EXHIBIT 10.16

                          SECURITIES PURCHASE AGREEMENT
                          -----------------------------

     THIS  SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of May 19,
                                                ---------
2004,  by  and  among NS8 CORPORATION, a Delaware corporation, with headquarters
located  at  Two  Union Square, 601 Union Street, Seattle, Washington 98101 (the
"Company"), and the Buyers listed on Schedule I attached hereto (individually, a
  ------
"Buyer"  or  collectively  "Buyers").
 -----                      ------

                                   WITNESSETH:
                                   -----------

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

WHEREAS,  the  parties desire that, upon the terms and subject to the conditions
contained  herein, the Company shall issue and sell to the Buyer(s), as provided
herein,  and the Buyer(s) shall purchase up to 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  $.001  (the  "Common  Stock") (as converted, the "Conversion
                                  -------------                       ----------
Shares")  of  which  Seven  Hundred  Fifty  Thousand Dollars ($750,000) shall be
------
funded  on  the  fifth  (5th) business day following the date hereof (the "First
                                                                           -----
Closing")  and  Seven  Hundred Fifty Thousand Dollars ($750,000) shall be funded
-------
on  the  fifth  (5th) business day following the date the registration statement
(the  "Registration  Statement")  is  filed,  pursuant the Investor Registration
       -----------------------
Rights  Agreement  dated  the date hereof, with the United States Securities and
Exchange  Commission  (the "SEC") (the "Second Closing (individually referred to
                            ---         --------------
as a "Closing" collectively referred to as the "Closings"), for a total purchase
      -------                                   --------
price  of  up  to  One  Million Five Hundred Thousand Dollars ($1,500,000), (the
"Purchase  Price")  in  the  respective amounts set forth opposite each Buyer(s)
----------------
name  on  Schedule  I  (the  "Subscription  Amount");  and
                              --------------------

WHEREAS,  contemporaneously  with  the execution and delivery of this Agreement,
the  parties hereto are executing and delivering a Registration Rights Agreement
substantially  in  the  form  attached  hereto  as  Exhibit  A  (the  "Investor
                                                    ----------         --------
Registration  Rights  Agreement")  pursuant  to  which the Company has agreed to
          ---------------------
provide  certain  registration  rights  under  the  1933  Act  and the rules and
regulations  promulgated  there under, and applicable state securities laws; and

WHEREAS,  the  aggregate  proceeds  of  the  sale  of the Convertible Debentures
contemplated  hereby  shall be held in escrow pursuant to the terms of an escrow
agreement  substantially  in the form of the Escrow Agreement attached hereto as
Exhibit  B.
 ---------

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

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


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substantially  in  the  form  attached  hereto  as  Exhibit  D  (the  "Security
                                                    ----------         --------
Agreement")  pursuant  to  which  the  Company has agreed to provide the Buyer a
security interest in Pledged Collateral (as this term is defined in the Security
Agreement  dated  the  date  hereof)  to secure Company's obligations under this
Agreement,  the  Convertible  Debenture,  the  Investor  Registration  Rights
Agreement,  the  Irrevocable Transfer Agent Instructions, the Security Agreement
or  any  other  obligations  of  the  Company  to  the  Investor;  and

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

     1.     PURCHASE  AND  SALE  OF  CONVERTIBLE  DEBENTURES.
            ------------------------------------------------

     (a)     Purchase  of  Convertible  Debentures.  Subject to the satisfaction
             -------------------------------------
(or  waiver)  of  the terms and conditions of this Agreement, each Buyer agrees,
severally  and not jointly, to purchase at Closing (as defined herein below) and
the  Company  agrees to sell and issue to each Buyer, severally and not jointly,
at  Closing,  Convertible  Debentures  in  amounts  corresponding  with  the
Subscription  Amount  set forth opposite each Buyer's name on Schedule I hereto.
Upon execution hereof by a Buyer, the Buyer shall wire transfer the Subscription
Amount  set  forth  opposite his name on Schedule I in same-day funds or a check
payable  to  "Butler  Gonzalez LLP, as Escrow Agent for NS8 Corporation /Cornell
Capital  Partners,  LP",  which  Subscription  Amount  shall  be  held in escrow
pursuant  to  the  terms  of  the  Escrow Agreement (as hereinafter defined) and
disbursed  in  accordance therewith.  Notwithstanding the foregoing, a Buyer may
withdraw  his  Subscription Amount and terminate this Agreement as to such Buyer
at  any  time  after  the  execution hereof and prior to Closing (as hereinafter
defined).

