Document:

SUBSIDIARY  GUARANTY  AGREEMENT
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     THIS  SUBSIDIARY  GUARANTY  AGREEMENT  (the  "Guaranty  Agreement"  or  the
"Guaranty"),  dated  as  of  August  18,  2000,  is  made  by  MERLIN  SOFTWARE
TECHNOLOGIES,  INC.,  a  Nevada corporation (the "Guarantor") to the Holders (as
set  forth  in  Exhibit A hereto) of the Notes (as defined herein) (collectively
referred  to as the "Lender").  Capitalized terms used but not otherwise defined
herein  shall  have  the meanings ascribed to them in the Purchase Agreement (as
hereinafter  defined)

                       W  I  T  N  E  S  S  E  T  H:
                       ----------------------------

     WHEREAS,  Merlin  Software  Technologies  International  Inc.,  a  Nevada
corporation  (the  "COMPANY"),  has  entered  into  a Note and  Warrant Purchase
Agreement  with  the  Holders  dated  as  of  even  date  hereof  (the "PURCHASE
AGREEMENT"),  for  the  purchase  by  the  Holders  of up to an aggregate of Two
Million  One  Hundred Thousand Dollars ($2,100,000) principal amount of Series A
10%  Senior Secured Convertible Notes (the "NOTES") from the Company.  Terms not
specifically  defined  herein  are used as defined in the Purchase Agreement and
the  Notes.  It  is  a condition to the purchase of the Notes under the Purchase
Agreement  that  this  guaranty  (the  "Guaranty") be executed, delivered and in
effect;

     WHEREAS,  the Guarantor will benefit from the availability of credit to the
Company  under the terms and conditions of the Purchase Agreement and the Notes;
and

     WHEREAS, to induce the Lender to execute and deliver the Purchase Agreement
and  perform  their  obligations  thereunder,  and  for  other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guarantor is willing to guarantee the payment when due and timely performance of
all  of  the obligations of  the Company under the Purchase Agreement, the Notes
and  the  Related  Documents;

     NOW,  THEREFORE,  in consideration of the foregoing premises, and intending
to  be  legally  bound  hereby,  the  undersigned,  agrees  as  follows:

1.     GUARANTY.  The  Guarantor hereby unconditionally, absolutely, continually
and  irrevocably guarantees to the Lender the payment and performance in full of
the  Liabilities  (as  defined  below).  For  all  purposes  of  this  Guaranty
Agreement,  "Liabilities"  means: (a) the Company's prompt payment in full, when
due  or  declared  due  and  at all such times, of all obligations and all other
amounts  pursuant  to the terms of the Purchase Agreement, the Notes and each of
the  other Related Documents (as the same may be amended, supplemented, modified
or  extended  from  time  to  time),  heretofore,  now  or  at any time or times
hereafter  owing,  arising, due or payable, whether direct or contingent, joint,
several  or  independent  of  the  Company  to  the  Lender,  including  without
limitation  principal,  interest, premium or fee (including, but not limited to,
attorneys'  fees  and expenses); and (b) the Company's prompt, full and faithful
performance,  observance and discharge of each and every agreement, undertaking,
covenant  and  provision  to  be  performed,  observed  or  discharged  by

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     the Company under the Notes, the Purchase Agreement and each of the Related
Documents  and  any  other  documents  executed  in  connection  therewith.  The
Guarantor's  obligations  to  the  Lender  under  this  Guaranty  Agreement  are
hereinafter collectively referred to as the "Obligations."  The Guarantor agrees
that  it is directly and primarily liable for the Liabilities and that there are
no  conditions  whatsoever  to  the  effectiveness  of  this  Guaranty.

     2.     PAYMENT.     If  the Company shall default in payment or performance
of  any  Liabilities,  whether principal, interest, premium, fee (including, but
not  limited  to,  attorneys'  fees and expenses), or otherwise, when and as the
same shall become due, whether according to the terms of the Notes, the Purchase
Agreement  or  the  Related Documents by acceleration, or otherwise, or upon the
occurrence  of  any  other  Event of Default (as defined in the Notes) under the
Notes that has not been cured or waived, then the Guarantor, upon demand thereof
by the Lender or its successors or assigns, will, within three (3) business days
of  such  demand,  fully  pay  to  the Lender an amount equal to all Guarantor's
Obligations  then  due  and  owing.

     3.     GRANT  OF  SECURITY  INTEREST.

     (a)  In  order to further secure the payment of said Liabilities, Guarantor
does  hereby  grants  the  Lender  a  security  interest  in all assets, rights,
property  and  interest  of every kind and nature therein and thereto including,
without  limitation,  all  intellectual  property,  goods,  accounts receivable,
contracts, contract rights, inventory, security interests, equipment, machinery,
motor  vehicles,  furniture,  fixtures,  leasehold  improvements,  investment
property,  financial  assets,  chattel  papers,  documents, instruments, general
intangibles,  rights  to  proceeds of written letters of credit and all products
and proceeds of the foregoing, whether now or hereafter existing or acquired and
belonging  to  the  Guarantor or in which the Guarantor has any interest and any
and all proceeds and products thereof, as well as a continuing security interest
and  lien  for  the  amount  of  all  such  Liabilities upon any and all moneys,
securities and any and all other property of Guarantor and the proceeds thereof,
now or hereafter actually or constructively held or received by or in transit in
any  manner  to  or  from  the Lender, its correspondents or agents, from or for
Guarantor, whether for safekeeping, custody, pledge, transmission, collection or
otherwise  or  coming into the possession of Lender in any way, or placed in any
safe  deposit  box leased by Lender to Guarantor (all of the foregoing, together
with  any  property,  now or hereafter, pledged, assigned, and transferred to or
deposited with Lender or its agents by or for Guarantor or in which Lender shall
otherwise  be  granted  a  security  interest by or for Guarantor to secure said
Liabilities,  are  hereinafter  individually and collectively called "Collateral
Security").

     (b) If Guarantor, as registered holder of Collateral Security, shall become
entitled  to  receive  or  does  receive any stock certificate, option or right,
whether  as  an  addition  to,  in  substitution  of,  or  in exchange for, such
Collateral  Security,  or otherwise, Guarantor agrees to accept same as Lender's
agent  and  to  hold  same  in  trust  for  Lender,  and  to  forthwith

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     deliver  the  same  to  Lender in the exact form received, with Guarantor's
indorsement  when  necessary,  to  be  held  by  Lender  as Collateral Security.

     (c)  Guarantor  consents that the Obligations or the liability of any other
guarantor,  surety,  indemnitor,  indorser,  or any other party for or upon said
Obligations  or  said Collateral Security may, from time to time, in whole or in
part,  be  renewed,  extended,  modified,  accelerated,  compromised, settled or
released  by  Lender,  and  that  any  Collateral  Security  or  liens  for said
Obligations  may,  from  time  to time, in whole or in part, be exchanged, sold,
released,  surrendered  or  otherwise  dealt with by Lender, and that Lender may
refuse  payment,  in  whole  or  in part, from any party to the Obligations, all
without  any  notice  to,  or  further  assent  by, or any reservation of rights
against,  Guarantor  and without in any way affecting or releasing the liability
of  Guarantor  hereunder.

     4.     UNCONDITIONAL OBLIGATIONS.  This is a guaranty of payment and not of
collection.  The  Guarantor's Obligations under this Guaranty Agreement shall be
absolute  and  unconditional  irrespective  of  the  validity,  legality  or
enforceability of the Notes, and shall not be affected by any action taken under
the Notes or any other agreement between the Lender and the Company or any other
person,  in  the  exercise  of  any  right or power therein conferred, or by any
failure  or omission to enforce any right conferred thereby, or by any waiver of
any  covenant  or  condition  therein  provided,  or  by any acceleration of the
maturity of any of the Liabilities, or any transfer or disposition of any assets
of the Company or by any extension or renewal of the Notes, in whole or in part,
or by any modification, alteration, amendment or addition of or to the Notes, or
any  other  agreement between the Lender and the Company or any other person, or
by  any other circumstance whatsoever (with or without notice to or knowledge of
the  Guarantor) which may or might in any manner or to any extent vary the risks
of  the  Guarantor, or might otherwise constitute a legal or equitable discharge
of  a surety or guarantor; it being the purpose and intent of the parties hereto
that  this Guaranty Agreement and the Guarantor's Obligations hereunder shall be
absolute  and  unconditional  under  any  and all circumstances and shall not be
discharged  except  by payment as herein provided.  This Guaranty shall continue
in  full  force  and  effect  and Lender may continue to act in reliance thereon
notwithstanding  the  termination  or  revocation  of  any  other  guaranty  of
Obligations, the death, disability, incompetence or incapacity of the Guarantor,
and  shall  be  binding  upon  Guarantor and Guarantor's estate and the personal
representatives,  heirs  and  successors  and  assigns  of Guarantor, who shall,
nevertheless,  remain  liable  with  respect  to Obligations and any renewals or
extensions thereof or liabilities arising out of same, and the Lender shall have
all  the  rights  herein  provided  for  as  if  no  such  event  has  occurred.

