Document:

DISTRIBUTOR AGREEMENT

To: Name: ______________________________________ ("Distributor")

    Address: ______________________________________

             ______________________________________

    Telephone: ______________; Facsimile: __________________

From: NATIONAL PIZZA CORP.
      759 CEDAR FIELD COURT
      TOWN AND COUNTRY, MO 63017 ("NPCO")

     Thank you for agreeing to become a distributor of NPCO's pizza products!
This agreement will describe the respective rights and obligations between NPCO
and you. As your supplier, NPCO agrees to the following:

     i.   To assist Distributor in securing the number of locations set forth in
          the Initial Order below for the NPCO products to be carried in
          __________(city), ___________(state).

     ii.  Provide Distributor with form consignment agreements to be used for
          the NPCO pizza ovens at all of Distributor's locations;

     iii. To Install the NPCO pizza ovens at each location;

     iv.  To provide Distributor with initial instructions on the functions and
          operations of the NPCO ovens;

     v.   To provided Distributor with advertising materials at no cost to
          Distributor for the first order. After the first order, advertising
          materials will be supplied at NPCO's then current prices;

     vi.  To provide parts and maintenance for the ovens. Depending on the
          nature of the parts or service required, there may be a charge for
          this.

     As NPCO's distributor, you agree to the following:

     a.   To purchase 100% of the pizza to be sold to each of Distributor's
          location from NPCO at NPCO's then current prices;

     b.   To service each location at least once per week to ensure the
          functionality of all equipment and the supply of pizza;
<PAGE>
     c.   To use and distribute all advertising materials provided by NPCO in a
          manner to maximize sales of the pizza products and awareness of the
          product and brand name;

     d.   To comply with NPCO instructions and guidelines in the installation
          and operation of all NPCO pizza ovens;

     e.   To permit NPCO to determine Distributor's initial locations and
          establish Distributor's route and territory;

     f.   To operate and expand Distributor's route to the best of Distributor's
          ability.

     Distributor also understands and agrees that NPCO has made no guarantee or
representations as to the securing of any specific locations, the profitability
of the distributorship or any the realization of any profits. Distributor
understands that there are no exclusive territories granted by NPCO to
Distributor. Ownership of all NPCO pizza ovens shall be with Distributor upon
delivery of same from NPCO.

     Distributor's Initial Order consists of 20 pizza ovens, 20 NPCO secured
locations, and 120 dozen frozen pizzas. The Initial Order will include the
requisite number of signs, pizza cutters, spices, business cards and NPCO's
bookkeeping system.

     In order to effectuate the Initial Order and become a distributor, the
initial payment due upon execution of this Agreement is US$8,500. Payment for
the Initial Order may be made by cashier's or certified check, money order or
bank draft. Payments thereafter may also be made by ordinary check.

     Distributor understands that NPCO makes no warranties, express or implied
with respect to the pizza ovens or pizzas. This agreement may not be modified
unless done so in writing and that no promises or representations have been made
by NPCO that are not expressly set forth herein or in the accompanying Business
Opportunity Disclosure document, a copy of which Distributor hereby acknowledges
receipt of. The Initial Order is non-cancelable and that any monies paid
hereunder are non-refundable.

Cont'd

                                  Page 2 of 3
<PAGE>
     Distributor is under no obligation to place any orders with NPCO for pizza
or other merchandise after completion of the Initial Order.

AGREED AND ACCEPTED:

NATIONAL PIZZA CORP.                     Distributor.

By:___________________________           ______________________________

Title:________________________

                                  Page 3 of 3Exhibit 4.1

                               SECURITY AGREEMENT
                      AND APPOINTMENT OF AGENT FOR HOLDERS

     This  Security  Agreement  and  Appointment  of  Agent  for  Holders  (this
"AGREEMENT")  is made and entered into as of January 25, 2002, by and among EBIZ
Enterprises,  Inc., a Nevada  corporation  ("EBIZ") and Jones Business  Systems,
Inc.  ("JBSI"),  a wholly owned  subsidiary of EBIZ,  (collectively  referred to
hereinafter  as the  "Borrower"),  the persons or to be identified on Schedule 1
from  time to time  (each a  "HOLDER"  and  collectively,  "HOLDERS")  and First
Financial Equity Corporation,  an Arizona corporation ("FFEC") as the collateral
agent,  acting in the manner and to the extent  described in this  Agreement for
the benefit of Holders.

