Document:

EXHIBIT 10.7

                          SUBSIDIARY SECURITY AGREEMENT
                          -----------------------------

     THIS  SUBSIDIARY  SECURITY AGREEMENT (the "Agreement"), is entered into and
                                                ---------
made  effective  as  of  November  __,  2005,  by  and  among  CANONLINE  MEDIA
CORPORATION,  a  British  Columbia  corporation  (the "Subsidiary"), and Cornell
                                                       ----------
Capital  Partners,  LP  (the  "Secured  Party").
                               --------------

     WHEREAS,  the  Subsidiary  is a wholly-owned subsidiary of Canonline Global
Media,  Inc.,  a  wholly-owned  subsidiary  of  NS8  Corporation (the "Parent");
                                                                       ------

     WHEREAS, on the date hereof, the Parent shall issue and sell to the Secured
Party,  as  provided in the Securities Purchase Agreement dated the date hereof,
and the Secured Party shall purchase up to Three Million One Hundred Sixty Three
Thousand  Four  Hundred Thirty Dollars ($3,163,430) of ten percent (10%) secured
convertible  debentures  (the  "Convertible  Debentures"),  which  shall  be
                                -----------------------
convertible  into  shares  of common stock of the Parent, 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,  the  Subsidiary  shall  benefit  from the sale of the Convertible
Debentures  by  the  Parent  to  the  Secured  Party;

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

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

                                   ARTICLE 1.

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

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

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     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
Subsidiary  or  the  Parent  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 Parent to the
Secured  Party  under the Securities Purchase Agreement, the Secured Convertible
Debenture,  the  Investor Registration Rights Agreement and Irrevocable Transfer
Agent  Instructions,  and any other amounts now or hereafter owed to the Secured
Party  by  the Parent thereunder or hereunder (collectively, the "Obligations").
                                                                  -----------

                                   ARTICLE 2.

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

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

     (a)     The  Subsidiary 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 Subsidiary as
set forth in Exhibit "A" attached hereto (collectively, the "Pledged Property"):
             -----------                                     ----------------

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

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

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

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

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

     (ii)  All  interest, dividends, income and other payments and distributions
which  are  received  by  the  Subsidiary  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 Subsidiary 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)     Each  of the following events shall constitute a default under this
Agreement  (each  an  "Event  of  Default"):
                       ------------------

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

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

     (iii) the Subsidiary or the Parent shall: (1) make a general assignment for
the  benefit  of its creditors; (2) apply for or consent to the appointment of a
receiver,  trustee,  assignee,  custodian,  sequestrator,  liquidator or similar
official  for  itself  or  any  of  its  assets  and  properties; (3) commence a
voluntary  case  for relief as a debtor under the United States Bankruptcy Code;
(4)  file  with  or otherwise submit to any governmental authority any petition,

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answer  or  other document seeking:  (A) reorganization, (B) an arrangement with
creditors or (C) to take advantage of any other present or future applicable law
respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief
of  debtors, dissolution or liquidation; (5) file or otherwise submit any answer
or  other document admitting or failing to contest the material allegations of a
petition  or  other  document  filed  or  otherwise  submitted against it in any
proceeding  under  any  such applicable law, or (6) be adjudicated a bankrupt or
insolvent  by  a  court  of  competent  jurisdiction;

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

     (v)  Any  obligation  of  Company  in  excess  of  $100,000 (other than its
Obligations  under this Agreement) for the payment of borrowed money is not paid
when due or within any applicable grace period, or such obligation becomes or is
declared  to be due and payable before the expressed maturity of the obligation,
or  there  shall have occurred an event that, with the giving of notice or lapse
of  time,  or both, would cause any such obligation to become, or allow any such
obligation  to  be  declared  to  be,  due  and  payable.

     (vi)  A breach by the Subsidiary of any material contract that would have a
material  adverse  affect  upon  the  business  of  the  Subsidiary.

                                   ARTICLE 3.

