Filed by Automated Filing Services Inc. (604) 609-0244 - Cyop Systems International, Inc. - Exhibit 10.3






Dated: December 15, 2005

NEITHER THIS DEBENTURE NOR THE
SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

	No. CCP-2	 $700,000



CYOP SYSTEMS INTERNATIONAL, INC.

Secured Convertible Debenture

Due December 15, 2008

          This
Secured Convertible Debenture (the “Debenture”) is issued by CYOP
SYSTEMS INTERNATIONAL, INC., a Nevada corporation (the “Obligor”), to
CORNELL CAPITAL PARTNERS, LP (the “Holder”), pursuant to that
certain Securities Purchase Agreement (the “Securities Purchase
Agreement”) of even date herewith.

          FOR
VALUE RECEIVED, the Obligor hereby promises to pay to the Holder or its
successors and assigns the principal sum of Seven Hundred Thousand Dollars
($700,000) together with accrued but unpaid interest on or before December 15,
2008 (the “Maturity Date”) in accordance with the following terms:

          Interest.
Interest shall accrue on the outstanding principal balance hereof at an annual
rate equal to ten percent (10%). Interest shall be calculated on the basis of a
360-day year and the actual number of days elapsed, to the extent permitted by
applicable law. Interest hereunder will be paid to the Holder or its assignee
(as defined in Section 5) in whose name this Debenture is registered on
the records of the Obligor regarding registration and transfers of Debentures
(the “Debenture Register”).

          Right
of Redemption. The Obligor at its option shall have the right, with
three (3) business days advance written notice (the “Redemption Notice”),
to redeem a portion or all amounts outstanding under this Debenture prior to the
Maturity Date. The Obligor shall pay an amount equal to the principal amount
being redeemed plus a redemption premium (“Redemption Premium”)
equal to twenty percent (20%) of the principal amount being redeemed, and
accrued interest, (collectively referred to as the “Redemption Amount”).
The Obligor shall deliver to the Holder the Redemption Amount on the third
(3rd) business day after the Redemption Notice.

1




          In
the event the Obligor exercises a redemption of either all or a portion of the
outstanding principal amounts plus accrued interest due and outstanding under
this debenture as outlined herein, the Holder shall receive a warrant to
purchase one million (1,000,000) shares of the Company’s Common Stock for every
One Hundred Thousand Dollars ($100,000) redeemed, pro rata. (the
“Warrant”) The Warrant shall be exercisable on a “cash basis” and have an
exercise price of the of one hundred ten percent (110%) of the Closing Bid Price
of the Company’s Common Stock on the Closing Date, as quoted by Bloomberg, LP,
per share. The Warrant shall have “piggy-back” and demand registration rights
and shall survive for five (5) years from the Closing Date.

          Notwithstanding
the foregoing in the event that the Obligor has elected to redeem a portion of
the outstanding principal amount and accrued interest under this Debenture the
Holder shall be permitted to convert all or any portion of this Debenture during
such three business day period.

          Security
Agreements. This Debenture is secured by an Amended and Restated
Security Agreement (the “Security Agreement”) of even date herewith
between the Obligor and the Holder.

          Consent
of Holder to Sell Capital Stock or Grant Security Interests. So
long as any of the principal amount or interest on this Debenture remains unpaid
and unconverted, the Obligor shall not, without the prior consent of the Holder,
(i) issue or sell any shares of Common Stock or preferred stock without
consideration or for consideration per share less than the Closing Bid Price of
the Common Stock determined immediately prior to its issuance, (ii) issue or
sell 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 consideration per share less than the Closing
Bid Price of the Common Stock determined immediately prior to its issuance,
(iii) enter into any security instrument granting the holder a security interest
in any of the assets of the Obligor, or (iv) file any registration statements 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.

