Document:

EXHIBIT
      10.3

     

    Dated:
      April 24, 2006

     

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

     

    
      	
              No.
                CCP-9

            	
              $250,000

            
	 	 

    

    BSI2000,
      INC.

     

    Secured
      Convertible Debenture

     

    Due
      April 24, 2009

     

    This
      Secured Convertible Debenture (the “Debenture”)
      is
      issued by BSI2000,
      INC., a
      Delaware corporation (the “Obligor”),
      to
CORNELL
      CAPITAL PARTNERS, LP
      (the
“Holder”),
      pursuant to that certain Second Amended and Restated Securities Purchase
      Agreement (the “Securities
      Purchase Agreement”)
      of
      even date herewith. 

     

    FOR
      VALUE RECEIVED,
      the
      Obligor hereby promises to pay to the Holder or its successors and assigns
      the
      principal sum of Two Hundred Fifty Thousand Dollars ($250,000) together with
      accrued but unpaid interest on or before April 24, 2009 (the “Maturity
      Date”)
      in
      accordance with the following terms:

     

    Interest.
      Interest shall accrue on the outstanding principal balance hereof at an annual
      rate equal to twelve percent (12%). Interest shall be calculated on the basis
      of
      a 360-day year and the actual number of days elapsed, to the extent permitted
      by
      applicable law. Interest hereunder will be paid to the Holder or its assignee
      (as defined in Section
      4)
      in
      whose name this Debenture is registered on the records of the Obligor regarding
      registration and transfers of Debentures (the “Debenture
      Register”).

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
      the foregoing in the event that the Obligor has elected to redeem a portion
      of
      the outstanding principal amount and accrued interest under this Debenture
      the
      Holder shall still be entitled to effectuate Conversions as contemplated
      hereunder. 

     

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

     

    Consent
      of Holder to Sell Capital Stock or Grant Security Interests.
      Except
      for any issuance of Common Stock to the Holder, so
      long
      as any of the principal amount or interest on this Debenture remains unpaid
      and
      unconverted, the Obligor shall not, without the prior consent of the Holder,
      (i) issue or sell any Common Stock or preferred stock without consideration
or
      for a
      consideration per share less than the Bid Price of the Common Stock determined
      immediately prior to its issuance,
      (ii) issue or sell any preferred stock, warrant, option, right, contract,
      call, or other security or instrument granting the holder thereof the right
      to
      acquire Common Stock without consideration or
      for a
      consideration per share less than the Bid Price of the Common Stock determined
      immediately prior to its issuance,
      (iii)
      enter into any security instrument granting the holder a security interest
      in
      any of the assets of the Obligor, or
      (iv)
      file any
      registration statements on Form S-8.

     

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

     

    This
      Debenture is subject to the following additional provisions:

     

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

     

    Section
      2. Events
      of Default.

     

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

     

    
      
        
        

      

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

     

    (ii) The
      Obligor shall fail to observe or perform any other covenant, agreement or
      warranty contained in, or otherwise commit any breach or default of any
      provision of this Debenture (except as may be covered by Section
      2(a)(i)
      hereof),
      any Transaction Document (as defined in Section
      4),
      the
      Securities Purchase Agreement dated June 17, 2005 or any and all related
      documents, agreements or instruments thereto, including without limitation
      the
      Warrant dated June 17, 2005, or the Securities Purchase Agreement dated
      September 30, 2004 or any and all related documents, agreements or instruments
      thereto, which is not cured within ten (10) written notice of such
      default;

     

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

     

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

     

    
      
        
        

      

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

     

    (vi) The
      Obligor or any subsidiary of the Obligor shall be a party to any Change of
      Control Transaction (as defined in Section
      4);
      

     

    (vii) The
      Obligor shall fail to file the Underlying Shares Registration Statement (as
      defined in Section
      4)
      with
      the Commission (as defined in Section
      4),
      or the
      Underlying Shares Registration Statement shall not have been declared effective
      by the Commission, in each case within the time periods set forth in the Amended
      and Restated Investor Registration Rights Agreement of even date herewith
      between the Obligor and the Holder;

     

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

     

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

     

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

     