5.     CURRENCY  AND FUNDS OF PAYMENT.  The Guarantor hereby guarantees that the
Guarantor's  Obligations will be paid in lawful currency of the United States of
America and in immediately available funds, regardless of any law, regulation or
decree  now  or  hereafter  in  effect  that  might  in  any  manner  affect the
Liabilities,  or  the  rights  of the Lender with respect thereto as against the
Company,  or  cause  or  permit  to  be  invoked  any  alteration  in

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     the  time,  amount or manner of payment by the Company of any or all of the
Company's  Liabilities.

     6.     EVENTS OF DEFAULT.  In the event that (a) the Guarantor shall file a
petition  to  take  advantage of any insolvency statute, (b) the Guarantor shall
commence  or  suffer  to  exist  a proceeding for the appointment of a receiver,
trustee,  liquidator  or  conservator  of  all  of  or  substantially all of its
property;  (c)  the  Guarantor  shall  file  a  petition  or  answer  seeking
reorganization  or  arrangement  or  similar relief under the Federal bankruptcy
laws  or  any other applicable law or statute of the United States of America or
any  state  or  similar  law  of  any  other  country;  (d) a court of competent
jurisdiction  shall  enter  an order, judgment or decree appointing a custodian,
receiver,  trustee,  liquidator  or  conservator  of  the  Guarantor  of  all or
substantially  all  of  its  properties, or approve a petition filed against the
Guarantor  seeking  reorganization  or  arrangement  or similar relief under the
Federal  bankruptcy  laws  or  any other applicable law or statute of the United
States of America or any state or similar law of any other country, or if, under
the  provisions  of  any  other law for the relief or aid of debtors, a court of
competent  jurisdiction  shall assume custody or control of the Guarantor of all
or  substantially  all  of  its  properties  and  such  order, judgment, decree,
approval  or  assumption  remains unstayed or undismissed for a period of thirty
(30)  days;  (e)  there  is  commenced  against  the Guarantor any proceeding or
petition seeking reorganization, arrangement or similar relief under the Federal
bankruptcy  laws  or any other applicable law or statute of the United States of
America  or  any  state,  which  proceeding  or  petition  remains  unstayed  or
undismissed  for  a  period of thirty (30) days; (f) the Guarantor shall fail to
perform  any agreement herein or contained in the Purchase Agreement, Subsidiary
Security  Agreement,  Subsidiary  Intellectual  Property  Security Agreement and
Assignment  or  other  agreement delivered by Guarantor to Lender; (g) a default
occurs in the punctual payment of any sum payable upon any of the Obligations or
the  Liabilities  (h)  the Guarantor grants a security interest in any property,
including  without  limitation, in the rights of any of the Collateral Security;
(i)  entry of a judgment or issuance of a warrant of attachment or an injunction
against,  or  against  any  of the property of the Guarantor; (j) failure of the
Guarantor  or  the  Company at any time to comply with the Margin Regulations of
the  Federal  Reserve  Board or any amendments thereto; (k) there shall occur an
Event  of  Default  under  the  Notes,  the  Purchase  Agreement, or any Related
Document;  (l)  any default shall occur in the payment of amounts due hereunder;
or (m) any other default shall occur hereunder which remains uncured or unwaived
for  a  period  of  ten  (10)  days (each of the foregoing an "Event of Default"
hereunder);  then  at the Lender's election and without notice thereof or demand
therefor,  so long as such Event of Default shall be continuing, the Guarantor's
Obligations  shall  immediately  become  due  and  payable.

     7. SUITS. The Guarantor from time to time shall pay to Lender, within three
(3)  business  days  of  demand by the Lender therefor, at the Lender's place of
business  set  forth in the Notes, the Guarantor's Obligations as they become or
are  declared  due, and in the event such payment is not so made, the Lender may
proceed  to  suit  against the Guarantor.  At the Lender's election, one or more
and  successive  or  concurrent  suits  may  be  brought  hereon

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     by the Lender against the Guarantor, whether or not suit has been commenced
against  the  Company, and whether or not the Lender has taken or failed to take
any  other  action  to  collect all or any portion of the Company's Liabilities.

     8.     SET-OFF  AND  WAIVER.  The  Guarantor  waives  any  right  to assert
against  the  Lender  as  a  defense,  counterclaim, set-off or cross claim, any
defense  (legal  or equitable) or other claim which such Guarantor may now or at
any  time  hereafter  have  against  the  Company or the Lender.  If at any time
hereafter  the  Lender  employs  counsel  for  advice or other representation to
enforce the Guarantor's Obligations that arise out of an Event of Default, then,
in  any  of  the  foregoing events, all of the attorneys' fees and disbursements
arising  from  such  services  and all expenses, costs and charges in any way or
respect arising in connection therewith or relating thereto shall be paid by the
Guarantor  to  the  Lender,  on  demand.

     9.     WAIVER;  SUBROGATION.

     (a)     The  Guarantor  hereby  waives  notice  of  the following events or
occurrences:  (i)  the  Lender's acceptance of this Guaranty Agreement; (ii) the
Lender  heretofore,  now or from time to time hereafter loaning monies or giving
or  extending  credit  to or for the benefit of the Company, whether pursuant to
the  Notes  or  any  amendments,  modifications,  or  supplements  thereto,  or
replacements  or extensions thereof; (iii) the Lender or the Company heretofore,
now  or  at  any  time  hereafter,  obtaining,  amending,  substituting  for,
releasing, waiving or modifying the Notes; (iv) presentment, demand, notices of
default,  non-payment,  partial  payment,  notice  of dishonor, suit, protest or
taking other action by the Lender; (v) the Lender heretofore, now or at any time
hereafter  granting  to  the Company (or any other party liable to the Lender on
account  of  the Liabilities) any indulgence or extensions of time of payment of
the  Liabilities;  and  (vi) the Lender heretofore, now or at any time hereafter
accepting  from the Company or any other person, any partial payment or payments
on  account of the Liabilities or any collateral securing the payment thereof or
the  Lender  settling, subordinating, compromising, discharging or releasing the
same.  The  Guarantor  agrees that the Lender may heretofore, now or at any time
hereafter  do any or all of the foregoing in such manner, upon such terms and at
such  times as the Lender, in its sole and absolute discretion, deems advisable,
without  in  any way or respect impairing, affecting, reducing or releasing such
Guarantor from the Guarantor's Obligations, and the Guarantor hereby consents to
each  and  all  of  the  foregoing  events  or  occurrences.

     (b)     The Guarantor hereby agrees that  payment  or  performance  by such
Guarantor  of  the  Guarantor's Obligations under this Guaranty Agreement may be
enforced  by  the Lender upon demand by the Lender to such Guarantor without the
Lender  being required, the Guarantor expressly waiving any right it may have to
require  the Lender, to prosecute collection or seek to enforce or resort to any
remedies  against  the  Company, IT BEING EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND
AGREED  TO  BY  THE  GUARANTOR  THAT DEMAND UNDER THIS GUARANTY AGREEMENT MAY BE

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     MADE  BY  THE  LENDER,  AND  THE  PROVISIONS HEREOF ENFORCED BY THE LENDER,
EFFECTIVE  AS  OF  THE  FIRST DATE ANY EVENT OF DEFAULT OCCURS AND IS CONTINUING
UNDER  THE  NOTES.  The  Guarantor's  Obligations  shall  in no way be impaired,
affected, reduced, or released by reason of the Lender's failure or delay to do,
take  or  enforce  any of the acts, actions or things described in this Guaranty
including,  without  limiting  the  generality  of  the  foregoing,  those acts,
actions  and  things  described  in  this  Section  9.

