Exhibit


                               SECURITY AGREEMENT

         THIS SECURITY  AGREEMENT  (the  "Agreement"),  is entered into and made
effective as of April __, 2004, by and between  CYCO.NET INC., (the  "Company"),
and the  BUYER(S)  listed on  Schedule I  attached  to the  Securities  Purchase
Agreement dated the date hereof (the "Secured Party").

         WHEREAS,  the Company  shall issue and sell to the  Secured  Party,  as
provided in the Securities  Purchase  Agreement  dated the date hereof,  and the
Secured Party shall purchase up to Five Hundred Thousand  Dollars  ($500,000) of
five percent (5%) secured convertible debentures (the "Convertible Debentures"),
which shall be convertible  into shares of the Company's common stock, par value
$0.001 (the "Common Stock") (as converted, the "Conversion Shares"), for a total
purchase  price  of up to  Five  Hundred  Thousand  Dollars  ($500,000),  in the
respective  amounts set forth opposite each Buyer(s) name on Schedule I attached
to the Securities Purchase Agreement;

         WHEREAS,  to induce the  Secured  Party to enter  into the  transaction
contemplated  by the  Securities  Purchase  Agreement,  the Secured  Convertible
Debenture,  the Investor Registration Rights Agreement, the Irrevocable Transfer
Agent Instructions,  and the Escrow Agreement  (collectively  referred to as the
"Transaction  Documents"),  the Company  hereby  grants to the  Secured  Party a
security  interest  in and to the  pledged  property  identified  on Exhibit "A"
hereto   (collectively   referred  to  as  the  "Pledged  Property")  until  the
satisfaction of the Obligations, as defined herein below.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants herein contained,  and for other good and valuable consideration,  the
adequacy and receipt of which are hereby acknowledged, the parties hereto hereby
agree as follows:

                                   ARTICLE 1.

                         DEFINITIONS AND INTERPRETATIONS

         Section 1.1.      Recitals.

         The above recitals are true and correct and are incorporated herein, in
their entirety, by this reference.

         Section 1.2.      Interpretations.

         Nothing  herein  expressed or implied is intended or shall be construed
to confer  upon any person  other than the  Secured  Party any right,  remedy or
claim under or by reason hereof.

         Section 1.3.      Obligations Secured.

         The  obligations  secured  hereby  are any and all  obligations  of the
Company now existing or hereinafter  incurred to the Secured Party, whether oral
or written and whether  arising before,  on or after the date hereof  including,

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without limitation,  those obligations of the Company to the Secured Party under
the  Securities  Purchase  Agreement,  the Secured  Convertible  Debenture,  the
Investor   Registration   Rights   Agreement  and  Irrevocable   Transfer  Agent
Instructions,  and any other amounts now or hereafter  owed to the Secured Party
by the Company thereunder or hereunder (collectively, the "Obligations").

                                   ARTICLE 2.

              PLEDGED COLLATERAL, ADMINISTRATION OF COLLATERAL AND
                        TERMINATION OF SECURITY INTEREST

         Section 2.1.      Pledged Property.

                  (a) Company hereby  pledges to the Secured Party,  and creates
in the Secured  Party for its benefit,  a security  interest for such time until
the  Obligations  are paid in full, in and to all of the property of the Company
as set  forth  in  Exhibit  "A"  attached  hereto  (collectively,  the  "Pledged
Property"):

         The Pledged Property,  as set forth in Exhibit "A" attached hereto, and
the  products  thereof  and the  proceeds  of all  such  items  are  hereinafter
collectively referred to as the "Pledged Collateral."

                  (b)  Simultaneously  with the  execution  and delivery of this
Agreement,  the  Company  shall make,  execute,  acknowledge,  file,  record and
deliver to the Secured Party any documents  reasonably  requested by the Secured
Party to perfect its security interest in the Pledged  Property.  Simultaneously
with the  execution  and  delivery of this  Agreement,  the Company  shall make,
execute,  acknowledge  and  deliver  to the  Secured  Party such  documents  and
instruments, including, without limitation, financing statements,  certificates,
affidavits  and forms as may, in the Secured  Party's  reasonable  judgment,  be
necessary to effectuate,  complete or perfect, or to continue and preserve,  the
security interest of the Secured Party in the Pledged Property,  and the Secured
Party shall hold such documents and instruments as secured party, subject to the
terms and conditions contained herein.

         Section 2.2.      Rights; Interests; Etc.

                  (a) So long as no Event of Default  (as  hereinafter  defined)
shall have occurred and be continuing:

                           (i) the Company shall be entitled to exercise any and
all rights  pertaining  to the  Pledged  Property  or any part  thereof  for any
purpose not inconsistent with the terms hereof; and

                           (ii) the  Company  shall be  entitled  to receive and
retain any and all payments paid or made in respect of the Pledged Property.