          Rights
of First Refusal. For a period of eighteen (18) months from the date
hereof, so long as any portion of this Debenture is outstanding (including
principal or accrued interest), if the Obligor intends to raise additional
capital by the issuance or sale of capital stock of the Obligor, 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 Obligor,
underwriter, placement agent or any third party) the Obligor shall be obligated
to offer to the Holder 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 Holder shall have ten (10) business days from receipt of such 

2




notice of the sale or issuance of capital stock to accept or
reject all or a portion of such capital raising offer.

          This
Debenture is subject to the following additional provisions:

          Section
1. This Debenture is exchangeable for an equal aggregate principal
amount of Debentures of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such
registration of transfer or exchange.

          Section
2. Events of Default.

          (a)
An “Event of Default”, wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

                    (i)
Any default in the payment of the principal of, interest on or other charges in
respect of this Debenture, free of any claim of subordination, as and when the
same shall become due and payable (whether on a Conversion Date or the Maturity
Date or by acceleration or otherwise);

                    (ii)
The Obligor shall fail to observe or perform any other covenant, agreement or
warranty contained in, or otherwise commit any breach or default of any
provision of this Debenture (except as may be covered by Section 2(a)(i)
hereof) or any Transaction Document (as defined in Section 5) which is
not cured with in the time prescribed;

                    (iii)
The Obligor or any subsidiary of the Obligor shall commence, or there shall be
commenced against the Obligor or any subsidiary of the Obligor under any
applicable bankruptcy or insolvency laws as now or hereafter in effect or any
successor thereto, or the Obligor or any subsidiary of the Obligor commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Obligor or any
subsidiary of the Obligor or there is commenced against the Obligor or any
subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding
which remains undismissed for a period of 61 days; or the Obligor or any
subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the
Obligor or any subsidiary of the Obligor suffers any appointment of any
custodian, private or court appointed receiver or the like for it or any
substantial part of its property which continues undischarged or unstayed for a
period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor
makes a general assignment for the benefit of creditors; or the Obligor or any
subsidiary of the Obligor shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or the
Obligor or any subsidiary of the Obligor shall call a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its
debts; or the Obligor or any subsidiary of the Obligor shall by any act or
failure to act expressly indicate its consent to, approval of or acquiescence in
any of the foregoing; or any corporate or other action is taken by the Obligor
or any subsidiary of the Obligor for the purpose of effecting any of the
foregoing;

3




                    (iv)
The Obligor or any subsidiary of the Obligor shall default in any of its
obligations under any other debenture or any mortgage, credit agreement or other
facility, indenture agreement, factoring agreement or other instrument under
which there may be issued, or by which there may be secured or evidenced any
indebtedness for borrowed money or money due under any long term leasing or
factoring arrangement of the Obligor or any subsidiary of the Obligor in an
amount exceeding $100,000, whether such indebtedness now exists or shall
hereafter be created and such default shall result in such indebtedness becoming
or being declared due and payable prior to the date on which it would otherwise
become due and payable;

                    (v)
The Common Stock shall cease to be quoted for trading or listed for trading on
either the Nasdaq OTC Bulletin Board (“OTC”), Nasdaq SmallCap Market, New
York Stock Exchange, American Stock Exchange or the Nasdaq National Market
(each, a “Subsequent Market”) and shall not again be quoted or listed for
trading thereon within five (5) Trading Days of such delisting;

                    (vi)
The Obligor or any subsidiary of the Obligor shall be a party to any Change of
Control Transaction (as defined in Section 5); 

                    (vii)
The Obligor shall fail to file the Underlying Shares Registration Statement (as
defined in Section 5) with the Commission (as defined in Section
5), or the Underlying Shares Registration Statement shall not have been
declared effective by the Commission, in each case within the time periods set
forth in the Investor Registration Rights Agreement (“Registration Rights
Agreement”) of even date herewith between the Obligor and the Holder;

                    (viii)
If the effectiveness of the Underlying Shares Registration Statement lapses for
any reason or the Holder shall not be permitted to resell the shares of Common
Stock underlying this Debenture under the Underlying Shares Registration
Statement, in either case, for more than five (5) consecutive Trading Days or an
aggregate of eight Trading Days (which need not be consecutive Trading
Days);

