EXHIBIT 10.4

                     AMENDED AND RESTATED SECURITY AGREEMENT
                     ---------------------------------------

     THIS  AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement"), is entered
                                                         ---------
into  and  made  effective  as  of  November  ___,  2005,  by  and  between  NS8
CORPORATION, a Delaware corporation with its principal place of business located
at 600 University Street, Suite 1525, Seattle, WA 98101 (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  issued to the Secured Party convertible debentures under
the Securities Purchase Agreement dated May 19, 2004 between the Company and the
Secured  Party.  This  Agreement  shall amend and restate the Security Agreement
between  the  Company  and  the  Secured  Party  dated  May  19,  2004;

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

WHEREAS,  the  Secured  Party is willing to provide such additional financing on
the  condition that such additional financing is secured hereunder and under the
UCC-1  Financing  Statement  filed  in  Delaware  on  June 14, 2004, file number
2004-167-7198-7,  in connection with the Securities Purchase Agreement dated May
19,  2004  and  the  convertible  debentures  issued  thereto;

WHEREAS,  all  of  the Company's obligations to the Secured Party are secured by
this  Agreement,  which  was  perfected pursuant to that certain UCC-1 Financing
Statement  filed  in  Delaware  on  June  14, 2004, file number 2004-167-7198-7;

WHEREAS,  the  Company shall issue and sell to the Secured Party, as provided in
the  Securities Purchase Agreement of even date herewith between the Company and
the  Secured  Party (the "Securities Purchase Agreement"), and the Secured Party
                          -----------------------------
shall purchase up to Three Million One Hundred Sixty Three Thousand Four Hundred
Thirty  Dollars ($3,163,430) of secured convertible debentures (the "Convertible
                                                                     -----------
Debentures"),  which  shall  be  convertible into shares of the Company's common
----------
stock,  par  value  $0.0001  (the "Common Stock") (as converted, the "Conversion
                                   ------------                       ----------
Shares")  in  the  respective  amounts  set forth opposite each Buyer(s) name on
------
Schedule  I  attached  to  the  Securities  Purchase  Agreement;

WHEREAS,  to induce the Secured Party to enter into the transaction contemplated
by  the  Securities Purchase Agreement, the Convertible Debentures, the Investor
Registration  Rights Agreement of even date herewith between the Company and the
Secured  Party  (the  "Investor  Registration Rights Agreement"), the Pledge and
                       ---------------------------------------
Escrow  Agreement of even date herewith among the Company, the Secured Party and
David Gonzalez, Esq. (the "Pledge Agreement"), the Escrow Agreement of even date
                           ----------------
herewith  among  the  Company,  the Secured Party, and David Gonzalez, Esq. (the
"Escrow  Agreement"),  and the Irrevocable Transfer Agent Instructions among the
 -----------------
Company,  the  Secured  Party,  Transfer  Agent,  and  David Gonzalez, Esq. (the
"Transfer  Agent  Instructions")  (collectively  referred to as the "Transaction
 -----------------------------                                       -----------
Documents"),  the Company hereby grants to the Secured Party a security interest
---------
in  and  to  the  pledged  property identified on Exhibit A hereto (collectively
                                                  ---------
referred  to  as  the  "Pledged  Property")  until  the  satisfaction  of  the
                        -----------------
Obligations,  as  defined  herein  below.


                                      EX-36
<PAGE>

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

                                   ARTICLE 1.

                         DEFINITIONS AND INTERPRETATIONS
                         -------------------------------

Section  1.1.     Recitals.
                  --------

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

Section  1.2.     Interpretations.
                  ---------------

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

Section  1.3.     Obligations  Secured.
                  --------------------

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

                                   ARTICLE 2.

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

Section  2.1.     Pledged  Property.
                  -----------------

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

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


                                      EX-37
<PAGE>

in  the  Pledged  Property,  and  the  Secured  Party
shall hold such documents and instruments as secured party, subject to the terms
and  conditions  contained  herein.

Section  2.2.     Rights;  Interests;  Etc.
                  -------------------------

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

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

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

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

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

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

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

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


                                      EX-38
<PAGE>

                                   ARTICLE 3.

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

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

     Upon the occurrence of an Event of Default, the Company hereby appoints the
Secured  Party  as  its  attorney-in-fact,  with full authority in the place and
stead  of  the Company and in the name of the Company or otherwise, from time to
time  in  the  Secured  Party's discretion to take any action and to execute any
instrument  which  the Secured Party may reasonably deem necessary to accomplish
the  purposes  of  this Agreement, including, without limitation, to receive and
collect all instruments made payable to the Company representing any payments in
respect  of  the Pledged Property 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 from and
after an occurrence of an Event of Default, the Secured Party may notify account
debtors  and  obligors  on any Pledged Property to make payments directly to the
Secured  Party.

