SUBSIDIARY INTELLECTUAL PROPERTY SECURITY AGREEMENT

 SUBSIDIARY  INTELLECTUAL  PROPERTY  SECURITY  AGREEMENT
                             AND  ASSIGNMENT

     THIS  SUBSIDIARY  INTELLECTUAL  PROPERTY  SECURITY AGREEMENT AND ASSIGNMENT
(this  "AGREEMENT")  is  made  this  18th day of August, 2000 by MERLIN SOFTWARE
TECHNOLOGIES,  INC.,  a  Nevada  corporation  (the  "GRANTOR"),  in favor of the
Holders  (as  set  forth  in  Schedule  V  hereto)  of the Notes (as hereinafter
defined)  (each  a  "SECURED  PARTY"  and  collectively  the "SECURED PARTIES").

W  I  T  N  E  S  S  E  T  H:
----------------------------

     WHEREAS,  Merlin  Software  Technologies  International,  Inc.,  a  Nevada
corporation  ("Merlin  International"), the Grantor and the Secured Parties have
entered  into  the Note and Warrant Purchase Agreement dated of even date hereof
(the  "PURCHASE  AGREEMENT"), for the purchase by the Holders of an aggregate of
up  to Two Million One Hundred Thousand Dollars ($2,100,000) principal amount of
Series A 10% Senior Secured Convertible Notes (the "NOTES") and up to a total of
1,520,000  Series A Warrants to Purchase Common Stock from Merlin International;

     WHEREAS,  under  the terms of the Notes and the Purchase Agreement, Grantor
desires,  pursuant to this Agreement, to grant to the Secured Parties a security
interest  in  the  assets  described  herein;  and

     WHEREAS,  a material part of the consideration given in connection with and
as  an inducement to the execution and delivery of the Purchase Agreement by the
Secured  Parties was the obligation of the Grantor to enter into this Agreement;

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
contained  herein,  the  parties  hereto  agree  as  follows:

     1.     GRANT  OF  SECURITY.  The Grantor hereby grants (subject to existing
liens) a continuing security interest in and collaterally assigns to the Secured
Parties,  all  of  the  following  (collectively,  the  "COLLATERAL"):

     (a)     Patents.  All  of  the Grantor's right, title and interest, whether
now  owned or hereafter acquired, in and to all United States issued patents and
patent  applications  (including  without  limitation  the  patents  and  patent
applications identified on Schedule I attached hereto and incorporated herein by
reference)  and  including the right to recover for all past, present and future
infringements  thereof  and  all  reissues,  divisions,  continuations,
continuations-in-part,  substitutes,  renewals,  and  extensions  thereof,  all
improvements thereon, and all other rights of any kind whatsoever of the Grantor
accruing  thereunder  or  pertaining  thereto  (collectively,  the  "PATENTS").

     (b)     Trademarks.  All  of  the  Grantor's  right,  title  and  interest,
whether now owned or hereafter acquired, in and to all United States trademarks,
trade  names,  trade  dress,  domain names, service marks, trademark and service
mark  registrations, and applications for trademark or service mark registration
and  any  renewals  thereof  (including without limitation each trademark, trade
name,  trade  dress,  domain  name,  registration  and application identified in
Schedule  II attached hereto and incorporated herein by reference) and including
all income, royalties, damages and payments now and hereafter due and/or payable
with  respect  thereto  (including without limitation damages for past or future
infringements  thereof),  the  right  to  sue or otherwise recover for all past,
present  and  future  infringements  thereof,  all  rights corresponding thereto
throughout  the  world  (but  only such rights as now exist or may come to exist
under  applicable  local law) and all other rights of any kind whatsoever of the
Grantor  accruing  thereunder  or pertaining thereto, together in each case with
the  goodwill of the business connected with the use of, and symbolized by, each
such  trademark  and  service  mark  (collectively,  the  "TRADEMARKS").

     (c)     Copyrights.  All  of  the  Grantor's  right,  title  and  interest,
whether  now owned or hereafter acquired, in and to all United States copyrights
and  copyright  applications  (including  without  limitation the copyrights and
copyright  applications  identified  on  Schedule  III  attached  hereto  and
incorporated  herein  by  reference)  and including the right to recover for all
past,  present  and  future  infringements  thereof and all reissues, divisions,
continuations,  continuations-in-part,  substitutes,  renewals,  and  extensions
thereof,  all  improvements thereon, and all other rights of any kind whatsoever
of  the  Grantor  accruing  thereunder  or pertaining thereto (collectively, the
"COPYRIGHTS").

     (d)     Licenses.  All  license agreements regarding Patents, Trademarks or
Copyrights  (other  than "off the shelf" software) with any other party, whether
the  Grantor  is  a  licensor  or  licensee  under  any  such  license agreement
(including without limitation the licenses listed on Schedule IV attached hereto
and  incorporated  herein by reference), and the right to prepare for sale, sell
and  advertise for sale, all inventory now or hereafter owned by the Grantor and
now  or  hereafter  covered  by  such  licenses (collectively, the "LICENSES")).

     (e)     All  proceeds  of  any  of  the  foregoing.

     In addition, the Grantor has executed in blank and delivered to the Secured
Parties  an  assignment  of  the  Licenses  and  federally  registered  Patents,
Trademarks  and  Copyrights  (the "SUBSIDIARY IP ASSIGNMENT") owned by it in the
form  of Exhibit A hereto.  The Grantor hereby authorizes the Secured Parties to
complete  as  Assignee  and  record  with the United States Patent and Trademark
Office  (the  "PATENT  AND  TRADEMARK  OFFICE")  and the United States Copyright
Office  (the  "COPYRIGHT  OFFICE")  each  Subsidiary  IP  Assignment  upon  the
occurrence  of  an  Event  of  Default  (as such term is defined herein) that is
continuing at the time of filing.  "EVENT OF DEFAULT" shall have the meaning set
forth  in  Section  2  of  the  Notes.

     2.     SECURITY FOR OBLIGATIONS.  The security interests granted under this
Agreement  (the  "SECURITY  INTERESTS") by the Grantor secure the payment of all
Obligations  of  the  Merlin

     International  (as  such  term  is  defined  herein).  The "OBLIGATIONS" of
Merlin  International  shall  mean  the  prompt  payment  when due or within any
applicable  grace  period,  whether  at  stated  maturity,  by  acceleration  or
otherwise  and  at  all  times  thereafter  of any and all obligations of Merlin
International  owed  to  the  Secured  Parties under the Purchase Agreement, the
Notes  and the Related Documents irrespective of any change of the time, manner,
or  place  of  payment.

     The Security Interests granted by this Agreement are granted in conjunction
with  the  security  interests granted to the Secured Parties in other assets of
the  Grantor  under  the  Subsidiary  Security Agreement dated even date hereof.