                                    RECITALS

A. EBIZ and JBSI filed  separate  petitions for relief under Chapter 11 of Title
11 of the United States Bankruptcy Code (the "BANKRUPTCY  CODE") on September 7,
2001 in the United States Bankruptcy Court, District of Arizona (the "BANKRUPTCY
COURT") initiating two cases which have been ordered to be jointly  administered
(the "BANKRUPTCY CASE").

B. The  Canopy  Group  ("CANOPY")  holds a  properly  perfected  first  position
security interest in all of Borrower's  assets.  Canopy and FFEC intend to enter
into an Intercreditor  Agreement in order to address various matters relating to
the seniority of their relative  security  interests and their respective rights
to property serving as their collateral (the "INTERCREDITOR AGREEMENT").

C. Canopy and Borrower  entered into a Stipulation to Use Cash  Collateral  (the
"CASH COLLATERAL Stipulation") in the Bankruptcy Case.

D. Borrower is in need of additional  financing to  successfully  reorganize its
financial affairs,  propose and confirm a Plan of Reorganization and emerge from
bankruptcy.

E. Borrower is in the process of making a direct offering of collateralized debt
instruments  (the  "DIRECT  OFFERING")  to  other  companies,   institutions  or
individuals (the "HOLDERS"). Borrower and FFEC anticipate that the amount of the
Direct Offering shall be  $1,100,000.00,  and FFEC shall serve as the collateral
agent for the Holders as more fully set forth herein.  The Direct  Offering will
be structured to comply with  Sections 364 and 1145 of the  Bankruptcy  Code and
all  applicable  securities  laws.  It is the  intent  of the  parties  that the
exemptions from certain securities regulations provided by 11 U.S.C ss.ss.364(f)
& 1145(a), 15 U.S.C.  ss.77(c) and any other available securities law exemptions
shall be applicable to the Direct Offering.

F. Borrower desires to retain FFEC as its financial advisor and has or will seek
Bankruptcy  Court  approval to enter into a Financial  Advisory  Agreement  with
FFEC.

G. In connection with the Direct Offering,  Borrower has borrowed or will borrow
funds from Holders pursuant to various Direct Offering Promissory Notes in favor
of Holders with substantially  identical terms and conditions (each a "NOTE" and
collectively,  the "NOTES") and  Subscription  Agreements  with Holders  (each a
"SUBSCRIPTION AGREEMENT" and collectively,  the "SUBSCRIPTION AGREEMENTS") dated
concurrently  with this  Agreement.  The  minimum  amount of funds which must be
received by FFEC through the Direct Offering in order for the parties to proceed
<PAGE>
with  the  financing  transaction   contemplated  by  this  Agreement  shall  be
$300,000.00 (the "MINIMUM RAISE").

H. As security for the payment and  performance  of  Borrower's  obligations  to
Holders  arising  under the Direct  Offering and the Notes,  it is the intent of
Borrower to pledge to and create in favor of FFEC, as the collateral  agent, for
the benefit of Holders, a security interest in certain property of Borrower,  as
provided below.

I. Each Holder has executed or will execute a Subscription Agreement pursuant to
which such Holder has agreed to be bound by all of the terms and  conditions  of
this Agreement,  which is attached as an exhibit to each Subscription Agreement,
without actually executing this Agreement.

                                    AGREEMENT

     NOW, THEREFORE,  in consideration of the mutual covenants contained in this
Agreement, the parties agree as follows:

     1. GRANT OF  SECURITY  INTERESTS.  Subject  only to: (i) FFEC  successfully
obtaining  an amount of funds equal to or greater than the amount of the Minimum
Raise and actually  loaning  such amounts to Borrower;  and (ii) FFEC and Canopy
entering into the Intercreditor  Agreement, to secure payment and performance of
the obligations of Borrower to Holders under the Notes, Borrower grants to Agent
a security interest in all of the Collateral (as defined in Exhibit "A").

     2. AGENT

          2.1  APPOINTMENT.  Each  Holder  appoints  FFEC as  Agent  under  this
Agreement to protect and  preserve the  Collateral  and  irrevocably  authorizes
Agent to act as Agent of such  Holder  as  specified  in this  Agreement.  Agent
agrees to act as Agent upon the express conditions  contained in this Section 2.
In performing  its functions  and duties under this  Agreement,  Agent shall act
solely as Agent of  Holders  and does not assume and shall not be deemed to have
assumed any obligation  towards or  relationship  of agency or trust with or for
Borrower.

