EXHIBIT 4.12

                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

      Intellectual  Property  Security  Agreement (this  "Agreement" dated as of
September 23, 2004, by and among Cyberlux Corporation, a Nevada corporation (the
"Company"),  and the  secured  parties  signatory  hereto  and their  respective
endorsees, transferees and assigns (collectively, the "Secured Party").

                              W I T N E S S E T H :

      WHEREAS,  pursuant  to a  Securities  Purchase  Agreement,  dated the date
hereof,  between  Company  and the  Secured  Party (the  "Purchase  Agreement"),
Company  has  agreed to issue to the  Secured  Party and the  Secured  Party has
agreed to purchase  from Company  certain of Company's  10% Secured  Convertible
Notes, due two years from the date of issue (the "Notes"), which are convertible
into shares of Company's  Common  Stock,  par value $.001 per share (the "Common
Stock"). In connection therewith,  Company shall issue the Secured Party certain
Common Stock purchase warrants (the "Warrants"); and

      WHEREAS,  in order to induce  the  Secured  Party to  purchase  the Notes,
Company has agreed to execute and  deliver to the Secured  Party this  Agreement
for the  benefit  of the  Secured  Party  and to  grant  to it a first  priority
security interest in certain Intellectual Property (defined below) of Company to
secure the prompt payment, performance and discharge in full of all of Company's
obligations  under the Notes and  exercise  and  discharge  in full of Company's
obligations under the Warrants; and

      NOW,  THEREFORE,  in consideration of the agreements  herein contained and
for other good and valuable consideration,  the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:

      1. Defined Terms. Unless otherwise defined herein, terms which are defined
in the  Purchase  Agreement  and used herein are so used as so defined;  and the
following terms shall have the following meanings:

            "Software Intellectual Property" shall mean:

            (a) all software  programs  (including all source code,  object code
and all related  applications  and data  files),  whether  now owned,  upgraded,
enhanced, licensed or leased or hereafter acquired by the Company, above;

            (b) all  computers  and  electronic  data  processing  hardware  and
firmware associated therewith;

            (c)  all  documentation  (including  flow  charts,  logic  diagrams,
manuals, guides and specifications) with respect to such software,  hardware and
firmware described in the preceding clauses (a) and (b); and

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            (d) all  rights  with  respect to all of the  foregoing,  including,
without limitation, any and all upgrades,  modifications,  copyrights, licenses,
options,   warranties,   service  contracts,   program  services,  test  rights,
maintenance  rights,  support  rights,  improvement  rights,  renewal rights and
indemnifications   and   substitutions,   replacements,   additions,   or  model
conversions of any of the foregoing.

            "Copyrights"  shall  mean  (a)  all  copyrights,  registrations  and
applications  for  registration,   issued  or  filed,  including  any  reissues,
extensions or renewals thereof, by or with the United States Copyright Office or
any similar  office or agency of the United States,  any state  thereof,  or any
other country or political  subdivision  thereof, or otherwise,  including,  all
rights  in  and  to  the  material  constituting  the  subject  matter  thereof,
including, without limitation, any referred to in Schedule B hereto, and (b) any
rights in any material  which is  copyrightable  or which is protected by common
law,  United  States  copyright  laws or  similar  laws or any law of any State,
including, without limitation, any thereof referred to in Schedule B hereto.

            "Copyright  License"  shall  mean any  agreement,  written  or oral,
providing for a grant

            by the  Company of any right in any  Copyright,  including,  without
limitation, any thereof referred to in Schedule B hereto.

            "Intellectual  Property"  shall  means,  collectively,  the Software
Intellectual Property, Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses and Trade Secrets.

            "Obligations"  means all of the  Company's  obligations  under  this
Agreement  and the  Notes,  in each case,  whether  now or  hereafter  existing,
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or  unliquidated,  whether or not jointly owed with  others,  and whether or not
from time to time  decreased or  extinguished  and later  decreased,  created or
incurred,  and all or any portion of such  obligations or  liabilities  that are
paid,  to the  extent all or any part of such  payment  is avoided or  recovered
directly  or  indirectly  from the  Secured  Party as a  preference,  fraudulent
transfer  or  otherwise  as  such  obligations  may  be  amended,  supplemented,
converted, extended or modified from time to time.

            "Patents"  shall mean (a) all letters patent of the United States or
any other country or any  political  subdivision  thereof,  and all reissues and
extensions thereof,  including,  without limitation,  any thereof referred to in
Schedule B hereto,  and (b) all  applications  for letters  patent of the United
States and all divisions, continuations and continuations-in-part thereof or any
other country or any political subdivision,  including,  without limitation, any
thereof referred to in Schedule B hereto.

            "Patent License" shall mean all agreements, whether written or oral,
providing for the grant by the Company of any right to manufacture,  use or sell
any invention covered by a Patent,  including,  without limitation,  any thereof
referred to in Schedule B hereto.

            "Security Agreement" shall mean the a Security Agreement,  dated the
date hereof between Company and the Secured Party.


