Document:

Exhibit 10.7

                                ESCROW AGREEMENT

         THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
January 29, 2004, by Y3K SECURE ENTERPRISE  SOFTWARE INC., a Nevada  corporation
(the "Company");  CORNELL CAPITAL PARTNERS,  LP, a Delaware limited  partnership
(the "Investor"); and BUTLER GONZALEZ LLP (the "Escrow Agent").

                                   BACKGROUND

         WHEREAS,  the Company and the  Investor  have  entered  into an Standby
Equity  Distribution  Agreement (the "Standby  Equity  Distribution  Agreement")
dated as of the date hereof,  pursuant to which the Investor  will  purchase the
Company's Common Stock,  par value $0.001 per share (the "Common  Stock"),  at a
price per share  equal to the  Purchase  Price,  as that term is  defined in the
Standby Equity  Distribution  Agreement,  for an aggregate price of up to Twenty
Million  Dollars  ($20,000,000).   The  Standby  Equity  Distribution  Agreement
provides that on each Advance Date the Investor,  as that term is defined in the
Standby Equity Distribution Agreement, shall deposit the Advance pursuant to the
Advance Notice in a segregated escrow account to be held by Escrow Agent and the
Company shall  deposit  shares of the  Company's  Common  Stock,  which shall be
purchased  by the  Investor  as set  forth in the  Standby  Equity  Distribution
Agreement,  with the Escrow Agent,  in order to effectuate a disbursement to the
Company of the Advance by the Escrow Agent and a disbursement to the Investor of
the shares of the Company's Common Stock by Escrow Agent at a closing to be held
as set forth in the Standby Equity Distribution Agreement (the "Closing").

         WHEREAS,  Escrow  Agent has agreed to accept,  hold,  and  disburse the
funds  and  the  shares  of the  Company's  Common  Stock  deposited  with it in
accordance with the terms of this Agreement.

         WHEREAS, in order to establish the escrow of funds and shares to effect
the provisions of the Standby Equity Distribution Agreement,  the parties hereto
have entered into this Agreement.

         NOW THEREFORE,  in consideration of the foregoing,  it is hereby agreed
as follows:

         1. Definitions.  The following terms shall have the following  meanings
when used herein:

              a. "Escrow Funds" shall mean the Advance funds  deposited with the
Escrow Agent pursuant to this Agreement.

              b.  "Joint  Written  Direction"  shall  mean a  written  direction
executed by the Investor and the Company  directing Escrow Agent to disburse all
or a portion of the Escrow  Funds or to take or refrain  from  taking any action
pursuant to this Agreement.

              c. "Common  Stock Joint  Written  Direction"  shall mean a written
direction executed by the Investor and the Company directing  Investor's Counsel
to disburse all or a portion of the shares of the  Company's  Common Stock or to
refrain from taking any action pursuant to this Agreement.

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         2. Appointment of and Acceptance by Escrow Agent.

              a. The Investor  and the Company  hereby  appoint  Escrow Agent to
serve as Escrow Agent  hereunder.  Escrow Agent hereby accepts such  appointment
and,  upon  receipt by wire  transfer  of the Escrow  Funds in  accordance  with
Section  3 below,  agrees to hold,  invest  and  disburse  the  Escrow  Funds in
accordance with this Agreement.

              b. The Investor and the Company hereby appoint the Escrow Agent to
serve as the holder of the shares of the  Company's  Common Stock which shall be
purchased by the Investor. The Escrow Agent hereby accepts such appointment and,
upon receipt via D.W.A.C or the  certificates  representing of the shares of the
Company's  Common Stock in accordance  with Section 3 below,  agrees to hold and
disburse  the  shares of the  Company's  Common  Stock in  accordance  with this
Agreement.

              c.  The  Company  hereby  acknowledges  that the  Escrow  Agent is
counsel to the Investor in connection  with the  transactions  contemplated  and
referenced  herein.  The Company agrees that in the event of any dispute arising
in connection  with this Escrow  Agreement or otherwise in  connection  with any
transaction or agreement  contemplated and referenced  herein,  the Escrow Agent
shall be permitted  to continue to  represent  the Investor and the Company will
not seek to disqualify such counsel.

         3. Creation of Escrow Account/Common Stock Account.

              a. On or prior  to the date of this  Agreement  the  Escrow  Agent
shall  establish an escrow  account for the deposit of the Escrow Funds entitled
as follows: Y3K SECURE ENTERPRISE SOFTWARE  INC./Cornell  Capital Partners,  LP.
The Investor will wire funds to the account of the Escrow Agent as follows:

Bank:                             Wachovia, N.A. of New Jersey
Routing #:                        031201467
Account #:                        2020000659170
Name on Account:                  Butler Gonzalez LLP as Escrow Agent
Name on Sub-Account:              Y3K Secure Enterprise Software Inc./
                                  Cornell Capital Partners, LP Escrow account
Reference Sub-Account #:          __________

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              b. On or prior  to the date of this  Agreement  the  Escrow  Agent
shall establish an account for the D.W.A.C.  of the shares of Common Stock.  The
Company will D.W.A.C. shares of the Company's Common Stock to the account of the
Escrow Agent as follows:

Brokerage Firm:                            Jessup & Lamont
Account #:                                 LES 023557
DTC #:                                     0030
Name on Account:                           Butler Gonzalez LLP Escrow Account

         4. Deposits into the Escrow Account.  The Investor agrees that it shall
promptly  deliver all monies for the  payment of the Common  Stock to the Escrow
Agent for deposit in the Escrow Account.

