Filed by Automated Filing Services Inc. (604) 609-0244 - Cyop Systems International, Inc. - Exhibit 10.1






SECURITIES PURCHASE AGREEMENT

          THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of
December 15, 2005, by and among CYOP SYSTEMS INTERNATIONAL, INC., a
Nevada corporation (the “Company”), and the Buyers listed on Schedule I
attached hereto (individually, a “Buyer” or collectively
“Buyers”).

WITNESSETH

          WHEREAS,
the Company and the Buyer(s) are executing and delivering this Agreement in
reliance upon an exemption from securities registration pursuant to Section 4(2)
and/or Rule 506 of Regulation D (“Regulation D”) as promulgated by the
U.S. Securities and Exchange Commission (the “SEC”) under the Securities
Act of 1933, as amended (the “Securities Act”);

          WHEREAS,
the Buyer has purchased from the Company the following securities: (i) a 12%
promissory note dated August 30, 2005 in the original principal amount of Six
Hundred Fifty Thousand Dollars ($650,000) (referred to as the “Prior
Securities”), pursuant to that certain Securities Purchase Agreement dated
August 30, 2005 (the “August 2005 Securities Purchase
Agreement”);

          WHEREAS,
contemporaneously with the execution and delivery of the August 2005 Securities
Purchase Agreement, the parties hereto executed and delivered a Registration
Rights Agreement dated August 30, 2005 (the “August 2005 Investor
Registration Rights Agreement”) pursuant to which the Company has provided
certain registration rights under the Securities Act and the rules and
regulations promulgated there under, and applicable state securities laws;

          WHEREAS,
contemporaneously with the execution and delivery of the August 2005 Securities
Purchase Agreement, the parties executed and delivered an Irrevocable Transfer
Agent Instructions dated August 30, 2005 (the “August 2005 Irrevocable
Transfer Agent Instructions”);

          WHEREAS,
contemporaneously with the execution and delivery of the August 2005 Securities
Purchase Agreement, the parties hereto executed and delivered a Security
Agreement dated August 30, 2005 (the “August 2005 Security Agreement”)
and filed corresponding a UCC-1 with the Nevada Secretary of State on August 31,
2005 (filing No. 2005027194-2) and the PPSA Security Agreement filed in British
Columbia/Vancouver on August 31, 2005 (registration No. 555104C and control No.
B6879235) pursuant to which the Company provided the Buyer a security interest
in Pledged Collateral (as this term is defined in the August, 2005 Security
Agreement) to secure the Company’s obligations under August 2005 Securities
Purchase Agreement, the Prior Securities, August 2005 Investor Registration
Rights Agreement and August 2005 Irrevocable Transfer Agent Instructions
(collectively referred to as the “August 2005 Transaction
Documents”), or any other obligations of the Company to the Buyer(s);

          WHEREAS,
as of the date hereof, the Buyer is the beneficial owner of the Prior
Securities. The Buyer desires to surrender the Prior Securities and the August
September 2005 Convertible Debenture plus accrued and unpaid interest on the
Prior Securities through the date hereof ($650,000 in principal plus $19,446.58
as and for interest on the Prior Securities for a 




total of $669,446.58), for consideration solely consisting of
surrendering the Prior Securities to be replaced by a convertible debenture to
be issued hereunder and to purchase additional convertible debentures as
outlined below for the total purchase price of One Million Three Hundred Fifty
Thousand Dollars ($1,350,000);

          WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained
herein, the Buyer(s) parties herein shall surrender the Prior Securities and the
August 2005 Transaction Documents and the Company shall simultaneously issue to
the Buyer(s), as provided herein, and the Buyer(s) shall accept from the Company
for consideration solely consisting of surrendering the Prior Securities a
secured convertible debenture of $669,446.58 (consisting of $650,000 in
principal plus $19,446.58 for interest on the Prior Securities) as provided
herein and the Company shall issue and sell to the Buyer(s), as provided herein,
and the Buyer(s) shall purchase, an additional, One Million Three Hundred Fifty
Thousand Dollars ($1,350,000) of secured convertible debentures collectively
referred to as (collectively referred to as the “Convertible
Debentures”), which shall be convertible into shares of the Company’s common
stock, par value $0.00002 (the “Common Stock”) (as converted, the
“Conversion Shares”) of which Seven Hundred Thousand Dollars
($700,000) shall be funded on the fifth (5th) business day following
the date hereof (the “First Closing”), One Hundred Fifty Thousand Dollars
($150,000) shall be funded two (2) business days prior to the date the
registration statement (the “Registration Statement”) is filed, pursuant
to the Investor Registration Rights Agreement dated the date hereof, with the
United States Securities and Exchange Commission (the “SEC”), provided
that the Company has increased its authorized shares to one billion
(1,000,000,000), the Company and the Buyer(s) have received notification from
the SEC, orally or in writing, that all comments pursuant to the SEC’s comment
letter dated October 13, 2005 File No. 000-32355 and all subsequent comment
letters have been addressed and that the SEC has no further comments, and that
all amendments to the Company’s public filings as required by the SEC’s comments
letters have been filed and cleared by the SEC (the “Second Closing”),
and Five Hundred Thousand Dollars ($500,000) shall be funded one (1) business
day prior to the date the Registration Statement is declared effective by the
SEC (the “Third Closing”) (individually referred to as a “Closing”
collectively referred to as the “Closings”), for a total purchase price
of up to One Million Three Hundred Fifty Thousand Dollars ($1,350,000) (the
“Purchase Price”) which shall be funded in the respective amounts set
forth opposite each Buyer(s) name on Schedule I (the “Subscription
Amount”); 

          WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the parties
hereto are executing and delivering a Registration Rights Agreement (the
“Investor Registration Rights Agreement”) pursuant to which the
Company has agreed to provide certain registration rights under the Securities
Act and the rules and regulations promulgated there under, and applicable state
securities laws; and

          WHEREAS,
the aggregate proceeds of the sale of the Convertible Debentures contemplated
hereby shall be held in escrow pursuant to the terms of an escrow agreement (the
“Escrow Agreement”) between the Company, the Buyers, and David Gonzalez,
Esq. (the “Escrow Agent”).

          WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the parties
hereto are executing and delivering an Amended and Restated August 2005 Security


2




Agreement (the “Security Agreement”) pursuant to which
the Company has agreed to provide the Buyer a security interest in Pledged
Collateral (as this term is defined in the Security Agreement) to secure the
Company’s obligations under this Agreement, the Transaction Documents, or any
other obligations of the Company to the Buyer; and

          WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the parties
hereto are executing and delivering Irrevocable Transfer Agent Instructions (the
“Irrevocable Transfer Agent Instructions”)

          NOW,
THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement the Company and the Buyer(s) hereby agree as
follows:

          1.
PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

                    (a)
Purchase of Convertible Debentures. Subject to the satisfaction (or
waiver) of the terms and conditions of this Agreement, each Buyer agrees,
severally and not jointly, to surrender at the First Closing and for
consideration solely consisting of surrendering the Prior Securities and August
2005 Transaction Documents, the Company agrees to issue to the Buyer(s) a
replacement Convertible Debenture as outlined herein and additionally, at each
closing, each Buyer agrees, severally and not jointly, to purchase and the
Company agrees to sell and issue to each Buyer, severally and not jointly,
additional, Convertible Debentures in amounts corresponding with the
Subscription Amount set forth opposite each Buyer’s name on Schedule I hereto.
Upon execution hereof by a Buyer, the Buyer shall wire transfer the Subscription
Amount set forth opposite his name on Schedule I in same-day funds or a check
payable to “David Gonzalez, Esq., as Escrow Agent for Cyop Systems
International, Inc./Cornell Capital Partners, LP”, which Subscription Amount
shall be held in escrow pursuant to the terms of the Escrow Agreement (as
hereinafter defined) and disbursed in accordance therewith. Notwithstanding the
foregoing, a Buyer may withdraw his Subscription Amount and terminate this
Agreement as to such Buyer at any time after the execution hereof and prior to
Closing (as hereinafter defined).

                    (b)
Closing Date. The First Closing of the surrender and replacement of the
Prior Securities and purchase and sale of the additional Convertible Debentures
shall take place at 10:00 a.m. Eastern Standard Time on the fifth
(5th) business day following the date hereof, subject to notification
of satisfaction of the conditions to the First Closing set forth herein and in
Sections 6 and 7 below (or such later date as is mutually agreed to by the
Company and the Buyer(s)) (the “First Closing Date”), and the Second
Closing of the purchase and sale of the Convertible Debentures shall take place
at 10:00 a.m. Eastern Standard Time two (2) business days prior to the date the
Registration Statement is filed with the SEC, subject to notification of
satisfaction of the conditions to the Second Closing set forth herein and in
Sections 6 and 7 below (or such later date as is mutually agreed to by the
Company and the Buyer(s)) (the “Second Closing Date”), and the Third
closing of the purchase and sale of the Convertible Debentures shall take place
at 10:00 a.m. Eastern Standard Time one (1) business day prior to the date the
Registration Statement is declared effective by the SEC, subject to notification
of satisfaction of the conditions to the Third Closing set forth herein and in
Sections 6 and 7 below (or such later date as is mutually agreed to by the
Company and the Buyer(s)) (the “Third Closing Date”)
(collectively, the “Closing Dates”). The Closing shall occur on the
respective 

3




Closing Dates at the offices of Yorkville Advisors, LLC, 3700
Hudson Street, Suite 3700, Jersey City, New Jersey 07302 (or such other place as
is mutually agreed to by the Company and the Buyer(s)). 

                    (c)
Escrow Arrangements; Form of Payment. Upon execution hereof by Buyer(s)
and pending the Closings, the aggregate proceeds of the sale of the Convertible
Debentures to Buyer(s) pursuant hereto shall be deposited in a non-interest
bearing escrow account with the Escrow Agent, pursuant to the terms the Escrow
Agreement. Subject to the satisfaction of the terms and conditions of this
Agreement, on the Closing Dates, (i) the Escrow Agent shall deliver to the
Company in accordance with the terms of the Escrow Agreement such aggregate
proceeds for the Convertible Debentures to be issued and sold to such Buyer(s),
minus the fees to be paid directly from the proceeds the Closings as set forth
herein, and (ii) the Company shall deliver to each Buyer, Convertible Debentures
which such Buyer(s) is purchasing in amounts indicated opposite such Buyer’s
name on Schedule I, duly executed on behalf of the Company.

          2.
BUYER’S REPRESENTATIONS AND WARRANTIES.

          Each
Buyer represents and warrants, severally and not jointly, that:

                    (a)
Investment Purpose. Each Buyer is acquiring the Convertible Debentures
and, upon conversion of Convertible Debentures, the Buyer will acquire the
Conversion Shares then issuable, for its own account for investment only and not
with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under the
Securities Act; provided, however, that by making the representations herein,
such Buyer reserves the right to dispose of the Conversion Shares at any time in
accordance with or pursuant to an effective registration statement covering such
Conversion Shares or an available exemption under the Securities Act.

                    (b)
Accredited Investor Status. Each Buyer is an “Accredited
Investor” as that term is defined in Rule 501(a)(3) of Regulation D.

                    (c)
Reliance on Exemptions. Each Buyer understands that the Convertible
Debentures are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such securities.