                    (ix)
The Obligor shall fail for any reason to deliver Common Stock certificates to a
Holder prior to the fifth (5th) Trading Day after a Conversion Date
or the Obligor shall provide notice to the Holder, including by way of public
announcement, at any time, of its intention not to comply with requests for
conversions of this Debenture in accordance with the terms hereof; 

                    (x)
The Obligor shall fail for any reason to deliver the payment in cash pursuant to
a Buy-In (as defined herein) within three (3) days after notice is claimed
delivered hereunder; 

          (b)
During the time that any portion of this Debenture is outstanding, if any Event
of Default has occurred, the full principal amount of this Debenture, together
with interest and other amounts owing in respect thereof, to the date of
acceleration shall become at the Holder's election, immediately due and payable
in cash, provided however, the Holder may request (but shall have no
obligation to request) payment of such amounts in Common Stock of the Obligor.
In addition to any other remedies, the Holder shall have the right (but not the
obligation) to convert this Debenture at any time after (x) an Event of Default
or (y) the Maturity Date at the

4




Conversion Price then in-effect. The Holder need not provide
and the Obligor hereby waives any presentment, demand, protest or other notice
of any kind, and the Holder may immediately and without expiration of any grace
period enforce any and all of its rights and remedies hereunder and all other
remedies available to it under applicable law. Such declaration may be rescinded
and annulled by Holder at any time prior to payment hereunder. No such
rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon. Upon an Event of Default, notwithstanding any
other provision of this Debenture or any Transaction Document, the Holder shall
have no obligation to comply with or adhere to any limitations, if any, on the
conversion of this Debenture or the sale of the Underlying Shares.

          Section
3. Conversion.

          (a)
Conversion at Option of Holder.

                    (i)
This Debenture shall be convertible into shares of Common Stock at the option of
the Holder, in whole or in part at any time and from time to time, after the
Original Issue Date (as defined in Section 5) (subject to the limitations
on conversion set forth in Section 3(b) hereof). The number of shares of
Common Stock issuable upon a conversion hereunder equals the quotient obtained
by dividing (x) the outstanding amount of this Debenture to be converted by (y)
the Conversion Price (as defined in Section 3(c)(i)). The Obligor shall
deliver Common Stock certificates to the Holder prior to the Fifth
(5th) Trading Day after a Conversion Date.

                    (ii)
Notwithstanding anything to the contrary contained herein, if on any Conversion
Date: (1) the number of shares of Common Stock at the time authorized, unissued
and unreserved for all purposes, or held as treasury stock, is insufficient to
pay principal and interest hereunder in shares of Common Stock; (2) the Common
Stock is not listed or quoted for trading on the OTC or on a Subsequent Market;
(3) the Obligor has failed to timely satisfy its conversion; or (4) the issuance
of such shares of Common Stock would result in a violation of Section
3(b), then, at the option of the Holder, the Obligor, in lieu of delivering
shares of Common Stock pursuant to Section 3(a)(i), shall deliver, within
three (3) Trading Days of each applicable Conversion Date, an amount in cash
equal to the product of the outstanding principal amount to be converted plus
any interest due therein divided by the Conversion Price, chosen by the Holder,
and multiplied by the highest closing price of the stock from date of the
conversion notice till the date that such cash payment is made.

          Further,
if the Obligor shall not have delivered any cash due in respect of conversion of
this Debenture or as payment of interest thereon by the fifth (5th)
Trading Day after the Conversion Date, the Holder may, by notice to the Obligor,
require the Obligor to issue shares of Common Stock pursuant to Section
3(c), except that for such purpose the Conversion Price applicable thereto
shall be the lesser of the Conversion Price on the Conversion Date and the
Conversion Price on the date of such Holder demand. Any such shares will be
subject to the provisions of this Section.

