Document:

Canada Southern

Exhibit 10.2

EXECUTIVE EMPLOYMENT AGREEMENT

This Agreement dated and made effective as of the first day of April, 2004.

BETWEEN:

CANADA SOUTHERN PETROLEUM LTD., a company incorporated pursuant to the laws of the Province of Nova Scotia and having offices in Calgary, Alberta (the “Corporation”)

- and -

JOHN W.A. McDONALD, a professional engineer residing in Calgary, Alberta (the “Executive”)

WHEREAS the Corporation wishes to retain the services of the Executive, in the capacity of President and Chief Executive Officer of the Corporation, to assist in the furtherance of its Business;

AND WHEREAS the Corporation and the Executive have agreed that their relationship will be governed by the terms and conditions of this Agreement;

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the provision of services by the Executive to the Corporation, and the employment of the Executive by the Corporation, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged by the parties hereto, the parties agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

1.1

In this Agreement, including the recitals hereto, the following terms shall have the following meanings:

(a)

“Act” means the Alberta Business Corporations Act, as amended;

(b)

“Affiliated” has the meaning set out in the Act, and an “Affiliate” means one of two or more Affiliated bodies corporate;

(c)

“Agreement” means this Executive Employment Agreement, as from time to time supplemented or amended by one or more agreements entered into pursuant to the applicable provisions hereof;

(d)

“Base Salary” means the amount paid to the Executive annually by the Corporation pursuant to Section 5.1;

(e)

“Benefits” means those amounts or entitlements provided, or paid for, by the Corporation in respect of the Executive pursuant to Article VI;

(f)

“Board of Directors” means the board of directors of the Corporation;

(g)

“Business” means the business of the Corporation;

(h)

“Cause” means any reason which would entitle the Corporation to terminate the Executive’s employment without notice or payment in lieu of notice at common law, or under the provisions of any other applicable law or regulation and includes, without limiting the generality of the foregoing:

(i)

fraud, misappropriation of the Corporation’s property or funds, embezzlement, malfeasance, misfeasance or nonfeasance in office which is willfully or grossly negligent on the part of the Executive;

(ii)

the willful allowance by the Executive of his duty to the Corporation and his personal interests to come into conflict in a material way in relation to any transaction or matter that is of a substantial nature; or

(iii)

the breach by the Executive of any of his covenants or obligations under this Agreement, including any non-competition, non-solicitation or confidentiality covenants with the Corporation;

(i)

“Change of Control” means the occurrence of any of the following:

(i)

the purchase or acquisition by whatever means of any Shares by a Holder which results in the Holder beneficially owning, or exercising control or direction over Shares such that, assuming the conversion of Shares beneficially owned or over which control or direction is exercised by the Holder, the Holder would beneficially own or exercise control or direction over Shares (together with such Holder’s then owned Shares, if any) carrying the right to cast more than 51% of the votes attaching to all Shares;

(ii)

the amalgamation, consolidation or merger of the Corporation with any other corporation pursuant to which the shareholders of the Corporation immediately prior to such transaction do not own shares of the successor or continuing corporation which would entitle them to cast a majority of the votes attaching to shares in the capital of the successor or continuing corporation which might be cast to elect directors of that corporation;

(iii)

the sale, lease or transfer by the Corporation of all or substantially all of the assets of the Corporation to any Person other than a Related Corporation;

(iv)

approval by the shareholders of the Corporation of the liquidation, dissolution or winding-up of the Corporation; or

(v)

a situation in which the majority of the Board of Directors, following a meeting of the shareholders of the Corporation involving a contest for, or an item of business relating to, the election of directors, are not management nominees to the Board of Directors.

(j)

“Corporate Property” includes any and all proprietary technology, financial, operating and training information, all works of expression and any copyrights in such works, current or potential business contacts and contract development information, patentable inventions, discoveries or trade secrets, and any materials, tools, equipment, devices, records, files, data, tapes, computer programs, computer disks, software, communications, letters, proposals, memoranda, lists, drawings, blueprints, correspondence, specifications or any other documents or property belonging to the Corporation or any Related Corporations;

(k)

“Confidential Information means any information of a confidential nature which relates to the Business of the Corporation or any Related Corporation, including trade secrets, technical information, patents, marketing strategies, sales and pricing policies, financial information, business, marketing or technical plans, programs, methods, techniques, concepts, formulas, documentation, intellectual property, software, industrial designs, products, technical studies and data, strategic studies, engineering information, client and supplier lists, shareholder data and personnel information.  Notwithstanding the foregoing, Confidential Information shall not include any information which:

(i)

was in the possession of or known to the Executive, without any obligation to keep it confidential, before it was disclosed to the Executive by the Corporation;

(ii)

is or becomes public knowledge through no fault of the Executive;

(iii)

is independently developed by the Executive outside the scope of his employment duties to the Corporation;

(iv)

is disclosed by the Corporation to another Person without any restriction on its use or disclosure; or

(v)

is or becomes lawfully available to the Executive from a source other than the Corporation.

(l)

“Effective Date” means the date as set forth on page one of this Agreement;

(m)

“Excluded Reason” means the termination of the Executive’s employment by the Corporation for Cause pursuant to Section 9.2, by the Executive pursuant to Section 10.1, or termination upon Death or Permanent Disability pursuant to Article XI;

(n)

“Holder” means any Person or group of Persons acting jointly or in concert, or associated or Affiliated with any such Person, group of Persons or any of such Persons acting jointly or in concert;

(o)

“Monthly Base Salary” means the annual Base Salary paid to the Executive, divided by 12;

(p)

“Notice” means any Notice given by one Party to the other Party in accordance with Article XV;

(q)

“Party” means one or other of the Executive and the Corporation, and “Parties” means both the Executive and the Corporation;

(r)

“Permanent Disability” means a mental or physical disability whereby the Executive:

(i)

is unable, due to illness, disease, mental or physical disability or similar cause, to fulfill his obligations as an employee or officer of the Corporation for a cumulative period of 9 months out of 12 consecutive calendar months; or

(ii)

is declared by a Court of competent jurisdiction to be mentally incompetent or incapable of managing his affairs;

(s)

“Person” includes an individual, partnership, association, body corporate, trustee, executor, administrator or legal representative, and “Persons” means a group of more than one Person;

(t)

“Related Corporation” means any subsidiary corporation or partnership, division, Affiliate, predecessor or successor of the Corporation;

(u)

“Remuneration” means the Base Salary and other amounts the Executive is entitled to receive pursuant to Article V;

(v)

“Severance Period” shall be 12 months plus 2 additional months notice or pay in lieu of notice for each additional complete year of service after the first complete year of service, to a maximum of 24 months notice of pay in lieu of notice;

(w)

“Shares” means before the voting shares of the Corporation;

(x)

“Term” means the period during which this Agreement remains in force pursuant to Article III; and

(y)

“Termination Date” means the last day actively worked by the Executive for the Corporation.

1.2

The headings in this Agreement are inserted for convenience and ease of reference only, and shall not affect the construction or interpretation of this Agreement.

1.3

All words in this Agreement importing the singular number include the plural, and vice versa.  All words importing gender include the masculine, feminine and neuter genders.

1.4

All monetary amounts are in Canadian dollars.

1.5

The word “including”, when following any general statement or term, is not to be construed as limiting the general statement or term to the specific items or matters set forth or to similar items or matters, but rather as permitting the general statement or term to refer to all other items or matters that could reasonably fall within its broadest possible scope.

1.6

A reference to a statute includes all regulations made thereunder, all amendments to the statute or regulations in force from time to time, and any statute or regulation that supplements or supersedes such statute or regulations.

1.7

A reference to an entity includes any successor to that entity.

1.8

A reference to “approval”, “authorization” or “consent’ means written approval, authorization or consent.

1.9

A reference to an Article is to an Article of this Agreement and the reference to a Section followed by a number or some combination of numbers and letters refers to the section, paragraph, subparagraph, clause or subclause of this Agreement so designated.

ARTICLE II

EMPLOYMENT OF EXECUTIVE

2.1

The Corporation agrees to employ the Executive as the President and Chief Executive Officer, and the Executive agrees to accept such employment, all in accordance with the terms and conditions of this Agreement.

2.2

The Parties agree that the relationship between the Corporation and the Executive is that of employer and employee.

ARTICLE III

TERM OF AGREEMENT

3.1

The Term and the Executive’s employment with the Corporation shall be for a three year period from the Effective Date, unless earlier terminated by the Corporation or the Executive pursuant to the terms and conditions of this Agreement.

3.2

This Agreement may only be extended beyond the Term, by mutual agreement between the Executive and the Corporation, expressed in writing.

ARTICLE IV

DUTIES OF EXECUTIVE

4.1

The Executive shall, during the Term:

(a)

perform the duties and responsibilities of the President and Chief Executive Officer of the Corporation, including all those duties and responsibilities customarily performed by a person holding the same or an equivalent position in corporations of a similar size to the Corporation in a similar Business to that of the Corporation in Canada, as well as such other related duties and responsibilities as may be assigned to the Executive by the Board of Directors from time to time;

(b)

accept such other office or offices which be may be elected or appointed by the Board of Directors in addition to that of President and Chief Executive Officer; and

(c)

devote the whole of his working time, attention, efforts and skill to the performance of his employment duties and responsibilities as set out herein, and truly and faithfully serve the best interests of the Corporation at all times.  In particular, and without limiting the generality of the foregoing, the Executive shall not engage in any personal activities or any employment consulting work, trade or other business activity on his own account or on behalf of any other Person which may compete, conflict or interfere with the performance of the Executive’s duties hereunder in any way, provided that, Executive shall be entitled to provide temporary assistance to former employer in resolving the Bantry and Cedar Energy matters.  Executive shall receive no compensation from former employer in return for providing such temporary assistance, and such assistance shall be rendered to former employer such that Executive’s involvement with former employer is minimized and – to the maximum extent possible – such assistance shall be provided outside of normal business hours. 

(d)

It shall not be a violation of this paragraph 4.1(c) for the Executive to engage in any activities, voluntary or not, which do not interfere with the Executive’s duties under this Agreement,  

ARTICLE V

REMUNERATION

5.1

During the term of this Agreement, the Corporation shall pay to the Executive a salary of $210,000.00 per annum (the “Base Salary”), less required statutory deductions, payable in equal semi-monthly installments in such a manner as the parties may mutually agree.  The Executive’s Base Salary will be reviewed annually by the Board of Directors, and may be increased at the sole discretion of the Board of Directors, based upon such factors as the Board of Directors in its sole discretion determines are relevant, which factors may include the performance of the Corporation and the executive compensation arrangements of other corporations of a similar size engaged in a similar Business to that of the Corporation.

5.2

The Corporation may also grant the Executive annual or incentive bonuses in an amount of up to 40 per cent of annual base salary, for fully satisfactory performance, or in amounts and on such terms and conditions as the Board of Directors in its sole discretion may determine from time to time, based upon such factors as the Board of Directors in its sole discretion determines are relevant, which factors may include the Executive’s performance under the terms of this Agreement and the performance of the Corporation, provided that, in the event of a partial year of service, payment of any Executive bonus under this provision will be pro rated according to the following formula: (number of months employed) x (12).

5.3

The Corporation shall reimburse the Executive for all reasonable out-of-pocket expenses incurred in the performance of his employment duties under this Agreement, including all reasonable travel and promotional expenses payable or incurred by the Executive in connection with the performance of his employment duties.  All payments or reimbursements of expenses shall be subject to the submission by the Executive of appropriate vouchers, bills and receipts to the Chairman of the Audit Committee of the Board of Directors.

5.4

Upon termination of this Agreement for any reason, the Executive shall only be entitled to receive any Remuneration earned up to the Termination Date, in addition to any other severance or termination payments which are payable under the terms of this Agreement.

ARTICLE VI

BENEFITS

6.1

The Executive shall be entitled to receive the following Benefits while employed by the Corporation:

(a)

paid parking, (however, the Employee acknowledges that such costs will be a taxable benefit);

(b)

an employee benefit package including medical, dental and other health care group benefits, as well as life and term disability insurance, subject to the terms of the policies provided by the relevant insurer as may be changed from time to time, in the sole discretion of the Corporation or insurer.

ARTICLE VII

STOCK OPTION

7.1

The Executive is entitled to participate in its Stock Option Plan, as may be amended by the Corporation from time to time.  Upon commencing employment with the Corporation, Executive shall be awarded options to buy 100,000 shares of the Limited Voting Stock of the Corporation, under terms and conditions to be established by the Board of Directors.

ARTICLE VIII

VACATION

8.1

The Executive shall be entitled to an annual vacation of 4 weeks.  Vacation may be taken in such a manner and at such times as the Executive and the Corporation mutually agree, subject to the business priorities of the Corporation.

ARTICLE IX

TERMINATION BY CORPORATION

9.1

The Corporation shall be entitled to terminate this Agreement and the Executive’s employment with the Corporation at any time, for any reason, upon Notice to the Executive, in which case:

(a)

subject to Sections 9.2 and 10.3, the Corporation shall pay the Executive the following amounts in full and final settlement of any claims by the Executive against the Corporation or any Related Corporation, arising out of, or in any way connected to, the Executive’s employment with the Corporation or any Related Corporation, or the termination of such employment, whether at common law or under the provision of any statute or regulation, or pursuant to any agreement between the Parties:

(i)

Base Salary for the Severance Period; plus

(ii)

a lump sum equal to the cost to the Corporation to provide the Benefits referred to in Article VI hereof during the Severance Period, with the exception of any registered pension plans of the Corporation or any Related Corporation, or any supplementary pension benefits that the Executive may be entitled to, or any benefit or entitlement the Executive may have or have had under any registered pension plan or supplementary pension benefits;

(b)

the Executive’s right to receive the payment under this Section 9.1 shall not be subject to any duty to mitigate, nor affected by any actual mitigation by the Executive;

(c)

the obligation of the Corporation to make payments under this Section 9.1 shall be subject to any and all withholdings and deductions required to be made by the Corporation by law;

(d)

payment under this Section 9.1 shall be subject to the prior execution by the Executive of a Settlement Agreement and Release, on terms acceptable to the Corporation acting reasonably; and

(e)

the Executive hereby grants the Corporation the right to set-off against any payments to the Executive under this Section 9.1 any amount which the Executive owes to the Corporation, whether immediately due and owing or not.

9.2

The Corporation shall be entitled to terminate this Agreement and the Executive’s employment with the Corporation at any time, without notice or payment in lieu of notice, for Cause.

ARTICLE X

TERMINATION BY EXECUTIVE

10.1

The Executive may terminate this Agreement and his employment with the Corporation by providing 90 days’ prior Notice to the Corporation.  Upon receipt of such Notice of termination by the Executive, the Corporation shall only be required to pay the Executive any Remuneration, and provide the Executive with any Benefits, earned up to the Termination Date, and may either require the Executive to continue to perform his duties until the Termination Date, or dismiss the Executive at any time after receipt of the Notice, without additional compensation or obligation to the Executive.

10.2

Subject to the conditions set out in Section 10.4, the Executive may terminate his employment with the Corporation within 90 days following the occurrence of a Change of Control of the Corporation and receive the payment set out in section 10.3.

10.3

In the event that the Executive’s employment with the Corporation is terminated in strict accordance with Section 10.2, the Corporation shall pay the Executive the following amounts in full and final settlement of any claims by the Executive against the Corporation or any Related Corporation, arising out of or in any way connected to the Executive’s employment with the Corporation or any Related Corporation, or the termination of such employment, whether at common law or under the provision of any statute or regulation, or pursuant to the terms of any agreement between the Parties:

(a)

Base Salary for the Severance Period; plus

(b)

a lump sum equal to the cost to the Corporation to provide the Benefits referred to in Article VI hereof during the Severance Period, with the exception of any registered pension plans of the Corporation or any Related Corporation, or any supplementary pension benefits that the Executive may be entitled to, or any benefit or entitlement the Executive may have or have had under any registered pension plan or supplementary pension benefits.

10.4

Payment under Section 10.3 shall be subject to the following conditions:

(a)

the prior execution by the Executive of a Settlement Agreement and Release on terms acceptable to the Corporation;

(b)

the Executive’s full co-operation and assistance, in connection with any Change of Control, to transfer the Executive’s duties and responsibilities to a replacement at the request of the Corporation and for a period requested by the Corporation not to exceed 60 days, and the tendering by the Executive of his resignation from any position he may hold as an officer or a director of the Corporation and any Related Corporations or by virtue of these offices, at such time as the Corporation may request;

(c)

the obligation of the Corporation to make payments under Section 10.3 shall be subject to any and all withholdings and deductions required to be made by the Corporation by law;

(d)

the Executive hereby grants the Corporation the right to set-off against any payments to the Executive under Section 10.3 any amount which the Executive owes to the Corporation, whether immediately due and owing or not;

(e)

the Executive’s right to receive the payment under Section 10.3 shall not be subject to any duty to mitigate, nor affected by any actual mitigation by the Executive; and

(f)

payment under Section 10.3 shall be in place of, and not in addition to, any other statutory and common law severance or termination payment in lieu of reasonable notice which may be made to the Executive pursuant to any other term or provision of this Agreement.

10.5

In the event that the Executive terminates his employment with the Corporation in any manner other than in strict accordance with the requirements set out in Section 10.2, the Corporation shall have no obligation to pay the Executive any of the amounts or grant the Executive any of the rights set out in Sections 9.1 or 10.3.

ARTICLE XI

TERMINATION UPON DEATH OR PERMANENT DISABILITY

11.1

This Agreement shall automatically terminate upon the death of the Executive.

11.2

In the event that the Executive shall suffer a Permanent Disability, the Corporation may terminate this Agreement and the Executive’s employment by providing 60 days prior Notice to the Executive.  Upon termination of the Executive’s employment pursuant to this Section 11.2, the Corporation shall have no further obligation or liability to the Executive, with the exception that the Executive shall continue to be entitled to such insurance benefits as he is qualified to receive pursuant to any long term disability plan and to any benefit or entitlement under any pension plan of the Corporation or any executive superannuation undertakings in which the Executive participates and is qualified to receive.

11.3

The Executive and the Corporation agree that a termination of the Executive’s employment pursuant to Section 11.2 is in respect of a situation consisting of:

(a)

a frustration of the Agreement at law;

(b)

a breach by the Executive of a bona fide occupational requirement owed to the Corporation; and

(c)

accommodation of the Executive by the Corporation to the point of undue hardship for the Corporation.

ARTICLE XII

PROPERTY RIGHTS

12.1

Although the Executive is not expected to be in a technical development role, for clarity, the Executive acknowledges and confirms that the Corporation shall be entitled to own and control all proprietary technology, and financial, operating, and training ideas, processes, and materials, including works of expression and all copyrights in such works, that are developed, created, or conceived by the Executive during the course of this Agreement (collectively referred to as “Contract Developments”), to the extent that such Contract Developments relate to the Corporation’s current or potential Business or if such Contract Developments were in any part undertaken in connection with this Agreement or with Corporation supplied software or equipment or on the premises of the Corporation or its customers or contractors.  Accordingly, the Executive hereby agrees to disclose, deliver, and assign all such patentable inventions, discoveries, and improvements, trade secrets, and all works subject to copyright, and further agrees to execute all documents, patent applications, and arrangements necessary to further document such ownership and/or assignment and to take whatever other steps may be needed to give the Corporation the full benefit of them.

12.2

The Executive agrees that all copyrightable materials generated or developed under this Agreement, including computer programs and documentation, shall be considered works made for hire under the copyright laws of Canada and the United States and shall, upon creation, be owned exclusively by the Corporation.  To the extent that any such materials, under applicable law, may not be considered works made for hire, the Executive hereby assigns to the Corporation the ownership of all copyrights in such materials, without the necessity of any further consideration, and the Corporation shall be entitled to register and hold in its own name all copyrights in respect of such materials.

ARTICLE XIII

CONFIDENTIAL INFORMATION, NON-SOLICITATION AND NON-COMPETITION

13.1

The Executive acknowledges and agrees that in performing the duties and responsibilities of his employment pursuant to this Agreement, he will occupy a position of high fiduciary trust and confidence with the Corporation, pursuant to which he will develop and acquire wide experience and knowledge with respect to all aspects of the Business carried on by the Corporation and its Related Corporations, and the manner in which such Business is conducted.  It is the express intent and agreement of the Executive and the Corporation that such knowledge and experience shall be used solely and exclusively in furtherance of the Business interests of the Corporation and its Related Corporations, and not in any manner detrimental to them.  The Executive therefore agrees that, so long as he is employed by the Corporation pursuant to this Agreement, he shall not engage in any practice or business that competes directly with the Business of the Corporation or its Related Corporations.  The Executive further agrees that his fiduciary duties shall survive the termination of his employment for any reason.

13.2

The Executive further acknowledges and agrees that in performing the duties and responsibilities of his employment pursuant to this Agreement, he will become knowledgeable with respect to a wide variety of Confidential Information which is the exclusive property of the Company, the disclosure of which would cause irreparable harm to the Corporation.  The Executive therefore agrees that during the Term and following the termination of the Executive’s employment for any reason, he shall treat confidentially all Confidential Information belonging to the Corporation, and shall not disclose the Confidential Information to any unauthorized persons, except with the express consent of the Board of Directors, or otherwise as required by law.

13.3

In the event that this Agreement is terminated in accordance with Sections 9.1 or 10.2, the Executive acknowledges and agrees that during the Term and for a period following the Term equal to the Severance Period, he shall not for any reason, either directly or indirectly through any Person, agent, employee, Affiliate or representative:

(a)

solicit, entice or encourage, or attempt to solicit, entice or encourage, any employee, customer or exclusive supplier of the Corporation as at the Termination Date to become an employee, customer or exclusive supplier of any Person or enterprise that competes with the Business of the Corporation or a Related Corporation in the Western Canadian Sedimentary Basin, or any other exploration area in which the Corporation may conduct business.

(b)

purchase, offer or agree to purchase, directly or indirectly, more than 5% of the outstanding securities of the Corporation or a Related Corporation or any material assets of the Corporation or a Related Corporation;

(c)

make, or in any way participate in, either directly or indirectly, any non-management solicitation of any proxy to vote or any consent with respect to any Shares;

(d)

directly or indirectly make any public announcement with respect to any transaction involving the Corporation or any Related Corporation, or any securities or assets thereof;

(e)

form, join or in any way participate in a group in connection with any of the foregoing;

(f)

otherwise act, alone or in concert with others, to seek to control or influence the management or the Board of Directors or policies of the Corporation; or

(g)

engage in any business that competes directly with the Business of the Corporation or any Related Corporation during the Term and for a period following the Term equal to the Severance Period.  As used herein, the phrase “engaged in business” shall mean to act as an employee, agent, officer, director or consultant of a business or to be a sole proprietor, partner, joint venturer, unitholder, or owner of any other form of interest, of or in a business, but shall not include owning less than 1% of a public company which competes with the Corporation’s Business.

13.4

The Executive further acknowledges and agrees that pursuant to the terms of this Agreement, that to the extent he acquires Corporate Property of the Corporation, it shall remain the exclusive property of the Corporation.  Upon termination of the Executive’s employment and this Agreement for any reason, the Executive shall return to the Corporation all Corporate Property, together with any copies or reproductions thereof; which may have come into the Executive’s possession during the course of or pursuant to this Agreement, and shall delete or destroy all computer files on his personal computer which may contain any Confidential Information belonging to the Corporation.

13.5

The Executive acknowledges and agrees that the Corporation will suffer irreparable harm in the event that the Executive breaches any of the obligations under this Article XIII, and that monetary damages would be impossible to quantify and inadequate to compensate the Corporation for such a breach.  Accordingly, the Executive agrees that in the event of a breach, or a threatened breach, by the Executive of any of the provisions of this Article XIII, the Corporation shall be entitled to obtain, in addition to any other rights, remedies or damages available to the Corporation at law or in equity, an interim and permanent injunction, without having to prove damages, in order to prevent or restrain any such breach, or threatened breach, by the Executive, or by any or all of the Executive’s partners, employers, employees, servants, agents, representatives and any other Persons directly or indirectly acting for, or on behalf of; or with, the Executive, and that the Corporation shall be entitled to all of its costs and expenses incurred in obtaining such relief including reasonable solicitor and client legal costs and disbursements.

13.6

The Executive hereby agrees that all restrictions contained in this Article XIII are reasonable, valid and necessary protections of the Corporation’s proprietary business interests and hereby waives any and all defences to the strict enforcement thereof by the Corporation.  If any covenant or provision of this Article XIII is determined to be void or unenforceable in whole or in part, for any reason, it shall be deemed not to affect or impair the validity of any other covenant or provision of this Agreement, which shall remain in full force and effect.  The provisions of this Article XIII shall remain in full force and effect notwithstanding the termination of this Agreement for any reason.

ARTICLE XIV

INDEMNIFICATION AND INSURANCE

14.1

Subject to the requirements of the Act, the Corporation shall indemnify and save harmless the Executive from and against any personal liability which he incurs as a direct result of performing his employment duties on behalf of the Corporation, with the exception of the following:

(a)

any liability arising from the Executive’s gross negligence or fraud or other acts of willful misfeasance; and

(b)

any liability which the Corporation is prohibited by law from assuming.

14.2

The Corporation agrees to maintain directors and officers liability insurance for the benefit of the Executive while the Executive remains an officer of the Corporation and shall, at the Executive’s option or direction, provide such insurance for the Executive on a run-off basis upon termination of the Executive’s employment with the Corporation pursuant to Section 9.1 and Articles X and XI only, for a period of three (3) years from the Termination Date, on commercially reasonable terms.

14.3

The provisions of this Article XIV shall remain in full force and effect notwithstanding the termination of this Agreement for any reason.

ARTICLE XV

NOTICES

15.1

Any Notice required to be given hereunder may be provided by personal delivery, by registered mail or by facsimile to the Parties hereto at the following addresses:

To the Corporation:

Canada Southern Petroleum Ltd.

#250, 706 – 7th Avenue S.W.

Calgary, AB  T2P 0Z1

Attention:

Chair of the Board

Or at its registered office as may be shown from time to time on the records of the Registrar of Companies for the Province of Nova Scotia.

To the Executive:

c/o Canada Southern Petroleum Ltd.

#250, 706 – 7th Avenue S.W.

Calgary, AB  T2P 0Z1

Attention:

J. W.A. McDonald

Any Notice, direction or other instrument shall, if delivered, be deemed to have been given and received on the business day on which it was so delivered, and if not a business day, then on the business day next following the day of delivery, and, if mailed, shall be deemed to have been given and received on the fifth day following the day on which it was so mailed, and, if sent by facsimile transmission, shall be deemed to have been given and received on the next business day following the day it was sent.

15.2

Either Party may change its address for Notice in the aforesaid manner.

ARTICLE XVI

PRIVACY

16.1

The Executive acknowledges and agrees that the Executive will take all necessary steps to protect and maintain personal information of the employees, consultants or customers of the Corporation obtained in the course of the Executive’s employment with the Corporation.  The Executive shall at all times comply, and shall assist the Corporation to comply, with all applicable privacy laws, including without limitation, the Personal Information Protection Act (Alberta) and the Personal Information Protection and Electronic Documents Act (Canada).

16.2

The Executive acknowledges and agrees that the disclosure of the Executive’s personal information may be required as part of a potential business or commercial transaction or as part of the Corporation’s management of the employment relationship, and the Executive hereby grants consent as may be required by applicable privacy laws to the disclosure of personal information for the purposes of any potential business or commercial transaction and the ongoing management of the employment relationship by the Corporation.

ARTICLE XVII

GENERAL

17.1

Time shall be of the essence in this Agreement.

17.2

This Agreement shall be construed and enforced in accordance with the laws of the Province of Alberta, and the Parties hereby attorn to the non-exclusive jurisdiction of Alberta Courts.  Should provisions in this Agreement fail to comply with the applicable legislation, the Agreement shall be interpreted in accordance with those statutory requirements.

17.3

This Agreement and any other agreements expressly incorporated by reference herein, constitute the entire agreement between the Parties with respect to the subject matter hereof, and supercede and replace any and all prior agreements, undertakings, representations or negotiations pertaining to the subject matter of this Agreement.  The Parties agree that they have not relied upon any verbal statements, representations, warranties or undertakings in order to enter into this Agreement.  In the event of a conflict between this Agreement and any other agreement expressly incorporated by reference herein, the terms of this Agreement shall prevail.

17.4

This Agreement may not be amended or modified in any way except by written instrument signed by the Parties hereto.

17.5

This Agreement shall enure to the benefit of and be binding upon the Parties hereto, together with their personal representatives, successors and permitted assigns.

17.6

This Agreement is a personal services agreement and may not be assigned by either Party without the prior consent of the other Party.

17.7

The waiver by either Party of any breach of the provisions of this Agreement shall not operate or be construed as a waiver by that Party of any other breach of the same or any other provision of this Agreement.

17.8

The Parties agree to execute and deliver such further and other documents, and perform or cause to be performed such further and other acts and things as may be necessary or desirable in order to give full force and effect to this Agreement.

17.9

The Executive agrees that following the termination of the Executive’s employment with the Corporation for any reason, the Executive shall tender his resignation from any position he may hold as an officer or director of the Corporation or any Related Corporation, or by virtue of those offices.

17.10

Should any provision in this Agreement be found to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of the Agreement shall not be affected or impaired thereby in any way.

ARTICLE I

EXECUTION IN COUNTERPART

18.1

This Agreement may be executed by the Parties in counterpart.

IN WITNESS WHEREOF the Parties hereto acknowledge and agree that they have read and understand the terms of this Agreement, and that they have had an opportunity to seek independent legal advice prior to entering into this Agreement, and that they have executed this Agreement with full force and effect from the date first written above.

	 	CANADA SOUTHERN PETROLEUM LTD.

Per:

/s/ Richard C. McGinity

            Chairman of the Board of Directors

	

by  /s/ Wilson Kwan

Witness

	

by /s/ John W. A. McDonald

JOHN W.A. McDONALDEXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made effective as of the 20th day of February, 2004

BETWEEN:  NS8 CORPORATION, a Company incorporated under the laws of the State
          ---------------
          of  Delaware,  having  offices  at Two Union Square, 601 Union Street,
          Suite 4200, Seattle, Washington 98101 and Suite 700, 1311 Howe Street,
          Vancouver,  British  Columbia  V6Z  2P3

          (hereinafter  called  "Employer"  or  "NS8",  as  the context implies)

AND:      MARC  STRAUCH,residing  at  20430  NE  108th Street, Redmond, State of
          Washington,  United  States  of  America  98053

          (hereinafter  called  the  "Executive")

                                    RECITALS

A.     The  Employer  is  in  the  business  of  designing  and producing online
business  applications  in the areas of streaming software, digital media rights
and  data-content  management,  audio-video  communications,  and  corporate
collaboration  systems.

B.     The  Executive  is  in the business of designing and developing marketing
strategies  and  business development programs for technology related businesses
and  producing  marketing  materials  collateral  thereto.

C.     The  Employer  wishes  to  employ  the  Executive as it's Chief Marketing
Officer  and  the Executive wishes to be employed as the Chief Marketing Officer
of  the Employer pursuant to the mutual covenants, terms, and conditions of this
agreement  (the  "Agreement").

                                    AGREEMENT

     In  consideration  of  the  mutual covenants, terms, and conditions of this
Agreement,  the  parties  hereto  agree  as  follows:

                                       20
<PAGE>

1.     APPOINTMENT  AND  DUTIES  AS  CHIEF  MARKETING  OFFICER
       -------------------------------------------------------

(a)     The  Employer  hereby  appoints  the Executive to the positions of Chief
Marketing  Officer  of NS8 and the Executive hereby accepts such appointment and
agrees  to  carry  out  the  duties,  responsibilities,  and obligations of that
position  and  to  duly  exercise the powers afforded to him by such appointment
upon  the  terms  and conditions set forth in this Agreement. As Chief Marketing
Officer, the responsibilities of Executive will include, but will not be limited
to,  the  following:

(i)     Assuming  overall  responsibility  for Employer's go-to-market strategy,
tactics,  messaging,  branding,  positioning,  competitive  analysis, collateral
development,  market launch, and execution of the foregoing, with positioning to
Business Decision Makers (BDM), Technical Decision Makers (TDM), and Information
Technology  (IT)  Professionals  in terms of economic justification and business
case  development;

(ii)     Assisting  the President and other senior executives of Employer in New
Business  Development,  executing  the  Employer's  business,  marketing,  and
strategic  plans,  and  participating  in  key  marketing and project roll-outs;

(iii)     Reporting  to and assisting the Board of Directors regarding strategic
direction  matters,  business  development  and  related  opportunities;

(iv)     Assisting  in  leading  the  Employer  to technological and competitive
market  dominance,  including  participating  in  key  negotiations;

(v)     Executing  any  other  duties  and  carrying out such other functions as
might  be  reasonably  required  by  the  Board  of  Directors  of the Employer;

(vi)     Preparing  or assisting in the preparation of materials for shareholder
or  public  dissemination;  and

(vii)     Being  willing to act as a director and officer of the Employer or any
of  its  subsidiaries  or  joint  ventures.

(b)     As  Chief  Marketing  Officer, the Executive's critical responsibilities
and  overall  performance  will  be  reviewed  by  the Board of Directors of the
Employer  every  quarter  (three  months) during the Term of this Agreement (the
"Review(s)").  Within  30 days after the completion of each quarterly Review the
Board  of  Directors  will  prepare a written report (the "Report(s)") that will
summarize  the  essential elements of the relevant quarterly Review. The Reports
will  include,  without  limiting  the generality of the foregoing, the Board of
Directors'  (i)  evaluation  of  the  critical  responsibilities  and  overall
performance  of  the Executive as Chief Marketing Officer of the Employer during

                                       21
<PAGE>

the  preceding  quarter;  (ii)  recommendations  regarding  the upgrading of the
Executive's  involvement  in  the  operations  of  the  Employer;  and  (iii)
recommendations  regarding  the  increase or decrease of the Executive's duties,
responsibilities  and  obligations  as  an  executive of the Employer.  Upon the
completion  of  each  Report,  the  relevant  Report  will  be  presented to the
Executive  for  his  review  and  consideration.  The  Executive  or  designated
representatives of the Board of Directors may then request and require a meeting
with  the  other  to  discuss  the  Report and implement such action as might be
deemed  appropriate in the circumstances. The failure or delay in the production
of any quarterly Report will not be deemed a default on the part of the Board of
Directors  or  the  Employer  and any such Report may be prepared as soon as the
Board  is  able  to  do  so.

(c)     Executive  shall  complete  an  officers and directors questionnaire and
when  appropriate,  provide  full,  true,  and  accurate  disclosures  as may be
necessary  from  time  to  time,  and  provide  full  disclosures  regarding any
potential  conflicts  of  interest  and  other information that might materially
affect  Employer  or  otherwise as may be required to comply with Sarbanes-Oxley
legislation,  securities  laws,  and  other  applicable  legislation.

2.     TERM  OF  APPOINTMENT
       ---------------------

The appointment of the Executive to the position of Chief Marketing Officer will
commence  March  1,  2004  (the  "Commencement  Date"), and shall continue until
terminated in accordance with the provisions of this Agreement.  The initial six
(6)  months  of  the  term  hereof  shall  be  a probationary period ("Probation
Period"),  during  which  period the Employer may terminate Executive with cause
immediately  and  without  any  advance  notice, or without cause upon two weeks
advance  written notice.  After the expiration of the Probation Period, Employer
may  only  terminate  Executive  pursuant  to  Section  10  hereof.

3.     COMPENSATION
       ------------

(a)     The fixed remuneration of the Executive for his services shall be at the
rate  of One Hundred Twenty-five Thousand Dollars (US$125,000) per annum for the
first  year  of  employment; provided, however, that at the end of the Probation
Period  the  performance  of  the  Executive  and  Employer's  business shall be
reviewed  and  evaluated by the Board of Directors (the "Board") to determine if
the performance of Executive justifies an increase of the fixed remuneration and
to determine if Employer then has the ability to pay Executive a greater rate of
fixed remuneration for the balance of the first year of Employment or for a part
thereof. If the Board determines that in all the circumstances it is appropriate
that  the  fixed  remuneration  should  be  increased  then  it will be adjusted
accordingly.  The  fixed  remuneration  shall  thereafter  be  reviewed  and, if
appropriate,  adjusted  on  each  anniversary  of  the  Commencement Date of his
employment  pursuant to this Agreement upon agreement of Executive and Employer.

                                       22
<PAGE>

The  review  will  be undertaken by assessing the Executive's achievement of the
over-all  objectives  established  by  the  Employer and by having regard to the
market  rates  of  remuneration paid in the United States for similar duties and
responsibilities  for  similar  sized  companies.  Employer  shall  withhold all
federal  income  and  payroll  taxes  from such compensation as required by law.

(b)     In  addition to the fixed remuneration, the Executive might receive from
the  Employer, at the sole discretion of Employer's Board, a cash or stock bonus
payment  based on a percentage of sales of the Employer's business for each year
during  the period of his employment under this Agreement from and including the
employment  year  commencing  on  the  Commencement  Date of this Agreement (the
"Sales  Bonus").  If  granted,  the Sales Bonus will be based on a percentage of
sales  to  be  determined by the Board upon the achievement by the Executive and
the  Employer's  business  of  certain  performance  benchmarks  and  criteria
determined  by  the  Board.  The Board will determine whether all or any part of
the  Sales  Bonus will be paid in the form of Employer's common stock.  Employer
shall  withhold  all  federal income and payroll taxes from such compensation as
required  by  law.

(c)     Upon  the  date  of  this  Agreement first written above (the "Effective
Date"),  Employer will grant the Executive (i) Two Million (2,000,000) shares of
Employer's  common  stock  as restricted shares (the "Granted Shares"), and (ii)
nonqualified  stock  options  to  acquire  One  and One-half Million (1,500,000)
shares  of  the  Employer's  common  stock at an exercise price which equals the
closing  market  price  of  the stock as of the Effective Date of this Agreement
(the  "NSO's),  which  NSO's  shall  be  subject  to  all terms, conditions, and
qualifications  set  forth  in  Section  4A hereof.  All such Granted Shares and
NSO's shall be forfeit to the Employer in the event the Employer terminates this
Agreement  in  accordance  with  Section  10(a)(ii) during the first year hereof
calculated  from  the  Commencement  Date,  or if Executive shall terminate this
Agreement during the first year hereof calculated from the Commencement Date for
any  reason.  The  Employer  will  issue  the share certificate representing the
Granted  Shares to Executive on the anniversary date of the Commencement Date if
the  Granted  Shares  have  not  previously  been  forfeited  to  the  Employer.

(d)     In  addition  to the Executive's Granted Shares and NSO's, the Executive
will  also  be able to participate, to the extent determined by the Compensation
Committee  of  the Board of Directors, in additional stock bonus or stock option
plans  of  the Employer after completing one (1) year of service to the Employer
calculated  from  the  Commencement  Date.

4.     BENEFITS
       --------

(a)     Automobile and Travel. The Employer will reimburse the Executive for his
automobile  expenses  based  on  his actual mileage at the rate of $0.375USD per

                                       23
<PAGE>

mile;  provided,  however,  Employer's  total  obligation  for  reimbursement of
Executive's  automobile  expenses  shall not exceed $600USD per month.  Employer
will  withhold  all  federal  income and payroll taxes from such compensation as
required  by law.  Other "non-automobile" travel expenditures will be dealt with
in  the  manner described in sub-paragraph 4(b).  The Executive will be provided
with a reasonable allowance for hotel or necessary housing in the event that the
Executive  might  be  required  to  reside  outside  of  the area of his current
residential  location.

(b)     Expenses.  It  is  understood  and  agreed that the Executive will incur
expenses  in  connection with his duties under this Agreement. The Employer will
reimburse  the Executive for any reasonable and necessary expenses provided that
the  Executive provides to the Employer an itemized written account and receipts
acceptable  to  the  Employer within 30 days after they have been incurred.  The
Employer will reimburse the Executive monthly provided the Executive submits his
itemized  written  account  and receipts acceptable to the Employer on a regular
monthly basis in a timely fashion.  Employer shall not be obligated to reimburse
Executive  for any item in excess of $2,000USD unless approved in advance by the
Board.

(c)     Benefit  Plans.  Employer  has arranged a benefits plan for its Canadian
resident  employees, including dental, medical and extended health care benefits
and  life  insurance.  Since  the Employer's existing benefits plan is unable to
accommodate  the  Executive  because  of  his status as a resident of the United
States  of  America,  Executive  will be covered by a new benefits coverage plan
package  being  arranged  in  the  United  States  for the Executive and for all
personnel  of  Employer who are residents of the United States, with coverage to
be  effective  upon the Commencement Date, if possible.  Employer will reimburse
the  Executive  for premiums paid for the period after the Commencement Date for
Executive's  current individual policies for dental, medical and extended health
care  benefits  for  Executive  and  his spouse until the benefits plan for U.S.
residents  is  implemented.  Employer  will  only  pay  the  premiums  for  life
insurance  coverage  included  under the current individual policies for dental,
medical  and  extended  health care benefits of Executive and his spouse and not
for  any  other  life  or disability policies covering Executive and his spouse.
The life insurance coverage under the U.S. benefits coverage package shall be in
the  amount  provided  under  Employer's Canadian benefits coverage package. The
U.S.  benefits  plan  will  be  subject  to  the  approval  of  the  Board.

(d)     throughout  the  term hereof, the Employer shall obtain and maintain one
or  more  policies  of  directors  and  officers  liability  insurance providing
coverage  on  a  claims  made basis, limits, and deductibles comparable to those
obtained  by  other  similarly  situated companies, and reasonably acceptable to
Executive.  Employer  shall maintain such insurance following the termination of
this Agreement for any reason for the statute of limitations on covered risks in
respect  of  the period of Executive's employment, or shall obtain tail coverage
for  the  benefit  of  Executive  for  such period of limitations, at Employer's

                                       24
<PAGE>

expense.  It  is  understood  and agreed by the parties that while Employer will
exercise all reasonable efforts to obtain such coverage, it might be required to
accept  a  lesser  amount  of  coverage on less favorable terms due to insurance
market conditions and the availability of coverage.  In addition, Employer shall
indemnify Executive as described on Exhibit A hereto, in addition to Executive's
indemnification  rights  under  Employer's Articles of Incorporation and Bylaws.

(e)     Executive  agrees  that  Employer  will be permitted to obtain insurance
coverage  in  respect of the Executive, if possible, for an amount not less than
$1,000,000  USD as part of Employer's key-man insurance and that the beneficiary
of  such  insurance in the event of the death or disability of Executive will be
the  Employer.

4A.     TERMS  AND  CONDITIONS  OF  NSO'S
        ---------------------------------

(a)     The  NSO's shall be exercisable at any time, in whole or in part, during
the  five  (5)  year period commencing upon the expiration of one year following
the  Commencement  Date  of  this  Agreement.

(b)     If  at  any  time during the option period the Employer registers any of
its securities for sale, Executive shall be entitled to require the registration
of  the  shares  to  be  issued  pursuant to the NSO's.  Further, if at any time
during  the  option period the Employer shall be entitled to register the shares
to  be  issued pursuant to the NSO's on Form S-3, Executive shall be entitled to
demand  registration  of  such  shares.

(c)     Executive  shall  be  entitled  to  participate  in  any  proposed  sale
arrangement  with  other  founders and/or executives of the Employer pursuant to
exemptions  from registration, subject to all restrictions of the Securities Act
of  1933.

(d)     The  NSO's  shall  be  nontransferable, other than to an entity in which
Executive  exercises  100%  control,  or  to  a  trust  in  which all beneficial
interests  are  held  by  members  of  Executive's  immediate  family.

(e)     The  shares  to  be  issued  upon  exercise  of the NSO's are restricted
shares,  and, unless registered, will bear legends imposed by the Securities Act
of  1933.  So long as Executive is employed by Employer, Rule 144 will limit and
control  all  dispositions  of  such  shares.

(f)     If  at any time a purchaser is to acquire more than twenty percent (20%)
of  the  issued  and  outstanding  capital stock of the Employer, then Executive
shall  be  deemed  to have exercised all NSO's then held, and the Employer shall
pay  additional  compensation  to  Executive  in  an  amount  such  that,  after
withholding  all  payroll  and  other  taxes  associated  with  such  additional
compensation,  the  net  additional compensation shall be equal to the total tax
obligation  of  Executive  resulting  from  the exercise of all NSO's then held,

                                       25
<PAGE>

which  net  sum  the  Employer  shall  withhold and deposit with appropriate tax
authorities  on  behalf  of  Executive  as  provided  by  law.

(g)     If  Employer  shall  adopt  a stock option plan after the date hereof to
which the NSO's shall be subject, the provisions of this Agreement shall control
over  any  contrary  provisions  in  such  plan.

5.     AUTHORITY
       ---------

(a)     The  Executive  shall  have,  subject  always to the general or specific
instructions  and  directions  of  the  Board  of  the  Employer, full power and
authority  to  manage  and  direct  the  marketing  program  and  the  Marketing
Department (the "Marketing Functions") of the Employer (except for those matters
and  duties as by law must be transacted or performed by the Board, the Chairman
of  the  Board,  the Chief Executive Officer or the President of Employer). With
respect  to Marketing Functions, the Executive will have the power and authority
to enter into contracts, engagements or commitments in the name of and on behalf
of  the  Employer  and  to engage, employ and dismiss employees, consultants and
agents  of  the  Employer  other  than  officers  or  Directors of the Employer,
provided  that  in  each  such  case Executive obtains the prior approval of the
Board  to  the  proposed  action.

(b)     The  Executive  shall  conform to all lawful instructions and directions
given  to  him by the Board of Directors of the Employer, and obey and carry out
the  Articles  and  By-laws  of  the  Employer.

(c)     Notwithstanding  the  forgoing,  during  the Probation Period, Executive
shall  not  have  authority,  without the prior written approval of the Board of
Directors,  to  execute  any  financial  transaction  document  on behalf of the
Employer,  or  to  hire  or  terminate  any  executive  of  the  Employer.

6.     SERVICE
       -------

(a)     The  Executive,  throughout  the  term  of his appointment and except as
otherwise  disclosed  in  writing  as of the Commencement Date, shall devote his
full  business  time  and attention to the business and affairs of the Employer,
its affiliates and subsidiaries and shall not, without the consent in writing of
the  Board  undertake  any  other  business  or occupation or become a director,
officer,  employee,  consultant  or  agent  of  any  other  company,  firm,  or
individual.

(b)     The  Executive  shall  well  and  faithfully  serve  the  Employer,  its
affiliates  and  subsidiaries  and use his best efforts to promote the interests
thereof  and  shall  not  disclose  the  private affairs or trade secrets of the
Employer,  its  affiliates,  or  subsidiaries  to  any  person other than to the
Directors  of  the  Employer or disclose for any purpose other than for those of

                                       26
<PAGE>

the  Employer  any  information  the  Executive might acquire in relation to the
Employer's  business.

(c)     The  Executive  shall  attend  at  the Employer's office in Seattle on a
daily  basis  during regular business hours, Monday to Friday, except when he is
required  to  attend  at  the  Vancouver,  BC  office  or elsewhere to attend to
Employer's  business.

7.     INTENTIONALLY  OMITTED
       ----------------------

8.     CONFIDENTIAL  INFORMATION
       -------------------------

The  Executive acknowledges that as the Chief Marketing Officer and in any other
position as the Executive may hold, the Executive will acquire information about
certain  matters  and  things  which are confidential to the Employer, and which
information  is  the exclusive property of the Employer.  As of the Commencement
Date  and  at  all times thereafter, Executive shall be bound by and observe the
Employer's  Non-Disclosure  Agreement  previously  executed  and  delivered  by
Executive.  Further,  the  Executive  shall  at all times comply with Employer's
standard  policies and procedures in office security monitoring and surveillance
activities  within  the  premises  of  Employer.

9.     VACATION
       --------

The  Executive  shall  be  entitled  during  each  year  to  five (5) weeks paid
vacation.  The  vacation  shall  be  taken at the time or times as the Board may
approve. The Executive shall be allowed to carry forward two (2) unused vacation
into  the  next  calendar  year  but  not  further.

10.     TERMINATION  OF  EMPLOYMENT
        ---------------------------

(a)     The  parties  understand and agree that this Agreement may be terminated
in  the  following  manner  in  the  specified  circumstances:

(i)     by  the Executive, at any time, for any reason, on the giving of 8 weeks
written  notice  to  the Employer. The Employer may waive notice, in whole or in
part.

(ii)     by  the  Employer,  without any notice or pay in lieu thereof, for good
cause  shown.  For  the  purposes  of  this Agreement, good cause shown shall be
limited  to:

(1)     any material breach by the Executive of the provisions of this Agreement
involving  deceit  or  fraud,  or  any  material  breach by the Executive of the
Non-Disclosure  Agreement  causing  the  Employer  material  damage;

(2)     any  conduct  of  the Executive which results in publicity which, in the
reasonable  opinion  of  the  Employer,  which  opinion  shall be subject to the

                                       27
<PAGE>

dispute resolution provisions hereof, brings himself or the Employer into public
disrepute;

(3)     conviction  of  the  Executive  of  a  criminal  offense punishable as a
felony.