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<PAGE>

            "Trademarks" shall mean (a) all trademarks,  trade names,  corporate
names, company names,  business names,  fictitious business names, trade styles,
service marks, logos and other source or business identifiers,  and the goodwill
associated  therewith,  now  existing  or  hereafter  adopted or  acquired,  all
registrations  and  recordings  thereof,  and  all  applications  in  connection
therewith,  whether in the United States  Patent and Trademark  Office or in any
similar  office or agency of the United  States,  any state thereof or any other
country or any political subdivision thereof, or otherwise,  including,  without
limitation,  any thereof referred to in Schedule B hereto, and (b) all reissues,
extensions or renewals thereof.

            "Trademark  License"  shall  mean any  agreement,  written  or oral,
providing  for the  grant by the  Company  of any  right  to use any  Trademark,
including, without limitation, any thereof referred to in Schedule B hereto.

            "Trade  Secrets"  shall mean common law and statutory  trade secrets
and all other confidential or proprietary or useful information and all know-how
obtained by or used in or  contemplated  at any time for use in the  business of
the Company (all of the foregoing being  collectively  called a "Trade Secret"),
whether or not such Trade Secret has been reduced to a writing or other tangible
form,  including all documents and things embodying,  incorporating or referring
in any way to such Trade Secret, all Trade Secret licenses, including each Trade
Secret license referred to in Schedule B hereto,  and including the right to sue
for  and to  enjoin  and  to  collect  damages  for  the  actual  or  threatened
misappropriation  of any Trade Secret and for the breach or  enforcement  of any
such Trade Secret license.

      2. Grant of Security  Interest.  In  accordance  with  Section 3(m) of the
Security Agreement,  to secure the complete and timely payment,  performance and
discharge in full,  as the case may be, of all of the  Obligations,  the Company
hereby, unconditionally and irrevocably, pledges, grants and hypothecates to the
Secured Party, a continuing  security interest in, a continuing first lien upon,
an  unqualified  right to possession  and  disposition of and a right of set-off
against,  in each  case  to the  fullest  extent  permitted  by law,  all of the
Company's right,  title and interest of whatsoever kind and nature in and to the
Intellectual Property (the "Security Interest").

      3.  Representations  and  Warranties.  The Company  hereby  represents and
warrants, and covenants and agrees with, the Secured Party as follows:

            (a) The Company has the requisite  corporate  power and authority to
enter into this Agreement and otherwise to carry out its obligations thereunder.
The execution, delivery and performance by the Company of this Agreement and the
filings  contemplated  therein have been duly authorized by all necessary action
on the part of the  Company and no further  action is  required by the  Company.
This Agreement  constitutes a legal, valid and binding obligation of the Company
enforceable  in  accordance  with its  terms,  except as  enforceability  may be
limited by bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
affecting the enforcement of creditor's rights generally.


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            (b) The  Company  represents  and  warrants  that it has no place of
business or offices where its  respective  books of account and records are kept
(other than  temporarily  at the offices of its  attorneys  or  accountants)  or
places where the Intellectual Property is stored or located, except as set forth
on Schedule A attached hereto;

            (c) The  Company  is the  sole  owner of the  Intellectual  Property
(except for non-exclusive licenses granted by the Company in the ordinary course
of business),  free and clear of any liens,  security  interests,  encumbrances,
rights or claims,  and is fully authorized to grant the Security Interest in and
to pledge the Intellectual Property. There is not on file in any governmental or
regulatory  authority,   agency  or  recording  office  an  effective  financing
statement,  security agreement,  license or transfer or any notice of any of the
foregoing  (other than those that have been filed in favor of the Secured  Party
pursuant  to this  Agreement)  covering  or  affecting  any of the  Intellectual
Property.  So long as this Agreement  shall be in effect,  the Company shall not
execute  and shall  not  knowingly  permit  to be on file in any such  office or
agency any such financing  statement or other document or instrument  (except to
the extent filed or recorded in favor of the Secured Party pursuant to the terms
of this Agreement), except for a financing statement covering assets acquired by
the Company after the date hereof,  provided that the value of the  Intellectual
Property  covered by this Agreement along with the Collateral (as defined in the
Security Agreement) is equal to at least 150% of the Obligations.

            (d) The Company shall at all times maintain its books of account and
records relating to the Intellectual Property at its principal place of business
and its Intellectual  Property at the locations set forth on Schedule A attached
hereto and may not relocate such books of account and records unless it delivers
to the  Secured  Party at least 30 days  prior to such  relocation  (i)  written
notice of such relocation and the new location thereof (which must be within the
United  States) and (ii) evidence that the necessary  documents  have been filed
and recorded and other steps have been taken to perfect the Security Interest to
create in favor of the Secured  Party  valid,  perfected  and  continuing  first
priority liens in the Intellectual  Property to the extent they can be perfected
through such filings.

            (e) This  Agreement  creates in favor of the  Secured  Party a valid
security  interest  in  the  Intellectual  Property  securing  the  payment  and
performance of the Obligations and, upon making the filings required  hereunder,
a perfected first priority security  interest in such  Intellectual  Property to
the extent that it can be perfected through such filings.

