MASTER SECURITY AGREEMENT

To:      Laurus Master Fund, Ltd.
         c/o M&C Corporate Services Limited
         P.O.  Box 309 GT
         Ugland House
         South Church Street
         George Town
         Grand Cayman, Cayman Islands

Date:    March 2, 2006

To Whom It May Concern:

         1. Defined Terms:

         Any reference herein to "Collateral" shall, unless the context
otherwise requires, be deemed a reference to "Collateral or any part thereof".
The term "Proceeds", whenever used herein shall, by way of example, include
trade-ins, equipment, money, bank accounts, notes, chattel paper, goods,
contracts rights, accounts and any other personal property or obligation
received when such Collateral or Proceeds are sold, exchanged, collected or
otherwise disposed of or dealt with.

         2. To secure the payment of all Obligations (as hereafter defined),
Essential Innovations Technology Corp., a Nevada corporation (the "Company") and
Essential Innovations Corp., a federal Canadian corporation, and each other
entity that is required to enter into this Master Security Agreement (each an
"Assignor" and, collectively with the Company, the "Assignors") hereby assigns
and grants to Laurus Master Fund, Ltd. ("Laurus") a continuing security interest
in all of the following property now owned or at any time hereafter acquired by
any Assignor, or in which any Assignor now has or at any time in the future may
acquire any right, title or interest (the "Collateral"): all cash, cash
equivalents, accounts, accounts receivable, deposit accounts, inventory,
equipment, goods, documents of title, instruments (including, without
limitation, promissory notes), contract rights, general intangibles (including,
without limitation, payment intangibles and an absolute right to license on
terms no less favorable than those current in effect among Assignors'
affiliates), supporting obligations, chattel paper, investment property
(including, without limitation, all equity interests owned by any Assignor),
letter of credit rights, trademarks, trademark applications, tradestyles,
patents, patent applications, copyrights, copyright applications and other
intellectual property in which any Assignor now has or hereafter may acquire any
right, title or interest, all Proceeds and products thereof (including, without
limitation, proceeds of insurance) and all additions, accessions and
substitutions thereto or therefore. In the event any Assignor wishes to finance
an acquisition in the ordinary course of business of any hereafter acquired
equipment and has obtained a commitment from a financing source to finance such
equipment from an unrelated third party, Laurus agrees to release its security
interest on such hereafter acquired equipment so financed by such third party
financing source. Except as otherwise defined herein, all capitalized terms used
herein shall have the meaning provided such terms in (i) the Security and
Purchase Agreement referred to below, or (ii), if not defined therein, the
meaning provided such terms in (a) the Uniform Commercial Code (as in effect
from time to time in the State of New York)("UCC") in the case of a U.S.
corporation, or (b) the Personal Property Security Act (British Columbia) and
any other similar provincial statute (as amended from time to time, which Act,
including amendments thereto and any Act substituted therefore and amendment
thereto, together with all regulations thereunder, are herein referred to as the
"PPSA") in the case of a Canadian corporation.

         3. The term "Obligations" as used herein shall mean and include all
debts, liabilities and obligations owing by each Assignor to Laurus arising
under, out of, or in connection with: (i) that certain Security and Purchase

<PAGE>

Agreement dated as of the date hereof by and between the Company and Laurus (the
"Security and Purchase Agreement") and (ii) the Ancillary Agreements referred to
in the Security and Purchase Agreement (the Security and Purchase Agreement and
each Ancillary Agreement, as each may be amended, modified, restated or
supplemented from time to time, are collectively referred to herein as the
"Documents") and in connection with any documents, instruments or agreements
relating to or executed in connection with the Documents or any documents,
instruments or agreements referred to therein or otherwise, and in connection
with any other indebtedness, obligations or liabilities of any Assignor to
Laurus, whether now existing or hereafter arising, direct or indirect,
liquidated or unliquidated, absolute or contingent, due or not due and whether
under, pursuant to or evidenced by a note, agreement, guaranty, instrument or
otherwise, in each case, irrespective of the genuineness, validity, regularity
or enforceability of such Obligations, or of any instrument evidencing any of
the Obligations or of any Collateral therefor or of the existence or extent of
such Collateral, and irrespective of the allowability, allowance or disallowance
of any or all of the Obligations, in any case commenced by or against any
Assignor under Title 11, United States Code, the Bankruptcy and Insolvency Act
(Canada) and the Companies' Creditors Arrangement Act, including, without
limitation, obligations or indebtedness of the Company and each Assignor for
post-petition interest, fees, costs and charges that would have accrued or been
added to the Obligations but for the commencement of such case.