     (b)     Closing  Date.  The  First  Closing of the purchase and sale of the
             -------------
Convertible  Debentures  shall take place at 10:00 a.m. Eastern Standard Time on
the  fifth (5th) business day following the date hereof, subject to notification
of  satisfaction  of the conditions to the First Closing set forth herein and in
Sections  6  and  7  below  (or  such later date as is mutually agreed to by the
Company  and  the Buyer(s)) (the "First Closing Date") and the Second Closing of
                                  ------------------
the  purchase  and  sale of the Convertible Debentures shall take place at 10:00
a.m.  Eastern  Standard  Time on the fifth (5th) business day following the date
the  Registration  Statement  is  filed with the SEC, subject to notification of
satisfaction  of  the  conditions  to the Second Closing set forth herein and in
Sections  6  and  7  below  (or  such later date as is mutually agreed to by the
Company  and the Buyer(s)) (the "Second Closing Date") (collectively referred to
                                 -------------------
a the "Closing Dates").  The Closing shall occur on the respective Closing Dates
       -------------
at the offices of Butler Gonzalez, LLP, 1416 Morris Avenue, Suite 207, Union, NJ
07083  (or  such  other  place  as  is mutually agreed to by the Company and the
Buyer(s)).

     (c)     Escrow  Arrangements;  Form  of  Payment.  Upon execution hereof by
             ----------------------------------------
Buyer(s)  and  pending  the  Closings, the aggregate proceeds of the sale of the
Convertible  Debentures  to  Buyer(s)  pursuant  hereto  shall be deposited in a
non-interest  bearing  escrow  account with Butler Gonzalez LLP, as escrow agent
(the  "Escrow  Agent"), pursuant to the terms of an escrow agreement between the
       -------------
Company,  the  Buyer(s)  and  the  Escrow  Agent  in the form attached hereto as
Exhibit  B  (the  "Escrow Agreement").  Subject to the satisfaction of the terms
      ----         ----------------
and  conditions  of  this  Agreement, on the Closing Dates, (i) the Escrow Agent
shall  deliver  to  the  Company  in  accordance  with  the  terms of the Escrow
Agreement  such  aggregate  proceeds for the Convertible Debentures to be issued


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and sold to such Buyer(s), minus the fees and expenses of Butler Gonzalez LLP of
which  Ten  Thousand  Dollars  ($10,000)  shall  be paid directly from the gross
proceeds  held  in  escrow of the First Closing  by wire transfer of immediately
available  funds in accordance with the Company's written wire instructions, and
(ii)  the Company shall deliver to each Buyer, Convertible Debentures which such
Buyer(s)  is  purchasing  in  amounts  indicated  opposite  such Buyer's name on
Schedule  I,  duly  executed  on  behalf  of  the  Company.

     2.     BUYER'S  REPRESENTATIONS  AND  WARRANTIES.
            -----------------------------------------

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

     (a)     Investment  Purpose.  Each  Buyer  is  acquiring  the  Convertible
             -------------------
Debentures  and,  upon  conversion  of  Convertible  Debentures,  the Buyer will
acquire  the Conversion Shares then issuable, for its own account for investment
only  and  not with a view towards, or for resale in connection with, the public
sale  or  distribution  thereof, except pursuant to sales registered or exempted
under  the  1933  Act;  provided,  however,  that  by making the representations
herein, such Buyer reserves the right to dispose of the Conversion Shares at any
time  in  accordance  with  or  pursuant  to an effective registration statement
covering  such  Conversion  Shares or an available exemption under the 1933 Act.

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

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

     (d)     Information.  Each  Buyer  and  its  advisors  (and  his  or,  its
             -----------
counsel),  if  any,  have  been  furnished  with  all  materials relating to the
business,  finances  and  operations  of  the  Company and information he deemed
material to making an informed investment decision regarding his purchase of the
Convertible  Debentures  and the Conversion Shares, which have been requested by
such  Buyer.  Each  Buyer  and  its  advisors,  if  any,  have been afforded the
opportunity  to  ask  questions of the Company and its management.  Neither such
inquiries  nor any other due diligence investigations conducted by such Buyer or
its  advisors, if any, or its representatives shall modify, amend or affect such
Buyer's  right to rely on the Company's representations and warranties contained
in  Section  3  below.  Each  Buyer  understands  that  its  investment  in  the
Convertible Debentures and the Conversion Shares involves a high degree of risk.
Each Buyer is in a position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and enables such Buyer
to obtain information from the Company in order to evaluate the merits and risks
of  this  investment.  Each  Buyer  has  sought  such  accounting, legal and tax
advice,  as  it has considered necessary to make an informed investment decision
with respect to its acquisition of the Convertible Debentures and the Conversion
Shares.