    (b) During
      the time that any portion of this Debenture is outstanding, if any Event of
      Default has occurred, the full principal amount of this Debenture, together
      with
      interest and other amounts owing in respect thereof, to the date of acceleration
      shall become at the Holder's election, immediately due and payable in cash,
      provided
      however,
      the
      Holder may request (but shall have no obligation to request) payment of such
      amounts in Common Stock of the Obligor. In addition to any other remedies,
      the
      Holder shall have the right (but not the obligation) to convert this Debenture
      at any time after (x) an Event of Default or (y) the Maturity Date at the
      Conversion Price then in-effect. The Holder need not provide and the Obligor
      hereby waives any presentment, demand, protest or other notice of any kind,
      and
      the Holder may immediately and without expiration of any grace period enforce
      any and all of its rights and remedies hereunder and all other remedies
      available to it under applicable law. Such declaration may be rescinded and
      annulled by Holder at any time prior to payment hereunder. No such rescission
      or
      annulment shall affect any subsequent Event of Default or impair any right
      consequent thereon. Upon an Event of Default, notwithstanding any other
      provision of this Debenture or any Transaction Document, the Holder shall have
      no obligation to comply with or adhere to any limitations, if any, on the
      conversion of this Debenture or the sale of the Underlying Shares.

     

    
      
        
        

      

      
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    Section
      3. Conversion.

     

    (a) (i) Conversion
      at Option of Holder.

     

    (A) This
      Debenture shall be convertible into shares of Common Stock at the option of
      the
      Holder, in whole or in part at any time and from time to time, after the
      Original Issue Date (as defined in Section 4) (subject to the limitations on
      conversion set forth in Section
      3(a)(ii)
      hereof).
      The number of shares of Common Stock issuable upon a conversion hereunder equals
      the quotient obtained by dividing (x) the outstanding amount of this Debenture
      to be converted by (y) the Conversion Price (as defined in Section
      3(c)(i)).
      The
      Obligor shall deliver Common Stock certificates to the Holder prior to the
      Fifth
      (5th)
      Trading
      Day after a Conversion Date.

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (ii) Certain
      Conversion Restrictions.

     

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

     

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

     

    (ii) In
      addition to any other rights available to the Holder, if the Obligor fails
      to
      deliver to the Holder such certificate or certificates pursuant to Section
      3(a)(i)(A)
      by the
      fifth (5th)
      Trading
      Day after the Conversion Date, and if after such fifth (5th)
      Trading
      Day the Holder purchases (in an open market transaction or otherwise) Common
      Stock to deliver in satisfaction of a sale by such Holder of the Underlying
      Shares which the Holder anticipated receiving upon such conversion (a
“Buy-In”),
      then
      the Obligor shall (A) pay in cash to the Holder (in addition to any remedies
      available to or elected by the Holder) the amount by which (x) the Holder's
      total purchase price (including brokerage commissions, if any) for the Common
      Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
      of Common Stock that such Holder anticipated receiving from the conversion
      at
      issue multiplied by (2) the market price of the Common Stock at the time of
      the
      sale giving rise to such purchase obligation and (B) at the option of the
      Holder, either reissue a Debenture in the principal amount equal to the
      principal amount of the attempted conversion or deliver to the Holder the number
      of shares of Common Stock that would have been issued had the Obligor timely
      complied with its delivery requirements under Section
      3(a)(i)(A).
      For
      example, if the Holder purchases Common Stock having a total purchase price
      of
      $11,000 to cover a Buy-In with respect to an attempted conversion of Debentures
      with respect to which the market price of the Underlying Shares on the date
      of
      conversion was a total of $10,000 under clause (A) of the immediately preceding
      sentence, the Obligor shall be required to pay the Holder $1,000. The Holder
      shall provide the Obligor written notice indicating the amounts payable to
      the
      Holder in respect of the Buy-In.

