EXHIBIT 10.18

                               SECURITY AGREEMENT
                               ------------------

     THIS  SECURITY  AGREEMENT  (the  "Agreement"),  is  entered  into  and made
                                       ---------
effective  as  of May 19, 2004, by and between NS8 CORPORATION, (the "Company"),
                                                                      -------
and  the  BUYER(S)  listed  on  Schedule  I  attached to the Securities Purchase
Agreement  dated  the  date  hereof  (the  "Secured  Party").
                                            --------------

     WHEREAS, the Company shall issue and sell to the Secured Party, as provided
in  the  Securities  Purchase  Agreement  dated the date hereof, and the Secured
Party  shall  purchase  up  to  One  Million  Five  Hundred  Thousand  Dollars
($1,500,000)  of  five  percent  (5%)  secured  convertible  debentures  (the
"Convertible  Debentures"),  which  shall  be  convertible  into  shares  of the
 -----------------------
Company's  common  stock, par value $___ (the "Common Stock") (as converted, the
                                               ------------
"Conversion  Shares"),  for  a  total  purchase  price of up to One Million Five
 ------------------
Hundred  Thousand  Dollars  ($1,500,000),  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 Secured Convertible Debenture, the
Investor  Registration  Rights  Agreement,  the  Irrevocable  Transfer  Agent
Instructions,  and  the  Escrow  Agreement  (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, in consideration of the premises 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
                         DEFINITIONS AND INTERPRETATIONS
                         -------------------------------

     Section     Recitals.
                 --------

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

     Section     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     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


                                      E-98
<PAGE>

written  and  whether  arising  before,  on  or after the date hereof including,
without  limitation, those obligations of the Company to the Secured Party under
the  Securities  Purchase  Agreement,  the  Secured  Convertible  Debenture, the
Investor  Registration  Rights  Agreement  and  Irrevocable  Transfer  Agent
Instructions,  and  any other amounts now or hereafter owed to the Secured Party
by  the  Company  thereunder  or  hereunder  (collectively,  the "Obligations").
                                                                  -----------

                                     ARTICLE
                PLEDGED COLLATERAL, ADMINISTRATION OF COLLATERAL
                ------------------------------------------------
                      AND TERMINATION OF SECURITY INTEREST
                      ------------------------------------

     Section     Pledged  Property.
                 -----------------

          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"):
              ----------                                     ----------------

     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."
                        -------------------

          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     Rights;  Interests;  Etc.
                 -------------------------

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

          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

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

          Upon the occurrence and during the continuance of an Event of Default:


                                      E-99
<PAGE>

          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

     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

     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

          Each  of  the  following  events shall constitute a default under this
Agreement  (each  an  "Event  of  Default"):
                       ------------------

          any  default,  whether in whole or in part, shall occur in the payment
to  the  Secured  Party  of  principal,  interest  or  other item comprising the
Obligations  as  and when due or with respect to any other debt or obligation of
the  Company  to  a  party  other  than  the  Secured  Party;

     any default, whether in whole or in part, shall occur in the due observance
or  performance of any obligations or other covenants, terms or provisions to be
performed  under  this  Agreement  or  the  Transaction  Documents;

     the  Company  shall:  (1)  make a general assignment for the benefit of its
creditors;  (2)  apply for or consent to the appointment of a receiver, trustee,
assignee,  custodian, sequestrator, liquidator or similar official for itself or
any  of its assets and properties; (3) commence a voluntary case for relief as a
debtor  under  the  United  States  Bankruptcy  Code; (4) file with or otherwise
submit  to  any  governmental  authority  any petition, answer or other document
seeking:  (A)  reorganization,  (B) an arrangement with creditors or (C) to take
advantage  of  any other present or future applicable law respecting bankruptcy,
reorganization,  insolvency,  readjustment  of  debts,  relief  of  debtors,
dissolution  or  liquidation;  (5)  file or otherwise submit any answer or other
document  admitting or failing to contest the material allegations of a petition
or  other  document  filed  or  otherwise submitted against it in any proceeding
under  any such applicable law, or (6) be adjudicated a bankrupt or insolvent by
a  court  of  competent  jurisdiction;  or


                                      E-100
<PAGE>

     any case, proceeding or other action shall be commenced against the Company
for  the  purpose of effecting, or an order, judgment or decree shall be entered
by  any court of competent jurisdiction approving (in whole or in part) anything
specified  in  Section  2.2(c)(iii)  hereof, or any receiver, trustee, assignee,
custodian,  sequestrator,  liquidator  or other official shall be appointed with
respect to the Company, or shall be appointed to take or shall otherwise acquire
possession  or control of all or a substantial part of the assets and properties
of  the  Company, and any of the foregoing shall continue unstayed and in effect
for  any  period  of  thirty  (30)  days.

                                     ARTICLE
                          ATTORNEY-IN-FACT; PERFORMANCE
                          -----------------------------

     Section     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     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

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

     Section     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.


