Document:

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.

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<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.

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         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.

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<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

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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

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<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

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<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.

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<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

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<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.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       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>VIDEOLOCITY INTERNATIONAL INC.
                            PLACEMENT AGENT AGREEMENT

                                                     Dated as of: May __,  2002

Westrock Advisors, Inc.
230 Park Avenue, Floor 9
New York, New York 10169

Ladies and Gentlemen:

         The undersigned,  Videolocity International Inc. , a Nevada corporation
(the  "Company"),  hereby  agrees  with  Westrock  Advisors  Inc.,  a  New  York
Corporation (the "Placement Agent") and Cornell Capital Partners, LP, A Delaware
Limited Partnership (the "Investor") as follows:

         1. Offering.
            ---------
         The Company hereby engages the Placement  Agent to act as its exclusive
placement agent in connection with the Equity Line of Credit Agreement dated the
date  hereof,  (the  "Equity  Line of Credit  Agreement")  pursuant to which the
Company  shall  issue  and sell to the  Investor,  from  time to  time,  and the
Investor shall  purchase from the Company (the  "Offering") up to Twenty Million
Dollars  ($20,000,000) of the Company's common stock (the "Commitment  Amount"),
par value $.001 per share (the "Common Stock"),  at price per share equal to the
Purchase Price, as that term is defined in the Equity Line of Credit  Agreement.
Pursuant  to the terms  hereof,  the  Placement  Agent shall  render  consulting
services to the Company with respect to the Equity Line of Credit  Agreement and
shall be  available  for  consultation  in  connection  with the  advances to be
requested by the Company pursuant to the Equity Line of Credit Agreement

         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. The Investor will be granted certain registration rights with respect
to the Common Stock as more fully set forth in the Registration Rights Agreement
between the Company and the  Investor  dated the date hereof (the  "Registration
Rights  Agreement").  The  documents to be executed and  delivered in connection
with the Offering,  including,  but not limited,  to this Agreement,  the Equity
Line of Credit  Agreement,  the Registration  Rights  Agreement,  and the Escrow
Agreement with First Union National Bank (the "Escrow Agreement"),  are referred
to sometimes hereinafter  collectively as the "Offering Materials",  which shall
also include the SEC Documents. The Company's Common Stock is sometimes referred
to hereinafter as the  "Securities."  The Placement Agent shall not be obligated
to sell any Securities and this Offering by the Placement  Agent shall be solely
on a "best efforts basis."

                                       1
<PAGE>

         2. Compensation.
            -------------

            A. Upon the  execution of this  Agreement the Company shall issue to
the  Placement  Agent or its  designee an amount  equal to ten  thousand  shares
(10,000)  shares of the Company's  Common Stock  (collectively,  the  "Placement
Agent's Shares ").  Furthermore  the Placement  Agent's Shares are to be held in
escrow by Butler  Gonzalez LLP for sixty (60) days  following the Effective Date
(as that term is defined in the  Registration  Rights  Agreement  dated the date
hereof).  However  in the  event  the  Registration  Statement  (as that term is
defined  in the  Registration  Rights  Agreement  dated the date  hereof) is not
declared  effective the Placement  Agent shall be entitled to sell the Placement
Agent's  Shares  pursuant  to Rule 144 one (1) year  from the date  hereof.  The
Placement Agent shall be entitled to "piggy-back"  registration rights triggered
upon  registration of any shares of Common Stock by the Investor with respect to
the Placement Agent's Shares pursuant to the Registration Rights Agreement dated
the date hereof.

         3.  Representations,  Warranties and Covenants of the Placement  Agent.
             -------------------------------------------------------------------

            A.  The  Placement  Agent  represents,  warrants  and  covenants  as
follows:

                (i) The Placement  Agent has the  necessary  power to enter into
this Agreement and to consummate the transactions contemplated hereby.

                (ii) The execution  and delivery by the Placement  Agent of this
Agreement and the consummation of the transactions  contemplated herein will not
result in any  violation  of, or be in conflict  with,  or  constitute a default
under, any agreement or instrument to which the Placement Agent is a party or by
which the Placement Agent or its properties are bound, or any judgment,  decree,
order or, to the Placement Agent's  knowledge,  any statute,  rule or regulation
applicable to the Placement Agent. This Agreement when executed and delivered by
the Placement Agent, will constitute the legal, valid and binding obligations of
the Placement  Agent,  enforceable in accordance  with their  respective  terms,
except  to the  extent  that (a) the  enforceability  hereof or  thereof  may be
limited by bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, (b)
the enforceability hereof or thereof is subject to general principles of equity,
or (c) the  indemnification  provisions  hereof or thereof  may be held to be in
violation of public policy.

                (iii) Upon receipt and execution of this Agreement the Placement
Agent will  promptly  forward  copies of this  Agreement  to the  Company or its
counsel  and the  Investor or its  counsel.