            (f) Upon request of the Secured Party, the Company shall execute and
deliver  any and all  agreements,  instruments,  documents,  and  papers  as the
Secured Party may request to evidence the Secured Party's  security  interest in
the  Intellectual  Property  and the  goodwill  and general  intangibles  of the
Company relating thereto or represented thereby, and the Company hereby appoints
the Secured Party its attorney-in-fact to execute and file all such writings for
the  foregoing  purposes,  all acts of such attorney  being hereby  ratified and
confirmed;  such power being coupled with an interest is  irrevocable  until the
Obligations have been fully satisfied and are paid in full.

            (g) The execution,  delivery and  performance of this Agreement does
not conflict with or cause a breach or default, or an event that with or without
the passage of time or notice,  shall constitute a breach or default,  under any
agreement  to which the Company is a party or by which the Company is bound.  No
consent (including,  without limitation,  from stock holders or creditors of the
Company) is required  for the Company to enter into and perform its  obligations
hereunder.


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            (h) The Company  shall at all times  maintain the liens and Security
Interest  provided for hereunder as valid and perfected first priority liens and
security  interests  in the  Intellectual  Property  to the  extent  they can be
perfected by filing in favor of the Secured  Party until this  Agreement and the
Security Interest  hereunder shall terminate pursuant to Section 11. The Company
hereby agrees to defend the same against any and all persons.  The Company shall
safeguard and protect all  Intellectual  Property for the account of the Secured
Party.  Without limiting the generality of the foregoing,  the Company shall pay
all  fees,  taxes and other  amounts  necessary  to  maintain  the  Intellectual
Property and the Security Interest  hereunder,  and the Company shall obtain and
furnish to the  Secured  Party from time to time,  upon  demand,  such  releases
and/or  subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.

            (i) The Company will not transfer,  pledge,  hypothecate,  encumber,
license  (except  for  non-exclusive  licenses  granted  by the  Company  in the
ordinary  course  of  business),  sell  or  otherwise  dispose  of  any  of  the
Intellectual Property without the prior written consent of the Secured Party.

            (j) The Company shall,  within ten (10) days of obtaining  knowledge
thereof,  advise the  Secured  Party  promptly,  in  sufficient  detail,  of any
substantial  change in the Intellectual  Property,  and of the occurrence of any
event  which  would  have  a  material  adverse  effect  on  the  value  of  the
Intellectual Property or on the Secured Party's security interest therein.

            (k)  The   Company   shall   permit  the   Secured   Party  and  its
representatives and agents to inspect the Intellectual Property at any time, and
to make  copies of records  pertaining  to the  Intellectual  Property as may be
requested by the Secured Party from time to time.

            (l)  The  Company  will  take  all  steps  reasonably  necessary  to
diligently pursue and seek to preserve,  enforce and collect any rights, claims,
causes  of  action  and  accounts  receivable  in  respect  of the  Intellectual
Property.  (m) The Company shall promptly notify the Secured Party in sufficient
detail upon becoming aware of any  attachment,  garnishment,  execution or other
legal  process  levied  against  any  Intellectual  Property  and of  any  other
information  received by the Company that may materially affect the value of the
Intellectual  Property,  the Security Interest or the rights and remedies of the
Secured Party hereunder.

            (n) All information heretofore,  herein or hereafter supplied to the
Secured  Party by or on behalf of the Company with  respect to the  Intellectual
Property  is  accurate  and  complete  in all  material  respects as of the date
furnished.

            (o)  Schedule  A  attached  hereto  contains  a  list  of all of the
subsidiaries of Company.


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            (p)  Schedule B  attached  hereto  includes  all  Licenses,  and all
Patents and Patent Licenses,  if any, owned by the Company in its own name as of
the date  hereof.  Schedule  B hereto  includes  all  Trademarks  and  Trademark
Licenses,  if any,  owned by the Company in its own name as of the date  hereof.
Schedule B hereto includes all Copyrights and Copyright Licenses,  if any, owned
by the Company in its own name as of the date hereof. Schedule B hereto includes
all Trade Secrets and Trade Secret Licenses,  if any, owned by the Company as of
the date hereof. To the best of the Company's knowledge,  each License,  Patent,
Trademark,   Copyright  and  Trade  Secret  is  valid,  subsisting,   unexpired,
enforceable and has not been abandoned.  Except as set forth in Schedule B, none
of such  Licenses,  Patents,  Trademarks,  Copyrights  and Trade  Secrets is the
subject of any  licensing or franchise  agreement.  To the best of the Company's
knowledge,   no  holding,   decision  or  judgment  has  been  rendered  by  any
Governmental  Body which would  limit,  cancel or question  the  validity of any
License,  Patent,  Trademark,  Copyright  and  Trade  Secrets  .  No  action  or
proceeding  is pending (i) seeking to limit,  cancel or question the validity of
any License,  Patent,  Trademark,  Copyright or Trade Secret,  or (ii) which, if
adversely  determined,  would have a material adverse effect on the value of any
License, Patent, Trademark,  Copyright or Trade Secret. The Company has used and
will continue to use for the duration of this Agreement, proper statutory notice
in  connection  with  its use of the  Patents,  Trademarks  and  Copyrights  and
consistent  standards  of quality in products  leased or sold under the Patents,
Trademarks and Copyrights.