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

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

     Upon  the occurrence of an Event of Default, the Subsidiary hereby appoints
the  Secured Party as its attorney-in-fact, with full authority in the place and
stead  of  the  Subsidiary  and in the name of the Subsidiary 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 Subsidiary representing
any  payments  in  respect  of the Pledged Collateral or any part thereof and to
give  full  discharge  for  the  same.  The  Secured  Party may demand, collect,
receipt  for,  settle, compromise, adjust, sue for, foreclose, or realize on the
Pledged  Property  as  and  when the Secured Party may determine.  To facilitate
collection  from  and  after  the occurrence of an Event of Default, the Secured
Party may notify account debtors and obligors on any Pledged Property or Pledged
Collateral  to  make  payments  directly  to  the  Secured  Party.

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

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

                                   ARTICLE 5.

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

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

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

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

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<PAGE>

     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 Subsidiary ten (10) days' prior written notice of the time
and  place  or  of  the  time  after which a private sale may be made (the "Sale
                                                                            ----
Notice")),  which  notice  period  shall  in  any  event  is hereby agreed to be
------
commercially  reasonable.  At  any  sale  or  sales of the Pledged Property, the
Subsidiary  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
Subsidiary will execute and deliver, or cause to be executed and delivered, such
instruments,  documents,  assignments, waivers, certificates, and affidavits and
supply  or  cause  to be supplied such further information and take such further
action as the Secured Party reasonably shall require in connection with any such
sale.

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

     (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  Subsidiary.

     (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,  as in effect in the State of New Jersey.

     (i)     If the Subsidiary 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 Subsidiary and collect the monies adjudged or decreed to be payable
in the manner provided by law out of the property of Company, wherever situated.
The  Secured  Party  may proceed against the Subsidiary without proceeding first
against  any  other  party,  including,  without  limitation,  the  Parent.

     (ii) The Subsidiary 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

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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 Subsidiary or the property of the Subsidiary
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 Subsidiary 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  Collateral.
                       --------------------------------------

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

                                   ARTICLE 6.

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

     The  Subsidiary  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  Subsidiary  shall  do,  or  cause  to  be done, all things, or
proceed  with  due  diligence with any actions or courses of action, that may be
reasonably necessary (i) to maintain Company's due organization, valid existence
and  good  standing  under  the  laws of its state of incorporation, and (ii) to

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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 Subsidiary shall not do,
or  cause  to  be  done,  any  act impairing the Subsidiary's corporate power or
authority  (i)  to carry on the Subsidiary'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  (which  other  loan  instruments
collectively  shall  be referred to as the "Loan Instruments") 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 Subsidiary's
assets,  business,  operations, properties or condition, financial or otherwise;
(b)  the  Subsidiary'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 Subsidiary shall provide the Security Party with such financial data as
the  Secured  Party  may  reasonably request, within a reasonable time after any
such  request,  including,  without  limitation  the  following  financial data:

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

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

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

     The Subsidiary 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 Subsidiary 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

     (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 Subsidiary, or
submitted  to  or  filed  by  the  Subsidiary  with  any  governmental authority
involving  or  affecting  (i)  the Subsidiary that could have a Material Adverse
Effect;  (ii) the Obligations; (iii) any part of the Pledged Collateral; or (iv)
any  of the transactions contemplated in this Agreement or the Loan Instruments.

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

     The Subsidiary 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  Subsidiary 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 Subsidiary shall maintain or cause to be maintained, at its own
expense,  all  of its assets and properties in good working order and condition,
subject  to  ordinary  wear  and  tear, making all necessary repairs thereto and
renewals  and  replacements  thereof.

     (b)  The  Subsidiary  shall  maintain or cause to be maintained, at its own
expense, insurance in form, substance and amounts (including deductibles), which
the  Subsidiary  deems  reasonably  necessary  to the Subsidiary's business, (i)
adequate to insure all assets and properties of the Subsidiary, 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 Subsidiary; (iii) as may be required by
the Transaction Documents and/or the Loan Instruments 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  Subsidiary  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 Subsidiary 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  Subsidiary  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

                                     EX-103
<PAGE>

the  Pledged  Property,  those  assets  and  properties  whose loss could have a
Material  Adverse Effect, the Subsidiary shall defend the Secured Party's right,
title  and  interest in and to each and every part of the Pledged Property, each
against  all  manner  of claims and demands on a timely basis to the full extent
permitted  by  applicable  law.