     (c)     The  Guarantor  further  agrees  with respect to this Guaranty that
such  Guarantor  shall  have no right of subrogation, reimbursement or indemnity
until such time as all of the Company's Liabilities have been fully, finally and
indefeasibly  paid  in  full.

     10.     EFFECTIVENESS;  ENFORCEABILITY.  This  Guaranty  Agreement shall be
effective  as  of  the  date hereof, and shall continue in full force and effect
until  the  Company's Liabilities have been fully, finally and indefeasibly paid
in full.  This Guaranty Agreement shall be binding upon and inure to the benefit
of  the  Guarantor  and  the Lender and their respective successors and assigns.
Notwithstanding  the  foregoing,  Guarantor  may  not, without the prior written
consent  of  the  Lender,  assign  any  rights,  powers,  duties  or obligations
hereunder.  Any  claim  or claims that the Lender may at any time hereafter have
against  the  Guarantor  under  this  Guaranty  Agreement may be asserted by the
Lender  by  written  notice  directed  to the Guarantor at the address specified
herein.

     11.     REPRESENTATIONS  AND  WARRANTIES.  The  Guarantor  hereby makes the
following  representations  and  warranties  to  the  Lender:

     (a)     the  Guarantor  is  duly authorized to execute, deliver and perform
this  Guaranty  Agreement;

     (b)     this  Guaranty  Agreement  is legal, valid, binding and enforceable
against such Guarantor in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting  the  enforcement  of  creditors'  rights  generally  and  by  general
equitable  principles;

     (c)     such  Guarantor's  execution,  delivery  and  performance  of  this
Guaranty  Agreement  does not violate or constitute a breach of any agreement to
which  such  Guarantor  is  a  party,  or  any  applicable  laws;

     (d)     Guarantor  makes  each  of  the  representations  and  warranties
contained  in  Article  III  of  the Purchase Agreement as if set forth in their
entirety  herein  with  respect and reference to the Guarantor and this Guaranty
Agreement;

     (e)     the  financial  information of the Guarantor previously provided to
the  Lender  is  true  and  correct  in  all  respects;  and

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     (f)     no representation or warranty made the Guarantor in this Agreement,
the  Purchase  Agreement  or  any  Related Document nor in any document, written
information,  financial statement, certificate, schedule or exhibit prepared and
furnished  or  to  be prepared and furnished by Guarantor in connection with the
transactions  contemplated hereby, contains or will contain any untrue statement
of  a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained herein or therein not misleading in light
of  the  circumstances  under  which  they  were  furnished.

     12.     NEGATIVE  COVENANTS.  The  Guarantor  agrees  that until the Notes,
together with interest and all other Obligations of the Company or the Guarantor
to  the  Lender (whether under the Purchase Agreement, the Related Documents, or
otherwise)  are paid in full, the Guarantor shall not, without the prior written
consent  of  the  Lender:

     (a)     Create, incur, assume or suffer to exist any Lien upon or defect in
title  to  or  restriction  upon  the  use  of  any  of the Collateral Security,
Collateral  or  Pledged Stock, or the property or assets of the Guarantor of any
character,  whether  owned  at the date hereof or hereafter acquired, or hold or
acquire any property or assets of any character under conditional sales, finance
lease  or other title retention agreements, except Liens in favor of the Lender.

     (b)     Create,  incur,  assume  or  suffer  to  exist,  contingently  or
otherwise,  any  Indebtedness,  except  Indebtedness  to  the  Lender.

     (c)     Lend  or advance money, credit or property to any person, or invest
in  or purchase or repurchase the stock or Indebtedness, or all or a substantial
part  of  the assets or properties, of any Person, or guarantee, assume, endorse
or otherwise become responsible for (directly or indirectly or by any instrument
having the effect of assuring any person's payment or performance or capability)
the Indebtedness, performance, obligations, stock or dividends of any person, or
agree  to  do any of the foregoing, except endorsement of negotiable instruments
for  deposit  or collection all and investments in readily marketable securities
in  the  ordinary  course  of  business.

     (d)     Make  any  prepayment  of  Indebtedness  or  agree to do any of the
foregoing.

     (e)     Enter  into  any agreement which prohibits or limits the ability of
the  Guarantor to create, incur, assume or suffer to exist any Lien, upon any of
its  property,  assets  or  revenues,  whether  now owned or hereafter acquired.

     (f)     Change  the  address  of  its  principal  place of business without
giving  30  days'  prior  written  notice  to  the  Lender.

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     13.     AFFIRMATIVE  COVENANTS.  The  Guarantor  covenants and agrees that,
until  the Notes together with interest and all other Obligations of the Company
and  the Guarantor to the Lender under the Purchase Agreement, the Notes and the
Related  Documents  are  otherwise  paid  in  full:

     (a)     Comply  with  all  statutes  and  governmental  regulations  if
noncompliance  therewith  would  have a Material Adverse Effect on the Guarantor
and  pay  all  taxes,  assessments,  governmental  charges,  claims  for  labor,
supplies,  rent  and  any other obligation which, if unpaid, might become a Lien
against  any  of  its  properties  that  constitute  Collateral  Security,  the
Collateral  and the Pledged Stock or a Lien on any other property, except any of
the  foregoing  being  contested  in  good  faith  by  appropriate  proceedings
diligently  conducted and against which adequate reserves have been established;

     (b)     It will allow any representative of the Lender to visit and inspect
the  books  of  account  and  other  records and files of the Guarantor, to make
copies  thereof  and  to discuss the affairs, business, finances and accounts of
the  Company  and  the  Guarantor with its employees, all during normal business
hours  and  as  often  as  the  Lender  may  reasonably  request;

     (c)     It  will  duly  comply  with  all the terms and covenants contained
herein  and  in  each  of  the  instruments and documents given to the Lender in
connection with or pursuant to this Agreement, the Purchase Agreement, the Notes
and  the  other Related Documents, all at the times and places and in the manner
set  forth  herein  or  therein,  and  (ii)  at all times maintain the liens and
security  interests  provided  for  under  or  pursuant  to  this Agreement, the
Purchase  Agreement  , the Notes and any Related Document as valid and perfected
liens  and  security  interests  on  the  property  covered  thereby;

     (d)     It  will  keep  the  Collateral  Security,  the  Collateral and the
Pledged  Stock  and Pledged Stock and other properties of the Guarantor, whether
real,  personal  or mixed, free and clear of all Liens, other than (i) the Liens
created  by the Related Documents and (ii) Permitted Liens.  The Guarantor shall
keep  all  Collateral Security, the Collateral and the Pledged Stock free of any
and  restrictions  and, in the case of stock, certificates representing the same
free  of  all  restrictive  legends;

     (e)     (i) It will keep all of its insurable properties adequately insured
at  all times with responsible insurance carriers against loss or damage by fire
and  other  hazards  as  are  customarily  insured against by similar businesses
owning  such  properties  similarly  situated  and  (ii) maintain general public
liability  insurance  at  all  times with responsible insurance carriers against
liability  on  account of damage to persons and property such insurance policies
to be in form reasonably  satisfactory  to  the  Lender.  Each  of  the policies
of insurance described  in  this  Section  13(e)  shall  provide that the Lender
shall  be  an  additional insured and loss payee and that the insurer shall give
the Lender not less  than  thirty  (30)  days'

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     prior  written  notice before any such policy shall lapse or be terminated,
canceled  or  materially  amended;

     (f)     It  will keep true books of record and account which full, true and
correct  entries  shall  be  made  of  all  of  its dealings and transactions in
accordance  with  customary  business  practices,  and  set up on its books such
reserves  as  may  be required by GAAP with respect to doubtful accounts and all
taxes,  assessments, charges, levies and claims and with respect to its business
in  general,  and include such reserves in interim as well as year-end financial
statements;  and

     (g)     Upon  the  Guarantor obtaining knowledge of any litigation or other
proceedings  being  instituted  against the Guarantor, any of the Company or any
Subsidiary  of  the Company, or any attachment, levy, execution or other process
being  instituted  against  any  assets  of  the Guarantor or the Company or any
Subsidiary,  in  an  aggregate  amount  in  respect  of all such proceedings and
processes  greater  than  $50,000  not  otherwise  covered by insurance, it will
promptly  deliver  to  the  Lender written notice thereof stating the nature and
status  of  such  litigation,  dispute,  proceeding,  levy,  execution  or other
process.

