Document:

EXHIBIT 10.18

                               SECURITY AGREEMENT
                               ------------------

     THIS  SECURITY  AGREEMENT  (the  "Agreement"),  is  entered  into  and made
                                       ---------
effective  as  of May 19, 2004, by and between NS8 CORPORATION, (the "Company"),
                                                                      -------
and  the  BUYER(S)  listed  on  Schedule  I  attached to the Securities Purchase
Agreement  dated  the  date  hereof  (the  "Secured  Party").
                                            --------------

     WHEREAS, the Company shall issue and sell to the Secured Party, as provided
in  the  Securities  Purchase  Agreement  dated the date hereof, and the Secured
Party  shall  purchase  up  to  One  Million  Five  Hundred  Thousand  Dollars
($1,500,000)  of  five  percent  (5%)  secured  convertible  debentures  (the
"Convertible  Debentures"),  which  shall  be  convertible  into  shares  of the
 -----------------------
Company's  common  stock, par value $___ (the "Common Stock") (as converted, the
                                               ------------
"Conversion  Shares"),  for  a  total  purchase  price of up to One Million Five
 ------------------
Hundred  Thousand  Dollars  ($1,500,000),  in  the  respective amounts set forth
opposite  each  Buyer(s)  name on Schedule I attached to the Securities Purchase
Agreement;

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

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

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

     Section     Recitals.
                 --------

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

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

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

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

     The  obligations  secured hereby are any and all obligations of the Company
now  existing  or  hereinafter  incurred  to  the Secured Party, whether oral or

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written  and  whether  arising  before,  on  or after the date hereof including,
without  limitation, those obligations of the Company to the Secured Party under
the  Securities  Purchase  Agreement,  the  Secured  Convertible  Debenture, the
Investor  Registration  Rights  Agreement  and  Irrevocable  Transfer  Agent
Instructions,  and  any other amounts now or hereafter owed to the Secured Party
by  the  Company  thereunder  or  hereunder  (collectively,  the "Obligations").
                                                                  -----------

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

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

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

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

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

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

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

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

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

          Upon the occurrence and during the continuance of an Event of Default:

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

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

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

          Each  of  the  following  events shall constitute a default under this
Agreement  (each  an  "Event  of  Default"):
                       ------------------

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

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

     the  Company  shall:  (1)  make a general assignment for the benefit of its
creditors;  (2)  apply for or consent to the appointment of a receiver, trustee,
assignee,  custodian, sequestrator, liquidator or similar official for itself or
any  of its assets and properties; (3) commence a voluntary case for relief as a
debtor  under  the  United  States  Bankruptcy  Code; (4) file with or otherwise
submit  to  any  governmental  authority  any petition, answer or other document
seeking:  (A)  reorganization,  (B) an arrangement with creditors or (C) to take
advantage  of  any other present or future applicable law respecting bankruptcy,
reorganization,  insolvency,  readjustment  of  debts,  relief  of  debtors,
dissolution  or  liquidation;  (5)  file or otherwise submit any answer or other
document  admitting or failing to contest the material allegations of a petition
or  other  document  filed  or  otherwise submitted against it in any proceeding
under  any such applicable law, or (6) be adjudicated a bankrupt or insolvent by
a  court  of  competent  jurisdiction;  or

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<PAGE>

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

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

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

     Upon the occurrence of an Event of Default, the Company hereby appoints the
Secured  Party  as  its  attorney-in-fact,  with full authority in the place and
stead  of  the Company and in the name of the Company or otherwise, from time to
time  in  the  Secured  Party's discretion to take any action and to execute any
instrument  which  the Secured Party may reasonably deem necessary to accomplish
the  purposes  of  this Agreement, including, without limitation, to receive and
collect all instruments made payable to the Company representing any payments in
respect of the Pledged Collateral or any part thereof and to give full discharge
for  the  same.  The  Secured  Party  may  demand, collect, receipt for, settle,
compromise,  adjust,  sue  for, foreclose, or realize on the Pledged Property as
and when the Secured Party may determine.  To facilitate collection, the Secured
Party may notify account debtors and obligors on any Pledged Property or Pledged
Collateral  to  make  payments  directly  to  the  Secured  Party.

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

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

                                     ARTICLE

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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

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

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

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<PAGE>

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

     to  the  payment  of  the  Obligations  then  due  and  unpaid.

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

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

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

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

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

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

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

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

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<PAGE>

     Section     Duties  Regarding  Pledged  Collateral.
                 --------------------------------------

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

                                     ARTICLE
                              AFFIRMATIVE COVENANTS
                              ---------------------

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

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

          The Company shall do, or cause to be done, all things, or proceed with
due  diligence  with  any  actions  or courses of action, that may be reasonably
necessary  (i)  to maintain Company's due organization, valid existence and good
standing  under the laws of its state of incorporation, and (ii) to preserve and
keep  in full force and effect all qualifications, licenses and registrations in
those  jurisdictions in which the failure to do so could have a Material Adverse
Effect  (as  defined  below);  and  (b) the Company shall not do, or cause to be
done,  any act impairing the Company's corporate power or authority (i) to carry
on  the Company's business as now conducted, and (ii) to execute or deliver this
Agreement  or  any  other  document delivered in connection herewith, including,
without limitation, any UCC-1 Financing Statements required by the Secured Party
to  which  it is or will be a party, or perform any of its obligations hereunder
or  thereunder.  For  purpose  of  this  Agreement,  the  term "Material Adverse
                                                                ----------------
Effect"  shall  mean  any  material  and adverse affect as determined by Secured
Party in its sole discretion, whether individually or in the aggregate, upon (a)
the  Company's  assets, business, operations, properties or condition, financial
or  otherwise;  (b)  the Company's to make payment as and when due of all or any
part  of  the  Obligations;  or  (c)  the  Pledged  Property.