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

     The  Subsidiary 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  Subsidiary  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 Subsidiary, 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 Subsidiary 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 Subsidiary 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 Subsidiary is a
party  or  by  which  the Subsidiary or any of its properties is bound.  Without
limiting  the  foregoing,  the  Subsidiary  shall  pay  all  of its indebtedness
promptly  in  accordance  with  the  terms  thereof.

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

     The  Subsidiary  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  Subsidiary  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

                                     EX-104
<PAGE>

$50,000,  instituted  by any persons against the Subsidiary, or affecting any of
the  assets  of the Subsidiary, and (b) any dispute, not resolved within fifteen
(15)  days  of  the commencement thereof, between the Subsidiary on the one hand
and  any  governmental  or  regulatory  body  on  the  other  hand,  which might
reasonably  be  expected  to  have  a  Material  Adverse  Effect on the business
operations  or  financial  condition  of  the  Subsidiary.

                                   ARTICLE 7.

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

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

     Section  7.1.     Liens  and  Encumbrances.
                       ------------------------

     The Subsidiary 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 Subsidiary'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 Subsidiary's capital
stock;  or  enter  into  any sale-leaseback financing respecting any part of the
Pledged Property  as lessee, or cause or assist the inception or continuation of
any  of  the  foregoing.

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

     Without  the  prior  express  written  consent  of the Secured Party, which
consent shall not be unreasonably withheld, the Subsidiary shall not:  (a) Amend
its  Articles  of  Incorporation  or  By-Laws;  (b)  be  a  party to any merger,
consolidation or corporate reorganization, (c) 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, (d) sell, transfer,
convey, grant a security interest in or lease all or any substantial part of its
assets,  nor  (e)  create  any  subsidiaries nor convey any of its assets to any
subsidiary  in  excess  of  $200,000  in  the  aggregate.

     Section  7.3.     Management,  Ownership.
                       ----------------------

     Brent  R.  Bysouth  shall  remain employed by the Subsidiary in his current
capacity.  This  provision  is  a  material  factor  in  the  Secured  Party's
willingness  to  institute  and  maintain  a  lending  relationship  with  the
Subsidiary.

     Section  7.4.     Dividends,  Etc.
                       ---------------

     Except  for  dividends  payable  to  the  Parent,  the Subsidiary 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

                                     EX-105
<PAGE>

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  7.5.     Conduct  of  Business.
                       ---------------------

     The  Subsidiary  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  7.6.     Places  of  Business.
                       --------------------

     The  location  of  the  Subsidiary's  chief  place of business is 1311 Howe
Street,  Suite  700,  Vancouver,  BC  Canada  V6Z 2P3.  The Subsidiary shall not
change  the  location  of its chief place of business, chief executive office or
any  place of business disclosed to the Secured Party or move any of the Pledged
Property from its current location without thirty (30) days prior written notice
to  the  Secured  Party  in  each  instance.

                                   ARTICLE 8.

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

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

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

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

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

                                     EX-106
<PAGE>

And  if  to  Subsidiary:         CanOnline  Media  Corporation
                                 1311  Howe  Street  -  Suite  700
                                 Vancouver,  BC  Canada  V6Z  2P3
                                 Attention:  Brent  R.  Bysouth
                                 Telephone:  (604)  677-6994
                                 Facsimile:  (604)  677-7011

With  a  copy  to:

                                 Telephone:
                                 Facsimile:

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

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

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

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

     In the event of an Event of Default, the Subsidiary 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 Subsidiary 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 waiver, affect, or diminish any right of the Secured Party
under  this Agreement to demand strict compliance and performance herewith.  Any
waiver  by  the  Secured Party of any Event of Default shall not waive or affect
any other Event of Default, whether such Event of Default is prior or subsequent
thereto  and whether of the same or a different type.  None of the undertakings,
agreements  and  covenants of the Subsidiary 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

                                     EX-107
<PAGE>

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 Subsidiary 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
Subsidiary  shall  be  entitled  to  the  return, at its expense, of such of the
Pledged  Property  as  shall  not  have been sold in accordance with Section 5.2
hereof  or  otherwise  applied  pursuant  to  the  terms  hereof.

