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

         THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
May ___,  2002, by VIDEOLOCITY  INTERNATIONAL  INC., a Nevada  corporation  (the
"Company");  CORNELL CAPITAL PARTNERS,  LP, a Delaware limited  partnership (the
"Investor");  BUTLER GONZALEZ LLP (the  "Investor's  Counsel");  and FIRST UNION
NATIONAL BANK, a national  banking  association,  as Escrow Agent hereunder (the
"Escrow Agent").


                                   BACKGROUND
                                   ----------

         WHEREAS,  the Company and the Investor have entered into an Equity Line
of Credit Agreement (the "Equity Line of Credit Agreement") dated as of the date
hereof, pursuant to which the Investor will purchase the Company's Common Stock,
par value $.001 per share (the  "Common  Stock"),  at a price per share equal to
the  Purchase  Price,  as that  term is  defined  in the  Equity  Line of Credit
Agreement, for an aggregate price of up to Twenty Million Dollars ($20,000,000).
The Equity  Line of Credit  Agreement  provides  that on each  Advance  Date the
Investor, as that term is defined in the Equity Line of Credit Agreement,  shall
deposit  the  Advance  pursuant to the  Advance  Notice in a  segregated  escrow
account to be held by Escrow Agent and the Company shall  deposit  shares of the
Company's Common Stock, which shall be purchased by the Investor as set forth in
the Equity Line of Credit Agreement,  with the Investor's  Counsel,  in order to
effectuate a disbursement  to the Company of the Advance by the Escrow Agent and
a  disbursement  to the Investor of the shares of the Company's  Common Stock by
Investor's  Counsel at a closing  to be held as set forth in the Equity  Line of
Credit Agreement (the "Closing").

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

         WHEREAS,  Investor's  Counsel has agreed to accept,  hold, and disburse
the shares of the Company's  Common Stock which have been  deposited  with it in
accordance with the terms of this Agreement.

         WHEREAS, in order to establish the escrow of funds and shares to effect
the provisions of the Equity Line of Credit  Agreement,  the parties hereto have
entered into this Agreement.

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

1.       Definitions.  All  capitalized  terms  used  herein  and not  otherwise
defined  herein,  shall have the same meaning  ascribed to them as in the Equity
Line of Credit  Agreement.  In  addition  the  following  terms  shall  have the
following meanings when used herein:

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

                                       1
<PAGE>

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

         c.  "Common  Stock  Joint  Written  Direction"  shall  mean  a  written
direction executed by the Investor and the Company directing  Investor's Counsel
to disburse all or a portion of the shares of the  Company's  Common Stock or to
refrain from taking any action pursuant to this Agreement.

2.       Appointment of and Acceptance by Escrow Agent and Investor's Counsel.
         ---------------------------------------------------------------------

         a. The Investor and the Company hereby appoint Escrow Agent to serve as
Escrow Agent  hereunder.  Escrow Agent hereby accepts such appointment and, upon
receipt by wire transfer of the Escrow Funds in accordance with Section 3 below,
agrees to hold,  invest and disburse the Escrow  Funds in  accordance  with this
Agreement.

         b. The Investor and the Company  hereby appoint  Investor's  Counsel to
serve as the holder of the shares of the  Company's  Common Stock which shall be
purchased by the Investor.  Investor's  Counsel hereby accepts such  appointment
and, upon receipt via D.W.A.C or the certificates  representing of the shares of
the Company's  Common Stock in accordance  with Section 3 below,  agrees to hold
and disburse the shares of the Company's  Common Stock in  accordance  with this
Agreement.

