Document:

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

SECURITIES PURCHASE AGREEMENT

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

WITNESSETH

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

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

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

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

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

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

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

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

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

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

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

2

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

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

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

          1.
PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

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

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

3

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

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

          2.
BUYER’S REPRESENTATIONS AND WARRANTIES.

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

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

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

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

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

4

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

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

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

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

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

5

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

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

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

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

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

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

6

          3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

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

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

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

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

7

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

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

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

8

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

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

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

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

9

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

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

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

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

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

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

10

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

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

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

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

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

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

11

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

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

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

          4.
COVENANTS.

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

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

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

12

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

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

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

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

                    (g)
Fees and Expenses.

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

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

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

13

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

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

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

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

14

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

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

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

          5.
TRANSFER AGENT INSTRUCTIONS.

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

15

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

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

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

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

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

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

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

16

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

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

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

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

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

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

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

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

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

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

17

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

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

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

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

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

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

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

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

18

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

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

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

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

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

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

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

19

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

          8.
INDEMNIFICATION.

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

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

20

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

          9.
GOVERNING LAW: MISCELLANEOUS.

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

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

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

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

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

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

21

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

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

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

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

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

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

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

22

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

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

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

[REMAINDER PAGE INTENTIONALLY LEFT BLANK]

23

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

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

24

SCHEDULE I

SCHEDULE OF BUYERS 

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

DISCLOSURE SCHEDULE

2Filed by Automated Filing Services Inc. (604) 609-0244 - Cyop Systems International, Inc. - Exhibit 10.2

Dated: December 15, 2005

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

	No. CCP-1	 $669,446.58

CYOP SYSTEMS INTERNATIONAL, INC.

Secured Convertible Debenture

Due December 15, 2008

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

          FOR
VALUE RECEIVED, on August 30, 2005 pursuant to that certain August 30,
2005 convertible debenture which is hereby surrendered, and for consideration
consisting solely of such surrender, replaced with this Debenture, the Obligor
hereby promises to pay to the Holder or its successors and assigns the principal
sum of Six Hundred Sixty Nine Thousand Four Hundred Forty Six Dollars and Fifty
Eight Cents ($669,446.58) together with accrued but unpaid interest on or before
December 15, 2008 (the “Maturity Date”) in accordance with the following
terms:

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

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

1

interest, (collectively referred to as the “Redemption
Amount”). The Obligor shall deliver to the Holder the Redemption Amount on
the third (3rd) business day after the Redemption Notice.

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

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

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

          Consent
of Holder to Sell Capital Stock or Grant Security Interests. So
long as any of the principal amount or interest on this Debenture remains unpaid
and unconverted, the Obligor shall not, without the prior consent of the Holder,
(i) issue or sell any shares of Common Stock or preferred stock without
consideration or for consideration per share less than the Closing Bid Price of
the Common Stock determined immediately prior to its issuance, (ii) issue or
sell any preferred stock, warrant, option, right, contract, call, or other
security or instrument granting the holder thereof the right to acquire Common
Stock without consideration or for consideration per share less than the Closing
Bid Price of the Common Stock determined immediately prior to its issuance,
(iii) enter into any security instrument granting the holder a security interest
in any of the assets of the Obligor, or (iv) file any registration statements on
Form S-8 notwithstanding the foregoing upon ten (10) trading days prior written
notice to the Buyer(s) the Company shall be able to file a registration
statement, registering up to twenty million (20,000,000) shares of the Company’s
Common Stock, on Form S-8 pursuant to the Company’s bonafide employee stock
option plan.

          Rights
of First Refusal. For a period of eighteen (18) months from the date
hereof, so long as any portion of this Debenture is outstanding (including
principal or accrued interest), if the Obligor intends to raise additional
capital by the issuance or sale of capital stock of the Obligor, including
without limitation shares of any class of Common Stock, any class of preferred
stock, options, warrants or any other securities convertible or exercisable into
shares of Common Stock (whether the offering is conducted by the Obligor,
underwriter, placement agent or any third party) the Obligor shall be obligated
to offer to the Holder such issuance or sale of capital stock, by providing in
writing the principal amount of capital it intends to raise and outline of the
material terms of such capital raise, prior to the offering such issuance or
sale of capital stock to any third parties including, but not limited to,
current or former officers or 

2

directors, current or former shareholders and/or investors of
the obligor, underwriters, brokers, agents or other third parties. The Holder
shall have ten (10) business days from receipt of such notice of the sale or
issuance of capital stock to accept or reject all or a portion of such capital
raising offer.

          This
Debenture is subject to the following additional provisions:

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

          Section
2. Events of Default.

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

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

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

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

3

acquiescence in any of the foregoing; or any corporate or other
action is taken by the Obligor or any subsidiary of the Obligor for the purpose
of effecting any of the foregoing;

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

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

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

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

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

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

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

          (b)
During the time that any portion of this Debenture is outstanding, if any Event
of Default has occurred, the full principal amount of this Debenture, together
with interest and other amounts owing in respect thereof, to the date of
acceleration shall become at the Holder's election, immediately due and payable
in cash, provided however, the Holder may request (but shall have no
obligation to request) payment of such amounts in Common Stock of the
Obligor.

4

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

          Section
3. Conversion.

          (a)
Conversion at Option of Holder.