         5. Disbursements from the Escrow Account.

              a. At such  time as  Escrow  Agent  has  collected  and  deposited
instruments  of payment in the total amount of the Advance and has received such
Common Stock via D.W.A.C from the Company which are to be issued to the Investor
pursuant to the Standby Equity  Distribution  Agreement,  the Escrow Agent shall
notify the Company and the Investor. The Escrow Agent will continue to hold such
funds  until the  Investor  and  Company  execute  and  deliver a Joint  Written
Direction  directing  the Escrow Agent to disburse the Escrow Funds  pursuant to
Joint  Written  Direction  at which time the Escrow  Agent shall wire the Escrow
Funds to the Company.  In disbursing  such funds,  Escrow Agent is authorized to
rely upon such Joint Written Direction from Company and may accept any signatory
from  the  Company  listed  on the  signature  page  to this  Agreement  and any
signature from the Investor that Escrow Agent already has on file.  Simultaneous
with delivery of the executed  Joint  Written  Direction to the Escrow Agent the
Investor  and Company  shall  execute and deliver a Common  Stock Joint  Written
Direction to the Escrow Agent  directing the Escrow Agent to release via D.W.A.C
to the Investor the shares of the  Company's  Common  Stock.  In releasing  such
shares of Common Stock the Escrow Agent is  authorized  to rely upon such Common
Stock Joint Written Direction from Company and may accept any signatory from the
Company  listed on the signature  page to this  Agreement and any signature from
the Escrow Agent has on file.

         In the  event the  Escrow  Agent  does not  receive  the  amount of the
Advance  from the  Investor or the shares of Common Stock to be purchased by the
Investor  from the  Company,  the Escrow  Agent shall notify the Company and the
Investor.

         In the event that the Escrow Agent has not received the Common Stock to
be purchased by the Investor from the Company, in no event will the Escrow Funds
be  released  to the  Company  until  such  shares  are  received  by the Escrow
Agreement.  For purposes of this Agreement, the term "Common Stock certificates"
shall mean Common Stock  certificates to be purchased pursuant to the respective
Advance Notice pursuant to the Standby Equity Distribution Agreement.

         6. Deposit of Funds.  The Escrow Agent is hereby  authorized to deposit
the wire transfer proceeds in the Escrow Account.

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<PAGE>

         7. Suspension of Performance: Disbursement Into Court.

              a.  Escrow  Agent.  If at any time,  there shall exist any dispute
between the Company and the Investor with respect to holding or  disposition  of
any portion of the Escrow Funds or the Common Stock or any other  obligations of
Escrow Agent  hereunder,  or if at any time Escrow Agent is unable to determine,
to Escrow Agent's sole  satisfaction,  the proper  disposition of any portion of
the  Escrow  Funds  or  Escrow  Agent's  proper  actions  with  respect  to  its
obligations hereunder, or if the parties have not within thirty (30) days of the
furnishing  by Escrow  Agent of a notice of  resignation  pursuant  to Section 9
hereof,  appointed a successor Escrow Agent to act hereunder,  then Escrow Agent
may, in its sole discretion, take either or both of the following actions:

              i. Suspend the  performance of any of its  obligations  (including
without  limitation any  disbursement  obligations)  under this Escrow Agreement
until such dispute or uncertainty  shall be resolved to the sole satisfaction of
Escrow Agent or until a successor  Escrow Agent shall be appointed  (as the case
may be);  provided  however,  Escrow  Agent shall  continue to invest the Escrow
Funds in accordance with Section 8 hereof; and/or

              ii.  Petition  (by  means of an  interpleader  action or any other
appropriate method) any court of competent  jurisdiction in any venue convenient
to Escrow Agent, for  instructions  with respect to such dispute or uncertainty,
and to the  extent  required  by law,  pay into  such  court,  for  holding  and
disposition in accordance with the instructions of such court, all funds held by
it in the Escrow Funds,  after deduction and payment to Escrow Agent of all fees
and expenses  (including  court costs and attorneys'  fees) payable to, incurred
by, or expected to be incurred by Escrow Agent in connection with performance of
its duties and the exercise of its rights hereunder.

              iii.  Escrow Agent shall have no  liability  to the  Company,  the
Investor,  or any person with respect to any such  suspension of  performance or
disbursement  into  court,  specifically  including  any  liability  or  claimed
liability that may arise, or be alleged to have arisen, out of or as a result of
any delay in the  disbursement of funds held in the Escrow Funds or any delay in
with respect to any other action required or requested of Escrow Agent.

         8.  Investment  of Escrow  Funds.  The Escrow  Agent shall  deposit the
Escrow Funds in a non-interest bearing money market account.

         If Escrow Agent has not received a Joint Written  Direction at any time
that an  investment  decision  must be made,  Escrow Agent may retain the Escrow
Fund, or such portion thereof,  as to which no Joint Written  Direction has been
received, in a non-interest bearing money market account.