         4. The Assignors acknowledge and agree that: (i) value has been given,
or will be given upon the making of payment under the Security and Purchase
Agreement by Laurus; (ii) the Assignors have rights in the Collateral; and (iii)
the Assignors and Laurus have not agreed to postpone the time for attachment of
the security interest granted hereunder which shall attach upon the execution of
this Master Security Agreement and, in the case of Collateral acquired after the
date hereof, when such Assignor has rights therein.

         5. Each Assignor hereby jointly and severally represents, warrants and
covenants to Laurus that:

                  (a) it is a corporation, partnership or limited liability
         company, as the case may be, validly existing, in good standing and
         organized under the respective laws of its jurisdiction of organization
         set forth on Schedule A, and each Assignor will provide Laurus thirty
         (30) days' prior written notice of any change in any of its respective
         jurisdiction of organization;

                  (b) its legal name is as set forth in its respective
         Certificate of Incorporation or other organizational document (as
         applicable) as amended through the date hereof and as set forth on
         Schedule A, and it will provide Laurus thirty (30) days' prior written
         notice of any change in its legal name;

                  (c) its organizational corporate identification number (if
         applicable) is as set forth on Schedule A hereto, and it will provide
         Laurus thirty (30) days' prior written notice of any change in any of
         its organizational identification number;

                  (d) it is the lawful owner of its respective Collateral and it
         has the sole right to grant a security interest therein and will defend
         the Collateral against all claims and demands of all persons and
         entities;

                  (e) it will keep its respective Collateral free and clear of
         all attachments, levies, taxes, liens, security interests and
         encumbrances of every kind and nature ("Encumbrances"), except (i)
         Encumbrances securing the Obligations (ii) to the extent said
         Encumbrance does not secure indebtedness in excess of US$50,000 and
         such Encumbrance is removed or otherwise released within ten (10) days
         of the creation thereof and (iii) Encumbrances set forth on Schedule
         4.9 of the Security and Purchase Agreement;

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<PAGE>

                  (f) it will, at its and the other Assignors' joint and several
         cost and expense keep the Collateral in good state of repair (ordinary
         wear and tear excepted) and will not waste or destroy the same or any
         part thereof other than ordinary course discarding of items no longer
         used or useful in its or such other Assignors' business;

                  (g) it will not without Laurus' prior written consent, sell,
         exchange, lease or otherwise dispose of the Collateral, whether by
         sale, lease or otherwise, except in the ordinary course of business and
         for the disposition or transfer in the ordinary course of business
         during any fiscal year of obsolete and worn-out equipment or equipment
         no longer necessary for its ongoing needs, or equipment that is
         replaced by more economical or functional equipment having an aggregate
         fair market value of not more than US$25,000 and only to the extent
         that:

                  (i)      the Proceeds of any such disposition are used to
                           acquire replacement Collateral which is subject to
                           Laurus' first priority perfected security interest,
                           or are used to repay Obligations or to pay general
                           corporate expenses; and

                  (ii)     following the occurrence of an Event of Default which
                           continues to exist the proceeds of which are remitted
                           to Laurus to be held as cash collateral for the
                           Obligations;