3.       Creation of Escrow Account/Common Stock Account.
         ------------------------------------------------

a. On or prior to the date of this Agreement the Escrow Agent shall establish an
escrow  account  for the  deposit  of the  Escrow  Funds  entitled  as  follows:
Videolocity  International  Inc./Cornell Capital Partners,  LP The Investor will
wire funds to the account of the Escrow Agent as follows:

Bank:                            First Union National Bank of New Jersey
Routing #:                       031201467
Account #:                       2020000659170
Name on Account:                 Butler Gonzalez LLP/First Union as Escrow Agent
Name on Sub-Account:             Videolocity International Inc./
                                 Cornell Capital Partners, LP Escrow account
Reference Sub-Account #:         1806-02
Attn:                            Robert Mercado (732) 452-3005
                                 Carmela Agugliaro (732) 452-3005
Note:                            Only wire transfers shall be accepted.

                                       2
<PAGE>

         b. On or prior to the date of this Agreement  Investor's  Counsel shall
establish an account for the D.W.A.C. of the shares of Common Stock. The Company
will D.W.A.C.  shares of the Company's Common Stock to the account of Investor's
Counsel as follows:

Brokerage Firm:                   Investec Ernst & Co.
Account #:                        400-07595
DTC #:                            0233
Name on Account:                  Butler Gonzalez LLP Escrow Account



4.       Deposits  into the Escrow  Account.
         -----------------------------------

         The Investor  agrees that it shall promptly  deliver all monies for the
payment  of the  Common  Stock to the  Escrow  Agent for  deposit  in the Escrow
Account.

5.       Disbursements from the Escrow Account.
         --------------------------------------

         a. At such time as Escrow Agent has collected and deposited instruments
of payment in the total  amount of the  Advance and the  Investor's  Counsel has
received  such Common Stock via D.W.A.C from the Company  which are to be issued
to the  Investor  pursuant  to the Equity Line of Credit  Agreement,  Investor's
Counsel  shall  notify the  Company  and the  Investor.  The  Escrow  Agent will
continue to hold such funds until the Investor and Company execute and deliver a
Joint Written Direction  directing the Escrow Agent to disburse the Escrow Funds
pursuant to Joint  Written  Direction  at which time the Escrow Agent shall wire
the Escrow  Funds to the  Company.  In  disbursing  such funds,  Escrow Agent is
authorized to rely upon such Joint Written Direction from Company and may accept
any signatory  from the Company  listed on the signature  page to this Agreement
and any  signature  from the  Investor  that Escrow  Agent  already has on file.
Simultaneous with delivery of the executed Joint Written Direction to the Escrow
Agent the  Investor and Company  shall  execute and deliver a Common Stock Joint
Written Direction to Investor's Counsel directing  Investor's Counsel to release
via  D.W.A.C  to the  Investor  the shares of the  Company's  Common  Stock.  In
releasing such shares of Common Stock  Investor's  Counsel is authorized to rely
upon such Common Stock Joint Written  Direction  from Company and may accept any
signatory  from the Company  listed on the signature  page to this Agreement and
any signature from the Investor Investor's Counsel has on file.

         Each of the  Company  and the  Investor  agree that within six (6) days
from the date the  Advance  Notice  is  delivered  to the  Investor  and/or  the
Investor's Counsel the Company and the Investor will each execute and deliver to
the Escrow Agent the Joint Written  Direction to the Escrow Agent and the Common
Stock Joint Written Direction to the Investor's Counsel.

         In the  event the  Escrow  Agent  does not  receive  the  amount of the
Advance  from the  Investor,  the Escrow  Agent shall notify the Company and the
Investor.  In the event Investor's Counsel does not receive the shares of Common
Stock to be  purchased  by the  Investor  Investor's  Counsel  shall  notify the
Company and the Investor.

                                       3
<PAGE>

         In the event that the Escrow Agent is advised by the Investor's Counsel
that the Common Stock has not been received  from the Company,  in no event will
the Escrow  Funds be released to the Company  until such shares are  received by
the Investor's Counsel.  For purposes of this Agreement,  the term "Common Stock
certificates"  shall mean Common Stock  certificates to be purchased pursuant to
the respective Advance Notice pursuant to the Equity Line of Credit Agreement.

