Exhibit 10.21

                               SECURITY AGREEMENT


     THIS SECURITY  AGREEMENT (the  "Security  Agreement") is entered into as of
August 21, 2000,  by and between EBIZ  ENTERPRISES,  INC., a Nevada  corporation
(the  "Company"),  and THE CANOPY  GROUP,  INC.,  a Utah  corporation  ("Secured
Party").

                                    RECITALS

     A. Company has borrowed  funds from  Secured  Party  pursuant to a $500,000
Secured Convertible Promissory Note of even date herewith (the "Note").

     B. As security for its repayment  obligations  under the Note,  Company has
agreed to grant  Secured  Party a security  interest in all of its assets on the
terms set forth in this Security Agreement.

          NOW,  THEREFORE,  to that end and in  consideration  of the  premises,
covenants and agreements set forth below,  and the mutual benefits to be derived
from this Security  Agreement,  and other good and valuable  consideration,  the
parties hereto agree as follows:

          1. SECURITY  INTEREST.  To secure the "Obligation" (as defined below),
Company  hereby  transfers,  conveys,  assigns,  and grants to  Secured  Party a
security interest in all of Company's  assets,  which may include one or more of
the following items (hereinafter, collectively, the "Collateral"):

               (a) GENERAL  INTANGIBLES.  All of Company's General  Intangibles,
now  existing or  hereafter  arising or  acquired,  together  with the  proceeds
therefrom.  As used herein,  the term "General  Intangibles"  means all personal
property (including things in action) other than goods, accounts, chattel paper,
documents, instruments, and money, and includes, but is not limited to, business
records, deposit accounts, inventions,  intellectual property, designs, patents,
patent   applications,    trademarks,    trademark    applications,    trademark
registrations,   service  marks,   service  mark   applications,   service  mark
registrations,   trade  names,  goodwill,  technology,   know-how,  confidential
information,   trade  secrets,   customer  lists,  supplier  lists,  copyrights,
copyright applications, copyright registrations,  licenses, permits, franchises,
tax  refund  claims,  and any  letters  of credit,  guarantee  claims,  security
interests,  or other  security held by the Company to secure any  "Accounts" (as
hereinafter defined).

               (b) ACCOUNTS  (INCLUDING ACCOUNTS  RECEIVABLE).  All of Company's
Accounts,  whether now existing or hereafter arising or acquired,  together with
the proceeds  therefrom.  As used herein, the term "Accounts" means any right of
Company to receive payment from another person or entity,  including payment for
goods sold or leased,  or for  services  rendered,  no matter how  evidenced  or
arising, and regardless of whether yet earned by performance.  It includes,  but
is not limited to, accounts,  accounts  receivable,  contract rights,  contracts
receivable,  purchase orders, notes, drafts, acceptances,  all rights to payment
earned or unearned under a charter or other  contract  involving the use or hire
of a vessel and all rights incident to the charter or contract,  and other forms
of obligations and receivables.

               (c) INVENTORY.  All of Company's Inventory,  whether now owned or
hereafter  acquired,  together with the products and proceeds  therefrom and all
packaging,  manuals,  and instructions related thereto. As used herein, the term
"Inventory" means all goods, merchandise, and personal property held for sale or
leased or furnished or to be furnished under  contracts of service,  and all raw
materials, work in process, or materials used or consumed in Company's business,
wherever  located and whether in the possession of Company,  a  warehouseman,  a
bailee, or any other person.

               (d) EQUIPMENT. All of Company's Equipment, now owned or hereafter
acquired, together with the products and proceeds therefrom, and all substitutes
and replacements  therefor.  As used herein,  the term "Equipment"  includes all
equipment, machinery, tools, office equipment, supplies, furnishings, furniture,
or other items used or useful,  directly or indirectly,  in Company's  business,
all  accessions,  attachments,  and other additions  thereto,  all parts used in
connection therewith, all packaging,  manuals, and instructions related thereto,
and all leasehold or equitable interests therein.
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               (e)  FIXTURES.  All of Company's  interest in and to all fixtures
and furnishings, now owned or hereafter acquired, together with the products and
proceeds therefrom,  all substitutes and replacements therefor, all accessories,
attachments, and other additions thereto, all tools, parts, and supplies used in
connection  therewith,  and all packaging,  manuals,  and  instructions  related
thereto,  located on or attached to Company's business premises located at 15696
North 83rd Way, Scottsdale, Arizona 85260.

               (f) CHATTEL PAPER,  DOCUMENTS AND  INSTRUMENTS.  All of Company's
right, title, and interest in any chattel paper, documents, or instruments,  now
owned or  hereafter  acquired or arising,  or now or  hereafter  coming into the
possession,  control,  or custody of either Company or Secured  Party,  together
with all  proceeds  therefrom.  The  terms  "chattel  paper,"  "documents,"  and
"instruments"  shall have those  meanings  ascribed to them in the Utah  Uniform
Commercial Code.

          2.  OBLIGATION.  This  security  interest is given as security for all
indebtedness  and  obligations  owed by Company to Secured  Party,  whether  now
existing or  hereafter  incurred,  under this  Security  Agreement  or the Note,
together with all extensions,  modifications,  or renewals thereof  (hereinafter
referred to, collectively, as the "Obligation").