         9.  Resignation  and Removal of Escrow  Agent.  Escrow Agent may resign
from the  performance of its duties  hereunder at any time by giving thirty (30)
days' prior  written  notice to the  parties or may be removed,  with or without
cause, by the parties,  acting jointly,  by furnishing a Joint Written Direction
to Escrow  Agent,  at any time by the  giving of ten (10)  days'  prior  written
notice  to  Escrow  Agent as  provided  herein  below.  Upon any such  notice of
resignation  or removal,  the  representatives  of the  Investor and the Company
identified  in Sections  13a.(iv) and 13b.(iv),  below,  jointly shall appoint a

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<PAGE>

successor  Escrow  Agent  hereunder,  which shall be a  commercial  bank,  trust
company or other financial  institution  with a combined  capital and surplus in
excess of  $10,000,000.00.  Upon the acceptance in writing of any appointment of
Escrow Agent hereunder by a successor Escrow Agent,  such successor Escrow Agent
shall  thereupon  succeed  to and become  vested  with all the  rights,  powers,
privileges  and duties of the retiring  Escrow  Agent,  and the retiring  Escrow
Agent  shall be  discharged  from its duties and  obligations  under this Escrow
Agreement,  but shall not be discharged  from any liability for actions taken as
Escrow Agent  hereunder  prior to such  succession.  After any  retiring  Escrow
Agent's  resignation or removal,  the provisions of this Escrow  Agreement shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrow Funds and shall pay all funds held
by it in the Escrow Funds to the successor Escrow Agent,  after making copies of
such records as the retiring  Escrow Agent deems  advisable and after  deduction
and payment to the retiring  Escrow  Agent of all fees and  expenses  (including
court costs and  attorneys'  fees)  payable to,  incurred  by, or expected to be
incurred by the retiring  Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder.

         10. Liability of Escrow Agent.

              a. Escrow Agent shall have no liability or obligation with respect
to the Escrow  Funds  except  for Escrow  Agent's  willful  misconduct  or gross
negligence.  Escrow Agent's sole  responsibility  shall be for the  safekeeping,
investment, and disbursement of the Escrow Funds in accordance with the terms of
this  Agreement.  Escrow Agent shall have no implied duties or  obligations  and
shall not be charged with  knowledge or notice or any fact or  circumstance  not
specifically  set forth herein.  Escrow Agent may rely upon any instrument,  not
only as to its due  execution,  validity and  effectiveness,  but also as to the
truth and  accuracy of any  information  contained  therein,  which Escrow Agent
shall in good faith  believe to be genuine,  to have been signed or presented by
the person or parties  purporting to sign the same and conform to the provisions
of this  Agreement.  In no event shall  Escrow  Agent be liable for  incidental,
indirect, special, and consequential or punitive damages. Escrow Agent shall not
be obligated to take any legal action or commence any  proceeding  in connection
with the Escrow  Funds,  any account in which Escrow Funds are  deposited,  this
Agreement  or the  Standby  Equity  Distribution  Agreement,  or to  appear  in,
prosecute  or defend  any such  legal  action or  proceeding.  Escrow  Agent may
consult legal counsel  selected by it in the event of any dispute or question as
to construction of any of the provisions hereof or of any other agreement or its
duties  hereunder,  or relating to any dispute  involving any party hereto,  and
shall  incur no  liability  and shall be fully  indemnified  from any  liability
whatsoever  in acting in  accordance  with the opinion or  instructions  of such
counsel.  The Company and the Investor jointly and severally shall promptly pay,
upon  demand,  the  reasonable  fees and expenses of any such counsel and Escrow
Agent is hereby  authorized  to pay such fees and  expenses  from  funds held in
escrow.

              b. The Escrow Agent is hereby authorized,  in its sole discretion,
to comply with orders issued or process entered by any court with respect to the
Escrow  Funds,  without  determination  by the  Escrow  Agent  of  such  court's
jurisdiction  in the matter.  If any portion of the Escrow  Funds is at any time
attached,  garnished  or  levied  upon  under any  court  order,  or in case the
payment, assignment, transfer, conveyance or delivery of any such property shall

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be stayed or enjoined by any court order,  or in any case any order  judgment or
decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ judgment or decree
which it is advised by legal counsel  selected by it,  binding upon it,  without
the need for appeal or other action;  and if the Escrow Agent  complies with any
such  order,  writ,  judgment  or  decree,  it shall not be liable to any of the
parties  hereto  or to any other  person or entity by reason of such  compliance
even though such order,  writ judgment or decree may be  subsequently  reversed,
modified, annulled, set aside or vacated.