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

     The  Company  shall furnish to the Secured Party such financial data as the
Secured  Party  may  reasonably  request.  Without  limiting  the foregoing, the
Company  shall  furnish  to  the  Secured Party (or cause to be furnished to the
Secured  Party)  the  following:

     (a)     as  soon  as  practicable  and in any event within ninety (90) days
after  the  end  of  each  fiscal  year of the Company, the balance sheet of the
Company  as  of  the  close  of  such fiscal year, the statement of earnings and
retained  earnings  of  the  Company  as  of  the close of such fiscal year, and
statement  of cash flows for the Company for such fiscal year, all in reasonable
detail,  prepared  in  accordance  with generally accepted accounting principles
consistently  applied,  certified  by  the  chief  executive and chief financial
officers  of  the  Company  as  being  true  and  correct  and  accompanied by a
certificate  of the chief executive and chief financial officers of the Company,
stating  that  the  Company  has  kept,  observed,  performed and fulfilled each
covenant,  term and condition of this Agreement during such fiscal year and that
no  Event of Default hereunder has occurred and is continuing, or if an Event of

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Default  has  occurred  and  is  continuing,  specifying the nature of same, the
period  of  existence  of  same  and  the action the Company proposes to take in
connection  therewith;

(b)     within  thirty  (30)  days  of the end of each calendar month, a balance
sheet  of  the  Company as of the close of such month, and statement of earnings
and  retained  earnings  of  the  Company  as of the close of such month, all in
reasonable  detail,  and  prepared  substantially  in  accordance with generally
accepted  accounting  principles  consistently  applied,  certified by the chief
executive and chief financial officers of the Company as being true and correct;
and

(c)     promptly  upon  receipt  thereof, copies of all accountants' reports and
accompanying  financial  reports  submitted  to  the  Company  by  independent
accountants  in  connection  with  each  annual  examination  of  the  Company.

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

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

          as  soon  as  available,  a  copy of any notice or other communication
alleging  any nonpayment or other material breach or default, or any foreclosure
or  other  action  respecting any material portion of its assets and properties,
received  respecting any of the indebtedness of the Company in excess of $15,000
(other  than  the Obligations), or any demand or other request for payment under
any guaranty, assumption, purchase agreement or similar agreement or arrangement
respecting  the  indebtedness  or  obligations  of  others in excess of $15,000,
including  any received from any person acting on behalf of the Secured Party or
beneficiary  thereof;  and

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

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

     The  Company  shall  maintain its books, accounts and records in accordance
with  generally  accepted accounting principles consistently applied, and permit
the  Secured  Party, its officers and employees and any professionals designated
by  the  Secured  Party  in writing, at any time to visit and inspect any of its
properties  (including  but  not limited to the collateral security described in
the  Transaction  Documents  and/or  the  Loan Instruments), corporate books and
financial  records,  and  to discuss its accounts, affairs and finances with any
employee,  officer  or  director  thereof.

                                      E-105
<PAGE>

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

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

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

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

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

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

     The  Company  shall defend and enforce its right, title and interest in and
to  any  part  of:  (a) the Pledged Property; and (b) if not included within the
Pledged  Property , those assets and properties whose loss could have a Material
Adverse  Effect,  the  Company shall defend the Secured Party's right, title and
interest in and to each and every part of the Pledged Property, each against all
manner  of  claims and demands on a timely basis to the full extent permitted by
applicable  law.

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

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

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

     The  Company  shall  (a)  file  all  tax  returns and appropriate schedules
thereto that are required to be filed under applicable law, prior to the date of
delinquency,  (b)  pay  and  discharge  all  taxes, assessments and governmental
charges  or levies imposed upon the Company, upon its income and profits or upon
any  properties  belonging  to  it,  prior to the date on which penalties attach

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<PAGE>

thereto,  and  (c) pay all taxes, assessments and governmental charges or levies
that,  if  unpaid,  might  become  a  lien or charge upon any of its properties;
provided,  however,  that  the  Company  in good faith may contest any such tax,
assessment,  governmental  charge or levy described in the foregoing clauses (b)
and  (c)  so  long  as appropriate reserves are maintained with respect thereto.

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

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

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

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

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

     The  Company shall give notice, in writing, to the Secured Party of (a) any
actions,  suits  or  proceedings  wherein  the  amount  at issue is in excess of
$50,000,  instituted by any persons against the Company, or affecting any of the
assets  of  the  Company,  and (b) any dispute, not resolved within fifteen (15)
days  of  the  commencement thereof, between the Company on the one hand and any
governmental  or  regulatory  body  on the other hand, which might reasonably be
expected  to  have  a  Material  Adverse  Effect  on  the business operations or
financial  condition  of  the  Company.

                                     ARTICLE
                               NEGATIVE COVENANTS
                               ------------------

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

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

     The Company shall not directly or indirectly make, create, incur, assume or
permit to exist any assignment, transfer, pledge, mortgage, security interest or
other  lien  or  encumbrance  of  any  nature  in, to or against any part of the
Pledged  Property or of the Company's capital stock, or offer or agree to do so,
or  own  or  acquire  or agree to acquire any asset or property of any character

                                      E-107
<PAGE>

subject  to  any  of  the foregoing encumbrances (including any conditional sale
contract  or  other  title retention agreement), or assign, pledge or in any way
transfer  or  encumber  its right to receive any income or other distribution or
proceeds  from  any part of the Pledged Property or the Company's capital stock;
or  enter  into  any sale-leaseback financing respecting any part of the Pledged
Property  as  lessee, or cause or assist the inception or continuation of any of
the  foregoing.

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

     Without the prior express written consent of the Secured Party, the Company
shall  not:  (a)  Amend  its  Articles of Incorporation or By-Laws; (b) issue or
sell  its  stock,  stock  options, bonds, notes or other corporate securities or
obligations;  (c)  be  a  party  to  any  merger,  consolidation  or  corporate
reorganization,  (d)  purchase  or otherwise acquire all or substantially all of
the  assets  or  stock  of, or any partnership or joint venture interest in, any
other  person,  firm  or  entity,  (e)  sell, transfer, convey, grant a security
interest  in  or lease all or any substantial part of its assets, nor (f) create
any  subsidiaries  nor  convey  any  of  its  assets  to  any  subsidiary.