                    (d)
Information. Each Buyer and its advisors (and his or, its counsel), if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and information he deemed material to making an
informed investment decision regarding his purchase of the Convertible
Debentures and the Conversion Shares, which have been requested by such Buyer.
Each Buyer and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and its management. Neither such inquiries nor any
other due diligence investigations conducted by such Buyer or its advisors, if
any, or its 

4




representatives shall modify, amend or affect such Buyer’s
right to rely on the Company’s representations and warranties contained in
Section 3 below. Each Buyer understands that its investment in the Convertible
Debentures and the Conversion Shares involves a high degree of risk. Each Buyer
is in a position regarding the Company, which, based upon employment, family
relationship or economic bargaining power, enabled and enables such Buyer to
obtain information from the Company in order to evaluate the merits and risks of
this investment. Each Buyer has sought such accounting, legal and tax advice, as
it has considered necessary to make an informed investment decision with respect
to its acquisition of the Convertible Debentures and the Conversion Shares.

                    (e)
No Governmental Review. Each Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Convertible
Debentures or the Conversion Shares, or the fairness or suitability of the
investment in the Convertible Debentures or the Conversion Shares, nor have such
authorities passed upon or endorsed the merits of the offering of the
Convertible Debentures or the Conversion Shares.

                    (f)
Transfer or Resale. Each Buyer understands that except as provided in the
Investor Registration Rights Agreement: (i) the Convertible Debentures have not
been and are not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, or (B) such Buyer shall have
delivered to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration
requirements; (ii) any sale of such securities made in reliance on Rule 144
under the Securities Act (or a successor rule thereto) (“Rule 144”) may
be made only in accordance with the terms of Rule 144 and further, if Rule 144
is not applicable, any resale of such securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder. The Company reserves the right to place stop transfer
instructions against the shares and certificates for the Conversion Shares.

                    (g)
Legends. Each Buyer understands that the certificates or other
instruments representing the Convertible Debentures and or the Conversion Shares
shall bear a restrictive legend in substantially the following form (and a stop
transfer order may be placed against transfer of such stock certificates):

	 	THE SECURITIES REPRESENTED BY THIS
      CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED
      SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY
      NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED 	 








5





	 	IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
      ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
      STATE SECURITIES LAWS.   	 








The legend set forth above shall be removed and the Company
within two (2) business days shall issue a certificate without such legend to
the holder of the Conversion Shares upon which it is stamped, if, unless
otherwise required by state securities laws, (i) in connection with a sale
transaction, provided the Conversion Shares are registered under the Securities
Act or (ii) in connection with a sale transaction, after such holder provides
the Company with an opinion of counsel, which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale, assignment or transfer of the
Conversion Shares may be made without registration under the Securities Act.


                    (h)
Authorization, Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and is a valid and
binding agreement of such Buyer enforceable in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.

                    (i)
Receipt of Documents. Each Buyer and his or its counsel has received and
read in their entirety: (i) this Agreement and each representation, warranty and
covenant set forth herein and the Transaction Documents (as defined herein);
(ii) all due diligence and other information necessary to verify the accuracy
and completeness of such representations, warranties and covenants; (iii) the
Company’s Form 10-KSB for the fiscal year ended December 31, 2004; (iv) the
Company’s Form 10-QSB for the fiscal quarters ended March 31, 2005, June 30,
2005, and September 30, 2005 and (v) answers to all questions each Buyer
submitted to the Company regarding an investment in the Company; and each Buyer
has relied on the information contained therein and has not been furnished any
other documents, literature, memorandum or prospectus.

                    (j)
Due Formation of Corporate and Other Buyers. If the Buyer(s) is a
corporation, trust, partnership or other entity that is not an individual
person, it has been formed and validly exists and has not been organized for the
specific purpose of purchasing the Convertible Debentures and is not prohibited
from doing so.

                    (k)
No Legal Advice From the Company. Each Buyer acknowledges, that it had
the opportunity to review this Agreement and the transactions contemplated by
this Agreement with his or its own legal counsel and investment and tax
advisors. Each Buyer is relying solely on such counsel and advisors and not on
any statements or representations of the Company or any of its representatives
or agents for legal, tax or investment advice with respect to this investment,
the transactions contemplated by this Agreement or the securities laws of any
jurisdiction.

6




          3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

          The
Company represents and warrants as of the date hereof to each of the Buyers
that, except as set forth in the SEC Documents (as defined herein) or in the
Disclosure Schedule attached hereto (the “Disclosure Schedule”):

                    (a)
Organization and Qualification. The Company and its subsidiaries are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries taken as a whole.

                    (b)
Authorization, Enforcement, Compliance with Other Instruments. (i) The
Company has the requisite corporate power and authority to enter into and
perform this Agreement, the Security Agreement, the Investor Registration Rights
Agreement, the Irrevocable Transfer Agent Agreement, the Escrow Agreement, the
Amended and Restated Security Agreement, and any related agreements
(collectively the “Transaction Documents”) and to issue the Convertible
Debentures and the Conversion Shares in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including, without limitation, the issuance of the Convertible
Debentures the Conversion Shares and the reservation for issuance and the
issuance of the Conversion Shares issuable upon conversion or exercise thereof,
have been duly authorized by the Company’s Board of Directors and no further
consent or authorization is required by the Company, its Board of Directors or
its stockholders, (iii) the Transaction Documents have been duly executed and
delivered by the Company, (iv) the Transaction Documents constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and remedies. The
authorized officer of the Company executing the Transaction Documents knows of
no reason why the Company cannot file the registration statement as required
under the Investor Registration Rights Agreement or perform any of the Company’s
other obligations under such documents. 