          2.2 POWERS; GENERAL IMMUNITY,  ETC. Each Holder irrevocably authorizes
Agent to take such action on his, her or its behalf and to exercise  such powers
under this Agreement as are specifically delegated to Agent by the terms of this
Agreement,  together  with such  powers  as are  reasonably  incidental  to such
powers.  Agent  shall  have  only  those  duties,  which are  specified  in this
Agreement and may perform such duties by or through its agents,  representatives
or  employees.  In  performing  its  duties on behalf of  Holders,  Agent  shall
exercise the same care it would  exercise in dealing with loans made for its own
account,  but shall not be  responsible  to any Holder for:  (a) the  execution,
effectiveness,   genuineness,   validity,   enforceability,   collectibility  or
sufficiency of all or any of the Notes; or (b) any representations,  warranties,
recitals or statements made in this Agreement,  in any written or oral statement
or any financial or other  statements,  instruments,  reports,  certificates  or
other  documents  furnished  or  delivered  by Agent to any  Holder on behalf of
Borrower,  or be  required  to  ascertain  or inquire as to the  performance  or
observance of any of the terms, conditions,  provisions, covenants or agreements
contained in this Agreement or the Notes or as to the use of the proceeds of the
Notes.  Agent shall not be  responsible  for insuring the  Collateral or for the
payment of any taxes, assessments,  charges or liens of any nature,  whatsoever,
upon the  Collateral.  Agent shall not be required to ascertain or inquire as to
the  existence  or possible  existence  of any Event of  Default,  as defined in

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<PAGE>
Section 9, or potential Event of Default,  unless Agent has actual  knowledge of
or has been  notified in writing of such Event of Default or potential  Event of
Default  by  Holders  or  Borrower.  Neither  Agent  nor  any of its  employees,
representatives  or agents  shall be liable to Holders  for any action  taken or
omitted under or in connection  with this Agreement or the Notes,  unless caused
by its or their gross  negligence  or willful  misconduct.  No provision of this
Agreement  or of any Note  shall be deemed to impose any duty or  obligation  on
Agent to perform any act or to exercise any power in any  jurisdiction  in which
it shall be  illegal,  or shall be deemed to impose  any duty or  obligation  on
Agent to perform any act or exercise any right or power if such  performance  or
exercise  would  subject Agent to a tax in a  jurisdiction  where it is not then
subject to a tax.  Without  prejudice to the  generality  of the  foregoing,  no
Holder shall have any right of action, whatsoever,  against Agent as a result of
Agent  acting  or  (where so  instructed)  refraining  from  acting  under  this
Agreement or any Note in  accordance  with the  instructions  of Holders.  Agent
shall be entitled to refrain from exercising any power,  discretion or authority
vested in it under this Agreement,  unless and until it has obtained the written
instructions of the Requisite Holders as defined below. Nevertheless,  Agent may
in the exercise of its discretion and based upon its business judgment take such
actions  or cause  its  attorneys  or agents to take  such  actions  that  Agent
believes to be in the interests of the Holders.  "REQUISITE  HOLDERS" shall mean
any  combination of Holders whose combined Pro Rata Share,  as defined below, of
the  aggregate  principal  amount  outstanding  under  the  Notes is equal to or
greater than  fifty-one  percent  (51%).  "PRO RATA SHARE"  shall mean,  for any
Holder,  the proportion  the principal  amount  outstanding  under such Holder's
Note(s) bears to the aggregate  principal  amount  outstanding  under all of the
Notes.

          2.3 REPRESENTATIONS AND WARRANTIES;  NO RESPONSIBILITY FOR INSPECTION.
Each Holder  represents  and warrants  that such Holder has made his, her or its
own independent investigation of the financial condition and affairs of Borrower
in connection with the making of the loans represented by the Notes and has made
and shall continue to make his, her or its own appraisal of the creditworthiness
of Borrower. Agent shall have no duty or responsibility either initially or on a
continuing basis to make any such  investigation or any such appraisal on behalf
of Holders or to provide  any Holder  with any credit or other  information  and
shall  further  have  no   responsibility   with  respect  to  the  accuracy  or
completeness of the information provided to Holders.

          2.4 RELIANCE BY AGENT.

               2.4.1  Agent may  consult  with  counsel it selects  and shall be
fully  authorized  and  protected  in respect of any action taken or suffered by
Agent under or in accordance  with this  Agreement in reliance on any opinion or
legal advice of such counsel;  provided,  however, that such counsel must not be
an employee of or affiliated with Agent or Borrower.  Agent shall have the right
at any time to seek instructions concerning the administration of the Collateral
from any court of competent jurisdiction.