                (iv) The Placement Agent will not intentionally  take any action
that it reasonably  believes  would cause the Offering to violate the provisions
of the  Securities  Act of 1933,  as amended  (the "1933 Act"),  the  Securities
Exchange  Act of 1934 (the "1934 Act"),  the  respective  rules and  regulations
promulgated  there under (the "Rules and  Regulations") or applicable "Blue Sky"
laws  of any  state  or  jurisdiction.  (v) The  Placement  Agent  will  use all
reasonable  efforts to  determine  (a)  whether the  Investor  is an  Accredited
Investor  and (b) that any  information  furnished  by the  Investor is true and
accurate.  The  Placement  Agent shall have no obligation to insure that (x) any
check,  note,  draft or other  means of  payment  for the  Common  Stock will be
honored,  paid or enforceable against the Investor in accordance with its terms,
or (y) subject to the performance of the Placement  Agent's  obligations and the

                                       2
<PAGE>

accuracy of the Placement Agent's representations and warranties hereunder,  (1)
the Offering is exempt from the registration requirements of the 1933 Act or any
applicable state "Blue Sky" law or (2) the Investor is an Accredited Investor.

                (vi) The Placement Agent is a member of the National Association
of Securities Dealers, Inc., and is a broker-dealer registered as such under the
1934 Act and under the  securities  laws of the  states in which the  Securities
will be offered or sold by the  Placement  Agent  unless an  exemption  for such
state  registration is available to the Placement  Agent. The Placement Agent is
in  compliance  with  all  material  rules  and  regulations  applicable  to the
Placement Agent generally and applicable to the Placement Agent's  participation
in the Offering.

         4. Representations and Warranties of the Company.
            ----------------------------------------------

            A.   The Company represents and warrants as follows:

                (i) The  execution,  delivery  and  performance  of each of this
Agreement,  the Equity Line of Credit Agreement,  the Escrow Agreement,  and the
Registration Rights Agreement has been or will be duly and validly authorized by
the Company and is, or with respect to this Agreement, the Equity Line of Credit
Agreement,  the Escrow Agreement, and the Registration Rights Agreement will be,
a valid and binding agreement of the Company, enforceable in accordance with its
respective  terms,  except to the extent that (a) the  enforceability  hereof or
thereof may be limited by bankruptcy, insolvency, reorganization,  moratorium or
similar laws from time to time in effect and  affecting  the rights of creditors
generally,  (b) the  enforceability  hereof or  thereof  is  subject  to general
principles of equity or (c) the indemnification provisions hereof or thereof may
be held to be in  violation  of  public  policy.  The  Securities  to be  issued
pursuant to the transactions  contemplated by this Agreement and the Equity Line
of Credit  Agreement have been duly  authorized and, when issued and paid for in
accordance  with  (x) this  Agreement,  the  Equity  Line of  Agreement  and the
certificates/instruments  representing  such  Securities,  (y) will be valid and
binding  obligations  of the  Company,  enforceable  in  accordance  with  their
respective terms,  except to the extent that (1) the enforceability  thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, and
(2) the  enforceability  thereof is subject to general principles of equity. All
corporate action required to be taken for the  authorization,  issuance and sale
of the Securities has been duly and validly taken by the Company.

                (ii) The Company has a duly  authorized,  issued and outstanding
capitalization  as set forth herein and in the Equity Line of Credit  Agreement.
The  Company is not a party to or bound by any  instrument,  agreement  or other
arrangement  providing  for it to issue any  capital  stock,  rights,  warrants,
options or other securities, except for this Agreement, the agreements described
herein and as described in the Equity Line of Credit  Agreement,  dated the date
hereof  and  the  agreements  described  therein.  All  issued  and  outstanding
securities of the Company,  have been duly authorized and validly issued and are
fully paid and non-assessable;  the holders thereof have no rights of rescission
or  preemptive  rights  with  respect  thereto  and are not  subject to personal
liability  solely  by  reason  of  being  security  holders;  and  none  of such
securities  were issued in violation of the preemptive  rights of any holders of
any security of the Company. As of the date hereof, the authorized capital stock
of the Company  consists of 12,5000,000  shares of Common Stock, par value $.001
per share of which ___________ shares of Common Stock are issued and outstanding
and 1,000,000 shares of Preferred Stock, none of which are outstanding.

                                       3
<PAGE>

                  (iii) The Common  Stock to be issued in  accordance  with this
Agreement and the Equity Line of Credit  Agreement has been duly  authorized and
when issued and paid for in accordance with this  Agreement,  the Equity Line of
Credit  Agreement  and the  certificates/instruments  representing  such  Common
Stock,  will be validly  issued,  fully-paid  and  non-assessable;  the  holders
thereof will not be subject to personal liability solely by reason of being such
holders;  such  Securities  are not and will not be  subject  to the  preemptive
rights of any holder of any security of the Company.

                (iv)  Except  as may be  set  forth  in  the  SEC  Documents  or
Attachment 4.12 to the Equity Line of Credit Agreement, the Company has good and
marketable title to, or valid and enforceable leasehold estates in, all items of
real and personal property necessary to conduct its business (including, without
limitation, any real or personal property stated in the Offering Materials to be
owned or leased by the  Company),  free and  clear of all  liens,  encumbrances,
claims, security interests and defects of any material nature whatsoever,  other
than those set forth in the Offering  Materials  and liens for taxes not yet due
and payable.  (v) There is no litigation or governmental  proceeding pending or,
to the best of the Company's  knowledge,  threatened  against,  or involving the
properties  or  business  of the  Company,  except as set forth in the  Offering
Materials.