     3.     COLLATERAL  ASSIGNMENT.  In  addition  to, and not in limitation of,
the  grant  of the Security Interests in the Patents, Trademarks, Copyrights and
Licenses  in  Section  1  above,  the Grantor hereby grants, assigns, transfers,
conveys  and sets over to the Secured Parties, the Grantor's entire right, title
and  interest  in  and  to  the  Patents,  Trademarks,  Copyrights and Licenses;
provided,  that  such  grant,  assignment,  transfer and conveyance shall become
effective only at the election of the Secured Parties after the occurrence of an
Event  of  Default that is continuing at the time of such election.  The Grantor
hereby  agrees  that after the effectiveness of such grant, assignment, transfer
and  conveyance  of  any of the Patents, Trademarks, Copyrights and License, the
use  by  the  Secured Parties of any of such Patents, Trademarks, Copyrights and
Licenses  shall  be without any liability for royalties or other related charges
from  the  Secured  Parties  to  the  Grantor.

     4.     FURTHER  ASSURANCES.

     (a)     The  Grantor  agrees  that from time to time, at the expense of the
Grantor,  the  Grantor will promptly execute and deliver all further instruments
and documents and take all further actions that may be necessary or desirable in
the  Secured  Parties' reasonable determination, or that the Secured Parties may
reasonably  request,  in order to (i) continue, perfect and protect any Security
Interest  granted  or  purported  to  be granted hereby, (ii) enable the Secured
Parties,  for  the benefit of the Secured Parties, to exercise and enforce their
rights  and  remedies  hereunder  with  respect  to  any part of the Collateral.
Without  limiting  the generality of the foregoing, the Grantor will execute and
file  (with  the  appropriate  governmental  offices,  authorities, agencies and
regulatory  bodies  in the United States) such supplements to this Agreement and
such financing or continuation statements, or amendments thereto, and such other
instruments  or  notices, including executed Subsidiary IP Assignments, with the
Patent  and  Trademark  Office  and the Copyright Office, as may be necessary or
desirable, or as the Secured Parties may reasonably request, in order to perfect
and  preserve  the  Security  Interests  granted  hereby.

     (b)     The  Grantor  hereby  authorizes  the  Secured  Parties,  upon  the
occurrence  and  during  the continuation of an Event of Default, to file, where
permitted  by  law,  one  or  more  financing  or  continuation  statements, and
amendments  thereto,  relative  to all or any part of the Collateral without the
signature  of the Grantor.  A carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall  be  sufficient  as  a  financing  statement  where  permitted  by  law.

     (c)     The  Grantor will furnish to the Secured Parties, from time to time
statements  and  schedules further identifying and describing the Collateral and
such  other reports in connection with the Collateral as the Secured Parties may
reasonably  request,  all  in  reasonable  detail.

     (d)     The  Grantor  agrees  that  should  it  have or obtain an ownership
interest  in  any  United  States  patent  or patent application that is not now
identified on Schedule I, any trademark or trademark application that is not now
identified  on Schedule II or any copyright or copyright application that is not
now  identified  on  Schedule  III  or  any  license agreement in respect of any
patent,  trademark  or copyright that is not now identified on Schedule IV:  (i)
the  provisions  of  this  Agreement shall automatically apply to such item, and
such  item  shall  automatically become part of the Collateral; (ii) the Grantor
shall,  within  three months after acquiring or becoming aware of such ownership
interest,  (A)  give  written  notice  thereof  to the Secured Parties, (B) with
respect  to  Trademarks  and  Patents,  cause  such Trademarks and Patents to be
properly  registered  with  the Patent and Trademark Office, (C) with respect to
Copyrights,  cause  such  Copyrights to be registered with the Copyright Office,
and (D) file all documents that are known by the Grantor to be necessary or that
the Secured Parties reasonably request in order to perfect the Security Interest
of  the  Secured Parties therein; provided, however, that so long as no Event of
Default  shall  have occurred and be continuing, the registration obligations of
the  Borrower  pursuant  to subsections (ii)(B) and (ii)(C) of this Section 4(d)
shall  be  limited  to  those  that  are  consistent with the Grantor's business
judgement  and  actual  use  of  such  Trademarks,  Patents  and  Copyrights.

     (e)     The  Grantor  agrees:  (i)  to  take  all  necessary  steps  in any
proceeding  before  the  Patent and Trademark Office, the Copyright Office or in
any  court,  to  maintain  and  pursue  each patent application now or hereafter
included  in  the  Collateral and to maintain each material patent, trademark or
copyright  now  or hereafter included in the Collateral, including the filing of
divisional,  continuation, continuation-in-part and substitute applications, the
filing  of  applications  for  reissue,  renewal  or  extensions, the payment of
maintenance  fees,  and  the  participation  in  interference,  reexamination,
opposition  and  cancellation proceedings; (ii) to take corresponding steps with
respect  to  material  unpatented  inventions  on  which  the  Grantor is now or
hereafter  becomes  entitled  to  seek  protection;  (iii)  to bear any expenses
incurred  in  connection with such activities; and (iv) not to abandon any right
to  file  a  material  patent  application,  or  abandon  any  material  pending
application  with  respect  to  any of the Collateral, without the prior written
consent  of  the Secured Parties; provided, however, that so long as no Event of
Default  shall  have occurred and be continuing, the requirements of the Grantor
pursuant  to  subsections (i) and (ii) of this Section 4(e) shall be governed by
the  Grantor's business judgement and actual use of such Trademarks, Patents and
Copyrights.

     (f)   The Grantor shall not do any act or omit to do any act whereby any of
the  Collateral  may become dedicated or abandoned, except where such dedication
or  abandonment (i) will not materially adversely affect the business, condition
(financial  or

     otherwise), operations, performance, or properties of the Grantor or Merlin
International  taken  as  a  whole,  and  (ii)  is in the ordinary course of the
Grantor's  business.  The  Grantor agrees to notify the Secured Parties promptly
and  in  writing if it learns that any of the Collateral may become abandoned or
dedicated  or of any adverse determination or any development (including without
limitation the institution of any proceeding in the Patent and Trademark Office,
the  Copyright  Office,  or  any  court)  regarding  any  material  part  of the
Collateral.

     (g)     The  Grantor agrees that in the event that any of the Collateral as
to  which  it has granted the Security Interests is infringed or misappropriated
by  a  third  party,  the  Grantor shall promptly notify the Secured Parties and
shall  take  all  reasonable  steps  to  terminate  the  infringement  or
misappropriation,  and  take  such  other  actions  as  the  Grantor  shall deem
appropriate  under  the  circumstances  to  protect  such  Collateral; provided,
however,  that  so  long  as  no  Event  of  Default  shall have occurred and be
continuing,  the  termination of infringement or misappropriation obligations of
the  Grantor  described  in  this  sentence  shall  be limited to those that are
consistent  with  the  Grantor's  business  judgement  and  actual  use  of such
Collateral.  Any  expense  incurred  in connection with such activities shall be
borne  by  the  Grantor.

