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






AMENDED AND RESTATED

SECURITY AGREEMENT

          THIS
SECURITY AGREEMENT (the “Agreement”), is entered into and made
effective as of December 15, 2005, by and between CYOP SYSTEMS INTERNATIONAL,
INC., a Nevada corporation with its principal place of business located at
1090 Homer Street, Suite 390, Vancouver, British Columbia, V6B2W9 (the
“Company”), and the BUYER(S) listed on Schedule I attached to the
Securities Purchase Agreement dated the date hereof (the “Secured
Party”).

          WHEREAS,
the Company has issued and sold to the Buyer(s) Six Hundred Fifty Thousand
Dollars ($650,000) of secured convertible debentures (the “Prior
Securities”) pursuant to which Nineteen Thousand Four Hundred Forty Six
Dollars and Fifty Eight Cents ($19,446.58) in accrued interest is due and
outstanding under the Prior Securities, issued pursuant to that August 30, 2005
Securities Purchase Agreement (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 a corresponding UCC-1 with the Nevada Secretary of State on August 31,
2005 ( filing No. 2005027194-2) and a 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 therein) to secure the Company’s
obligations under Prior Securities, the August 2005 Securities Purchase
Agreement, August 2005 Convertible Debentures, August 2005 Investor Registration
Rights Agreement, and August 2005 Irrevocable Transfer Agent Instructions
(collectively, the “August 2005 Transaction Documents”), or any
other obligations of the Company to the Buyer;

          WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained
in the Securities Purchase Agreement dated the date hereof (the “Securities
Purchase Agreement”), the secured Convertible Debentures dated the
date hereof (the “Convertible Debentures”), the Investor’s
Registration Rights Agreement (the “Investor’s Registration Rights
Agreement”), and the Irrevocable Transfer Agent Instructions dated the
date hereof (the 




“Irrevocable Transfer Agent Instructions”)
(collectively, the “Transaction Documents”), the Secured Party shall
surrender the Prior Securities for consideration consisting solely of the
surrender of the Prior Securities and be replaced with a Secured Convertible
Debentures in the principal amounts of Six Hundred Sixty Nine Thousand Four
Hundred Forty Six Dollars and Fifty Eight Cents ($669,446.58), issued pursuant
to the Transaction Documents. Simultaneously, the Company shall issue and sell
to the Buyer(s) and the Buyer(s) shall purchase an additional One Million Three
Hundred Fifty Thousand Dollars ($1,350,000) of secured Convertible Debentures in
accordance with the terms and conditions of the Securities Purchase Agreement
for a total purchase price of One Million Three Hundred Fifty Thousand Dollars
($1,350,000); and

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

ARTICLE 1.

DEFINITIONS AND INTERPRETATIONS

          Section
1.1. Recitals.

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

          Section
1.2. Interpretations. 

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

          Section
1.3. Obligations Secured.

          The
obligations secured hereby are any and all obligations of the Company now
existing or hereinafter incurred to the Secured Party, whether oral or written
and whether arising before, on or after the date hereof including, without
limitation, those obligations of the Company to the Secured Party under this
Agreement, the Transaction Documents, and any other amounts now or hereafter
owed to the Secured Party by the Company thereunder or hereunder (collectively,
the “Obligations”).

ARTICLE 2.

PLEDGED PROPERTY, ADMINISTRATION OF COLLATERAL

AND TERMINATION OF SECURITY INTEREST

          Section
2.1. Pledged Property.

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

2




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

          Section
2.2. Rights; Interests; Etc.

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

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

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

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

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

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

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

                    (c)
An “Event of Default” shall be deemed to have occurred under this
Agreement upon an Event of Default under the Convertible Debentures.

3




ARTICLE 3.

ATTORNEY-IN-FACT; PERFORMANCE

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

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

Section 3.2. Secured Party May Perform.

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

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

Section 4.1. Authorization; Enforceability.

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

Section 4.2. Ownership of Pledged Property.

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

4




ARTICLE 5.

DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL

Section 5.1. Default and Remedies.

                    (a)
If an Event of Default occurs, then in each such case the Secured Party may
declare the Obligations to be due and payable immediately, by a notice in
writing to the Company, and upon any such declaration, the Obligations shall
become immediately due and payable.

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

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

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

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

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

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

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

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

5




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

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

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

          Section
5.3. Proofs of Claim.

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

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

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

          Section
5.4. Duties Regarding Pledged Property.

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

6




ARTICLE 6.

AFFIRMATIVE COVENANTS

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

          Section
6.1. Existence, Properties, Etc.

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

          Section
6.2. Financial Statements and Reports.

          The
Company shall furnish to the Secured Party within a reasonable time such
financial data as the Secured Party may reasonably request, including, without
limitation, the following:

                    (a)
The balance sheet of the Company as of the close of each fiscal year, the
statement of earnings and retained earnings of the Company as of the close of
such fiscal year, and statement of cash flows for the Company for such fiscal
year, all in reasonable detail, prepared in accordance with generally accepted
accounting principles consistently applied, certified by the chief executive and
chief financial officers of the Company as being true and correct and
accompanied by a certificate of the chief executive and chief financial officers
of the Company, stating that the Company has kept, observed, performed and
fulfilled each covenant, term and condition of this Agreement during such fiscal
year and that no Event of Default hereunder has occurred and is continuing, or
if an Event of Default has occurred and is continuing, specifying the nature of
same, the period of existence of same and the action the Company proposes to
take in connection therewith;

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

7




                    (c)
Copies of all accountants' reports and accompanying financial reports submitted
to the Company by independent accountants in connection with each annual
examination of the Company.