               2.4.2  Agent may rely,  and shall be fully  protected  in acting,
upon  any  resolution,  statement,  certificate,  instrument,  opinion,  report,
notice, request,  consent, order, bond or other paper or document that it has no
reason to believe to be other than  genuine and to have been signed or presented
by the  proper  party or  parties  or,  in the case of  cables,  telecopies  and
telexes, to have been sent by the proper party or parties. In the absence of its
gross negligence or willful  misconduct,  Agent may conclusively rely, as to the
truth of the statements and the correctness of the opinions  expressed  therein,
upon any  certificates  or opinions  furnished  to Agent and  conforming  to the
requirements of this Agreement.

               2.4.3 Agent shall not be under any  obligation to exercise any of
the  rights or powers  granted  to Agent by this  Agreement  at the  request  or
direction of Holders,  unless  Holders shall have  provided  Agent with adequate

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<PAGE>
security and indemnity  against the costs,  expenses and liabilities that may be
incurred by it in compliance with such request or direction.

          2.5 RIGHT TO INDEMNITY.  Each Holder jointly and severally  agrees to:
(i) indemnify and hold Agent, and any person acting on behalf of Agent, harmless
from and against (in the absence of gross  negligence  or willful  misconduct on
the part of Agent or any person acting on Agent's behalf); and (ii) promptly, on
receipt by such Holder of Agent's statement,  reimburse Agent, according to such
Holder's Pro Rata Share, to the extent Agent has not been reimbursed by Borrower
on account of and for, any and all liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits,  costs,  expenses  (including,  without
limitation, the reasonable fees and disbursements of counsel and other advisors)
or  disbursements  of any kind or nature,  whatsoever,  with  respect to Agent's
performance of its duties under this  Agreement.  If any indemnity  furnished to
Agent for any purpose shall,  in the opinion of Agent, be insufficient or become
impaired, Agent may call for additional indemnity and cease, or not commence, to
do the acts indemnified against until such additional indemnity is furnished.

          2.6 AGENT'S REIMBURSEMENT. If an Event of Default or a potential Event
of Default shall have occurred and be continuing,  Agent shall have the right to
request from Holders  according to each  Holder's Pro Rata Share,  such funds as
Agent may reasonably  determine are necessary for the establishment of a fund on
which Agent may draw to pay any expenses  incurred by Agent in  connection  with
the  enforcement  of the rights and remedies  granted to Agent on its own behalf
and on behalf of Holders under this Agreement including, without limitation, all
reasonable attorneys' fees and expenses of other advisors retained by Agent, and
Agent may cease or not  commence to enforce any rights and  remedies  under this
Agreement if Holders fail to comply with any such  request.  Pursuant to Section
9, any proceeds  realized from the disposition of the Collateral  after an Event
of Default in accordance with Section 9 shall be applied first to the payment of
expenses  incurred  by Agent  in  obtaining,  taking  possession  of,  removing,
insuring, repairing, storing and disposing of the Collateral.

          2.7 RESIGNATION AND APPOINTMENT OF SUCCESSOR  AGENT.  Agent may resign
at any time by giving  thirty  (30) days'  prior  written  notice to Holders and
Borrower;  provided,  however,  that the retiring  Agent shall continue to serve
until a successor  Agent shall have been selected and approved  pursuant to this
Section  2.7.  Upon any such  notice,  the  Requisite  Holders  shall  appoint a
successor Agent. Upon the receipt of any required consents and the acceptance of
an  appointment  as an Agent under this  Agreement  by a successor  Agent,  such
successor Agent shall succeed to and become vested with all the rights,  powers,
privileges  and duties of the retiring  Agent,  and the retiring  Agent shall be
discharged  from its duties and  obligations  under  this  Agreement.  After any
retiring  Agent's  resignation as Agent,  the provisions of this Agreement shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it was Agent under this Agreement.

          2.8  CONFLICTS.  Agent  and  its  affiliates  may  lend  money  to and
generally engage in any kind of business with Borrower and any person who may do
business with or own securities of Borrower,  all as if Agent were not Agent and
without any duty to account to Holders or to  disclose  to Holders  confidential
information  which  Agent  may  receive  from  Borrower  or any such  person  in
connection with such other activity or business.