            (q) With respect to any Intellectual Property:

                  (i)   such  Intellectual  Property is  subsisting  and has not
                        been adjudged invalid or  unenforceable,  in whole or in
                        part;

                  (ii)  such Intellectual Property is valid and enforceable;

                  (iii) the   Company  has  made  all   necessary   filings  and
                        recordations   to   protect   its   interest   in   such
                        Intellectual  Property,  including,  without limitation,
                        recordations  of all of its  interests  in the  Patents,
                        Patent  Licenses,  Trademarks and Trademark  Licenses in
                        the United  States  Patent and  Trademark  Office and in
                        corresponding  offices  throughout  the  world  and  its
                        claims to the Copyrights  and Copyright  Licenses in the
                        United  States  Copyright  Office  and in  corresponding
                        offices throughout the world;

                  (iv)  other than as set forth in  Schedule  B, the  Company is
                        the  exclusive  owner  of the  entire  and  unencumbered
                        right,  title and  interest in and to such  Intellectual
                        Property and no claim has been made that the use of such
                        Intellectual  Property  infringes on the asserted rights
                        of any third party; and

                  (v)   the Company has  performed  and will continue to perform
                        all acts and has paid  all  required  fees and  taxes to
                        maintain each and every item of Intellectual Property in
                        full  force  and  effect   throughout   the  world,   as
                        applicable.


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<PAGE>

            (r) Except  with  respect to any  Trademark  or  Copyright  that the
Company  shall  reasonably  determine  is of  negligible  economic  value to the
Company, the Company shall:

                  (i) maintain  each  Trademark and Copyright in full force free
            from any claim of abandonment  for non-use,  maintain as in the past
            the quality of products and services offered under such Trademark or
            Copyright;  employ such Trademark or Copyright with the  appropriate
            notice  of  registration;  not  adopt  or  use  any  mark  which  is
            confusingly  similar or a colorable  imitation of such  Trademark or
            Copyright unless the Secured Party shall obtain a perfected security
            interest in such mark pursuant to this  Agreement;  and not (and not
            permit  any  licensee  or  sublicensee  thereof  to) do  any  act or
            knowingly  omit to do any act whereby any Trademark or Copyright may
            become invalidated;

                  (ii) not,  except  with  respect to any  Patent  that it shall
            reasonably  determine is of negligible  economic value to it, do any
            act, or omit to do any act,  whereby any Patent may become abandoned
            or dedicated; and

                  (iii) notify the Secured Party immediately if it knows, or has
            reason to know, that any application or registration relating to any
            Patent, Trademark or Copyright may become abandoned or dedicated, or
            of any adverse  determination  or  development  (including,  without
            limitation,  the  institution  of,  or  any  such  determination  or
            development  in,  any  proceeding  in the United  States  Patent and
            Trademark  Office,  United States  Copyright  Office or any court or
            tribunal in any  country)  regarding  its  ownership  of any Patent,
            Trademark  or Copyright or its right to register the same or to keep
            and maintain the same.

            (s)  Whenever  the  Company,  either by itself or through any agent,
employee,  licensee or designee,  shall file an application for the registration
of any  Patent,  Trademark  or  Copyright  with the  United  States  Patent  and
Trademark Office, United States Copyright Office or any similar office or agency
in any other country or any political  subdivision  thereof or acquire rights to
any new Patent,  Trademark or Copyright  whether or not registered,  report such
filing to the Secured  Party within five business days after the last day of the
fiscal quarter in which such filing occurs.

            (t) The  Company  shall take all  reasonable  and  necessary  steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark  Office,  United States  Copyright Office or any similar office or
agency in any other country or any political  subdivision  thereof,  to maintain
and pursue each  application  (and to obtain the relevant  registration)  and to
maintain each registration of the Patents, Trademarks and Copyrights, including,
without  limitation,  filing of applications for renewal,  affidavits of use and
affidavits of incontestability.


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<PAGE>


            (u) In the event that any Patent, Trademark or Copyright included in
the Intellectual  Property is infringed,  misappropriated  or diluted by a third
party,  promptly  notify the Secured  Party  after it learns  thereof and shall,
unless it shall reasonably determine that such Patent, Trademark or Copyright is
of negligible economic value to it, which determination it shall promptly report
to the  Secured  Party,  promptly  sue  for  infringement,  misappropriation  or
dilution, to seek injunctive relief where appropriate and to recover any and all
damages for such infringement,  misappropriation or dilution, or take such other
actions as it shall  reasonably  deem  appropriate  under the  circumstances  to
protect such Patent,  Trademark or Copyright. If the Company lacks the financial
resources  to comply with this  Section  3(t),  the Company  shall so notify the
Secured Party and shall cooperate fully with any enforcement  action  undertaken
by the Secured Party on behalf of the Company.

