Collateral Agent or any other
Secured Party conduct its own independent investigation of the financial
condition and affairs of the Parent and its Subsidiaries in connection with the
issuance of the Securities. Each Secured Party also acknowledges that it shall,
independently and without reliance upon the Collateral Agent or any other
Secured Party and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and other Transaction Documents. For
avoidance of doubt, each Secured Party represents that it has had no contact
with the Collateral Agent; that the Collateral Agent has had no role in the
negotiation or preparation of the Transaction Documents and was contacted after
such negotiations and documents were finalized for the purpose of serving solely
in the administrative role of Collateral Agent under this Agreement.

                  (f) Each Secured Party agrees to indemnify the Collateral
Agent and each of its affiliates, and each of their respective directors,
officers, employees, agents and advisors (to the extent not reimbursed by the
Borrower), from any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements
(including fees, expenses and disbursements of financial and legal advisors) of
any kind or nature whatsoever that may be imposed on, incurred by, or asserted
against, the Collateral Agent or any of its affiliates, directors, officers,
employees, agents and advisors in any way relating to or arising out of this
Agreement or the other Transaction Documents or any action taken or omitted by
the Collateral Agent under this Agreement or the document related thereto;
provided, however, that no Secured Party shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Collateral Agent's or such
Affiliate's gross negligence or willful misconduct.

                  (g) The Collateral Agent may resign at any time by giving
written notice thereof to the Secured Parties and the Parent. Upon any such
resignation, the Secured Parties shall have the right to appoint a successor
Collateral Agent. If no successor Collateral Agent shall have been so appointed
by the Secured Parties, and shall have accepted such appointment, within 30 days
after the retiring Collateral Agent's giving of notice of resignation, then the
retiring Collateral Agent may, on behalf of the Secured Parties, appoint a
successor Collateral Agent, selected from among the Secured Parties. Upon the
acceptance of any appointment as Collateral Agent by a successor Collateral
Agent, such successor Collateral Agent shall succeed to, and become vested with,
all the rights, powers, privileges and duties of the retiring Collateral Agent,
and the retiring Collateral Agent shall be discharged from its duties and
obligations under this Agreement, the Transaction Documents and any other
documents required to be executed or delivered in connection therewith. Prior to
any retiring Collateral Agent's resignation hereunder as Collateral Agent, the
retiring Collateral Agent shall take such action as may be reasonably necessary
to assign to the successor Collateral Agent its rights as Collateral Agent under
the Transaction Documents. After such resignation, the retiring Collateral Agent
shall continue to have the benefit of this Agreement as to any actions taken or
omitted to be taken by it while it was Collateral Agent under this Agreement,
the Transaction Documents and any other documents required to be executed or
delivered in connection therewith.

                  (h) Each Secured Party agrees that any action taken by the
Collateral Agent in accordance with the provisions of this Agreement or of the
other document relating thereto, and the exercise by the Collateral Agent or the
Secured Parties of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Secured Parties.

<PAGE>
                                                                              19

                  (i) Each of the Secured Parties hereby directs, in accordance
with the terms hereof, the Collateral Agent to release (or in the case of clause
(ii) below, release or subordinate) any Lien held by the Collateral Agent for
the benefit of the Secured Parties against any of the following: (i) all of the
Collateral upon payment and satisfaction in full of all obligations under the
Notes and all other obligations under the Transaction Documents that the
Collateral Agent has been notified in writing are then due and payable; (ii) any
assets that are subject to a Lien permitted by Section 3.2); and (iii) any part
of the Collateral sold or disposed of by the Parent or any Subsidiary if such
sale or disposition is permitted by this Agreement and the Notes (or permitted
pursuant to a waiver or consent of a transaction otherwise prohibited by this
Agreement and the Notes). Each of the Secured Parties hereby directs the
Collateral Agent to execute and deliver or file such termination and partial
release statements and do such other things as are necessary to release Liens to
be released pursuant to this Section 7.14 promptly upon the effectiveness of any
such release.

                  (j) The contact information for the Collateral Agent is: Bush
Ross, P.A., 220 S. Franklin Street, Tampa, FL 33602, Attention: John Giordano.
The fax number for Bush Ross, P.A. is (813) 223-9620 and the E-mail address is
jgiordano@bushross.com. The telephone number for Bush Ross, P.A. is (813)
224-9255.

                  (k) The Collateral Agent:

                            (i) shall not be responsible in any manner for the
                   validity, correctness or sufficiency of any document or
                   instrument received by or made available to it, in its
                   capacity as Collateral Agent hereunder.