         11.  Indemnification  of Escrow Agent.  From and at all times after the
date of this Agreement, the parties jointly and severally, shall, to the fullest
extent  permitted by law and to the extent provided  herein,  indemnify and hold
harmless Escrow Agent and each director, officer, employee,  attorney, agent and
affiliate of Escrow Agent (collectively,  the "Indemnified Parties") against any
and all actions,  claims (whether or not valid), losses,  damages,  liabilities,
costs  and  expenses  of  any  kind  or  nature  whatsoever  (including  without
limitation  reasonable  attorney's  fees,  costs and  expenses)  incurred  by or
asserted against any of the Indemnified  Parties from and after the date hereof,
whether direct, indirect or consequential,  as a result of or arising from or in
any way relating to any claim,  demand,  suit, action, or proceeding  (including
any inquiry or  investigation) by any person,  including without  limitation the
parties to this Agreement,  whether  threatened or initiated,  asserting a claim
for any legal or  equitable  remedy  against  any  person  under any  statute or
regulation, including, but not limited to, any federal or state securities laws,
or under any common law or  equitable  cause or  otherwise,  arising  from or in
connection with the negotiation,  preparation, execution, performance or failure
of performance of this Agreement or any transaction contemplated herein, whether
or not any such  Indemnified  Party is a party to any such action or proceeding,
suit or the target of any such inquiry or investigation; provided, however, that
no  Indemnified  Party  shall  have the right to be  indemnified  hereunder  for
liability finally determined by a court of competent jurisdiction, subject to no
further  appeal,  to have resulted  solely from the gross  negligence or willful
misconduct  of such  Indemnified  Party.  If any such  action or claim  shall be
brought or asserted against any Indemnified  Party, such Indemnified Party shall
promptly notify the Company and the Investor  hereunder in writing,  and the and
the Company  shall  assume the defense  thereof,  including  the  employment  of
counsel and the payment of all expenses.  Such  Indemnified  Party shall, in its
sole discretion,  have the right to employ separate counsel (who may be selected
by such  Indemnified  Party in its sole  discretion)  in any such  action and to
participate and to participate in the defense thereof, and the fees and expenses
of such  counsel  shall  be paid by such  Indemnified  Party,  except  that  the
Investor  and/or the  Company  shall be required to pay such fees and expense if
(a) the Investor or the Company agree to pay such fees and expenses,  or (b) the
Investor  and/or the Company  shall fail to assume the defense of such action or
proceeding or shall fail, in the sole discretion of such  Indemnified  Party, to
employ counsel  reasonably  satisfactory  to the  Indemnified  Party in any such
action or proceeding,  (c) the Investor and the Company are the plaintiff in any
such  action or  proceeding  or (d) the named or  potential  parties to any such
action or proceeding  (including any potentially impleaded parties) include both
Indemnified  Party the Company and/or the Investor and  Indemnified  Party shall
have been  advised  by  counsel  that  there may be one or more  legal  defenses
available to it which are different from or additional to those available to the
Company or the  Investor.  The  Investor  and the  Company  shall be jointly and
severally  liable to pay fees and expenses of counsel  pursuant to the preceding
sentence, except that any obligation to pay under clause (a) shall apply only to

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the party so agreeing.  All such fees and expenses payable by the Company and/or
the Investor pursuant to the foregoing  sentence shall be paid from time to time
as incurred,  both in advance of and after the final  disposition of such action
or claim.  The  obligations  of the parties under this section shall survive any
termination of this  Agreement,  and  resignation or removal of the Escrow Agent
shall be independent of any obligation of Escrow Agent.

         12.  Expenses  of Escrow  Agent.  Except as set forth in Section 11 the
Company shall  reimburse  Escrow Agent for all of its  reasonable  out-of-pocket
expenses,  including  attorneys' fees, travel expenses,  telephone and facsimile
transmission  costs,  postage  (including  express mail and  overnight  delivery
charges),  copying  charges  and the like as  outlined  in  Section  12.4 of the
Standby  Equity  Distribution  Agreement  dated  the  date  hereof.  All  of the
compensation  and  reimbursement  obligations set forth in this Section shall be
payable by the Company,  upon demand by Escrow  Agent.  The  obligations  of the
Company under this Section shall survive any  termination  of this Agreement and
the resignation or removal of Escrow Agent.

         13. Warranties.

              a. The Investor makes the following representations and warranties
to the Escrow Agent:

              i. The  Investor  has full  power and  authority  to  execute  and
deliver this Agreement and to perform its obligations hereunder.

              ii. This Agreement has been duly approved by all necessary  action
of the Investor,  including any necessary approval of the limited partner of the
Investor,  has been  executed  by duly  authorized  officers  of the  Investor's
general partner, enforceable in accordance with its terms.

              iii. The execution,  delivery,  and performance of the Investor of
this  Agreement  will not violate,  conflict  with, or cause a default under the
agreement  of  limited  partnership  of  the  Investor,  any  applicable  law or
regulation,  any  court  order or  administrative  ruling or degree to which the
Investor  is a  party  or any of its  property  is  subject,  or any  agreement,
contract, indenture, or other binding arrangement.

              iv.  Mark  A.  Angelo  has  been  duly  appointed  to  act  as the
representative  of  Investor  hereunder  and has full  power  and  authority  to
execute,  deliver, and perform this Agreement,  to execute and deliver any Joint
Written Direction,  to amend,  modify, or waive any provision of this Agreement,
and to take any and all other  actions as the  Investor's  representative  under
this Agreement, all without further consent or direction form, or notice to, the
Investor or any other party.

              v. No party other than the parties hereto have, or shall have, any
lien,  claim or security  interest in the Escrow Funds or any part  thereof.  No
financing  statement  under  the  Uniform  Commercial  Code  is on  file  in any
jurisdiction claiming a security interest in or describing (whether specifically
or generally) the Escrow Funds or any part thereof.