     

    
      
        
        

      

      
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    (c) (i) The
      Holder is entitled, at its option, to convert, and sell on the same day, at
      any
      time, until payment in full of this Debenture, all or any part of the principal
      amount of the Debenture, plus accrued interest, into shares of the Obligor’s
      Common Stock, par value $0.001 per share, at the price per share equal to the
      lesser of (a) an amount equal to one hundred twenty percent (120%) of the
      Closing Bid Price of the Common Stock on the date hereof (the “Fixed
      Price”)
      or
      (b) an amount equal to eighty percent (80%) of the lowest Closing Bid
      Price of the Common Stock for the five (5) trading days immediately preceding
      the Conversion Date which may be adjusted pursuant to the other terms of this
      Debenture. Subparagraphs (a) and (b) above are individually referred to as
      a “Conversion
      Price.”
      

     

    (ii) If
      the
      Obligor, at any time while this Debenture is outstanding, shall (a) pay a
      stock dividend or otherwise make a distribution or distributions on shares
      of
      its Common Stock or any other equity or equity equivalent securities payable
      in
      shares of Common Stock, (b) subdivide outstanding shares of Common Stock into
      a
      larger number of shares, (c) combine (including by way of reverse stock split)
      outstanding shares of Common Stock into a smaller number of shares, or (d)
      issue
      by reclassification of shares of the Common Stock any shares of capital stock
      of
      the Obligor, then the Fixed Price shall be multiplied by a fraction of which
      the
      numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding before such event and of which the denominator
      shall
      be the number of shares of Common Stock outstanding after such event. Any
      adjustment made pursuant to this Section shall become effective immediately
      after the record date for the determination of stockholders entitled to receive
      such dividend or distribution and shall become effective immediately after
      the
      effective date in the case of a subdivision, combination or
      re-classification.

     

    (iii) If
      the
      Obligor, at any time while this Debenture is outstanding, shall issue rights,
      options or warrants to all holders of Common Stock (and not to the Holder)
      entitling them to subscribe for or purchase shares of Common Stock at a price
      per share less than the Fixed Price, then the Fixed Price shall be multiplied
      by
      a fraction, of which the denominator shall be the number of shares of the Common
      Stock (excluding treasury shares, if any) outstanding on the date of issuance
      of
      such rights or warrants (plus the number of additional shares of Common Stock
      offered for subscription or purchase), and of which the numerator shall be
      the
      number of shares of the Common Stock (excluding treasury shares, if any)
      outstanding on the date of issuance of such rights or warrants, plus the number
      of shares which the aggregate offering price of the total number of shares
      so
      offered would purchase at the Fixed Price. Such adjustment shall be made
      whenever such rights or warrants are issued, and shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such rights, options or warrants. However, upon the expiration of
      any
      such right, option or warrant to purchase shares of the Common Stock the
      issuance of which resulted in an adjustment in the Fixed Price pursuant to
      this
      Section, if any such right, option or warrant shall expire and shall not have
      been exercised, the Fixed Price shall immediately upon such expiration be
      recomputed and effective immediately upon such expiration be increased to the
      price which it would have been (but reflecting any other adjustments in the
      Fixed Price made pursuant to the provisions of this Section after the issuance
      of such rights or warrants) had the adjustment of the Fixed Price made upon
      the
      issuance of such rights, options or warrants been made on the basis of offering
      for subscription or purchase only that number of shares of the Common Stock
      actually purchased upon the exercise of such rights, options or warrants
      actually exercised.

     

    
      
        
        

      

      
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    (iv) If
      the
      Obligor or any subsidiary thereof, as applicable, at any time while this
      Debenture is outstanding, shall issue shares of Common Stock or rights,
      warrants, options or other securities or debt that are convertible into or
      exchangeable for shares of Common Stock (“Common
      Stock Equivalents”)
      entitling any Person to acquire shares of Common Stock, at a price per share
      less than the Fixed Price (if the holder of the Common Stock or Common Stock
      Equivalent so issued shall at any time, whether by operation of purchase price
      adjustments, reset provisions, floating conversion, exercise or exchange prices
      or otherwise, or due to warrants, options or rights per share which is issued
      in
      connection with such issuance, be entitled to receive shares of Common Stock
      at
      a price per share which is less than the Fixed Price, such issuance shall be
      deemed to have occurred for less than the Fixed Price), then, at the sole option
      of the Holder, the Fixed Price shall be adjusted to mirror the conversion,
      exchange or purchase price for such Common Stock or Common Stock Equivalents
      (including any reset provisions thereof) at issue. Such adjustment shall be
      made
      whenever such Common Stock or Common Stock Equivalents are issued. The Obligor
      shall notify the Holder in writing, no later than one (1) business day following
      the issuance of any Common Stock or Common Stock Equivalent subject to this
      Section, indicating therein the applicable issuance price, or of applicable
      reset price, exchange price, conversion price and other pricing terms. No
      adjustment under this Section shall be made as a result of issuances and
      exercises of options to purchase shares of Common Stock issued for compensatory
      purposes pursuant to any of the Obligor's stock option or stock purchase
      plans.