                  (h) it will insure or cause the Collateral to be insured
         against loss or damage by fire, theft, burglary, pilferage, loss in
         transit and such other hazards as Laurus shall specify in amounts and
         under policies by insurers acceptable to Laurus. Laurus shall either be
         named as loss payee or additional insured as its interest may appear in
         all of the Assignors' policies of insurance. Each insurance policy
         shall include an endorsement whereby the insurers agree to give Laurus
         not less than thirty (30) days notice of the cancellation of the policy
         of insurance and permit Laurus to cure any default which may exist
         under the policy. All premiums on each Assignor's insurance policies
         shall be paid by such Assignor and the policies shall be delivered to
         Laurus. If any such Assignor fails to do so, Laurus may procure such
         insurance and the cost thereof shall be promptly reimbursed by the
         Assignors, jointly and severally, and shall constitute Obligations;

                  (i) it will, acting reasonable prior to an Event of Default,
         at all reasonable times allow Laurus or Laurus' representatives free
         access to and the right of inspection of the Collateral upon 24 hours
         notice; and

                  (j) such Assignor (jointly and severally with each other
         Assignor) hereby indemnifies and saves Laurus harmless from all loss,
         costs, damage, liability and/or expense, including reasonable legal
         fees, that Laurus may sustain or incur to enforce payment, performance
         or fulfillment of any of the Obligations and/or in the enforcement of
         this Master Security Agreement or in the prosecution or defense of any
         action or proceeding either against Laurus or any Assignor concerning
         any matter growing out of or in connection with this Master Security
         Agreement, and/or any of the Obligations and/or any of the Collateral
         except to the extent caused by Laurus' own gross negligence or wilful
         misconduct (as determined by a court of competent jurisdiction in a
         final and nonappealable decision).

         6. The occurrence of any "Event of Default" under and as defined in the
Note which shall have occurred and be continuing beyond any applicable cure
period, shall constitute an Event of Default under this Master Security
Agreement.

         7. Upon the occurrence of any Event of Default which is continuing and
at any time thereafter, Laurus may declare all Obligations immediately due and
payable. To the extent applicable, both before and after the occurrence of an
Event of Default, Laurus shall have all rights and remedies of a secured party

                                      -3-
<PAGE>

under the PPSA, the UCC, this Master Security Agreement and other applicable
law. Upon the occurrence of any Event of Default which is continuing and at any
time thereafter, Laurus will have the right to take possession of, collect,
demand, sue on, enforce, recover and receive the Collateral and give valid and
binding receipts and discharges therefore and in respect thereof. Laurus will
also have the right to maintain possession of the Collateral on each Assignor's
premises or to remove the Collateral or any part thereof to such other premises
as Laurus may desire. Upon Laurus' request, after the occurrence of any Event of
Default which is continuing, each of the Assignors shall assemble or cause the
Collateral to be assembled and make it available to Laurus at a place designated
by Laurus. If any notification of intended disposition of any Collateral is
required by law, such notification, if mailed, shall be deemed commercially
reasonable if mailed at least ten (10) days before such disposition, postage
prepaid, addressed to any Assignor either at such Assignor's address shown
herein or at any address appearing on Laurus' records for such Assignor. Any
proceeds of any disposition of any of the Collateral shall be applied by Laurus
to the payment of all expenses in connection with the sale of the Collateral,
including operating any Assignor's accounts, preparing and enforcing this Master
Security Agreement, taking and maintaining custody of, preserving, repairing,
possessing, preparing for disposition and disposing of Collateral and in
enforcing or collecting indebtedness and all such costs, charges and expenses,
including reasonable legal fees, expenses and disbursements and any balance of
such proceeds may be applied by Laurus toward the payment of the Obligations in
such order of application as Laurus may elect, and each Assignor shall be liable
for any deficiency.

         8. Upon the occurrence of an Event of Default which is continuing and
during the continuance of any Event of Default, Laurus may appoint or reappoint
by instrument in writing, any person or persons, whether an officer or officers
or an employee or employees of Laurus or not, to be an interim receiver,
receiver or receivers (hereinafter called a "Receiver", which term when used
herein shall include a receiver and manager) of any Collateral of Essential
Innovations Corp. and any other Canadian entity that is required to enter into
this Master Security Agreement (collectively, the "Canadian Companies")
(including any interest, income or profits therefrom) and may remove any
Receiver so appointed and appoint another in his/her/its stead. Any such
Receiver shall, so far as concerns responsibility for his/her/its acts, be
deemed the agent of each Canadian Company and not Laurus, and Laurus shall not
be in any way responsible for any misconduct, negligence or non-feasance on the
part of any such Receiver or his/her/its servants, agents or employees. Subject
to the provisions of the instrument appointing him/her/it, any such Receiver
shall have power to take possession of Collateral, to preserve Collateral or its
value, to carry on or concur in carrying on all or any part of the business of
each Canadian Company and to sell, lease, license or otherwise dispose of or
concur in selling, leasing, licensing or otherwise disposing of Collateral. To
facilitate the foregoing powers, any such Receiver may, to the exclusion of all
others, including any Canadian Company, enter upon, use and occupy all premises
owned or occupied by each Canadian Company wherein Collateral may be situate,
maintain Collateral upon such premises, borrow money on a secured or unsecured
basis and use Collateral directly in carrying on each Canadian Company's
business or as security for loans or advances to enable the Receiver to carry on
each Canadian Company's business or otherwise, as such Receiver shall, in its
discretion, determine. Except as may be otherwise directed by Laurus, all money
received from time to time by such Receiver in carrying out his/her/its
appointment shall be received in trust for and be paid over to Laurus. Every
such Receiver may, in the discretion of Laurus, be vested with all or any of the
rights and powers of Laurus.

         9. Upon an Event of Default which is continuing and during the
continuance of any Event of Default, Laurus may, either directly or through its
agents or nominees, exercise any or all of the powers and rights given to a
Receiver by virtue of Section 8.

         10. Laurus shall use reasonable care with respect to the Collateral in
its possession or under its control. Laurus shall not have any other duty as to
any Collateral in its possession or control or in the possession or control of

                                      -4-
<PAGE>

any agent or nominee of Laurus, or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining thereto.

         11. If any Assignor defaults in the performance or fulfillment of any
of the terms, conditions, promises, covenants, provisions or warranties on such
Assignor's part to be performed or fulfilled under or pursuant to this Master
Security Agreement, Laurus may, at its option without waiving its right to
enforce this Master Security Agreement according to its terms, immediately or at
any time thereafter and without notice to any Assignor, perform or fulfill the
same or cause the performance or fulfillment of the same for each Assignor's
joint and several account and at each Assignor's joint and several cost and
expense, and the cost and expense thereof (including reasonable legal fees)
shall be added to the Obligations and shall be payable on demand with interest
thereon at the highest rate permitted by law.

         12. Each Assignor appoints Laurus, any of Laurus' officers, employees
or any other person or entity whom Laurus may designate as such Assignor's
attorney, with power to execute such documents on each of such Assignor's behalf
and to supply any omitted information and correct patent errors in any documents
executed by any Assignor or on any Assignor's behalf; to file financing
statements against such Assignor covering the Collateral (and, in connection
with the filing of any such financing statements or financing change statements,
describe the Collateral as "all assets and all personal property, whether now
owned and/or hereafter acquired" (or any substantially similar variation
thereof)); to sign such Assignor's name on public records; and to do all other
things Laurus deems necessary to carry out this Master Security Agreement. Each
Assignor hereby ratifies and approves all acts of the attorney and neither
Laurus nor the attorney will be liable for any acts of commission or omission,
nor for any error of judgment or mistake of fact or law other than gross
negligence or wilful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision). This power being coupled
with an interest, is irrevocable so long as any Obligations remains unpaid.

         13. No delay or failure on Laurus' part in exercising any right,
privilege or option hereunder shall operate as a waiver of such or of any other
right, privilege, remedy or option, and no waiver whatever shall be valid unless
in writing, signed by Laurus and then only to the extent therein set forth, and
no waiver by Laurus of any default shall operate as a waiver of any other
default or of the same default on a future occasion. Laurus' books and records
containing entries with respect to the Obligations shall be admissible in
evidence in any action or proceeding, shall be binding upon each Assignor for
the purpose of establishing the items therein set forth and shall constitute
prima facie proof thereof. Laurus shall have the right to enforce any one or
more of the remedies available to Laurus, successively, alternately or
concurrently. However, Laurus shall not be liable or accountable for any failure
to exercise its remedies, take possession of, collect, enforce, realize, sell,
lease, license or otherwise dispose of Collateral or to institute any proceeding
for such purposes. Each Assignor agrees to join with Laurus in executing
financing statements or other instruments to the extent required by the UCC or
the PPSA in form satisfactory to Laurus and in executing such other documents or
instruments as may be required or deemed necessary by Laurus for purposes of
affecting or continuing Laurus' security interest in the Collateral.

         14. This Master Security Agreement shall be governed by and construed
in accordance with the laws of the Province of British Columbia and the federal
laws of Canada, and cannot be terminated orally. All of the rights, remedies,
options, privileges and elections given to Laurus hereunder shall inure to the
benefit of Laurus' successors and assigns. The term "Laurus" as herein used
shall include Laurus, any parent of Laurus', any of Laurus' subsidiaries and any
co-subsidiaries of Laurus' parent, whether now existing or hereafter created or
acquired, and all of the terms, conditions, promises, covenants, provisions and
warranties of this Master Security Agreement shall inure to the benefit of each
of the foregoing, and shall bind the representatives, successors and assigns of
each Assignor. Laurus and each Assignor hereby (a) waive any and all right to
trial by jury in litigation relating to this Master Security Agreement and the
transactions contemplated hereby and each Assignor agrees not to assert any

                                      -5-
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counterclaim in such litigation, (b) submit to the nonexclusive jurisdiction of
any New York State court sitting in the borough of Manhattan, the city of New
York and (c) waive any objection Laurus or each Assignor may have as to the
bringing or maintaining of such action with any such court.

         15. Each Assignor hereby acknowledges receipt of a copy of this Master
Security Agreement.

         16. This Master Security Agreement may be executed in any number of
counterparts which shall, collectively and separately constitute one agreement.
Any signature delivered by a party by facsimile transmission or by sending a
scanned copy by electronic mail shall be deemed an original signature hereto.

         17. It is understood and agreed that any person or entity that desires
to become an Assignor hereunder, or is required to execute a counterpart of this
Master Security Agreement after the date hereof pursuant to the requirements of
any Document, shall become an Assignor hereunder by (x) executing a joinder
agreement in form and substance satisfactory to Laurus, (y) delivering
supplements to such exhibits and annexes to such Documents as Laurus shall
reasonably request and (z) taking all actions as specified in this Master
Security Agreement as would have been taken by such Assignor had it been an
original party to this Master Security Agreement, in each case with all
documents required above to be delivered to Laurus and with all documents and
actions required above to be taken to the reasonable satisfaction of Laurus.

         18. All notices from Laurus to any Assignor shall be sufficiently given
if mailed or delivered to such Assignor's address set forth below.

         19. If there is any inconsistency between the provisions hereof and the
provisions of the Security and Purchase Agreement, the provisions of the
Security and Purchase Agreement shall prevail.

                                Very truly yours,
                                Essential Innovations Technology Corp. (Nevada)
                                By: /s/ Jason McDiarmid
                                Name: Jason McDiarmid
                                Title: President
                                Address       189 Warrick Street
                                              Coquitlam, B.C.
                                              V3K 6C1 Canada

                                Essential Innovations Corp. (Canada)
                                By: /s/ Steve Wuschke
                                Name: Steve Wuschke
                                Title: President
                                Address       24336 32nd
                                              Langley, BC Canada
                                              V2Z 2J4
ACKNOWLEDGED:

                                Laurus Master Fund, Ltd.
                                By: /s/ David Grin
                                Name: David Grin
                                Title: Director
                                Address:

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                                   SCHEDULE A

                                        Jurisdiction of       Organization
            Entity                        Organization     Identification Number
            ------                        ------------     ---------------------

Essential Innovations Technology Corp.        Nevada               *
Essential Innovations Corp.                   Canada               *