                  (b) Upon the occurrence and during the continuance of an Event
of Default:


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                           (i) All rights of the Company to exercise  the rights
which it would otherwise be entitled to exercise  pursuant to Section  2.2(a)(i)
hereof and to receive payments which it would otherwise be authorized to receive
and retain  pursuant to Section  2.2(a)(ii)  hereof shall be suspended,  and all
such  rights  shall  thereupon  become  vested  in the  Secured  Party who shall
thereupon have the sole right to exercise such rights and to receive and hold as
Pledged Collateral such payments;  provided,  however, that if the Secured Party
shall  become  entitled  and shall elect to exercise its right to realize on the
Pledged Collateral  pursuant to Article 5 hereof, then all cash sums received by
the Secured  Party,  or held by Company for the benefit of the Secured Party and
paid over pursuant to Section  2.2(b)(ii)  hereof,  shall be applied against any
outstanding Obligations; and

                           (ii)  All  interest,   dividends,  income  and  other
payments and  distributions  which are  received by the Company  contrary to the
provisions  of  Section  2.2(b)(i)  hereof  shall be  received  in trust for the
benefit of the Secured  Party,  shall be segregated  from other  property of the
Company and shall be forthwith paid over to the Secured Party; or

                           (iii) The Secured Party in its sole discretion  shall
be  authorized  to sell any or all of the Pledged  Property at public or private
sale in order to recoup all of the outstanding  principal plus accrued  interest
owed pursuant to the Convertible Debenture as described herein

                  (c) Each of the  following  events shall  constitute a default
under this Agreement (each an "Event of Default"):

                           (i) any default,  whether in whole or in part,  shall
occur in the payment to the Secured Party of  principal,  interest or other item
comprising the  Obligations as and when due or with respect to any other debt or
obligation of the Company to a party other than the Secured Party;

                           (ii) any default,  whether in whole or in part, shall
occur  in the  due  observance  or  performance  of  any  obligations  or  other
covenants,  terms or  provisions  to be  performed  under this  Agreement or the
Transaction Documents;

                           (iii)  the   Company   shall:   (1)  make  a  general
assignment  for the  benefit of its  creditors;  (2) apply for or consent to the
appointment  of  a  receiver,   trustee,  assignee,   custodian,   sequestrator,
liquidator or similar  official for itself or any of its assets and  properties;
(3)  commence a voluntary  case for relief as a debtor  under the United  States
Bankruptcy Code; (4) file with or otherwise submit to any governmental authority
any petition,  answer or other  document  seeking:  (A)  reorganization,  (B) an
arrangement  with  creditors or (C) to take  advantage  of any other  present or
future  applicable  law  respecting  bankruptcy,   reorganization,   insolvency,
readjustment of debts, relief of debtors,  dissolution or liquidation;  (5) file
or otherwise submit any answer or other document admitting or failing to contest
the  material  allegations  of a petition or other  document  filed or otherwise
submitted  against it in any proceeding under any such applicable law, or (6) be
adjudicated a bankrupt or insolvent by a court of competent jurisdiction; or


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<PAGE>

                           (iv) any case,  proceeding  or other  action shall be
commenced  against  the  Company  for the  purpose  of  effecting,  or an order,
judgment  or decree  shall be  entered  by any court of  competent  jurisdiction
approving  (in  whole or in part)  anything  specified  in  Section  2.2(c)(iii)
hereof, or any receiver, trustee, assignee, custodian, sequestrator,  liquidator
or other official  shall be appointed  with respect to the Company,  or shall be
appointed to take or shall otherwise  acquire  possession or control of all or a
substantial  part of the assets and  properties  of the Company,  and any of the
foregoing  shall  continue  unstayed and in effect for any period of thirty (30)
days.

                                   ARTICLE 3.

                          ATTORNEY-IN-FACT; PERFORMANCE

         Section 3.1.      Secured Party Appointed Attorney-In-Fact.

         Upon the occurrence of an Event of Default, the Company hereby appoints
the Secured Party as its attorney-in-fact,  with full authority in the place and
stead of the Company and in the name of the Company or  otherwise,  from time to
time in the  Secured  Party's  discretion  to take any action and to execute any
instrument  which the Secured Party may reasonably  deem necessary to accomplish
the purposes of this Agreement,  including,  without limitation,  to receive and
collect all instruments made payable to the Company representing any payments in
respect of the Pledged Collateral or any part thereof and to give full discharge
for the same.  The  Secured  Party may demand,  collect,  receipt  for,  settle,
compromise,  adjust, sue for,  foreclose,  or realize on the Pledged Property as
and when the Secured Party may determine. To facilitate collection,  the Secured
Party may notify account debtors and obligors on any Pledged Property or Pledged
Collateral to make payments directly to the Secured Party.

         Section 3.2.      Secured Party May Perform.

         If the Company fails to perform any  agreement  contained  herein,  the
Secured Party, at its option, may itself perform,  or cause performance of, such
agreement,  and  the  expenses  of the  Secured  Party  incurred  in  connection
therewith shall be included in the Obligations secured hereby and payable by the
Company under Section 8.3.