     

    (v) If
      the
      Obligor, at any time while this Debenture is outstanding, shall distribute
      to
      all holders of Common Stock (and not to the Holder) evidences of its
      indebtedness or assets or rights or warrants to subscribe for or purchase any
      security, then in each such case the Fixed Price at which this Debenture shall
      thereafter be convertible shall be determined by multiplying the Fixed Price
      in
      effect immediately prior to the record date fixed for determination of
      stockholders entitled to receive such distribution by a fraction of which the
      denominator shall be the Closing Bid Price determined as of the record date
      mentioned above, and of which the numerator shall be such Closing Bid Price
      on
      such record date less the then fair market value at such record date of the
      portion of such assets or evidence of indebtedness so distributed applicable
      to
      one outstanding share of the Common Stock as determined by the Board of
      Directors in good faith. In either case the adjustments shall be described
      in a
      statement provided to the Holder of the portion of assets or evidences of
      indebtedness so distributed or such subscription rights applicable to one share
      of Common Stock. Such adjustment shall be made whenever any such distribution
      is
      made and shall become effective immediately after the record date mentioned
      above.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

    (vii) The
      Obligor shall maintain a share reserve of not less than one hundred percent
      (100%) of the shares of Common Stock issuable upon conversion of this Debenture;
      and within three (3) Business Days following the receipt by the Obligor of
      a
      Holder's notice that such minimum number of Underlying Shares is not so
      reserved, the Obligor shall promptly reserve a sufficient number of shares
      of
      Common Stock to comply with such requirement.

     

    (viii) All
      calculations under this Section
      3
      shall be
      rounded up to the nearest $0.001 of a share.

     

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

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      	
              If
                to the Obligor, to:

            	
              BSI2000,
                Inc.

            
	 	
              12600
                West Colfax Avenue, B410

            
	 	
              Lakewood,
                CO 80215

            
	 	
              Attention: Jack
                Harper, CEO

            
	 	
              Telephone: (303)
                231-9095

            
	 	
              Facsimile: (303)
                231-9002

            
	 	 
	
              With
                a copy to: 

            	
              Kirkpatrick
                & Lockhart Nicholson Graham LLP

            
	 	
              201
                South Biscayne Boulevard, Suite 2000

            
	 	
              Miami,
                Florida 33131

            
	 	
              Attention: Clayton
                E. Parker, Esq.

            
	 	
              Telephone: (305)
                539-3306

            
	 	
              Facsimile: (305)
                328-7095

            
	 	 
	
              If
                to the Holder:

            	
              Cornell
                Capital Partners, LP

            
	 	
              101
                Hudson Street, Suite 3700

            
	 	
              Jersey
                City, NJ 07303

            
	 	
              Attention: Mark
                Angelo

            
	 	
              Telephone: (201)
                985-8300

            

    

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
              With
                a copy to:

            	
              David
                Gonzalez, Esq. 

            
	 	
              101
                Hudson Street - Suite 3700

            
	 	
              Jersey
                City, NJ 07302

            
	 	
              Telephone: (201)
                985-8300

            
	 	
              Facsimile: (201)
                985-8266

            
	 	 

    

    

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

     

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

     

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

     

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

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock, par value $0.001, of the Obligor and stock of any other class
      into which such shares may hereafter be changed or reclassified.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Transaction
      Documents”
means
      the Securities Purchase Agreement or any other agreement delivered in connection
      with the Securities Purchase Agreement, including, without limitation, the
      Fourth Amended and Restated Security Agreement, the Second Amended and Restated
      Investor Registration Rights Agreement, the Second Amended and Restated
      Irrevocable Transfer Agent Instructions and the Warrant dated November 3, 2005,
      the Warrants dated February 10, 2006 and the Warrants of even date
      herewith.