                            (ii) shall be entitled to act upon any written
                   certificate, statement, notice, demand, request, consent,
                   agreement or other instrument whatever, not only in reliance
                   upon its due execution and the validity and effectiveness of
                   its provisions, but also as to the accuracy and completeness
                   of any information therein contained, which the Collateral
                   Agent shall in good faith believe to be genuine and to have
                   been signed or presented by any authorized person.

                            (iii) shall be entitled to request and receive from
                   any party hereto such documents in addition to those provided
                   for herein as the Collateral Agent may deem necessary to
                   resolve any questions of fact involved in the administration
                   of its duties hereunder.

                            (iv) may, at the expense of the remaining parties,
                   consult independent counsel of its choice in respect to any
                   question relating to its duties or responsibilities under
                   this Agreement, and shall not be liable for any action taken
                   or omitted in good faith on advice of such counsel.

<PAGE>
                                                                              20

                            (v) shall be under no obligation to advance any
                   monetary sum in connection with the maintenance or
                   administration of this Agreement, to institute or defend any
                   action, suit or legal proceeding in connection herewith, or
                   to take any other action likely to involve the Collateral
                   Agent in expense, unless first indemnified by the remaining
                   parties to the Collateral Agent's satisfaction.

                            (vi) shall not be bound by any amendment to this
                   Agreement or by any other such amendment or agreement unless
                   the same shall have been executed by the Collateral Agent.

                            (vii) shall have only such duties and
                   responsibilities as are expressly set forth in this Agreement
                   in the performance of its obligations hereunder.

                            (viii) shall be indemnified and held harmless by the
                   remaining parties against any and all liabilities incurred by
                   it hereunder (including all costs, expenses and fees incurred
                   in defending any legal action or administrative proceeding or
                   in resisting any claim), except for those resulting from its
                   own willful misconduct or gross negligence.

                            (ix) may, if it becomes uncertain concerning its
                   rights and responsibilities with respect to its duties or if
                   it receives instructions with respect to the Collateral that
                   it believes to be in conflict with this Agreement or is
                   advised that a dispute has arisen with respect to its duties
                   under this Agreement, without liability, refrain from taking
                   any action until it is directed otherwise in a writing signed
                   by all of the Secured Parties or by an order of a court of
                   competent jurisdiction. The Collateral Agent is not obligated
                   to institute or defend any legal proceedings, although it
                   may, in its sole discretion and at the remaining parties'
                   expense, institute or defend such proceedings (including
                   proceedings seeking a declaratory judgment) and join
                   interested parties.

                            (x) The Collateral Agent will be paid a fee of
                   $3,000 for its agreement to serve as the Collateral Agent.
                   This fee is payable upon the execution of this Agreement.

         Section 7.15.   Appointment as "Fonde De Pouvoir".

                  (a) Without limiting the powers of the Collateral Agent acting
as a mandatory (i.e. agent) hereunder or under any of the other Transaction
Documents, each Grantor hereby acknowledges that, for purposes of holding any
security granted by each Grantor on property pursuant to the laws of the
Province of Quebec to secure obligations of a Grantor under any bond, debenture
or other title of indebtedness issued by a Grantor, the Collateral Agent shall
be the holder of an irrevocable power of attorney (fonde de pouvoir) (within the
meaning of the Civil Code of Quebec) for itself and for all present and future
Secured Parties and in particular for all present and future holders of any
bond, debenture or other title of indebtedness issued by a Grantor.

<PAGE>
                                                                              21

                  (b) Each of the Secured Parties hereby irrevocably
constitutes, to the extent necessary, the Collateral Agent as the holder of an
irrevocable power of attorney (fonde de pouvoir) (within the meaning of Article
2692 of the Civil Code of Quebec) in order to hold security or hypothecs granted
by each Grantor in the Province of Quebec to secure the obligations of a Grantor
under any bond, debenture or other title of indebtedness issued by a Grantor,
and hereby agrees that the Collateral Agent may act as the bondholder and
mandatary with respect to any bond, debenture or similar title of indebtedness
that may be issued by a Grantor and pledged in favor of the Collateral Agent for
itself and for the benefit of the Secured Parties. Each assignee of a Secured
Parties shall be deemed to have confirmed and ratified the constitution of the
Collateral Agent as the holder of such irrevocable power of attorney (fonde de
pouvoir) by execution of an assignment and acceptance.