                                   ARTICLE 4.

                         REPRESENTATIONS AND WARRANTIES

         Section 4.1.      Authorization; Enforceability.

         Each of the parties  hereto  represents  and warrants that it has taken
all action  necessary to authorize the  execution,  delivery and  performance of
this Agreement and the transactions  contemplated hereby; and upon execution and
delivery,  this Agreement shall constitute a valid and binding obligation of the
respective party, subject to applicable bankruptcy, insolvency,  reorganization,
moratorium  and similar laws  affecting  creditors'  rights or by the principles
governing the availability of equitable remedies.


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<PAGE>

         Section 4.2.      Ownership of Pledged Property.

         The Company warrants and represents that it is the legal and beneficial
owner of the Pledged  Property  free and clear of any lien,  security  interest,
option or other charge or encumbrance  except for the security  interest created
by this Agreement.

                                   ARTICLE 5.

                    DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL

         Section 5.1.      Default and Remedies.

                  (a) If an Event of Default  described in Section 2.2(c)(i) and
(ii)  occurs,  then  in each  such  case  the  Secured  Party  may  declare  the
Obligations  to be due and  payable  immediately,  by a notice in writing to the
Company, and upon any such declaration, the Obligations shall become immediately
due and payable.  If an Event of Default  described in Sections  2.2(c)(iii)  or
(iv)  occurs  and is  continuing  for the  period  set forth  therein,  then the
Obligations  shall  automatically  become  immediately  due and payable  without
declaration or other act on the part of the Secured Party.

                  (b) Upon the  occurrence  of an Event of Default,  the Secured
Party shall,:  (i) be entitled to receive all distributions  with respect to the
Pledged  Collateral,  (ii) to cause the Pledged  Property to be transferred into
the name of the Secured  Party or its  nominee,  (iii) to dispose of the Pledged
Property,  and (iv) to realize  upon any and all rights in the Pledged  Property
then held by the Secured Party.

         Section 5.2.      Method of Realizing Upon the Pledged Property:  Other
Remedies.

         Upon the  occurrence of an Event of Default,  in addition to any rights
and  remedies  available at law or in equity,  the  following  provisions  shall
govern the Secured Party's right to realize upon the Pledged Property:

                  (a) Any item of the Pledged  Property  may be sold for cash or
other value in any number of lots at brokers  board,  public  auction or private
sale and may be sold without  demand,  advertisement  or notice (except that the
Secured Party shall give the Company ten (10) days' prior written  notice of the
time and place or of the time after which a private  sale may be made (the "Sale
Notice")),  which  notice  period  shall in any  event is  hereby  agreed  to be
commercially  reasonable.  At any  sale or sales of the  Pledged  Property,  the
Company may bid for and purchase  the whole or any part of the Pledged  Property
and, upon compliance with the terms of such sale, may hold,  exploit and dispose
of the same without  further  accountability  to the Secured Party.  The Company
will  execute  and  deliver,  or  cause  to  be  executed  and  delivered,  such
instruments,  documents,  assignments, waivers, certificates, and affidavits and
supply or cause to be supplied  such further  information  and take such further
action as the Secured Party reasonably shall require in connection with any such
sale.

                  (b) Any  cash  being  held by the  Secured  Party  as  Pledged
Collateral  and all cash  proceeds  received by the Secured Party in respect of,
sale  of,  collection  from,  or other  realization  upon all or any part of the
Pledged Collateral shall be applied as follows:


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<PAGE>


                           (i) to the  payment of all  amounts  due the  Secured
Party for the  expenses  reimbursable  to it hereunder or owed to it pursuant to
Section 8.3 hereof;

                           (ii) to the payment of the  Obligations  then due and
unpaid.

                           (iii) the  balance,  if any, to the person or persons
entitled thereto, including, without limitation, the Company.

                  (c) In  addition to all of the rights and  remedies  which the
Secured Party may have pursuant to this Agreement,  the Secured Party shall have
all of the rights and remedies provided by law,  including,  without limitation,
those under the Uniform Commercial Code.

                           (i) If the Company fails to pay such amounts due upon
the  occurrence  of an Event of Default  which is  continuing,  then the Secured
Party may institute a judicial  proceeding for the collection of the sums so due
and unpaid,  may prosecute  such  proceeding to judgment or final decree and may
enforce the same against the Company and collect the monies  adjudged or decreed
to be payable in the manner  provided  by law out of the  property  of  Company,
wherever situated.

                           (ii) The  Company  agrees that it shall be liable for
any  reasonable  fees,  expenses  and costs  incurred  by the  Secured  Party in
connection  with  enforcement,  collection and  preservation  of the Transaction
Documents,  including,  without limitation,  reasonable legal fees and expenses,
and such amounts  shall be deemed  included as  Obligations  secured  hereby and
payable as set forth in Section 8.3 hereof.

         Section 5.3.      Proofs of Claim.