     14.     EXPENSES.  The Guarantor agrees to be liable for the payment of all
fees  and  expenses,  including  attorney's  fees  and expenses, incurred by the
Lender  in  connection  with  the  enforcement  of  this  Guaranty  Agreement.

     15.     REINSTATEMENT.  The  Guarantor  agrees that this Guaranty Agreement
shall continue to be effective or be reinstated, as the case may be, at any time
payment  received  by  the  Lender under the Notes or this Guaranty Agreement is
rescinded  or  must  be  restored  for  any  reason.  The execution and delivery
hereafter  to  Lender  by  Guarantor  of  a new instrument of guaranty shall not
terminate,  supersede  or  cancel  this  instrument,  unless  expressly provided
therein, and all rights and remedies of Lender hereunder or under any instrument
of  guaranty  hereafter  executed  and delivered to Lender by Guarantor shall be
cumulative  and  may  be  exercised  singly  or  concurrently.

     16.     COUNTERPARTS.  This  Guaranty  Agreement  may  be  executed  in any
number  of  counterparts,  each  of  which  shall be deemed to be an original as
against  any  party  whose  signature  appears  thereon,  and all of which shall
constitute  one  and  the  same  instrument.

     17.     RELIANCE. The Guarantor represents and warrants to Lender that: (a)
such  Guarantor  has  adequate means to obtain from the Company, on a continuing
basis,  information concerning the Company's financial condition and affairs and
has  full and complete access to Company's books and records; (b) such Guarantor
is  not  relying  on the Lender, its agents or other representatives, to provide
such  information,  now  or  in the future; (c) such Guarantor is executing this
Guaranty  Agreement  freely  and  deliberately,  and

<PAGE>

     understands the obligations and financial risk undertaken by providing this
Guaranty;  (d)  such  Guarantor  has  relied  solely  on  the  Guarantor's  own
independent  investigation,  appraisal  and  analysis of the Company's financial
condition and affairs in deciding to provide this Guaranty and is fully aware of
the  same;  and (e) such Guarantor has not depended or relied on the Lender, its
agents  or  other representatives, for any information whatsoever concerning the
Company's  financial  condition  and  affairs  or other matters material to such
Guarantor's  decision  to provide this Guaranty or for any counseling, guidance,
or  special consideration or any promise therefor with respect to such decision.
The  Guarantor  agrees that the Lender has no duty or responsibility whatsoever,
now or in the future, to provide to the Guarantor any information concerning the
Company's  financial  condition  and  affairs,  other than as expressly provided
herein,  and  that,  if  such  Guarantor  receives any such information from the
Lender,  its  agents or other representatives, such Guarantor will independently
verify  the  information  and  will  not rely on the Lender, its agents or other
representatives,  with  respect  to  such  information.

     18.     COMPLETE  AGREEMENT.  This guaranty embodies the whole agreement of
the  parties  and may not be modified unless in writing and signed by Lender and
no  course  of dealing between Guarantor and Lender shall be effective to change
or  modify  or to discharge in whole or in part this guaranty.  No Waiver of any
right  or  power  of  Lender  or  consent by it shall be valid unless in writing
signed  by  an  authorized  officer.

     19.     TERMINATION.  This  Guaranty  Agreement  and all obligations of the
Guarantor  hereunder  shall  terminate  without  delivery  of  any instrument or
performance of any act by any party on the date when all of the Liabilities have
been  fully,  finally  and  indefeasibly  paid  in  full.

     20.     GOVERNING  LAW.

     (A)     THIS  AGREEMENT  SHALL  BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH,  THE  LAWS OF THE STATE OF NEVADA APPLICABLE TO CONTRACTS EXECUTED, AND TO
BE  FULLY  PERFORMED,  IN  SUCH  STATE.

     (B)    EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT
ANY  SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
THE  TRANSACTIONS  CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL
COURT  SITTING  IN  THE  COUNTY OF NEW YORK, STATE OF NEW YORK, UNITED STATES OF
AMERICA AND, BY THE EXECUTION AND  DELIVERY  OF THIS AGREEMENT, EXPRESSLY WAIVES
ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE OR TO
THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS
GENERALLY  AND  UNCONDITIONALLY  TO  THE

<PAGE>

     JURISDICTION  OF  ANY  SUCH  COURT  IN ANY SUCH SUIT, ACTION OR PROCEEDING.

     (C)     EACH  PARTY  AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL
SERVICE  OF  A  COPY  OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY
SUCH  SUIT,  ACTION  OR  PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE
PREPAID)  TO THE ADDRESS OF SUCH PARTY PROVIDED HEREIN OR BY ANY OTHER METHOD OF
SERVICE  PROVIDED  FOR  UNDER  THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW
YORK.

     (D)     NOTHING  CONTAINED  IN SUBSECTIONS (B) OR (C) HEREOF SHALL PRECLUDE
THE  LENDER  FROM  BRINGING  ANY  SUIT,  ACTION  OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT IN THE COURTS OF ANY PLACE WHERE THE GUARANTOR OR ANY
OF  THE  GUARANTOR'S  PROPERTY OR ASSETS MAY BE FOUND OR LOCATED.  TO THE EXTENT
PERMITTED  BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE GUARANTOR HEREBY
IRREVOCABLY  SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES,
IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, THE JURISDICTION OF ANY OTHER
COURT  OR  COURTS  WHICH  NOW  OR  HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE
DOMICILE,  OR  OTHERWISE,  MAY  BE  AVAILABLE  TO  IT.

     (E)     IN  ANY  ACTION  OR  PROCEEDING  TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES  UNDER  OR  RELATED  TO  THIS  AGREEMENT  OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT  OR  AGREEMENT  DELIVERED  OR  THAT  MAY  IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE EXTENT PERMITTED
BY  APPLICABLE  LAW,  THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT  AND  NOT  BEFORE  A  JURY  AND  EACH  PARTY  HEREBY WAIVES, TO THE EXTENT
PERMITTED  BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR
PROCEEDING  HAS  BEEN  BROUGHT  IN  AN  INCONVENIENT  FORUM.

     21.     NOTICES.  Any  notice  hereunder  shall be in writing, and shall be
delivered  by  overnight  courier service or by certified mail, postage prepaid,
return  receipt  requested,  addressed  as  follows:

<PAGE>

     If  to  the  Guarantor:

     Merlin  Software  Technologies,  Inc.
     Suite  420-6450  Roberts  Street
     Burnaby,  British  Columbia,  Canada  V5G  4E1
     Attn:  Robert  Heller
     Telephone:  (604)  320-7227
     Telefacsimile:  (604)  320-7277

     with  a  copy  to:

     Clark,  Wilson
     800-885  West  Georgia  Street
     Attn:  Virgil  Z.  Hlus,  Esq.
     Vancouver,  British  Columbia,  Canada  V6C  3H1
     Telephone:  (604)  687-5700
     Telefacsimile:   (604)  687-6314

     If  to  the  Lender:

     Narragansett  Asset  Management,  LLC
     375  Park  Avenue
     New  York,  New  York  10152
     Attn:  Managing  Director
     Fax:  (212)  571-5027
     Phone:  (212)  521-5029

     with  a  copy  to:

     Kane  Kessler,  P.C.
     1350  Avenue  of  the  Americas
     New  York,  NY  10019
     Attn:      Robert  L.  Lawrence,  Esq.
     Fax:      (212)  245-3009

     Notices  sent by overnight courier service shall be deemed delivered on the
next  business  day, and notices sent by certified mail, postage prepaid, return
receipt requested, shall be deemed delivered two business days after the date of
mailing  thereof.