                    (c)
Capitalization. The authorized capital stock of the Company as of
September 30, 2005 consists of 500,000,000 shares of Common Stock and 0 shares
of Preferred Stock, par value $0.00002 (“Preferred Stock”) of which
333,498,160 shares of Common Stock and zero shares of Preferred Stock are issued
and outstanding. All of such outstanding shares have been validly issued and are
fully paid and nonassessable. Other than as disclosed in SEC Documents, no
shares of Common Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company. As of
the date of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, or contracts, commitments, 

7




understandings or arrangements by which the Company or any of
its subsidiaries is or may become bound to issue additional shares of capital
stock of the Company or any of its subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, (ii) there are no outstanding
debt securities and (iii) other than the 11,000,000 shares to be registered
pursuant to the FutureBet Systems, Inc. transaction there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the Securities Act (except
pursuant to the Registration Rights Agreement) and (iv) there are no outstanding
registration statements and there are no outstanding comment letters from the
SEC or any other regulatory agency. There are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Convertible Debentures as described in this Agreement. The
Company has furnished to the Buyer true and correct copies of the Company’s
Articles of Incorporation, as amended and as in effect on the date hereof (the
“Articles of Incorporation”), and the Company’s By-laws, as in effect on
the date hereof (the “By-laws”), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto other than stock options issued to employees
and consultants. 

                    (d)
Issuance of Securities. The Convertible Debentures are duly authorized
and, upon issuance in accordance with the terms hereof, shall be duly issued,
fully paid and nonassessable, are free from all taxes, liens and charges with
respect to the issue thereof. The Conversion Shares issuable upon conversion of
the Convertible Debentures have been duly authorized and reserved for issuance.
Upon conversion or exercise in accordance with the Convertible Debentures the
Conversion Shares will be duly issued, fully paid and nonassessable.

                    (e)
No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Articles of
Incorporation, any certificate of designations of any outstanding series of
preferred stock of the Company or the By-laws or (ii) conflict with or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of The National Association of Securities Dealers Inc.’s OTC
Bulletin Board on which the Common Stock is quoted) applicable to the Company or
any of its subsidiaries or by which any property or asset of the Company or any
of its subsidiaries is bound or affected. Neither the Company nor its
subsidiaries is in violation of any term of or in default under its Articles of
Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted, and shall not be conducted
in violation of any material law, ordinance, or regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as required
under the Securities Act and any applicable state securities laws, the Company
is not required to obtain any 

8




consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement or the Registration Rights Agreement in accordance with the terms
hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. The
Company and its subsidiaries are unaware of any facts or circumstance, which
might give rise to any of the foregoing.

                    (f)
SEC Documents: Financial Statements. Since January 1, 2002, the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) (all of the foregoing filed prior to
the date hereof or amended after the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to as the “SEC
Documents”). The Company has delivered to the Buyers or their
representatives, or made available through the SEC’s website at
http://www.sec.gov., true and complete copies of the SEC Documents. As of their
respective dates, the financial statements of the Company disclosed in the SEC
Documents (the “Financial Statements”) complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such Financial Statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and, fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Buyer which is not included in the SEC Documents, including, without
limitation, information referred to in this Agreement, contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

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

                    (h)
Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the Company,
the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the documents contemplated herein,
or (iii) have a material adverse effect on the business, operations, properties,
financial condition or results of operations of the Company and its subsidiaries
taken as a whole.

9




                    (i)
Acknowledgment Regarding Buyer’s Purchase of the Convertible
Debentures. The Company acknowledges and agrees that the Buyer(s) is
acting solely in the capacity of an arm’s length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that the Buyer(s) is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by the Buyer(s) or any
of their respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to such Buyer’s
purchase of the Convertible Debentures or the Conversion Shares. The Company
further represents to the Buyer that the Company’s decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.

                    (j)
No General Solicitation. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Convertible
Debentures or the Conversion Shares.

                    (k)
No Integrated Offering. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the Convertible
Debentures or the Conversion Shares under the Securities Act or cause this
offering of the Convertible Debentures or the Conversion Shares to be integrated
with prior offerings by the Company for purposes of the Securities Act.

                    (l)
Employee Relations. Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened. None of the Company’s or its
subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are good.

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

                    (n)
Environmental Laws. The Company and its subsidiaries are (i) in
compliance with any and all applicable foreign, federal, state and local laws
and regulations 

10




relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval.

                    (o)
Title. Any real property and facilities held under lease by the Company
and its subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its subsidiaries.

                    (p)
Insurance. The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its subsidiaries are
engaged. Neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.

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

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

                    (s)
No Material Adverse Breaches, etc. Neither the Company nor any of its
subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a material adverse
effect on the business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries. Neither the Company
nor any of its subsidiaries is in breach of any contract or agreement which
breach, in the judgment of the Company’s officers, has or is expected to have a
material adverse effect on the business, properties, operations, financial
condition, results of operations or prospects of the Company or its
subsidiaries.

11




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

                    (u)
Certain Transactions. Except for arm’s length transactions pursuant to
which the Company makes payments in the ordinary course of business upon terms
no less favorable than the Company could obtain from third parties and other
than the grant of stock options disclosed in the SEC Documents, none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

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

          4.
COVENANTS.

                    (a)
Best Efforts. Each party shall use its best efforts to timely satisfy
each of the conditions to be satisfied by it as provided in Sections 6 and 7 of
this Agreement.

                    (b)
Form D. The Company agrees to file a Form D with respect to the
Conversion Shares as required under Regulation D and to provide a copy thereof
to each Buyer promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Conversion Shares, or obtain an exemption for the
Conversion Shares for sale to the Buyers at the Closing pursuant to this
Agreement under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date.

                    (c)
Reporting Status. Until the earlier of (i) the date as of which the
Buyer(s) may sell all of the Conversion Shares without restriction pursuant to
Rule 144(k) promulgated under the Securities Act (or successor thereto), or (ii)
the date on which (A) the Buyer(s) shall have sold all the Conversion Shares and
(B) none of the Convertible Debentures 

12




are outstanding (the “Registration Period”), the Company
shall file in a timely manner all reports required to be filed with the SEC
pursuant to the Exchange Act and the regulations of the SEC thereunder, and the
Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination.

                    (d)
Use of Proceeds. The Company will use the proceeds from the sale of the
Convertible Debentures for general corporate and working capital purposes as
well as the purchase of the assets of FutureBet Systems, Inc.