                  (vi)  The  Company  has been  duly  organized  and is  validly
existing  as a  corporation  in good  standing  under  the laws of the  State of
Nevada. Except as set forth in the Offering Materials,  the Company does not own
or control,  directly  or  indirectly,  an  interest  in any other  corporation,
partnership,  trust, joint venture or other business entity. The Company is duly
qualified  or licensed  and in good  standing as a foreign  corporation  in each
jurisdiction   in  which  the   character  of  its   operations   requires  such
qualification or licensing and where failure to so qualify would have a material
adverse effect on the Company. The Company has all requisite corporate power and
authority,  and all material and necessary  authorizations,  approvals,  orders,
licenses,  certificates  and  permits  of and from all  governmental  regulatory
officials  and bodies  (domestic  and  foreign) to conduct its  businesses  (and
proposed  business) as described in the Offering  Materials.  Any disclosures in
the Offering  Materials  concerning the effects of foreign,  federal,  state and
local  regulation  on the  Company's  businesses  as currently  conducted and as
contemplated  are correct in all  material  respects  and do not omit to state a
material fact.  The Company has all corporate  power and authority to enter into
this Agreement,  the Equity Line of Credit  Agreement,  the Registration  Rights
Agreement,  and the Escrow Agreement, to carry out the provisions and conditions
hereof and  thereof,  and all  consents,  authorizations,  approvals  and orders
required in connection  herewith and therewith have been  obtained.  No consent,
authorization or order of, and no filing with, any court,  government  agency or
other body is  required by the Company  for the  issuance of the  Securities  or
execution and delivery of the Offering  Materials except for applicable  federal
and state  securities laws. The Company,  since its inception,  has not incurred
any  liability  arising  under or as a result of the  application  of any of the
provisions of the 1933 Act, the 1934 Act or the Rules and Regulations.
                  (vii)  There  has  been  no  material  adverse  change  in the
condition or prospects of the Company,  financial or otherwise,  from the latest
dates as of which such  condition or prospects,  respectively,  are set forth in
the Offering Materials,  and the outstanding debt, the property and the business
of the Company  conform in all  material  respects to the  descriptions  thereof
contained in the Offering Materials.

                                       4
<PAGE>

                (viii)  Except  as set  forth  in the  Offering  Materials,  the
Company is not in breach of, or in default  under,  any term or provision of any
material indenture, mortgage, deed of trust, lease, note, loan or Equity Line of
Credit  Agreement or any other  material  agreement or instrument  evidencing an
obligation for borrowed money, or any other material  agreement or instrument to
which  it is a party or by  which  it or any of its  properties  may be bound or
affected.  The Company is not in  violation  of any  provision of its charter or
by-laws or in violation of any franchise,  license, permit, judgment,  decree or
order, or in violation of any material statute, rule or regulation.  Neither the
execution  and delivery of the Offering  Materials  nor the issuance and sale or
delivery of the  Securities,  nor the  consummation  of any of the  transactions
contemplated  in the Offering  Materials nor the  compliance by the Company with
the terms and provisions hereof or thereof, has conflicted with or will conflict
with,  or has  resulted  in or will  result in a breach of, any of the terms and
provisions  of, or has  constituted or will  constitute a default under,  or has
resulted in or will result in the creation or imposition of any lien,  charge or
encumbrance  upon any property or assets of the Company or pursuant to the terms
of any indenture,  mortgage, deed of trust, note, loan or any other agreement or
instrument  evidencing an obligation for borrowed  money, or any other agreement
or  instrument to which the Company may be bound or to which any of the property
or assets of the Company is subject except (a) where such default,  lien, charge
or encumbrance  would not have a material  adverse effect on the Company and (b)
as  described  in the  Offering  Materials;  nor will such action  result in any
violation  of the  provisions  of the  charter or the by-laws of the Company or,
assuming  the  due  performance  by  the  Placement  Agent  of  its  obligations
hereunder,  any  material  statute or any  material  order,  rule or  regulation
applicable  to the  Company of any court or of any  foreign,  federal,  state or
other regulatory authority or other government body having jurisdiction over the
Company.

                (ix) Subsequent to the dates as of which information is given in
the Offering Materials, and except as may otherwise be indicated or contemplated
herein or therein and the securities offered pursuant to the Securities Purchase
Agreement  dated the date hereof,  the Company has not (a) issued any securities
or incurred any  liability or  obligation,  direct or  contingent,  for borrowed
money, or (b) entered into any transaction  other than in the ordinary course of
business, or (c) declared or paid any dividend or made any other distribution on
or in  respect  of its  capital  stock.  Except  as  described  in the  Offering
Materials, the Company has no outstanding obligations to any officer or director
of the Company.

                (x) There are no claims for services in the nature of a finder's
or  origination  fee with  respect to the sale of the Common  Stock or any other
arrangements, agreements or understandings that may affect the Placement Agent's
compensation,  as determined by the National  Association of Securities Dealers,
Inc.