                  (c) The execution by the Collateral Agent, acting as fonde de
pouvoir and mandatary, prior to this Agreement under any deeds of hypothec or
other security documents is hereby ratified and confirmed. Notwithstanding the
provisions of Section 32 of the An Act respecting the special powers of legal
persons (Quebec), the Collateral Agent may acquire and be the holder of any
bond, debenture or other title of indebtedness. Each Grantor hereby acknowledges
that each such bond or debenture constitutes a title of indebtedness, as such
term is used in Article 2692 of the Civil Code of Quebec.

                  (d) The Collateral Agent, acting as the holder of an
irrevocable power of attorney (fonde de pouvoir), shall have the same rights,
powers, immunities, indemnities and exclusions from liability as are prescribed
in favor of the Collateral Agent in this Agreement, which shall apply mutatis
mutandis. Without limitation, the provisions of this Agreement allowing
resignation of a Collateral Agent, shall apply mutatis mutandis to the
resignation and appointment of a successor Collateral Agent, acting as the
holder of an irrevocable power of attorney (fonde de pouvoir).

                            [SIGNATURE PAGES FOLLOW]

<PAGE>

         IN WITNESS WHEREOF, the parties have duly executed this Pledge and
Security Agreement as of the day and year first written above.

                                            MANARIS CORPORATION

                                            By:_________________________________
                                               Name:
                                               Title:

                                            C-CHIP TECHNOLOGIES CORPORATION
                                            (NORTH AMERICA)

                                            By:_________________________________
                                               Name:
                                               Title:

                                            SECURED PARTY:

                                            By:_________________________________
                                               Name:
                                               Title:

Acknowledged and Agreed:

COLLATERAL AGENT:

By:_____________________________________
   Name:
   Title:REGISTRATION RIGHTS AGREEMENT
                          -----------------------------

                  This Registration Rights Agreement (this "Agreement") is made
and entered into as of August 11, 2006, by and among Manaris Corporation, a
Nevada corporation (the "Company"), and the purchasers listed on Schedule I
hereto (the "Purchasers").

                  This Agreement is being entered into pursuant to the Note and
Warrant Purchase Agreement dated as of the date hereof among the Company and the
Purchasers (the "Purchase Agreement").

                  The Company and the Purchasers hereby agree as follows:

          1.      Definitions.

                  Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

                  "Advice" shall have meaning set forth in Section 3(m).

                  "Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.

                  "Board" shall have meaning set forth in Section 3(n).

                  "Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
state of New York generally are authorized or required by law or other
government actions to close.

                  "Closing Date" means the date of the initial closing of the
purchase and sale of the Notes and the Warrants pursuant to the Purchase
Agreement.

                  "Commission" means the Securities and Exchange Commission.

                  "Common Stock" means the Company's Common Stock, par value
$0.0001 per share.

                  "Effectiveness Date" means with respect to the Registration
Statement the earlier of (A) the ninetieth (90th) day following the Closing Date
(or in the event the Registration Statement receives a "full review" by the
Commission, the one hundred twentieth (120th) day following the Closing Date) or
(B) the date which is within three (3) Business Days after the date on which the
Commission informs the Company that (i) the Commission will not review the
Registration Statement or (ii) the Company may request the acceleration of the
effectiveness of the Registration Statement and the Company makes such request;
provided that, if the Effectiveness Date falls on a Saturday, Sunday or any
other day which shall be a legal holiday or a day on which the Commission is
authorized or required by law or other government actions to close, the
Effectiveness Date shall be the following Business Day.

<PAGE>

                  "Effectiveness Period" shall have the meaning set forth in
Section 2.

                  "Event" shall have the meaning set forth in Section 7(d).

                  "Event Date" shall have the meaning set forth in Section 7(d).

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Filing Date" means the forty-fifth (45th) day following the
Closing Date; provided that, if the Filing Date falls on a Saturday, Sunday or
any other day which shall be a legal holiday or a day on which the Commission is
authorized or required by law or other government actions to close, the Filing
Date shall be the following Business Day.

                  "Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.

                  "Indemnified Party" shall have the meaning set forth in
Section 5(c).

                  "Indemnifying Party" shall have the meaning set forth in
Section 5(c).

                  "Losses" shall have the meaning set forth in Section 5(a).

                  "Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.

                  "Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

                  "Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.

                  "Registrable Securities" means (A) the shares of Common Stock
issuable upon conversion or repayment of the Notes and (B) the shares of Common
Stock issuable upon exercise of the Warrants; provided, however, that
Registrable Securities shall include (but not be limited to) a number of shares
of Common Stock equal to no less than 125% of the maximum shares of Common Stock
which would be issuable upon conversion or repayment of the Notes and upon
exercise of the Warrants, assuming such conversion or repayment and exercise
occurred on the Closing Date or the Filing Date, whichever date would result in
the greater number of Registrable Securities.