Section  3.2.     Secured  Party  May  Perform.
                  ----------------------------

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

                                   ARTICLE 4.

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

Section  4.1.     Authorization;  Enforceability.
                  ------------------------------

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

Section  4.2.     Ownership  of  Pledged  Property.
                  --------------------------------

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


                                      EX-39
<PAGE>

                                   ARTICLE 5.

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

Section  5.1.     Default  and  Remedies.
                  ----------------------

     (a) If an Event of Default 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.

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

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

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

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

     (b)  Any  cash  being held by the Secured Party as Pledged Property 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 Property shall be
applied  as  follows:

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

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

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


                                      EX-40
<PAGE>

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

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

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

Section  5.3.     Proofs  of  Claim.
                  -----------------

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

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

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

Section  5.4.     Duties  Regarding  Pledged  Property.
                  ------------------------------------

     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.


                                      EX-41
<PAGE>

                                   ARTICLE 6.

                              AFFIRMATIVE COVENANTS
                              ---------------------

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

Section  6.1.     Existence,  Properties,  Etc.
                  -----------------------------

     (a)     The  Company  shall do, or cause to be done, all things, or proceed
with due diligence with any actions or courses of action, that may be reasonably
necessary  (i)  to  maintain the 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 reasonable discretion, whether individually
or  in  the  aggregate,  upon  (a)  the  Company's assets, business, operations,
properties  or  condition,  financial  or  otherwise;  (b) the Company's to make
payment  as  and  when  due  of  all  or any part of the Obligations; or (c) the
Pledged  Property.

Section  6.2.     Financial  Statements  and  Reports.
                  -----------------------------------

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

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

Section  6.3.     Accounts  and  Reports.
                  ----------------------

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

     (a)  as  soon  as  available,  a  copy of any notice or other communication
alleging  any nonpayment or other material breach or default, or any foreclosure
or  other  action  respecting any material portion of its assets and properties,
received respecting any of the indebtedness of the Company in excess of $100,000
(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 $100,000,
including  any received from any person acting on behalf of the Secured Party or
beneficiary  thereof;  and


                                      EX-42
<PAGE>

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

Section  6.4.     Maintenance  of  Books  and  Records;  Inspection.
                  -------------------------------------------------

     The  Company  shall  maintain its books, accounts and records in accordance
with  generally  accepted accounting principles consistently applied, and permit
the  Secured  Party, its officers and employees and any professionals designated
by  the Secured Party in writing, at any time to visit and inspect during normal
business hours with reasonable prior notice to the Company 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.

Section  6.5.     Maintenance  and  Insurance.
                  ---------------------------

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

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

Section  6.6.     Contracts  and  Other  Collateral.
                  ---------------------------------

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

Section  6.7.     Defense  of  Collateral,  Etc.
                  ------------------------------

     The  Company  shall defend and enforce its right, title and interest in and
to  any  part  of:  (a) the Pledged Property; and (b) if not included within the
Pledged  Property,  those assets and properties whose loss could have a Material
Adverse  Effect,  the  Company shall defend the Secured Party's right, title and


                                      EX-43
<PAGE>

interest in and to each and every part of the Pledged Property, each against all
manner  of  claims and demands on a timely basis to the full extent permitted by
applicable  law.

Section  6.8.     Payment  of  Debts,  Taxes,  Etc.
                  ---------------------------------

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

Section  6.9.     Taxes  and  Assessments;  Tax  Indemnity.
                  ----------------------------------------

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

Section  6.10.     Compliance  with  Law  and  Other  Agreements.
                   ---------------------------------------------

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

Section  6.11.     Notice  of  Default.
                   -------------------

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

Section  6.12.     Notice  of  Litigation.
                   ----------------------

     The  Company shall give notice, in writing, to the Secured Party of (a) any
actions,  suits  or  proceedings  wherein  the  amount  at issue is in excess of
$50,000,  instituted by any persons against the Company, or affecting any of the
assets  of  the  Company,  and (b) any dispute, not resolved within fifteen (15)
days  of  the  commencement thereof, between the Company on the one hand and any


                                      EX-44
<PAGE>

governmental  or  regulatory  body  on the other hand, which might reasonably be
expected  to  have  a  Material  Adverse  Effect  on  the business operations or
financial  condition  of  the  Company.