                    (iii)
The Holder shall effect conversions by delivering to the Obligor a completed
notice in the form attached hereto as Exhibit A (a “Conversion Notice”).
The date on which a Conversion Notice is delivered is the “Conversion
Date.” Unless the Holder is 

5




converting the entire principal amount outstanding under this
Debenture, the Holder is not required to physically surrender this Debenture to
the Obligor in order to effect conversions. Conversions hereunder shall have the
effect of lowering the outstanding principal amount of this Debenture plus all
accrued and unpaid interest thereon in an amount equal to the applicable
conversion. The Holder and the Obligor shall maintain records showing the
principal amount converted and the date of such conversions. In the event of any
dispute or discrepancy, the records of the Holder shall be controlling and
determinative in the absence of manifest error.

          (b)
Certain Conversion Restrictions.

                    (i)
A Holder may not convert this Debenture or receive shares of Common Stock as
payment of interest hereunder to the extent such conversion or receipt of such
interest payment would result in the Holder, together with any affiliate
thereof, beneficially owning (as determined in accordance with Section 13(d) of
the Exchange Act and the rules promulgated thereunder) in excess of 4.9% of the
then issued and outstanding shares of Common Stock, including shares issuable
upon conversion of, and payment of interest on, this Debenture held by such
Holder after application of this Section. Since the Holder will not be obligated
to report to the Obligor the number of shares of Common Stock it may hold at the
time of a conversion hereunder, unless the conversion at issue would result in
the issuance of shares of Common Stock in excess of 4.9% of the then outstanding
shares of Common Stock without regard to any other shares which may be
beneficially owned by the Holder or an affiliate thereof, the Holder shall have
the authority and obligation to determine whether the restriction contained in
this Section will limit any particular conversion hereunder and to the extent
that the Holder determines that the limitation contained in this Section
applies, the determination of which portion of the principal amount of this
Debenture is convertible shall be the responsibility and obligation of the
Holder. If the Holder has delivered a Conversion Notice for a principal amount
of this Debenture that, without regard to any other shares that the Holder or
its affiliates may beneficially own, would result in the issuance in excess of
the permitted amount hereunder, the Obligor shall notify the Holder of this fact
and shall honor the conversion for the maximum principal amount permitted to be
converted on such Conversion Date in accordance with the periods described in
Section 3(a)(i) and, at the option of the Holder, either retain any
principal amount tendered for conversion in excess of the permitted amount
hereunder for future conversions or return such excess principal amount to the
Holder. The provisions of this Section may be waived by a Holder (but only as to
itself and not to any other Holder) upon not less than 65 days prior notice to
the Obligor. Other Holders shall be unaffected by any such waiver.

          (c)
Conversion Price and Adjustments to Conversion Price.

                    (i)
The Holder shall be entitled to convert, at its sole option, at any time a
portion or all amounts of principal and interest due and outstanding under this
Debenture into shares of the Obligor’s Common Stock at a price equal to ninety
percent (90%) of the lowest Volume Weighted Average Price of the Common Stock of
the thirty (30) trading days immediately preceding the Conversion Date as quoted
by Bloomberg, LP (the “Market Conversion Price”). The Market Conversion
Price shall also be referred to as the “Conversion Price.” The Conversion
Price may be adjusted pursuant to the other terms of this Debenture.

6




                    (ii)
In case of any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is converted into other securities,
cash or property, the Holder shall have the right thereafter to, at its option,
(A) convert the then outstanding principal amount, together with all accrued but
unpaid interest and any other amounts then owing hereunder in respect of this
Debenture into the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of the Common Stock following
such reclassification or share exchange, and the Holder of this Debenture shall
be entitled upon such event to receive such amount of securities, cash or
property as the shares of the Common Stock of the Obligor into which the then
outstanding principal amount, together with all accrued but unpaid interest and
any other amounts then owing hereunder in respect of this Debenture could have
been converted immediately prior to such reclassification or share exchange
would have been entitled, or (B) require the Obligor to prepay the outstanding
principal amount of this Debenture, plus all interest and other amounts due and
payable thereon. The entire prepayment price shall be paid in cash. This
provision shall similarly apply to successive reclassifications or share
exchanges.