     (h)     The  Grantor  agrees  (i)  to  maintain  the quality of any and all
products  in  connection  with which the Collateral is used, consistent with the
quality standards established by the Grantor for said products as of the date of
determination,  and  (ii)  to  provide  the  Secured  Parties, quarterly, with a
certificate  of  an  officer  of the Grantor certifying the Grantor's compliance
with  the  foregoing  subsections  4(a)through  4(i).

     (i)     The  Grantor  shall  continue  to  mark its products as required by
statute  with  the  numbers  of  all  appropriate  Patents.

     5.     GENERAL  REPRESENTATIONS AND WARRANTIES.  The Grantor represents and
warrants  as  follows:

     (a)     It  has  the  unqualified right to enter into this Agreement and to
perform  its  terms  and  to  grant all the rights, titles and interests granted
herein.

(b)     No authorization, consent, approval or other action by, and no notice to
or  filing  with,  any  governmental  authority  or regulatory body or any other
Person  is  required  either  (i)  for  the grant by the Grantor of the Security
Interests  granted  hereby  (excluding  such  licenses  which,  by  their terms,
required  the  consent of the licensor to assign the license but as to which the
Grantor represents and warrants such consent has been made in writing, copies of
which have been delivered to the Secured Parties) or for the execution, delivery
or  performance  of this Agreement by the Grantor, or (ii) for the perfection of
or  the exercise by the Secured Parties, of their rights and remedies hereunder,
except  for  the  filing of this Agreement with the Patent and Trademark Office,
the  Copyright Office and the filings required by the Uniform Commercial Code or
the  British  Columbia  Personal  Property

     Security  Act  of the State or province, respectively, in which the Grantor
maintains its chief executive office, and except to the extent that the exercise
of  rights and remedies may be limited by any applicable bankruptcy, insolvency,
reorganization,  moratorium or similar law affecting creditors' rights generally
or  by  general  principles  of  equity.

     (c)     The  execution,  delivery  and  performance  by the Grantor of this
Agreement  does  not and will not contravene any contractual restriction binding
on  or  affecting  the  Grantor  or  any of its properties that has a reasonable
likelihood  of  having  a  Material  Adverse  Effect.

     (d)     This  Agreement has been duly executed and delivered by the Grantor
and  is a legal, valid and binding obligation of the Grantor enforceable against
the  Grantor  in  accordance  with  its terms, except as such enforcement may be
limited  by  applicable  bankruptcy, insolvency, reorganization or other similar
laws  relating  to  or limiting creditors' rights generally or by general equity
principles.

     (e)     To  the  best  of  the Grantor's knowledge, the Collateral does not
infringe  any  rights  owned  or  possessed  by  any  third  party.

     (f)     To  the  best  of  the  Grantor's  knowledge,  there are no claims,
judgments  or  settlements  to  be  paid  by  the  Grantor  or pending claims or
litigation  relating  to  the  Collateral.

     (g)     Set  forth on Schedule IV is a list, which is complete and accurate
in  all  material  respects  as  of  the date hereof, of Licenses of the Grantor
necessary  for the conduct of its business as currently conducted or used in the
selling or marketing of the Grantor's products, including the expiration date of
such  Licenses.

     (h)     Each  License  of  the Grantor identified on Schedule IV is validly
subsisting  and  has  not been adjudged invalid or unenforceable, in whole or in
part,  and  is, to the Grantor's knowledge, valid and enforceable.  No action or
proceeding  is  pending  or,  to  the Grantor's knowledge, threatened seeking to
limit,  cancel  or  question  the  validity  of  Collateral.

     (i)     The Grantor's products have been marked as required by statute with
respect  to  the  Collateral.

     (j)     The  actions  contemplated  under or in connection with the Related
Documents (as defined in the Purchase Agreement) will not impair the legal right
of  the  Grantor  or  Merlin  International  to  use  any  of  the  Collateral.

     (k)     Except  as disclosed to the Secured Parties in writing prior to the
date  of  this  Agreement,  the Grantor has no knowledge of the existence of any
right under any patent, trademark, license agreement, trade  name, trade secret,
know-how,  confidential  research,  development  and  commercial information, or
other  proprietary  information  held  by  any  other

     Person  that  would  preclude  the  Grantor  or  Merlin  International from
publishing,  distributing,  marketing,  selling,  or using any product currently
made  by it, being made for it or sold or used by it, imported by it or exported
by it, as the case may be, or to use any processes currently used by it (except,
in each case, to the extent that the Grantor has granted an exclusive license to
another  Person),  or  materially  interfere  with the ability of the Grantor to
carry  on its business as currently carried on, and the Grantor has no knowledge
of  any  claim  to  the  contrary  that  is  likely  to  be  made.

     (l)     The  Grantor  has  used  consistent  standards  of  quality  in
manufacturing,  distribution and marketing of each product sold and provision of
each  service  provided  under  any  Trademark.

     6.     PATENT  REPRESENTATIONS  AND WARRANTIES.  The Grantor represents and
warrants  as  follows:

     (a)     It  is the sole legal and beneficial owner of the Patents set forth
opposite  its  name  on  Schedule I hereto, free and clear of any lien, security
interest,  option,  charge,  pledge, assignment (whether conditional or not), or
any  other encumbrance except for the Security Interests created or permitted by
this  Agreement,  the  Purchase  Agreement, the Notes, the Related Documents and
certain  Licenses and registered user agreements described on Schedule IV and no
effective financing statement or other instrument similar in effect covering all
or  any  part of such Collateral is on file in any recording office, except such
as  may  have  been  filed  in  favor  of  the  Secured  Parties.

     (b)     Set  forth  on  Schedule I is a list of all of the Patents owned by
the  Grantor necessary for the conduct of its business as currently conducted or
used  in  the  selling  or  marketing  of  the  Grantor's  products.

     (c)     Each  Patent  of  the  Grantor  identified  on Schedule I hereto is
subsisting  and has not been adjudged unpatentable, invalid or unenforceable, in
whole  or  in part, and to the knowledge of the Grantor is patentable, valid and
enforceable,  and  each of such Patent applications has been filed in conformity
with applicable rules and procedures of the Patent and Trademark Office and will
be  diligently prosecuted in conformity therewith so as not to become improperly
abandoned;  provided,  however,  that  so long as no Event of Default shall have
occurred  and  be  continuing,  the  filing  and  prosecution obligations of the
Grantor  described  in  this  Section  6(c)  shall  be limited to those that are
consistent  with  the  Grantor's  business  judgement  and  actual  use  of such
Collateral.

     7.     TRADEMARK  REPRESENTATIONS  AND  WARRANTIES.  The Grantor represents
and  warrants  as  follows:

(a)     It  is  the  sole, legal and beneficial owner of the entire right, title
and  interest  in and to the Trademarks purported to be granted by it hereunder,
free  and  clear  of  any  lien,  security  interest,  option,  charge,  pledge,
registered  user  agreement,  assignment  (whether

     conditional  or not), or covenant, or any other encumbrance, except for the
Security  Interests  created  or  permitted  by  this  Agreement,  the  Purchase
Agreement,  the Notes, the Related Documents and certain Licenses and registered
user  agreements  described on Schedule IV.  No effective financing statement or
other  instrument  similar  in effect covering all or any part of the Trademarks
purported  to  be  granted  by the Grantor hereunder is on file in any recording
office,  including,  without limitation, the Patent and Trademark Office, except
such  as  may  have  been  filed  in  favor  of  the  Secured  Parties.