                  In  case  of the  pendency  of any  receivership,  insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relating to the Company or the property of the Company
or of such other obligor or its creditors,  the Secured Party  (irrespective  of
whether the Obligations shall then be due and payable as therein expressed or by
declaration  or otherwise  and  irrespective  of whether the Secured Party shall
have made any demand on the Company for the payment of the Obligations), subject
to the rights of Previous Security Holders, shall be entitled and empowered,  by
intervention in such proceeding or otherwise:

                           (i) to file and prove a claim for the whole amount of
the  Obligations  and to file such other papers or documents as may be necessary
or advisable  in order to have the claims of the Secured  Party  (including  any
claim for the  reasonable  legal fees and  expenses and other  expenses  paid or
incurred by the  Secured  Party  permitted  hereunder  and of the Secured  Party
allowed in such judicial proceeding), and

                           (ii) to  collect  and  receive  any  monies  or other
property  payable or  deliverable on any such claims and to distribute the same;
and any custodian,  receiver,  assignee,  trustee,  liquidator,  sequestrator or
other similar official in any such judicial  proceeding is hereby  authorized by
the Secured  Party to make such  payments to the Secured Party and, in the event
that the Secured Party shall consent to the making of such payments  directed to
the Secured  Party,  to pay to the Secured Party any amounts for expenses due it
hereunder.


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<PAGE>

         Section 5.4.      Duties Regarding Pledged Collateral.

         The Secured Party shall have no duty as to the collection or protection
of the Pledged  Property or any income thereon or as to the  preservation of any
rights pertaining thereto, beyond the safe custody and reasonable care of any of
the Pledged Property actually in the Secured Party's possession.

                                   ARTICLE 6.

                              AFFIRMATIVE COVENANTS

         The Company  covenants and agrees that,  from the date hereof and until
the  Obligations  have been fully paid and  satisfied,  unless the Secured Party
shall consent otherwise in writing (as provided in Section 8.4 hereof):

         Section 6.1.      Existence, Properties, Etc.

                  (a) The Company shall do, or cause to be done, all things,  or
proceed with due  diligence  with any actions or courses of action,  that may be
reasonably necessary (i) to maintain Company's due organization, valid existence
and good  standing  under  the laws of its state of  incorporation,  and (ii) to
preserve  and keep in full  force and effect all  qualifications,  licenses  and
registrations in those  jurisdictions in which the failure to do so could have a
Material Adverse Effect (as defined below); and (b) the Company shall not do, or
cause to be done, any act impairing the Company's  corporate  power or authority
(i) to carry on the Company's business as now conducted,  and (ii) to execute or
deliver this Agreement or any other document  delivered in connection  herewith,
including,  without limitation,  any UCC-1 Financing  Statements required by the
Secured  Party  to  which  it is or  will  be a  party,  or  perform  any of its
obligations  hereunder or thereunder.  For purpose of this  Agreement,  the term
"Material  Adverse  Effect"  shall  mean any  material  and  adverse  affect  as
determined by Secured Party in its sole discretion,  whether  individually or in
the aggregate, upon (a) the Company's assets, business,  operations,  properties
or condition,  financial or otherwise;  (b) the Company's to make payment as and
when due of all or any part of the Obligations; or (c) the Pledged Property.

         Section 6.2.      Financial Statements and Reports.

         The Company shall furnish to the Secured Party such  financial  data as
the Secured Party may reasonably  request.  Without limiting the foregoing,  the
Company  shall  furnish to the Secured  Party (or cause to be  furnished  to the
Secured Party) the following:

                  (a) as soon as practicable and in any event within ninety (90)
days after the end of each fiscal year of the Company,  the balance sheet of the
Company as of the close of such fiscal  year,  the  statement  of  earnings  and
retained  earnings  of the  Company  as of the close of such  fiscal  year,  and
statement of cash flows for the Company for such fiscal year,  all in reasonable
detail,  prepared in accordance with generally  accepted  accounting  principles
consistently  applied,  certified  by the chief  executive  and chief  financial
officers  of the  Company  as  being  true  and  correct  and  accompanied  by a
certificate of the chief executive and chief financial  officers of the Company,
stating  that the Company  has kept,  observed,  performed  and  fulfilled  each
covenant,  term and condition of this Agreement during such fiscal year and that


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no Event of Default hereunder has occurred and is continuing,  or if an Event of
Default has  occurred  and is  continuing,  specifying  the nature of same,  the
period of  existence  of same and the action  the  Company  proposes  to take in
connection therewith;

                  (b) within thirty (30) days of the end of each calendar month,
a balance  sheet of the Company as of the close of such month,  and statement of
earnings and retained earnings of the Company as of the close of such month, all
in reasonable  detail,  and prepared  substantially in accordance with generally
accepted  accounting  principles  consistently  applied,  certified by the chief
executive and chief financial officers of the Company as being true and correct;
and

                  (c) promptly upon receipt thereof,  copies of all accountants'
reports  and  accompanying   financial  reports  submitted  to  the  Company  by
independent  accountants  in  connection  with each  annual  examination  of the
Company.