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

     (f)     Transfer or Resale.  Each Buyer understands that except as provided
             ------------------
in  the  Investor  Registration Rights Agreement: (i) the Convertible Debentures
have  not  been  and  are  not  being registered under the 1933 Act or any state
securities  laws, and may not be offered for sale, sold, assigned or transferred
unless  (A)  subsequently  registered  thereunder,  or (B) such Buyer shall have
delivered  to the Company an opinion of counsel, in a generally acceptable form,
to  the  effect  that such securities to be sold, assigned or transferred may be
sold,  assigned  or  transferred pursuant to an exemption from such registration
requirements;  (ii)  any  sale  of  such securities made in reliance on Rule 144
under  the  1933 Act (or a successor rule thereto) ("Rule 144") may be made only
                                                     --------
in  accordance  with  the  terms  of  Rule  144  and further, if Rule 144 is not
applicable,  any  resale  of  such  securities  under circumstances in which the
seller  (or  the  person  through  whom the sale is made) may be deemed to be an
underwriter  (as  that  term  is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC  thereunder; and (iii) neither the Company nor any other person is under any
obligation  to  register  such  securities  under  the  1933  Act  or  any state
securities  laws  or  to  comply  with the terms and conditions of any exemption
thereunder.  The  Company reserves the right to place stop transfer instructions
against  the  shares  and  certificates  for  the  Conversion  Shares.

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

THE  SECURITIES  REPRESENTED  BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES  ACT  OF  1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THE  SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW  TOWARD  RESALE  AND  MAY  NOT  BE  OFFERED  FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED  IN  THE  ABSENCE  OF  AN  EFFECTIVE  REGISTRATION  STATEMENT  FOR  THE
SECURITIES  UNDER  THE  SECURITIES  ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES  LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

The  legend  set  forth  above  shall  be removed and the Company within two (2)
business days shall issue a certificate without such legend to the holder of the


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Conversion  Shares  upon  which  it is stamped, if, unless otherwise required by
state  securities  laws, (i) in connection with a sale transaction, provided the
Conversion Shares are registered under the 1933 Act or (ii) in connection with a
sale  transaction,  after  such  holder  provides the Company with an opinion of
counsel,  which  opinion  shall  be  in  form, substance and scope customary for
opinions  of  counsel  in  comparable  transactions, to the effect that a public
sale,  assignment  or  transfer  of  the  Conversion  Shares may be made without
registration  under  the  1933  Act.

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

     (i)     Receipt  of  Documents.  Each  Buyer  and  his  or  its counsel has
             ----------------------
received  and  read  in  their  entirety:  (i)  this  Agreement  and  each
representation,  warranty and covenant set forth herein, the Security Agreement,
the  Investor  Registration  Rights  Agreement,  the  Escrow  Agreement, and the
Irrevocable  transfer  Agent  Instructions;  (ii)  all  due  diligence and other
information  necessary  to  verify  the  accuracy  and  completeness  of  such
representations,  warranties  and covenants; (iii) the Company's Form 10-KSB for
the  fiscal year ended December 31, 2003; (iv) the Company's Form 10-QSB for the
fiscal  quarter ended March 31, 2004 and (v) answers to all questions each Buyer
submitted  to the Company regarding an investment in the Company; and each Buyer
has  relied  on the information contained therein and has not been furnished any
other  documents,  literature,  memorandum  or  prospectus.

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

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

     3.     REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.
            --------------------------------------------------

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

     (a)     Organization  and  Qualification.  The Company and its subsidiaries
             --------------------------------
are  corporations duly organized and validly existing in good standing under the
laws  of the jurisdiction in which they are incorporated, and have the requisite
corporate  power  to  own their properties and to carry on their business as now


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being  conducted.  Each of the Company and its subsidiaries is duly qualified as
a  foreign  corporation  to  do  business  and  is  in  good  standing  in every
jurisdiction  in  which  the  nature  of the business conducted by it makes such
qualification  necessary,  except  to  the  extent  that  the  failure  to be so
qualified or be in good standing would not have a material adverse effect on the
Company  and  its  subsidiaries  taken  as  a  whole.