          2.9  COMMUNICATIONS.  Agent will  promptly  notify  each Holder of any
Event of Default or  potential  Event of Default of which Agent  becomes  aware.
Holders  agree that written  communications  from Agent to Borrower on behalf of
Holders that are within the scope of Agent's duties under this  Agreement  shall
be binding on all Holders.

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<PAGE>
          2.10 CARE OF COLLATERAL.  Agent shall exercise  reasonable care in the
custody and  preservation  of the  Collateral,  but shall have no  obligation to
initiate  any action  with  respect to, or  otherwise  inform  Borrower  of, any
conversion, call, exchange right, preemptive right, subscription right, purchase
offer or other right or privilege relating to or affecting the Collateral. Agent
shall have no duty to preserve the rights of Borrower  against adverse claims or
to protect the Collateral  against the possibility of a decline in market value.
Subject  to  Section 8, Agent  shall not be  obligated  to take any action  with
respect to the  Collateral  requested by Borrower  unless the request is made in
writing and Agent  determines  that the requested  action will not  unreasonably
jeopardize the value of the Collateral as security for the Notes.

          2.11  ESCROW OF FUNDS PRIOR TO MINIMUM  RAISE.  Prior to the date that
FFEC receives such funds from Holders that shall be equal to or greater than the
amount  of  the  Minimum   Raise,   FFEC  shall  retain  all  such  funds  in  a
noninterest-bearing  escrow  account  for the  benefit  of the  Holders  and the
Company  and  shall not  disburse  any  portion  of such  funds to the  Company.
Immediately  upon  determining  that it has  received  an amount  of funds  from
Holders  through the Direct Offering that is equal to or greater than the amount
of the Minimum Raise, FFEC shall disburse such funds to the Company.

     3. SPECIAL PROVISIONS CONCERNING ACCOUNTS RECEIVABLE; CONTRACT RIGHTS;
INSTRUMENTS.

          3.1 LEGENDS.  If Agent so directs,  Borrower shall place a legend,  in
form and  manner  reasonably  satisfactory  to  Agent,  on  Borrower's  accounts
receivable  and contracts,  as well as books,  records and documents of Borrower
evidencing or pertaining to the same with an  appropriate  reference to the fact
that such accounts receivable and contracts have been assigned to Agent and that
Agent has a security interest in them.

          3.2 DIRECTION TO ACCOUNT DEBTORS;  CONTRACTING PARTIES:  ETC. Upon the
occurrence of an Event of Default and, if Agent so directs, Borrower agrees: (a)
to cause all payments on account of Borrower's accounts receivable and contracts
to be made  directly to Agent;  and (b) that Agent may, at its option,  directly
notify the obligors  with respect to any such accounts  receivable  and/or under
any  contracts to make payments  with respect to such  accounts  receivable  and
contracts as provided in preceding  clause (a).  Without  notice to or assent by
Borrower, Agent may apply any or all amounts in the manner provided in Section 9
of this  Agreement.  The  costs  and  expenses  including,  without  limitation,
attorneys' fees, of collection,  whether incurred by Borrower or Agent, shall be
borne by Borrower.

     4.  BORROWER'S  REPRESENTATIONS  AND  COVENANTS.  Borrower  represents  and
covenants as follows:

          4.1 Borrower is the owner of the Collateral and the Collateral is free
from all liens,  adverse claims and other security  interests  (other than those
created by this  Agreement),  except that:  (a) the Collateral is subject to the
senior  perfected  security  interests  of  Canopy  and  certain  other  secured
creditors listed in the Bankruptcy Schedules filed by EBIZ and JBSI; (b) certain
contract,  lease and license  rights;  and (c) Borrower  shall have the right to
acquire equipment or other similar items in the future through purchase or lease
where the payment to the seller is secured by such  equipment  or other items or
is subject to the  interests of the lessor,  so long as such  equipment or other
items do not replace items of Collateral under this Agreement.

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<PAGE>
          4.2 No representation or warranty is made by Borrower with respect to:
(a)  the  value  of the  Collateral  as of the  date of  this  Agreement  or the
liquidation value of the Collateral in connection with a transfer, sale or other
disposition of the Collateral  pursuant to Section 10; or (b) the  assignability
of the contract rights and exclusive licenses referred to in Section 5.1.