         Section 6.3.      Accounts and Reports.

         The  Company  shall  maintain  a  standard   system  of  accounting  in
accordance with generally accepted accounting  principles  consistently  applied
and provide, at its sole expense, to the Secured Party the following:

                  (a) as  soon  as  available,  a copy of any  notice  or  other
communication  alleging any nonpayment or other material  breach or default,  or
any  foreclosure or other action  respecting any material  portion of its assets
and properties,  received  respecting any of the  indebtedness of the Company in
excess of $15,000 (other than the  Obligations),  or any demand or other request
for  payment  under any  guaranty,  assumption,  purchase  agreement  or similar
agreement or arrangement respecting the indebtedness or obligations of others in
excess of $15,000,  including  any received  from any person acting on behalf of
the Secured Party or beneficiary thereof; and

                  (b)  within  fifteen  (15)  days  after  the  making  of  each
submission or filing, a copy of any report, financial statement, notice or other
document,  whether  periodic or otherwise,  submitted to the shareholders of the
Company, or submitted to or filed by the Company with any governmental authority
involving  or  affecting  (i) the  Company  that could  have a Material  Adverse
Effect; (ii) the Obligations;  (iii) any part of the Pledged Collateral; or (iv)
any of the transactions contemplated in this Agreement.

         Section 6.4.      Maintenance of Books and Records; Inspection.

         The  Company  shall  maintain  its  books,   accounts  and  records  in
accordance with generally accepted accounting  principles  consistently applied,
and permit the Secured Party,  its officers and employees and any  professionals
designated by the Secured Party in writing, at any time to visit and inspect any
of  its  properties  (including  but  not  limited  to the  collateral  security
described in the Transaction Documents),  corporate books and financial records,
and to discuss its accounts,  affairs and finances with any employee, officer or
director thereof.


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         Section 6.5.      Maintenance and Insurance.

                  (a) The Company shall maintain or cause to be  maintained,  at
its own expense,  all of its assets and  properties  in good  working  order and
condition,  making all necessary  repairs thereto and renewals and  replacements
thereof.

                  (b) The Company shall maintain or cause to be  maintained,  at
its  own  expense,   insurance  in  form,   substance  and  amounts   (including
deductibles),  which the Company  deems  reasonably  necessary to the  Company's
business, (i) adequate to insure all assets and properties of the Company, which
assets and properties are of a character  usually  insured by persons engaged in
the same or similar business against loss or damage resulting from fire or other
risks included in an extended coverage policy; (ii) against public liability and
other tort claims that may be incurred by the Company;  (iii) as may be required
by the  Transaction  Documents or  applicable  law and (iv) as may be reasonably
requested by Secured Party, all with adequate,  financially  sound and reputable
insurers.

         Section 6.6.      Contracts and Other Collateral.

         The Company shall perform all of its obligations  under or with respect
to each instrument,  receivable,  contract and other intangible  included in the
Pledged  Property  to which the Company is now or  hereafter  will be party on a
timely basis and in the manner therein required,  including, without limitation,
this Agreement.

         Section 6.7.      Defense of Collateral, Etc.

         The Company  shall defend and enforce its right,  title and interest in
and to any part of: (a) the Pledged Property; and (b) if not included within the
Pledged  Property , those assets and properties whose loss could have a Material
Adverse Effect,  the Company shall defend the Secured  Party's right,  title and
interest in and to each and every part of the Pledged Property, each against all
manner of claims and demands on a timely  basis to the full extent  permitted by
applicable law.

         Section 6.8.      Payment of Debts, Taxes, Etc.

         The Company shall pay, or cause to be paid, all of its indebtedness and
other liabilities and perform, or cause to be performed,  all of its obligations
in accordance with the respective terms thereof, and pay and discharge, or cause
to be paid or discharged,  all taxes, assessments and other governmental charges
and levies  imposed upon it, upon any of its assets and  properties on or before
the last day on which the same may be paid without  penalty,  as well as pay all
other  lawful  claims  (whether  for  services,  labor,  materials,  supplies or
otherwise) as and when due

         Section 6.9.      Taxes and Assessments; Tax Indemnity.

         The Company  shall (a) file all tax returns and  appropriate  schedules
thereto that are required to be filed under applicable law, prior to the date of
delinquency,  (b) pay and  discharge  all taxes,  assessments  and  governmental
charges or levies imposed upon the Company,  upon its income and profits or upon
any  properties  belonging  to it, prior to the date on which  penalties  attach


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thereto,  and (c) pay all taxes,  assessments and governmental charges or levies
that,  if  unpaid,  might  become a lien or charge  upon any of its  properties;
provided,  however,  that the  Company in good faith may  contest  any such tax,
assessment,  governmental  charge or levy described in the foregoing clauses (b)
and (c) so long as appropriate reserves are maintained with respect thereto.