                                      -2-

<PAGE>

                  "Registration Statement" means the registration statements and
any additional registration statements contemplated by Section 2, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.

                  "Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Special Counsel" means Kramer Levin Naftalis & Frankel LLP,
for which the Holders will be reimbursed by the Company pursuant to Section 4.

                  "Warrants" means the warrants to purchase shares of Common
Stock issued to the Purchasers pursuant to the Purchase Agreement.

          2.      Resale Registration.

                                      -3-

<PAGE>

                  On or prior to the Filing Date the Company shall prepare and
file with the Commission a "resale" Registration Statement providing for the
resale of all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form SB-2
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form SB-2, in which case such registration shall be on
another appropriate form in accordance herewith and the Securities Act and the
rules promulgated thereunder). Such Registration Statement shall cover to the
extent allowable under the Securities Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions with
respect to the Registrable Securities. The Company shall (i) not permit any
securities other than the Registrable Securities and the securities to be listed
on Schedule II hereto to be included in the Registration Statement and (ii) use
its best efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof, but
in any event prior to the Effectiveness Date, and to keep such Registration
Statement continuously effective under the Securities Act until such date as is
the earlier of (x) the date when all Registrable Securities covered by such
Registration Statement have been sold or (y) the date on which the Registrable
Securities may be sold without any restriction pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion letter,
addressed to the Company's transfer agent to such effect (the "Effectiveness
Period"). The Company shall request that the effective time of the Registration
Statement is 4:00 p.m. Eastern Time on the effective date. If at any time and
for any reason, an additional Registration Statement is required to be filed
because at such time the actual number of shares of Common Stock into which the
Notes are convertible and the Warrants are exercisable exceeds the number of
shares of Registrable Securities remaining under the Registration Statement, the
Company shall have twenty (20) Business Days to file such additional
Registration Statement, and the Company shall use its best efforts to cause such
additional Registration Statement to be declared effective by the Commission as
soon as possible, but in no event later than sixty (60) days after filing.

          3.      Registration Procedures.

                  In connection with the Company's registration obligations
hereunder, the Company shall:

                  (a) Prepare and file with the Commission on or prior to the
Filing Date, a Registration Statement on Form SB-2 (or if the Company is not
then eligible to register for resale the Registrable Securities on Form SB-2
such registration shall be on another appropriate form in accordance herewith
and the Securities Act and the rules promulgated thereunder) in accordance with
the plan of distribution as set forth on Exhibit A hereto and in accordance with
applicable law, and cause the Registration Statement to become effective and
remain effective as provided herein; provided, however, that not less than five
(5) Business Days prior to the filing of the Registration Statement or any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated therein by reference), the Company shall (i)
furnish to the Holders and any Special Counsel, copies of all such documents
proposed to be filed, which documents (other than those incorporated by
reference) will be subject to the review of such Holders and such Special
Counsel, and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of Special Counsel, to conduct a reasonable review of
the documents. The Company shall not file the Registration Statement or any such
Prospectus or any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities or any Special Counsel shall reasonably
object in writing within three (3) Business Days of their receipt thereof.

                                      -4-

<PAGE>

                  (b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements as necessary in
order to register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or supplemented by
any required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424 (or any similar provisions then in force) promulgated
under the Securities Act; (iii) respond as promptly as possible, but in no event
later than ten (10) Business Days, to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and to
provide the Holders, within such ten (10) Business Day period, true and complete
copies of all correspondence from and to the Commission relating to the
Registration Statement; (iv) file the final prospectus pursuant to Rule 424 of
the Securities Act no later than 9:00 a.m. Eastern Time on the Business Day
following the date the Registration Statement is declared effective by the
Commission; and (v) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
Effectiveness Period in accordance with the intended methods of disposition by
the Holders thereof set forth in the Registration Statement as so amended or in
such Prospectus as so supplemented.