     

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

     

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

     

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Section
      12. If
      any
      provision of this Debenture is invalid, illegal or unenforceable, the balance
      of
      this Debenture shall remain in effect, and if any provision is inapplicable
      to
      any person or circumstance, it shall nevertheless remain applicable to all
      other
      persons and circumstances. If it shall be found that any interest or other
      amount deemed interest due hereunder shall violate applicable laws governing
      usury, the applicable rate of interest due hereunder shall automatically be
      lowered to equal the maximum permitted rate of interest. The Obligor covenants
      (to the extent that it may lawfully do so) that it shall not at any time insist
      upon, plead, or in any manner whatsoever claim or take the benefit or advantage
      of, any stay, extension or usury law or other law which would prohibit or
      forgive the Obligor from paying all or any portion of the principal of or
      interest on this Debenture as contemplated herein, wherever enacted, now or
      at
      any time hereafter in force, or which may affect the covenants or the
      performance of this indenture, and the Obligor (to the extent it may lawfully
      do
      so) hereby expressly waives all benefits or advantage of any such law, and
      covenants that it will not, by resort to any such law, hinder, delay or impeded
      the execution of any power herein granted to the Holder, but will suffer and
      permit the execution of every such as though no such law has been
      enacted.

     

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

     

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

     

    [SIGNATURE
      PAGE FOLLOWS; REMAINDER OF PAGE INTENTIONLLY BLANK]

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	
              BSI2000,
                INC. 

            
	 	 
	 	
              By:
                /s/ Jack Harper

            
	 	
              Name: 
                Jack Harper

            
	 	
              Title: 
                Chairman and Chief Executive
                Officer

            

    

    

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    EXHIBIT
      “A”

     

    NOTICE
      OF CONVERSION

     

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

     

    

    
      	
              TO:

            	 

    

    

    The
      undersigned hereby irrevocably elects to convert $__________________________
      of
      the
      principal amount of the above Debenture into Shares of Common Stock of BSI2000,
      Inc., according to the conditions stated therein, as of the Conversion Date
      written below.

     

    
      	
              Conversion
                Date:

            	 	 	   

	
              Applicable
                Conversion Price:

            	 	 	  

	
              Signature:

            	 	 	  

	
              Name:

            	 	 	  

	
              Address:

            	 	 	  

	
              Amount
                to be converted:

            	 	
              $

            	
                
                

            
	
              Amount
                of Debenture unconverted:

            	 	
              $ 

            	
                
                

            
	
              Conversion
                Price per share: 

            	 	
              $

            	
                
                

            
	
              Number
                of shares of Common Stock to be issued:

            	 	 	  

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

            	 	 	  

	
              Issue
                to:

            	 	 	  

	
              Authorized
                Signature:

            	 	 	  

	
              Name:

            	 	 	  

	
              Title:

            	 	 	  

	
              Phone
                Number:

            	 	 	  

	
              Broker
                DTC Participant Code:

            	 	 	  

	
              Account
                Number:EXHIBIT
        10.4

       

      FOURTH
        AMENDED AND RESTATED SECURITY
        AGREEMENT

       

      THIS
        FOURTH AMENDED AND RESTATED SECURITY AGREEMENT
        (the
“Agreement”), is
        entered into and made effective as of April 24, 2006, by and between
BSI2000,
        INC., a
        Delaware corporation with its principal place of business located at 12600
        West
        Colfax Avenue, B410, Lakewood, CO 80215 (the “Company”),
        and
        the BUYER(S)
        listed
        on Schedule I attached to the Securities Purchase Agreement dated the date
        hereof (the
        “Secured
        Party”).