6.       Collection Procedure.
         ---------------------

         The  Escrow  Agent  is  hereby  authorized  to  forward  each  wire for
collection  and,  upon  collection  of the  proceeds  of each wire  deposit  the
collected proceeds in the Escrow Account.

         Any wires returned  unpaid to the Escrow Agent shall be returned to the
Investor.  In such cases,  the Escrow Agent will promptly  notify the Company of
such return.

7.       Suspension of Performance: Disbursement Into Court.
         ---------------------------------------------------

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

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

            ii.  petition  (by  means of an  interpleader  action  or any  other
appropriate method) any court of competent  jurisdiction in any venue convenient
to Escrow Agent, for  instructions  with respect to such dispute or uncertainty,
and to the  extent  required  by law,  pay into  such  court,  for  holding  and
disposition in accordance with the instructions of such court, all funds held by
it in the Escrow Funds,  after deduction and payment to Escrow Agent of all fees
and expenses  (including  court costs and attorneys'  fees) payable to, incurred
by, or expected to be incurred by Escrow Agent in connection with performance of
its duties and the exercise of its rights hereunder.

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

         b. Investor's  Counsel.  If at any time,  there shall exist any dispute
between the Company and the Investor with respect to holding or  disposition  of
any portion of the shares of Common Stock or any other obligations of Investor's


                                       4
<PAGE>

Counsel hereunder,  or if at any time Investor's Counsel is unable to determine,
to Investor's Counsel's sole satisfaction, the proper disposition of any portion
of the  shares of Common  Stock or  Investor's  Counsel's  proper  actions  with
respect to its obligations  hereunder,  then Investor's Counsel may, in its sole
discretion, take either or both of the following actions:

            i.  suspend the  performance  of any of its  obligations  (including
without  limitation any  disbursement  obligations)  under this Escrow Agreement
until such dispute or uncertainty  shall be resolved to the sole satisfaction of
Investor's Counsel or until a successor shall be appointed (as the case may be);
and/or

            ii.  petition  (by  means of an  interpleader  action  or any  other
appropriate method) any court of competent  jurisdiction in any venue convenient
to  Investor's  Counsel,  for  instructions  with  respect  to such  dispute  or
uncertainty, and to the extent required by law, pay into such court, for holding
and disposition in accordance with the instructions of such court, all shares of
the  Company's  Common  Stock funds held by it, after  deduction  and payment to
Investor's  Counsel  of  all  fees  and  expenses  (including  court  costs  and
attorneys'  fees)  payable  to,  incurred  by, or  expected  to be  incurred  by
Investor's Counsel in connection with performance of its duties and the exercise
of its rights hereunder.

            iii. Investor's Counsel shall have no liability to the Company,  the
Investor,  or any person with respect to any such  suspension of  performance or
disbursement  into  court,  specifically  including  any  liability  or  claimed
liability that may arise, or be alleged to have arisen, out of or as a result of
any delay in the release of shares of the Company's Common Stock or any delay in
with respect to any other action required or requested of Investor's Counsel.

8.       Investment of Escrow Funds.
         ---------------------------

         The Escrow  Agent  shall  deposit  the Escrow  Funds in a  non-interest
bearing money market account.

         If Escrow Agent has not received a Joint Written  Direction at any time
that an investment  decision must be made,  Escrow Agent shall invest the Escrow
Fund, or such portion thereof,  as to which no Joint Written  Direction has been
received,  in investments  described above. The foregoing  investments  shall be
made by the Escrow Agent.  Notwithstanding  anything to the contrary  contained,
Escrow Agent may,  without  notice to the parties,  sell or liquidate any of the
foregoing  investments at any time if the proceeds  thereof are required for any
release of funds permitted or required hereunder,  and Escrow Agent shall not be
liable or responsible for any loss, cost or penalty resulting from any such sale
or liquidation.

9.       Resignation and Removal of Escrow Agent.
         ----------------------------------------

         Escrow Agent may resign from the performance of its duties hereunder at
any time by giving thirty (30) days' prior written  notice to the parties or may
be removed, with or without cause, by the parties, acting jointly, by furnishing
a Joint Written Direction to Escrow Agent, at any time by the giving of ten (10)
days' prior written  notice to Escrow Agent as provided  herein below.  Upon any
such notice of resignation or removal,  the  representatives of the Investor and
the Company identified in Sections 15a.(iv) and 15b.(iv),  below,  jointly shall
appoint a successor  Escrow Agent  hereunder,  which shall be a commercial bank,
trust company or other financial institution with a combined capital and surplus


                                       5
<PAGE>

in excess of  $10,000,000.00.  Upon the acceptance in writing of any appointment
of Escrow Agent  hereunder by a successor  Escrow Agent,  such successor  Escrow
Agent shall thereupon succeed to and become vested with all the rights,  powers,
privileges  and duties of the retiring  Escrow  Agent,  and the retiring  Escrow
Agent  shall be  discharged  from its duties and  obligations  under this Escrow
Agreement,  but shall not be discharged  from any liability for actions taken as
Escrow Agent  hereunder  prior to such  succession.  After any  retiring  Escrow
Agent's  resignation or removal,  the provisions of this Escrow  Agreement shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrow Funds and shall pay all funds held
by it in the Escrow Funds to the successor Escrow Agent,  after making copies of
such records as the retiring  Escrow Agent deems  advisable and after  deduction
and payment to the retiring  Escrow  Agent of all fees and  expenses  (including
court costs and  attorneys'  fees)  payable to,  incurred  by, or expected to be
incurred by the retiring  Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder.

10.      Liability of Escrow Agent.
         --------------------------

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

         b. The Escrow Agent is hereby  authorized,  in its sole discretion,  to
comply with orders  issued or process  entered by any court with  respect to the
Escrow  Funds,  without  determination  by the  Escrow  Agent  of  such  court's
jurisdiction  in the matter.  If any portion of the Escrow  Funds is at any time
attached,  garnished  or  levied  upon  under any  court  order,  or in case the
payment, assignment, transfer, conveyance or delivery of any such property shall
be stayed or enjoined by any court order,  or in any case any order  judgment or
decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ judgment or decree


                                       6
<PAGE>

which it is advised by legal counsel  selected by it,  binding upon it,  without
the need for appeal or other action;  and if the Escrow Agent  complies with any
such  order,  writ,  judgment  or  decree,  it shall not be liable to any of the
parties  hereto  or to any other  person or entity by reason of such  compliance
even though such order,  writ judgment or decree may be  subsequently  reversed,
modified, annulled, set aside or vacated.

11.      Liability of Investor's Counsel.
         --------------------------------

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

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

                                       7
<PAGE>

12.      Indemnification of Escrow Agent.
         --------------------------------

         From and at all times  after the date of this  Agreement,  the  parties
jointly and severally,  shall, to the fullest extent permitted by law and to the
extent  provided  herein,  indemnify  and hold  harmless  Escrow  Agent and each
director,  officer,  employee,  attorney,  agent and  affiliate  of Escrow Agent
(collectively,  the "Indemnified  Parties") against any and all actions,  claims
(whether or not valid), losses, damages, liabilities,  costs and expenses of any
kind or nature whatsoever  (including without limitation  reasonable  attorney's
fees, costs and expenses) incurred by or asserted against any of the Indemnified
Parties  from  and  after  the  date  hereof,   whether   direct,   indirect  or
consequential,  as a result of or  arising  from or in any way  relating  to any
claim,   demand,   suit,  action,  or  proceeding   (including  any  inquiry  or
investigation) by any person,  including without  limitation the parties to this
Agreement,  whether threatened or initiated,  asserting a claim for any legal or
equitable remedy against any person under any statute or regulation,  including,
but not limited to, any federal or state  securities  laws,  or under any common
law or equitable  cause or  otherwise,  arising from or in  connection  with the
negotiation,  preparation,  execution,  performance or failure of performance of
this Agreement or any transaction  contemplated herein,  whether or not any such
Indemnified  Party is a party  to any such  action  or  proceeding,  suit or the
target  of any  such  inquiry  or  investigation;  provided,  however,  that  no
Indemnified Party shall have the right to be indemnified hereunder for liability
finally determined by a court of competent  jurisdiction,  subject to no further
appeal, to have resulted solely from the gross negligence or willful  misconduct
of such  Indemnified  Party.  If any such  action or claim  shall be  brought or
asserted against any Indemnified  Party,  such Indemnified  Party shall promptly
notify the  Company  and the  Investor  hereunder  in  writing,  and the and the
Company shall assume the defense  thereof,  including the  employment of counsel
and the payment of all  expenses.  Such  Indemnified  Party  shall,  in its sole
discretion,  have the right to employ  separate  counsel (who may be selected by
such  Indemnified  Party  in its sole  discretion)  in any  such  action  and to
participate and to participate in the defense thereof, and the fees and expenses
of such  counsel  shall  be paid by such  Indemnified  Party,  except  that  the
Investor  and/or the  Company  shall be required to pay such fees and expense if
(a) the Investor or the Company agree to pay such fees and expenses,  or (b) the
Investor  and/or the Company  shall fail to assume the defense of such action or
proceeding or shall fail, in the sole discretion of such  Indemnified  Party, to
employ counsel  reasonably  satisfactory  to the  Indemnified  Party in any such
action or proceeding,  (c) the Investor and the Company are the plaintiff in any
such  action or  proceeding  or (d) the named or  potential  parties to any such
action or proceeding  (including any potentially impleaded parties) include both
Indemnified  Party the Company and/or the Investor and  Indemnified  Party shall
have been  advised  by  counsel  that  there may be one or more  legal  defenses
available to it which are different from or additional to those available to the
Company or the  Investor.  The  Investor  and the  Company  shall be jointly and
severally  liable to pay fees and expenses of counsel  pursuant to the preceding
sentence, except that any obligation to pay under clause (a) shall apply only to
the party so agreeing.  All such fees and expenses payable by the Company and/or
the Investor pursuant to the foregoing  sentence shall be paid from time to time
as incurred,  both in advance of and after the final  disposition of such action
or claim.  The  obligations  of the parties under this section shall survive any
termination of this  Agreement,  and  resignation or removal of the Escrow Agent
shall be independent of any obligation of Escrow Agent.

13.      Indemnification of Investor's Counsel.
         --------------------------------------

         From and at all times  after the date of this  Agreement,  the  parties
jointly and severally,  shall, to the fullest extent permitted by law and to the
extent provided herein,  indemnify and hold harmless Investor's Counsel and each
partner,  director,   officer,  employee,   attorney,  agent  and  affiliate  of


                                       8
<PAGE>

Investor's Counsel (collectively, the "Indemnified Parties") against any and all
actions, claims (whether or not valid), losses, damages, liabilities,  costs and
expenses  of  any  kind  or  nature  whatsoever  (including  without  limitation
reasonable  attorney's fees, costs and expenses) incurred by or asserted against
any of the Indemnified  Parties from and after the date hereof,  whether direct,
indirect or consequential, as a result of or arising from or in any way relating
to any claim,  demand,  suit,  action,  or proceeding  (including any inquiry or
investigation) by any person,  including without  limitation the parties to this
Agreement,  whether threatened or initiated,  asserting a claim for any legal or
equitable remedy against any person under any statute or regulation,  including,
but not limited to, any federal or state  securities  laws,  or under any common
law or equitable  cause or  otherwise,  arising from or in  connection  with the
negotiation,  preparation,  execution,  performance or failure of performance of
this Agreement or any transaction  contemplated herein,  whether or not any such
Indemnified  Party is a party  to any such  action  or  proceeding,  suit or the
target  of any  such  inquiry  or  investigation;  provided,  however,  that  no
Indemnified Party shall have the right to be indemnified hereunder for liability
finally determined by a court of competent  jurisdiction,  subject to no further
appeal, to have resulted solely from the gross negligence or willful  misconduct
of such  Indemnified  Party.  If any such  action or claim  shall be  brought or
asserted against any Indemnified  Party,  such Indemnified  Party shall promptly
notify the Company and the Investor  hereunder in writing,  and the Investor and
the Company  shall  assume the defense  thereof,  including  the  employment  of
counsel and the payment of all expenses.  Such  Indemnified  Party shall, in its
sole discretion,  have the right to employ separate counsel (who may be selected
by such  Indemnified  Party in its sole  discretion)  in any such  action and to
participate and to participate in the defense thereof, and the fees and expenses
of such  counsel  shall  be paid by such  Indemnified  Party,  except  that  the
Investor  and/or the  Company  shall be required to pay such fees and expense if
(a) the Investor or the Company agree to pay such fees and expenses,  or (b) the
Investor  and/or the Company  shall fail to assume the defense of such action or
proceeding or shall fail, in the sole discretion of such  Indemnified  Party, to
employ counsel  reasonably  satisfactory  to the  Indemnified  Party in any such
action or proceeding,  (c) the Investor and the Company are the plaintiff in any
such  action or  proceeding  or (d) the named or  potential  parties to any such
action or proceeding  (including any potentially impleaded parties) include both
Indemnified  Party the Company  and/or the  Investor and the  Indemnified  Party
shall have been advised by counsel that there may be one or more legal  defenses
available to it which are different from or additional to those available to the
Company or the  Investor.  The  Investor  and the  Company  shall be jointly and
severally  liable to pay fees and expenses of counsel  pursuant to the preceding
sentence, except that any obligation to pay under clause (a) shall apply only to
the party so agreeing.  All such fees and expenses payable by the Company and/or
the Investor pursuant to the foregoing  sentence shall be paid from time to time
as incurred,  both in advance of and after the final  disposition of such action
or claim.  The  obligations  of the parties under this section shall survive any
termination of this Agreement.

14.      Expenses of Escrow Agent and/or Investor's Counsel.
         ---------------------------------------------------

         Except  as set forth in  Section  12 and 13 the  Company  shall pay the
Investor's  Counsel on each Advance  Date  pursuant to the Equity Line of Credit
the sum of Five Hundred  Dollars ($500) to cover all legal,  administrative  and
escrow fees related to such Advance.

                                       9
<PAGE>

15.      Warranties.
         -----------

         a. The Investor makes the following  representations  and warranties to
the Escrow Agent and Investor's Counsel:

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

            ii. This Agreement has been duly approved by all necessary action of
the Investor,  including any  necessary  approval of the limited  partner of the
Investor,  has been  executed  by duly  authorized  officers  of the  Investor's
general partner, enforceable in accordance with its terms.

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

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

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

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

         b. The Company makes the following  representations  and  warranties to
Escrow Agent, the Investor and Investor's Counsel:

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

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

            iii. The execution, delivery, and performance by the Company of this
Escrow  Agreement is in accordance with the Equity Line of Credit  Agreement and
will not violate,  conflict  with, or cause a default under the  certificate  of


                                       10
<PAGE>

incorporation  or bylaws of the Company,  any applicable law or regulation,  any
court order or  administrative  ruling or decree to which the Company is a party
or any of its property is subject,  or any agreement,  contract,  indenture,  or
other binding arrangement.

            iv.  Robert E. Holt,  President  of the  Company  or, in his absence
Larry  McNeil,  C.F.O.  of the Company  have been duly  appointed  to act as the
representative  of the Company  hereunder  and has full power and  authority  to
execute,  deliver, and perform this Agreement,  to execute and deliver any Joint
Written Direction, to amend, modify or waive any provision of this Agreement and
to take all other actions as the Company's  Representative under this Agreement,
all without  further consent or direction from, or notice to, the Company or any
other party.

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

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

16.      Consent  to  Jurisdiction  and Venue.
         -------------------------------------

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

17.      Notice.
         -------

         All notices and other communications  hereunder shall be in writing and
shall be deemed to have been validly  served,  given or delivered  five (5) days
after deposit in the United States mails,  by certified mail with return receipt
requested and postage prepaid, when delivered personally,  one (1) day delivered
to any overnight  courier,  or when  transmitted by facsimile  transmission  and
addressed to the party to be notified as follows:

If to Investor, to:                  Cornell Capital Partners, LP
                                     101 Hudson Street - Suite 3606
                                     Jersey City, New Jersey 07302
                                     Attention: Mark Angelo
                                     Facsimile:        (201) 985-8266

                                       11
<PAGE>

With copy to:                        Butler Gonzalez LLP
                                     1000 Stuyvesant Avenue - Suite 6
                                     Union, New Jersey 07083
                                     Attention:   David Gonzalez, Esq.
                                     Facsimile:   (908) 810-0973

If to Company, to:                   Videolocity International Inc.
                                     1762 - A Prospector Drive
                                     Park City, Utah 84060
                                     Attention:   Robert E. Holt
                                     Facsimile:   (801) 521-2844

With a copy to:                      Leonard E. Neilson, Esq.
                                     8160 South Highlands Drive - Suite 209
                                     Sandy, Utah 84093
                                     Telephone: (801) 733-0800
                                     Facsimile: (801) 733-0808

If to the Escrow Agent, to:          First Union National Bank,
                                     407 Main Street
                                     Metuchen, New Jersey 08840
                                     Attention: Robert Mercado
                                                Carmela Agugliaro
                                     Facsimile: (732) 548-5973

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

18.      Amendments or Waiver.
         ---------------------

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

19.      Severability.
         -------------

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

20.      Governing Law.
         --------------

         This Agreement  shall be construed and  interpreted in accordance  with
the  internal  laws of the  State of New  Jersey  without  giving  effect to the
conflict of laws principles thereof.

21.      Entire Agreement.
         -----------------

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

                                       12
<PAGE>

22.      Binding Effect.
         ---------------

         All of the terms of this Agreement, as amended from time to time, shall
be binding upon,  inure to the benefit of and be  enforceable  by the respective
heirs, successors and assigns of the Investor, the Company, or the Escrow Agent.

23.      Execution of Counterparts.
         --------------------------

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

24.      Termination.
         ------------

         Upon  the  first to occur of the  disbursement  of all  amounts  in the
Escrow Funds  pursuant to Joint Written  Directions or the  disbursement  of all
amounts in the Escrow Funds into court pursuant to Section 7 hereof, or upon any
of the termination  provisions set forth in the Equity Line of Credit Agreement,
this Agreement shall terminate and Escrow Agent shall have no further obligation
or liability whatsoever with respect to this Agreement or the Escrow Funds.



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                                       13
<PAGE>




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

                                               VIDEOLOCITY INTERNATIONAL INC.

                                               By:   /s/ Robert E. Holt
                                                     ---------------------------
                                               Name:     Robert E. Holt
                                               Title:    President and C.E.O.


                                               FIRST UNION NATIONAL BANK

                                               By:   /s/ Robert Mercado
                                                     ---------------------------
                                               Name:     Robert Mercado
                                               Title:    As the Escrow Agent


                                               CORNELL CAPITAL PARTNERS, LP

                                               By:       Yorkville Advisors, LLC
                                               Its:      General Partner

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


                                               BUTLER GONZALEZ LLP

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


                                       14
<PAGE>