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

     (c)     Capitalization.  The  authorized  capital  stock  of  the  Company
             --------------
consists  of  205,000,000 shares of Common Stock, par value $.0001 per share and
5,000,000  shares  of  Preferred  Stock.  As of the date hereof  the Company has
88,278,850  shares  of Common Stock and no shares of Preferred Stock  issued and
outstanding.  All  of  such  outstanding shares have been validly issued and are
fully  paid  and  nonassessable.  Except  as  disclosed in the SEC Documents (as
defined  in  Section  3(f)), no shares of Common Stock are subject to preemptive
rights  or  any  other  similar  rights or any liens or encumbrances suffered or
permitted  by  the Company.  Except as disclosed in the SEC Documents, as of the
date  of  this Agreement, (i) there are no outstanding options, warrants, scrip,
rights  to  subscribe  to,  calls  or  commitments  of  any character whatsoever
relating  to,  or  securities  or rights convertible into, any shares of capital
stock  of  the  Company  or  any of its subsidiaries, or contracts, commitments,
understandings  or  arrangements by which the Company or any of its subsidiaries
is  or  may  become  bound  to  issue  additional shares of capital stock of the
Company  or  any  of  its  subsidiaries  or  options, warrants, scrip, rights to
subscribe  to,  calls or commitments of any character whatsoever relating to, or
securities  or  rights  convertible  into,  any  shares  of capital stock of the
Company  or  any  of  its  subsidiaries,  (ii)  there  are  no  outstanding debt
securities  and  (iii)  there  are no agreements or arrangements under which the
Company  or  any of its subsidiaries is obligated to register the sale of any of


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their  securities under the 1933 Act (except pursuant to the Registration Rights
Agreement)  and  (iv) there are no outstanding registration statements and there
are  no outstanding comment letters from the SEC or any other regulatory agency.
There  are  no  securities  or  instruments  containing anti-dilution or similar
provisions  that will be triggered by the issuance of the Convertible Debentures
as described in this Agreement.  The Company has furnished to the Buyer true and
correct  copies of the Company's Articles of Incorporation, as amended and as in
effect  on  the date hereof (the "Articles of Incorporation"), and the Company's
                                  -------------------------
By-laws,  as  in effect on the date hereof (the "By-laws"), and the terms of all
                                                 -------
securities  convertible  into  or  exercisable for Common Stock and the material
rights of the holders thereof in respect thereto other than stock options issued
to  employees  and  consultants.

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

     (e)     No  Conflicts.  Except  as  disclosed  in  the  SEC  Documents, the
             -------------
execution,  delivery  and performance of this Agreement, the Security Agreement,
the  Investors  Registration  Rights  Agreement,  the  Escrow  Agreement and the
Irrevocable  Transfer  Agent Instructions by the Company and the consummation by
the  Company  of  the  transactions contemplated hereby will not (i) result in a
violation  of  the Articles of Incorporation, any certificate of designations of
any  outstanding series of preferred stock of the Company or the By-laws or (ii)
conflict with or constitute a default (or an event which with notice or lapse of
time  or  both  would  become  a default) under, or give to others any rights of
termination,  amendment,  acceleration  or  cancellation  of,  any  agreement,
indenture  or  instrument  to  which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree  (including  federal  and  state  securities laws and regulations and the
rules  and  regulations of The National Association of Securities Dealers Inc.'s
OTC  Bulletin  Board  on  which  the  Common  Stock is quoted) applicable to the
Company  or  any  of  its  subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected.  Except as disclosed in
the  SEC  Documents, neither the Company nor its subsidiaries is in violation of
any  term  of  or  in  default under its Articles of Incorporation or By-laws or
their organizational charter or by-laws, respectively, or any material contract,
agreement,  mortgage,  indebtedness,  indenture, instrument, judgment, decree or
order  or  any  statute,  rule  or  regulation  applicable to the Company or its
subsidiaries.  The  business  of  the  Company and its subsidiaries is not being
conducted,  and  shall  not  be  conducted  in  violation  of  any material law,
ordinance,  or  regulation  of  any governmental entity.  Except as specifically
contemplated  by  this  Agreement  and  as  required  under the 1933 Act and any
applicable  state  securities  laws,  the  Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court  or governmental agency in order for it to execute, deliver or perform any
of  its  obligations under or contemplated by this Agreement or the Registration
Rights  Agreement  in  accordance  with  the terms hereof or thereof.  Except as