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

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

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

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

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

     AS  A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT
AND  TO  MAKE  THE  FINANCIAL ACCOMMODATIONS TO THE SUBSIDIARIES, THE SUBSIDIARY
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-108
<PAGE>

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

                                                    SUBSIDIARY:
                                                    CANONLINE MEDIA CORPORATION

                                                    By: /s/ Brent R. Bysouth
                                                        --------------------
                                                    Name: Brent R. Bysouth
                                                    Title: President

                                                    SECURED PARTY:
                                                    CORNELL CAPITAL PARTNERS, LP

                                                    By: Yorkville Advisors, LLC
                                                    Its: General Partner

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

                                     EX-109
<PAGE>

                                    EXHIBIT A
                         DEFINITION OF PLEDGED PROPERTY

     For  the purpose of securing prompt and complete payment and performance by
the  Subsidiary  of  all  of the Obligations, the Subsidiary 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 Subsidiary:

     (a)  all  goods  of  the  Subsidiary,  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  Subsidiary or in which the Subsidiary 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 Subsidiary, 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  Subsidiary,
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
Subsidiary  whether  now  owned  or  hereafter  created;

     (e)  all  accounts  and  other  receivables,  instruments or other forms of
obligations  and  rights  to  payment  of  the  Subsidiary  (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
Subsidiary's  customers,  and  all  proceeds  of  any insurance thereon, and all
guarantees,  securities  and liens which the Subsidiary 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  Subsidiary  represents  and  warrants will be bona fide and existing
obligations of its respective customers, arising out of the sale of goods by the
Subsidiary  in  the  ordinary  course  of  business;

     (f)  to  the  extent  assignable,  all of the Subsidiary'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-110
<PAGE>EXHIBIT 10.8

                          SUBSIDIARY SECURITY AGREEMENT
                          -----------------------------

     THIS  SUBSIDIARY  SECURITY AGREEMENT (the "Agreement"), is entered into and
                                                ---------
made  effective  as  of  November __, 2005, by and among CANONLINE GLOBAL MEDIA,
INC., a Washington corporation (the "Subsidiary"), and Cornell Capital Partners,
                                     ----------
LP  (the  "Secured  Party").
           --------------

     WHEREAS,  the  Subsidiary  is  a wholly-owned subsidiary of NS8 Corporation
(the  "Parent");
       ------

     WHEREAS, on the date hereof, the Parent shall issue and sell to the Secured
Party,  as  provided in the Securities Purchase Agreement dated the date hereof,
and the Secured Party shall purchase up to Three Million One Hundred Sixty Three
Thousand  Four  Hundred Thirty Dollars ($3,163,430) of ten percent (10%) secured
convertible  debentures  (the  "Convertible  Debentures"),  which  shall  be
                                -----------------------
convertible  into  shares  of common stock of the Parent, 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,  the  Subsidiary  shall  benefit  from the sale of the Convertible
Debentures  by  the  Parent  to  the  Secured  Party;

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

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

                                   ARTICLE 1.

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

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

                                     EX-111
<PAGE>

     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
Subsidiary  or  the  Parent  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 Parent to the
Secured  Party  under the Securities Purchase Agreement, the Secured Convertible
Debenture,  the  Investor Registration Rights Agreement and Irrevocable Transfer
Agent  Instructions,  and any other amounts now or hereafter owed to the Secured
Party  by  the Parent thereunder or hereunder (collectively, the "Obligations").
                                                                  -----------

                                   ARTICLE 2.