         Section 6.10.     Compliance with Law and Other Agreements.

         The Company shall  maintain its business  operations and property owned
or used in connection  therewith in compliance with (a) all applicable  federal,
state and  local  laws,  regulations  and  ordinances  governing  such  business
operations and the use and ownership of such property,  and (b) all  agreements,
licenses,  franchises,  indentures and mortgages to which the Company is a party
or by which the Company or any of its properties is bound.  Without limiting the
foregoing,  the Company shall pay all of its indebtedness promptly in accordance
with the terms thereof.

         Section 6.11.     Notice of Default.

         The  Company  shall give  written  notice to the  Secured  Party of the
occurrence  of any  default  or Event  of  Default  under  this  Agreement,  the
Transaction  Documents or any other Loan  Instrument  or any other  agreement of
Company for the payment of money, promptly upon the occurrence thereof.

         Section 6.12.     Notice of Litigation.

         The Company shall give notice, in writing,  to the Secured Party of (a)
any actions,  suits or  proceedings  wherein the amount at issue is in excess of
$50,000,  instituted by any persons against the Company, or affecting any of the
assets of the Company,  and (b) any dispute,  not resolved  within  fifteen (15)
days of the  commencement  thereof,  between the Company on the one hand and any
governmental  or regulatory  body on the other hand,  which might  reasonably be
expected  to have a  Material  Adverse  Effect  on the  business  operations  or
financial condition of the Company.

                                   ARTICLE 7.

                               NEGATIVE COVENANTS

         The Company  covenants and agrees that,  from the date hereof until the
Obligations  have been fully paid and satisfied,  the Company shall not,  unless
the Secured Party shall consent otherwise in writing:

         Section 7.1.      Indebtedness.

         The Company shall not directly or  indirectly  permit,  create,  incur,
assume, permit to exist,  increase,  renew or extend on or after the date hereof
any indebtedness on its part,  including  commitments,  contingencies and credit
availabilities, or apply for or offer or agree to do any of the foregoing.


                                       10
<PAGE>

         Section 7.2.      Liens and Encumbrances.

         The Company  shall not  directly or  indirectly  make,  create,  incur,
assume or permit to exist any assignment,  transfer, pledge, mortgage,  security
interest or other lien or  encumbrance  of any nature in, to or against any part
of the Pledged Property or of the Company's  capital stock, or offer or agree to
do so,  or own or  acquire  or agree to  acquire  any asset or  property  of any
character  subject  to  any  of  the  foregoing   encumbrances   (including  any
conditional sale contract or other title retention agreement), or assign, pledge
or in any way  transfer  or  encumber  its right to receive  any income or other
distribution or proceeds from any part of the Pledged  Property or the Company's
capital stock; or enter into any sale-leaseback financing respecting any part of
the Pledged Property as lessee, or cause or assist the inception or continuation
of any of the foregoing.

         Section 7.3. Articles, By-Laws, Mergers,  Consolidations,  Acquisitions
and Sales.

         Without the prior express  written  consent of the Secured  Party,  the
Company shall not: (a) Amend its Articles of Incorporation or By-Laws; (b) issue
or sell its stock, stock options,  bonds, notes or other corporate securities or
obligations;   (c)  be  a  party  to  any  merger,  consolidation  or  corporate
reorganization,  (d) purchase or otherwise  acquire all or substantially  all of
the assets or stock of, or any  partnership  or joint  venture  interest in, any
other  person,  firm or entity,  (e) sell,  transfer,  convey,  grant a security
interest in or lease all or any substantial  part of its assets,  nor (f) create
any subsidiaries nor convey any of its assets to any subsidiary.

         Section 7.4.      Management, Ownership.

         The  Company  shall  not  change  its  ownership,  executive  staff  or
management  without  the  prior  written  consent  of  the  Secured  Party.  The
ownership, executive staff and management of the Company are material factors in
the Secured Party's willingness to institute and maintain a lending relationship
with the Company.

         Section 7.5.      Dividends, Etc.

         The Company  shall not declare or pay any dividend of any kind, in cash
or in property, on any class of its capital stock, nor purchase,  redeem, retire
or  otherwise  acquire  for  value  any  shares  of such  stock,  nor  make  any
distribution of any kind in respect  thereof,  nor make any return of capital to
shareholders,  nor make any payments in respect of any pension,  profit sharing,
retirement,  stock option, stock bonus,  incentive  compensation or similar plan
(except as required or permitted  hereunder),  without the prior written consent
of the Secured Party.

         Section 7.6.      Guaranties; Loans.

         The Company shall not  guarantee  nor be liable in any manner,  whether
directly or  indirectly,  or become  contingently  liable after the date of this
Agreement in connection  with the  obligations or  indebtedness of any person or
persons,  except  for  (i)  the  indebtedness  currently  secured  by the  liens
identified on the Pledged  Property  identified on Exhibit A hereto and (ii) the
endorsement  of  negotiable  instruments  payable to the  Company for deposit or
collection  in the ordinary  course of business.  The Company shall not make any


                                       11
<PAGE>

loan,  advance or  extension  of credit to any  person  other than in the normal
course of its business.