                    (iii)
The Obligor shall at all times reserve and keep available out of its authorized
Common Stock the full number of shares of Common Stock issuable upon conversion
of all outstanding amounts under this Debenture; and within three (3) Business
Days following the receipt by the Obligor of a Holder's notice that such minimum
number of Underlying Shares is not so reserved, the Obligor shall promptly
reserve a sufficient number of shares of Common Stock to comply with such
requirement.

                    (iv)
All calculations under this Section 3 shall be rounded up to the nearest
$0.00002 or whole share.

                    (v)
Whenever the Conversion Price is adjusted pursuant to Section 3 hereof,
the Obligor shall promptly mail to the Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.

                    (vi)
If (A) the Obligor shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Obligor shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock; (C) the Obligor shall authorize the
granting to all holders of the Common Stock rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Obligor shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which
the Obligor is a party, any sale or transfer of all or substantially all of the
assets of the Obligor, of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property; or (E) the Obligor shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Obligor; then, in each case, the Obligor shall cause to be
filed at each office or agency maintained for the purpose of conversion of this
Debenture, and shall cause to be mailed to the Holder at its last address as it
shall appear upon the stock books of the Obligor, at least twenty (20) calendar
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of the Common Stock of record
to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) 

7




the date on which such reclassification, consolidation, merger,
sale, transfer or share exchange is expected to become effective or close, and
the date as of which it is expected that holders of the Common Stock of record
shall be entitled to exchange their shares of the Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange, provided, that the failure to mail
such notice or any defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such notice. The
Holder is entitled to convert this Debenture during the 20-day calendar period
commencing the date of such notice to the effective date of the event triggering
such notice.

                    (vii)
In case of any (1) merger or consolidation of the Obligor or any subsidiary of
the Obligor with or into another Person, or (2) sale by the Obligor or any
subsidiary of the Obligor of more than one-half of the assets of the Obligor in
one or a series of related transactions, a Holder shall have the right to (A)
exercise any rights under Section 2(b), (B) convert the aggregate amount
of this Debenture then outstanding into the shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
Common Stock following such merger, consolidation or sale, and such Holder shall
be entitled upon such event or series of related events to receive such amount
of securities, cash and property as the shares of Common Stock into which such
aggregate principal amount of this Debenture could have been converted
immediately prior to such merger, consolidation or sales would have been
entitled, or (C) in the case of a merger or consolidation, require the surviving
entity to issue to the Holder a convertible Debenture with a principal amount
equal to the aggregate principal amount of this Debenture then held by such
Holder, plus all accrued and unpaid interest and other amounts owing thereon,
which such newly issued convertible Debenture shall have terms identical
(including with respect to conversion) to the terms of this Debenture, and shall
be entitled to all of the rights and privileges of the Holder of this Debenture
set forth herein and the agreements pursuant to which this Debentures were
issued. In the case of clause (C), the conversion price applicable for the newly
issued shares of convertible preferred stock or convertible Debentures shall be
based upon the amount of securities, cash and property that each share of Common
Stock would receive in such transaction and the Conversion Price in effect
immediately prior to the effectiveness or closing date for such transaction. The
terms of any such merger, sale or consolidation shall include such terms so as
to continue to give the Holder the right to receive the securities, cash and
property set forth in this Section upon any conversion or redemption following
such event. This provision shall similarly apply to successive such events.

          (d)
Other Provisions.

                    (i)
The Obligor covenants that it will at all times reserve and keep available out
of its authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of this Debenture and payment of interest on this
Debenture, each as herein provided, free from preemptive rights or any other
actual contingent purchase rights of persons other than the Holder, not less
than such number of shares of the Common Stock as shall (subject to any
additional requirements of the Obligor as to reservation of such shares set
forth in this Debenture) be issuable (taking into account the adjustments and
restrictions of Sections 2(b) and 3(c)) upon the conversion of the
outstanding principal amount of this Debenture and payment of interest
hereunder. The Obligor covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized, issued and fully
paid, nonassessable 

8




and, if the Underlying Shares Registration Statement has been
declared effective under the Securities Act, registered for public sale in
accordance with such Underlying Shares Registration Statement.