          Section
6.3. Accounts and Reports.

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

                    (a)
as soon as available, a copy of any notice or other communication alleging any
nonpayment or other material breach or default, or any foreclosure or other
action respecting any material portion of its assets and properties, received
respecting any of the indebtedness of the Company in excess of Fifty Thousand
Dollars ($50,000) (other than the Obligations), or any demand or other request
for payment under any guaranty, assumption, purchase agreement or similar
agreement or arrangement respecting the indebtedness or obligations of others in
excess of Fifty Thousand Dollars ($50,000), including any received from any
person acting on behalf of the Secured Party or beneficiary thereof; and

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

          Section
6.4. Maintenance of Books and Records; Inspection.

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

          Section
6.5. Maintenance and Insurance.

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

                    (b)
The Company shall maintain or cause to be maintained, at its own expense,
insurance in form, substance and amounts (including deductibles), which the
Company deems reasonably necessary to the Company’s business, (i) adequate to
insure all assets and properties of the Company, which assets and properties are
of a character usually insured by persons engaged in the same or similar
business against loss or damage resulting from fire or other risks included in
an extended coverage policy; (ii) against public liability and other tort 

8




claims that may be incurred by the Company; (iii) as may be
required by the Transaction Documents and/or applicable law and (iv) as may be
reasonably requested by Secured Party, all with adequate, financially sound and
reputable insurers.

          Section
6.6. Contracts and Other Collateral.

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

          Section
6.7. Defense of Collateral, Etc.

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

          Section
6.8. Payment of Debts, Taxes, Etc.

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

          Section
6.9. Taxes and Assessments; Tax Indemnity.

          The
Company shall (a) file all tax returns and appropriate schedules thereto that
are required to be filed under applicable law, prior to the date of delinquency,
(b) pay and discharge all taxes, assessments and governmental charges or levies
imposed upon the Company, upon its income and profits or upon any properties
belonging to it, prior to the date on which penalties attach thereto, and (c)
pay all taxes, assessments and governmental charges or levies that, if unpaid,
might become a lien or charge upon any of its properties; provided,
however, that the Company in good faith may contest any such tax,
assessment, governmental charge or levy described in the foregoing clauses (b)
and (c) so long as appropriate reserves are maintained with respect thereto.


          Section
6.10. Compliance with Law and Other Agreements.

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

9




limiting the foregoing, the Company shall pay all of its
indebtedness promptly in accordance with the terms thereof.

          Section
6.11. Notice of Default.

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

          Section
6.12. Notice of Litigation.

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

ARTICLE 7. 

NEGATIVE COVENANTS

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

          Section
7.1. Indebtedness.

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

          Section
7.2. Liens and Encumbrances.

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

10




          Section
7.3. Certificate of Incorporation, By-Laws, Mergers, Consolidations,
Acquisitions and Sales.

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

          Section
7.4. Management, Ownership.

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

          Section
7.5. Dividends, Etc.

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

          Section
7.6. Guaranties; Loans.

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

          Section
7.7. Debt.

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

11




          Section
7.8. Conduct of Business.

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

          Section
7.9. Places of Business.

          The
location of the Company’s chief place of business is 1090 Homer Street, Suite
390, Vancouver, British Columbia, V6B2W9. The Company shall not change the
location of its chief place of business, chief executive office or any place of
business disclosed to the Secured Party or move any of the Pledged Property from
its current location without thirty (30) days' prior written notice to the
Secured Party in each instance. 

ARTICLE 8. 

MISCELLANEOUS

          Section
8.1. Notices.

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

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


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	And if to the Company: 	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 


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

          Section
8.2. Severability.

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

          Section
8.3. Expenses.

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

          Section
8.4. Waivers, Amendments, Etc.

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

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instrument in writing specifying such waiver, amendment, change
or modification and signed by the Secured Party.

          Section
8.5. Continuing Security Interest.

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

          Section
8.6. Independent Representation.

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

          Section
8.7. Applicable Law: Jurisdiction.

          This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of 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.

          Section
8.8. Waiver of Jury Trial.

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

          Section
8.9. Entire Agreement.

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

	 	COMPANY: 
	 	CYOP SYSTEMS INTERNATIONAL,
      INC. 
	 	    
	 	By:
      _____________________________________
	 	Name Mitch White 
	 	Title: President 
	 	    
	 	    
	 	SECURED PARTY: 
	 	CORNELL CAPITAL PARTNERS, LP
    
	 	    
	 	By: Yorkville Advisors,
      LLC 
	 	Its: General Partner
  
	 	    
	 	By:
      _____________________________________
	 	Name: Mark Angelo 
	 	Title: Portfolio Manager
  


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EXHIBIT A
DEFINITION OF PLEDGED
PROPERTY

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

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

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

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

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

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

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

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

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