                (xi)  Except  as may be set  forth  in the SEC  Documents  or an
attachment  to the  Equity  Line  of  Credit  Agreement,  the  Company  owns  or
possesses,  free and clear of all liens or  encumbrances  and rights  thereto or
therein by third  parties,  the  requisite  licenses or other  rights to use all
trademarks,  service marks,  copyrights,  service names,  trade names,  patents,
patent  applications and licenses necessary to conduct its business  (including,
without  limitation,  any such  licenses  or rights  described  in the  Offering
Materials as being owned or possessed by the Company)  and,  except as set forth
in the Offering Materials,  there is no claim or action by any person pertaining
to, or proceeding,  pending or threatened, which challenges the exclusive rights
of the  Company  with  respect to any  trademarks,  service  marks,  copyrights,
service names, trade names,  patents,  patent  applications and licenses used in
the conduct of the Company's businesses (including, without limitation, any such

                                       5
<PAGE>

licenses  or  rights  described  in the  Offering  Materials  as being  owned or
possessed  by the  Company)  except  any claim or action  that  would not have a
material adverse effect on the Company; the Company's current products, services
or processes do not infringe or will not infringe on the patents  currently held
by any third party.

                (xii) Except as described in the Offering Materials, the Company
is not under any  obligation to pay royalties or fees of any kind  whatsoever to
any third  party with  respect to any  trademarks,  service  marks,  copyrights,
service names, trade names, patents, patent applications, licenses or technology
it has developed, uses, employs or intends to use or employ, other than to their
respective licensors.

                (xiii) Subject to the  performance by the Placement Agent of its
obligations  hereunder and the offer and sale of the Securities comply, and will
continue to comply in all material respects with the requirements of Rule 506 of
Regulation  D  promulgated  by the SEC  pursuant  to the 1933 Act and any  other
applicable  federal and state laws,  rules,  regulations  and executive  orders.
Neither the Offering  Materials nor any amendment or supplement  thereto nor any
documents  prepared by the Company in connection  with the Offering will contain
any untrue  statement  of a  material  fact or omit to state any  material  fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the  circumstances  under  which they were made,  not  misleading.  All
statements of material  facts in the Offering  Materials are true and correct as
of the date of the Offering Materials.

                (xiv) All  material  taxes  which are due and  payable  from the
Company  have been  paid in full or  adequate  provision  has been made for such
taxes on the books of the Company  except for those taxes disputed in good faith
the Company does not have any tax  deficiency or claim  outstanding  assessed or
proposed against it.

                (xv) None of the  Company  nor any of its  officers,  directors,
employees or agents, nor any other person acting on behalf of the Company,  has,
directly  or  indirectly,  given or agreed to give any  money,  gift or  similar
benefit (other than legal price  concessions to customers in the ordinary course
of  business)  to any  customer,  supplier,  employee  or agent of a customer or
supplier,  or official or employee of any governmental agency or instrumentality
of any government  (domestic or foreign) or any political party or candidate for
office  (domestic  or foreign) or other person who is or may be in a position to
help or hinder the business of the Company (or assist it in connection  with any
actual or  proposed  transaction)  which (A) might  subject  the  Company to any
damage  or  penalty  in  any  civil,  criminal  or  governmental  litigation  or
proceeding, or (B) if not given in the past, might have had a materially adverse
effect on the assets,  business or operations of the Company as reflected in any
of the financial statements  contained in the Offering Materials,  or (C) if not
continued in the future, might adversely affect the assets, business, operations
or prospects of the Company in the future.

         5. Representations, Warranties and Covenants of the Investor.
            ----------------------------------------------------------
            A.  The Investor represents, warrants and covenants as follows:

                (i) The  Investor  has the  necessary  power to enter  into this
Agreement and to consummate the transactions contemplated hereby.

                (ii)  The  execution  and  delivery  by  the  Investor  of  this
Agreement and the consummation of the transactions  contemplated herein will not
result in any  violation  of, or be in conflict  with,  or  constitute a default
under,  any agreement or instrument to which the Investor is a party or by which
the Investor or its properties are bound, or any judgment,  decree, order or, to

                                       6
<PAGE>

the  Investor's  knowledge,  any statute,  rule or regulation  applicable to the
Investor.  This  Agreement  when executed and  delivered by the  Investor,  will
constitute the legal, valid and binding obligations of the Investor, enforceable
in accordance  with their  respective  terms,  except to the extent that (a) the
enforceability  hereof or  thereof  may be limited  by  bankruptcy,  insolvency,
reorganization,  moratorium  or  similar  laws from  time to time in effect  and
affecting the rights of creditors  generally,  (b) the enforceability  hereof or
thereof is subject to general  principles of equity, or (c) the  indemnification
provisions hereof or thereof may be held to be in violation of public policy.

                (iii) The Investor will promptly  forward  copies of any and all
due diligence questionnaires compiled by the Investor to the Placement Agent.

         6. Certain Covenants and Agreements of the Company.
            ------------------------------------------------

         The Company covenants and agrees at its expense and without any expense
to the Placement Agent as follows:

         A. To advise the Placement Agent of any material  adverse change in the
Company's  financial  condition,  prospects  or business  or of any  development
materially  affecting the Company or rendering untrue or misleading any material
statement in the Offering Materials occurring at any time as soon as the Company
is either informed or becomes aware thereof.

         B. To use its commercially reasonable efforts to cause the Common Stock
issuable  in  connection  with the  Equity  Line of  Credit to be  qualified  or
registered for sale on terms  consistent  with those stated in the  Registration
Rights  Agreement and under the  securities  laws of such  jurisdictions  as the
Placement  Agent  and the  Investor  shall  reasonably  request.  Qualification,
registration  and  exemption  charges  and fees  shall  be at the sole  cost and
expense of the Company.

         C. Upon  written  request,  to provide  and  continue  to  provide  the
Placement  Agent and the Investor copies of all quarterly  financial  statements
and audited annual financial statements prepared by or on behalf of the Company,
other reports prepared by or on behalf of the Company for public  disclosure and
all documents delivered to the Company's stockholders.

         D. To deliver, during the registration period of the Equity Line Credit
Agreement,  to the Placement Agent upon the Placement  Agent's  request,  within
forty five (45) days, a statement of its income for each such quarterly  period,
and its balance sheet and a statement of changes in  stockholders'  equity as of
the end of such quarterly  period,  all in reasonable  detail,  certified by its
principal  financial or accounting  officer;  (ii) within ninety (90) days after
the close of each fiscal year,  its balance sheet as of the close of such fiscal
year,   together  with  a  statement  of  income,  a  statement  of  changes  in
stockholders'  equity and a statement  of cash flow for such fiscal  year,  such
balance sheet, statement of income, statement of changes in stockholders' equity
and statement of cash flow to be in reasonable  detail and accompanied by a copy
of the  certificate  or  report  thereon  of  independent  auditors  if  audited
financial  statements are prepared;  and (iii) a copy of all documents,  reports
and information  furnished to its  stockholders at the time that such documents,
reports and information are furnished to its stockholders.

         E.       To comply with the terms of the Offering Materials.

                                       7
<PAGE>

         F. To ensure that any transactions between or among the Company, or any
of its officers, directors and affiliates be on terms and conditions that are no
less  favorable  to the  Company,  than the terms and  conditions  that would be
available in an "arm's length" transaction with an independent third party.

         7. Indemnification.
            ----------------

         A.  The  Company  hereby  agrees  that it will  indemnify  and hold the
Placement   Agent  and  each  officer,   director,   shareholder,   employee  or
representative of the Placement Agent and each person controlling, controlled by
or under common  control with the Placement  Agent within the meaning of Section
15 of the  1933  Act or  Section  20 of the  1934  Act or the  SEC's  Rules  and
Regulations promulgated there under (the "Rules and Regulations"), harmless from
and  against  any  and all  loss,  claim,  damage,  liability,  cost or  expense
whatsoever (including, but not limited to, any and all reasonable legal fees and
other  expenses and  disbursements  incurred in connection  with  investigating,
preparing to defend or defending any action,  suit or proceeding,  including any
inquiry or investigation, commenced or threatened, or any claim whatsoever or in
appearing  or  preparing  for  appearance  as a witness in any  action,  suit or
proceeding,  including any inquiry, investigation or pretrial proceeding such as
a deposition)  to which the Placement  Agent or such  indemnified  person of the
Placement  Agent may become  subject under the 1933 Act, the 1934 Act, the Rules
and Regulations, or any other federal or state law or regulation,  common law or
otherwise,  arising  out of or based  upon (i) any untrue  statement  or alleged
untrue  statement  of a  material  fact  contained  in  (a)  Section  4 of  this
Agreement,  (b) the Offering Materials (except those written statements relating
to the Placement  Agent given by an indemnified  person for inclusion  therein),
(c) any application or other document or written  communication  executed by the
Company or based upon written information  furnished by the Company filed in any
jurisdiction  in order to qualify  the Common  Stock under the  securities  laws
thereof,  or any state  securities  commission  or agency;  (ii) the omission or
alleged omission from documents  described in clauses (a), (b) or (c) above of a
material fact required to be stated  therein or necessary to make the statements
therein not  misleading;  or (iii) the breach of any  representation,  warranty,
covenant or agreement made by the Company in this Agreement. The Company further
agrees that upon demand by an  indemnified  person,  at any time or from time to
time, it will promptly  reimburse such indemnified  person for any loss,  claim,
damage,  liability,  cost  or  expense  actually  and  reasonably  paid  by  the
indemnified  person as to which the Company has indemnified such person pursuant
hereto.  Notwithstanding  the foregoing  provisions of this Paragraph  6(A), any
such payment or reimbursement by the Company of fees,  expenses or disbursements
incurred by an indemnified person in any proceeding in which a final judgment by
a court of competent  jurisdiction  (after all appeals or the expiration of time
to appeal) is entered  against the Placement  Agent or such  indemnified  person
based upon specific finding of fact that the Placement Agent or such indemnified
person's gross negligence or willful  misfeasance will be promptly repaid to the
Company.