         Section 7.7.      Debt.

         The  Company  shall not  create,  incur,  assume or suffer to exist any
additional  indebtedness of any description whatsoever in an aggregate amount in
excess of $25,000  (excluding  any  indebtedness  of the  Company to the Secured
Party,  trade  accounts  payable and accrued  expenses  incurred in the ordinary
course of business and the endorsement of negotiable  instruments payable to the
Company,  respectively  for  deposit or  collection  in the  ordinary  course of
business).

         Section 7.8.      Conduct of Business.

         The Company will  continue to engage,  in an efficient  and  economical
manner, in a business of the same general type as conducted by it on the date of
this Agreement.

         Section 7.9.      Places of Business.

         The location of the Company's  chief place of business is 400 Gold SW -
Suite 1000  Albuquerque,  New Mexico  87102.  The  Company  shall not change the
location of its chief place of business,  chief executive office or any place of
business disclosed to the Secured Party or move any of the Pledged Property from
its current  location  without  thirty (30) days'  prior  written  notice to the
Secured Party in each instance.

                                   ARTICLE 8.

                                  MISCELLANEOUS

         Section 8.1.      Notices.

         All notices or other  communications  required or permitted to be given
pursuant to this  Agreement  shall be in writing and shall be considered as duly
given on:  (a) the date of  delivery,  if  delivered  in person,  by  nationally
recognized  overnight  delivery  service or (b) five (5) days  after  mailing if
mailed from within the  continental  United  States by  certified  mail,  return
receipt requested to the party entitled to receive the same:

               If to the Secured Party:   Cornell Capital Partners, LP
                                          101 Hudson Street-Suite 3700
                                          Jersey City, New Jersey 07302
                                          Attention:    Mark Angelo
                                                        Portfolio Manager
                                          Telephone:    (201) 986-8300
                                          Facsimile:    (201) 985-8266


                                       12
<PAGE>

               With a copy to:           Butler Gonzalez LLP
                                         1416 Morris Avenue - Suite 207
                                         Union, New Jersey  07083
                                         Attention:    David Gonzalez, Esq.
                                         Telephone:    (908) 810-8588
                                         Facsimile:    (908) 810-0973


               And if to the Company:    Cyco.Net Inc.
                                         400 Gold SW - Suite 1000
                                         Albuquerque, NM 87102
                                         Attention:    Rick Urrea, President
                                                       and Chief Executive
                                                       Officer
                                         Telephone:    (505) 710-2190
                                         Facsimile:

               With a copy to:           Kirkpatrick & Lockhart LLP
                                         201 South Biscayne Boulevard-Suite 2000
                                         Miami, Florida  33131-2399
                                         Attention:    Clayton E. Parker, Esq.
                                         Telephone:    (305) 539-3300
                                         Facsimile:    (305) 358-7095

         Any party may change its  address by giving  notice to the other  party
stating its new address.  Commencing on the tenth (10th) day after the giving of
such notice, such newly designated address shall be such party's address for the
purpose of all notices or other communications required or permitted to be given
pursuant to this Agreement.

         Section 8.2.      Severability.

         If  any  provision  of  this   Agreement   shall  be  held  invalid  or
unenforceable,  such  invalidity or  unenforceability  shall attach only to such
provision and shall not in any manner affect or render invalid or  unenforceable
any other  severable  provision of this  Agreement,  and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.

         Section 8.3.      Expenses.

         In the  event of an  Event  of  Default,  the  Company  will pay to the
Secured  Party the  amount of any and all  reasonable  expenses,  including  the
reasonable  fees and expenses of its counsel,  which the Secured Party may incur
in connection with: (i) the custody or preservation of, or the sale,  collection
from, or other realization upon, any of the Pledged Property;  (ii) the exercise
or enforcement of any of the rights of the Secured Party  hereunder or (iii) the
failure by the Company to perform or observe any of the provisions hereof.


                                       13
<PAGE>

         Section 8.4.      Waivers, Amendments, Etc.

         The Secured  Party's delay or failure at any time or times hereafter to
require  strict  performance  by  Company  of any  undertakings,  agreements  or
covenants shall not waiver,  affect,  or diminish any right of the Secured Party
under this Agreement to demand strict compliance and performance  herewith.  Any
waiver by the  Secured  Party of any Event of Default  shall not waive or affect
any other Event of Default, whether such Event of Default is prior or subsequent
thereto and whether of the same or a different type.  None of the  undertakings,
agreements  and  covenants of the Company  contained in this  Agreement,  and no
Event of Default,  shall be deemed to have been waived by the Secured Party, nor
may this  Agreement  be  amended,  changed  or  modified,  unless  such  waiver,
amendment,  change or  modification  is  evidenced by an  instrument  in writing
specifying  such waiver,  amendment,  change or  modification  and signed by the
Secured Party.