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disclosed  in  the  SEC Documents, all consents, authorizations, orders, filings
and  registrations  which  the  Company  is  required  to obtain pursuant to the
preceding  sentence  have  been  obtained  or  effected  on or prior to the date
hereof.  The  Company  and  its  subsidiaries  are  unaware  of  any  facts  or
circumstance,  which  might  give  rise  to  any  of  the  foregoing.

     (f)     SEC  Documents:  Financial  Statements.  Since  May  15,  2002, the
             --------------------------------------
Company  has filed all reports, schedules, forms, statements and other documents
required  to be filed by it with the SEC under of the Securities Exchange Act of
1934,  as amended (the "1934 Act") (all of the foregoing filed prior to the date
                        --------
hereof  or  amended  after the date hereof and all exhibits included therein and
financial  statements  and  schedules  thereto  and  documents  incorporated  by
reference  therein,  being hereinafter referred to as the "SEC Documents").  The
                                                           -------------
Company  has delivered to the Buyers or their representatives, or made available
through  the  SEC's  website at http://www.sec.gov., true and complete copies of
the  SEC  Documents.  As  of their respective dates, the financial statements of
the Company disclosed in the SEC Documents (the "Financial Statements") complied
                                                 --------------------
as  to form in all material respects with applicable accounting requirements and
the  published  rules  and  regulations  of  the SEC with respect thereto.  Such
financial  statements  have  been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved (except
(i)  as  may  be  otherwise  indicated in such Financial Statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may  exclude  footnotes  or  may be condensed or summary statements) and, fairly
present in all material respects the financial position of the Company as of the
dates  thereof  and the results of its operations and cash flows for the periods
then  ended  (subject,  in  the case of unaudited statements, to normal year-end
audit  adjustments).  No  other  information  provided  by  or  on behalf of the
Company  to  the  Buyer  which  is not included in the SEC Documents, including,
without  limitation,  information  referred  to  in this Agreement, contains any
untrue  statement  of  a  material  fact  or  omits  to  state any material fact
necessary  in  order  to  make  the  statements  therein,  in  the  light of the
circumstances  under  which  they  were  made,  not  misleading.

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

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

     (i)     Acknowledgment  Regarding  Buyer's  Purchase  of  the  Convertible
             ------------------------------------------------------------------
Debentures.  The  Company  acknowledges  and  agrees that the Buyer(s) is acting
----------
solely  in  the  capacity  of  an  arm's  length  purchaser with respect to this


                                      E-78
<PAGE>

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

     (j)     No  General  Solicitation.  Neither  the  Company,  nor  any of its
             -------------------------
affiliates,  nor  any  person  acting on its or their behalf, has engaged in any
form  of  general  solicitation  or  general  advertising (within the meaning of
Regulation  D  under  the  1933 Act) in connection with the offer or sale of the
Convertible  Debentures  or  the  Conversion  Shares.

     (k)     No  Integrated  Offering.  Neither  the  Company,  nor  any  of its
             ------------------------
affiliates,  nor  any  person  acting  on  its  or their behalf has, directly or
indirectly,  made any offers or sales of any security or solicited any offers to
buy  any  security,  under  circumstances that would require registration of the
Convertible Debentures or the Conversion Shares under the 1933 Act or cause this
offering of the Convertible Debentures or the Conversion Shares to be integrated
with  prior  offerings  by  the  Company  for  purposes  of  the  1933  Act.

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

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

     (n)     Environmental  Laws.  The  Company  and its subsidiaries are (i) in
             -------------------
compliance  with  any  and all applicable foreign, federal, state and local laws
and  regulations  relating  to  the  protection  of human health and safety, the
environment  or  hazardous  or  toxic  substances  or  wastes,  pollutants  or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
               ------------------


                                      E-79
<PAGE>

other  approvals required of them under applicable Environmental Laws to conduct
their  respective  businesses  and  (iii)  are  in compliance with all terms and
conditions  of  any  such  permit,  license  or  approval.

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

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

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

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

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

     (t)     Tax  Status.  Except as set forth in the SEC Documents, the Company
             -----------
and each of its subsidiaries has made and filed all federal and state income and


                                      E-80
<PAGE>

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

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

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

     4.     COVENANTS.
            ---------

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

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

     (c)     Reporting  Status.  Until  the  earlier of (i) the date as of which
             -----------------
the  Buyer(s) may sell all of the Conversion Shares without restriction pursuant
to  Rule  144(k)  promulgated under the 1933 Act (or successor thereto), or (ii)
the date on which (A) the Buyer(s) shall have sold all the Conversion Shares and
(B)  none  of  the  Convertible  Debentures  are  outstanding (the "Registration
                                                                    ------------
Period"),  the  Company shall file in a timely manner all reports required to be
filed  with  the  SEC  pursuant  to  the 1934 Act and the regulations of the SEC


                                      E-81
<PAGE>

thereunder, and the Company shall not terminate its status as an issuer required
to  file  reports  under  the  1934  Act  even  if the 1934 Act or the rules and
regulations  thereunder  would  otherwise  permit  such  termination.

     (d)     Use  of  Proceeds.  The Company will use the proceeds from the sale
             -----------------
of  the  Convertible  Debentures  for  general  corporate  and  working  capital
purposes.

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

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

     (g)     Fees  and Expenses.  Each of the Company and the Buyer(s) shall pay
             ------------------
all  costs  and  expenses  incurred  by  such  party  in  connection  with  the
negotiation,  investigation,  preparation,  execution  and  delivery  of  this
Agreement, the Escrow Agreement, the Investor Registration Rights Agreement, the
Security  Agreement  and  the  Irrevocable  Transfer  Agent  Instructions.  The
Buyer(s)  shall  be  entitled  to  a  ten percent (10%) discount on the Purchase
Price.

     (h)     The  costs and expenses of the Buyer(s) and Butler Gonzalez LLP, of
which  Ten  Thousand  Dollars  ($10,000)  shall  be paid directly from the gross
proceeds  of  the  First  Closing  held  in  escrow

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


                                      E-82
<PAGE>

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

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

     (l)     Restriction  on  Issuance  of  the  Capital  Stock.  So long as any
             --------------------------------------------------
Convertible Debentures are outstanding, the Company shall not, without the prior
written  consent  of  the  Buyer(s),  issue  or  sell  shares of Common Stock or
Preferred  Stock (i) without consideration or for a consideration per share less
than  the  Bid  Price  of  the  Common Stock determined immediately prior to its
issuance,  (ii)  any  warrant,  option, right, contract, call, or other security
instrument  granting  the  holder  thereof,  the  right  to acquire Common Stock
without  consideration  or for a consideration less than such Common Stock's Bid
Price  value determined immediately prior to it's issuance, (iii) enter into any
security  instrument  granting  the  holder  a  security interest in any and all
assets  of  the  Company,  or  (iv) file any registration statement on Form S-8,
notwithstanding  the  foregoing  the Company may upon fifteen (15) business days
prior  written  notice to the Buyer(s) file a registration statement on Form S-8
for the issuance of shares of common stock and/or options for consultants and/or
attorneys  for  bona  fide  services  rendered or pursuant to bona fide employee
stock  option  plans  .


                                      E-83
<PAGE>

     5.     TRANSFER  AGENT  INSTRUCTIONS.
            -----------------------------

     The  Company shall issue the Irrevocable Transfer Agent Instructions to its
transfer  agent  irrevocably  appointing  Butler  Gonzalez  LLP as its agent for
purpose of having certificates issued, registered in the name of the Buyer(s) or
its  respective  nominee(s), for the Conversion Shares representing such amounts
of  Convertible Debentures as specified from time to time by the Buyer(s) to the
Company  upon  conversion  of  the  Convertible  Debentures,  for  interest owed
pursuant  to  the  Convertible Debenture, and for any and all Liquidated Damages
(as this term is defined in the Investor Registration Rights Agreement).  Butler
Gonzalez  LLP shall be paid a cash fee of Fifty Dollars ($50) for every occasion
they  act  pursuant to the Irrevocable Transfer Agent Instructions.  The Company
shall  not  change its transfer agent without the express written consent of the
Buyer(s),  which  may be withheld by the Buyer(s) in its sole discretion.  Prior
to  registration  of  the  Conversion  Shares  under  the  1933  Act,  all  such
certificates shall bear the restrictive legend specified in Section 2(g) of this
Agreement.  The  Company warrants that no instruction other than the Irrevocable
Transfer  Agent  Instructions  referred  to in this Section 5, and stop transfer
instructions  to  give  effect  to  Section  2(g)  hereof  (in  the  case of the
Conversion  Shares prior to registration of such shares under the 1933 Act) will
be  given  by  the  Company to its transfer agent and that the Conversion Shares
shall  otherwise  be freely transferable on the books and records of the Company
as  and  to  the extent provided in this Agreement and the Investor Registration
Rights Agreement.  Nothing in this Section 5 shall affect in any way the Buyer's
obligations  and  agreement  to  comply with all applicable securities laws upon
resale  of  Conversion  Shares.  If  the  Buyer(s)  provides the Company with an
opinion  of  counsel,  in  form,  scope  and substance customary for opinions of
counsel  in  comparable transactions to the effect that registration of a resale
by  the  Buyer(s) of any of the Conversion Shares is not required under the 1933
Act,  the Company shall within two (2) business days instruct its transfer agent
to  issue  one  or  more  certificates in such name and in such denominations as
specified  by  the  Buyer.  The  Company acknowledges that a breach by it of its
obligations  hereunder will cause irreparable harm to the Buyer by vitiating the
intent  and  purpose  of  the transaction contemplated hereby.  Accordingly, the
Company  acknowledges  that  the  remedy  at law for a breach of its obligations
under  this Section 5 will be inadequate and agrees, in the event of a breach or
threatened  breach  by the Company of the provisions of this Section 5, that the
Buyer(s)  shall  be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and transfer,
without  the  necessity  of  showing economic loss and without any bond or other
security  being  required.

     6.     CONDITIONS  TO  THE  COMPANY'S  OBLIGATION  TO  SELL.
            ----------------------------------------------------

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

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

     (b)     The  Buyer(s) shall have delivered to the Escrow Agent the Purchase
Price for Convertible Debentures in respective amounts as set forth next to each
Buyer  as outlined on Schedule I attached hereto and the Escrow Agent shall have


                                      E-84
<PAGE>

delivered  the  net  proceeds  to  the  Company  by wire transfer of immediately
available  U.S. funds pursuant to the wire instructions provided by the Company.

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

     (d)     The  Company  shall  have  filed  a  form  UCC-1 with regard to the
Pledged  Property  and  Pledged Collateral as detailed in the Security Agreement
dated  the  date  hereof  and  provided  proof  of  such filing to the Buyer(s).

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

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

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

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

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

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


                                      E-85
<PAGE>

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

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

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

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

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

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

     8.     INDEMNIFICATION.
            ---------------

     (a)     In  consideration  of  the  Buyer's  execution and delivery of this
Agreement  and  acquiring  the  Convertible Debentures and the Conversion Shares
hereunder,  and in addition to all of the Company's other obligations under this
Agreement,  the  Company  shall defend, protect, indemnify and hold harmless the
Buyer(s)  and each other holder of the Convertible Debentures and the Conversion
Shares,  and  all of their officers, directors, employees and agents (including,
without  limitation,  those  retained  in  connection  with  the  transactions
contemplated by this Agreement) (collectively, the "Buyer Indemnitees") from and
                                                    -----------------
against  any  and  all  actions, causes of action, suits, claims, losses, costs,
penalties,  fees,  liabilities and damages, and expenses in connection therewith
(irrespective  of whether any such Buyer Indemnitee is a party to the action for
which  indemnification hereunder is sought), and including reasonable attorneys'
fees  and  disbursements  (the "Indemnified Liabilities"), incurred by the Buyer
                                -----------------------
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any  misrepresentation  or  breach of any representation or warranty made by the
Company  in  this  Agreement,  the  Convertible  Debentures  or  the  Investor
Registration  Rights  Agreement or any other certificate, instrument or document
contemplated  hereby  or  thereby,  (b) any breach of any covenant, agreement or
obligation  of  the  Company  contained  in  this  Agreement,  or  the  Investor
Registration  Rights  Agreement or any other certificate, instrument or document
contemplated  hereby  or  thereby,  or  (c)  any  cause of action, suit or claim
brought or made against such Indemnitee and arising out of or resulting from the
execution,  delivery,  performance or enforcement of this Agreement or any other
instrument,  document  or  agreement  executed  pursuant  hereto  by  any of the