                  (c) Notify the Holders of Registrable Securities and any
Special Counsel as promptly as possible (and, in the case of (i)(A) below, not
less than three (3) Business Days prior to such filing, and in the case of (iii)
below, on the same day of receipt by the Company of such notice from the
Commission) and (if requested by any such Person) confirm such notice in writing
no later than one (1) Business Day following the day (i)(A) when a Prospectus or
any Prospectus supplement or post-effective amendment to the Registration
Statement is filed; (B) when the Commission notifies the Company whether there
will be a "review" of such Registration Statement and whenever the Commission
comments in writing on such Registration Statement and (C) with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation or threatening of any Proceedings for that purpose; (iv) if at any
time any of the representations and warranties of the Company contained in any
agreement contemplated hereby ceases to be true and correct in all material
respects; (v) of the receipt by the Company 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 or
threatening of any Proceeding for such purpose; and (vi) of the occurrence of
any event that makes any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, 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.

                                      -5-

<PAGE>

                  (d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, as promptly as possible, (i) any order
suspending the effectiveness of the Registration Statement or (ii) any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction.

                  (e) If requested by the Holders of a majority in interest of
the Registrable Securities, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment to the Registration Statement such information as
the Company reasonably agrees should be included therein and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment.

                  (f) If requested by any Holder, furnish to such Holder and any
Special Counsel, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.

                  (g) Promptly deliver to each Holder and any Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and subject to the provisions of Sections 3(m) and 3(n), the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.

                  (h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders and any Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.

                  (i) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a Registration Statement, which certificates, to the extent
permitted by the Purchase Agreement and applicable federal and state securities
laws, shall be free of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any
Holder may request in connection with any sale of Registrable Securities.

                  (j) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an 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 the light of the circumstances under which they were made, not misleading.

                                      -6-

<PAGE>

                  (k) Use its best efforts to cause all Registrable Securities
relating to the Registration Statement to be listed or quoted on the OTC
Bulletin Board or any other securities exchange, quotation system or market, if
any, on which similar securities issued by the Company are then listed or traded
as and when required pursuant to the Purchase Agreement.

                  (l) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available to its security
holders all documents filed or required to be filed with the Commission,
including, but not limited, to, earning statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 not later than 45 days after
the end of any 12-month period (or 90 days after the end of any 12-month period
if such period is a fiscal year) commencing on the first day of the first fiscal
quarter of the Company after the effective date of the Registration Statement,
which statement shall conform to the requirements of Rule 158.

                  (m) The Company may require each selling Holder to furnish to
the Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in the Registration
Statement, Prospectus, or any amendment or supplement thereto, and the Company
may exclude from such registration the Registrable Securities of any such Holder
who unreasonably fails to furnish such information within a reasonable time
after receiving such request.

                  If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.

                  Each Holder covenants and agrees that it will not sell any
Registrable Securities under the Registration Statement until the Company has
electronically filed the Prospectus as then amended or supplemented as
contemplated in Section 3(g) and notice from the Company that the Registration
Statement and any post-effective amendments thereto have become effective as
contemplated by Section 3(c).

                  Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v), 3(c)(vi) or 3(n), such Holder will forthwith discontinue disposition of
such Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.

                                      -7-

<PAGE>

                  (n) At any time following the date that the Registration
Statement is declared effective by the Commission, if (i) there is material
non-public information regarding the Company which the Company's Board of
Directors (the "Board") determines not to be in the Company's best interest to
disclose and which the Company is not otherwise required to disclose, (ii) there
is a significant business opportunity (including, but not limited to, the
acquisition or disposition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or other similar
transaction) available to the Company which the Board determines not to be in
the Company's best interest to disclose, or (iii) the Company is required to
file a post-effective amendment to the Registration Statement to incorporate the
Company's quarterly and annual reports and audited financial statements on Forms
10-QSB and 10-KSB, then the Company may (x) postpone or suspend filing of a
registration statement for a period not to exceed thirty (30) consecutive days
or (y) postpone or suspend effectiveness of a registration statement for a
period not to exceed twenty (20) consecutive days; provided that the Company may
not postpone or suspend effectiveness of a registration statement under this
Section 3(n) for more than forty-five (45) days in the aggregate during any
three hundred sixty (360) day period; provided, however, that no such
postponement or suspension shall be permitted for consecutive twenty (20) day
periods arising out of the same set of facts, circumstances or transactions.

          4.      Registration Expenses.

                  All fees and expenses incident to the performance of or
compliance with this Agreement by the Company, except as and to the extent
specified in this Section 4, shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the OTC
Bulletin Board and each other securities exchange or market on which Registrable
Securities are required hereunder to be listed, if any, (B) with respect to
filing fees required to be paid to the National Association of Securities
Dealers, Inc. and the NASD Regulation, Inc. and (C) in compliance with state
securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Holders in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company and Special Counsel for the Holders, in the case of the Special Counsel,
up to a maximum amount of $7,500, (v) Securities Act liability insurance, if the
Company so desires such insurance, and (vi) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation, the
Company's independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.