                    (e)
Reservation of Shares. The Company shall take all action reasonably
necessary to at all times have authorized, and reserved for the purpose of
issuance, such number of shares of Common Stock as shall be necessary to effect
the issuance of the Conversion Shares. If at any time the Company does not have
available such shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all of the Conversion Shares, the Company shall call
and hold a special meeting of the shareholders within thirty (30) days of such
occurrence, for the sole purpose of increasing the number of shares authorized.
The Company’s management shall recommend to the shareholders to vote in favor of
increasing the number of shares of Common Stock authorized. Management shall
also vote all of its shares in favor of increasing the number of authorized
shares of Common Stock.

                    (f)
Listings or Quotation. The Company shall promptly secure the listing or
quotation of the Conversion Shares upon each national securities exchange,
automated quotation system or The National Association of Securities Dealers
Inc.’s Over-The-Counter Bulletin Board (“OTCBB”) or other market, if any,
upon which shares of Common Stock are then listed or quoted (subject to official
notice of issuance) and shall use its best efforts to maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Conversion
Shares from time to time issuable under the terms of this Agreement. The Company
shall maintain the Common Stock’s authorization for quotation on the OTCBB.

                    (g)
Fees and Expenses.

                              (i)
Each of the Company and the Buyer(s) shall pay all costs and expenses incurred
by such party in connection with the negotiation, investigation, preparation,
execution and delivery of the Transaction Documents. The Company shall pay
Yorkville Advisors LLC a fee equal to Sixty Seven Thousand Five Hundred Dollars
($67,500), of which Thirty Five Thousand Dollars ($35,000) shall be paid
directly from the gross proceeds of the First Closing, Seven Thousand Five
Hundred Dollars ($7,500) shall be paid directly from the gross proceeds of the
Second Closing, and Twenty Five Thousand Dollars ($25,000) shall be paid
directly from the gross proceeds of the Third Closing.

                              (ii)
The Company shall pay a structuring fee to Yorkville Advisors LLC of Five
Thousand Dollars ($5,000) shall be paid directly from the proceeds of the First
Closing.

                              (iii)
The Company shall issue to the Buyer a warrants to purchase one million three
hundred fifty thousand (1,350,000) shares of the Company’s Common 

13




Stock for a period of five (5) years at an exercise price of
$0.05 per share (the “$0.05 Warrant”) and a warrant to purchase one
million six hundred twenty thousand (1,620,000) shares of the Company’s Common
Stock for a period of five (5) years at an exercise price of $0.06 per share
(the “$0.06 Warrant”). (the $0.05 Warrant and the $0.06 Warrant are
collectively referred to as the “Buyer’s Warrant”) The shares of the
Company’s Common Stock issuable upon conversion of the Buyer’s Warrant shall
have “piggy-back” and demand registration rights. 

                    (h)
Corporate Existence. So long as any of the Convertible Debentures remain
outstanding, the Company shall not directly or indirectly consummate any merger,
reorganization, restructuring, reverse stock split consolidation, sale of all or
substantially all of the Company’s assets or any similar transaction or related
transactions (each such transaction, an “Organizational Change”) unless,
prior to the consummation an Organizational Change, the Company obtains the
written consent of each Buyer. In any such case, the Company will make
appropriate provision with respect to such holders’ rights and interests to
insure that the provisions of this Section 4(h) will thereafter be applicable to
the Convertible Debentures.

                    (i)
Transactions With Affiliates. So long as any Convertible Debentures are
outstanding, the Company shall not, and shall cause each of its subsidiaries not
to, enter into, amend, modify or supplement, or permit any subsidiary to enter
into, amend, modify or supplement any agreement, transaction, commitment, or
arrangement with any of its or any subsidiary’s officers, directors, person who
were officers or directors at any time during the previous two (2) years,
stockholders who beneficially own five percent (5%) or more of the Common Stock,
or Affiliates (as defined below) or with any individual related by blood,
marriage, or adoption to any such individual or with any entity in which any
such entity or individual owns a five percent (5%) or more beneficial interest
(each a “Related Party”), except for (a) customary employment
arrangements and benefit programs on reasonable terms, (b) any investment in an
Affiliate of the Company, (c) any agreement, transaction, commitment, or
arrangement on an arms-length basis on terms no less favorable than terms which
would have been obtainable from a person other than such Related Party, (d) any
agreement, transaction, commitment, or arrangement which is approved by a
majority of the disinterested directors of the Company; for purposes hereof, any
director who is also an officer of the Company or any subsidiary of the Company
shall not be a disinterested director with respect to any such agreement,
transaction, commitment, or arrangement. “Affiliate” for purposes hereof
means, with respect to any person or entity, another person or entity that,
directly or indirectly, (i) has a ten percent (10%) or more equity interest in
that person or entity, (ii) has ten percent (10%) or more common ownership with
that person or entity, (iii) controls that person or entity, or (iv) shares
common control with that person or entity. “Control” or “controls”
for purposes hereof means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or entity.

                    (j)
Transfer Agent. The Company covenants and agrees that, in the event that
the Company’s agency relationship with the transfer agent should be terminated
for any reason prior to a date which is two (2) years after the Closing Date,
the Company shall immediately appoint a new transfer agent and shall require
that the new transfer agent execute and agree to be bound by the terms of the
Irrevocable Transfer Agent Instructions (as defined herein).

14




                    (k)
Restriction on Issuance of the Capital Stock. So long as any Convertible
Debentures are outstanding, the Company shall not, without the prior written
consent of the Buyer(s), (i) issue or sell shares of Common Stock or Preferred
Stock without consideration or for a consideration per share less than the bid
price of the Common Stock determined immediately prior to its issuance, (ii)
issue any preferred stock, warrant, option, right, contract, call, or other
security or instrument granting the holder thereof the right to acquire Common
Stock without consideration or for a consideration less than such Common Stock’s
Bid Price determined immediately prior to it’s issuance, (iii) enter into any
security instrument granting the holder a security interest in any and all
assets of the Company, or (iv) file any registration statement on Form S-8,
notwithstanding the foregoing upon ten (10) trading days prior written notice to
the Buyer(s) the Company shall be able to file a registration statement,
registering up to twenty million (20,000,000) shares of the Company’s Common
Stock, on Form S-8 pursuant to the Company’s bonafide employee stock option
plan.