      4. Defaults. The following events shall be "Events of Default":

            (a) The  occurrence of an Event of Default (as defined in the Notes)
under the Notes;

            (b) Any  representation or warranty of the Company in this Agreement
or in the Security  Agreement shall prove to have been incorrect in any material
respect when made;

            (c) The  failure by the  Company  to  observe or perform  any of its
obligations  hereunder  or in the  Security  Agreement  for ten (10) days  after
receipt by the Company of notice of such failure from the Secured Party; and

            (d) Any breach of, or default under, the Warrants.

      5. Duty To Hold In Trust.  Upon the occurrence of any Event of Default and
at any time  thereafter,  the Company shall,  upon receipt by it of any revenue,
income or other sums subject to the Security Interest,  whether payable pursuant
to the Notes or otherwise,  or of any check,  draft,  note,  trade acceptance or
other instrument  evidencing an obligation to pay any such sum, hold the same in
trust for the Secured  Party and shall  forthwith  endorse and transfer any such
sums or  instruments,  or both,  to the  Secured  Party for  application  to the
satisfaction of the Obligations.

      6. Rights and  Remedies  Upon  Default.  Upon  occurrence  of any Event of
Default and at any time  thereafter,  the Secured  Party shall have the right to
exercise all of the remedies  conferred  hereunder and under the Notes,  and the
Secured  Party shall have all the rights and  remedies of a secured  party under
the UCC and/or any other  applicable law (including the Uniform  Commercial Code
of any jurisdiction in which any Intellectual Property is then located). Without
limitation, the Secured Party shall have the following rights and powers:

            (a) The Secured Party shall have the right to take possession of the
Intellectual Property and, for that purpose,  enter, with the aid and assistance
of any  person,  any  premises  where  the  Intellectual  Property,  or any part
thereof, is or may be placed and remove the same, and the Company shall assemble
the  Intellectual  Property and make it available to the Secured Party at places
which the  Secured  Party  shall  reasonably  select,  whether at the  Company's
premises or elsewhere,  and make available to the Secured  Party,  without rent,
all of the Company's  respective  premises and facilities for the purpose of the
Secured  Party  taking  possession  of,  removing  or putting  the  Intellectual
Property in saleable or disposable form.


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<PAGE>

            (b) The Secured  Party shall have the right to operate the  business
of the  Company  using the  Intellectual  Property  and shall  have the right to
assign,  sell, lease or otherwise  dispose of and deliver all or any part of the
Intellectual  Property,  at public or private sale or otherwise,  either with or
without special conditions or stipulations,  for cash or on credit or for future
delivery,  in such parcel or parcels and at such time or times and at such place
or places,  and upon such terms and  conditions  as the  Secured  Party may deem
commercially reasonable,  all without (except as shall be required by applicable
statute  and cannot be  waived)  advertisement  or demand  upon or notice to the
Company  or right of  redemption  of the  Company,  which are  hereby  expressly
waived. Upon each such sale, lease, assignment or other transfer of Intellectual
Property,  the Secured Party may,  unless  prohibited  by  applicable  law which
cannot be waived,  purchase all or any part of the  Intellectual  Property being
sold,  free from and discharged of all trusts,  claims,  right of redemption and
equities of the Company, which are hereby waived and released.

      7. Applications of Proceeds. The proceeds of any such sale, lease or other
disposition of the  Intellectual  Property  hereunder shall be applied first, to
the expenses of retaking,  holding, storing,  processing and preparing for sale,
selling, and the like (including,  without limitation, any taxes, fees and other
costs incurred in connection  therewith) of the  Intellectual  Property,  to the
reasonable  attorneys'  fees  and  expenses  incurred  by the  Secured  Party in
enforcing its rights  hereunder and in connection with  collecting,  storing and
disposing  of  the  Intellectual  Property,  and  then  to  satisfaction  of the
Obligations, and to the payment of any other amounts required by applicable law,
after which the Secured Party shall pay to the Company any surplus proceeds. If,
upon the sale,  license or other disposition of the Intellectual  Property,  the
proceeds  thereof are insufficient to pay all amounts to which the Secured Party
is legally  entitled,  the Company will be liable for the  deficiency,  together
with interest  thereon,  at the rate of 15% per annum (the "Default Rate"),  and
the  reasonable  fees of any attorneys  employed by the Secured Party to collect
such  deficiency.  To the extent permitted by applicable law, the Company waives
all claims,  damages and demands  against the Secured  Party  arising out of the
repossession,  removal,  retention or sale of the Intellectual Property,  unless
due to the gross negligence or willful misconduct of the Secured Party.

      8. Costs and Expenses.  The Company agrees to pay all out-of-pocket  fees,
costs and expenses  incurred in connection with any filing  required  hereunder,
including without limitation, any financing statements, continuation statements,
partial releases and/or  termination  statements related thereto or any expenses
of any searches reasonably required by the Secured Party. The Company shall also
pay all other claims and charges which in the reasonable  opinion of the Secured
Party might prejudice,  imperil or otherwise affect the Intellectual Property or
the Security  Interest therein.  The Company will also, upon demand,  pay to the
Secured  Party the  amount of any and all  reasonable  expenses,  including  the
reasonable fees and expenses of its counsel and of any experts and agents, which
the  Secured  Party may incur in  connection  with (i) the  enforcement  of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other  realization  upon,  any of the  Intellectual  Property,  or (iii)  the
exercise  or  enforcement  of any of the rights of the  Secured  Party under the
Notes. Until so paid, any fees payable hereunder shall be added to the principal
amount of the Notes and shall bear interest at the Default Rate.


                                       9
<PAGE>

      9.  Responsibility  for  Intellectual  Property.  The Company  assumes all
liabilities and responsibility in connection with all Intellectual Property, and
the  obligations  of the Company  hereunder  or under the Notes and the Warrants
shall in no way be affected or  diminished  by reason of the loss,  destruction,
damage or theft of any of the Intellectual  Property or its  unavailability  for
any reason.

      10. Security  Interest  Absolute.  All rights of the Secured Party and all
Obligations  of the  Company  hereunder,  shall be absolute  and  unconditional,
irrespective of: (a) any lack of validity or  enforceability  of this Agreement,
the Notes,  the Warrants or any agreement  entered into in  connection  with the
foregoing,  or any portion hereof or thereof; (b) any change in the time, manner
or place of  payment or  performance  of, or in any other term of, all or any of
the  Obligations,  or any other  amendment  or waiver of or any  consent  to any
departure from the Notes,  the Warrants or any other  agreement  entered into in
connection with the foregoing; (c) any exchange, release or nonperfection of any
of the  Intellectual  Property,  or any  release  or  amendment  or waiver of or
consent to departure from any other Intellectual  Property for, or any guaranty,
or any other security, for all or any of the Obligations;  (d) any action by the
Secured Party to obtain,  adjust,  settle and cancel in its sole  discretion any
insurance  claims or matters made or arising in connection with the Intellectual
Property;  or (e) any other  circumstance  which might otherwise  constitute any
legal or equitable  defense  available to the Company,  or a discharge of all or
any part of the Security  Interest granted hereby.  Until the Obligations  shall
have been paid and  performed  in full,  the rights of the  Secured  Party shall
continue even if the Obligations are barred for any reason,  including,  without
limitation, the running of the statute of limitations or bankruptcy. The Company
expressly waives  presentment,  protest,  notice of protest,  demand,  notice of
nonpayment  and  demand  for  performance.  In the  event  that at any  time any
transfer of any  Intellectual  Property  or any payment  received by the Secured
Party  hereunder  shall  be  deemed  by  final  order  of a court  of  competent
jurisdiction to have been a voidable  preference or fraudulent  conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise  due to any party  other than the  Secured  Party,  then,  in any such
event, the Company's  obligations  hereunder shall survive  cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or  cancellation  of this  Agreement,  but shall  remain a valid and binding
obligation  enforceable in accordance with the terms and provisions  hereof. The
Company  waives all right to require  the Secured  Party to proceed  against any
other person or to apply any  Intellectual  Property which the Secured Party may
hold at any time,  or to  marshal  assets,  or to pursue any other  remedy.  The
Company waives any defense  arising by reason of the  application of the statute
of limitations to any obligation  secured  hereby.

      11. Term of  Agreement.  This  Agreement and the Security  Interest  shall
terminate  on the date on which all  payments  under the Notes have been made in
full  and all  other  Obligations  have  been  paid  or  discharged.  Upon  such
termination,  the  Secured  Party,  at the  request  and at the  expense  of the
Company,  will join in executing any  termination  statement with respect to any
financing statement executed and filed pursuant to this Agreement.


                                       10
<PAGE>

      12. Power of Attorney; Further Assurances.

            (a) The Company  authorizes the Secured Party, and does hereby make,
constitute and appoint it, and its respective  officers,  agents,  successors or
assigns  with full  power of  substitution,  as the  Company's  true and  lawful
attorney-in-fact, with power, in its own name or in the name of the Company, to,
after the  occurrence  and during the  continuance  of an Event of Default,  (i)
endorse any notes, checks, drafts, money orders, or other instruments of payment
(including  payments  payable under or in respect of any policy of insurance) in
respect  of the  Intellectual  Property  that may come  into  possession  of the
Secured  Party;  (ii) to sign and endorse  any UCC  financing  statement  or any
invoice, freight or express bill, bill of lading, storage or warehouse receipts,
drafts against  debtors,  assignments,  verifications  and notices in connection
with accounts, and other documents relating to the Intellectual Property;  (iii)
to pay or discharge taxes,  liens,  security  interests or other encumbrances at
any time levied or placed on or threatened  against the  Intellectual  Property;
(iv) to demand, collect, receipt for, compromise,  settle and sue for monies due
in respect of the Intellectual Property; and (v) generally, to do, at the option
of the Secured Party, and at the Company's expense, at any time, or from time to
time,  all acts and things which the Secured  Party deems  necessary to protect,
preserve and realize upon the  Intellectual  Property and the Security  Interest
granted therein in order to effect the intent of this  Agreement,  the Notes and
the Warrants, all as fully and effectually as the Company might or could do; and
the Company hereby ratifies all that said attorney shall lawfully do or cause to
be done by virtue hereof. This power of attorney is coupled with an interest and
shall be  irrevocable  for the term of this  Agreement and thereafter as long as
any of the Obligations shall be outstanding.