<PAGE>

     IN  WITNESS  WHEREOF,  the parties have duly executed this Agreement on the
day  and  year  first  written  above.

     GUARANTOR:

     MERLIN  SOFTWARE  TECHNOLOGIES,  INC.

     By:  /s/  Robert  Heller
          -------------------
     Name:  Robert  Heller
     Title:   President

     LENDER:

     NARRAGANSETT  I.,  L.P.

     By:  /s/  Joseph  L.  Dowling
     ------------------------
     Name:  Joseph  L.  Dowling
     Title:  Managing  Member

     NARRAGANSETT  OFFSHORE  LTD.
     by  its  Investment  Manager,
     Leo  Holding,  L.L.C.

     By:  /s/  Joseph  L.  Dowling
     ------------------------
     Name:  Joseph  L.  Dowling
     Title:  Managing  Member

     PEQUOT  SCOUT  FUND,  L.P.
     by  its  Investment  Advisor,
     Pequot  Capital  Management,  Inc.

     By:  /s/  David  J.  Malat
     ---------------------
     Name:  David  J.  Malat
     Title:  Chief  Accounting  Officer

     SDS  MERCHANT  FUND,  L.P.
     By  its  Managing  Member,
     SDS  Capital  Partners,  L.L.C.

     By:  /s/  Steven  Derby
     ------------------
     Name:  Steven  Derby
     Title:  Managing  Member

<PAGE>

                                   EXHIBIT  A

                             HOLDERS  OF  THE  NOTES

     Narragansett  I,  L.P.

     Narragansett  Offshore  Ltd.

     Pequot  Scout  Fund,  L.P.

     SDS  Merchant  Fund,  L.P.PLEDGE  AGREEMENT

     THIS  PLEDGE  AGREEMENT  (this  "Agreement") is made and entered into as of
August  18, 2000 by and between MERLIN SOFTWARE TECHNOLOGIES INTERNATIONAL INC.,
a  Nevada corporation (the "Pledgor") and the Holders (as set forth in Exhibit A
hereto) of the Notes (as defined herein) (collectively, the "Lender" or "Secured
Party") now or hereafter party to the Purchase Agreement (as defined below). All
capitalized  terms  used  but  not  otherwise  defined  herein  shall  have  the
respective  meanings  assigned  thereto  in  the  Purchase  Agreement.

                       W  I  T  N  E  S  S  E  T  H  :

     WHEREAS,  The  Pledgor  has  entered  into  the Notes and  Warrant Purchase
Agreement  with  the  Holders  dated  as  of  even  date  hereof  (the "PURCHASE
AGREEMENT"),  for  the purchase of up to an aggregate of Two Million One Hundred
Thousand  Dollars  ($2,100,000)  principal amount of Series A 10% Senior Secured
Convertible  Notes  (the  "NOTES")  from  the  Company.  Terms  not specifically
defined  herein are used as defined in the Purchase Agreement and the Notes.  It
is  a  condition  to the purchase of the Notes under the Purchase Agreement that
this  Pledge  Agreement  (the  "Pledge Agreement") be executed, delivered and in
effect;

     WHEREAS,  pursuant  to  the  Purchase  Agreement, the Pledgor has agreed to
enter  into  this  Pledge Agreement providing for the pledge of all the stock of
(the  "Pledged  Stock") Merlin Software Technologies, Inc., a Nevada corporation
(the  "Subsidiary"),  to  secure,  among other things, the prompt payment of all
obligations  of  the  Pledgor  under  the  Notes;

     NOW,  THEREFORE,  in consideration of the foregoing premises, and intending
to  be  legally  bound  hereby,  the  undersigned,  agrees  as  follows:

     1.     PLEDGE  OF  STOCK;  OTHER  COLLATERAL.

     (a)     As  collateral  security  for  the  payment  and performance of all
debts,  obligations  or  liabilities  now  or  hereafter  existing,  absolute or
contingent,  of  the  Pledgor's  and/or  the  Subsidiary's obligations under the
Purchase  Agreement,  the  Notes  and  the  Related Documents (collectively, the
"Secured  Obligations"),  the Pledgor hereby pledges and collaterally assigns to
the Lender, and grants to the Lender pursuant to the New York Uniform Commercial
Code (the "UCC") a first priority security interest in the Pledged Stock and all
of  the  following:

     (A)     all  cash, securities, dividends, rights, and other property at any
time  and from time to time declared or distributed in respect of or in exchange
for  any  or  all  of  the  Pledged  Stock;  and

     (B)    all other property hereafter delivered to the Lender in substitution
for or in addition to any  of  the  foregoing,  all certificates and instruments
representing  or  evidencing  such

<PAGE>

     property  and  all cash, securities, interest, dividends, rights, and other
property at any time and from time to time declared or distributed in respect of
or  in  exchange  for  any  or  all  of  the  Pledged  Stock.

All  such  Pledged Stock, certificates, instruments, cash, securities, interest,
dividends,  rights  and other property referred to in this Section 1, are herein
collectively  referred  to  as  the  "Collateral."  All  of the Pledged Stock is
currently  owned by the Pledgor and represented by the stock certificates listed
on  Schedule  I  hereto.

     (b)     The  Pledgor agrees to: (i) execute and deliver an Escrow Agreement
at the First Tranche Closing (as defined in the Purchase Agreement), in the form
attached  as  Exhibit  B  hereto, appointing Kane Kessler, P.C., as escrow agent
(the  "Escrow Agent") for the Pledged Stock; (ii) deliver to the Escrow Agent in
accordance  with  the  Escrow  Agreement  a  stock  certificate representing the
Pledged  Stock,  together  with  a  stock  transfer  Power of Attorney form with
respect  to  the  Pledged Stock duly executed by the Pledgor in blank; and (iii)
deliver  all  the  Collateral to the Lender at such location as the Lender shall
from  time to time designate by written notice pursuant to Section 19 hereof for
its custody at all times until termination of this Agreement, together with such
instruments  of  assignment  and  transfer  as  requested  by  the  Lender.

     (c)     All  advances,  charges,  costs  and expenses, including reasonable
attorneys'  fees,  incurred or paid by the Lender in exercising any right, power
or  remedy  conferred  by  this  Agreement, or in the enforcement thereof, shall
become  a part of the Secured Obligations secured hereunder and shall be paid to
the  Lender  by  the  Pledgor  immediately  upon  demand therefor, with interest
thereon  until  paid in full at the rate provided for in the Purchase Agreement.

     2.   STATUS OF PLEDGED STOCK. Pledgor hereby represents and warrants to the
Lender  that  (a)  all of the shares of the Pledged Stock are validly issued and
outstanding,  fully paid and nonassessable and constitute 100% of the issued and
outstanding  shares  of capital stock of Merlin Software Technologies, Inc.; (b)
Pledgor is the registered record and beneficial owner of the Pledged Stock, free
and  clear  of  all  Liens,  charges, equities, encumbrances and restrictions on
pledge  or  transfer  (other  than  the  pledge  hereunder and under the Related
Documents  and  applicable restrictions pursuant to federal and state securities
laws);  (c)  it has full power, legal right and lawful authority to execute this
Agreement and to pledge, assign and transfer its Pledged Stock in the manner and
form hereof; (d) the pledge, assignment and delivery of the Pledged Stock to the
Lender  pursuant  to this Agreement creates or continues, as applicable, a valid
and  perfected  first priority security interest in such Pledged Stock, securing
the  payment  of  the Secured Obligations, assuming continuous and uninterrupted
possession thereof by the Lender; (e) the pledge, assignment and delivery of the
Pledged  Stock  to  the  Lender  pursuant  to  this  Agreement does and will not
contravene or conflict with any contractual agreement, law or regulation binding
upon  the  Pledgor;  and  (f) this Pledge Agreement is legal, valid, binding and
enforceable  against  the  Pledgor  in  accordance  with  its  terms  except  as
enforceability  may  be  limited  by  bankruptcy,  insolvency,  reorganization,
moratorium  or  similar  laws  affecting  the  enforcement  of creditors' rights
generally  and  by  general equitable principles.  Except as otherwise expressly
provided herein or in the Purchase Agreement, Notes or Related Documents none of
the  Pledged  Stock  (nor  any  interest  therein  or  thereto)  shall  be sold,
transferred or assigned without the Lender's prior written consent, which may be
withheld  for  any  reason.  Pledgor  covenants

<PAGE>

     with  the  Lender  that it shall at all times cause its Pledged Stock to be
represented  by  the  certificates  now and hereafter delivered to the Lender in
accordance  with  Section 1 hereof and that it shall cause the Subsidiary not to
issue  any  capital  stock, or securities convertible into capital stock, at any
time during the term of this Agreement.  Pledgor hereby agrees not to enter into
any agreement requiring that any voting rights associated with the Pledged Stock
be  exercised  in  any  particular manner nor grant any interest in or permit to
exist  any  Lien, charge, encumbrance or restriction with respect to the Pledged
Stock  (other  than  applicable  restrictions  pursuant  to  federal  and  state
securities  laws).

     3.     PRESERVATION  AND  PROTECTION  OF  COLLATERAL.

     (a)     Lender  shall  be  under  no  duty or liability with respect to the
collection,  protection  or preservation of the Collateral, or otherwise, beyond
the  use of reasonable care in the custody and preservation thereof while in its
possession.

     (b)     Pledgor  agrees  to  pay  when  due  all  taxes, charges, Liens and
assessments  against  the  Collateral,  unless  being contested in good faith by
appropriate proceedings diligently conducted and against which adequate reserves
have  been  established  in  accordance  with  generally  accepted  accounting
principals applied on a consistent basis.  Upon the failure of Pledgor to so pay
or  contest  such taxes, charges, Liens or assessments, the Lender at its option
may  pay  or  contest any of them (the Lender having the sole right to determine
the  legality  or  validity  and  the  amount necessary to discharge such taxes,
charges,  Liens  or  assessments).

4.     DEFAULT.  Should  Pledgor  fail  to  pay  the  Lender  any of the Secured
Obligations  as of the end of the Business Day on which such Secured Obligations
become due and payable and after the expiration of all grace or cure periods, if
any, and all extensions or waivers, if any, and should such failure continue, or
should  any  other  Event  of  Default  set  forth  in  the  Notes  occur and be
continuing,  or  should  such  Pledgor  fail  otherwise to comply with the terms
hereof  (any  of  the foregoing an "Event of Default"), the Lender is given full
power and authority, then or at any time thereafter, to sell, assign and deliver
or  collect  the whole or any part of the Collateral, or any substitute therefor
or  any  addition  thereto,  in  one or more sales, with or without any previous
demands  or  demand of performance or, to the extent permitted by law, notice or
advertisement,  in  such order as the Lender may elect; and any such sale may be
made  either  at  public  or  private  sale at the Lender's place of business or
elsewhere,  either for cash or upon credit or for future delivery, at such price
as  the  Lender may reasonably deem fair; and the Lender may be the purchaser of
any or all Collateral so sold and hold the same thereafter in its own right free
from  any  claim  of  Pledgor  or  right of redemption.  Demands of performance,
advertisements  and  presence of property and sale and notice of sale are hereby
waived  to  the  extent  permissible  by law; provided, however, that the Lender
shall  give  to Pledgor five days' notice prior to any sale permitted under this
Agreement,  and  Pledgor  agrees  that such notice shall constitute commercially
reasonable  notice.  Any sale hereunder may be conducted by an auctioneer or any
officer  or  agent  of  the  Lender.  Pledgor  recognizes that the Lender may be
unable  to  effect  a  public  sale  of  the  Collateral  by  reason  of certain
prohibitions  contained  in  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act"),  and  applicable  state law, and may be otherwise delayed or
adversely  affected  in  effecting  any  sale  by  reason  of  present or future
restrictions  thereon  imposed  by  governmental  authorities,  and  that  as  a
consequence  of  such  prohibitions  and

<PAGE>

     restrictions  the  Lender  may  be  compelled  (i) to resort to one or more
private  sales to a restricted group of purchasers who will be obliged to agree,
among  other  things, to acquire the stock for their own account, for investment
and  not  with  a  view  to  the distribution or resale thereof, or (ii) to seek
regulatory  approval of any proposed sale or sales, or (iii) to limit the amount
of Collateral sold to any Person or group.  Pledgor agrees and acknowledges that
private  sales so made may be at prices and upon terms less favorable to Pledgor
than  if such Collateral was sold either at public sales or at private sales not
subject  to other regulatory restrictions, and that the Lender has no obligation
to  delay  the sale of any of the Collateral for the period of time necessary to
permit the issuer of such Collateral to register or otherwise qualify them, even
if  such issuer would agree to register or otherwise qualify such Collateral for
public  sale  under the Securities Act or applicable state law.  Pledgor further
agrees, to the extent permitted by applicable law, that the use of private sales
made  under  the  foregoing  circumstances to dispose of the Collateral shall be
deemed  to  be dispositions in a commercially reasonable manner.  Pledgor hereby
acknowledges that a ready market may not exist for the Pledged Stock if they are
not traded on a national securities exchange or quoted on an automated quotation
system  and  agrees and acknowledges that in such event the Pledged Stock may be
sold  for  an  amount less than a pro rata share of the fair market value of the
issuer's assets minus its liabilities. In addition to the foregoing, the Secured
Party  may exercise such other rights and remedies as may be available under the
Purchase  Agreement,  Notes  and  Related  Documents,  at law (including without
limitation  the  UCC)  or  in  equity.

     5.     PROCEEDS  OF SALE. The proceeds of the sale of any of the Collateral
and  all  sums received or collected from or on account of such Collateral shall
be  applied  to  the  payment  of  expenses  incurred  or  paid by the Lender in
connection with any sale, transfer or delivery of the Collateral, to the payment
of  any  other  costs, charges, reasonable attorneys' fees or expenses mentioned
herein,  and  to the payment of the Secured Obligations or any part thereof, all
in  such  order  and  manner  as  the  Lender  may determine and as permitted by
applicable  law  and  regulation. The Lender shall, upon satisfaction in full of
all  such  Secured  Obligations, pay or cause to be paid any balance to Pledgor.

     6.     PRESENTMENTS,  ETC.  The  Lender  shall  not  be  under  any duty or
obligation  whatsoever  to  make  or  give  any  presentments,  demands  for
performances,  notices of non-performance, protests, notice of protest or notice
of dishonor in connection with any obligations or evidences of indebtedness held
thereby  as  collateral,  or  in connection with any obligations or evidences of
indebtedness  which  constitute  in  whole  or  in  part the Secured Obligations
secured  hereunder.

     7.   ATTORNEY-IN-FACT. Pledgor hereby appoints the Lender as such Pledgor's
attorney-in-fact  for  the  purposes  of  carrying  out  the  provisions of this
Agreement  and  taking  any action and executing any instrument which the Lender
may  deem  necessary  or  advisable  to  accomplish  the  purposes hereof, which
appointment  is  irrevocable  and  coupled  with an interest; provided, that the
Lender shall have and may exercise rights under this power of attorney only upon
the  occurrence  and during the continuance of a Default or an Event of Default.
Without limiting the generality of the foregoing, upon the occurrence and during
the  continuance  of  a Default or an Event of Default, the Agent shall have the
right  and power to receive, endorse and collect all checks and other orders for
the  payment  of  money  made payable to such Pledgor representing any dividend,
interest  payment,

<PAGE>

     principal payment or other distribution payable or distributable in respect
to  the  Collateral or any part thereof and to give full discharge for the same.

     8.     ABSOLUTE  RIGHTS  AND  OBLIGATIONS. All rights of the Secured Party,
and  all  obligations  of  the  Pledgor  hereunder,  shall  be  absolute  and
unconditional  irrespective  of:

     (a)     any lack of validity or enforceability of the Purchase Agreement or
any  other  agreement  or instrument relating to any of the Secured Obligations;

     (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 or the
Related  Documents  or  any other agreement or instrument relating to any of the
Secured  Obligations;

     (c)     any exchange, release or non-perfection of any other collateral, or
any  release  or  amendment  or  waiver  of  or  consent  to  departure from the
Subsidiary  Guaranty  Agreement,  or any guaranty, for all or any of the Secured
Obligations;  or

     (d)     any  other circumstances which might otherwise constitute a defense
available  to,  or  a  discharge  of,  the  Pledgor  in  respect  of the Secured
Obligations  or  of  this  Agreement.

     9.     WAIVER  BY  PLEDGOR.  Pledgor  waives  (to  the  extent permitted by
applicable  law)  any right to require Secured Party or any other obligee of the
Secured Obligations to (a) proceed against the Subsidiary or any other Person or
entity,  (b)  proceed against or exhaust any Collateral, or (c) pursue any other
remedy  in its power; and waives (to the extent permitted by applicable law) any
defense  arising  by reason of any disability or other defense of the Subsidiary
or  any other Person, or by reason of the cessation from any cause whatsoever of
the  liability  of  the Subsidiary or any other Person or entity.  Pledgor shall
not  have  the right of subrogation, and Pledgor waives any right to enforce any
remedy  which  the Secured Party or any other obligee of the Secured Obligations
now has or may hereafter have against any other Person and waives (to the extent
permitted by applicable law) any benefit of and any right to participate  in any
collateral  or security whatsoever now or hereafter held by the Lender.  Pledgor
authorizes  the  Secured  Party and any other obligee of the Secured Obligations
without  notice (except notice required by applicable law) or demand and without
affecting  its  liability  hereunder or under the Purchase Agreement, Notes, and
the  Related  Documents  from time to time to: (i) take and hold security, other
than  the  Collateral  herein  described,  for  the  payment  of  such  Secured
Obligations  or  any  part thereof, and exchange, enforce, waive and release the
Collateral  herein described or any part thereof or any such other security; and
(ii)  apply  such Collateral or other security and direct the order or manner of
sale  thereof  as  the Secured Party or obligee in its discretion may determine.

     The  Lender  may  at  any  time  deliver  or cause to be delivered (without
representation,  recourse  or  warranty)  the  Collateral or any part thereof to
Pledgor  and  the  receipt  thereof  by  Pledgor  shall  be  a complete and full
acquittance  for  the  Collateral  so  delivered,  and  the  Secured Party shall
thereafter  be  discharged  from  any  liability  or  responsibility  therefor.

<PAGE>

     10.     DIVIDENDS  AND  VOTING  RIGHTS.

     (a)     All  dividends  and  other distributions with respect to any of the
Pledged  Stock shall be subject to the pledge hereunder.  All dividends shall be
promptly  delivered  to the Escrow Agent (together, if the Lender shall request,
with stock powers or instruments of assignment duly executed in blank affixed to
any  capital stock or other negotiable document or instrument so distributed) to
be  held,  released  or  disposed  of  by it hereunder, subject to the terms and
conditions  of  the  Escrow  Agreement,  or,  at the option of the Lender, to be
applied  to  the  Secured  Obligations  hereby  secured  as  they  become  due.

     (b)     So  long  as no Default or Event of Default shall have occurred and
be  continuing,  the registration of the Collateral in the name of Pledgor shall
not  be  changed  and Pledgor shall be entitled to exercise all voting and other
rights and powers pertaining to the Collateral for all purposes not inconsistent
with  the  terms  hereof.

     (c)     Upon  the  occurrence  and during the continuance of any Default or
Event of Default, at the option of the Lender, all rights of Pledgor to exercise
the  voting  or  consensual rights and powers which it is authorized to exercise
pursuant  to  subsection (b) above shall cease and the Lender may thereupon (but
shall  not  be  obligated  to),  at  its  request,  cause  such Collateral to be
registered  in  the name of the Lender or its nominee or agent and exercise such
voting  or  consensual  rights  and  powers  as  appertain  to ownership of such
Collateral,  and  to  that  end Pledgor hereby appoints the Lender as its proxy,
with  full  power  of  substitution,  to vote and exercise all other rights as a
shareholder with respect to such Pledged Stock hereunder upon the occurrence and
during  the  continuance  of  any  Default  or  Event of Default, which proxy is
coupled  with  an  interest  and  is  irrevocable  prior  to termination of this
Agreement,  and  Pledgor  hereby  agrees  to provide such further proxies as the
Lender  may  request;  provided,  however, that the Lender in its discretion may
from  time  to  time  refrain  from  exercising,  and  shall not be obligated to
exercise,  any  such  voting  or  consensual  rights  or  such  proxy.

     11.     POWER  OF  SALE.  Until  the  indefeasible  payment  in full of all
Secured  Obligations,  the  power  of sale and other rights, powers and remedies
granted  to the Lender hereunder shall continue to exist and may be exercised by
the Lender at any time and from time to time, upon the occurrence and during the
continuance  of  an  Event of Default, irrespective of the fact that any Secured
Obligations  or  any  part  thereof  may  have  become  barred by any statute of
limitations  or  that  the  liability  of  Pledgor  may  have  ceased.

     12.    OTHER RIGHTS. The rights, powers and remedies given to the Lender by
this  Agreement shall be in addition to all rights, powers and remedies given to
the  Secured  Party by virtue of any statute or rule of law.  Any forbearance or
failure  or  delay  by  the  Lender  in  exercising  any  right, power or remedy
hereunder shall not be deemed to be a waiver of such right, power or remedy, and
any single or partial exercise of any right, power or remedy hereunder shall not
preclude  the further exercise thereof; and every right, power and remedy of the
Secured  Party  shall  continue  in  full

<PAGE>

     force  and  effect until such right, power or remedy is specifically waived
by  the  Lender  by  an  instrument  in  writing.

     13.     FURTHER  ASSURANCES.  Pledgor  agrees at its own expense to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, financing statements, agreements and instruments, as the Lender may
at  any  time  reasonably  request  in  connection  with  the  administration or
enforcement  of  this Agreement or related to the Collateral or any part thereof
or  in order better to assure and confirm unto the Lender its rights, powers and
remedies  hereunder.  Pledgor  hereby consents and agrees that the issuers of or
obligors in respect of the Collateral shall be entitled to accept the provisions
hereof as conclusive evidence of the right of the Lender, to exercise its rights
hereunder  with  respect  to the Collateral, notwithstanding any other notice or
direction  to  the contrary heretofore or hereafter given by such Pledgor or any
other  Person  to  any  of  such  issuers  or  obligors.

     14.     BINDING  AGREEMENT;  ASSIGNMENT.  This  Agreement,  and  the terms,
covenants  and conditions hereof, shall be binding upon and inure to the benefit
of  the  parties  hereto, and to their respective successors and assigns, except
that  Pledgor  shall  not  be permitted to assign this Agreement or any interest
herein  or in the Collateral, or any part thereof, or otherwise pledge, encumber
or  grant any option with respect to the Collateral, or any part thereof, or any
cash  or  property  held  by  the Lender as Collateral under this Agreement. All
references  herein  to  the  Lender shall include any successor thereof, and any
other  obligees  from  time  to  time  of  the  Obligations.

     15.     SEVERABILITY. In case any Lien, security interest or other right of
any  Secured  Party or any provision hereof shall be held to be invalid, illegal
or  unenforceable,  such  invalidity,  illegality  or unenforceability shall not
affect  any  other  Lien,  security  interest  or  other right granted hereby or
provision  hereof.

     16.     COUNTERPARTS.  This  Agreement  may  be  executed  in any number of
counterparts  and  all  the  counterparts  taken  together  shall  be  deemed to
constitute  one  and  the  same  instrument.

     17.     TERMINATION.  This  Agreement  and  all  obligations of the Pledgor
hereunder  shall  terminate without delivery of any instrument or performance of
any  act  by  any  party  on  the  indefeasible  payment  in full of all Secured
Obligations.  Upon  such termination of this Agreement, the Lender shall, at the
sole  expense of the Pledgor, deliver to Pledgor the certificates evidencing the
shares  of  Pledged  Stock  (and  any  other  property received as a dividend or
distribution  or  otherwise in respect of such Pledged Stock), together with any
cash then constituting the Collateral, not then sold or otherwise disposed of in
accordance  with  the  provisions hereof and take such further actions as may be
necessary  to  effect  the  same.