                                   ARTICLE 7.

                               NEGATIVE COVENANTS
                               ------------------

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

Section  7.1.     Indebtedness.
                  ------------

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

Section  7.2.     Liens  and  Encumbrances.
                  ------------------------

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

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

     Without the prior express written consent of the Secured Party, the Company
shall  not:  (a) Amend its Certificate of Incorporation or By-Laws; (b) issue or
sell  its  stock,  stock  options, bonds, notes or other corporate securities or
obligations (except as otherwise permitted in the Transaction Documents); (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  newly  formed  subsidiary.


                                      EX-45
<PAGE>

Section  7.4.     Management,  Ownership.
                  ----------------------

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

Section  7.5.     Dividends,  Etc.
                  ---------------

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

Section  7.6.     Guaranties;  Loans.
                  ------------------

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

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 600 University
Street,  Suite  1525,  Seattle,  WA  98101.  The  Company  shall  not change the
location  of its chief place of business, chief executive office or any place of
business disclosed to the Secured Party or move any of the Pledged Property from
its  current  location  without  thirty  (30)  days' prior written notice to the
Secured  Party  in  each  instance.

                                   ARTICLE 8.

                                  MISCELLANEOUS
                                  -------------

Section  8.1.     Notices.
                  -------

     All  notices  or  other  communications  required  or permitted to be given
pursuant  to  this Agreement shall be in writing and shall be considered as duly
given  on:  (a)  the  date  of  delivery,  if delivered in person, by nationally


                                      EX-46
<PAGE>

recognized  overnight  delivery  service  or  (b) five (5) days after mailing if
mailed  from  within  the  continental  United  States by certified mail, return
receipt  requested  to  the  party  entitled  to  receive  the  same:

If  to  the  Secured  Party:     Cornell  Capital  Partners,  LP
                                 101  Hudson  Street-Suite  3700
                                 Jersey  City,  New  Jersey  07302
                                 Attention:  Mark  Angelo
                                   Portfolio  Manager
                                 Telephone:  (201)  986-8300
                                 Facsimile:  (201)  985-8266

With  a  copy  to:               David  Gonzalez,  Esq.
                                 101  Hudson  Street,  Suite  3700
                                 Jersey  City,  NJ  07302
                                 Telephone:  (201)  985-8300
                                 Facsimile:  (201)  985-8266

And  if  to  the  Company:       NS8  Corporation
                                 600  University  Street  -  Suite  1525
                                 Seattle,  WA  98101
                                 Attention:  Anthony  Alda
                                 Telephone:  (604)  677-6994
                                 Facsimile:  (604)  677-7011

With  a  copy  to:               McGuireWoods,  LLP
                                 1345  Avenue  of  the  Americas
                                 New  York,  NY  10105
                                 Attention:  Louis  W.  Zehil,  Esq.
                                 Telephone:  (212)  548-2138
                                 Facsimile:  (212)  680-2175

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

Section  8.2.     Severability.
                  ------------

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


                                      EX-47
<PAGE>

Section  8.3.     Expenses.
                  --------

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

Section  8.4.     Waivers,  Amendments,  Etc.
                  ---------------------------

     The  Secured  Party's  delay  or  failure at any time or times hereafter to
require  strict  performance  by  Company  of  any  undertakings,  agreements or
covenants  shall  not  waive, 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 8.5.     Continuing  Security  Interest.
                 ------------------------------

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

Section  8.6.     Independent  Representation.
                  ---------------------------

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

Section  8.7.     Applicable  Law:  Jurisdiction.
                  ------------------------------

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


                                      EX-48
<PAGE>

Section  8.8.     Waiver  of  Jury  Trial.
                  -----------------------

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

Section  8.9.     Entire  Agreement.
                  -----------------

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


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      EX-49
<PAGE>

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


                                                    COMPANY:
                                                    NS8 CORPORATION

                                                    By: /s/ Anthony Alda
                                                        ------------------------
                                                    Name: Anthony Alda
                                                    Title: CEO


                                                    SECURED PARTY:
                                                    CORNELL CAPITAL PARTNERS, LP

                                                    By: Yorkville Advisors, LLC
                                                    Its: General Partner

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


                                      EX-50
<PAGE>

                                    EXHIBIT A
                         DEFINITION OF PLEDGED PROPERTY

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

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

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

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

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

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

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

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


                                      EX-51
<PAGE>