            (b)  On  a  continuing  basis,  the  Company  will  make,   execute,
acknowledge,  deliver, file and record, as the case may be, in the proper filing
and recording places in any jurisdiction,  including,  without  limitation,  the
jurisdictions  indicated on Schedule C, attached hereto,  all such  instruments,
and take all such action as may reasonably be deemed necessary or advisable,  or
as reasonably  requested by the Secured Party, to perfect the Security  Interest
granted  hereunder  and  otherwise  to carry out the intent and purposes of this
Agreement,  or for assuring  and  confirming  to the Secured  Party the grant or
perfection of a security interest in all the Intellectual Property.

            (c) The Company hereby irrevocably appoints the Secured Party as the
Company's  attorney-in-fact,  with full  authority in the place and stead of the
Company and in the name of the Company, from time to time in the Secured Party's
discretion,  to take any action and to execute any instrument  which the Secured
Party may deem  necessary  or  advisable  to  accomplish  the  purposes  of this
Agreement,  including  the  filing,  in its  sole  discretion,  of  one or  more
financing or continuation statements and amendments thereto,  relative to any of
the  Intellectual  Property without the signature of the Company where permitted
by law.


                                       11
<PAGE>

      13.  Notices.  All  notices,  requests,  demands and other  communications
hereunder shall be in writing,  with copies to all the other parties hereto, and
shall be deemed to have been duly  given  when (i) if  delivered  by hand,  upon
receipt,  (ii) if sent by facsimile,  upon receipt of proof of sending  thereof,
(iii) if sent by  nationally  recognized  overnight  delivery  service  (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified  mail,  return receipt  requested,  postage  prepaid,  four days after
posting in the U.S. mails, in each case if delivered to the following addresses:

         If to the Company:         Cyberlux Corporation
                                    4625 Creekstone Drive, Suite 100
                                    Research Triangle Park
                                    Durham, North Carolina 27703
                                    Attention:  Donald F. Evans
                                    Telephone:  919-474-9700
                                    Facsimile:  919-474-9712

                                       and

                                    Cyberlux Corporation
                                    241 Lamplighter Lane
                                    Marietta, Georgia 30067
                                    Attention:  John W. Ringo, Esq.
                                    Telephone: 770-952-1904
                                    Facsimile: 770-952-0894

         With copies to:            Sichenzia Ross Friedman Ference LLP
                                    1065 Avenue of the Americas
                                    New York, New York 10018
                                    Attention:  Gregory Sichenzia, Esq.
                                    Telephone:  212-930-9700
                                    Facsimile:  212-930-9725

         If to the Secured Party:   AJW Partners, LLC
                                    AJW Offshore, Ltd.
                                    AJW Qualified Partners, LLC
                                    New Millennium Capital Partners II, LLC
                                    1044 Northern Boulevard
                                    Suite 302
                                    Roslyn, New York  11576
                                    Attention:  Corey Ribotsky
                                    Facsimile:  516-739-7115

         With copies to:            Ballard Spahr Andrews & Ingersoll, LLP
                                    1735 Market Street, 51st Floor
                                    Philadelphia, Pennsylvania  19103
                                    Attention:  Gerald J. Guarcini, Esquire
                                    Facsimile: 215-864-8999


                                       12
<PAGE>


      14.  Other  Security.  To the  extent  that  the  Obligations  are  now or
hereafter  secured by property  other than the  Intellectual  Property or by the
guarantee,  endorsement  or property of any other person,  firm,  corporation or
other  entity,  then  the  Secured  Party  shall  have  the  right,  in its sole
discretion, to pursue, relinquish,  subordinate, modify or take any other action
with respect  thereto,  without in any way  modifying  or  affecting  any of the
Secured Party's rights and remedies hereunder.

      15. Miscellaneous.

            (a) No course of dealing  between the Company and the Secured Party,
nor any failure to  exercise,  nor any delay in  exercising,  on the part of the
Secured Party, any right, power or privilege  hereunder or under the Notes shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right, power or privilege  hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.

            (b) All of the rights and remedies of the Secured Party with respect
to the Intellectual  Property,  whether established hereby or by the Notes or by
any other agreements, instruments or documents or by law shall be cumulative and
may be exercised singly or concurrently.

            (c) This Agreement and the Security Agreement  constitute the entire
agreement  of the  parties  with  respect to the  subject  matter  hereof and is
intended to supersede all prior negotiations, understandings and agreements with
respect  thereto.  Except  as  specifically  set  forth  in this  Agreement,  no
provision  of this  Agreement  may be  modified  or amended  except by a written
agreement  specifically  referring to this  Agreement  and signed by the parties
hereto.