                    (ii)
Upon a conversion hereunder the Obligor shall not be required to issue stock
certificates representing fractions of shares of the Common Stock, but may if
otherwise permitted, make a cash payment in respect of any final fraction of a
share based on the Closing Bid Price at such time. If the Obligor elects not, or
is unable, to make such a cash payment, the Holder shall be entitled to receive,
in lieu of the final fraction of a share, one whole share of Common Stock.

                    (iii)
The issuance of certificates for shares of the Common Stock on conversion of
this Debenture shall be made without charge to the Holder thereof for any
documentary stamp or similar taxes that may be payable in respect of the issue
or delivery of such certificate, provided that the Obligor shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate upon conversion in a name other
than that of the Holder of such Debenture so converted and the Obligor shall not
be required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Obligor the
amount of such tax or shall have established to the satisfaction of the Obligor
that such tax has been paid.

                    (iv)
Nothing herein shall limit a Holder's right to pursue actual damages or declare
an Event of Default pursuant to Section 2 herein for the Obligor 's
failure to deliver certificates representing shares of Common Stock upon
conversion within the period specified herein and such Holder shall have the
right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief,
in each case without the need to post a bond or provide other security. The
exercise of any such rights shall not prohibit the Holder from seeking to
enforce damages pursuant to any other Section hereof or under applicable law.


                    (v)
In addition to any other rights available to the Holder, if the Obligor fails to
deliver to the Holder such certificate or certificates pursuant to Section
3(a)(i) by the fifth (5th) Trading Day after the Conversion Date,
and if after such fifth (5th) Trading Day the Holder purchases (in an
open market transaction or otherwise) Common Stock to deliver in satisfaction of
a sale by such Holder of the Underlying Shares which the Holder anticipated
receiving upon such conversion (a “Buy-In”), then the Obligor shall (A)
pay in cash to the Holder (in addition to any remedies available to or elected
by the Holder) the amount by which (x) the Holder's total purchase price
(including brokerage commissions, if any) for the Common Stock so purchased
exceeds (y) the product of (1) the aggregate number of shares of Common Stock
that such Holder anticipated receiving from the conversion at issue multiplied
by (2) the market price of the Common Stock at the time of the sale giving rise
to such purchase obligation and (B) at the option of the Holder, either reissue
a Debenture in the principal amount equal to the principal amount of the
attempted conversion or deliver to the Holder the number of shares of Common
Stock that would have been issued had the Obligor timely complied with its
delivery requirements under Section 3(a)(i). For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of Debentures with respect to
which the market price of the Underlying Shares on the date of 

9




conversion was a total of $10,000 under clause (A) of the
immediately preceding sentence, the Obligor shall be required to pay the Holder
$1,000. The Holder shall provide the Obligor written notice indicating the
amounts payable to the Holder in respect of the Buy-In.

          Section
4. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms hereof must be
in writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) trading day after deposit
with a nationally 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 Holder: 	Cornell Capital Partners, LP 
	  	101 Hudson Street, Suite 3700 
	  	Jersey City, NJ 07303 
	  	Attention: 	Mark Angelo 
	  	Telephone: 	(201) 985-8300 
	  	  	  
	With a copy to: 	David Gonzalez, Esq. 
	  	101 Hudson Street – Suite 3700 
	  	Jersey City, NJ 07302 
	  	Telephone: 	(201) 985-8300 
	  	Facsimile: 	(201) 985-8266 


or at such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written
notice given to each other party three (3) business days prior to the
effectiveness of such change. Written confirmation of receipt (i) given by the
recipient of such notice, consent, waiver or other communication, (ii)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (iii) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of personal 

10




service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.