                    (l)
Neither the Buyer(s) nor any of its affiliates have an open short position in
the Common Stock of the Company, and the Buyer(s) agrees that it shall not, and
that it will cause its affiliates not to, engage in any short sales of or
hedging transactions with respect to the Common Stock as long as any Convertible
Debentures shall remain outstanding.

                    (m)
Rights of First Refusal. For a period of eighteen (18) months from each
Closing, so long as any portion of Convertible Debentures are outstanding, if
the Company intends to raise additional capital by the issuance or sale of
capital stock of the Company, including without limitation shares of any class
of common stock, any class of preferred stock, options, warrants or any other
securities convertible or exercisable into shares of common stock (whether the
offering is conducted by the Company, underwriter, placement agent or any third
party) the Company shall be obligated to offer to the Buyers such issuance or
sale of capital stock, by providing in writing the principal amount of capital
it intends to raise and outline of the material terms of such capital raise,
prior to the offering such issuance or sale of capital stock to any third
parties including, but not limited to, current or former officers or directors,
current or former shareholders and/or investors of the obligor, underwriters,
brokers, agents or other third parties. The Buyers shall have ten (10) business
days from receipt of such notice of the sale or issuance of capital stock to
accept or reject all or a portion of such capital raising offer.

          5.
TRANSFER AGENT INSTRUCTIONS.

                    (a)
The Company shall issue the Irrevocable Transfer Agent Instructions to its
transfer agent irrevocably appointing David Gonzalez, Esq. as the Company’s
agent for purpose of having certificates issued, registered in the name of the
Buyer(s) or its respective nominee(s), for the Conversion Shares representing
such amounts of Convertible Debentures as specified from time to time by the
Buyer(s) to the Company upon conversion of the Convertible Debentures, for
interest owed pursuant to the Convertible Debenture, and for any and all
Liquidated Damages (as this term is defined in the Investor Registration Rights
Agreement). David Gonzalez, Esq. shall be paid a cash fee of Fifty Dollars ($50)
for every occasion they act pursuant to the Irrevocable Transfer Agent
Instructions. The Company shall not change its transfer agent without the
express written consent of the Buyer(s), which may be withheld by the Buyer(s)
in its sole discretion. Prior to registration of the Conversion Shares under the
Securities Act, all such certificates shall bear the restrictive legend
specified in Section 

15




2(g) of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 5, and stop transfer instructions to give effect to Section 2(g)
hereof (in the case of the Conversion Shares prior to registration of such
shares under the Securities Act) will be given by the Company to its transfer
agent and that the Conversion Shares shall otherwise be freely transferable on
the books and records of the Company as and to the extent provided in this
Agreement and the Investor Registration Rights Agreement. Nothing in this
Section 5 shall affect in any way the Buyer’s obligations and agreement to
comply with all applicable securities laws upon resale of Conversion Shares. If
the Buyer(s) provides the Company with an opinion of counsel, in form, scope and
substance customary for opinions of counsel in comparable transactions to the
effect that registration of a resale by the Buyer(s) of any of the Conversion
Shares is not required under the Securities Act, the Company shall within two
(2) business days instruct its transfer agent to issue one or more certificates
in such name and in such denominations as specified by the Buyer. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that the Buyer(s) shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.

          6.
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

The obligation of the Company hereunder to issue and sell the
Convertible Debentures to the Buyer(s) at the Closings is subject to the
satisfaction, at or before the Closing Dates, of each of the following
conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole discretion:

                    (a)
Each Buyer shall have executed the Transaction Documents and delivered them to
the Company.

                    (b)
The Buyer(s) shall have delivered to the Escrow Agent the Purchase Price for
Convertible Debentures in respective amounts as set forth next to each Buyer as
outlined on Schedule I attached hereto and the Escrow Agent shall have delivered
the net proceeds to the Company by wire transfer of immediately available U.S.
funds pursuant to the wire instructions provided by the Company.

                    (c)
The representations and warranties of the Buyer(s) shall be true and correct in
all material respects as of the date when made and as of the Closing Dates as
though made at that time (except for representations and warranties that speak
as of a specific date), and the Buyer(s) shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyer(s) at or prior to the Closing Dates.

          7.
CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE.

16




                    (a)
The obligation of the Buyer(s) hereunder to purchase the Convertible Debentures
at the First Closing is subject to the satisfaction, at or before the First
Closing Date, of each of the following conditions:

                              (i)
The Company shall have executed the Transaction Documents and delivered the same
to the Buyer(s).

                              (ii)
The Common Stock shall be authorized for quotation on the OTCBB, trading in the
Common Stock shall not have been suspended for any reason, and all the
Conversion Shares issuable upon the conversion of the Convertible Debentures
shall be approved by the OTCBB.

                              (iii)The
representations and warranties of the Company shall be true and correct in all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the First Closing Date
as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the First Closing Date. If requested by the Buyer, the
Buyer shall have received a certificate, executed by the President of the
Company, dated as of the First Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by the Buyer including,
without limitation an update as of the First Closing Date regarding the
representation contained in Section 3(c) above.

                              (iv)The
Company shall have executed and delivered to the Buyer(s) the Convertible
Debentures in the respective amounts set forth opposite each Buyer(s) name on
Schedule I attached hereto.

                              (v)
The Buyer(s) shall have received an opinion of counsel from counsel to the
Company in a form satisfactory to the Buyer(s).

                              (vi)The
Company shall have provided to the Buyer(s) a certificate of good standing from
the secretary of state from the state in which the company is incorporated.