     (b)     Set  forth  on Schedule II is a list of all of the Trademarks owned
by  the Grantor necessary for the conduct of its business as currently conducted
or  used  in  the  selling  or  marketing  of  the  Grantor's  products.

     (c)     Each  Trademark of the Grantor identified on Schedule II is validly
subsisting  and  has  not  been  abandoned or adjudged invalid, unregistrable or
unenforceable,  in  whole or in part, and is, to the Grantor's knowledge, valid,
registrable  and  enforceable.

     8.     COPYRIGHT  REPRESENTATIONS  AND  WARRANTIES.  The Grantor represents
and  warrants  as  follows:

     (a)     It  is  the  sole,  legal and beneficial owner of the entire right,
title  and  interest  in  and  to  the  Copyrights purported to be granted by it
hereunder,  free  and  clear  of  any  lien,  security interest, option, charge,
pledge,  registered  user agreement, assignment (whether conditional or not), or
covenant, or any other encumbrance, except for the Security Interests created or
permitted  by  this  Agreement,  the  Purchase Agreement, the Notes, the Related
Documents  and  certain  Licenses  and  registered  user agreements described on
Schedule  IV.  No  effective  financing statement or other instrument similar in
effect covering all or any part of the Copyrights purported to be granted by the
Grantor  hereunder  is  on  file  in  any  recording  office, including, without
limitation, the Copyright Office, except such as may have been filed in favor of
the  Secured  Parties.

     (b)     Set  forth on Schedule III is a list of all of the Copyrights owned
by  the Grantor necessary for the conduct of its business as currently conducted
or  materially  used  in  the  selling  or  marketing of the Grantor's products.

     (c)     Each Copyright of the Grantor identified on Schedule III is validly
subsisting  and  has  not  been  abandoned or adjudged invalid, unregistrable or
unenforceable,  in  whole  or in part, and is, to the Grantor's knowledge, valid
and  enforceable.

     9.     TRANSFERS  AND  OTHER  LIENS.  The  Grantor  shall  not:

    (a)   sell, assign (except  by operation of law) or otherwise dispose of any
of,  or grant any option with respect to, the Collateral, except as permitted by
the  Purchase  Agreement,  the  Notes and the Related Documents, except that the
Grantor  may  license the Collateral (i) in the ordinary course of the Grantor's
business,  provided  that  such  license  is

     necessary or desirable in the conduct of the Grantor's business, or (ii) in
connection  with a sale of assets in compliance with the Purchase Agreement, the
Notes  and  the  Related Documents, provided that such license shall be on terms
reasonably  expected  to  maximize  the  gain  to the Grantor resulting from the
granting  of such license.  The Secured Parties shall execute any documents that
the  Grantor  may  reasonably request in order to permit the Grantor to exercise
its right hereunder to license the Collateral, provided that the Secured Parties
shall not be required to do anything that may, in the reasonable judgment of the
Secured  Parties,  adversely  affect  the validity of the Security Interests; or

     (b)     take any other action in connection with any of the Collateral that
would  impair  the  value  of  the  interest  or  rights  of  the Grantor in the
Collateral  taken  as a whole or that would impair the interest or rights of the
Secured  Parties.

     10.     SECURED  PARTIES  APPOINTED ATTORNEY-IN-FACT.  Without limiting any
other  provision  of  this  Agreement,  upon  the  occurrence  and  during  the
continuance  of an Event of Default, the Grantor hereby irrevocably appoints the
Secured  Parties,  as the Grantor's attorney-in-fact, with full authority in the
place and stead of the Grantor and in the name of the Grantor or otherwise, from
time  to  time  in  the  Secured  Parties  discretion, to take any action and to
execute any instrument that the Secured Parties may reasonably deem necessary or
advisable  to  accomplish  the  purposes  of  this  Agreement, including without
limitation:

     (a)     to  ask, demand, collect, sue for, recover, compromise, receive and
give  acquittance  and  receipts  for  moneys  due and to become due under or in
respect  of  any  of  the  Collateral;

     (b)     to  receive,  endorse  and collect any drafts or other instruments,
documents  and  chattel  paper  in  connection  with  clause  (a)  above;

     (c)     to  file any claims or take any action or institute any proceedings
that  the  Secured  Parties  may  reasonably deem necessary or desirable for the
collection  of  any  of the Collateral or otherwise to enforce the rights of the
Secured  Parties,  with  respect  to  any  of  the  Collateral;  and

     (d)     to  execute, in connection with the sale provided for in Section 13
hereof,  any  endorsement,  assignments,  or  other instruments of conveyance or
transfer  with  respect  to  the  Collateral.

     11.     SECURED  PARTIES  MAY  PERFORM.

     (a)     If the Grantor fails to perform any agreement contained herein, the
Secured Parties may itself perform, or cause performance of, such agreement, and
the  expenses  of  the Secured Parties incurred in connection therewith shall be
payable  by  the  Grantor  to  the  fullest  extent permitted by applicable law.

     (b)     The  Secured Parties or their designated representatives shall have
the  right  to the extent reasonably requested and upon reasonable prior notice,
at any reasonable time during normal business hours of the Grantor and from time
to  time,  to inspect the Grantor's premises and to examine the Grantor's books,
records  and  operations  relating  to  the  Collateral.

     12.     THE  SECURED  PARTIES' DUTIES.  The powers conferred on the Secured
Parties  hereunder  are solely to protect the interest of the Secured Parties in
the  Collateral  and  shall  not  impose any duty upon them to exercise any such
powers.  Except  for  the safe custody of any Collateral in their possession and
the  accounting  for moneys actually received by them hereunder no Secured Party
shall  have  any  duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against other parties or any other rights pertaining to
any Collateral.  Each Secured Party shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if such
Collateral  is  accorded  treatment substantially equal to that which such party
accords  its  own  similar  property.