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              vi. All of the  representations  and  warranties  of the  Investor
contained  herein are true and  complete  as of the date hereof and will be true
and complete at the time of any disbursement from the Escrow Funds.

         b. The Company makes the following  representations  and  warranties to
Escrow Agent and, the Investor:  i. The Company is a corporation duly organized,
validly  existing,  and in good standing  under the laws of the State of Nevada,
and has full power and  authority to execute and deliver this  Agreement  and to
perform its obligations hereunder.

              ii.  This  Agreement  has  been  duly  approved  by all  necessary
corporate action of the Company,  including any necessary  shareholder approval,
has been executed by duly  authorized  officers of the Company,  enforceable  in
accordance with its terms.

              iii. The execution,  delivery,  and  performance by the Company of
this Escrow  Agreement is in  accordance  with the Standby  Equity  Distribution
Agreement  and will not violate,  conflict  with,  or cause a default  under the
certificate  of  incorporation  or bylaws of the Company,  any applicable law or
regulation,  any  court  order or  administrative  ruling or decree to which the
Company  is a  party  or any of  its  property  is  subject,  or any  agreement,
contract, indenture, or other binding arrangement.

              iv. King Cole has been duly appointed to act as the representative
of the Company  hereunder and has full power and authority to execute,  deliver,
and perform this Agreement,  to execute and deliver any Joint Written Direction,
to amend,  modify or waive any provision of this Agreement and to take all other
actions as the  Company's  Representative  under  this  Agreement,  all  without
further consent or direction from, or notice to, the Company or any other party.

              v. No party other than the parties  hereto  shall have,  any lien,
claim or security interest in the Escrow Funds or any part thereof. No financing
statement  under  the  Uniform  Commercial  Code is on file in any  jurisdiction
claiming  a  security  interest  in  or  describing  (whether   specifically  or
generally) the Escrow Funds or any part thereof.

              vi.  All of the  representations  and  warranties  of the  Company
contained  herein are true and  complete  as of the date hereof and will be true
and complete at the time of any disbursement from the Escrow Funds.

         14.  Consent to  Jurisdiction  and  Venue.  In the event that any party
hereto commences a lawsuit or other proceeding  relating to or arising from this
Agreement,  the parties  hereto agree that the United States  District Court for
the District of New Jersey shall have the sole and exclusive  jurisdiction  over
any  such   proceeding.   If  all  such  courts  lack  federal   subject  matter
jurisdiction,  the parties agree that the Superior Court Division of New Jersey,
Chancery  Division of Hudson County shall have sole and exclusive  jurisdiction.
Any of these  courts  shall be proper  venue for any such  lawsuit  or  judicial
proceeding and the parties hereto waive any objection to such venue. The parties
hereto consent to and agree to submit to the  jurisdiction  of any of the courts
specified  herein  and agree to accept the  service of process to vest  personal
jurisdiction over them in any of these courts.

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         15. Notice. All notices and other communications  hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered five
(5) days after deposit in the United States mail, by certified  mail with return
receipt requested and postage prepaid,  when delivered  personally,  one (1) day
delivery to any overnight courier, or when transmitted by facsimile transmission
and addressed to the party to be notified as follows:

If to Investor, to:                  Cornell Capital Partners, LP
                                     101 Hudson Street - Suite 3606
                                     Jersey City, New Jersey 07302
                                     Attention: Mark Angelo
                                     Facsimile: (201) 985-8266

If to Escrow Agent, to:              Butler Gonzalez LLP
                                     1000 Stuyvesant Avenue - Suite 6
                                     Union, New Jersey 07083
                                     Attention: David Gonzalez, Esq.
                                     Telephone: (908) 810-8588
                                     Facsimile: (908) 810-0973

If to Company, to:                   Y3K Secure Enterprise Software Inc.
                                     108 West Stewart Avenue
                                     Puyallup, Washington  98371
                                     Attention: King Cole, President
                                     Telephone: (253) 284-2935
                                     Facsimile: (253) 284-2944

With a copy to:                      Kirkpatrick & Lockhart LLP
                                     201 South Biscayne Boulevard - Suite 2000
                                     Miami, Florida 33131-2399
                                     Attention: Clayton E. Parker, Esq.
                                     Telephone: (305) 539-3300
                                     Facsimile: (305) 358-7095

         Or to such other address as each party may designate for itself by like
notice.

         16.  Amendments  or Waiver.  This  Agreement  may be  changed,  waived,
discharged or terminated  only by a writing  signed by the parties of the Escrow
Agent.  No delay or omission by any party in  exercising  any right with respect
hereto  shall  operate  as  waiver.  A waiver on any one  occasion  shall not be
construed as a bar to, or waiver of, any right or remedy on any future occasion.

         17.  Severability.  To the extent any  provision  of this  Agreement is
prohibited  by  or  invalid  under  applicable  law,  such  provision  shall  be
ineffective  to  the  extent  of  such  prohibition,   or  invalidity,   without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

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         18. Governing Law. This Agreement shall be construed and interpreted in
accordance  with the internal laws of the State of Nevada  without giving effect
to the conflict of laws principles thereof.

         19. Entire Agreement.  This Agreement  constitutes the entire Agreement
between the parties relating to the holding, investment, and disbursement of the
Escrow Funds and sets forth in their entirety the  obligations and duties of the
Escrow Agent with respect to the Escrow Funds.

         20. Binding Effect. All of the terms of this Agreement, as amended from
time to time,  shall be binding upon, inure to the benefit of and be enforceable
by the respective heirs, successors and assigns of the Investor, the Company, or
the Escrow Agent.

         21.  Execution of  Counterparts.  This  Agreement and any Joint Written
Direction  may be  executed  in  counter  parts,  which when so  executed  shall
constitute one and same agreement or direction.

         22.  Termination.  Upon the  first to occur of the  termination  of the
Standby Equity Distribution  Agreement dated the date hereof or the disbursement
of all  amounts in the  Escrow  Funds and Common  Stock into court  pursuant  to
Section 7 hereof,  this Agreement shall terminate and Escrow Agent shall have no
further obligation or liability whatsoever with respect to this Agreement or the
Escrow Funds or Common Stock.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       10
<PAGE>

         IN WITNESS  WHEREOF the parties have hereunto set their hands and seals
the day and year above set forth.