                                      -8-

<PAGE>

          5.      Indemnification.

                  (a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, managers, partners, members, shareholders,
agents, brokers, investment advisors and employees of each of them, each Person
who controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out
of or relating to any violation of securities laws or untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, except to the extent, but only to the
extent, that such untrue statements or omissions are based solely upon
information regarding such Holder or such other Indemnified Party furnished in
writing to the Company by such Holder expressly for use therein. The Company
shall notify the Holders promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.

                  (b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents and employees of such controlling Persons,
to the fullest extent permitted by applicable law, from and against all Losses
(as determined by a court of competent jurisdiction in a final judgment not
subject to appeal or review), as incurred, arising solely out of or based solely
upon any untrue statement of a material fact contained in the Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or arising solely out of or based solely upon any omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by
such Holder or other Indemnifying Party to the Company specifically for
inclusion in the Registration Statement or such Prospectus. Notwithstanding
anything to the contrary contained herein, each Holder shall be liable under
this Section 5(b) for only that amount as does not exceed the net proceeds to
such Holder as a result of the sale of Registrable Securities pursuant to such
Registration Statement.

                                      -9-

<PAGE>

                  (c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party) in writing, and
the Indemnifying Party shall be entitled to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have proximately and materially adversely prejudiced the Indemnifying
Party.

                  An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such parties
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened Proceeding in respect of which any
Indemnified Party is a party and indemnity has been sought hereunder, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

              All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnified Party shall reimburse all such fees and expenses to the extent
it is finally judicially determined that such Indemnified Party is not entitled
to indemnification hereunder).

                                      -10-

<PAGE>

                  (d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is due but unavailable to an Indemnified Party because of a failure
or refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
benefits received by the Indemnifying Party on the one hand and the Indemnified
Party on the other from the offering of the Preferred Stock and Warrants. If,
but only if, the allocation provided by the foregoing sentence is not permitted
by applicable law, the allocation of contribution shall be made in such
proportion as is appropriate to reflect not only the relative benefits referred
to in the foregoing sentence but also the relative fault, as applicable, of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms. In no
event shall any selling Holder be required to contribute an amount under this
Section 5(d) in excess of the net proceeds received by such Holder upon sale of
such Holder's Registrable Securities pursuant to the Registration Statement
giving rise to such contribution obligation.

              The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. The indemnity and
contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties
pursuant to the law.

          6.      Rule 144.

                  As long as any Holder owns any Notes, Warrants or Registrable
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders with true
and complete copies of all such filings. As long as any Holder owns any Notes,
Warrants or Registrable Securities, if the Company is not required to file
reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare
and furnish to the Holders and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further
action as any Holder may reasonably request in writing, all to the extent
required from time to time to enable such Person to sell the Conversion Shares
and the Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including providing any legal opinions relating to such sale
pursuant to Rule 144. Upon the request of any Holder, the Company shall deliver
to such Holder a written certification of a duly authorized officer as to
whether it has complied with such requirements.

                                      -11-

<PAGE>

          7.      Miscellaneous.

                  (a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, such Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.

                  (b) No Inconsistent Agreements. Neither the Company nor any of
its subsidiaries has, as of the date hereof entered into and currently in
effect, nor shall the Company or any of its subsidiaries, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as disclosed in Schedule
2.1(c) of the Purchase Agreement or Schedule II hereto, neither the Company nor
any of its subsidiaries has previously entered into any agreement currently in
effect granting any registration rights with respect to any of its securities to
any Person. Without limiting the generality of the foregoing, without the
written consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to request the
Company to register any securities of the Company, under the Securities Act
unless the rights so granted are subject in all respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.

                  (c) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders in such capacity pursuant hereto
or as disclosed on Schedule 2.1(c) of the Purchase Agreement or Schedule II
hereto) may include securities of the Company in the Registration Statement, and
the Company shall not after the date hereof enter into any agreement providing
such right to any of its securityholders, unless the right so granted is subject
in all respects to the prior rights in full of the Holders set forth herein, and
is not otherwise in conflict with the provisions of this Agreement.