            (d) In the event that any provision of this  Agreement is held to be
invalid,  prohibited or unenforceable in any jurisdiction for any reason, unless
such provision is narrowed by judicial construction, this Agreement shall, as to
such jurisdiction,  be construed as if such invalid, prohibited or unenforceable
provision  had been more narrowly  drawn so as not to be invalid,  prohibited or
unenforceable.   If,  notwithstanding  the  foregoing,  any  provision  of  this
Agreement  is  held  to  be  invalid,   prohibited  or   unenforceable   in  any
jurisdiction,  such provision, as to such jurisdiction,  shall be ineffective to
the  extent  of  such  invalidity,   prohibition  or  unenforceability   without
invalidating the remaining  portion of such provision or the other provisions of
this  Agreement  and without  affecting the validity or  enforceability  of such
provision or the other provisions of this Agreement in any other jurisdiction.

            (e) No  waiver of any  breach or  default  or any right  under  this
Agreement  shall be  considered  valid unless in writing and signed by the party
giving  such  waiver,  and no such  waiver  shall  be  deemed  a  waiver  of any
subsequent breach or default or right,  whether of the same or similar nature or
otherwise.

            (f) This Agreement shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns.


                                       13
<PAGE>


            (g) Each  party  shall take such  further  action  and  execute  and
deliver such further  documents as may be necessary or  appropriate  in order to
carry out the provisions and purposes of this Agreement.

            (h) This Agreement shall be construed in accordance with the laws of
the  State of New  York,  except  to the  extent  the  validity,  perfection  or
enforcement  of a security  interest  hereunder  in  respect  of any  particular
Intellectual  Property which are governed by a jurisdiction other than the State
of New York in which  case such law shall  govern.  Each of the  parties  hereto
irrevocably submit to the exclusive jurisdiction of any New York State or United
States  Federal court sitting in Manhattan  county over any action or proceeding
arising out of or  relating to this  Agreement,  and the parties  hereto  hereby
irrevocably agree that all claims in respect of such action or proceeding may be
heard and determined in such New York State or Federal court. The parties hereto
agree that a final judgment in any such action or proceeding shall be conclusive
and may be enforced  in other  jurisdictions  by suit on the  judgment or in any
other manner  provided by law. The parties hereto further waive any objection to
venue in the State of New York and any  objection to an action or  proceeding in
the State of New York on the basis of forum non conveniens.

            (i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS  RESPECTIVE  RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED  UPON OR  ARISING  OUT OF
THIS AGREEMENT.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL  ENCOMPASSING OF
ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER
OF THIS AGREEMENT,  INCLUDING WITHOUT LIMITATION  CONTRACT CLAIMS,  TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY
HERETO  ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO
ENTER INTO A BUSINESS  RELATIONSHIP,  THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS  THAT IT HAS REVIEWED  THIS WAIVER WITH ITS LEGAL  COUNSEL,  AND THAT
SUCH  PARTY HAS  KNOWINGLY  AND  VOLUNTARILY  WAIVES  ITS RIGHTS TO A JURY TRIAL
FOLLOWING  SUCH  CONSULTATION.   THIS  WAIVER  IS  IRREVOCABLE,   MEANING  THAT,
NOTWITHSTANDING  ANYTHING HEREIN TO THE CONTRARY,  IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT  AMENDMENTS,
RENEWALS AND SUPPLEMENTS OR MODIFICATIONS  TO THIS AGREEMENT.  IN THE EVENT OF A
LITIGATION,  THIS AGREEMENT MAY BE FILED AS A WRITTEN  CONSENT TO A TRIAL BY THE
COURT.

            (j) This  Agreement  may be executed in any number of  counterparts,
each of which when so  executed  shall be deemed to be an original  and,  all of
which taken together shall  constitute one and the same Agreement.  In the event
that any signature is delivered by facsimile transmission,  such signature shall
create a valid  binding  obligation  of the party  executing (or on whose behalf
such  signature is executed)  the same with the same force and effect as if such
facsimile signature were the original thereof.


                                       14
<PAGE>


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                                       15
<PAGE>


      IN WITNESS  WHEREOF,  the parties  hereto have caused this Agreement to be
duly executed on the day and year first above written.



                                     CYBERLUX CORPORATION

                                     By: /s/ DONALD F. EVANS
                                         -------------------
                                         Donald F. Evans
                                         Chief Executive Officer


                                     AJW PARTNERS, LLC
                                     By:  SMS Group, LLC

                                     By: /s/ COREY S. RIBOTSKY
                                         ----------------------
                                         Corey S. Ribotsky
                                         Manager


                                     AJW OFFSHORE, LTD.
                                     By:  First Street Manager II, LLC

                                     By: /s/ COREY S. RIBOTSKY
                                         ----------------------
                                         Corey S. Ribotsky
                                         Manager


                                     AJW QUALIFIED PARTNERS, LLC
                                     By:  AJW Manager, LLC

                                     By: /s/ COREY S. RIBOTSKY
                                         ----------------------
                                         Corey S. Ribotsky
                                         Manager


                                     NEW MILLENNIUM CAPITAL
                                     PARTNERS II, LLC

                                     By:  First Street Manager II, LLC

                                     By: /s/ COREY S. RIBOTSKY
                                         ----------------------
                                         Corey S. Ribotsky
                                         Manager


                                       16