          Section
5. Definitions. For the purposes hereof, the following terms
shall have the following meanings:

          “Business
Day” means any day except Saturday, Sunday and any day which shall be a
federal legal holiday in the United States or a day on which banking
institutions are authorized or required by law or other government action to
close.

          “Change
of Control Transaction” means the occurrence of (a) an acquisition after the
date hereof by an individual or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Obligor, by
contract or otherwise) of in excess of fifty percent (50%) of the voting
securities of the Obligor (except that the acquisition of voting securities by
the Holder shall not constitute a Change of Control Transaction for purposes
hereof), (b) a replacement at one time or over time of more than one-half of the
members of the board of directors of the Obligor which is not approved by a
majority of those individuals who are members of the board of directors on the
date hereof (or by those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors was approved by
a majority of the members of the board of directors who are members on the date
hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of
the assets of the Obligor or any subsidiary of the Obligor in one or a series of
related transactions with or into another entity, or (d) the execution by the
Obligor of an agreement to which the Obligor is a party or by which it is bound,
providing for any of the events set forth above in (a), (b) or (c).

          “Commission”
means the Securities and Exchange Commission.

          “Common
Stock” means the common stock, par value $0.00002, of the Obligor and stock
of any other class into which such shares may hereafter be changed or
reclassified.

          “Conversion
Date” shall mean the date upon which the Holder gives the Obligor notice of
their intention to effectuate a conversion of this Debenture into shares of the
Company’s Common Stock as outlined herein.

          “Closing
Bid Price” means the price per share in the last reported trade of the
Common Stock on the OTC or on the exchange which the Common Stock is then listed
as quoted by Bloomberg, LP.

          “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

          “Original
Issue Date” shall mean the date of the first issuance of this Debenture
regardless of the number of transfers and regardless of the number of
instruments, which may be issued to evidence such Debenture.

          “Person”
means a corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.

11




          “Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

          “Trading
Day” means a day on which the shares of Common Stock are quoted on the OTC
or quoted or traded on such Subsequent Market on which the shares of Common
Stock are then quoted or listed; provided, that in the event that the shares of
Common Stock are not listed or quoted, then Trading Day shall mean a Business
Day.

          “Transaction
Documents” means the Securities Purchase Agreement or any other agreement
delivered in connection with the Securities Purchase Agreement, including,
without limitation, the Amended and Restated Security Agreement, the Irrevocable
Transfer Agent Instructions, the Registration Rights Agreement, the Escrow
Agreement and the Warrant.

          “Underlying
Shares” means the shares of Common Stock issuable upon conversion of this
Debenture or as payment of interest in accordance with the terms hereof.

          “Underlying
Shares Registration Statement” means a registration statement meeting the
requirements set forth in the Registration Rights Agreement, covering among
other things the resale of the Underlying Shares and naming the Holder as a
“selling stockholder” thereunder.

          “Volume
Weighted Average Price” means the volume weighted average prices of the
Common Stock on the OTC or on the exchange which the Common Stock is then listed
as quoted by Bloomberg, LP.

          Section
6. Except as expressly provided herein, no provision of this Debenture
shall alter or impair the obligations of the Obligor, which are absolute and
unconditional, to pay the principal of, interest and other charges (if any) on,
this Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed. This Debenture is a direct obligation of the Obligor. This Debenture
ranks pari passu with all other Debentures now or hereafter issued under the
terms set forth herein. As long as this Debenture is outstanding, the Obligor
shall not and shall cause their subsidiaries not to, without the consent of the
Holder, (i) amend its certificate of incorporation, bylaws or other charter
documents so as to adversely affect any rights of the Holder; (ii) repay,
repurchase or offer to repay, repurchase or otherwise acquire shares of its
Common Stock or other equity securities other than as to the Underlying Shares
to the extent permitted or required under the Transaction Documents; or (iii)
enter into any agreement with respect to any of the foregoing. 