                                      E-86
<PAGE>

Indemnities,  any  transaction  financed  or to be financed in whole or in part,
directly  or  indirectly,  with  the proceeds of the issuance of the Convertible
Debentures  or  the  status of the Buyer or holder of the Convertible Debentures
the Conversion Shares,  as a Buyer of Convertible Debentures in the Company.  To
the  extent  that  the foregoing undertaking by the Company may be unenforceable
for  any  reason, the Company shall make the maximum contribution to the payment
and  satisfaction  of  each of the Indemnified Liabilities, which is permissible
under  applicable  law.

     (b)     In  consideration  of  the Company's execution and delivery of this
Agreement,  and  in  addition to all of the Buyer's other obligations under this
Agreement,  the  Buyer  shall  defend,  protect, indemnify and hold harmless the
Company  and  all  of  its officers, directors, employees and agents (including,
without  limitation,  those  retained  in  connection  with  the  transactions
contemplated  by  this Agreement) (collectively, the "Company Indemnitees") from
                                                      -------------------
and  against  any and all Indemnified Liabilities incurred by the Indemnitees or
any  of  them  as  a  result  of,  or  arising  out  of,  or relating to (a) any
misrepresentation  or  breach  of  any  representation  or  warranty made by the
Buyer(s)  in  this  Agreement,  ,  instrument or document contemplated hereby or
thereby  executed  by  the  Buyer,  (b) any breach of any covenant, agreement or
obligation  of  the  Buyer(s)  contained  in  this  Agreement,  the  Investor
Registration  Rights  Agreement or any other certificate, instrument or document
contemplated  hereby  or  thereby  executed  by  the  Buyer, or (c) any cause of
action,  suit  or claim brought or made against such Company Indemnitee based on
material  misrepresentations  or  due to a material breach and arising out of or
resulting  from  the  execution,  delivery,  performance  or enforcement of this
Agreement,  the  Investor Registration Rights Agreement or any other instrument,
document  or  agreement  executed  pursuant  hereto  by  any  of  the  Company
Indemnities.  To  the extent that the foregoing undertaking by each Buyer may be
unenforceable  for any reason, each Buyer shall make the maximum contribution to
the  payment  and  satisfaction of each of the Indemnified Liabilities, which is
permissible  under  applicable  law.

     9.     GOVERNING  LAW:  MISCELLANEOUS.
            ------------------------------

     (a)     Governing Law.  This Agreement shall be governed by and interpreted
             -------------
in  accordance  with  the  laws  of  the State of 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.

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

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


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<PAGE>

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

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

     (f)     Notices.  Any  notices,  consents, waivers, or other communications
             -------
required  or  permitted to be given under the terms of this Agreement must be in
writing  and  will  be  deemed  to  have  been  delivered (i) upon receipt, when
delivered personally; (ii) upon confirmation of receipt, when sent by facsimile;
(iii)  three  (3)  days  after being sent by U.S. certified mail, return receipt
requested,  or  (iv)  one  (1)  day  after  deposit with a nationally recognized
overnight  delivery  service,  in  each  case properly addressed to the party to
receive  the  same.  The addresses and facsimile numbers for such communications
shall  be:
If  to  the  Company,  to:            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


                                      E-88
<PAGE>

If  to  the  Transfer  Agent, to:     Continental Stock Transfer & Trust Company
                                      17th  Battery  Place  -  8th  Floor
                                      New  York,  NY  10004
                                      Attention:  Roger  Bernhammer
                                      Telephone:  (212)  509-4000
                                      Facsimile:   (212)  509-5150

With  Copy  to:                       Butler  Gonzalez  LLP
                                      1416  Morris  Avenue  -  Suite  207
                                      Union,  NJ  07083
                                      Attention:  David  Gonzalez,  Esq.
                                      Telephone:  (908)  810-8588
                                      Facsimile:  (908)  810-0973

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

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

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

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

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

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


                                      E-89
<PAGE>

accomplish  the  purposes  of  this  Agreement  and  the  consummation  of  the
transactions  contemplated  hereby.

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

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

                    [REMAINDER PAGE INTENTIONALLY LEFT BLANK]


                                      E-90
<PAGE>

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


                                                        COMPANY:
                                                        NS8  CORPORATION

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


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<PAGE>