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

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

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

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

     Section  7.5Guaranties;  Loans.
                 ------------------

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

     Section  7.6 Debt.
                  ----

     The  Company  shall not directly or indirectly permit create, incur, assume
or  suffer to exist any additional indebtedness of any description whatsoever in
an  aggregate  amount  in excess of $25,000 including commitments, contingencies

                                      E-108
<PAGE>

and  credit  availabilities,  or  apply  for  or offer or agree to do any of the
foregoing.  (excluding  any  indebtedness  of  the Company to the Secured Party,
trade  accounts  payable and accrued expenses incurred in the ordinary course of
business  and  the endorsement of negotiable instruments payable to the Company,
respectively  for  deposit  or  collection  in the ordinary course of business).

     Section  7.7     Conduct  of  Business.
                      ---------------------

     The Company will continue to engage, in an efficient and economical manner,
in  a  business  of the same general type as conducted by it on the date of this
Agreement.

     Section  7.8     Places  of  Business.
                      --------------------

     The  location of the Company's chief place of business is Two Union Square,
601 Union Street - Suite 4200 Seattle, Washington 98101 and 200-1311 Howe Street
Vancouver, BC Canada V6Z 2P3 .  The Company shall not change the location of its
chief  place  of  business,  chief  executive  office  or  any place of business
disclosed  to  the  Secured  Party  or move any of the Pledged Property from its
current  location  without thirty (30) days' prior written notice to the Secured
Party  in  each  instance.

                                     ARTICLE
                                  MISCELLANEOUS
                                  -------------

     Section     Notices.
                 -------

     All  notices  or  other  communications  required  or permitted to be given
pursuant  to  this Agreement shall be in writing and shall be considered as duly
given  on:  (a)  the  date  of  delivery,  if delivered in person, by nationally
recognized  overnight  delivery  service  or  (b) five (5) days after mailing if
mailed  from  within  the  continental  United  States by certified mail, return
receipt  requested  to  the  party  entitled  to  receive  the  same:
     If  to  the  Secured  Party:     Cornell  Capital  Partners,  LP
                                      101  Hudson  Street-Suite  3700
                                      Jersey  City,  New  Jersey  07302
                                      Attention:  Mark  Angelo
                                         Portfolio  Manager
                                      Telephone:  (201)  986-8300
                                      Facsimile:  (201)  985-8266

     With  a  copy  to:               Butler  Gonzalez  LLP
                                      1416  Morris  Avenue  -  Suite  207
                                      Union,  New  Jersey  07083
                                      Attention:  David  Gonzalez,  Esq.
                                      Telephone:  (908)  810-8588
                                      Facsimile:  (908)  810-0973

                                      E-109
<PAGE>

     And  if  to  the  Company:       NS8  Corporation
                                      Two  Union  Square
                                      601  Union  Street  -  Suite  2400
                                      Seattle,  WA  98101
                                      Attention:      Peter  Hogendoorn
                                      Telephone:    (206)  652-3338
                                      Facsimile:     (206)  652-3205

                                      NS8  Corporation
                                      200-1311  Howe  Street
                                      Vancouver,  BC  Canada  V6Z  2P3
                                      Telephone:  (604)  677-6994
                                :     Facsimile:   (604)  677-7011

     With  a  copy  to                Gottbetter  &  Partners,  LLP
                                      488  Madison  Avenue
                                      New  York,  NY  10016
                                      Attention:    Adam  S.  Gottbetter,  Esq.
                                      Telephone:  (212)  400-6900
                                      Facsimile:   (212)  400-6901

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

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

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

     Section     Expenses.
                 --------

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

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

     The  Secured  Party's  delay  or  failure at any time or times hereafter to
require  strict  performance  by  Company  of  any  undertakings,  agreements or

                                      E-110
<PAGE>

covenants  shall  not waiver, affect, or diminish any right of the Secured Party
under  this Agreement to demand strict compliance and performance herewith.  Any
waiver  by  the  Secured Party of any Event of Default shall not waive or affect
any other Event of Default, whether such Event of Default is prior or subsequent
thereto  and whether of the same or a different type.  None of the undertakings,
agreements  and  covenants  of  the  Company contained in this Agreement, and no
Event  of Default, shall be deemed to have been waived by the Secured Party, nor
may  this  Agreement  be  amended,  changed  or  modified,  unless  such waiver,
amendment,  change  or  modification  is  evidenced  by an instrument in writing
specifying  such  waiver,  amendment,  change  or modification and signed by the
Secured  Party.

     Section     Continuing  Security  Interest.
     -------     ------------------------------

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

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

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

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

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

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

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

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

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      E-111
<PAGE>

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

                                                    COMPANY:
                                                    NS8  CORPORATION

                                                    By:  /s/  Peter  Hogendoorn
                                                         ----------------------
                                                    Name:     Peter  Hogendoorn
                                                    Title:  CEO

                                                    SECURED  PARTY:
                                                    CORNELL CAPITAL PARTNERS, LP

                                                    BY:  YORKVILLE ADVISORS, LLC
                                                    ITS:  GENERAL  PARTNER

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

                                      E-112
<PAGE>EXHIBIT 10.19

                                ESCROW AGREEMENT
                                ----------------

     THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of May
                                  ---------
19,  2004  NS8 CORPORATION, a Delaware corporation (the "Company"); the Buyer(s)
                                                         -------
listed  on  the  Securities  Purchase  Agreement,  dated  the  date hereof (also
referred  to  as  the  "Investor(s)"), and BUTLER GONZALEZ, LLP, as Escrow Agent
                        -----------
hereunder  (the  "Escrow  Agent").
                  -------------

                                   BACKGROUND
                                   ----------

     WHEREAS,  the  Company  and  the Investor(s) have entered into a Securities
Purchase  Agreement  (the "Securities Purchase Agreement"), dated as of the date
                           -----------------------------
hereof,  pursuant  to  which  the  Company  proposes to sell secured convertible
debentures  (the  "Convertible  Debentures") which shall be convertible into the
                   -----------------------
Company's  Common Stock, par value US$.0001 per share (the "Common Stock"), at a
                                                            ------------
price  per  share  equal  to  the Purchase Price, as that term is defined in the
Securities  Purchase Agreement.  The Securities Purchase Agreement provides that
the Investor(s) shall deposit the purchase amount in a segregated escrow account
to  be held by Escrow Agent in order to effectuate a disbursement to the Company
at  a  closing to be held as set forth in the Securities Purchase Agreement (the
"Closing").
 -------

WHEREAS,  the  Company  intends to sell Convertible Securities (the "Offering").
                                                                     --------

WHEREAS,  Escrow  Agent  has  agreed  to  accept,  hold,  and disburse the funds
deposited  with  it  in  accordance  with  the  terms  of  this  Agreement.

WHEREAS,  in order to establish the escrow of funds and to effect the provisions
of  the Securities Purchase Agreement, the parties hereto have entered into this
Agreement.

NOW  THEREFORE,  in  consideration  of  the  foregoing,  it  is hereby agreed as
follows:

     1.     DEFINITIONS.  The  following terms shall have the following meanings
            -----------
when  used  herein:

     a.     "Escrow  Funds"  shall  mean  the  funds deposited with Escrow Agent
             -------------
pursuant  to  this  Agreement.

     b.     "Joint Written Direction" shall mean a written direction executed by
             -----------------------
the  Investor(s)  and  the  Company  directing Escrow Agent to disburse all or a
portion  of  the  Escrow  Funds  or  to  take  or refrain from taking any action
pursuant  to  this  Agreement.

     c.     "Escrow  Period"  shall  begin with the commencement of the Offering
             --------------
and  shall  terminate  upon  the  earlier  to  occur  of  the  following  dates:

     (i)     The  date  upon which Escrow Agent confirms that it has received in
the  Escrow  Account  all  of  the  proceeds  of  the  sale  of  the Convertible
Debentures;

                                      E-113
<PAGE>

     (ii)     The  expiration  of twenty (20) days from the date of commencement
of the Offering (unless extended by mutual written agreement between the Company
and  the  Investor(s)  with  a  copy  of  such  extension  to  Escrow Agent); or

     (iii)     The  date  upon  which a determination is made by the Company and
the  Investor(s)  to  terminate  the  Offering  prior  to  the  sale  of all the
Convertible  Debentures.

     During  the  Escrow  Period, the Company and the Investor(s) are aware that
they are not entitled to any funds received into escrow and no amounts deposited
in  the  Escrow  Account  shall  become  the  property  of  the  Company  or the
Investor(s)  or  any  other entity, or be subject to the debts of the Company or
the  Investor(s)  or  any  other  entity.

     2.     APPOINTMENT  OF AND ACCEPTANCE BY ESCROW AGENT.  The Investor(s) and
            ----------------------------------------------
the  Company  hereby  appoint  Escrow  Agent to serve as Escrow Agent hereunder.
Escrow  Agent hereby accepts such appointment and, upon receipt by wire transfer
of  the  Escrow Funds in accordance with Section 3 below, agrees to hold, invest
and  disburse  the  Escrow  Funds  in  accordance  with  this  Agreement.

     a.     The  Company hereby acknowledges that the Escrow Agent is counsel to
the  Investor(s)  in  connection with the transactions contemplated and referred
herein.  The  Company  agrees  that  in  the  event  of  any  dispute arising in
connection  with  this  Escrow  Agreement  or  otherwise  in connection with any
transaction  or  agreement  contemplated  and  referred herein, the Escrow Agent
shall be permitted to continue to represent the Investor(s) and the Company will
not  seek  to  disqualify  such  counsel.

     3.     CREATION  OF  ESCROW  FUNDS.  On  or  prior  to  the  date  of  the
            ---------------------------
commencement of the Offering, the parties shall establish an escrow account with
the  Escrow  Agent,  which  escrow  account  shall  be entitled as follows:  NS8
Corporation/Cornell  Capital  Partners, LP Escrow Account for the deposit of the
Escrow  Funds.  The  Investor(s)  will instruct subscribers to wire funds to the
account  of  the  Escrow  Agent  as  follows:
BANK:                  Wachovia,  N.A.  of  New  Jersey
ROUTING  #:            031201467
ACCOUNT  #:            2020000659170
NAME  ON  ACCOUNT:     Butler  Gonzalez  LLP  as  Escrow  Agent
NAME  ON  SUB-ACCOUNT: NS8  Corporation/Cornell  Capital Partners, LP Escrow
                       account

     4.     DEPOSITS  INTO THE ESCROW ACCOUNT.  The Investor(s) agrees that they
            ---------------------------------
shall  promptly  deliver  funds for the payment of the Convertible Debentures to
Escrow  Agent  for  deposit  in  the  Escrow  Account.

                                      E-114
<PAGE>

     5.     DISBURSEMENTS  FROM  THE  ESCROW  ACCOUNT.
            -----------------------------------------

     a.     The  Escrow  Agent  will  continue  to hold such funds until Cornell
Capital  Partners,  LP  on behalf of the Investor(s) and Company execute a Joint
Written  Direction  directing  the  Escrow  Agent  to  disburse the Escrow Funds
pursuant  to  Joint Written Direction signed by the Company and the Investor(s).
In  disbursing  such  funds,  Escrow Agent is authorized to rely upon such Joint
Written  Direction  from  the  Company  and  the  Investor(s) and may accept any
signatory  from  the  Company listed on the signature page to this Agreement and
any  signature  from  the Investor(s) that the Escrow Agent already has on file.

     b.     In  the event Escrow Agent does not receive the amount of the Escrow
Funds  from  the  Investor(s),  Escrow  Agent  shall  notify the Company and the
Investor(s).  Upon  receipt  of  payment  instructions  from the Company, Escrow
Agent  shall refund to each subscriber without interest the amount received from
each Investor(s), without deduction, penalty, or expense to the subscriber.  The
purchase  money  returned  to each subscriber shall be free and clear of any and
all  claims  of  the  Company,  the  Investor(s)  or  any  of  their  creditors.

     c.     In  the  event  Escrow  Agent  does receive the amount of the Escrow
Funds  prior  to  expiration  of  the Escrow Period, in no event will the Escrow
Funds  be  released to the Company until such amount is received by Escrow Agent
in  collected  funds. For purposes of this Agreement, the term "collected funds"
shall  mean all funds received by Escrow Agent which have cleared normal banking
channels  and  are  in  the  form  of  cash.

     6.     COLLECTION  PROCEDURE.  Escrow Agent is hereby authorized to deposit
            ---------------------
the  proceeds  of  each  wire  in  the  Escrow  Account.

     7.     SUSPENSION OF PERFORMANCE: DISBURSEMENT INTO COURT.  If at any time,
            --------------------------------------------------
there  shall  exist  any  dispute  between  the Company and the Investor(s) with
respect  to  holding  or  disposition  of any portion of the Escrow Funds or any
other  obligations  of Escrow Agent hereunder, or if at any time Escrow Agent is
unable to determine, to Escrow Agent's sole satisfaction, the proper disposition
of any portion of the Escrow Funds or Escrow Agent's proper actions with respect
to its obligations hereunder, or if the parties have not within thirty (30) days
of the furnishing by Escrow Agent of a notice of resignation pursuant to Section
9 hereof, appointed a successor Escrow Agent to act hereunder, then Escrow Agent
may,  in  its  sole  discretion,  take  either or both of the following actions:

     a.     suspend the performance of any of its obligations (including without
limitation  any disbursement obligations) under this Escrow Agreement until such
dispute  or  uncertainty  shall  be  resolved to the sole satisfaction of Escrow
Agent or until a successor Escrow Agent shall be appointed (as the case may be);
provided  however,  Escrow  Agent  shall  continue to invest the Escrow Funds in
accordance  with  Section  8  hereof;  and/or

     b.     petition  (by  means  of  an  interpleader  action  or  any  other
appropriate  method) any court of competent jurisdiction in any venue convenient
to  Escrow  Agent, for instructions with respect to such dispute or uncertainty,
and  to  the  extent  required  by  law,  pay  into  such court, for holding and
disposition in accordance with the instructions of such court, all funds held by
it  in the Escrow Funds, after deduction and payment to Escrow Agent of all fees

                                      E-115
<PAGE>

and  expenses  (including  court costs and attorneys' fees) payable to, incurred
by, or expected to be incurred by Escrow Agent in connection with performance of
its  duties  and  the  exercise  of  its  rights  hereunder.

     c.     Escrow  Agent  shall  have  no  liability  to  the  Company,  the
Investor(s), or any person with respect to any such suspension of performance or
disbursement  into  court,  specifically  including  any  liability  or  claimed
liability that may arise, or be alleged to have arisen, out of or as a result of
any  delay in the disbursement of funds held in the Escrow Funds or any delay in
with  respect  to  any  other  action  required  or  requested  of Escrow Agent.

     8.     INVESTMENT  OF  ESCROW FUNDS.  Escrow Agent shall deposit the Escrow
            ----------------------------
Funds  in  a  non-interest  bearing  account.

     If Escrow Agent has not received a Joint Written Direction at any time that
an  investment  decision  must  be  made, Escrow Agent shall maintain the Escrow
Funds,  or such portion thereof, as to which no Joint Written Direction has been
received,  in  a  non-interest  bearing  account.

     9.     RESIGNATION  AND  REMOVAL  OF ESCROW AGENT.  Escrow Agent may resign
            ------------------------------------------
from  the  performance of its duties hereunder at any time by giving thirty (30)
days'  prior  written  notice  to the parties or may be removed, with or without
cause,  by  the parties, acting jointly, by furnishing a Joint Written Direction
to  Escrow  Agent,  at  any  time  by the giving of ten (10) days' prior written
notice  to  Escrow  Agent  as  provided  herein  below.  Upon any such notice of
resignation  or  removal, the representatives of the Investor(s) and the Company
identified  in  Sections  13a.(iv)  and 13b.(iv), below, jointly shall appoint a
successor  Escrow  Agent  hereunder,  which  shall  be  a commercial bank, trust
company  or  other  financial institution with a combined capital and surplus in
excess  of  US$10,000,000.00.  Upon the acceptance in writing of any appointment
of  Escrow  Agent  hereunder  by a successor Escrow Agent, such successor Escrow
Agent  shall thereupon succeed to and become vested with all the rights, powers,
privileges  and  duties  of  the  retiring Escrow Agent, and the retiring Escrow
Agent  shall  be  discharged  from  its duties and obligations under this Escrow
Agreement,  but  shall not be discharged from any liability for actions taken as
Escrow  Agent  hereunder  prior  to  such succession.  After any retiring Escrow
Agent's  resignation  or  removal, the provisions of this Escrow Agreement shall
inure  to its benefit as to any actions taken or omitted to be taken by it while
it  was  Escrow  Agent  under  this Escrow Agreement.  The retiring Escrow Agent
shall  transmit  all  records  pertaining  to the Escrow Funds and shall pay all
funds held by it in the Escrow Funds to the successor Escrow Agent, after making
copies  of  such  records as the retiring Escrow Agent deems advisable and after
deduction  and  payment  to  the  retiring Escrow Agent of all fees and expenses
(including court costs and attorneys' fees) payable to, incurred by, or expected
to  be  incurred by the retiring Escrow Agent in connection with the performance
of  its  duties  and  the  exercise  of  its  rights  hereunder.

     10.     LIABILITY  OF  ESCROW  AGENT.
             ----------------------------

     a.     Escrow  Agent  shall have no liability or obligation with respect to
the  Escrow  Funds  except  for  Escrow  Agent's  willful  misconduct  or  gross
negligence.  Escrow  Agent's  sole  responsibility shall be for the safekeeping,
investment, and disbursement of the Escrow Funds in accordance with the terms of

                                      E-116
<PAGE>

this  Agreement.  Escrow  Agent  shall have no implied duties or obligations and
shall  not  be  charged with knowledge or notice or any fact or circumstance not
specifically  set  forth herein.  Escrow Agent may rely upon any instrument, not
only  as  to  its  due execution, validity and effectiveness, but also as to the
truth and accuracy of any information contained herein, which Escrow Agent shall
in  good  faith  believe  to be genuine, to have been signed or presented by the
person  or  parties purporting to sign the same and conform to the provisions of
this  Agreement.  In  no  event  shall  Escrow  Agent  be liable for incidental,
indirect,  special,  and  consequential or punitive damages.  Escrow Agent shall
not  be  obligated  to  take  any  legal  action  or  commence any proceeding in
connection  with  the  Escrow  Funds,  any  account  in  which  Escrow Funds are
deposited,  this Agreement or the Purchase Agreement, or to appear in, prosecute
or  defend  any such legal action or proceeding.  Escrow Agent may consult legal
counsel  selected  by  it  in  any  event  of  any  dispute  or  question  as to
construction  of  any  of the provisions hereof or of any other agreement or its
duties  hereunder,  or  relating  to any dispute involving any party hereto, and
shall  incur  no  liability  and  shall  be fully indemnified from any liability
whatsoever  in  acting  in  accordance  with the opinion or instructions of such
counsel.  The  Company  and the Investor(s) jointly and severally shall promptly
pay,  upon  demand,  the  reasonable  fees  and  expenses  of  any such counsel.

     b.     Escrow Agent is hereby authorized, in its sole discretion, to comply
with  orders  issued  or process entered by any court with respect to the Escrow
Funds, without determination by Escrow Agent of such court's jurisdiction in the
matter.  If  any  portion of the Escrow Funds is at any time attached, garnished
or  levied  upon  under  any  court  order,  or in case the payment, assignment,
transfer,  conveyance  or  delivery  of  any  such  property  shall be stayed or
enjoined  by  any court order, or in any case any order judgment or decree shall
be  made  or  entered  by any court affecting such property or any part thereof,
then  and in any such event, Escrow Agent is authorized, in its sole discretion,
to rely upon and comply with any such order, writ judgment or decree which it is
advised  by legal counsel selected by it,  binding upon it, without the need for
appeal  or other action; and if Escrow Agent complies with any such order, writ,
judgment  or  decree,  it shall not be liable to any of the parties hereto or to
any  other person or entity by reason of such compliance even though such order,
writ  judgment  or  decree may be subsequently reversed, modified, annulled, set
aside  or  vacated.

     11.     INDEMNIFICATION  OF  ESCROW AGENT.  From and at all times after the
             ---------------------------------
date of this Agreement, the parties jointly and severally, shall, to the fullest
extent  permitted  by  law and to the extent provided herein, indemnify and hold
harmless  Escrow Agent and each director, officer, employee, attorney, agent and
affiliate  of Escrow Agent (collectively, the "Indemnified Parties") against any
                                               -------------------
and  all  actions,  claims (whether or not valid), losses, damages, liabilities,
costs  and  expenses  of  any  kind  or  nature  whatsoever  (including  without
limitation  reasonable  attorney's  fees,  costs  and  expenses)  incurred by or
asserted  against any of the Indemnified Parties from and after the date hereof,
whether  direct, indirect or consequential, as a result of or arising from or in
any  way  relating  to any claim, demand, suit, action, or proceeding (including
any  inquiry  or  investigation) by any person, including without limitation the
parties  to  this  Agreement, whether threatened or initiated, asserting a claim
for  any  legal  or  equitable  remedy  against  any person under any statute or
regulation, including, but not limited to, any federal or state securities laws,
or  under  any  common  law  or equitable cause or otherwise, arising from or in
connection  with the negotiation, preparation, execution, performance or failure
of performance of this Agreement or any transaction contemplated herein, whether
or  not  any such Indemnified Party is a party to any such action or proceeding,
suit or the target of any such inquiry or investigation; provided, however, that

                                      E-117
<PAGE>

no  Indemnified  Party  shall  have  the  right  to be indemnified hereunder for
liability finally determined by a court of competent jurisdiction, subject to no
further appeal, to have resulted from the gross negligence or willful misconduct
of  such  Indemnified  Party.  If  any  such action or claim shall be brought or
asserted  against  any  Indemnified Party, such Indemnified Party shall promptly
notify the Company and the Investor(s) hereunder in writing, and the Investor(s)
and  the  Company  shall assume the defense thereof, including the employment of
counsel  and  the payment of all expenses.  Such Indemnified Party shall, in its
sole  discretion, have the right to employ separate counsel (who may be selected
by  such  Indemnified  Party  in  its sole discretion) in any such action and to
participate and to participate in the defense thereof, and the fees and expenses
of  such  counsel  shall  be  paid  by  such  Indemnified Party, except that the
Investor(s) and/or the Company shall be required to pay such fees and expense if
(a)  the  Investor(s) or the Company agree to pay such fees and expenses, or (b)
the  Investor(s)  and/or  the  Company  shall fail to assume the defense of such
action  or  proceeding or shall fail, in the sole discretion of such Indemnified
Party, to employ counsel reasonably satisfactory to the Indemnified Party in any
such  action  or  proceeding,  (c)  the  Investor(s)  and  the  Company are  the
plaintiff in any such action or proceeding or (d) the named or potential parties
to  any  such action or proceeding (including any potentially impleaded parties)
include  both  the Indemnified Party, the Company and/or the Investor(s) and the
Indemnified  Party  shall  have been advised by counsel that there may be one or
more  legal  defenses  available to it which are different from or additional to
those  available  to  the  Company  or the Investor(s).  The Investor(s) and the
Company  shall  be  jointly  and  severally  liable  to pay fees and expenses of
counsel  pursuant  to  the preceding sentence, except that any obligation to pay
under  clause  (a) shall apply only to the party so agreeing.  All such fees and
expenses payable by the Company and/or the Investor(s) pursuant to the foregoing
sentence  shall  be  paid  from time to time as incurred, both in advance of and
after  the  final  disposition  of such action or claim.  The obligations of the
parties  under this section shall survive any termination of this Agreement, and
resignation  or  removal  of  the  Escrow  Agent  shall  be  independent  of any
obligation  of  Escrow  Agent.

     The parties agree that neither payment by the Company or the Investor(s) of
any  claim  by  Escrow  Agent for indemnification hereunder shall impair, limit,
modify,  or  affect,  as between the Investor(s) and the Company, the respective
rights  and obligations of Investor(s), on the one hand, and the Company, on the
other  hand.

     12.     EXPENSES  OF  ESCROW  AGENT.  Except as set forth in Section 11 the
             ---------------------------
Company  shall  reimburse  Escrow  Agent for all of its reasonable out-of-pocket
expenses,  including  attorneys'  fees, travel expenses, telephone and facsimile
transmission  costs,  postage  (including  express  mail  and overnight delivery
charges),  copying  charges  and  the  like.  All  of  the  compensation  and
reimbursement  obligations  set  forth  in  this Section shall be payable by the
Company, upon demand by Escrow Agent.  The obligations of the Company under this
Section  shall  survive any termination of this Agreement and the resignation or
removal  of  Escrow  Agent.

     13.     WARRANTIES.
             ----------

     a.     The  Investor(s)  makes the following representations and warranties
to  Escrow  Agent:

                                      E-118
<PAGE>

     (i)     The Investor(s) has full power and authority to execute and deliver
this  Agreement  and  to  perform  its  obligations  hereunder.

     (ii)     This  Agreement  has been duly approved by all necessary action of
the  Investor(s), including any necessary approval of the limited partner of the
Investor(s) or necessary corporate approval, as applicable, has been executed by
duly  authorized officers of the Investor(s), enforceable in accordance with its
terms.

     (iii)     The  execution,  delivery,  and performance of the Investor(s) of
this  Agreement  will  not  violate, conflict with, or cause a default under any
agreement  of  limited  partnership  of  Investor(s)  or  the  certificate  of
incorporation  or  bylaws of the Investor(s) (as applicable), any applicable law
or  regulation,  any court order or administrative ruling or degree to which the
Investor(s)  is  a  party  or  any of its property is subject, or any agreement,
contract,  indenture,  or  other  binding  arrangement.

     (iv)     Mark  Angelo  has been duly appointed to act as the representative
of  the  Investor(s)  hereunder  and  has  full  power and authority to execute,
deliver,  and  perform  this  Escrow Agreement, to execute and deliver any Joint
Written  Direction,  to amend, modify, or waive any provision of this Agreement,
and  to take any and all other actions as the Investor(s)'s representative under
this Agreement, all without further consent or direction form, or notice to, the
Investor(s)  or  any  other  party.

     (v)     No  party  other than the parties hereto and the Investor(s)s have,
or  shall  have, any lien, claim or security interest in the Escrow Funds or any
part  thereof.  No  financing  statement under the Uniform Commercial Code is on
file  in any jurisdiction claiming a security interest in or describing (whether
specifically  or  generally)  the  Escrow  Funds  or  any  part  thereof.

     (vi)     All  of  the  representations  and  warranties  of the Investor(s)
contained  herein  are  true and complete as of the date hereof and will be true
and  complete  at  the  time  of  any  disbursement  from  the  Escrow  Funds.

     b.     The  Company  makes  the following representations and warranties to
the  Escrow  Agent:

     (i)     The  Company is a corporation duly organized, validly existing, and
in  good standing under the laws of the State of Delaware and has full power and
authority  to  execute and deliver this Agreement and to perform its obligations
hereunder.

     (ii)     This  Agreement  has been duly approved by all necessary corporate
action  of  the  Company, including any necessary shareholder approval, has been
executed  by  duly authorized officers of the Company, enforceable in accordance
with  its  terms.

     (iii)     The  execution,  delivery, and performance by the Company of this
Agreement  is  in accordance with the Securities Purchase Agreement and will not
violate,  conflict  with,  or  cause  a  default  under  the  certificate  of
incorporation  (or  articles  of  incorporation, as applicable) or bylaws of the
Company,  any  applicable  law  or regulation, any court order or administrative
ruling  or  decree  to  which  the  Company is a party or any of its property is

                                      E-119
<PAGE>

subject,  or  any  agreement, contract, indenture, or other binding arrangement,
including  without limitation to the Securities Purchase Agreement, to which the
Company  is  a  party.

     (iv)     Peter  Hogendoorn  has  been  duly  appointed  to  act  as  the
representative  of  the  Company  hereunder  and has full power and authority to
execute,  deliver,  and perform this Agreement, to execute and deliver any Joint
Written Direction, to amend, modify or waive any provision of this Agreement and
to  take all other actions as the Company's Representative under this Agreement,
all  without further consent or direction from, or notice to, the Company or any
other  party.

     (v)     No  party  other than the parties hereto and the Investor(s)s have,
or  shall  have, any lien, claim or security interest in the Escrow Funds or any
part  thereof.  No  financing  statement under the Uniform Commercial Code is on
file  in any jurisdiction claiming a security interest in or describing (whether
specifically  or  generally)  the  Escrow  Funds  or  any  part  thereof.

     (vi)     All of the representations and warranties of the Company contained
herein are true and complete as of the date hereof and will be true and complete
at  the  time  of  any  disbursement  from  the  Escrow  Funds.

     14.     CONSENT  TO  JURISDICTION  AND  VENUE.  In the event that any party
             -------------------------------------
hereto  commences a lawsuit or other proceeding relating to or arising from this
Agreement,  the  parties  hereto agree that the United States District Court for
the  District  of New Jersey shall have the sole and exclusive jurisdiction over
any  such  proceeding.  If  all  such  courts  lack  federal  subject  matter
jurisdiction,  the parties agree that the Superior Court Division of New Jersey,
Chancery  Division  of Hudson County shall have sole and exclusive jurisdiction.
Any  of  these  courts  shall  be  proper venue for any such lawsuit or judicial
proceeding  and  the  parties  hereto  waive  any  objection to such venue.  The
parties  hereto consent to and agree to submit to the jurisdiction of any of the
courts  specified  herein  and  agree  to  accept the service of process to vest
personal  jurisdiction  over  them  in  any  of  these  courts.

     15.     NOTICE.  All notices and other communications hereunder shall be in
             ------
writing and shall be deemed to have been validly served, given or delivered five
(5) days after deposit in the United States mails, by certified mail with return
receipt  requested  and  postage prepaid, when delivered personally, one (1) day
delivered  to  any  overnight  courier,  or  when  transmitted  by  facsimile
transmission  and  upon confirmation of receipt and addressed to the party to be
notified  as  follows:
If  to  Investor(s),  to:     Cornell  Capital  Partners,  LP
                              101  Hudson  Street  -  Suite  3700
                              Jersey  City,  NJ  07302
                              Attention:  Mark  Angelo
                                 Portfolio  Manager
                              Telephone:  (201)  985-8300
                              Facsimile:   (201)  985-8266

                                      E-120
<PAGE>

If  to  Escrow  Agent,  to:   Butler  Gonzalez  LLP
                              1416  Morris  Avenue,  Suite  207
                              Union,  NJ  07083
                              Attention:  David  Gonzalez,  Esq.
                              Telephone:  (908)  810-8588
                              Facsimile:  (908)  810-0973

If  to  the  Company,  to:    NS8  Corporation
                              Two  Union  Square
                              601  Union  Street  -  Suite  2400
                              Seattle,  WA  98101
                              Attention:      Peter  Hogendoorn
                              Telephone:    (206)  652-3338
                              Facsimile:     (206)  652-3205

                              NS8  Corporation
                              200-1311  Howe  Street
                              Vancouver,  BC  Canada  V6Z  2P3
                              Telephone:  (604)  677-6994
                              Facsimile:   (604)  677-7011
:
With  a  copy  to             Gottbetter  &  Partners,  LLP
                              488  Madison  Avenue
                              New  York,  NY  10016
                              Attention:    Adam  S.  Gottbetter,  Esq.
                              Telephone:  (212)  400-6900
                              Facsimile:   (212)  400-6901

Or  to such other address as each party may designate for itself by like notice.

     16.     AMENDMENTS  OR  WAIVER.  This  Agreement  may  be  changed, waived,
             ----------------------
discharged  or  terminated  only  by a writing signed by the parties hereto.  No
delay or omission by any party in exercising any right with respect hereto shall
operate as waiver.  A waiver on any one occasion shall not be construed as a bar
to,  or  waiver  of,  any  right  or  remedy  on  any  future  occasion.

     17.     SEVERABILITY.  To  the  extent  any  provision of this Agreement is
             ------------
prohibited  by  or  invalid  under  applicable  law,  such  provision  shall  be
ineffective  to  the  extent  of  such  prohibition,  or  invalidity,  without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

     18.     GOVERNING  LAW.  This  Agreement shall be construed and interpreted
             --------------
in  accordance  with the internal laws of the State of ___ without giving effect
to  the  conflict  of  laws  principles  thereof.

     19.     ENTIRE  AGREEMENT.  This Agreement constitutes the entire Agreement
             -----------------
between the parties relating to the holding, investment, and disbursement of the
Escrow  Funds and sets forth in their entirety the obligations and duties of the
Escrow  Agent  with  respect  to  the  Escrow  Funds.

     20.     BINDING  EFFECT.  All  of  the  terms of this Agreement, as amended
             ---------------
from  time  to  time,  shall  be  binding  upon,  inure to the benefit of and be

                                      E-121
<PAGE>

enforceable  by the respective heirs, successors and assigns of the Investor(s),
the  Company,  or  the  Escrow  Agent.

     21.     EXECUTION  OF  COUNTERPARTS.  This  Agreement and any Joint Written
             ---------------------------
Direction  may  be  executed  in  counter  parts,  which  when so executed shall
constitute  one  and  same  agreement  or  direction.

     22.     TERMINATION.  Upon  the  first  to occur of the disbursement of all
             -----------
amounts  in  the  Escrow  Funds  pursuant  to  Joint  Written  Directions or the
disbursement of all amounts in the Escrow Funds into court pursuant to Section 7
hereof,  this  Agreement  shall terminate and Escrow Agent shall have no further
obligation  or liability whatsoever with respect to this Agreement or the Escrow
Funds.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      E-122
<PAGE>

     IN  WITNESS WHEREOF the parties have hereunto set their hands and seals the
day  and  year  above  set  forth.

                                                    NS8  CORPORATION

                                                    By:  /s/  Peter  Hogendoorn
                                                         ----------------------
                                                    Name:     Peter  Hogendoorn
                                                    Title:  CEO

                                                    CORNELL CAPITAL PARTNERS, LP

                                                    BY:  YORKVILLE ADVISORS, LLC
                                                    ITS:  GENERAL  PARTNER

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

                                                    BUTLER  GONZALEZ  LLP

                                                    By:  /s/  David  Gonzalez
                                                         --------------------
                                                    Name:  David  Gonzalez, Esq.
                                                    Title:  Partner

                                      E-123
<PAGE>

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