                                      -12-

<PAGE>

                  (d) Piggy-Back Registrations. If at any time when there is not
an effective Registration Statement covering (i) Conversion Shares or (ii)
Warrant Shares, the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each holder of Registrable Securities
written notice of such determination and, if within thirty (30) days after
receipt of such notice, or within such shorter period of time as may be
specified by the Company in such written notice as may be necessary for the
Company to comply with its obligations with respect to the timing of the filing
of such registration statement, any such holder shall so request in writing
(which request shall specify the Registrable Securities intended to be disposed
of by the Purchasers), the Company will cause the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the holder, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered, provided that if
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to such holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay expenses in accordance with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 7(d) for the same period as the delay in
registering such other securities. The Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered; provided, however, that the Company shall not
be required to register any Registrable Securities pursuant to this Section 7(d)
that are eligible for sale pursuant to Rule 144(k) of the Securities Act. In the
case of an underwritten public offering, if the managing underwriter(s) or
underwriter(s) should reasonably object to the inclusion of the Registrable
Securities in such registration statement, then if the Company after
consultation with the managing underwriter should reasonably determine that the
inclusion of such Registrable Securities would materially adversely affect the
offering contemplated in such registration statement, and based on such
determination recommends inclusion in such registration statement of fewer or
none of the Registrable Securities of the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro-rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration), if the
Company after consultation with the underwriter(s) recommends the inclusion of
fewer Registrable Securities, or (y) none of the Registrable Securities of the
Holders shall be included in such registration statement, if the Company after
consultation with the underwriter(s) recommends the inclusion of none of such
Registrable Securities; provided, however, that if securities are being offered
for the account of other persons or entities as well as the Company, such
reduction shall not represent a greater fraction of the number of Registrable
securities intended to be offered by the Holders than the fraction of similar
reductions imposed on such other persons or entities (other than the Company).

                                      -13-

<PAGE>

                  (e) Failure to File Registration Statement and Other Events.
The Company and the Purchasers agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Period or
if certain other events occur. The Company and the Holders further agree that it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (A) the Registration Statement is not filed on or prior to the
Filing Date, or (B) the Registration Statement is not declared effective by the
Commission on or prior to the Effectiveness Date (or in the event an additional
Registration Statement is filed because the actual number of shares of Common
Stock into which the Notes are convertible and the Warrants are exercisable
exceeds the number of shares of Common Stock initially registered is not filed
and declared effective with the time periods set forth in Section 2), or (C) the
Company fails to file with the Commission a request for acceleration in
accordance with Rule 461 promulgated under the Securities Act within three (3)
Business Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration Statement will not
be "reviewed," or not subject to further review, or (D) the Registration
Statement is filed with and declared effective by the Commission but thereafter
ceases to be effective as to all Registrable Securities at any time prior to the
expiration of the Effectiveness Period, without being succeeded promptly by a
subsequent Registration Statement filed with and declared effective by the
Commission in accordance with Section 2 hereof, or (E) the Company has breached
Section 3(n), or (F) trading in the Common Stock shall be suspended or if the
Common Stock is delisted from or no longer quoted on the OTC Bulletin Board (or
other principal exchange on which the Common Stock is listed or traded) for any
reason for more than three (3) Business Days in the aggregate (any such failure
or breach being referred to as an "Event," and for purposes of clauses (A) and
(B) the date on which such Event occurs, or for purposes of clause (C) the date
on which such three (3) Business Day period is exceeded, or for purposes of
clause (D) after more than fifteen (15) Business Days, or for purposes of clause
(F) the date on which such three (3) Business Day period is exceeded, being
referred to as "Event Date"), the Company shall pay an amount in cash as
liquidated damages to each Holder equal to 1.5% for each calendar month
(prorated for shorter periods) of the Holder's initial investment in the Notes
from the Event Date until the applicable Event is cured; provided, however, that
in no event shall the amount of liquidated damages payable at any time and from
time to time to any Holder pursuant to this Section 7(e) exceed an aggregate of
twelve percent (12%) of the amount of the Holder's initial investment in the
Notes. Notwithstanding anything to the contrary in this paragraph (e), if (i)
any of the Events described in clauses (A), (B), (C), (D) or (F) shall have
occurred, (II) on or prior to the applicable Event Date, the Company shall have
exercised its rights under Section 3(n) hereof and (III) the postponement or
suspension permitted pursuant to such Section 3(n) shall remain effective as of
such applicable Event Date, then the applicable Event Date shall be deemed
instead to occur on the second Business Day following the termination of such
postponement or suspension. Liquidated damages payable by the Company pursuant
to this Section 7(e) shall be payable on the first (1st) Business Day of each
thirty (30) day period following the Event Date. Notwithstanding anything to the
contrary contained herein, in no event shall any liquidated damages be payable
with respect to the Warrants or the Warrant Shares.

                  (f) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of a majority of the Registrable Securities outstanding.

                                      -14-

<PAGE>

                  (g) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., New York
City time, on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., New York
City time, on any date and earlier than 11:59 p.m., New York City time, on such
date, (iii) the Business Day following the date of mailing, if sent by overnight
delivery by nationally recognized overnight courier service or (iv) actual
receipt by the party to whom such notice is required to be given. The addresses
for such communications shall be with respect to each Holder at its address set
forth under its name on Schedule I attached hereto with copies to its legal
counsel named therein, or with respect to the Company, addressed to:

                                    Manaris Corporation
                                    1155 Rene-Levesque Blvd. West, Suite 2720
                                    Montreal, Quebec
                                    Canada H3B 2K8
                                    Attention: Chief Executive Officer
                                    Tel. No.: (514) 337-2447
                                    Fax No.: (514) 337-0985

with copies (which copies
shall not constitute notice
to the Company) to:                 Sichenzia Ross Friedman Ference LLP
                                    1065 Avenue of the Americas
                                    New York, New York 10018
                                    Attention: Darrin M. Ocasio, Esq.
                                    Tel. No.: (212) 930-9700
                                    Fax No.: (212) 930-9725

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to each Holder (in addition to the legal
counsel set forth on Schedule I hereto) shall be sent to Kramer Levin Naftalis &
Frankel LLP, Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas,
New York, New York 10036, Attention: Christopher S. Auguste, Esq., Telephone
No.: (212) 715-9100, Facsimile No.: (212) 715-8000.

                  (h) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of each Holder and its successors and
assigns. The Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of each Holder. Each
Purchaser may assign its rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.

                                      -15-

<PAGE>

                  (i) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any Person of all or a portion of the
Notes or Registrable Securities if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws, (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions of this Agreement, and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement. The rights to assignment shall apply to the Holders (and
to subsequent) successors and assigns.

                  (j) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.

                  (k) Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York, without giving effect to any of the conflicts of law principles which
would result in the application of the substantive law of another jurisdiction.
This Agreement shall not be interpreted or construed with any presumption
against the party causing this Agreement to be drafted. The Company and the
Holders agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York,
and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue. The Company and the
Holders irrevocably consent to personal jurisdiction in the state and federal
courts of the state of New York. The Company and the Holders consent to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing in this Section 7(k) shall affect or limit any right
to serve process in any other manner permitted by law. The Company and the
Holders hereby agree that the prevailing party in any suit, action or proceeding
arising out of or relating to this Agreement or the Purchase Agreement, shall be
entitled to reimbursement for reasonable legal fees from the non-prevailing
party. The parties hereby waive all rights to a trial by jury.

                  (l) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

                                      -16-

<PAGE>

                  (m) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable in any respect, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

                  (n) Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.

                  (o) Shares Held by the Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.

                  (p) Independent Nature of Purchasers. The Company acknowledges
that the obligations of each Purchaser under the Transaction Documents are
several and not joint with the obligations of any other Purchaser, and no
Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under the Transaction Documents. The Company acknowledges
that the decision of each Purchaser to purchase Securities pursuant to the
Purchase Agreement has been made by such Purchaser independently of any other
Purchaser and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company or of its Subsidiaries which may have made or given by
any other Purchaser or by any agent or employee of any other Purchaser, and no
Purchaser or any of its agents or employees shall have any liability to any
Purchaser (or any other person) relating to or arising from any such
information, materials, statements or opinions. The Company acknowledges that
nothing contained herein, or in any Transaction Document, and no action taken by
any Purchaser pursuant hereto or thereto (including, but not limited to, the (i)
inclusion of a Purchaser in the Registration Statement and (ii) review by, and
consent to, such Registration Statement by a Purchaser) shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Company acknowledges
that each Purchaser shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of this Agreement
or out of the other Transaction Documents, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose. The Company acknowledges that for reasons of administrative convenience
only, the Transaction Documents have been prepared by counsel for the placement
agent and such counsel does not represent the Purchasers and the Purchasers have
retained their own individual counsel with respect to the transactions
contemplated hereby. The Company acknowledges that it has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested to do so by the
Purchasers.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -17-

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.

                                                     MANARIS CORPORATION

                                                     By:________________________
                                                        Name:
                                                        Title:

                                                     PURCHASER:

                                                     By:________________________
                                                        Name:
                                                        Title:

                                      -18-

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