       

      RECITALS:

       

      WHEREAS,
        the
        Company issued to the Secured Party, as provided in the Securities Purchase
        Agreement dated September 30, 2004 (the “2004
        SPA”)
        between the Company and the Secured Party, and the Secured Party purchased
        One
        Million Two Hundred Fifty Thousand Dollars ($1,250,000) of secured convertible
        debentures plus accrued and unpaid interest, and the Company issued to the
        Secured Party, as provided in the Securities Purchase Agreement dated June
        17,
        2005 (the “June
        2005 SPA”)
        between the Company and the Secured Party, and the Secured Party purchased
        One
        Million Two Hundred Fifty Thousand Dollars ($1,250,000) of secured convertible
        debentures plus accrued and unpaid interest (the convertible debentures issued
        pursuant to both the 2004 SPA and the June 2005 SPA shall collectively be
        referred to as the “Prior
        Debentures”).
        The
        Company hereby expressly reaffirms all of the principal and accrued but unpaid
        interest under the Prior Debentures. 

       

      WHEREAS,
        this
        Agreement shall amended and restated the Third Amended and Restated Security
        Agreement between the parties hereto dated February 10, 2006, amend and restate
        the Second Amended and Restated Security Agreement between the parties hereto
        dated November 3, 2005, the Security Agreement between the parties hereto
        dated
        September 30, 2004 and shall amend and restate the Amended and Restated Security
        Agreement dated June 17, 2005. 

       

      WHEREAS,
        the
        Company has requested the Secured Party to make additional financing available
        to the Company. 

       

      WHEREAS,
        the
        Secured Party is willing to provide such additional financing on the condition
        that such additional financing is secured hereunder and under the UCC-1 filed
        on
        October 15, 2004 (#20042113504) filed in connection with the Securities Purchase
        Agreement dated September 30, 2004. 

       

      WHEREAS,
        the
        Company shall issue and sell to the Secured Party, as provided in the Second
        Amended and Restated Securities Purchase Agreement of even date herewith
        between
        the Company and the Secured Party (the “Securities
        Purchase Agreement”),
        and
        the Secured Party shall purchase up to One Million Five Hundred Thousand
        Dollars
        ($1,500,000) of secured convertible debentures (the “Convertible
        Debentures”),
        which
        shall be convertible into shares of the Company’s common stock, par value $0.001
        (the “Common
        Stock”)
        (as
        converted, the “Conversion
        Shares”)
        in the
        respective amounts set forth opposite each Buyer(s) name on Schedule I
        attached to the Securities Purchase Agreement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      WHEREAS,
        to
        induce
        the Secured Party to enter into the transaction contemplated by the Securities
        Purchase Agreement, the Convertible Debentures, the Second Amended and Restated
        Investor Registration Rights Agreement of even date herewith between the
        Company
        and the Secured Party (the “Investor
        Registration Rights Agreement”),
        the
        Warrants of even date herewith, the Warrants dated February 10, 2006 and
        the
        Warrant dated November 3, 2005 and the Second Amended and Restated Irrevocable
        Transfer Agent Instructions among the Company, the Secured Party, the Transfer
        Agent, and David Gonzalez, Esq. (the “Transfer
        Agent Instructions”)
        (collectively referred to as the “Transaction
        Documents”),
        the
        Company hereby grants to the Secured Party a security interest in and to
        the
        pledged property identified on Exhibit
        A
        hereto
        (collectively referred to as the “Pledged
        Property”)
        until
        the satisfaction of the Obligations, as defined herein below.

       

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

       

      ARTICLE
        1.

       

      DEFINITIONS
        AND INTERPRETATIONS

       

      Section
        1.1. Recitals.
        

       

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

       

      Section
        1.2. Interpretations.
        

       

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

       

      Section
        1.3. Obligations
        Secured.

       

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

       

      ARTICLE
        2.

       

      PLEDGED
        COLLATERAL, ADMINISTRATION OF COLLATERAL 

      AND
        TERMINATION OF SECURITY INTEREST

       

      Section
        2.1. Pledged
        Property.

       

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

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      The
        Pledged Property, as set forth in Exhibit “A”
        attached
        hereto, and the products thereof and the proceeds of all such items are
        hereinafter collectively referred to as the “Pledged
        Collateral.”

       

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

       

      Section
        2.2. Rights;
        Interests; Etc.

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

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

       

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

       

      ARTICLE
        3.

       

      ATTORNEY-IN-FACT;
        PERFORMANCE

       

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

       

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

       

      Section
        3.2. Secured
        Party May Perform.