          Section
7. This Debenture shall not entitle the Holder to any of the rights of
a stockholder of the Obligor, including without limitation, the right to vote,
to receive dividends and other distributions, or to receive any notice of, or to
attend, meetings of stockholders or any other proceedings of the Obligor, unless
and to the extent converted into shares of Common Stock in accordance with the
terms hereof.

          Section
8. If this Debenture is mutilated, lost, stolen or destroyed, the
Obligor shall execute and deliver, in exchange and substitution for and upon
cancellation of the mutilated Debenture, or in lieu of or in substitution for a
lost, stolen or destroyed Debenture, a new Debenture for the principal amount of
this Debenture so mutilated, lost, stolen or destroyed but 

12




only upon receipt of evidence of such loss, theft or
destruction of such Debenture, and of the ownership hereof, and indemnity, if
requested, all reasonably satisfactory to the Obligor.

          Section
9. No indebtedness of the Obligor is senior to this Debenture in right
of payment, whether with respect to interest, damages or upon liquidation or
dissolution or otherwise. Without the Holder’s consent, the Obligor will not and
will not permit any of their subsidiaries to, directly or indirectly, enter
into, create, incur, assume or suffer to exist any indebtedness of any kind, on
or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits there from that is senior in
any respect to the obligations of the Obligor under this Debenture.

          Section
10. This Debenture shall be governed by and construed in accordance
with the laws of the State of New Jersey, without giving effect to conflicts of
laws thereof. Each of the parties consents to the jurisdiction of the Superior
Courts of the State of New Jersey sitting in Hudson County, New Jersey and the
U.S. District Court for the District of New Jersey sitting in Newark, New Jersey
in connection with any dispute arising under this Debenture and hereby waives,
to the maximum extent permitted by law, any objection, including any objection
based on forum non conveniens to the bringing of any such proceeding in
such jurisdictions. 

          Section
11. If the Obligor fails to strictly comply with the terms of this
Debenture, then the Obligor shall reimburse the Holder promptly for all fees,
costs and expenses, including, without limitation, attorneys’ fees and expenses
incurred by the Holder in any action in connection with this Debenture,
including, without limitation, those incurred: (i) during any workout, attempted
workout, and/or in connection with the rendering of legal advice as to the
Holder’s rights, remedies and obligations, (ii) collecting any sums which become
due to the Holder, (iii) defending or prosecuting any proceeding or any
counterclaim to any proceeding or appeal; or (iv) the protection, preservation
or enforcement of any rights or remedies of the Holder.

          Section
12. Any waiver by the Holder of a breach of any provision of this
Debenture shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Debenture. The failure of the Holder to insist upon strict adherence to any term
of this Debenture on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Debenture. Any waiver must be in
writing.

          Section
13. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Obligor covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Obligor from paying all or any portion of the
principal of or interest on this Debenture as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the 

13




performance of this indenture, and the Obligor (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

          Section
14. Whenever any payment or other obligation hereunder shall be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.

          Section
15. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

[REMAINDER OF PAGE INTENTIONLLY LEFT BLANK]

14




IN WITNESS WHEREOF, the Obligor has caused this Secured
Convertible Debenture to be duly executed by a duly authorized officer as of the
date set forth above.

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


15




EXHIBIT “A”

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert the
Debenture)

TO:

          The
undersigned hereby irrevocably elects to convert $ ________________________ of
the principal amount of the above Debenture into Shares of Common Stock of Cyop
Systems International, Inc., according to the conditions stated therein, as of
the Conversion Date written below.

	Conversion Date:   	  
	Applicable Conversion Price: 	  
	Signature:   	  
	Name:     	  
	Address:     	  
	Amount to be converted: 	$ 
	Amount of Debenture unconverted:
        	$ 

	Conversion Price per share: 	$ 
	Number of shares of Common Stock to
      be issued: 	    

	Please issue the shares of Common Stock
      in the following name and to the following address:  
        	        



	Issue to:     	  
	Authorized Signature: 	  
	Name:     	  
	Title:     	  
	Phone Number:   	  
	Broker DTC Participant Code: 	  
	Account Number: