Document:

Exhibit 10.20

THESE  SECURITIES HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"),  OR UNDER ANY STATE  SECURITIES  LAWS. THESE SECURITIES ARE
SUBJECT  TO  RESTRICTIONS  ON   TRANSFERABILITY   AND  RESALE  AND  MAY  NOT  BE
TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION  STATEMENT IN EFFECT WITH RESPECT TO THESE SECURITIES UNDER THE ACT
OR  APPLICABLE  STATE  SECURITIES  LAWS  OR AN  OPINION  OF  COUNSEL  REASONABLY
SATISFACTORY  TO  THE  COMPANY  THAT  ANY  PROPOSED  TRANSFER  OR  RESALE  IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

                                   ----------

                       SECURED CONVERTIBLE PROMISSORY NOTE

                                       OF

                             EBIZ ENTERPRISES, INC.

$500,000                                                         August 21, 2000

     Ebiz  Enterprises,  Inc., a Nevada  corporation (the "COMPANY"),  for value
received,  hereby promises to pay to The Canopy Group,  Inc., a Utah corporation
(the "NOTEHOLDER"), at 240 West Center Street, Orem, Utah 84057, or its assigns,
the sum of Five Hundred Thousand Dollars ($500,000.00), or such other or greater
amount  as may be  outstanding,  plus  interest  accrued  on  unpaid  principal,
compounded annually,  at a rate of ten percent (10%) per annum,  calculated from
the date of this secured  convertible  promissory  note (this  "Note") until the
principal  amount hereof and all interest accrued thereon is paid (or converted,
as  provided in Section 2 hereof.  The  principal  amount of this Note,  and the
interest  accrued  thereon,  shall be  payable at the  principal  offices of the
Noteholder  or by mail to the  registered  address of the holder of this Note on
the earliest to occur of (i) September 21, 2000,  (ii) a default under this Note
in accordance  with  Paragraph 8 below,  (iii) a default as that term defined in
the Security Agreement executed herewith,  and (iv) the date ten (10) days after
the date of any  breach by the  Company  of any  agreement  with the  Noteholder
and/or  any  affiliate  of the  Noteholder,  unless  this Note  shall  have been
previously  converted  pursuant to Section 2 hereof or as provided  otherwise in
this Note.

     The  following  is a statement of the rights of the holder of this Note and
the conditions to which this Note is subject, and to which the holder hereof, by
the acceptance of this Note, agrees:

     1. DEFINITIONS.  The following  definitions shall apply for all purposes of
this Note:

          1.1 "COMPANY" shall mean the Company as defined above and includes any
corporation  which  shall  succeed to or assume the  obligations  of the Company
under this Note.

          1.2 "CHANGE OF CONTROL TRANSACTION" shall mean a merger,  acquisition,
or other  business  combination  in  which  fifty  percent  (50%) or more of the
Company's  outstanding  voting stock is  transferred  to different  holders in a
single transaction or a series of related transactions.

          1.3  "CONVERSION  DATE"  shall  mean the date on  which,  pursuant  to
Sections 2 and 3 hereof, the Noteholder exercises its right to convert this Note
into the Conversion Stock at the Note Conversion Price.

          1.4 "CONVERSION  STOCK" shall mean the shares of Common Stock,  $0.001
par value,  of the Company.  The number and  character  of shares of  Conversion
Stock are  subject to  adjustment  as provided  herein and the term  "Conversion
Stock"  shall  include  shares and other  securities  and  property  at any time
receivable  or issuable  upon  conversion  of this Note in  accordance  with its
terms.
<PAGE>
          1.5 "NOTE CONVERSION PRICE" shall be $1.00 per share.

          1.6 "NOTEHOLDER,"  "HOLDER," or similar terms, when the context refers
to a holder of this  Note,  shall  mean any  person who shall at the time be the
registered holder of this Note.

     2. CONVERSION.

          2.1 (a) CONVERSION OF NOTE. At any time, the Noteholder shall have the
right, at the holder's option,  to convert the principal and accrued interest on
this Note, in whole or in part,  into  Conversion  Stock at the Note  Conversion
Price.  Conversion  under this Section 2 shall occur only upon surrender of this
Note for  conversion at the  principal  offices of the Company,  accompanied  by
written notice of election to convert.

     (b)  CONVERSION IN THE EVENT OF PREPAYMENT OR PAYMENT OF NOTE.  The Company
shall  have the right to prepay  the  entire  principal  balance,  plus  accrued
interest, due under the Note at any time prior to the maturity date if the Note.
The  Noteholder  shall have no  obligation  to accept any payment  less than the
entire principal balance,  plus accrued interest.  At such time that the Company
has funds  immediately  available and elects to pay the entire principal balance
and accrued interest (whether as a prepayment or payment at or after maturity of
this Note),  the Noteholder  shall have ten (10) days from the receipt of notice
of the  Company's  election  to pay  off the  Note  to  convert  the  Note  into
Conversion Stock at the Note Conversion Price.

          2.2 CERTAIN TRANSACTIONS. The Company shall give written notice to the
Noteholder of any Change of Control  Transaction at least ten (10) business days
prior to the date on which such Change of Control  Transaction shall take place.
Prior to the closing of such Change of Control  Transaction,  the Company shall,
at  Noteholder's  election,  either (i) repay all unpaid  principal and interest
under  this Note or (ii)  convert  this Note into  Conversion  Stock at the Note
Conversion Price.

     3. ISSUANCE OF CONVERSION STOCK. As soon as practicable after conversion of
this Note, the Company, at its expense,  will (i) cause to be issued in the name
of and delivered to the holder of this Note, a certificate or  certificates  for
the number of shares of  Conversion  Stock to which the holder shall be entitled
upon such  conversion  (bearing  such  legends as may be required by  applicable
state  and  federal  securities  laws in the  opinion  of legal  counsel  of the
Company), together with any other securities and property to which the holder is
entitled upon such conversion under the terms of this Note, and (ii) execute and
deliver to Noteholder a Stock Purchase Agreement, Shareholders Rights Agreement,
and Investors Right's Agreement,  in substantially the forms previously provided
to the Company by the Noteholder.  Such conversion  shall be deemed to have been
made (i)  under  Section  2 above  and (ii)  immediately  prior to the  close of
business on the date that the Note shall have been  surrendered  for conversion,
accompanied by written notice of election to convert.  No fractional shares will
be issued upon  conversion of this Note.  If upon any  conversion of this Note a
fraction of a share would  otherwise  result,  then, in lieu of such  fractional
share, the Company will pay the cash value of that fractional share,  calculated
on the basis of the applicable Note Conversion Price.

     4.  ADJUSTMENT  OF NUMBER OF SHARES.  The number and character of shares of
Conversion  Stock issuable upon  conversion of this Note (or any shares of stock
or  other  securities  or  property  at the time  receivable  or  issuable  upon
conversion of this Note) are subject to adjustment upon the occurrence of any of
the following events:

          4.1 ADJUSTMENT FOR STOCK SPLITS,  STOCK DIVIDENDS,  RECAPITALIZATIONS,
ETC. In the event that the Company shall fix a record date for the determination
of  holders  of  securities   affected  by  any  stock  split,  stock  dividend,
reclassification,  recapitalization  or other  similar  event that will,  in the
future,  affect the number of outstanding shares of the Company's capital stock,
then, and in each such case, the Noteholder, upon conversion of this Note at any
time after the Company shall fix the record date for such event,  shall receive,
in addition to the shares of Conversion  Stock  issuable upon  conversion on the
Conversion  Date,  the right to receive the  securities  of the Company to which
such holder  would have been  entitled if such  holder had  converted  this Note
immediately  prior to such record  date (all  subject to further  adjustment  as
provided in this Note).

                                        2
<PAGE>
          4.2 ADJUSTMENT FOR DIVIDENDS AND DISTRIBUTIONS.  In the event that the
Company shall make or issue, or shall fix a record date for the determination of
eligible  holders  of  securities  entitled  to  receive,  a  dividend  or other
distribution  payable  with  respect to the  Conversion  Stock (or any shares of
stock or other  securities at the time  issuable  upon  conversion of this Note)
that is payable in (a) securities of the Company other than capital stock or (b)
any other assets,  then, and in each such case, the Noteholder,  upon conversion
of this Note at any time after the  consummation,  effective date or record date
of such event, shall receive,  in addition to the shares of Conversion Stock (or
such other stock or  securities)  issuable  upon such  conversion  prior to such
date,  the  securities  or such other assets of the Company to which such holder
would have been entitled  upon such date if such holder had converted  this Note
immediately prior thereto (all subject to further adjustment as provided in this
Note).

          4.3 ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER. In the event
of any  reorganization  not  considered a Change of Control  Transaction  of the
Company (or any other  corporation the stock or other securities of which are at
the time  receivable  upon the  conversion  of this Note) after the date of this
Note, or in the event,  after such date,  the Company (or any such  corporation)
shall  consolidate  with or merge  into  another  corporation  or convey  all or
substantially all of its assets to another corporation where such transaction is
not considered a Change of Control Transaction, then, and in each such case, the
Noteholder,  upon the  conversion of this Note (as provided in Section 2) at any
time after the  consummation of such  reorganization,  consolidation,  merger or
conveyance,  shall  be  entitled  to  receive,  in lieu of the  stock  or  other
securities  and property  receivable  upon the  conversion of this Note prior to
such  consummation,  the stock or other  securities  or  property  to which such
Noteholder   would   have  been   entitled   upon  the   consummation   of  such
reorganization, consolidation, merger or conveyance if such holder had converted
this Note  immediately  prior  thereto,  all  subject to further  adjustment  as
provided in this Section 4, and the successor or purchasing  corporation in such
reorganization,  consolidation, merger or conveyance (if other than the Company)
shall  duly  execute  and  deliver  to  the   Noteholder  a  supplement   hereto
acknowledging such corporation's obligations under this Note. In each such case,
the  terms  of the Note  shall be  applicable  to the  shares  of stock or other
securities  or property  receivable  upon the  conversion of this Note after the
consummation of such reorganization, consolidation, merger or conveyance.

          4.4  CONVERSION  OF  STOCK.  In the event  that all of the  authorized
Conversion Stock of the Company is converted, pursuant to the Company's Articles
of  Incorporation,  into other capital  stock or securities or property,  or the
Conversion Stock otherwise ceases to exist, then the Noteholder, upon conversion
of this  Note at any time  after the date on which  the  Conversion  Stock is so
converted or ceases to exist (the "TERMINATION DATE"), shall receive, in lieu of
the number of shares of Conversion Stock that would have been issuable upon such
conversion  immediately  prior to the  Termination  Date (the "FORMER  NUMBER OF
SHARES OF CONVERSION  STOCK"),  the stock and other  securities  and property to
which such  Noteholder  would have been entitled to receive upon the Termination
Date if such holder had converted this Note with respect to the Former Number of
Shares  of  Conversion  Stock  immediately  prior to the  Termination  Date (all
subject to further adjustment as provided in this Note).

          4.5 NOTICE OF  ADJUSTMENTS.  The Company  shall  promptly give written
notice of each  adjustment or readjustment of the number of shares of Conversion
Stock or other securities  issuable upon conversion of this Note, by first class
mail,  postage  prepaid,  to the registered  holder of this Note at the holder's
address  as  shown  on the  Company's  books.  The  notice  shall  describe  the
adjustment or readjustment and show in reasonable  detail the facts on which the
adjustment or readjustment is based.

          4.6 NO CHANGE  NECESSARY.  The form of this  Note need not be  changed
because of any  adjustment in the number of shares of Conversion  Stock issuable
upon its conversion.

          4.7  RESERVATION  OF  STOCK.  The  Company  has  taken  all  necessary
corporate action and obtained all necessary government consents and approvals to
authorize the issuance of this Note and,  prior to the  conversion  hereof,  the
shares of Conversion Stock issuable upon conversion of this Note. If at any time
the number of authorized but unissued  Common Shares or other  securities  shall
not be sufficient to effect the  conversion of this Note,  then the Company will
take such  corporate  action as may,  in the  opinion of its legal  counsel,  be
necessary  to  increase  its  authorized  but  unissued  Common  Shares or other
securities  to such  number of shares of Common  Shares or other  securities  as
shall be sufficient for such purpose.

                                        3
<PAGE>
     5. FULLY  PAID  SHARES.  All shares of  Conversion  Stock  issued  upon the
conversion of this Note shall be validly issued, fully paid and non-assessable.

     6. NO RIGHTS OR  LIABILITIES AS  SHAREHOLDER.  This Note does not by itself
entitle the  Noteholder to any voting rights or other rights as a shareholder of
the Company.  In the absence of  conversion  of this Note, no provisions of this
Note, and no enumeration herein of the rights or privileges of the holder, shall
cause such holder to be a shareholder of the Company for any purpose.

     7. CORPORATE ACTION;  NO IMPAIRMENT.  The Company will not, by amendment of
its   Articles  of   Incorporation   or  bylaws,   or  through   reorganization,
consolidation,  merger, dissolution, issue or sale of securities,  repurchase of
securities,  sale of  assets  or any  other  action,  avoid or seek to avoid the
observance  or  performance  of any of the terms of this  Note,  but will at all
times in good  faith  assist in the  carrying  out of all such  terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Noteholder  under this Note against wrongful  impairment.  The
Company shall not amend its Articles of Incorporation or issue any capital stock
or options to  purchase  any  capital  stock of the  Company  without  the prior
written consent of the Noteholder.

     8. DEFAULT. The Company will be in default if the Company fails to make any
payment  when due  hereunder.  The Company will also be in default if any of the
following  occurs  and such  default  is not cured  within a ten (10) day period
after the Noteholder has given the Company written notice of such default:

          (a) The Company  breaches any material  obligation  to the  Noteholder
hereunder.

          (b) A receiver is appointed  for any part of the  Company's  property,
the Company makes an assignment for the benefit of creditors,  or any proceeding
is commenced  either by the Company or against the Company under any  bankruptcy
or insolvency laws.

          (c) The  Company  materially  defaults  under the  Security  Agreement
referred to in Section 9 below.

          (d) The Company  suspends its normal business  operations or otherwise
fails to continue to operate its business in the ordinary course.

In the event of a default under this Section 8, Noteholder shall, in addition to
any other  remedies  allowed  by law,  be  entitled  to  accelerate  all  unpaid
principal and interest under this Note.

     9.  SECURITY  AGREEMENT.  This Note is secured by a  security  interest  in
certain  collateral,  which security  interest was granted by the Company to the
original  holder  of the  Note  pursuant  to the  terms  of a  certain  security
agreement (the "SECURITY  AGREEMENT"),  dated on or about the date of this Note,
are among the original holder of the Note and the Company,  and are incorporated
herein by this reference.

     10.  WAIVER  AND  AMENDMENT.  ANY  PROVISION  OF THIS NOTE MAY BE  AMENDED,
WAIVED,  MODIFIED,  DISCHARGED OR TERMINATED  SOLELY UPON THE WRITTEN CONSENT OF
BOTH THE COMPANY AND THE NOTEHOLDER.

     11.  ASSIGNMENT;  BINDING UPON SUCCESSORS AND ASSIGNS.  The Company may not
assign any of its  obligations  hereunder  without the prior written  consent of
Noteholder.  The terms and conditions of this Note shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties.

     12.  WAIVER OF NOTICE;  ATTORNEYS'  FEES.  The Company and all endorsers of
this Note  hereby  waive  notice,  demand,  notice of  nonpayment,  presentment,
protest and notice of  dishonor.  If any action at law or in equity is necessary

                                        4
<PAGE>
to enforce this Note or to collect payment under this Note, the Noteholder shall
be entitled  to recover,  as an element of the costs of suit and not as damages,
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which it may be entitled. Noteholder will be entitled to recover
its costs of suit, regardless of whether such suit proceeds to final judgment.

     13.  CONSTRUCTION  OF NOTE. The terms of this Note have been  negotiated by
the Company, the original holder of this Note and their respective attorneys and
the  language  hereof will not be  construed  for or against  either  Company or
Noteholder. Unless otherwise explicitly set forth, a reference to a Section will
mean a Section in this Note.  The titles and headings  herein are for  reference
purposes  only and will not in any manner  limit the  construction  of this Note
which will be considered as a whole.

     14. NOTICES. Any notice or other communication  required or permitted to be
given  under  this  Note  shall be in  writing,  shall be  delivered  by hand or
overnight courier service,  by certified mail, postage prepaid, or by facsimile,
and will be deemed given upon delivery,  if delivered  personally,  one business
day after deposit with a national courier service for overnight delivery, or one
business day after  transmission by facsimile with confirmation of receipt,  and
three days after deposit in the mails, if mailed, to the following addresses:

          (i)  If to the Noteholder:

               The Canopy Group
               240 West Center Street
               Orem, Utah 84057

          (ii) If to Company:

               Ebiz Enterprise, Inc.
               15695 North 83rd Way
               Scottsdale, Arizona 85260

or to such  other  address  as may have been  furnished  to the  other  party in
writing  pursuant to this  Section 14,  except that notices of change of address
shall only be effective upon receipt.

     15.  GOVERNING LAW. This Note shall be governed by and construed  under the
internal  laws of the  United  States  and the  State  of  Utah  as  applied  to
agreements among Utah residents entered into and to be performed entirely within
Utah, without reference to principles of conflict of laws or choice of laws.

     IN WITNESS  WHEREOF,  the  Company has caused this Note to be signed in its
name as of the date first above written.

                                        EBIZ ENTERPRISES, INC.

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

                                        5Exhibit 10.21

                               SECURITY AGREEMENT

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

                                    RECITALS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                        2
<PAGE>
          7. REMEDIES.  Upon the occurrence of any default hereunder at any time
thereafter,  all of the  Obligation  will,  at the election of Secured Party and
without notice of such election,  or demand for payment,  become immediately due
and payable and Secured  Party will have the  remedies of a secured  party under
the Utah Uniform Commercial Code or other applicable law.

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

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

                                         EBIZ ENTERPRISES, INC.,
                                         a Nevada corporation

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

                                         THE CANOPY GROUP, INC.,
                                         a Utah corporation

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

                                        3

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