          4.3 The  manufacturing  facilities  of  Borrower  are located at 13715
Murphy Road, Suite D, Stafford, Texas 77477. All inventory and equipment held on
the date of this  Agreement  by Borrower is located at that  location.  Borrower
agrees that all inventory and  equipment  now held or  subsequently  acquired by
Borrower  shall be kept at that same  business  address.  The  originals  of all
documents evidencing all accounts receivable and contract rights of Borrower and
the only  original  books of account and  records of  Borrower  relating to such
accounts  receivable  and contract  rights are, and will continue to be, kept at
Borrower's  chief  executive  office or at such new  locations  as Borrower  may
establish in accordance with this Section. Borrower will notify Agent in writing
prior to any  change in the  location  of its chief  executive  office or of any
change of Borrower's name or corporate  structure or of any proposed transfer of
any material item or portion of the  Collateral and will take at its expense all
action, satisfactory to Agent, to maintain the security interest of Agent in the
Collateral intended to be granted by this Agreement at all times fully perfected
and in full force and effect.  Notwithstanding the foregoing,  there shall be no
restriction  applicable  to  Borrower's  transfer of  inventory to the extent of
normal shipments to Borrower's customers (consistent with past practice).

          4.4 Except for sales of inventory in the ordinary  course of business,
Borrower  will not,  without the prior written  consent of Agent (which  consent
will  not  be  unreasonably  withheld),  sell,  transfer,  assign,  exchange  or
otherwise  dispose of the Collateral.  Except as to sales in the ordinary course
of  business  or  sales or  dispositions  in  connection  with  the  upgrade  of
Borrower's equipment, if the Collateral, or any material part of the Collateral,
is sold, transferred, assigned, exchanged, or otherwise disposed of in violation
of these  provisions,  the  security  interest  of Agent  shall  continue in the
proceeds of such Collateral,  notwithstanding such sale,  transfer,  assignment,
exchange or other disposition,  and Borrower will hold the proceeds thereof in a
separate  account  for  Agent's  benefit.  Borrower  will,  at Agent's  request,
transfer such proceeds to Agent in kind.

          4.5  Borrower  will  pay and  discharge  all  taxes,  assessments  and
governmental  charges and levies against the Collateral prior to delinquency and
will keep the Collateral free of all unpaid charges, whatsoever.

          4.6  Borrower  will use  reasonable  efforts to keep and  maintain the
Collateral in good  condition and repair.  Borrower will not misuse or abuse the
Collateral,  or waste or allow it to  deteriorate  except for ordinary  wear and
tear in its normal and expected use in Borrower's  business,  and will comply in
all material respects with all laws, statutes and regulations  pertaining to the
use or ownership of the Collateral.

          4.7 Borrower will maintain such insurance against loss of or damage to
items of equipment and other similar tangible  personal property included in the
Collateral as Borrower may deem necessary or advisable in its sole discretion.

          4.8 Agent shall have at all reasonable  times (a reasonable time being
deemed  to mean  normal  business  hours of  Borrower  and  based  upon at least
twenty-four  (24) hours oral or written  notice  from  Agent) the right to enter
into and upon any premises  where any of the  Collateral or records with respect
to the  Collateral  are located for the purpose of inspecting  the same,  making

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<PAGE>
copies of records, observing the use of any part of the Collateral, or otherwise
protecting its security  interest in the  Collateral;  provided,  however,  that
Agent shall not disrupt the operations of Borrower.

     5. FINANCING STATEMENTS.  Borrower agrees to sign and deliver to Agent such
financing  statements,  in a form acceptable to Agent, as Agent may from time to
time reasonably request or as are necessary or desirable in the opinion of Agent
to  establish  and  maintain  a  valid,  enforceable  security  interest  in the
Collateral  as  provided in this  Agreement  and the other  rights and  security
contemplated in this Agreement, all in accordance with the A.R.S.ss.47-9101,  ET
SEQ., or any other relevant law.  Borrower will pay any  applicable  filing fees
and related expenses.

     6.  POTENTIAL  CONVERSION  OR  EXCHANGE  OF  NOTES  PURSUANT  TO THE  PLAN;
ASSIGNMENT OF NOTES; ADDITIONAL HOLDERS.

          6.1 CONVERSION OR EXCHANGE.  The parties  acknowledge that the Plan of
Reorganization  (the  "PLAN") to be  proposed  by  Borrower  may provide for the
conversion  or exchange of all or part of the  aggregate  amount of debt due and
owing to Holders upon the  effective  date of that Plan into common stock of the
entity that shall be designated by the Plan as the "Reorganized Debtor," or that
the Plan may grant certain rights of conversion or exchange to each Holder.