Failure  by the Employer to rely on the provision of this paragraph in any given
instance or instances, shall not constitute a precedent or be deemed a waiver of
its  rights  hereunder.

(iii)     at any time after the Commencement Date by the Employer for any of the
following  reasons upon giving the Executive at least one month's advance notice
in  writing  and  on  paying  to the Executive termination (severance) pay in an
amount  equal  to  one  month's  compensation  (as defined in sub-paragraph 3(a)
above)  for  each  full  year  of  his  employment:

(1)     Executive  is  convicted  of  a criminal offense (other than a felony or
traffic  violations);

(2)     Executive  fails  to provide adequate reporting of progress and material
results to the Board of Directors, or, in the absence of the Board of Directors,
to  the  Chairman  of  the  Board  of  Directors;

(3)     Executive commits an act of corporate espionage, or any act constituting
a  breach of any of the Employer's rules or agreements governing confidentiality
of  trade  secrets  or  confidential  information;

(4)     Executive  distributes  or  exchanges  any  confidential  information
regarding  the  Employer  or  its  products  or  services  which,  directly  or
indirectly,  has  a  material  adverse  effect  on the Employer or its business;

(5)     Executive  is  convicted  of  any  criminal  or  quasi-criminal  offense
relating  to  insider  trading,  or  it  is determined by any relevant governing
authority  that  Executive  has  violated  any  legislation, regulation, or rule
relating  to  insider  trading;

(6)     Executive  fails  to  adequately perform his duties and responsibilities
pursuant  to  the  terms  and conditions of this Agreement or as directed by the
Board  of  Directors  of  Employer;  or

(7)     Executive  is  in  violation  of  or fails to adequately comply with any
material  term  or  condition of this Agreement or any direction of the Board of
Directors  of  the  Employer.

                                       28
<PAGE>

(b)     The  parties  understand  and  agree  that  the  giving of notice or the
payment of pay in lieu of notice by the Employer to the Executive on termination
of the Executive's employment shall not prevent the Employer from alleging cause
for  the  termination.

(c)     On  termination of employment the Executive shall immediately resign all
offices  held  (including  directorships)  in  the  Employer, its affiliates and
subsidiaries  and  except as provided in this Agreement, the Executive shall not
be  entitled to receive any severance payment or compensation for loss of office
or  otherwise by reason of the resignation.  If the Executive fails to resign as
mentioned  the  Employer is irrevocably authorized to appoint some person in the
Executive's  position,  place  and  stead and in his name and on the Executive's
behalf  to  sign  any  documents or do any things necessary or requisite to give
cause  to  such  resignation.

11.     EMPLOYER'S  PROPERTY
        --------------------

The  Executive  acknowledges  that  all items of every nature or kind created or
used  by  the  Executive  pursuant  to  the  Executive's  employment  under this
Agreement,  or  furnished  by  the Employer to the Executive, and all equipment,
automobiles, credit cards, software or hardware, books, records, reports, files,
diskettes,  manuals,  literature,  confidential  information  or other materials
shall remain and be considered the exclusive property of the Employer ("Employer
Property")  at all times and shall be immediately surrendered to the Employer at
the  request of the Employer, or in the absence of a request, on the termination
of  the Executive's employment the Employer shall have the right to repossess or
seize  any  or  all  of  the Employer Property from the Executive without notice
where  ever  the  Employer  Property  may  me  located.

11A.     INTELLECTUAL  PROPERTY  RIGHTS
         ------------------------------

(a)     For  purposes  of  this  Agreement,  "Inventions"  includes,  without
limitation,  information,  inventions,  contributions,  improvements,  ideas, or
discoveries,  whether  protectable  or not, and whether or not conceived or made
during  work  hours.  Executive  shall  be entitled to proportionate credit with
respect  to  all  Inventions  to  which  Executive  makes a direct contribution.
Notwithstanding the forgoing, however, Executive shall assert no ownership claim
with  respect to any Invention (i) unless the Board of Directors of the Employer
determines that Employer cannot commercially exploit such Invention, (ii) unless
the  Employer  becomes  insolvent,  (iii)  at  any  time  when  such  Invention
constitutes collateral held by any financial institution to secure financing for
the  Employer,  or  (iv)  during  the  course  of  or following the sale of such
Invention  by  Employer.

(b)     Executive  agrees to promptly disclose in writing to Employer during the
term  hereof, all Inventions developed during the term hereof in which Executive
believes  he  directly  participated  and claims an interest so that Executive's
rights  and  Employer's  rights  in  such  Inventions  can  be  determined.

                                       29
<PAGE>

(c)     NOTICE:  IN  ACCORDANCE WITH WASHINGTON LAW, THIS SECTION DOES NOT APPLY
        ------
TO  INVENTIONS  FOR  WHICH  NO  EQUIPMENT,  SUPPLIES,  FACILITY, OR TRADE SECRET
INFORMATION OF EMPLOYER WAS USED AND WHICH WAS DEVELOPED ENTIRELY ON EXECUTIVE'S
OWN  TIME,  UNLESS:  (A)  THE  INVENTION RELATES (I) DIRECTLY TO THE BUSINESS OF
EMPLOYER  OR  (II)  TO EMPLOYER'S ACTUAL OR DEMONSTRABLY ANTICIPATED RESEARCH OR
DEVELOPMENT,  OR  (B) THE INVENTION RESULTS FROM ANY WORK PERFORMED BY EXECUTIVE
FOR  EMPLOYER.

11B.     RESOLUTION  OF  DISPUTES
         ------------------------

(a)     Except for the right of Employer and Executive to seek injunctive relief
in  court,  any  controversy,  claim  or  dispute  of any type arising out of or
relating  to Executive's employment or the provisions of this Agreement shall be
resolved in accordance with this Section regarding resolution of disputes, which
will  be  the  sole  and exclusive procedure for the resolution of any disputes.
This Agreement shall be enforced in accordance with the Federal Arbitration Act,
the enforcement provisions of which are incorporated by this reference.  Matters
subject  to  these  provisions  include,  without limitation, claims or disputes
based  on  statute, contract, common law and tort and will include, for example,
matters  pertaining to termination, discrimination, harassment, compensation and
benefits.  Matters to be resolved under these procedures also include claims and
disputes arising out of statutes such as the Fair Labor Standards Act, Title VII
of  the  Civil  Rights  Act,  the  Age  Discrimination  in  Employment  Act, the
Washington  Minimum  Wage  Act,  and  the Washington Law Against Discrimination.
Nothing  in  this  provision  is intended to restrict Executive or Employer from
submitting  any  matter  to an administrative agency with jurisdiction over such
matter.

(b)     Employer and Executive will make a good faith attempt to resolve any and
all  claims and disputes by submitting them to mediation in Seattle, Washington,
before  resorting to arbitration or any other dispute resolution procedure.  The
mediation  of  any  claim  or  dispute  must be conducted in accordance with the
then-current  JAMS  procedures  for  the  resolution  of  employment disputes by
mediation,  by a mediator who has had both training and experience as a mediator
of  general employment and commercial matters.  If the parties to this Agreement
cannot  agree  on  a  mediator,  then  the  mediator will be selected by JAMS in
accordance  with  JAMS'  strike  list method.  Within thirty (30) days after the
selection of the mediator, Employer and Executive and their respective attorneys
will  meet  with  the mediator for one mediation session of at least four hours.
If  the  claim  or  dispute  cannot  be settled during such mediation session or
mutually  agreed  continuation  of the session, either Employer or Executive may
give  the  mediator  and  the other party to the claim or dispute written notice
declaring the end of the mediation process.  All discussions connected with this
mediation  provision  will  be  confidential  and  treated  as  compromise  and
settlement  discussions.  Nothing  disclosed  in  such discussions, which is not
independently discoverable, may be used for any purpose in any later proceeding.

                                       30
<PAGE>

The  mediator's  fees  will be paid in equal portions by Employer and Executive,
unless  Employer  agrees  to  pay  all  such  fees.