    18.  INDEMNIFICATION. Pledgor hereby covenants and agrees to pay, indemnify,
and  hold  the  Lender harmless from and against any and all other out-of-pocket
liabilities,  costs,  expenses or disbursements of any kind or nature whatsoever
arising  in connection with any claim or litigation by any Person resulting from
the  execution,  delivery,  enforcement,  performance and administration of this
Agreement,  the  Purchase  Agreement, the Notes or the Related Documents, or the
transactions  contemplated  hereby or thereby, or in any respect relating to the
Collateral  or  any  transaction  pursuant

<PAGE>

     to  which  Pledgor  has incurred any Secured Obligation (all the foregoing,
collectively,  the  "Indemnified  Liabilities");  provided,  however,  that  the
Pledgor  shall  have  no  obligation  hereunder  with  respect  to  Indemnified
Liabilities  arising  from  the  willful  misconduct  or gross negligence of the
Lender. The agreements in this subsection shall survive repayment of all Secured
Obligations  and  the  termination  or  expiration  of  this  Agreement.

     19.     NOTICES.  Any  notice  shall  be  conclusively  deemed to have been
received  by  any party hereto and be effective on the day on which delivered to
such  party  (against  receipt  therefor) at the address set forth below or such
other  address  as such party shall specify to the other parties in writing (or,
in  the  case of telephonic notice or notice by telefacsimile (where the receipt
of  such  message  is verified by return) expressly provided for hereunder, when
received  at  such telephone or telefacsimile number as may from time to time be
specified  in written notice to the other parties hereto or otherwise received),
or  if  sent prepaid by certified or registered mail return receipt requested on
the  third  Business  Day after the day on which mailed, or if sent prepaid by a
national  overnight  courier service, on the first Business Day after the day on
which  delivered  to  such  service  against receipt therefor, addressed to such
party  at  said  address:

     (a)     if to Pledgor:          Merlin Software Technologies International,
                                     Inc.
                                     Suite  420-6450  Roberts  Street
                                     Burnaby, British Columbia, Canada  V5G  4E1
                                     Attn:  Robert  Heller
                                     Telephone:  (604)  320-7227
                                     Telefacsimile:  (604)  320-7277

             with  a  copy  to:      Virgil  Hlus,  Esq.
                                     Clark,  Wilson
                                     800-885  West  Georgia  Street
                                     Vancouver, British Columbia, Canada  V6C3H1
                                     Telephone:  (604)  687-5700
                                     Telefacsimile:   (604)  687-6314

     (b)     if  to  the  Lender:    Narragansett  Asset  Management,  LLC
                                     375  Park  Avenue
                                     New  York,  New  York  10152
                                     Attn:  Managing  Director
                                     Fax:  (212)  521-5029
                                     Phone:  (212)  521-5027

             with  a  copy  to:      Kane  Kessler,  P.C.
                                     1350  Avenue  of  the  Americas
                                     New  York,  New  York  10019
                                     Attention:  Robert  L.  Lawrence,  Esq.
                                     Telephone:  (212)  541-6222
                                     Telefacsimile:  (212)  245-3009

<PAGE>

     20.     GOVERNING  LAW;  WAIVERS.

     (A)     THIS  AGREEMENT  SHALL  BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH,  THE  LAWS OF THE STATE OF NEVADA APPLICABLE TO CONTRACTS EXECUTED, AND TO
BE  FULLY  PERFORMED,  IN  SUCH  STATE.

     (B)     EACH  PARTY  HEREBY  EXPRESSLY  AND IRREVOCABLY AGREES AND CONSENTS
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND  THE  TRANSACTIONS  CONTEMPLATED  HEREIN  MAY  BE INSTITUTED IN ANY STATE OR
FEDERAL  COURT  SITTING  IN  THE  COUNTY  OF NEW YORK, STATE OF NEW YORK, UNITED
STATES  OF  AMERICA  AND,  BY  THE  EXECUTION  AND  DELIVERY  OF THIS AGREEMENT,
EXPRESSLY  WAIVES  ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING
OF  THE VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY  SUBMITS  GENERALLY  AND  UNCONDITIONALLY TO THE JURISDICTION OF ANY
SUCH  COURT  IN  ANY  SUCH  SUIT,  ACTION  OR  PROCEEDING.

     (C)     EACH  PARTY  AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL
SERVICE  OF  A  COPY  OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY
SUCH  SUIT,  ACTION  OR  PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE
PREPAID)  TO  THE  ADDRESS  OF SUCH PARTY PROVIDED IN SECTION 15.1 OF THE CREDIT
AGREEMENT  OR  BY  ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE
LAWS  IN  EFFECT  IN  THE  STATE  NEW  YORK.

     (D)     NOTHING  CONTAINED  IN SUBSECTIONS (B) OR (C) HEREOF SHALL PRECLUDE
ANY  PARTY  FROM  BRINGING  ANY  SUIT,  ACTION  OR  PROCEEDING ARISING OUT OF OR
RELATING  TO  THIS AGREEMENT OR THE OTHER RELATED DOCUMENTS IN THE COURTS OF ANY
PLACE  WHERE  ANY  OTHER  PARTY OR ANY OF SUCH PARTY'S PROPERTY OR ASSETS MAY BE
FOUND  OR  LOCATED.  TO  THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION,  EACH  PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH  COURT  AND  EXPRESSLY  WAIVES,  IN  RESPECT  OF  ANY  SUCH SUIT, ACTION OR
PROCEEDING,  THE  JURISDICTION  OF  ANY  OTHER  COURT  OR  COURTS  WHICH  NOW OR
HEREAFTER,  BY  REASON  OF  ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE
AVAILABLE  TO  IT.

     (E)     IN  ANY  ACTION  OR  PROCEEDING  TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES  UNDER  OR  RELATED  TO  THIS  AGREEMENT  OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT  OR  AGREEMENT  DELIVERED  OR  THAT  MAY  IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE EXTENT PERMITTED
BY  APPLICABLE  LAW,  THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A

<PAGE>

COURT  AND  NOT  BEFORE  A  JURY  AND  EACH  PARTY  HEREBY WAIVES, TO THE EXTENT
PERMITTED  BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR
PROCEEDING  HAS  BEEN  BROUGHT  IN  AN  INCONVENIENT  FORUM.

<PAGE>

     IN  WITNESS  WHEREOF,  the  parties  have  duly  executed this Stock Pledge
Agreement  on  the  day  and  year  first  written  above.

MERLIN  SOFTWARE  TECHNOLOGIES  INTERNATIONAL,  INC.

     By:  /s/  Robert  Heller
          -------------------
     Name:  Robert  Heller
     Title:   President

NARRAGANSETT  I.,  L.P.

     By:  /s/  Joseph  L.  Dowling
     ------------------------
     Name:  Joseph  L.  Dowling
     Title:  Managing  Member

NARRAGANSETT  OFFSHORE  LTD.
by  its  Investment  Manager,
Leo  Holding,  L.L.C.

     By:  /s/  Joseph  L.  Dowling
     ------------------------
     Name:  Joseph  L.  Dowling
     Title:  Managing  Member

PEQUOT  SCOUT  FUND,  L.P.
By  its  Investment  Advisor,
Pequot  Capital  Management,  Inc.

     By:  /s/  David  J.  Malat
     ---------------------
     Name:  David  J.  Malat
     Title:  Chief  Accounting  Officer

SDS  MERCHANT  FUND,  L.P.
By  its  Managing  Member,
SDS  Capital  Partners,  L.L.C.

     By:  /s/  Steven  Derby
     ------------------
     Name:  Steven  Derby
     Title:  Managing  Member

<PAGE>

                            SCHEDULE  I

NUMBER  OF  SHARES                              CERTIFICATE  NUMBERS
------------------                              --------------------

      7,986,665                                        0180

<PAGE>

                            EXHIBIT  A

                     HOLDERS  OF  THE  NOTES

     Narragansett  I,  L.P.

     Narragansett  Offshore  Ltd.

     Pequot  Scout  Fund,  L.P.

     SDS  Merchant  Fund,  L.P.

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