       

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

       

      ARTICLE
        4.

       

      REPRESENTATIONS
        AND WARRANTIES

       

      Section
        4.1. Authorization;
        Enforceability.

       

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

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      Section
        4.2. Ownership
        of Pledged Property.

       

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

       

      ARTICLE
        5.

       

      DEFAULT;
        REMEDIES; SUBSTITUTE COLLATERAL

       

      Section
        5.1. Default
        and Remedies.

       

      (a) If
        an
        Event of Default described in Section 2.2(c)(i) and (ii) occurs,
        then in each such case the Secured Party may declare the Obligations to be
        due
        and payable immediately, by a notice in writing to the Company, and upon
        any
        such declaration, the Obligations shall become immediately due and payable.
        If
        an Event of Default described in Sections 2.2(c)(iii) or
        (iv) occurs and is continuing for the period set forth therein, then the
        Obligations shall automatically become immediately due and payable without
        declaration or other act on the part of the Secured Party.

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

      Section
        5.3. Proofs
        of Claim.

       

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

       

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

       

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

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      Section
        5.4. Duties
        Regarding Pledged Collateral.

       

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

       

      ARTICLE
        6.

       

      AFFIRMATIVE
        COVENANTS

       

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

       

      Section
        6.1. Existence,
        Properties, Etc.

       

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

       

      Section
        6.2. Financial
        Statements and Reports.

       

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

       

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

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

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

       

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

       

      Section
        6.3. Accounts
        and Reports.

       

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

       

      (a) as
        soon
        as available, a copy of any notice or other communication alleging any
        nonpayment or other material breach or default, or any foreclosure or other
        action respecting any material portion of its assets and properties, received
        respecting any of the indebtedness of the Company in excess of $15,000 (other
        than the Obligations), or any demand or other request for payment under any
        guaranty, assumption, purchase agreement or similar agreement or arrangement
        respecting the indebtedness or obligations of others in excess of $15,000,
        including any received from any person acting on behalf of the Secured Party
        or
        beneficiary thereof; and

       

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

       

      Section
        6.4. Maintenance
        of Books and Records; Inspection.

       

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

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      Section
        6.5. Maintenance
        and Insurance.

       

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

       

      (b) The
        Company shall maintain or cause to be maintained, at its own expense, insurance
        in form, substance and amounts (including deductibles), which the Company
        deems
        reasonably necessary to the Company’s business, (i) adequate to insure all
        assets and properties of the Company, which assets and properties are of
        a
        character usually insured by persons engaged in the same or similar business
        against loss or damage resulting from fire or other risks included in an
        extended coverage policy; (ii) against public liability and other tort
        claims that may be incurred by the Company; (iii) as may be required by the
        Transaction Documents and/or applicable law and (iv) as may be reasonably
        requested by Secured Party, all with adequate, financially sound and reputable
        insurers.

       

      Section
        6.6. Contracts
        and Other Collateral.

       

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

       

      Section
        6.7. Defense
        of Collateral, Etc.

       

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

       

      Section
        6.8. Payment
        of Debts, Taxes, Etc.

       

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

       

      Section
        6.9. Taxes
        and Assessments; Tax Indemnity.

       

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

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      Section
        6.10. Compliance
        with Law and Other Agreements.
        

       

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

       

      Section
        6.11. Notice
        of Default.
        

       

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

       

      Section
        6.12. Notice
        of Litigation.

       

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

       

      ARTICLE
        7.

       

      NEGATIVE
        COVENANTS

       

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

       

      Section
        7.1. Indebtedness.

       

      The
        Company shall not directly or indirectly permit, create, incur, assume, permit
        to exist, increase, renew or extend on or after the date hereof any indebtedness
        on its part, including commitments, contingencies and credit availabilities,
        or
        apply for or offer or agree to do any of the foregoing (excluding any
        indebtedness of the Company to the Secured Party, trade accounts payable
        and
        accrued expenses incurred in the ordinary course of business and the endorsement
        of negotiable instruments payable to the Company, respectively for deposit
        or
        collection in the ordinary course of business).

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      Section
        7.2. Liens
        and Encumbrances.