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

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

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

5

                    (iii)
The Holder shall effect conversions by delivering to the Obligor a completed
notice in the form attached hereto as Exhibit A (a “Conversion Notice”).
The date on which a Conversion Notice is delivered is the “Conversion
Date.” Unless the Holder is converting the entire principal amount
outstanding under this Debenture, the Holder is not required to physically
surrender this Debenture to the Obligor in order to effect conversions.
Conversions hereunder shall have the effect of lowering the outstanding
principal amount of this Debenture plus all accrued and unpaid interest thereon
in an amount equal to the applicable conversion. The Holder and the Obligor
shall maintain records showing the principal amount converted and the date of
such conversions. In the event of any dispute or discrepancy, the records of the
Holder shall be controlling and determinative in the absence of manifest
error.

          (b)
Certain Conversion Restrictions.

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

          (c)
Conversion Price and Adjustments to Conversion Price.

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

6

The Market Conversion Price shall also be referred to as the
“Conversion Price.” The Conversion Price may be adjusted pursuant to the
other terms of this Debenture.

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

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

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

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

                    (vi)
If (A) the Obligor shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Obligor shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock; (C) the Obligor shall authorize the
granting to all holders of the Common Stock rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Obligor shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which
the Obligor is a party, any sale or transfer of all or substantially all of the
assets of the Obligor, of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property; or (E) the Obligor shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Obligor; then, in each case, the Obligor shall cause to be
filed at each office or agency maintained for the purpose of conversion of this
Debenture, and shall cause to be mailed to the Holder at its last address as it
shall appear upon the stock books of the Obligor, at least twenty (20) calendar
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to 

7

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

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

          (d)
Other Provisions.

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

8

3(c)) upon the conversion of the outstanding principal
amount of this Debenture and payment of interest hereunder. The Obligor
covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly and validly authorized, issued and fully paid, nonassessable and,
if the Underlying Shares Registration Statement has been declared effective
under the Securities Act, registered for public sale in accordance with such
Underlying Shares Registration Statement.

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

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

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

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

9

requirements under Section 3(a)(i). For example, if the
Holder purchases Common Stock having a total purchase price of $11,000 to cover
a Buy-In with respect to an attempted conversion of Debentures with respect to
which the market price of the Underlying Shares on the date of conversion was a
total of $10,000 under clause (A) of the immediately preceding sentence, the
Obligor shall be required to pay the Holder $1,000. The Holder shall provide the
Obligor written notice indicating the amounts payable to the Holder in respect
of the Buy-In.

          Section
4. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms hereof must be
in writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) trading day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

	If to the Company, to: 	Cyop Systems International, Inc. 
	  	1090 Homer Street – Suite 390 
	  	Vancouver, British Columbia V6B2W9 
	  	Attention: 	Mitch White 
	  	Telephone: 	(604) 685-0696 
	  	Facsimile: 	(604) 637-8201 
	  	  	  
	With a copy to: 	Richardson Patel, LLP 
	  	10900 Wilshire Boulevard, Suite 500 
	  	Los Angeles, CA 90024 
	  	Attention: 	Peter Hogan, Esq. 
	  	Telephone: 	(310) 208-1182 
	  	Facsimile: 	(310) 208-1154 
	  	  	  
	If to the Holder: 	Cornell Capital Partners, LP 
	  	101 Hudson Street, Suite 3700 
	  	Jersey City, NJ 07303 
	  	Attention: 	Mark Angelo 
	  	Telephone: 	(201) 985-8300 
	  	  	  
	With a copy to: 	David Gonzalez, Esq. 
	  	101 Hudson Street – Suite 3700 
	  	Jersey City, NJ 07302 
	  	Telephone: 	(201) 985-8300 
	  	Facsimile: 	(201) 985-8266 

or at such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written
notice given to each other party three (3) business days prior to the
effectiveness of such change. Written confirmation of receipt (i) given by the
recipient of such notice, consent, waiver or other communication, (ii)
mechanically or 

10

electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (iii) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

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

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

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

          “Commission”
means the Securities and Exchange Commission.

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

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

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

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

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

11

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

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

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

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

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

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

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

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

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

          Section
8. If this Debenture is mutilated, lost, stolen or destroyed, the
Obligor shall execute and deliver, in exchange and substitution for and upon
cancellation of the mutilated 

12

Debenture, or in lieu of or in substitution for a lost, stolen
or destroyed Debenture, a new Debenture for the principal amount of this
Debenture so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Debenture, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory to
the Obligor.

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

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

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

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

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

13

or any portion of the principal of or interest on this
Debenture as contemplated herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of this
indenture, and the Obligor (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impeded the execution
of any power herein granted to the Holder, but will suffer and permit the
execution of every such as though no such law has been enacted.

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

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

[REMAINDER OF PAGE INTENTIONLLY LEFT BLANK]

14

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

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

15

EXHIBIT “A”

NOTICE OF CONVERSION

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

TO:

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

	Conversion Date:   	 	  
	Applicable Conversion Price: 	 	  
	Signature:   	 	  
	Name:     	 	  
	Address:     	 	  
	Amount to be converted: 	 	$ 
	Amount of Debenture unconverted:
        	 	$ 
	Conversion Price per share: 	 	$ 
	Number of shares of Common Stock to be issued:
    	 	 
	Please issue the shares of Common Stock in the following
      name and to the following address:    
    	 	 
	Issue to:     	 	  
	Authorized Signature: 	 	  
	Name:     	 	  
	Title:     	 	  
	Phone Number:   	 	  
	Broker DTC Participant Code: 	 	  
	Account Number:

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