                              (vii)
The Company shall have filed a form UCC-1 or such other forms as may be required
to perfect the Buyer’s interest in the Pledged Property as detailed in the
Security Agreement dated the date hereof and provided proof of such filing to
the Buyer(s).

                              (viii)
The Company shall have provided to the Buyer an acknowledgement, to the
satisfaction of the Buyer, from the Company’s independent certified public
accountants as to its ability to provide all consents required in order to file
a registration statement in connection with this transaction.

                              (ix)
The Company shall have provided to the Buyer an acknowledgement, to the
satisfaction of the Buyer, from the Company’s independent certified public
accountants that the acquisition of FutureBet Systems, Inc. does not meet the


17




“significance” test of Rule 8-K and therefore the Company does
not have to comply with the filing as exhibits to the 8-K, filed as a result of
the FutureBet Systems, Inc. acquisition, financial statements of FutureBet
Systems, Inc, pro forma financial information, and copies of plans of
acquisition or disposition. 

                              (x)
The Company shall have reserved out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the Convertible
Debentures, shares of Common Stock to effect the conversion of all of the
Conversion Shares then outstanding. 

                              (xi)
The Irrevocable Transfer Agent Instructions, in form and substance satisfactory
to the Buyer, shall have been delivered to and acknowledged in writing by the
Company’s transfer agent.

                    (b)
The obligation of the Buyer(s) hereunder to accept the Convertible Debentures at
the Second Closing is subject to the satisfaction, at or before the Second
Closing Date, of each of the following conditions:

                              (i)
The Common Stock shall be authorized for quotation on the OTCBB, trading in the
Common Stock shall not have been suspended for any reason, and all the
Conversion Shares issuable upon the conversion of the Convertible Debentures
shall be approved by the OTCBB.

                              (ii)
The Company shall have increased it authorized shares of Common Stock to one
billion (1,000,000,000) shares.

                              (iii)
The Company and the Buyer(s) have received notification, orally or in writing,
from the SEC that all comments pursuant to the SEC’s comment letter dated
October 13, 2005 File No. 000-32355 and all subsequent comment letters have been
addressed and that the SEC has no further comments, and that all amendments to
the Company’s public filings as required by the SEC’s comments letters have been
filed and cleared by the SEC.

                              (iv)
The representations and warranties of the Company shall be true and correct in
all material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Second Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Second Closing Date. If requested by the Buyer, the
Buyer shall have received a certificate, executed by two officers of the
Company, dated as of the Second Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by the Buyer including,
without limitation an update as of the Second Closing Date regarding the
representation contained in Section 3(c) above.

18




                              (v)
The Company shall have executed and delivered to the Buyer(s) the Convertible
Debentures in the respective amounts set forth opposite each Buyer(s) name on
Schedule I attached hereto.

                              (vi)The
Company shall have certified that all conditions to the Second Closing have been
satisfied and that the Company will file the Registration Statement with the SEC
in compliance with the rules and regulations promulgated by the SEC for filing
thereof two (2) business days after the Second Closing. If requested by the
Buyer, the Buyer shall have received a certificate, executed by the two officers
of the Company, dated as of the Second Closing Date, to the foregoing effect.
The Buyers have no obligation to fund at the Second Closing if the Company has
not filed the Registration Statement.

                    (c)
The obligation of the Buyer(s) hereunder to accept the Convertible Debentures at
the Third Closing is subject to the satisfaction, at or before the Third Closing
Date, of each of the following conditions:

                              (i)
The Common Stock shall be authorized for quotation on the OTCBB, trading in the
Common Stock shall not have been suspended for any reason, and all the
Conversion Shares issuable upon the conversion of the Convertible Debentures
shall be approved by the OTCBB.

                              (ii)
The representations and warranties of the Company shall be true and correct in
all material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Second Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Second Closing Date and Third Closing Date. If
requested by the Buyer, the Buyer shall have received a certificate, executed by
two officers of the Company, dated as of the Second Closing Date and Third
Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by the Buyer including, without limitation an update as of
the Second Closing Date regarding the representation contained in Section 3(c)
above.

                              (iii)
The Company shall have executed and delivered to the Buyer(s) the Convertible
Debentures in the respective amounts set forth opposite each Buyer(s) name on
Schedule I attached hereto.

                              (iv)
The Company shall have certified that all conditions to the Second Closing and
Third Closing Date have been satisfied and that the Company will file the
Registration Statement with the SEC in compliance with the rules and regulations
promulgated by the SEC for filing thereof two (2) business days after the Second
Closing and Third Closing Date. If requested by the Buyer, the Buyer shall have
received a certificate, executed by the two officers of the Company, dated as of
the Second Closing Date and Third Closing Date, to the foregoing effect. The
Buyers have no obligation to fund at the Second Closing if the Company 

19




has not filed the Registration Statement or the Third Closing
if the Company has not gotten notice from the SEC that the Registration
Statement has been declared effective.

          8.
INDEMNIFICATION.

                    (a)
In consideration of the Buyer’s execution and delivery of this Agreement and
acquiring the Convertible Debentures and the Conversion Shares hereunder, and in
addition to all of the Company’s other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless the Buyer(s) and each
other holder of the Convertible Debentures and the Conversion Shares, and all of
their officers, directors, employees and agents (including, without limitation,
those retained in connection with the transactions contemplated by this
Agreement) (collectively, the “Buyer Indemnitees”) from and against any
and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Buyer Indemnitee is a party to the action for
which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”), incurred by the
Buyer Indemnitees or any of them as a result of, or arising out of, or relating
to (a) any misrepresentation or breach of any representation or warranty made by
the Company in this Agreement, the Convertible Debentures or the Investor
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement, or the Investor
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of this Agreement or any other
instrument, document or agreement executed pursuant hereto by any of the parties
hereto, any transaction financed or to be financed in whole or in part, directly
or indirectly, with the proceeds of the issuance of the Convertible Debentures
or the status of the Buyer or holder of the Convertible Debentures the
Conversion Shares, as a Buyer of Convertible Debentures in the Company. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities, which is permissible under
applicable law.