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

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

     (a)     The  Subsidiary 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 Subsidiary as
set forth in Exhibit "A" attached hereto (collectively, the "Pledged Property"):
             -----------                                     ----------------

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

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

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

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

                                     EX-112
<PAGE>

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

     (ii)  All  interest, dividends, income and other payments and distributions
which  are  received  by  the  Subsidiary  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 Subsidiary 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)     Each  of the following events shall constitute a default under this
Agreement  (each  an  "Event  of  Default"):
                       ------------------

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

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

     (iii) the Subsidiary or the Parent shall: (1) make a general assignment for
the  benefit  of its creditors; (2) apply for or consent to the appointment of a
receiver,  trustee,  assignee,  custodian,  sequestrator,  liquidator or similar
official  for  itself  or  any  of  its  assets  and  properties; (3) commence a
voluntary  case  for relief as a debtor under the United States Bankruptcy Code;
(4)  file  with  or otherwise submit to any governmental authority any petition,

                                     EX-113
<PAGE>

answer  or  other document seeking:  (A) reorganization, (B) an arrangement with
creditors or (C) to take advantage of any other present or future applicable law
respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief
of  debtors, dissolution or liquidation; (5) file or otherwise submit any answer
or  other document admitting or failing to contest the material allegations of a
petition  or  other  document  filed  or  otherwise  submitted against it in any
proceeding  under  any  such applicable law, or (6) be adjudicated a bankrupt or
insolvent  by  a  court  of  competent  jurisdiction;

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

     (v)  Any  obligation  of  Company  in  excess  of  $100,000 (other than its
Obligations  under this Agreement) for the payment of borrowed money is not paid
when due or within any applicable grace period, or such obligation becomes or is
declared  to be due and payable before the expressed maturity of the obligation,
or  there  shall have occurred an event that, with the giving of notice or lapse
of  time,  or both, would cause any such obligation to become, or allow any such
obligation  to  be  declared  to  be,  due  and  payable.

     (vi)  A breach by the Subsidiary of any material contract that would have a
material  adverse  affect  upon  the  business  of  the  Subsidiary.

                                   ARTICLE 3.

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

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

     Upon  the occurrence of an Event of Default, the Subsidiary hereby appoints
the  Secured Party as its attorney-in-fact, with full authority in the place and
stead  of  the  Subsidiary  and in the name of the Subsidiary 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 Subsidiary representing
any  payments  in  respect  of the Pledged Collateral or any part thereof and to
give  full  discharge  for  the  same.  The  Secured  Party may demand, collect,
receipt  for,  settle, compromise, adjust, sue for, foreclose, or realize on the
Pledged  Property  as  and  when the Secured Party may determine.  To facilitate
collection  from  and  after  the occurrence of an Event of Default, the Secured
Party may notify account debtors and obligors on any Pledged Property or Pledged
Collateral  to  make  payments  directly  to  the  Secured  Party.

                                     EX-114
<PAGE>

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

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

                                   ARTICLE 5.

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

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

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

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

                                     EX-115
<PAGE>

     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 Subsidiary ten (10) days' prior written notice of the time
and  place  or  of  the  time  after which a private sale may be made (the "Sale
                                                                            ----
Notice")),  which  notice  period  shall  in  any  event  is hereby agreed to be
------
commercially  reasonable.  At  any  sale  or  sales of the Pledged Property, the
Subsidiary  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
Subsidiary will execute and deliver, or cause to be executed and delivered, such
instruments,  documents,  assignments, waivers, certificates, and affidavits and
supply  or  cause  to be supplied such further information and take such further
action as the Secured Party reasonably shall require in connection with any such
sale.

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

     (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  Subsidiary.

     (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,  as in effect in the State of New Jersey.

     (i)     If the Subsidiary 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 Subsidiary and collect the monies adjudged or decreed to be payable
in the manner provided by law out of the property of Company, wherever situated.
The  Secured  Party  may proceed against the Subsidiary without proceeding first
against  any  other  party,  including,  without  limitation,  the  Parent.

     (ii) The Subsidiary 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

                                     EX-116
<PAGE>

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 Subsidiary or the property of the Subsidiary
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 Subsidiary 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  Collateral.
                       --------------------------------------

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

                                   ARTICLE 6.

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

     The  Subsidiary  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  Subsidiary  shall  do,  or  cause  to  be done, all things, or
proceed  with  due  diligence with any actions or courses of action, that may be
reasonably necessary (i) to maintain Company's due organization, valid existence
and  good  standing  under  the  laws of its state of incorporation, and (ii) to

                                     EX-117
<PAGE>

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 Subsidiary shall not do,
or  cause  to  be  done,  any  act impairing the Subsidiary's corporate power or
authority  (i)  to carry on the Subsidiary'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  (which  other  loan  instruments
collectively  shall  be referred to as the "Loan Instruments") 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 Subsidiary's
assets,  business,  operations, properties or condition, financial or otherwise;
(b)  the  Subsidiary'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 Subsidiary shall provide the Security Party with such financial data as
the  Secured  Party  may  reasonably request, within a reasonable time after any
such  request,  including,  without  limitation  the  following  financial data:

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

                                     EX-118
<PAGE>

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

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

     The Subsidiary 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 Subsidiary 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

     (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 Subsidiary, or
submitted  to  or  filed  by  the  Subsidiary  with  any  governmental authority
involving  or  affecting  (i)  the Subsidiary that could have a Material Adverse
Effect;  (ii) the Obligations; (iii) any part of the Pledged Collateral; or (iv)
any  of the transactions contemplated in this Agreement or the Loan Instruments.

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

     The Subsidiary 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  Subsidiary 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 Subsidiary shall maintain or cause to be maintained, at its own
expense,  all  of its assets and properties in good working order and condition,
subject  to  ordinary  wear  and  tear, making all necessary repairs thereto and
renewals  and  replacements  thereof.

     (b)  The  Subsidiary  shall  maintain or cause to be maintained, at its own
expense, insurance in form, substance and amounts (including deductibles), which
the  Subsidiary  deems  reasonably  necessary  to the Subsidiary's business, (i)
adequate to insure all assets and properties of the Subsidiary, 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 Subsidiary; (iii) as may be required by
the Transaction Documents and/or the Loan Instruments 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  Subsidiary  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 Subsidiary 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  Subsidiary  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

                                     EX-119
<PAGE>

the  Pledged  Property,  those  assets  and  properties  whose loss could have a
Material  Adverse Effect, the Subsidiary shall defend the Secured Party's right,
title  and  interest in and to each and every part of the Pledged Property, each
against  all  manner  of claims and demands on a timely basis to the full extent
permitted  by  applicable  law.

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

     The  Subsidiary 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  Subsidiary  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 Subsidiary, 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 Subsidiary 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 Subsidiary 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 Subsidiary is a
party  or  by  which  the Subsidiary or any of its properties is bound.  Without
limiting  the  foregoing,  the  Subsidiary  shall  pay  all  of its indebtedness
promptly  in  accordance  with  the  terms  thereof.

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

     The  Subsidiary  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  Subsidiary  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

                                     EX-120
<PAGE>

$50,000,  instituted  by any persons against the Subsidiary, or affecting any of
the  assets  of the Subsidiary, and (b) any dispute, not resolved within fifteen
(15)  days  of  the commencement thereof, between the Subsidiary on the one hand
and  any  governmental  or  regulatory  body  on  the  other  hand,  which might
reasonably  be  expected  to  have  a  Material  Adverse  Effect on the business
operations  or  financial  condition  of  the  Subsidiary.

                                   ARTICLE 7.

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

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

     Section  7.1.     Liens  and  Encumbrances.
                       ------------------------

     The Subsidiary 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 Subsidiary'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 Subsidiary's capital
stock;  or  enter  into  any sale-leaseback financing respecting any part of the
Pledged Property  as lessee, or cause or assist the inception or continuation of
any  of  the  foregoing.

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

     Without  the  prior  express  written  consent  of the Secured Party, which
consent shall not be unreasonably withheld, the Subsidiary shall not:  (a) Amend
its  Articles  of  Incorporation  or  By-Laws;  (b)  be  a  party to any merger,
consolidation or corporate reorganization, (c) 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, (d) sell, transfer,
convey, grant a security interest in or lease all or any substantial part of its
assets,  nor  (e)  create  any  subsidiaries nor convey any of its assets to any
subsidiary  in  excess  of  $200,000  in  the  aggregate.

     Section  7.3.     Management,  Ownership.
                       ----------------------

     Brent  R.  Bysouth  shall  remain employed by the Subsidiary in his current
capacity.  This  provision  is  a  material  factor  in  the  Secured  Party's
willingness  to  institute  and  maintain  a  lending  relationship  with  the
Subsidiary.

     Section  7.4.     Dividends,  Etc.
                       ---------------

     Except  for  dividends  payable  to  the  Parent,  the Subsidiary 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

                                     EX-121
<PAGE>

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  7.5.     Conduct  of  Business.
                       ---------------------

     The  Subsidiary  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  7.6.     Places  of  Business.
                       --------------------

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

                                   ARTICLE 8.

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

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

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

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

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

                                     EX-122
<PAGE>

And  if  to  Subsidiary:         CanOnline  Global  Media,  Inc.
                                 600  University  Street  -  Suite  1525
                                 Seattle,  WA  98101
                                 Attention:  Brent  R.  Bysouth
                                 Telephone:  (206)  331-4545
                                 Facsimile:  (206)  342-1799

With  a  copy  to:

                                 Telephone:
                                 Facsimile:

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

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

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

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

     In the event of an Event of Default, the Subsidiary 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 Subsidiary 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 waiver, affect, or diminish any right of the Secured Party
under  this Agreement to demand strict compliance and performance herewith.  Any
waiver  by  the  Secured Party of any Event of Default shall not waive or affect
any other Event of Default, whether such Event of Default is prior or subsequent
thereto  and whether of the same or a different type.  None of the undertakings,
agreements  and  covenants of the Subsidiary 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

                                     EX-123
<PAGE>

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 Subsidiary 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
Subsidiary  shall  be  entitled  to  the  return, at its expense, of such of the
Pledged  Property  as  shall  not  have been sold in accordance with Section 5.2
hereof  or  otherwise  applied  pursuant  to  the  terms  hereof.

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

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

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

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

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

     AS  A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT
AND  TO  MAKE  THE  FINANCIAL ACCOMMODATIONS TO THE SUBSIDIARIES, THE SUBSIDIARY
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-124
<PAGE>

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

                                                    SUBSIDIARY:
                                                    CANONLINE GLOBAL MEDIA, INC.

                                                    By: /s/ Brent R. Bysouth
                                                        --------------------
                                                    Name: Brent R. Bysouth
                                                    Title: President

                                                    SECURED PARTY:
                                                    CORNELL CAPITAL PARTNERS, LP

                                                    By: Yorkville Advisors, LLC
                                                    Its: General Partner

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

                                     EX-125
<PAGE>

                                    EXHIBIT A
                         DEFINITION OF PLEDGED PROPERTY

     For  the purpose of securing prompt and complete payment and performance by
the  Subsidiary  of  all  of the Obligations, the Subsidiary 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 Subsidiary:

     (a)  all  goods  of  the  Subsidiary,  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  Subsidiary or in which the Subsidiary 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 Subsidiary, 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  Subsidiary,
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
Subsidiary  whether  now  owned  or  hereafter  created;

     (e)  all  accounts  and  other  receivables,  instruments or other forms of
obligations  and  rights  to  payment  of  the  Subsidiary  (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
Subsidiary's  customers,  and  all  proceeds  of  any insurance thereon, and all
guarantees,  securities  and liens which the Subsidiary 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  Subsidiary  represents  and  warrants will be bona fide and existing
obligations of its respective customers, arising out of the sale of goods by the
Subsidiary  in  the  ordinary  course  of  business;

     (f)  to  the  extent  assignable,  all of the Subsidiary'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-126
<PAGE>

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