                        Y3K SECURE ENTERPRISE SOFTWARE INC.

                        By: /s/ King Cole
                           -----------------------------------
                        Name:    King Cole
                        Title:   President

                        CORNELL CAPITAL PARTNERS, LP

                        By:      Yorkville Advisors, LLC
                        Its:     General Partner

                        By: /s/ Mark A. Angelo
                           -----------------------------------
                        Name:    Mark A. Angelo
                        Title:   Portfolio Manager

                        BUTLER GONZALEZ LLP

                        By: /s/ David Gonzalez
                           -----------------------------------
                        Name:    David Gonzalez, Esq.
                        Title:   Partner

                                       11SECURITIES PURCHASE AGREEMENT

         THIS  SECURITIES  PURCHASE  AGREEMENT (this  "Agreement"),  dated as of
January  14, 2004 by and among Y3K SECURE  ENTERPRISE  SOFTWARE  INC.,  a Nevada
corporation,  with its  principal  office  located  at 108 West  Stewart  Street
Puyallup,  Washington,  (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 "1933 Act");

      WHEREAS,  the  parties  desire  that,  upon the terms and  subject  to the
conditions  contained herein,  the Company shall issue and sell to the Buyer(s),
as provided  herein,  and the Buyer(s)  shall purchase up to Three Hundred Fifty
Thousand Dollars ($350,000) of secured convertible  debentures (the "Convertible
Debentures"),  which shall be  convertible  into shares of the Company's  common
stock,  par value $.001 (the  "Common  Stock") (as  converted,  the  "Conversion
Shares") of which Two Hundred Thousand Dollars ($200,000) shall be funded on the
fifth (5th) business day following the date hereof (the "First Closing") and One
Hundred  Fifty  Thousand  Dollars  ($150,000)  on the fifth (5th)  business  day
following the date the registration statement (the "Registration  Statement") is
filed,  pursuant  the  Investor  Registration  Rights  Agreement  dated the date
hereof,  with the United States  Securities and Exchange  Commission (the "SEC")
(the "Second Closing") (collectively referred to as the "Closings"), for a total
purchase price of up to Three Hundred Fifty Thousand  Dollars  ($350,000),  (the
"Purchase  Price") in the  respective  amounts set forth  opposite each Buyer(s)
name on Schedule I ( the "Subscription Amount"); and

      WHEREAS,  contemporaneously  with  the  execution  and  delivery  of  this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement  substantially in the form attached hereto as Exhibit A (the "Investor
Registration  Rights  Agreement")  pursuant  to which the  Company has agreed to
provide  certain  registration  rights  under  the  1933 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  substantially in the form of the Escrow Agreement  attached hereto as
Exhibit B.

      WHEREAS,  contemporaneously  with  the  execution  and  delivery  of  this
Agreement,  the parties hereto are executing and delivering Irrevocable Transfer
Agent  Instructions  substantially in the form attached hereto as Exhibit C (the
"Irrevocable Transfer Agent Instructions").

      WHEREAS,  contemporaneously  with  the  execution  and  delivery  of  this
Agreement,  the parties hereto are executing and delivering a Security Agreement

                                       1
<Page>

substantially   in  the  form  attached  hereto  as  Exhibit  D  (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  dated the date  hereof)  to secure  Company's  obligations  under the
Agreement,   the  Convertible   Debenture,   the  Investor  Registration  Rights
Agreement,   the  Irrevocable   Transfer  Agent  Instructions  or  the  Security
Agreement; and

      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 purchase at Closing (as defined herein below) and
the Company  agrees to sell and issue to each Buyer,  severally and not jointly,
at  Closing,   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  "Butler  Gonzalez  LLP,  as Escrow  Agent for Y3K Secure  Enterprise
Software 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 purchase and sale of the
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 on the fifth (5th)  business day following 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") (collectively  referred to
a the "Closing Dates").  The Closing shall occur on the respective Closing Dates
at the offices of Butler Gonzalez,  LLP, 1000 Stuyvesant Avenue, Suite 6, Union,
NJ 07083 (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 Butler  Gonzalez LLP, as escrow agent
(the "Escrow Agent"),  pursuant to the terms of an escrow agreement  between the
Company,  the  Buyer(s)  and the  Escrow  Agent in the form  attached  hereto as
Exhibit B (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

                                       2
<Page>

Buyer(s),  minus the fees and  expenses of Butler  Gonzalez  LLP of Ten Thousand
Dollars  ($10,000)  shall be paid directly from the gross  proceeds of the First
Closing and the retainer of  Kirkpatrick  & Lockhart LLP of which Five  Thousand
Dollars ($5,000) shall be paid from the gross proceeds of the First Closing, and
No Thousand  Dollars ($0) shall be paid directly from the gross  proceeds of the
Second  Closing by wire transfer of  immediately  available  funds in accordance
with the Company's written wire instructions, 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 1933  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 1933 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 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,

                                       3
<Page>

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 1933 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 1933 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 1933  Act)  may  require
compliance  with  some  other  exemption  under  the 1933 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 1933 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 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.

                                       4
<Page>

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 1933 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 1933 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,  the Security  Agreement,  the Investor
Registration  Rights  Agreement,  the  Escrow  Agreement,  and  the  Irrevocable
transfer  Agent  Instructions;  (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 June,  2003;  (iv) the Company's Form 10-QSB for the fiscal quarters ended
September,  2003. 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.