          3. PROCEEDS.  As used in this Security Agreement,  the term "proceeds"
means all  products of the  Collateral  and all  additions  and  accessions  to,
replacements of, insurance or condemnation  proceeds of, and documents  covering
any of the  Collateral,  all  property  received  wholly  or  partly in trade or
exchange for any of the Collateral, all leases of any of the Collateral, and all
rents,  revenues,  issues,  profits,  and proceeds arising from the sale, lease,
license,   encumbrance,   collection,   or  any  other  temporary  or  permanent
disposition, of any of the Collateral or any interest therein.

          4.  TITLE;  FILING.  Company  warrants  that,  it is the  owner of the
Collateral free and clear of all liens,  claims, and encumbrances  except as set
forth  on  Exhibit  A.  Company  covenants  that so long as any  portion  of the
Obligation  remains  unpaid,  Company  will  not  execute  or  file a  financing
statement or security  agreement  covering the  Collateral  to anyone other than
Secured  Party,  except in the  ordinary  course  of  business  or as  otherwise
allowed.  Company agrees to sign and deliver one or more financing statements or
supplements  thereto or other instruments as Secured Party may from time to time
require to comply with the Uniform  Commercial  Code or other  applicable law to
preserve,  protect and enforce the security interest of Secured Party and to pay
all costs of filing such statements or instruments.  In addition,  Company shall
promptly file a financing  statement to perfect Secured Party's  interest in the
Collateral.

          5. CARE OF  COLLATERAL.  Company  will keep in  effect  all  licenses,
permits  and  franchises  required  by law or  contract  relating  to  Company's
business (if applicable), property, or the Collateral; maintain insurance on the
Collateral;  keep the Collateral in good repair and be responsible  for any loss
or damage to it;  at all  times  warrant  and  defend  Company's  ownership  and
possession of the Collateral;  keep the Collateral free from all liens,  claims,
encumbrances and security interests;  pay when due all taxes,  license fees, and
other charges upon the  Collateral or upon Company's  business,  property or the
income  therefrom;  and not misuse,  conceal or in any way use or dispose of the
Collateral  unlawfully or contrary to the provisions of this Security  Agreement
or of any insurance  coverage.  Loss of, damage to, or  uncollectability  of the
Collateral  or any  part  thereof  will  not  release  Company  from  any of its
obligations hereunder.

          6.  DEFAULT.  A default  hereunder  will occur if any of the following
events occur:  (1) Company fails to pay any portion of the Obligation  when due;
(2) Company fails to perform any undertaking or materially breaches any warranty
or  covenant  in  this  Security  Agreement  or the  Note;  (3)  any  statement,
representation or warranty of Company under this Security  Agreement or the Note
is untrue in any material  respect when made; (4) Company  becomes  insolvent or
unable to pay debts as they  mature or makes an  assignment  for the  benefit of
creditors or any  proceeding  is instituted by or against it alleging that it is
insolvent or unable to pay its debts as they mature; (5) dissolution of Company;
(6) an attachment,  garnishment,  execution or other process is issued or a lien
filed against any property of Company,  which is not removed within a reasonable
period of time;  and (7) Company  transfers an interest in any of the Collateral
contrary to the provisions of this Security  Agreement without the prior written
consent of Secured Party other than in the ordinary  course of business.  Waiver
of any default will not constitute a waiver of any other or subsequent default.

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          7. REMEDIES.  Upon the occurrence of any default hereunder at any time
thereafter,  all of the  Obligation  will,  at the election of Secured Party and
without notice of such election,  or demand for payment,  become immediately due
and payable and Secured  Party will have the  remedies of a secured  party under
the Utah Uniform Commercial Code or other applicable law.

          8. GENERAL. The waiver by Secured Party of any breach of any provision
of this Security  Agreement or warranty or representation  herein set forth will
not be construed as a waiver of any subsequent  breach.  The failure to exercise
any right hereunder by Secured Party will not operate as a waiver of such right.
All rights and remedies herein  provided are cumulative.  Company may not assign
its rights or delegate its duties  hereunder  without  Secured  Party's  written
consent.  This  Security  Agreement  may not be altered  or amended  except by a
writing  signed by all the  parties  hereto.  This  Security  Agreement  will be
governed by and construed  and  interpreted  in accordance  with the laws of the
State of Utah. Any provision  hereof found to be invalid will not invalidate the
remainder.  All words used  herein  will be  construed  to be of such gender and
number as the circumstances  require. This Security Agreement binds Company, its
successors  and  assigns,  and  inures to the  benefit  of  Secured  Party,  its
successors and assigns.

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

                                         EBIZ ENTERPRISES, INC.,
                                         a Nevada corporation


                                         By: /s/ Jeffrey I. Rassas
                                             -----------------------------------
                                             Jeffrey I. Rassas, Chief Executive
                                             Officer


                                         THE CANOPY GROUP, INC.,
                                         a Utah corporation


                                         By: /s/ Ralph Yarro
                                             -----------------------------------
                                             Ralph Yarro, President

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