                    (b)
In consideration of the Company’s execution and delivery of this Agreement, and
in addition to all of the Buyer’s other obligations under this Agreement, the
Buyer shall defend, protect, indemnify and hold harmless the Company and all of
its officers, directors, employees and agents (including, without limitation,
those retained in connection with the transactions contemplated by this
Agreement) (collectively, the “Company Indemnitees”) from and against any
and all Indemnified Liabilities incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Buyer(s) in this Agreement,
instrument or document contemplated hereby or thereby executed by the Buyer, (b)
any breach of any covenant, agreement or obligation of the Buyer(s) contained in
this Agreement, the Investor Registration Rights Agreement or any other
certificate, instrument or document contemplated hereby or thereby executed by
the Buyer, or (c) any cause of action, suit or claim brought or made against
such Company Indemnitee based on material misrepresentations or due to a
material breach and arising out of or resulting from the execution, delivery,
performance or enforcement of this 

20




Agreement, the Investor Registration Rights Agreement or any
other instrument, document or agreement executed pursuant hereto by any of the
parties hereto. To the extent that the foregoing undertaking by each Buyer may
be unenforceable for any reason, each Buyer shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.

          9.
GOVERNING LAW: MISCELLANEOUS.

                    (a)
Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New Jersey without regard to the
principles of conflict of laws. The parties further agree that any action
between them shall be heard in Hudson County, New Jersey, and expressly consent
to the jurisdiction and venue of the Superior Court of New Jersey, sitting in
Hudson County 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.

                    (b)
Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
(4) additional original executed signature pages to be physically delivered to
the other party within five (5) days of the execution and delivery hereof.

                    (c)
Headings. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.

                    (d)
Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

                    (e)
Entire Agreement, Amendments. This Agreement supersedes all other prior
oral or written agreements between the Buyer(s), the Company, their affiliates
and persons acting on their behalf with respect to the matters discussed herein,
and this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.

                    (f)
Notices. Any notices, consents, waivers, or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered (i) upon receipt, when delivered
personally; (ii) upon confirmation of receipt, when sent by facsimile; (iii)
three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally 

21




recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

	If to the Company, to: 	Cyop Systems International, Inc. 
	  	1090 Homer Street – Suite 390 
	  	Vancouver, British Columbia V6B2W9 
	  	Attention: 	Mitch White 
	  	Telephone: 	(604) 685-0696 
	  	Facsimile: 	(604) 637-8201 
	  	  	  
	With a copy to: 	Richardson Patel, LLP 
	  	10900 Wilshire Boulevard, Suite 500 
	  	Los Angeles, CA 90024 
	  	Attention: 	Peter Hogan, Esq. 
	  	Telephone: 	(310) 208-1182 
	  	Facsimile: 	(310) 208-1154 


          If
to the Buyer(s), to its address and facsimile number on Schedule I, with copies
to the Buyer’s counsel as set forth on Schedule I. Each party shall provide five
(5) days’ prior written notice to the other party of any change in address or
facsimile number.

                    (g)
Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns. Neither
the Company nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party
hereto.

                    (h)
No Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.

                    (i)
Survival. Unless this Agreement is terminated under Section 9(l), the
representations and warranties of the Company and the Buyer(s) contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9,
and the indemnification provisions set forth in Section 8, shall survive the
Closing for a period of two (2) years following the date on which the
Convertible Debentures are converted in full. The Buyer(s) shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.

                    (j)
Publicity. The Company and the Buyer(s) shall have the right to approve,
before issuance any press release or any other public statement with respect to
the transactions contemplated hereby made by any party; provided, however, that
the Company shall be entitled, without the prior approval of the Buyer(s), to
issue any press release or other public disclosure with respect to such
transactions required under applicable securities or other laws or regulations
(the Company shall use its best efforts to consult the Buyer(s) in connection
with any such press release or other public disclosure prior to its release and
Buyer(s) shall be provided with a copy thereof upon release thereof).

22




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

                    (l)
Termination. In the event that the Closing shall not have occurred with
respect to the Buyers on or before five (5) business days from the date hereof
due to the Company’s or the Buyer’s failure to satisfy the conditions set forth
in Sections 6 and 7 above (and the non-breaching party’s failure to waive such
unsatisfied condition(s)), the non-breaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided, however, that if this Agreement is terminated by the Company pursuant
to this Section 9(l), the Company shall remain obligated to reimburse the
Buyer(s) for the fees and expenses of Yorkville Advisors LLC described in
Section 4(g) above.

                    (m)
No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

[REMAINDER PAGE INTENTIONALLY LEFT BLANK]

23




          IN
WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.

	 	COMPANY: 
	 	CYOP SYSTEMS
      INTERNATIONAL, 
	 	INC. 
	 	  
	 	By:
      _________________________________
	 	Name Mitch White 
	 	Title: President



24




SCHEDULE I

SCHEDULE OF BUYERS 

	  	    	Address/Facsimile 	Amount of 
	Name 	  Signature 	Number of Buyer 	Subscription 
	  	    	    	  
	  	    	    	  
	Cornell Capital Partners, LP 	By:
                Yorkville
      Advisors, LLC 	101 Hudson Street – Suite 3700
     	$1,350,000 
	  	Its:
                General
      Partner 	Jersey City, NJ 07303  	  
	  	    	Facsimile:
           (201) 985-8266 	  
	  	    	    	  
	  	By:
      ___________________________________	    	  
	  	Name:
           Mark Angelo 	    	  
	  	Its:
                Portfolio
      Manager 	    	  
	  	    	    	  
	With a copy to: 	David Gonzalez, Esq.  	101 Hudson Street – Suite 3700
     	  
	  	    	Jersey City, NJ 07302  	  
	  	    	Facsimile:
           (201) 985-8266 	  






DISCLOSURE SCHEDULE

2