      3.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

      The Company  represents and warrants to each of the Buyers that, except as
set forth in the SEC Documents (as defined herein):

                                       5
<Page>

            (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  Escrow  Agreement,   the  Irrevocable  Transfer  Agent
Instructions,   and  any  related  agreements,  and  to  issue  the  Convertible
Debentures  and the  Conversion  Shares in accordance  with the terms hereof and
thereof,  (ii) the  execution  and  delivery  of this  Agreement,  the  Security
Agreement, the Investor Registration Rights Agreement, the Escrow Agreement, the
Irrevocable  Transfer  Agent  Instructions  (as defined  herein) and any related
agreements  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) this Agreement, the Security Agreement, the
Investor  Registration Rights Agreement,  the Escrow Agreement,  the Irrevocable
Transfer Agent  Instructions and any related  agreements have been duly executed
and delivered by the Company, (iv) this Agreement,  the Security Agreement,  the
Investor  Registration Rights Agreement,  the Escrow Agreement,  the Irrevocable
Transfer Agent Instructions and any related agreements  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  this  Agreement,   the  Security  Agreement,   the  Investor
Registration Rights Agreement,  the Escrow Agreement,  the Irrevocable  Transfer
Agent Instructions and any related agreements 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
consists of 200,000,000 shares of Common Stock, par value $.001 per share and No
shares of  Preferred  Stock.  As of the date hereof the  Company has  68,442,170
shares of Common Stock and No shares of Preferred Stock issued and  outstanding.
All of such  outstanding  shares have been validly issued and are fully paid and
nonassessable.  Except as disclosed in the SEC  Documents (as defined in Section
3(f)),  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.  Except  as  disclosed  in the SEC  Documents,  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

                                       6
<Page>

Company or any of its subsidiaries, or contracts, commitments, 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) 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 1933 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,  except those already disclosed to
the Buyer.  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 Certificate of Incorporation,  as
amended   and  as  in  effect  on  the  date   hereof   (the   "Certificate   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.  Except as  disclosed in the SEC  Documents,  the
execution,  delivery and performance of this Agreement,  the Security Agreement,
the  Investors  Registration  Rights  Agreement,  the Escrow  Agreement  and the
Irrevocable  Transfer Agent  Instructions by the Company and the consummation by
the  Company of the  transactions  contemplated  hereby will not (i) result in a
violation of the Certificate 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. Except as disclosed in the SEC Documents,  neither the Company nor its

                                       7
<Page>

subsidiaries  is in violation of any term of or in default under its Certificate
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 1933 Act and any applicable  state securities laws, the Company is not
required to obtain any 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.  Except as  disclosed  in the SEC  Documents,  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 April,  2002, the
Company has filed all reports,  schedules, forms, statements and other documents
required to be filed by it with the SEC under of the Securities  Exchange Act of
1934, as amended (the "1934 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. Except as disclosed in the SEC Documents,
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) except as expressly disclosed in the SEC
Documents,  have  a  material  adverse  effect  on  the  business,   operations,

                                       8
<Page>

properties,  financial condition or results of operations of the Company and its
subsidiaries taken as a whole.

            (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 1933 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 1933 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 1933 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.

                                       9
<Page>

            (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  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. Except as set forth in the
SEC Documents, 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.  Except as set forth in the SEC  Documents,
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

                                       10
<Page>

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.

            (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 as set forth in the SEC Documents,
and 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  timely to
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.

                                       11
<Page>

            (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 1933 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  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 1934  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 1934 Act  even if the  1934  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.

            (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 of the
Company shall call and hold a special meeting of the  shareholders  within sixty
(60) 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.  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  this
Agreement, the Escrow Agreement, and the Investor Registration Rights Agreement.
The Buyer(s)  shall be entitled to a ten percent (10%)  discount on the Purchase
Price.

            (h) The costs and expenses of the Buyer(s) and Butler  Gonzalez LLP,
which shall be Ten Thousand Dollars  ($10,000) and the retainer of Kirkpatrick &
Lockhart LLP of which Five Thousand  Dollars  ($5,000)  shall be paid for by the
Company  at the  First  Closing  and No  Thousand  Dollars  ($0,)  shall be paid
directly  from the  proceeds  of the  Second  Closing  directly  from the  gross
proceeds held in escrow.

                                       12
<Page>

            (i)  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,  which consent
will not be  unreasonably  withheld.  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.

            (j)  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.

            (k) 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 transfer agent execute and agree to be bound by the terms
of the Irrevocable  Transfer Agent  Instructions (as defined herein) to Transfer
Agent.

            (l)  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),  issue or sell  shares  of  Common  Stock or
Preferred Stock (i) without  consideration or for a consideration per share less
than Fair Market Value of the Common Stock determined  immediately  prior to its
issuance,  (ii) any warrant,  option, right,  contract,  call, or other security
instrument  granting  the  holder  thereof,  the right to acquire  Common  Stock
without  consideration or for a consideration less than such Common Stock's Fair

                                       13
<Page>

Market value 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.

            (m)  Restrictions  on  Short  Selling.  So long  as any  Convertible
Debentures  are  outstanding,  the Buyer  agrees that it will not  initiate  nor
maintain any short selling  positions of the  Company's  capital  stock,  ticker
symbol YTHK.OB,  nor will it allow any affiliated or related persons or entities
to initiate or maintain any such short selling position.

      5.    TRANSFER AGENT INSTRUCTIONS.

      The Company shall issue the Irrevocable Transfer Agent Instructions to its
transfer  agent  irrevocably  appointing  Butler  Gonzalez  LLP as its 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).  Butler
Gonzalez LLP 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 1933 Act, all such certificates
shall bear the restrictive  legend  specified in Section 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 1933 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 1933 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.

                                       14
<Page>

      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  this  Agreement,  the  Security
Agreement,  the Escrow Agreement and the Investor  Registration Rights Agreement
and the Irrevocable  Transfer Agent  Instructions  and delivered the same 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.

            (d)  The  Company  shall  promptly  file,  not  later  than  one day
following the First Closing,  a form UCC -1 with regard to the Pledged  Property
and Pledged  Collateral  as detailed in the  Security  Agreement  dated the date
hereof and provided proof of such filing to the Buyer(s).

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

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

            (a) The Company  shall have executed  this  Agreement,  the Security
Agreement,  the Convertible  Debenture,  the Escrow  Agreement,  the Irrevocable
Transfer  Instructions  and the  Investor  Registration  Rights  Agreement,  and
delivered the same to the Buyer(s).

            (b) 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
of the Conversion Shares issuable upon conversion of the Convertible  Debentures
shall be approved for listing or quotation on the OTCBB.

            (c) 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

                                       15
<Page>

Closing  Dates 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 Closing  Dates.  If requested
by the Buyer,  the Buyer  shall have  received a  certificate,  executed  by the
President of the Company, dated as of the Closing Dates, 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 Closing Dates  regarding the
representation contained in Section 3(c) above.

            (d) 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.

            (e) The  Buyer(s)  shall have  received  an opinion of counsel  from
Kirkpatrick & Lockhart, LLP in a form satisfactory to the Buyer(s).

            (f) 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.

            (g) As of the Closing  Date,  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.

            (h)  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.

            (i)  The   Company   shall  have   provided   to  the   Investor  an
acknowledgement,  to the satisfaction of the Investor, from ___________________,
as to  its  ability  to  provide  all  consents  required  in  order  to  file a
registration statement in connection with this transaction.

            (j) The Company shall promptly file, not more than one day following
the date of the First Closing, a form UCC -1 with regard to the Pledged Property
and Pledged  Collateral  as detailed in the  Security  Agreement  dated the date
hereof and provided proof of such filing to the Buyer(s).

      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

                                       16
<Page>

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
Indemnities,  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
Agreement,  the Investor  Registration Rights Agreement or any other instrument,
document  or  agreement   executed   pursuant  hereto  by  any  of  the  Company
Indemnities.  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 Nevada 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

                                       17
<Page>

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  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:

                                       18
<Page>

If to the Company, to:             Y3K Secure Enterprise Software Inc.
                                   108 West Stewart Street
                                   Puyallup, WA  98371
                                   Attention: King Cole
                                   Telephone: (253) 284-2935
                                   Facsimile: (235) 284-2944

With a copy to:                    Kirkpatrick & Lockhart LLP
                                   201 South Biscayne Boulevard - Suite 2000
                                   Miami, FL  33131-2399
                                   Attention: Clayton E. Parker, Esq.
                                   Telephone: (305) 539-3300
                                   Facsimile: (305) 358-7095

With an additional copy to:        Law Office of Jack G. Orr
                                   110 Old City Hall
                                   625 Commerce Street
                                   Tacoma, WA  98402
                                   Phone: 253.756.9795
                                   Fax:  253.756.9782

If to the Transfer Agent, to       Nevada Agency and Trust Company
                                   50 West Liberty, Suite 880
                                   Reno, NV 89501
                                   Attn: Leah Finke
                                   ph. 775-322-0626
                                   fax 775-322-5623

With Copy to:                      Butler Gonzalez LLP
                                   1000 Stuyvesant Avenue - Suite 6
                                   Union, NJ 07083
                                   Attention: David Gonzalez, Esq.
                                   Telephone: (908) 810-8588
                                   Facsimile: (908) 810-0973

      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.

                                       19
<Page>

            (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).

            (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 Butler Gonzalez 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]

                                       20
<Page>

      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:
                                         Y3K SECURE ENTERPRISE SOFTWARE INC.

                                         By: /s/ King Cole
                                            ------------------------------------
                                         Name: King Cole
                                         Title: President

<Page>

                                                                       EXHIBIT A

                 FORM OF INVESTOR REGISTRATION RIGHTS AGREEMENT

<Page>

                                                                       EXHIBIT B

                            FORM OF ESCROW AGREEMENT

<Page>

                                                                       EXHIBIT C

                     IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

<Page>

                                                                       EXHIBIT D

                               SECURITY AGREEMENT

<Page>

                                   SCHEDULE I

                               SCHEDULE OF BUYERS

<Table>
<Caption>
                                                                          Address/Facsimile         Amount of
            Name                           Signature                       Number of Buyer        Subscription
-----------------------------    -----------------------------   ------------------------------   ------------
<S>                              <C>                             <C>                                <C>
Cornell Capital Partners, LP     By:   Yorkville Advisors, LLC   101 Hudson Street - Suite 3606     $ 350,000
                                 Its:  General Partner           Jersey City, NJ  07303
                                                                    Facsimile: (201) 985-8266

                                 By:
                                    --------------------------
                                 Name: Mark A. Angelo
                                 Its:   Portfolio Manager
</Table>

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