       

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

       

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

       

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

       

      Section
        7.4. Management,
        Ownership.

       

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

       

      Section
        7.5. Dividends,
        Etc.

       

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

       

      Section
        7.6. Guaranties;
        Loans.

       

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

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      Section
        7.7. Conduct
        of Business.

       

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

       

      Section
        11.8. Places
        of Business.

       

      The
        location of the Company’s chief place of business is 12600 West Colfax Avenue,
        B410, Lakewood, CO 80215. The Company shall not change the location of its
        chief
        place of business, chief executive office or any place of business disclosed
        to
        the Secured Party or move any of the Pledged Property from its current location
        without thirty (30) days' prior written notice to the Secured Party in each
        instance. 

       

      ARTICLE
        8.

       

      MISCELLANEOUS

       

      Section
        8.1. Notices.

       

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

       

      
        	
                If
                  to the Secured Party:

              	
                Cornell
                  Capital Partners, LP

              
	 	
                101
                  Hudson Street-Suite 3700 

              
	 	
                Jersey
                  City, New Jersey 07302 

              
	 	
                Attention: Mark
                  Angelo

              
	 	
                Portfolio
                  Manager

              
	 	
                Telephone: (201)
                  986-8300

              
	 	
                Facsimile: (201)
                  985-8266

              
	 	 
	
                With
                  a copy to:

              	
                David
                  Gonzalez, Esq.

              
	 	
                101
                  Hudson Street, Suite 3700

              
	 	
                Jersey
                  City, NJ 07302

              
	 	
                Telephone: (201)
                  985-8300

              
	 	
                Facsimile: (201)
                  985-8266

              

      

       

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      
        	
                And
                  if to the Company:

              	
                BSI2000,
                  INC.

              
	 	
                12600
                  West Colfax Avenue, B410

              
	 	
                Lakewood,
                  CO 80215

              
	 	
                Attention: Jack
                  Harper, CEO

              
	 	
                Telephone: (303)
                  231-9095

              
	 	
                Facsimile: (303)
                  231-9002

              
	 	 
	
                With
                  a copy to:

              	
                Kirkpatrick
                  & Lockhart Nicholson Graham, LLP

              
	 	
                201
                  South Biscayne Boulevard, Suite 2000

              
	 	
                Miami,
                  Florida 33131

              
	 	
                Attention: Clayton
                  E. Parker, Esq.

              
	 	
                Telephone: (305)
                  539-3306

              
	 	
                Facsimile: (305)
                  328-7095

              

      

      

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

       

      Section
        8.2. Severability.

       

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

       

      Section
        8.3. Expenses.

       

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

       

      Section
        8.4. Waivers,
        Amendments, Etc.

       

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

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      Section
        8.5. Continuing
        Security Interest.

       

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

       

      Section
        8.6. Independent
        Representation.

       

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

       

      Section
        8.7. Applicable
        Law: Jurisdiction.

       

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

       

      Section
        8.8. Waiver
        of Jury Trial.

       

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

       

      Section
        8.9. Entire
        Agreement.

       

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

       

      
        [SIGNATURE
          PAGE FOLLOWS; REMAINDER OF PAGE INTENTIONALLY BLANK]

         

        
          
            
            

          

          
            14

            
              

            

          

          
            
            

          

        

      

       

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

         

        
          	 	
                  COMPANY:

                
	 	
                  BSI2000,
                    INC.

                
	 	 
	 	
                  By:
                    /s/ Jack Harper

                
	 	
                  Name: Jack
                    Harper

                
	 	
                  Title: President
                    & CEO

                
	 	 
	 	 
	 	
                  SECURED
                    PARTY:

                
	 	
                  CORNELL
                    CAPITAL PARTNERS, LP

                
	 	 
	 	
                  By: Yorkville
                    Advisors, LLC

                
	 	
                  Its: General
                    Partner

                
	 	 
	 	
                  By:
                    /s/ Mark Angelo

                
	 	
                  Name: Mark
                    Angelo

                
	 	
                  Title: Portfolio
                    Manager

                
	 	 

        

      

    

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
        A

      DEFINITION
        OF PLEDGED PROPERTY

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        A-1

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