(c)     If  any  claim  or  dispute  has  not  been  resolved in accordance with
subsection  (b) of this Section, then the claim or dispute will be determined by
arbitration  in  accordance  with  the  then-current JAMS employment arbitration
rules  and  procedures,  except  as  modified  herein.  The  arbitration will be
conducted  by a sole neutral arbitrator who has had both training and experience
as an arbitrator of general employment and commercial matters and who is and for
at least ten (10) years has been, a partner, a shareholder, or a member in a law
firm.  If  Employer  and  Executive  cannot  agree  on  an  arbitrator, then the
arbitrator  will  be  selected  by  JAMS  in accordance with Rule 13 of the JAMS
employment  arbitration  rules  and  procedures.  No  person who has served as a
mediator  under  the  mediation  provision,  however,  may  be  selected  as the
arbitrator  for  the  same  claim  or  dispute.  Reasonable  discovery  will  be
permitted  and  the  arbitrator  may  decide  any  issue  as  to discovery.  The
arbitrator  may  decide any issue as to whether or as to the extent to which any
dispute  is  subject  to the dispute resolution provisions in Section 12 and the
arbitrator  may award any relief permitted by law.  The arbitrator must base the
arbitration  award on the provisions of this Section and applicable law and must
render  the  award  in  writing, including an explanation of the reasons for the
award.  Judgment  upon the award may be entered by any court having jurisdiction
of  the  matter,  and  the decision of the arbitrator will be final and binding.
The  statute  of  limitations  applicable  to the commencement of a lawsuit will
apply  to  the  commencement  of  arbitration  under  this  subsection (c).  The
arbitrator's  fees  will  be  paid  in equal portions by Employer and Executive.
(d)     Unless  otherwise  agreed,  the prevailing party will be entitled to its
costs  and  reasonable attorneys' fees incurred in the resolution of any dispute
relating  to  the  interpretation  or  enforcement  of  this  Agreement.

12.     ASSIGNMENT  OF  RIGHTS
        ----------------------

The  rights  which accrue to the Employer under this Agreement shall pass to the
successors  or  assigns  of  the  business of Employer as a going concern if the
assignment  of this Agreement is a condition of such transfer of the business of
Employer.  The  rights  of the Executive under this Agreement are not assignable
or  transferable  in  any  manner.

                                       31
<PAGE>

13.     NOTICES
        -------

(a)     Any  notice  required or permitted to be given to the Executive shall be
sufficiently  given  if  delivered  to  the Executive personally or if mailed by
registered  mail  to  the  Executive's address last known to the Employer, or if
delivered  to  the  Executive  via  facsimile.

(b)     Any  notice  required  or permitted to be given to the Employer shall be
sufficiently  given if mailed by registered mail to the Employer's Vancouver, BC
office  at  its  address  last  known  to  the Executive, or if delivered to the
Employer  via  facsimile.

14.     SEVERABILITY
        ------------

In  the  event that any provision or part of this Agreement shall be deemed void
or  invalid  by  a  court of competent jurisdiction, the remaining provisions or
parts  shall  be  and  remain  in  full  force  and  effect.

15.     ENTIRE  AGREEMENT
        -----------------

This  contract constitutes the entire Agreement between the parties with respect
to  the  employment  and appointment of the Executive as Chief Marketing officer
and  any  and  all  previous  agreements,  written  or oral, express or implied,
between  the  parties  or  on  their  behalf,  relating  to  the  employment and
appointment  of  the  Executive by the Employer, are terminated and canceled and
each  of  the  parties releases and forever discharges the other of and from all
manner  of actions, causes of action, claims and demands whatsoever, under or in
respect  of  any  agreement.

16.     MODIFICATION  OF  AGREEMENT
        ---------------------------

Any  modification to this Agreement must be in writing and signed by the parties
or  it  shall  have  no  effect  and  shall  be  void.

17.     HEADINGS
        --------

The  headings  used in this Agreement are for convenience only and are not to be
construed  in  any  way  as  additions  to  or  limitations of the covenants and
agreements  contained  in  it.

            REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK

                           NEXT PAGE IS EXECUTION PAGE

                                       32
<PAGE>

18.     GOVERNING  LAW
        --------------

This  Agreement  shall  be construed in accordance with the laws of the State of
Washington,  United  States  of  America.

     IN  WITNESS  WHEREOF  this Agreement has been executed by the parties as of
the  day,  month  and  year  first  above  written.

SIGNED,  SEALED  AND  DELIVERED
BY  MARC  STRAUCH
in  the  presence  of:          )
                                )
________________________________)          _____________________________
Witness  -  Signature           )          Executive's  Signature
                                )
________________________________)          _____________________________
Witness - Print Name            )          Executive - Social Security Number

AGREED  TO  AND  ACCEPTED  BY:

NS8  CORPORATION

Per:  _______________________________
      Authorized  Signing  Officer/Director

Per:  _______________________________
      Authorized  Signing  Officer/Director

                                       33
<PAGE>

                                    EXHIBIT A

                        ADDENDUM TO EMPLOYMENT AGREEMENT

This  is  an  Addendum  to  that  certain Employment Agreement (the "Agreement")
having  an Effective Date as of February ____, 2004, between NS8 CORPORATION, as
"Employer," and MARC STRAUCH, as "Executive," whereby the Employer and Executive
hereby  mutually  agree  to  amend  the  Agreement  to  add  the  following
indemnification  provisions  to  the  Agreement:

1.     Indemnification  of  Executive
       ------------------------------

The  Employer  agrees  to  indemnify  and  hold  harmless the Executive from and
against  any  claims,  losses,  damages,  expenses or liabilities (collectively,
"Losses"),  including without limitation legal fees and accounting fees (subject
to  the limitations set forth below), incurred in connection with investigating,
preparing,  defending,  paying,  settling  or compromising any action, claim; or
proceeding  (whether  or  not  in  connection  with  any  pending  or threatened
litigation  in  which the Executive is a named party) to which the Executive may
become  subject  and  which  is  related  to  or arises out of the engagement or
performance  of  the  services  of the Executive contemplated in this Agreement.
The  Employer will not, however, be responsible to the Executive with respect to
any  Losses  to  the  extent  that  a court of competent jurisdiction shall have
determined  by  a final judgment that such Losses resulted from actions taken or
omitted  to be taken by the Executive due to the Executive's gross negligence or
wilful  misconduct.

The Employer will reimburse the Executive for Losses as such Losses are incurred
or  paid,  notwithstanding  the  absence  of  judicial  determination  as to the
propriety  or  enforceability  of  the  Employer's  obligation  to reimburse the
Executive  for such Losses and the possibility that such payments might later be
held  by a court of competent jurisdiction to have been improper.  To the extent
that  any  such  interim  reimbursement  is  so  held to have been improper, the
Executive  shall  promptly  return  it  to the Employer, together with interest,
compounded annually, equal to the prime rate announced from time to time by Bank
of  America,  San  Francisco,  California.

The  Employer also agrees that Executive shall have no liability, whether at law
or in equity, to the Employer or its affiliates, directors, officers, employees,
agents,  advisors, representatives, control persons or stockholders, directly or
indirectly,  related  to  or arising out of the engagement or performance of the
services of the Executive contemplated in this Agreement, except Losses incurred
by  the  Employer  to  the  extent  a court of competent jurisdiction shall have
determined  by a final judgment that such Losses resulted primarily from actions
taken  or  omitted  to  be  taken  by the Executive due to the Executive's gross
negligence  or  wilful  misconduct.  In no event, regardless of the legal theory

                                       34
<PAGE>

advanced,  shall  the  Executive  be  liable  for  any  consequential, indirect,
incidental  or  special  damages  of  any  nature.

2.     Addendum  Incorporated  into  Agreement  by  Reference
       ------------------------------------------------------

All  of  the  terms,  provisos  and  conditions  of  this  Addendum  are  hereby
incorporated  into  the Agreement by reference and shall form a part thereof for
all  purposes

IN  WITNESS WHEREOF, the parties have duly signed and delivered this Addendum to
--------------------------------------------------------------------------------
the  Agreement  as  of  the  day  and  year  first  above  written.
-------------------------------------------------------------------

                                                        NS8  CORPORATION

                                                        By:
                                                            --------------------
                                                        Name:
                                                              ------------------
                                                        Title:
                                                               -----------------

                                                        MARC STRAUCH

                                                        By:
                                                            --------------------
                                                        Name: Marc Strauch

                                       35
<PAGE>

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