                                      E-101
<PAGE>

     Section     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
                    DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL
                    ----------------------------------------

     Section     Default  and  Remedies.
                 ----------------------

          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.

     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     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:

          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  shall  in  any  event 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.

     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:


                                      E-102
<PAGE>

          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;

     to  the  payment  of  the  Obligations  then  due  and  unpaid.

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

          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.

          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.

     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     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:

          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

     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.


                                      E-103
<PAGE>

     Section     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
                              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     Existence,  Properties,  Etc.
                 -----------------------------

          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     Financial  Statements  and  Reports.
                 -----------------------------------

     The  Company  shall furnish to the Secured Party such financial data as the
Secured  Party  may  reasonably  request.  Without  limiting  the foregoing, the
Company  shall  furnish  to  the  Secured Party (or cause to be furnished to the
Secured  Party)  the  following:

     (a)     as  soon  as  practicable  and in any event within ninety (90) days
after  the  end  of  each  fiscal  year of the Company, the balance sheet of the
Company  as  of  the  close  of  such 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


                                      E-104
<PAGE>

Default  has  occurred  and  is  continuing,  specifying the nature of same, the
period  of  existence  of  same  and  the action the Company proposes to take in
connection  therewith;

(b)     within  thirty  (30)  days  of the end of each calendar month, a balance
sheet  of  the  Company as of the close of such 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)     promptly  upon  receipt  thereof, 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     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:

          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

     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     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.


                                      E-105
<PAGE>

     Section     Maintenance  and  Insurance.
                 ---------------------------

          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.

     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     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     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     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     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


                                      E-106
<PAGE>

thereto,  and  (c) pay all taxes, assessments and governmental charges or levies
that,  if  unpaid,  might  become  a  lien or charge upon any of its properties;
provided,  however,  that  the  Company  in good faith may contest any such tax,
assessment,  governmental  charge or levy described in the foregoing clauses (b)
and  (c)  so  long  as appropriate reserves are maintained with respect thereto.

     Section     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     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     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
                               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     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


                                      E-107
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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  7.2     Articles,  By-Laws,  Mergers, Consolidations, Acquisitions
                      ----------------------------------------------------------
and  Sales.
  --------

     Without the prior express written consent of the Secured Party, the Company
shall  not:  (a)  Amend  its  Articles 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  7.3 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  7.4     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  7.5Guaranties;  Loans.
                 ------------------

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

     Section  7.6 Debt.
                  ----

     The  Company  shall not directly or indirectly permit create, incur, assume
or  suffer to exist any additional indebtedness of any description whatsoever in
an  aggregate  amount  in excess of $25,000 including commitments, contingencies


                                      E-108
<PAGE>

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).

     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  7.8     Places  of  Business.
                      --------------------

     The  location of the Company's chief place of business is Two Union Square,
601 Union Street - Suite 4200 Seattle, Washington 98101 and 200-1311 Howe Street
Vancouver, BC Canada V6Z 2P3 .  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
                                  MISCELLANEOUS
                                  -------------

     Section     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:               Butler  Gonzalez  LLP
                                      1416  Morris  Avenue  -  Suite  207
                                      Union,  New  Jersey  07083
                                      Attention:  David  Gonzalez,  Esq.
                                      Telephone:  (908)  810-8588
                                      Facsimile:  (908)  810-0973


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     And  if  to  the  Company:       NS8  Corporation
                                      Two  Union  Square
                                      601  Union  Street  -  Suite  2400
                                      Seattle,  WA  98101
                                      Attention:      Peter  Hogendoorn
                                      Telephone:    (206)  652-3338
                                      Facsimile:     (206)  652-3205

                                      NS8  Corporation
                                      200-1311  Howe  Street
                                      Vancouver,  BC  Canada  V6Z  2P3
                                      Telephone:  (604)  677-6994
                                :     Facsimile:   (604)  677-7011

     With  a  copy  to                Gottbetter  &  Partners,  LLP
                                      488  Madison  Avenue
                                      New  York,  NY  10016
                                      Attention:    Adam  S.  Gottbetter,  Esq.
                                      Telephone:  (212)  400-6900
                                      Facsimile:   (212)  400-6901


     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     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     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     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


                                      E-110
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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.

     Section     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     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     Applicable  Law:  Jurisdiction.
                 ------------------------------

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

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      E-111
<PAGE>

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


                                                    COMPANY:
                                                    NS8  CORPORATION

                                                    By:  /s/  Peter  Hogendoorn
                                                         ----------------------
                                                    Name:     Peter  Hogendoorn
                                                    Title:  CEO


                                                    SECURED  PARTY:
                                                    CORNELL CAPITAL PARTNERS, LP

                                                    BY:  YORKVILLE ADVISORS, LLC
                                                    ITS:  GENERAL  PARTNER

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


                                      E-112
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