         Section 8.5.      Continuing Security Interest.

         This  Agreement  shall  create a  continuing  security  interest in the
Pledged Property and shall: (i) remain in full force and effect until payment in
full of the Obligations; and (ii) be binding upon the Company and its successors
and heirs and (iii) inure to the benefit of the Secured Party and its successors
and assigns.  Upon the payment or satisfaction in full of the  Obligations,  the
Company shall be entitled to the return, at its expense,  of such of the Pledged
Property as shall not have been sold in  accordance  with  Section 5.2 hereof or
otherwise applied pursuant to the terms hereof.

         Section 8.6.      Independent Representation.

         Each party hereto  acknowledges  and agrees that it has received or has
had the opportunity to receive  independent  legal counsel of its own choice and
that it has been sufficiently  apprised of its rights and responsibilities  with
regard to the substance of this Agreement.

         Section 8.7.      Applicable Law:  Jurisdiction.

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

         Section 8.8.      Waiver of Jury Trial.

         AS A  FURTHER  INDUCEMENT  FOR THE  SECURED  PARTY TO ENTER  INTO  THIS
AGREEMENT AND TO MAKE THE FINANCIAL  ACCOMMODATIONS TO THE COMPANY,  THE COMPANY
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING  RELATED IN ANY
WAY TO THIS  AGREEMENT  AND/OR  ANY  AND ALL  OTHER  DOCUMENTS  RELATED  TO THIS
TRANSACTION.


                                       14
<PAGE>

         Section 8.9.      Entire Agreement.

         This Agreement  constitutes the entire  agreement among the parties and
supersedes any prior agreement or  understanding  among them with respect to the
subject matter hereof.



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                                       15
<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date first above written.


                                    COMPANY:
                                    CYCO.NET INC.

                                    By:
                                        ----------------------------------------
                                    Name:  Rick Urrea
                                    Title: President and Chief Executive Officer


                                    SECURED PARTY:
                                    CORNELL CAPITAL PARTNERS, LP

                                    BY:    YORKVILLE ADVISORS, LLC
                                    ITS:   GENERAL PARTNER

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




                                       16
<PAGE>


                                    EXHIBIT A
                         DEFINITION OF PLEDGED PROPERTY


         For the purpose of securing prompt and complete payment and performance
by the  Company  of all of the  Obligations,  the  Company  unconditionally  and
irrevocably hereby grants to the Secured Party a continuing security interest in
and to, and lien upon, the following Pledged Property of the Company:

                  (a) all goods of the Company,  including,  without limitation,
machinery,  equipment, furniture,  furnishings,  fixtures, signs, lights, tools,
parts,  supplies  and  motor  vehicles  of every  kind and  description,  now or
hereafter owned by the Company or in which the Company may have or may hereafter
acquire any interest, and all replacements, additions, accessions, substitutions
and proceeds thereof,  arising from the sale or disposition  thereof,  and where
applicable,  the proceeds of insurance  and of any tort claims  involving any of
the foregoing;

                  (b) all inventory of the Company,  including,  but not limited
to, all goods, wares,  merchandise,  parts, supplies,  finished products,  other
tangible  personal  property,  including such inventory as is temporarily out of
Company's  custody or possession  and including any returns upon any accounts or
other  proceeds,  including  insurance  proceeds,  resulting  from  the  sale or
disposition of any of the foregoing;

                  (c)  all  contract  rights  and  general  intangibles  of  the
Company,  including,  without limitation,  goodwill,  trademarks,  trade styles,
trade  names,  leasehold  interests,  partnership  or joint  venture  interests,
patents and patent applications,  copyrights, deposit accounts whether now owned
or hereafter created;

                  (d) all documents, warehouse receipts, instruments and chattel
paper of the Company whether now owned or hereafter created;

                  (e) all accounts and other  receivables,  instruments or other
forms of obligations and rights to payment of the Company  (herein  collectively
referred  to as  "Accounts"),  together  with the  proceeds  thereof,  all goods
represented  by such  Accounts  and all such goods that may be  returned  by the
Company's  customers,  and  all  proceeds  of any  insurance  thereon,  and  all
guarantees,  securities  and liens which the Company may hold for the payment of
any such  Accounts  including,  without  limitation,  all rights of  stoppage in
transit,  replevin and reclamation and as an unpaid vendor and/or lienor, all of
which  the  Company  represents  and  warrants  will be bona  fide and  existing
obligations of its respective customers, arising out of the sale of goods by the
Company in the ordinary course of business;

                  (f) to the  extent  assignable,  all of the  Company's  rights
under all present and future  authorizations,  permits,  licenses and franchises
issued or granted in connection with the operations of any of its facilities;

                  (g) all products and proceeds (including,  without limitation,
insurance proceeds) from the above-described Pledged Property.


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