     13.     REMEDIES  UPON  AN  EVENT OF DEFAULT.  If an Event of Default shall
have  occurred  and  be  continuing:

     (a)  Secured Parties may exercise in respect of the Collateral, in addition
to  other  rights and remedies provided for herein or otherwise available to it,
all  the  rights  and remedies of a secured party upon default under the Uniform
Commercial  Code  as in effect in the State of New York (the "UCC") and also may
(i) exercise any and all rights and remedies of the Grantor under, in connection
with,  or otherwise in respect of, such Collateral, including the completion and
filing  of  the  Subsidiary  IP Assignment, (ii) require the Grantor to, and the
Grantor  hereby  agrees  that  it  will  at  its expense and upon request of the
Secured  Parties forthwith, assemble all or part of the documents embodying such
Collateral  as  directed  by  the  Secured  Parties and make it available to the
Secured  Parties,  at  a  place  to be designated by the Secured Parties that is
reasonably  convenient to both the Secured Parties and the Grantor, (iii) occupy
any  premises  owned  or  leased  by  the Grantor where documents embodying such
Collateral or any part thereof are assembled for a reasonable period in order to
effectuate  the  Secured  Parties'  rights  and  remedies  hereunder  or  under
applicable law, without obligation to the Grantor in respect of such occupation,
(iv)  license  such Collateral or any part thereof, (v) with notice as specified
below, sell such Collateral or any part thereof in one or more parcels at public
or  private sale, at any of the Secured Parties' offices or elsewhere, for cash,
on  credit  or  for  future  delivery,  and upon such other terms as the Secured
Parties  may  deem commercially reasonable, and (vi) without prior notice to the
Grantor,  direct  any  licensee of any Collateral to pay all royalties and other
payments  which  may  be  or  which may thereafter become payable to the Grantor
directly  to the Secured Parties or any designee of the Secured Parties, but the
Secured  Parties shall give notice to the Grantor of any such direction no later
than five (5) business days after giving any such direction.  The Grantor agrees
that  at  least  ten  (10)  days' business notice to the Grantor of the time and
place  of any public sale or the time after which any private sale is to be made
shall  constitute  reasonable  notification.  The  Secured  Parties shall not be
obligated  to  make  any  sale  of  the

     Collateral  regardless  of  notice  of sale having been given.  The Secured
Parties may adjourn any public or private sale from time to time by announcement
at  the time and place fixed therefor, and such sale may, with further notice to
the  Grantor,  be  made  at  the  time  and  place to which it was so adjourned.

     (b)     All  payments  received  by the Grantor under or in connection with
the  Collateral  shall  be  received  in  trust  for  the benefit of the Secured
Parties,  shall  be  segregated  from  other  funds  of the Grantor and shall be
immediately  paid  over  to  the Secured Parties in the same form as so received
(with  any  necessary  endorsement).

     (c)     All  payments  made  under  or  in  connection with or otherwise in
respect of the Collateral, and all cash proceeds received by the Secured Parties
in respect of any sale of, collection from, or other realization upon all or any
part  of  such Collateral may, in the discretion of the Secured Parties, be held
by  the  Secured  Parties, as collateral for, and then or at any time thereafter
applied  for  the ratable benefit of the Secured Parties against all or any part
of  the  Obligations.  Any  sale  or other disposition of the Collateral and the
possession  thereof  by  the  Secured  Parties  shall  be in compliance with all
provisions  of  applicable  law  (including  applicable  provisions of the UCC).

     14.     AMENDMENTS,  ETC.  No  amendment or waiver of any provision of this
Agreement  nor  consent  to  any departure by the Grantor therefrom shall in any
event be effective unless the same shall be in writing and signed by the Secured
Parties, and then such waiver or consent shall be effective only in the specific
instance  and  for  the  specific  purpose  for  which  given.

     15.     CONTINUING  SECURITY  INTEREST.

     (a)     This  Agreement  shall create a continuing Security Interest in the
Collateral  and  shall  remain  in  full  force  and  effect until terminated in
accordance  with  the  provisions  of  Section  22  hereof.

     (b)     Except  as permitted hereby or by the Purchase Agreement, the Notes
and  the  Related  Documents,  the  Grantor  shall  not sell, lease, transfer or
otherwise  dispose  of  any item of Collateral during the term of this Agreement
without  the  prior  written consent of the Secured Parties to such sale, lease,
transfer  or  other  disposition.

     (c)     Upon  the  termination of this Agreement in accordance with Section
22 hereof, the Collateral shall be automatically released from the liens created
hereby,  all rights to the Collateral shall automatically revert to the Grantor,
and  this Agreement and all obligations of the Grantor hereunder shall terminate
without delivery of any instrument or performance of any act by any party.  Upon
such  termination  of  this  Agreement,  the  Secured Parties shall reassign and
redeliver  such  Collateral  then held by or for the Secured Parties and execute
and deliver to the Grantor such documents as Grantor shall reasonably request to
evidence  such  termination.

     16.     DEFINITIONS.  All  terms  used  herein and not specifically defined
shall be defined in accordance with the appropriate definitions appearing in the
Purchase  Agreement  and the Notes, and such definitions are hereby incorporated
herein  by  reference  and  made  a  part  hereof.

     17.     ENTIRE  AGREEMENT.  This  Agreement  constitutes  and expresses the
entire  understanding  between  the  parties  hereto with respect to the subject
matter  hereof,  and  supersedes  all  prior  agreements  and  understandings,
inducements,  commitments  or  conditions,  express or implied, oral or written,
except  as herein contained.  The express terms hereof control and supersede any
course  of  performance or usage of the trade inconsistent with any of the terms
hereof.  Neither  this  Agreement  nor  any  portion  or provision hereof may be
changed,  altered,  modified, supplemented, discharged, canceled, terminated, or
amended orally or in any manner other than by an agreement, in writing signed by
the  parties  hereto.

     18.     FURTHER  ASSURANCES.  The  Grantor  agrees at its own expense to do
such  further  acts  and  things,  and  to  execute  and deliver such additional
conveyances,  assignments,  financing statements, agreements and instruments, as
the  Secured  Parties  may at any time reasonably request in connection with the
administration  or enforcement of this Agreement or related to the Collateral or
any  part  thereof  or  in  order  better to assure and confirm unto the Secured
Parties  their  rights,  powers  and  remedies  hereunder.  The  Grantor  hereby
consents and agrees that the issuers of or obligors in respect of the Collateral
shall  be entitled to accept the provisions hereof as conclusive evidence of the
right of the Secured Parties, to exercise their rights hereunder with respect to
the  Collateral,  notwithstanding  any other notice or direction to the contrary
heretofore  or hereafter given by the Grantor or any other Person to any of such
issuers  or  obligors.

     19.     BINDING  AGREEMENT;  ASSIGNMENT.  This  Agreement,  and  the terms,
covenants,  conditions,  rights  and  remedies hereof, shall be binding upon and
inure to the benefit of the parties hereto, and to their respective heirs, legal
representatives,  successors  and  assigns;  provided, however, that the Grantor
shall  be  permitted  to assign any of its rights, powers, duties or obligations
under  this  Agreement  or any interest herein or in the Collateral, or any part
thereof,  or  otherwise pledge, encumber or grant any option with respect to the
Collateral,  or  any  part  thereof, or any cash or property held by the Secured
Parties  as  Collateral  under this Agreement, with the prior written consent of
the  Secured  Parties  which  consent  shall  not  be  unreasonably  withheld.

     20.     SEVERABILITY.  If  any  term  or  provision of this Agreement is or
shall  become  illegal,  invalid or unenforceable in any jurisdiction, all other
terms and provisions of this Agreement shall remain legal, valid and enforceable
in  such jurisdiction and such illegal, invalid or unenforceable provision shall
be  legal,  valid  and  enforceable  in  any  other  jurisdiction.

     21.     COUNTERPARTS; FACSIMILE SIGNATURES.  This Agreement may be executed
in any number of counterparts  and  by  different  parties  hereto  in  separate
counterparts,  each  of which when so executed shall be deemed to be an original
and  all  of  which  when  taken  together  shall  constitute  one  and the same
agreement.  This  Agreement,  once  executed by a party, may be delivered to the

     other  party  hereto  by facsimile transmission of a copy of this Agreement
bearing  the  signature  of  the  party  so  delivering  this  Agreement.

     22.     TERMINATION.  This  Agreement  and  all  obligations of the Grantor
hereunder  shall  terminate  once  the  Obligations  have  been  paid  in  full.

     23.     NOTICES.  Any  notice,  request or consent required hereunder or in
connection  herewith  shall  be  deemed  satisfactorily  given  if  in  writing
(including facsimile transmissions) and delivered by hand, U.S. mail (registered
or  certified  mail)  or  recognized  overnight  courier to the parties at their
respective addresses or telecopier number set forth in the Purchase Agreement or
such  other  addresses or telecopier numbers as may be given by any party to the
others  in  writing.

     24.     GOVERNING  LAW.  This  Agreement  shall  be  governed  as  to  its
validity,  interpretation and effect in accordance with the laws of the state of
Nevada,  except  as  required  by  mandatory provisions of law and except if the
validity  or  perfection  of  the  security  interest  hereunder,  or  remedies
hereunder, in respect of any particular collateral are governed by the laws of a
jurisdiction  other  than  Nevada.

     25.     WAIVER  OF JURY TRIAL.  Debtor and Secured Party hereby waive trial
by jury in any judicial proceeding to which they are parties involving, directly
or  indirectly,  any  matter (whether in tort, contract or otherwise) in any way
arising  out  of,  related  to,  or  connected  with  this  Agreement  and  the
relationships  established  hereunder.

     [SIGNATURE  PAGES  FOLLOW]

     IN  WITNESS  WHEREOF,  the  parties  have  duly  executed  this  Subsidiary
Intellectual  Property  Security  Agreement  and  Assignment on the day and year
first  written  above.

SECURED  PARTIES:                         GRANTOR:

NARRAGANSETT  I,  L.P.                    MERLIN  SOFTWARE  TECHNOLOGIES,  INC.

By:     /s/  Joseph  L.  Dowling          By:     /s/  Robert  Heller
        ------------------------                  -------------------
     Name:  Joseph  L.  Dowling                   Name:  Robert  Heller
     Title: Managing  Member                      Title: President

NARRAGANSETT  OFFSHORE,  L.P.
by  its  Investment  Manager,
Leo  Holding,  L.L.C.

By:     /s/  Joseph  L.  Dowling
        ------------------------
      Name:  Joseph  L.  Dowling
      Title: Managing  Member

PEQUOT  SCOUT  FUND,  L.P.
by  its  Investment  Advisor,
Pequot  Capital  Management,  Inc.

By:     /s/  David  J.  Malat
        ---------------------
     Name:  David  J.  Malat
     Title: Chief  Accounting  Officer

SDS  MERCHANT  FUND,  L.P.
by  its  Managing  Member,
SDS  Capital  Partners,  L.L.C.

By:     /s/  Steven  Derby
        ------------------
     Name:  Steven  Derby
     Title: Managing  Member

PROVINCE  OF  BRITISH  COLUMBIA     )
                                    )ss.
CANADA                              )

     Before me, the undersigned, a Notary Public in and for the county aforesaid
on  this  21st day of August 2000, personally appeared Robert Heller to me known
personally,  and  who,  being  by me duly sworn, deposes and says that he is the
President  of  Merlin Software Technologies, Inc., and that foregoing instrument
was signed on behalf of said corporation by authority of its Board of Directors,
and  said Robert Heller acknowledged said instrument to be the free act and deed
of  said  corporation.

/s/  Virgil  Z.  Hlus
---------------------
Notary  Public
My  commission  expires:  NA

Virgil  Z.  Hlus
Barrister  &  Solicitor
800  -  885  West  Georgia  Street
Vancouver,  B.C.  V6C  3H1
Telephone:  (604)  687-5700

     SUBSIDIARY  INTELLECTUAL  PROPERTY  SECURITY  AGREEMENT
     SIGNATURE  PAGE  2  OF  2

                                   SCHEDULE  I

                         Patents and Patent Applications
                         -------------------------------

Property                 Serial  No.            Filing  Date               Title
--------                 -----------            ------------               -----

United  States           Not  yet  assigned       May  30,  2000       Method of
Provincal Patent                                                      Developing
Application                                                                 Open
                                                                 Source Software

                                   SCHEDULE II

                      Trademarks and Trademark Applications
                      -------------------------------------

TRADEMARK  REGISTRATIONS/APPLICATIONS/UNREGISTERED  TRADEMARKS

                             JURISDICTION AND        FILING             DATE  OF
TRADEMARK                    SERIAL  NO.             DATE             FIRST  USE
---------                    -----------             ----             ----------

HOTWIRE  FAX                 US  75/810,582          Oct.  22, 1999   Oct., 1996

LINUX  FOR  THE  MASSES      US  75/008,115          Mar. 23, 2000   Feb.,  2000

MERLIN  SOFTECH              US  75/775,538          Sept. 10, 1999  Sept.  1999

MERLIN  SOFTWARE
TECHNOLOGIES, INC.           US 75/755, 753          July 20, 1999    June, 1999

MS-LINUX                     US  75/815,006          Oct. 22, 1999  Not used yet

MS-LINUX  &  Design          US  75/815,008          Oct. 22, 1999  Not used yet

OPTION  SOURCE               US  (not assigned)     May 26, 2000     March, 2000

PENGUIN  WIZARD  Design      US  75/755,755          July 20, 1999   Oct.,  1999

PERFECTBACKUP+               US75/815,000          Oct.  22,  1999  Jan. 7, 1999

SOFTWARE  THAT'S
PURE MAGIC                   US 75/755,754          July 20, 1999      Oct. 1999

PENGUIN WIZARD Design        CA 1,060,637          May 25, 2000       Oct., 1999

INTERNET  DOMAIN  NAMES                              REGISTRATION  AGENCY
-----------------------                              --------------------

MerlinSofTech.com                                 Network  Solutions,  Inc.

