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

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