         B. The Placement  Agent hereby  agrees that it will  indemnify and hold
the Company and each officer, director, shareholder,  employee or representative
of the  Company,  and each person  controlling,  controlled  by or under  common
control  with the  Company  within the  meaning of Section 15 of the 1933 Act or
Section  20 of the 1934 Act or the  Rules  and  Regulations,  harmless  from and
against any and all loss, claim, damage,  liability,  cost or expense whatsoever
(including,  but not  limited  to, any and all  reasonable  legal fees and other
expenses and disbursements incurred in connection with investigating,  preparing
to defend or defending any action, suit or proceeding,  including any inquiry or
investigation,  commenced or threatened, or any claim whatsoever or in appearing

                                       8
<PAGE>

or preparing  for  appearance  as a witness in any action,  suit or  proceeding,
including  any  inquiry,   investigation  or  pretrial   proceeding  such  as  a
deposition) to which the Company or such  indemnified  person of the Company may
become subject under the 1933 Act, the 1934 Act, the Rules and  Regulations,  or
any other federal or state law or regulation,  common law or otherwise,  arising
out of or based upon (i) the  conduct of the  Placement  Agent or its  officers,
employees or  representatives  in its acting as Placement Agent for the Offering
or (ii)  the  material  breach  of any  representation,  warranty,  covenant  or
agreement  made by the  Placement  Agent in this  Agreement  (iii)  any false or
misleading  information  provided to the Company by one of the Placement Agent's
indemnified persons.

         C. The  Investor  hereby  agrees  that it will  indemnify  and hold the
Placement   Agent  and  each  officer,   director,   shareholder,   employee  or
representative of the Placement Agent, and each person  controlling,  controlled
by or under  common  control  with the  Placement  Agent  within the  meaning of
Section  15 of the 1933 Act or  Section  20 of the  1934  Act or the  Rules  and
Regulations,  harmless  from  and  against  any and  all  loss,  claim,  damage,
liability,  cost or expense whatsoever  (including,  but not limited to, any and
all  reasonable  legal fees and other  expenses  and  disbursements  incurred in
connection with investigating, preparing to defend or defending any action, suit
or proceeding, including any inquiry or investigation,  commenced or threatened,
or any claim whatsoever or in appearing or preparing for appearance as a witness
in any action,  suit or  proceeding,  including  any inquiry,  investigation  or
pretrial  proceeding  such as a deposition) to which the Placement Agent or such
indemnified person of the Placement Agent may become subject under the 1933 Act,
the 1934 Act, the Rules and  Regulations,  or any other  federal or state law or
regulation,  common  law or  otherwise,  arising  out of or  based  upon (i) the
conduct of the Investor or its  officers,  employees or  representatives  in its
acting as the  Investor  for the  Offering  or (ii) the  material  breach of any
representation,  warranty,  covenant or  agreement  made by the  Investor in the
Offering  Materials  (iii) any false or misleading  information  provided to the
Placement Agent by one of the Investor's indemnified persons.

         D. The Placement  Agent hereby  agrees that it will  indemnify and hold
the Investor and each officer, director, shareholder, employee or representative
of the  Investor,  and each person  controlling,  controlled  by or under common
control  with the  Investor  within the meaning of Section 15 of the 1933 Act or
Section  20 of the 1934 Act or the  Rules  and  Regulations,  harmless  from and
against any and all loss, claim, damage,  liability,  cost or expense whatsoever
(including,  but not  limited  to, any and all  reasonable  legal fees and other
expenses and disbursements incurred in connection with investigating,  preparing
to defend or defending any action, suit or proceeding,  including any inquiry or
investigation,  commenced or threatened, or any claim whatsoever or in appearing
or preparing  for  appearance  as a witness in any action,  suit or  proceeding,
including  any  inquiry,   investigation  or  pretrial   proceeding  such  as  a
deposition) to which the Investor or such indemnified person of the Investor may
become subject under the 1933 Act, the 1934 Act, the Rules and  Regulations,  or
any other federal or state law or regulation,  common law or otherwise,  arising
out of or based upon (i) the  conduct of the  Placement  Agent or its  officers,
employees  or  representatives  in its  acting  as the  Placement  Agent for the
Offering or (ii) the material breach of any representation,  warranty,  covenant
or agreement made by the Placement  Agent in this  Agreement  (iii) any false or
misleading  information provided to the Investor by one of the Placement Agent's
indemnified persons.

                                       9
<PAGE>

         E.  Promptly  after  receipt  by an  indemnified  party  of  notice  of
commencement  of any action covered by Section 6(A),  (B), (C) or (D), the party
to be indemnified shall,  within five (5) business days, notify the indemnifying
party of the commencement  thereof; the omission by one (1) indemnified party to
so notify the indemnifying party shall not relieve the indemnifying party of its
obligation to indemnify any other  indemnified  party that has given such notice
and shall not relieve the  indemnifying  party of any liability  outside of this
indemnification  if not  materially  prejudiced  thereby.  In the event that any
action is brought against the indemnified  party, the indemnifying party will be
entitled to participate  therein and, to the extent it may desire, to assume and
control  the  defense  thereof  with  counsel  chosen by it which is  reasonably
acceptable to the indemnified party. After notice from the indemnifying party to
such  indemnified  party of its election to so assume the defense  thereof,  the
indemnifying  party  will not be liable to such  indemnified  party  under  such
Section  6(A),  (B),  (C), or (D) for any legal or other  expenses  subsequently
incurred by such indemnified  party in connection with the defense thereof,  but
the  indemnified  party may, at its own expense,  participate in such defense by
counsel  chosen by it,  without,  however,  impairing the  indemnifying  party's
control  of  the  defense.   Subject  to  the  proviso  of  this   sentence  and
notwithstanding  any other  statement  to the  contrary  contained  herein,  the
indemnified  party or  parties  shall  have the right to choose its or their own
counsel  and  control  the  defense  of any  action,  all at the  expense of the
indemnifying  party if,  (i) the  employment  of such  counsel  shall  have been
authorized in writing by the  indemnifying  party in connection with the defense
of  such  action  at  the  expense  of  the  indemnifying  party,  or  (ii)  the
indemnifying  party shall not have employed counsel  reasonably  satisfactory to
such  indemnified  party to have charge of the  defense of such action  within a
reasonable  time  after  notice of  commencement  of the  action,  or (iii) such
indemnified  party or parties shall have reasonably  concluded that there may be
defenses available to it or them which are different from or additional to those
available  to one  or  all  of the  indemnifying  parties  (in  which  case  the
indemnifying  parties  shall not have the right to direct  the  defense  of such
action on behalf of the  indemnified  party or parties),  in any of which events
such  fees  and  expenses  of one  additional  counsel  shall  be  borne  by the
indemnifying party; provided, however, that the indemnifying party shall not, in
connection with any one action or separate but substantially  similar or related
actions in the same jurisdiction  arising out of the same general allegations or
circumstance,  be liable for the  reasonable  fees and expenses of more than one
separate  firm of attorneys  at any time for all such  indemnified  parties.  No
settlement of any action or  proceeding  against an  indemnified  party shall be
made without the consent of the indemnifying party.

         F.  In  order  to  provide  for  just  and  equitable  contribution  in
circumstances in which the indemnification  provided for in Section 6(A) or 6(B)
is due in accordance  with its terms but is for any reason held by a court to be
unavailable  on grounds of policy or  otherwise,  the Company and the  Placement
Agent shall contribute to the aggregate losses,  claims, damages and liabilities
(including  legal or other expenses  reasonably  incurred in connection with the
investigation  or defense of same) which the other may incur in such  proportion
so that the  Placement  Agent  shall be  responsible  for  such  percent  of the
aggregate of such losses,  claims,  damages and  liabilities  as shall equal the
percentage of the gross  proceeds  paid to the  Placement  Agent and the Company
shall be responsible for the balance;  provided,  however, that no person guilty
of fraudulent  misrepresentation within the meaning of Section 11(f) of the 1933
Act shall be entitled to contribution from any person who was not guilty of such
fraudulent  misrepresentation.  For  purposes of this Section  6(F),  any person

                                       10
<PAGE>

controlling,  controlled by or under common control with the Placement Agent, or
any partner,  director,  officer,  employee,  representative or any agent of any
thereof,  shall have the same rights to  contribution as the Placement Agent and
each person controlling,  controlled by or under common control with the Company
within  the  meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
and each officer of the Company and each  director of the Company shall have the
same rights to contribution  as the Company.  Any party entitled to contribution
will,  promptly after receipt of notice of commencement  of any action,  suit or
proceeding  against such party in respect of which a claim for  contribution may
be made against the other party under this Section 6(D),  notify such party from
whom contribution may be sought,  but the omission to so notify such party shall
not relieve the party from whom  contribution  may be sought from any obligation
they may have hereunder or otherwise if the party from whom  contribution may be
sought is not  materially  prejudiced  thereby.  The indemnity and  contribution
agreements  contained in this Section 6 shall remain operative and in full force
and  effect  regardless  of  any  investigation  made  by or on  behalf  of  any
indemnified person or any termination of this Agreement.

         8. Payment of Expenses.
            --------------------

         The Company  hereby  agrees to bear all of the  expenses in  connection
with the Offering,  including,  but not limited to the  following:  filing fees,
printing and duplicating  costs,  advertisements,  postage and mailing  expenses
with respect to the transmission of Offering  Materials,  registrar and transfer
agent fees, escrow agent fees as set forth in the Escrow Agreement,  fees of the
Company's counsel and accountants, issue and transfer taxes, if any.

         9. Conditions of Closing.
            ----------------------

         The  Closing  shall  be  held at the  offices  of the  Investor  or its
counsel.  The  obligations of the Placement  Agent hereunder shall be subject to
the  continuing  accuracy of the  representations  and warranties of the Company
herein as of the date hereof and as of the Date of Closing (the "Closing  Date")
with  respect to the  Company  as if it had been made on and as of such  Closing
Date;  the  accuracy  on and as of the  Closing  Date of the  statements  of the
officers  of the  Company  made  pursuant  to the  provisions  hereof;  and  the
performance  by the Company on and as of the Closing Date of its  covenants  and
obligations hereunder and to the following further conditions:

         A. Upon the  effectiveness  of a  registration  statement  covering the
Equity Line of Credit  Agreement,  the Placement Agent shall receive the opinion
of Counsel to the Company,  dated as of the date thereof, which opinion shall be
in form and substance reasonably satisfactory to the Investor, their counsel and
the Placement Agent.

         B. At or prior to the  Closing,  the  Placement  Agent  shall have been
furnished such documents, certificates and opinions as it may reasonably require
for the purpose of enabling them to review or pass upon the matters  referred to
in this  Agreement  and the  Offering  Materials,  or in order to  evidence  the
accuracy, completeness or satisfaction of any of the representations, warranties
or conditions herein contained.

         C. At and prior to the  Closing,  (i) there shall have been no material
adverse change nor development  involving a prospective  change in the condition
or prospects or the business activities,  financial or otherwise, of the Company
from the latest  dates as of which such  condition  is set forth in the Offering
Materials; (ii) there shall have been no transaction, not in the ordinary course
of  business  except  the  transactions  pursuant  to  the  Securities  Purchase
Agreement  entered  into by the  Company  which  has not been  disclosed  in the
Offering  Materials or to the  Placement  Agent in writing;  (iii) except as set
forth in the Offering  Materials,  the Company shall not be in default under any
provision of any instrument relating to any outstanding indebtedness for which a
waiver or extension has not been otherwise received; (iv) except as set forth in
the Offering Materials,  the Company shall not have issued any securities (other
than those to be issued as provided in the  Offering  Materials)  or declared or
paid any dividend or made any distribution of its capital stock of any class and
there shall not have been any change in the indebtedness (long or short term) or
liabilities or  obligations  of the Company  (contingent or otherwise) and trade
payable  debt;  (v) no material  amount of the assets of the Company  shall have
been pledged or mortgaged,  except as indicated in the Offering  Materials;  and
(v) no action, suit or proceeding,  at law or in equity,  against the Company or
affecting any of its  properties  or  businesses  shall be pending or threatened
before  or by  any  court  or  federal  or  state  commission,  board  or  other
administrative  agency,  domestic or foreign,  wherein an unfavorable  decision,
ruling or finding could materially adversely affect the businesses, prospects or
financial  condition  or  income  of the  Company,  except  as set  forth in the
Offering Materials.

                                       11
<PAGE>

         D. At Closing,  the Placement  Agent shall receive a certificate of the
Company signed by an executive officer and chief financial officer,  dated as of
the  applicable  Closing,  to the  effect  that  the  conditions  set  forth  in
subparagraph  (C) above  have been  satisfied  and  that,  as of the  applicable
closing,  the representations and warranties of the Company set forth herein are
true and correct.

         10. Termination.
             ------------

         This Agreement  shall be co-terminus  with, and terminate upon the same
terms and conditions as those set forth in, the Equity Line of Credit Agreement.
The  rights  of the  Investor  and the  obligations  of the  Company  under  the
Registration  Rights  Agreement,  and the rights of the Placement  Agent and the
obligations  of the Company  shall  survive the  termination  of this  Agreement
unabridged.

         11. Miscellaneous.
             --------------

         A. This Agreement may be executed in any number of  counterparts,  each
of which shall be deemed to be an original,  but all which shall be deemed to be
one and the same instrument.

         B. Any notice  required or  permitted  to be given  hereunder  shall be
given in writing  and shall be deemed  effective  when  deposited  in the United
States mail, postage prepaid, or when received if personally  delivered or faxed
(upon  confirmation  of receipt  received by the sending  party),  addressed  as
follows:

                                       12
<PAGE>

If to Placement Agent, to:      Westrock Advisors, Inc.
                                230 Park Avenue, Floor 9
                                New York, New York 10169

If to the Company, to:          Videolocity International Inc.
                                1762 - A Propsector Drive
                                Park City, Utah 84060
                                Attention:  Robert E. Holt
                                                  President and C.E.O.
                                Telephone: (619) 890-8186 or (801) 521-2807
                                Facsimile:  (801) 521-2844

With a copy to:                 Kirkpatrick & Lockhart, LLP
                                Miami Center - 20th Floor
                                201 South Biscayne Boulevard
                                Miami, FL 33131-2399
                                Attention: Clayton E. Parker, Esq.
                                Telephone: (305) 539-3306
                                Facsimile: (305) 358-7095

If to the Investor:             Cornell Capital Partners, LP
                                101 Hudson Street - Suite 3606
                                Jersey City, NJ 07302
                                Attention: Mark A. Angelo
                                Portfolio Manager
                                Telephone: (201) 985-8300
                                Facsimile: (201) 985-8266

With Copies to:                 Butler Gonzalez LLP
                                1000 Stuyvesat Aveneue _ Suite No.: 6
                                Union, NJ 07083
                                Attention: David Gonzalez, Esq.
                                Telephone: (908) 810-8588
                                Facsimile: (908) 810-0973
or to such other address of which written notice is given to the others.

<PAGE>

         C. This  Agreement  shall be governed by and  construed in all respects
under the laws of the State of New York,  without  reference  to its conflict of
laws rules or principles. .

         D. This Agreement and the other  agreements  referenced  herein contain
the entire  understanding  between the parties hereto and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.

                                       13
<PAGE>

         E. If any  provision of this  Agreement  shall be held to be invalid or
unenforceable,  such invalidity or  unenforceability  shall not affect any other
provision of this Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       14
<PAGE>

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

                             COMPANY:
                                                 VIDEOLOCITY INTERNATIONAL INC.

                                                 By:____________________________
                                                 Name:      Robert E. Holt
                                                 Title:     President and C.E.O.

                                                 PLACEMENT AGENT:
                                                 WESTROCK ADVISORS, INC.

                                                 By:____________________________
                                                 Name:
                                                 Title:

                                                 INVESTOR:
                                                 CORNELL CAPITAL PARTNERS, LP

                                                 By: Yorkville Advisors, LLC
                                                 Its: General Partner

                                                 By:____________________________
                                                 Name: Mark A. Angelo
                                                 Title: Portfolio Manager

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