MerlinSofTech.net                                 Network  Solutions,  Inc.

option-source.com                                 Network  Solutions,  Inc.

option-source.net                                 Network  Solutions,  Inc.

option-source.org                                 Network  Solutions,  Inc.

theotheros.net                                    Network  Solutions,  Inc.

linuxeverywhere.org                               Network  Solutions,  Inc.

linuxeverywhere.net                               Network  Solutions,  Inc.

thelinuxpeople.net                                Network  Solutions,  Inc.

tuxware.net                                       Network  Solutions,  Inc.

tuxware.org                                       Network  Solutions,  Inc.

merlinux.net                                      Network  Solutions,  Inc.

merlinux.com                                      Network  Solutions,  Inc.

merlintuxware.com                                 Network  Solutions,  Inc.

thelinuxer.com                                    Network  Solutions,  Inc.

perfectbackup.com                                 Network  Solutions,  Inc.

perfectbackup.tc                                  register.com

merlintux.com                                     Network  Solutions,  Inc.

merlintux.net                                     Network  Solutions,  Inc.

                                  SCHEDULE III

                                   Copyrights
                                   ----------

UNREGISTERED  COPYRIGHTS

PerfectBACKUP+,  Linux  and  Unix  backup  software

HOTWIRE  FAX,  Linux  and  Unix  fax  software

FleetPro  II  Freight  Management  Software

BDI  Business  Directors,  Internet  Directory  Service

                      SCHEDULE  IV

                  License  Agreements

     Linux  Mall.com

     Impera  Software  Corp.

     Hanmi  Information  &  Communications  Co.  Ltd.

     Beyond  2000  Solutions

     LinuxPlaza

     IU  Software

     Ebiz  Enterprises  Inc.  (dba  TheLinusStore.com)

     Caldera  Systems,  Inc.

     Koch  Media  Ltd.  (dba  Koch  Distribution)

     G.T.  Enterprises

     TurboLinux,  Inc.

     Programmers  Paradise  Inc.

     Cosmos  Engineering  Co.

     Italsel  SRL

     Circadian  Software

     eLinux.com

                                   SCHEDULE V

                                     Holders

Narragansett  I,  L.P.

Narragansett  Offshore  Ltd.

Pequot  Scout  Fund,  L.P.

SDS  Merchant  Fund,  L.P.

                                    EXHIBIT A

                  SUBSIDIARY ASSIGNMENT OF PATENTS, TRADEMARKS,
                             COPYRIGHTS AND LICENSES

     THIS  SUBSIDIARY ASSIGNMENT OF PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
(this  "AGREEMENT")  is  made  as  of  this  18th  day of August, 2000 by MERLIN
SOFTWARE  TECHNOLOGIES,  INC.  (the  "GRANTOR")  in favor of the Holders (as set
forth  in Annex V hereof) of the Notes (as hereinafter defined) (each a "SECURED
PARTY"  and  collectively,  the  "SECURED  PARTIES").

                          W  I  T  N  E  S  S  E  T  H:
                          -----------------------------

     WHEREAS, pursuant to the Note and Warrant Purchase Agreement (the "PURCHASE
AGREEMENT")  dated  of  even  date  hereof the Secured Parties have purchased an
aggregate  of  up  to  Two  Million  Dollars  One  Hundred Thousand ($2,100,000)
principal  amount of Series A 10% Senior Secured Convertible Notes (the "NOTES")
and  up  to a total of 1,520,000 Series A Warrants to Purchase Common Stock from
Merlin  Software  Technologies International, Inc. ("MERLIN INTERNATIONAL"); and

     WHEREAS, pursuant to the terms of the Purchase Agreement and the Notes, the
Grantor  has  entered into a Subsidiary Intellectual Property Security Agreement
and  Assignment  (the  "SUBSIDIARY  IP  SECURITY  AGREEMENT") dated of even date
herewith,  pursuant  to  which  the Grantor has granted to the Secured Parties a
security  interest  in  the Trademarks, Copyrights, Licenses and Patents defined
below in order to secure Merlin International's obligations under the Notes; and

     WHEREAS,  the Grantor (a) has adopted and used and is using the trademarks,
service  marks and domain names (the "TRADEMARKS") identified on Annex I hereto,
and  is  the owner of the registrations of and pending registration applications
for  such Trademarks in the United States Patent and Trademark Office identified
on  Annex  I  hereto,  (b)  is  the  owner of and uses the copyrights, copyright
registrations and pending registration applications set forth on Annex II hereto
(the  "COPYRIGHTS"),  (c)  is  a  party to and has rights under the licenses and
license  agreements  listed  on Annex III hereto (the "LICENSES") and (d) is the
owner  of  and  uses  the patents, patent registrations and pending registration
applications  set  forth on Annex IV hereto (the "PATENTS" and together with the
Trademarks,  the  Copyrights  and  the  Licenses,  the  "COLLATERAL");  and

     WHEREAS,  the  Secured  Parties  desire  to  acquire  the  Trademarks,  the
Copyrights,  the  Licenses  and  the  Patents  and the registrations thereof and
registration  applications  therefor,  as  applicable,  in  connection  with the
exercise  of their remedies after the occurrence of an Event of Default, as such
term  is  defined  within  the  Subsidiary  IP  Security  Agreement,  under  the
Subsidiary  IP  Security  Agreement;

     NOW,  THEREFORE,  for  good and valuable consideration, receipt of which is
hereby  acknowledged, the Grantor does hereby assign, sell and transfer unto the
Secured  Parties  all  right,  title  and  interest  in  and  to the Trademarks,
Copyrights,  Licenses  and  Patents,  together with (i) the registrations of and
registration  applications  therefor,  as  applicable,  (ii) the goodwill of the
business  symbolized by and associated with the Trademarks and the registrations
thereof,  (iii)  the  right  to sue and recover for, and the right to profits or
damages  due  or accrued arising out of or in connection with, any and all past,
present  or  future  infringements  or  dilution  of  or damage or injury to the
Trademarks,  Copyrights, Patents or the registrations thereof or such associated
goodwill,  and  (iv)  all  rights  of  the  Grantor  to  enforce  all  Licenses.

     The  Grantor  hereby  grants  to  the Secured Parties, and notice is hereby
given  that  the  Grantor  has  granted to the Secured Parties, a first priority
security  interest  in  the  Collateral to secure the payment and performance in
full  of  all  of  the  obligations  of  Merlin  International  under the Notes.

     This  Assignment  is  made  pursuant  to  and  subject  to the terms of the
Subsidiary  IP  Security  Agreement, which is deemed incorporated herein by this
reference  and  shall  constitute  part of this Assignment as if fully set forth
herein.

     This Assignment is intended to and shall take effect as a sealed instrument
at  such  time  as the Secured Parties shall complete this instrument by signing
its  acceptance  of  this  Assignment  below.

     The  parties  agree to promptly execute and deliver all further instruments
necessary  or  desirable  to  carry  out  the  purposes  of  this  Agreement.

     This  Agreement  may  be  executed  in  any  number  of counterparts and by
different  parties  hereto  in  separate  counterparts,  each  of  which when so
executed  shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement.  This Agreement, once executed by a
party, may be delivered to the other party hereto by facsimile transmission of a
copy  of  this  Agreement  bearing the signature of the party so delivering this
Agreement.

     [Signature  page  follows]

     IN  WITNESS  WHEREOF,  the  parties  have  duly  executed  this  Subsidiary
Assignment  of  Patents, Trademarks, Copyrights and Licenses on the day and year
first  written  above.