          6.2 CANCELLATION OF DEBT UPON CONVERSION. After any such conversion or
exchange  under the Plan,  the amount due to each such  converting or exchanging
Holder shall be cancelled  and cease to be an  obligation  of Borrower but there
shall be no corresponding reduction in the Collateral except pursuant to Section
8.

          6.3 ASSIGNMENT OF NOTES & ADDITIONAL  HOLDERS. In the event any Holder
assigns or transfers  his, her or its Note or in the event there are  additional
Holders after the date of this  Agreement,  the transferee  and such  additional
Holders, as applicable, shall be required to agree in writing to be bound by all
of the terms and conditions of this Agreement and to agree that the Note of such
Holder or transferee shall be or remain subject to the terms of this Agreement.

     7. TERMINATION; RELEASE OF COLLATERAL.

          7.1 This Agreement, except for the rights and obligations contained in
Section 7 above,  shall terminate and Agent shall release and return to Borrower
such Collateral as has not been sold or otherwise  applied or released  pursuant
to this Agreement, together with any moneys at the time held by Agent under this
Agreement  upon the first to occur of: (a) payment in full of the Notes;  or (b)
conversion by all Holders of the Notes pursuant to the terms of the Plan.

          7.2 Upon  termination of this Agreement and in addition to the release
set forth in Section  8.1,  Agent  shall,  at  Borrower's  request and  expense,
execute and deliver to Borrower the proper  instruments  (including  one or more
Uniform Commercial Code Termination Statements on form UCC-3).

     8. EVENTS OF DEFAULT. The occurrence of one or more of the following events
(each an "Event of Default")  shall  constitute  an Event of Default  under this
Agreement:

          8.1 the  failure  of  Borrower  to pay when due  under any Note to any
Holder the  principal  or accrued  interest,  and such  failure  shall  continue
unremedied for thirty (30) or more calendar days;

                                       7
<PAGE>
          8.2 The failure of Borrower to perform any material obligation imposed
upon Borrower under this Agreement,  the Patent  Assignment or the  Subscription
Agreement;

          8.3 The breach by Borrower  of any  representation  contained  in this
Agreement;

          8.4 The conversion of the Bankruptcy Case to a case under Chapter 7 of
the Bankruptcy Code; or

          8.5 The  appointment,  at any time during the  Bankruptcy  Case,  of a
trustee, pursuant to 11 U.S.C. ss.1104.

          Upon the occurrence of any such Event of Default,  Agent shall, in the
exercise of its discretion or upon the written request of the Requisite Holders,
provide  Borrower  with a notice of said  Event of  Default  (the  "NOTICE")  by
serving a copy of the Notice to Borrower and Canopy at the  addresses  set forth
herein and in the manner(s). In the event that Borrower fails to cure that Event
of Default on or before ten (10)  business days after the receipt of the Notice,
Agent  shall be entitled  to: (a)  declare all Notes and all other  indebtedness
secured under this Agreement  immediately  due and payable;  (b) if permitted by
applicable  law,  transfer all or any part of the  Collateral  into the Holders'
names or the names of their nominees (and, if applicable, Borrower shall provide
such assistance as may be requested by Agent or Holders); (c) give all consents,
waivers and  ratifications  in respect of the  Collateral and otherwise act with
respect  to the  Collateral  as  though  Agent  were the  outright  owner of the
Collateral  (Borrower  hereby  irrevocably  constituting and appointing Agent as
Borrower's  proxy and  attorney-in-fact,  with full power of  substitution to do
so); and (d) exercise any or all other rights and remedies  granted to a secured
party under the provisions of the Arizona  Uniform  Commercial  Code,  including
without  limitation  the power to dispose of the Collateral by public or private
sale or to accept the Collateral in full payment of the Notes.

          Any proceeds  realized from the disposition of the Collateral shall be
applied first to the payment of expenses incurred by Agent in obtaining,  taking
possession  of,  removing,  insuring,  repairing,  storing and  disposing of the
Collateral  and then to the  payment to each  Holder of such  Holder's  Pro Rata
Share of such proceeds.  Any surplus proceeds shall be paid over to Borrower. In
the event such  proceeds  prove  insufficient  to  satisfy  all  obligations  of
Borrower  under the  Notes,  Borrower  shall  remain  liable  for the  resulting
deficiency.

     9.  COSTS  AND  EXPENSES.  All  costs and  expenses,  including  reasonable
attorneys' fees,  incurred by Agent in the exercise or enforcement of any right,
power or remedy  granted to it under this  Agreement  shall  become  part of the
indebtedness  secured under this  Agreement and shall  constitute a liability of
Borrower  payable  immediately  upon demand and bearing interest until paid at a
PER ANNUM rate equal to ten percent (10%).

     10.  APPLICABLE  LAW;  SUCCESSORS  AND  ASSIGNS.  This  Agreement  shall be
governed by and construed in  accordance  with the laws of the State of Arizona,
without giving effect to such State's  principles of conflicts of law, and shall
be binding upon the executors, administrators, heirs and assigns of the parties.

                                       8
<PAGE>
     11. NOTICES.  All notices,  consents,  waivers or demands of any kind which
any party to this  Agreement may be required or may desire to serve on any other
party in  connection  with  this  Agreement  shall be in  writing  and  shall be
delivered  by personal  service or sent by telecopy or  registered  or certified
mail,  return  receipt   requested,   with  postage  fully  prepaid.   All  such
communications shall be addressed as follows:

          IF TO BORROWER:

          EBIZ Enterprises, Inc.
          Jones Business Systems, Inc.
          c/o Bruce Parsons, President
          13715 Murphy Road, Suite D
          Stafford, TX  77477

     and to

          Christopher R. Kaup, Esq.
          TIFFANY & BOSCO, P.A.
          1850 North Central Avenue, Fifth Floor
          Phoenix, AZ  85004

          IF TO AGENT:

          First Financial Equity Corp.
          c/o George Fischer
          7373 North Scottsdale Road, Suite 162-B
          Scottsdale, AZ 85253

          IF TO HOLDERS: At the address for such persons in Agent's record
                         books.

          Except  as may  otherwise  be  provided  in this  Agreement,  all such
communications  shall be deemed to have been  received  and duly  given (a) when
transmitted by telecopier  with verified  receipt;  (b) two (2) days after being
delivered to an air courier (e.g.  Federal  Express) upon proof of delivery;  or
(c) five (5) days after being deposited  certified or registered  mail,  postage
prepaid. Any party may change his, her or its address for such communications by
giving notice to the other parties, as provided in this Section.

     12. SEVERABILITY.  If any provision of this Agreement is held to be invalid
under  applicable  law, then such  provision  shall be  ineffective  only to the
extent of such  invalidity,  and neither the remainder of such provision nor any
other provisions of this Agreement shall be affected by such invalidity.

     13. AMENDMENT.  This Agreement and any of its terms may be changed,  waived
or  terminated  only by a written  instrument  signed by the party  against whom
enforcement of such change, waiver or termination is sought; provided,  however,
that any provision of this Agreement that operates for the benefit of Holders as
a group may be waived as to (and shall be  binding  upon) all  Holders  with the
written consent of the Requisite Holders, but any one Holder's obligations under
this Agreement cannot be increased without such Holder's prior written consent.

                                       9
<PAGE>
     14.  MISCELLANEOUS.  No waiver of any term,  provision or condition of this
Agreement,  whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or  construed  as, a further or  continuing  waiver of any such
term,  provision or  condition,  or as a waiver of any other term,  provision or
condition of this Agreement.  This Agreement, the Notes, and the UCC-1 Financing
Statements,  together with their respective exhibits and schedules,  contain all
the  representations  and constitute the entire agreement of the Holders,  Agent
and  Borrower and  supersede  any and all prior  correspondence,  conversations,
negotiations,  agreements or  understandings  relating to the subject  matter of
this Agreement. This Agreement does not create any rights in parties who are not
a party to this  Agreement.  Each party agrees to cooperate fully with the other
parties and to sign such further instruments, documents and agreements as may be
reasonably  requested  by any other  party to better  evidence  and  reflect the
transactions  described in and  contemplated  by this Agreement and to carry out
the intents and purposes of this Agreement  including,  without limitation,  the
execution and delivery by Borrower of any instruments,  documents and agreements
necessary  to transfer  registration  rights  applicable  to the  Collateral  in
connection  with the transfer,  sale or other  disposition of all or any part of
the Collateral upon the occurrence of an Event of Default.

     IN WITNESS  WHEREOF,  this Agreement has been executed by the parties as of
the date first set forth above.

BORROWER:

EBIZ ENTERPRISES, INC.
JONES BUSINESS SYSTEMS, INC.

By
     --------------------------------
     Bruce Parsons
Its: President

AGENT:

FIRST FINANCIAL EQUITY CORP.

By
     --------------------------------
     George Fischer
Its: President

HOLDER:

--------------------------------
Print or type Name below:

--------------------------------

--------------------------------

--------------------------------

                                       10

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