GRANTOR:

MERLIN  SOFTWARE  TECHNOLOGIES,  INC.

     By:     /s/  Robert  Heller
             -------------------
             Name:  Robert  Heller
             Title:   President

     The  foregoing  assignment  of  the  Patents,  Trademarks,  Copyrights  and
Licenses and the registrations thereof and registration applications therefor by
Merlin Software Technologies, Inc. is hereby accepted as of the ___ day of ____,
20__.

SECURED  PARTIES:

NARRAGANSETT  I.,  L.P.

By:     /s/  Joseph  L.  Dowling
        ------------------------
      Name:  Joseph  L.  Dowling
      Title: Managing  Member

NARRAGANSETT  OFFSHORE  LTD.
by  its  Investment  Manager,
Leo  Holding,  L.L.C.

By:     /s/  Joseph  L.  Dowling
        ------------------------
     Name:  Joseph  L.  Dowling
     Title: Managing  Member

PEQUOT  SCOUT  FUND,  L.P.
by  its  Investment  Advisor,
Pequot  Capital  Management,  Inc.

By:     /s/  David  J.  Malat
        ---------------------
     Name:  David  J.  Malat
     Title: Chief  Accounting  Officer

SDS  MERCHANT  FUND,  L.P.
by  its  Managing  Member,
SDS  Capital  Partners,  L.L.C.

By:     /s/  Steven  Derby
        ------------------
     Name:  Steven  Derby
     Title: Managing  Member

                  SUBSIDIARY ASSIGNMENT OF PATENTS, TRADEMARKS,
                             COPYRIGHTS AND LICENSES

PROVINCE  OF  BRITISH  COLUMBIA     )
                                    )ss.
CANADA                              )

     Before me, the undersigned, a Notary Public in and for the county aforesaid
on  this  21st day of August 2000, personally appeared Robert Heller to me known
personally,  and  who,  being  by me duly sworn, deposes and says that he is the
President  of  Merlin Software Technologies, Inc., and that foregoing instrument
was signed on behalf of said corporation by authority of its Board of Directors,
and  said Robert Heller acknowledged said instrument to be the free act and deed
of  said  corporation.

/s/  Virgil  Z.  Hlus
---------------------
Notary  Public
My  commission  expires:  NA

Virgil  Z.  Hlus
Barrister  &  Solicitor
800  -  885  West  Georgia  Street
Vancouver,  B.C.  V6C  3H1
Telephone:  (604)  687-5700

                                       ANNEX  I

TRADEMARK  REGISTRATIONS/APPLICATIONS/UNREGISTERED  TRADEMARKS

                             JURISDICTION AND       FILING               DATE OF
TRADEMARK                    SERIAL  NO.            DATE              FIRST  USE
---------                    -----------            ----              ----------

HOTWIRE  FAX               US  75/810,582          Oct.  22, 1999     Oct., 1996

LINUX  FOR  THE  MASSES    US  75/008,115          Mar.  23,  2000   Feb.,  2000

MERLIN SOFTECH             US  75/775,538          Sept. 10,1999      Sept. 1999

MERLIN  SOFTWARE
TECHNOLOGIES, INC.         US  75/755, 753         July 20, 1999      June, 1999

MS-LINUX                   US  75/815,006          Oct.  22,  1999  Not used yet

MS-LINUX  &  Design        US  75/815,008          Oct.  22,  1999  Not used yet

OPTION  SOURCE             US  (not assigned)      May 26, 2000      March, 2000

PENGUIN  WIZARD  Design    US  75/755,755          July  20,  1999   Oct.,  1999

PERFECTBACKUP+             US  75/815,000          Oct.  22,  1999  Jan.7,  1999

SOFTWARE  THAT'S
PURE MAGIC                 US  75/755,754          July 20, 1999       Oct. 1999

PENGUIN WIZARD Design      CA  1,060,637           May 25, 2000       Oct., 1999

INTERNET  DOMAIN  NAMES                              REGISTRATION  AGENCY
-----------------------                              --------------------

MerlinSofTech.com                                 Network  Solutions,  Inc.

MerlinSofTech.net                                 Network  Solutions,  Inc.

option-source.com                                 Network  Solutions,  Inc.

option-source.net                                 Network  Solutions,  Inc.

option-source.org                                 Network  Solutions,  Inc.

theotheros.net                                    Network  Solutions,  Inc.

linuxeverywhere.org                               Network  Solutions,  Inc.

linuxeverywhere.net                               Network  Solutions,  Inc.

thelinuxpeople.net                                Network  Solutions,  Inc.

tuxware.net                                       Network  Solutions,  Inc.

tuxware.org                                       Network  Solutions,  Inc.

merlinux.net                                      Network  Solutions,  Inc.

merlinux.com                                      Network  Solutions,  Inc.

merlintuxware.com                                 Network  Solutions,  Inc.

thelinuxer.com                                    Network  Solutions,  Inc.

perfectbackup.com                                 Network  Solutions,  Inc.

perfectbackup.tc                                  register.com

merlintux.com                                     Network  Solutions,  Inc.

merlintux.net                                     Network  Solutions,  Inc.

                                    ANNEX II

                                   Copyrights

UNREGISTERED  COPYRIGHTS

PerfectBACKUP+,  Linux  and  Unix  backup  software

HOTWIRE  FAX,  Linux  and  Unix  fax  software

FleetPro  II  Freight  Management  Software

BDI  Business  Directors,  Internet  Directory  Service

                                    ANNEX III

                               License Agreements

     Linux  Mall.com

     Impera  Software  Corp.

     Hanmi  Information  &  Communications  Co.  Ltd.

     Beyond  2000  Solutions

     LinuxPlaza

     IU  Software

     Ebiz  Enterprises  Inc.  (dba  TheLinusStore.com)

     Caldera  Systems,  Inc.

     Koch  Media  Ltd.  (dba  Koch  Distribution)

     G.T.  Enterprises

     TurboLinux,  Inc.

     Programmers  Paradise  Inc.

     Cosmos  Engineering  Co.

     Italsel  SRL

     Circadian  Software

     eLinux.com

                                    ANNEX IV

                         Patents and Patent Applications

Property               Serial  No.              Filing  Date               Title
--------               -----------              ------------               -----

United States          Not yet assigned         May  30,  2000         Method of
Patent  Application                                                   Developing
                                                            Open Source Software

                                     ANNEX  V

                                     Holders

Narragansett  I,  L.P.

Narragansett  Offshore  Ltd.

Pequot  Scout  Fund,  L.P.

SDS  Merchant  Fund,  L.P. 

Basic Info X:

Name: SUBSIDIARY INTELLECTUAL PROPERTY SECURITY AGREEMENT
Type: Subsidiary Intellectual Property Security Agreement
Date: Jan. 10, 2001
Company: MERLIN SOFTWARE TECHNOLOGIES INTERNATIONAL INC
State: Nevada

Other info: