Document:

LEASE AGREEMENT

         THIS LEASE  AGREEMENT  ("Lease") is made and entered as of December 26,
2000, by and between,  JERRY HONEYWELL AND CAROL  HONEYWELL,  AS TRUSTEES OF THE
JERRY HONEYWELL AND CAROL HONEYWELL TRUST, as Landlord,  and  VIDEOLOCITY,  INC.
(formerly named, Moviesonline, Inc.), a Nevada corporation, as Tenant.

FOR GOOD AND VALUABLE  CONSIDERATION and the mutual observances of the terms and
covenants herein, the parties agree, as follows:

1. Premises.  Landlord hereby leases to Tenant on a 24-hour, 7-day a week basis,
the two-story office building owned by Landlord,  located at 1762-A,  Prospector
Drive,  Park City,  Utah 84060,  consisting of a first floor (the "First Floor")
and a second floor (the "Second Floor") (together, the "Premises").

2. Term.  This Lease shall be in effect  with  respect to the First Floor for an
initial term,  which shall  commence on January 1, 2001, and end on December 31,
2001.  This Lease  shall be in effect  with  respect to the Second  Floor for an
initial term, which shall commence on February 15, 2001, and end on December 31,
2001. In the event Tenant holds over after the expiration of this Lease,  Tenant
shall become a tenant at will.

3.  Option to Renew.  Provided  that  Tenant has not been in default  under this
Lease at any time,  Tenant shall have the option to renew the term of this Lease
for an  additional  term,  which shall  commence on January 1, 2002,  and end on
December 31, 2002.  All of the terms and  conditions  of this Lease shall remain
the same during the renewal  term,  except that the rent during the renewal term
shall be subject to  negotiation  between  Landlord and Tenant,  but in no event
less than the rent provided  during the initial term.  Tenant shall exercise the
option to renew by providing  Landlord with written  notice thereof at least one
hundred  twenty  (120) days prior to the end of the initial  term of this Lease.
Within ten (10) days after  receipt of such written  notice by Landlord,  Tenant
and  Landlord  shall meet and  negotiate in good faith to arrive at the rent for
the renewal term.

4.   Rent.  Tenant agrees to pay rent for the Premises, in advance, as follows:

         (a) For the First Floor: (i) the sum of $2,000.00 upon the execution of
this  Lease  for the  month of  January,  2001 and (ii)  thereafter,  the sum of
$2,000.00  on the  first  day of each and every  month  during  the term of this
Lease.

         (b) For the  Second  Floor:  (i) the  sum of  $1,000.00,  on or  before
February 1, 2001, for the period February 15, 2001,  through  February 28, 2001;
and (ii)  thereafter  the sum of  $2,000.00  on the  first day of each and every
month during the term of this Lease.

5. Late Payment Fee. If any monthly  installment of rent is not paid within five
(5) days of the date it is due, a late payment fee equal to ten percent (10%) of
the amount of the late monthly installment shall be added and be due and payable
without notice to Tenant.  If any two (2) monthly  installments  of rent are not
paid  within five (5) days of the date they are due, or if any check from Tenant
to Landlord is returned to Landlord for insufficient funds, Landlord may require
that all future monthly rent payments be in the form of cashier's checks.

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6. Security Deposit. Concurrently with the execution of this Lease, Tenant shall
pay to Landlord a security  deposit in the amount of $12,000.00.  Throughout the
term of the Lease,  Landlord  shall be  entitled to hold the  security  deposit,
without interest,  in Landlord's  general funds, and to use the security deposit
to pay any defaulted rent or other costs  associated  with the Premises that are
the  obligations  of Tenant and which have not been paid by Tenant.  At any time
Landlord expends funds from the security deposit to pay any obligation of Tenant
under this Lease,  Landlord will notify  Tenant,  and Tenant shall have five (5)
days in which to pay to  Landlord  the amount  required  in order to restore the
full amount of the security deposit.  Failure to so restore the security deposit
will be a default under this Lease. Provided that Tenant has not been in default
under this Lease at any time,  Landlord shall apply the security  deposit to pay
the  last two (2)  months  rent  due  during  the  initial  term of this  Lease;
provided,  however,  if Tenant has not been in  default  under this Lease at any
time and has exercised timely the option to renew,  Landlord shall instead apply
the security  deposit to pay the last two (2) months rent due during the renewal
term  of this  Lease.  Any  amount  of the  security  deposit  remaining  at the
expiration of this Lease shall be returned to Tenant by Landlord within ten (10)
days,  less  charges for any damages to the  Premises  or other  obligations  to
Landlord for which Tenant is responsible.

7. Interest.  Any  obligation of Tenant to Landlord under this Lease,  including
any advance made by Landlord for an  obligation of Tenant under this Lease which
Tenant is  required  to pay but has not paid,  which is in excess of the  amount
available to Landlord from the security  deposit,  shall accrue  interest at the
rate of eighteen  percent (18%) per annum from the date such  obligation  arises
until fully paid to Landlord.

8. Utilities;  Snow Removal. Landlord shall pay for all gas, electric power, and
water  services  consumed on the Premises by Tenant.  Tenant will be responsible
for any damages  resulting  to the  Premises as a result of Tenant's  failure to
maintain  adequate  temperatures in the Premises to prevent freezing of pipes or
other damage to the Premises.  Landlord shall be responsible  for the removal of
snow from the entrance to the Premises.  Tenant shall be responsible for its own
telephone services.

9. Trash  Disposal;  Janitorial.  Landlord shall pay any charges for the pick-up
and disposal of trash from the Premises. Tenant shall pay and be responsible for
its own  janitorial  services  and  supplies  for the  Premises,  which shall be
provided by a reputable, independent janitorial services company. The janitorial
services company employed by Tenant shall be subject to the reasonable  approval
of Landlord.  Janitorial services shall be performed no less than once each week
and shall include, at a minimum, removal of all trash, vacuuming of all carpets,
mopping of all tile floors,  and the thorough  cleaning of the rest rooms on the
Premises.

10.  Insurance; Indemnification.

         (a) Fire and casualty  insurance for the full replacement  value of the
building  constituting  a part of the Premises  will be provided and paid for by
Landlord.  This insurance will not cover any loss to Tenant's personal property,
inventory,  or fixtures.  Tenant shall insure its personal  property at its sole
cost and expense.

         (b) Tenant shall provide and maintain  public  liability  insurance for
those  claims  arising  from  injuries  within or about the Premises or directly
attributable  to Tenant's  negligence or actions related  thereto.  Tenant shall
carry commercial general liability insurance in the aggregate amount of not less
than $1,000,000.00, per occurrence and aggregate, with Landlord as an additional
named insured thereon.

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         (c)  Notwithstanding  Tenant's obligation to purchase general liability
insurance,  Tenant agrees to indemnify  and hold Landlord  harmless from any and
all claims,  causes of action,  loss,  damage or expense,  including  attorney's
fees,  for personal  injury and property  damage arising from or relating to the
use of the  Premises and the  adjacent  parking lot and walkways by Tenant,  its
officers,  employees,  agents, guests and invitees,  except for Landlord's gross
negligence or wilful acts.  Prior to taking  possession of the Premises,  Tenant
will  provide to Landlord a  Certificate  of  Liability  Insurance  showing that
insurance in  compliance  with this  Paragraph 10 has been  purchased by Tenant.
Such  Certificate of Liability  Insurance  shall provide for no less than thirty
(30) days notice of  cancellation to Landlord and shall be in form and substance
acceptable to Landlord.

11. Property Taxes. Landlord shall be solely responsible to pay any and all real
property  taxes and  assessments  against the  Premises.  Tenant shall be solely
responsible to pay any and all personal property taxes assessed against Tenant's
personal property located at the Premises.

12.  Condition of Premises.  Tenant has  inspected  the Premises and accepts the
Premises it their present "as is"  condition.  Landlord shall have no obligation
to make any changes, alternations, or improvements to the Premises.

13.  Use of  Premises;  Alterations  and  Improvements.  Tenant  has  leased the
Premises for general  office use and no other use of the Premises is  permitted.
Any change in such use shall  require the advance  written  consent of Landlord.
Unless  otherwise  agreed to in writing by Landlord,  Tenant agrees that its use
and occupancy of the Premises will be limited, as follows:

         (a) Tenant  shall not conduct any business  from the  Premises  that is
deemed extra-hazardous, or will result in an increase in fire insurance premiums
on the Premises, on inability to obtain fire insurance at standard rates. Tenant
shall not create  unreasonable  levels of noise,  odor, or vibration  that might
reasonably be expected to penetrate to adjoining  properties and cause annoyance
to the owners or occupants of the same. Tenant shall not conduct any activity on
the  Premises  that is  prohibited  by law.  Tenant shall commit no waste on the
Premises.

         (b) Tenant shall not store,  use, or dispose of Hazardous  Materials or
Toxic  Wastes  on the  Premises,  (except  in  such  limited  quantities  as are
reasonable and customary in the routine  operation of Tenant's business and then
only in compliance  with all applicable  laws,  rules and  regulations of local,
state and federal  governmental  agencies).  For the purposes of this Lease, the
term "Hazardous Materials" shall mean any product or substance that is regulated
under state or federal  environmental laws, including,  without limitation,  the
Utah Hazardous Waste Act (26-14-2 UCA), the Hazardous  Materials  Transportation
Act, Clean Water Act (33 USC 1317), the Resources  Conservation and Recovery Act
(42 USC 6901),  the  Comprehensive  Environmental  Response,  Compensation,  and
Liability Act (42 USC 9601), or any other state or federal statute or regulation
now in effect or later  adopted.  Any  violation of these Acts is a violation of
this Lease.

         (c)  Tenant  shall  not make any  structural  alterations  or  material
changes to the Premises, including construction or removal of partition walls or
the penetration of exterior walls or roofs, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed.

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         (d) Tenant  shall make no  exterior  modifications  to the  building or
grounds constituting the Premises without the written consent of Landlord, which
consent shall not be unreasonably withheld or delayed.

         (e) In the event that Tenant obtains  Landlord's written consent to any
alterations or improvements to the Premises,  Tenant shall not permit mechanics'
or materialmen's liens related to Tenant's  construction of such improvements to
attach to the  Premises.  In the event a liens is filed  against  the  Premises,
Landlord may give Tenant  written  notice to either remove such lien, or, in the
alternative,  to post an amount  equal to twice the  amount of the lien claim in
escrow pending the  resolution of the dispute with the lien claimant.  If Tenant
fails to  obtain a lien  release  or bond for the lien  within  five (5) days of
demand from Landlord,  Tenant shall be in monetary default under this Lease, and
Landlord  shall have all the  remedies  available  under this  Lease,  including
termination of this Lease.  Termination of this Lease will not, however, absolve
Tenant of the obligation to remove the lien or to indemnify Landlord against the
lien.

14.  Parking.  Tenant  shall have the right to use of the  surface  parking  lot
adjacent to the Premises in common with other  neighboring  property  owners and
their  guests  and  invitees,  on  a  first  come/first  served  basis,  without
additional  charge of any kind, so long as such parking does not violate any law
or create a nuisance.

15. Signs.  No signs,  banners,  or advertising  material shall be placed on the
exterior of the Premises without the written consent of Landlord,  which consent
shall  not  be  unreasonably   withheld  or  delayed.  Any  signs,  banners,  or
advertising material shall be paid for by Tenant and shall conform to and comply
with any applicable sign ordinance or other laws,  rules and regulations of Park
City Municipal  Corporation.  Any required sign permits shall be applied for and
paid for by Tenant.

16.  Maintenance  and  Repairs.  Tenant  shall  be  solely  responsible  for the
maintenance of the interior of the Premises in a clean, attractive, sanitary and
well kept  condition.  Landlord  shall be  responsible  to  maintain,  repair or
replace,  as necessary,  the plumbing  system and fixtures,  heating  system and
furnace,  electrical  systems and wiring, and all mechanical systems so that the
same shall always be in good  working  order and repair and in  compliance  with
applicable  building  codes and  safety  requirements  of all  local,  state and
federal governmental agencies. Landlord shall also maintain, repair and replace,
as necessary,  the roof, walls,  glazing and other structural  components of the
building  constituting  the  Premises,  unless  damage  is caused by the acts or
negligence of Tenant or Tenant's employees, agents, guests or invitees, in which
case Tenant  shall  reimburse  Landlord  for the cost of all  required  repairs.
Landlord  shall supply working light bulbs to all light fixtures in the Premises
upon commencement of this Lease; thereafter, Tenant shall be responsible for the
replacement of any light bulbs in such light fixtures.

17.  Assignment  and  Subleasing.  Tenant  shall  have no right to  sub-let  the
Premises  or assign this  Lease,  whether in full or in part,  without the prior
written consent of Landlord, which consent shall not be unreasonably withheld or
delayed,  and  any  purported  assignment  or  sublease  of the  Tenant  without
Landlord's  prior  written  consent  shall be  absolutely  void and of no effect
whatsoever. The sale of Tenant's business, or a controlling interest in Tenant's
business,  shall be deemed to be an  assignment  of the  Lease,  which  requires
Landlord's  prior  written  consent.  In no event shall  Landlord be required to
release Tenant in connection with any approved  assignment of this Lease. In the
event Tenant assigns or sub-lets this Lease (including an unapproved transfer of
control of Tenant's  business to a third party) in violation of this  provision,
Landlord  shall  have the  option of  declaring  this  Lease in  default  and/or
terminating this Lease on fifteen (15) days' written notice to Tenant.

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18. Abatement of Rent or Termination  Following Casualty Loss. In the event of a
fire or other casualty loss which makes the Premises  uninhabitable for a period
of more than one hundred  twenty (120) days,  Landlord  shall have the option of
terminating  this Lease or abating the rent during the actual  period of repairs
and  extending  the Lease term by a period equal to the period  during which the
Premises  are  uninhabitable.  If the  nature  of the  damage  is such  that the
Premises  cannot  reasonably be restored fully to their  condition  prior to the
loss within one hundred  twenty (120) days,  Tenant may terminate  this Lease by
written  notice to  Landlord.  Landlord  shall not be liable to Tenant  for lost
profits,  rent on  temporary  locations,  or other costs or damages  incurred by
Tenant as a result of the Premises  becoming  uninhabitable due to fire or other
casualty loss.

19.  Landlord's  Right to Inspect.  Landlord shall have the right to inspect the
Premises at reasonable  times to insure  compliance with this Lease.  Inspection
during  Tenant's  normal  business  hours is permitted with  reasonable  advance
notice to Tenant;  provided,  however,  Landlord  shall make every effort not to
inconvenience Tenant or to disrupt Tenant's business in connection with any such
inspections.  In the event of an  emergency,  Landlord  may  enter the  Premises
without  notice  Tenant in order to secure the Premises  and make any  emergency
repairs.

20.  Remedies.

         (a) In the event of a default  by Tenant in the  payment  of rent under
this Lease,  Landlord  shall have all remedies  available at law,  including the
right to enter and re-take possession of the Premises, or to re-let the Premises
on Tenant's  account  and hold Tenant  liable for the balance of the Lease term,
and/or to bring an action  against  Tenant for the amounts owed.  Landlord shall
have the right,  but not the  obligation,  to allow any approved  sub-tenants to
remain in possession,  and to re-take  possession of all or only portions of the
Premises.  Landlord  shall give  Tenant a written  notice of any  default in the
payment of rent,  stating the nature of the default and the amount owed.  Tenant
shall have five (5) days from the date of any such notice to pay all sums owing,
including  any late  payment  fee,  and if not cured  within such five (5) days,
Landlord may exercise its legal and equitable remedies, including termination of
this Lease and eviction of Tenant.  Landlord may also sue Tenant for any amounts
owed, with or without terminating this Lease.

         (b) In the event of a default  under this Lease  other than the payment
of rent, or any other monetary sum, Landlord shall give Tenant twenty (20) days'
written notice of the default  specifying the nature of the default,  and if the
condition  complained  of is not cured  within  said  twenty  (20) days (or such
longer period as may be required  when the condition  giving rise to the default
is such that the default  cannot be reasonably  cured within 20 days, and Tenant
has within the 20-day notice period  undertaken  the work  necessary to effect a
cure and is diligently prosecuting the same to completion),  Landlord shall have
the right to exercise all available legal and equitable  remedies against Tenant
to enforce the terms of this Lease,  including the  repossession of the Premises
and/or termination of this Lease.  Notwithstanding any time periods contained in
this Lease,  Tenant agrees to take such actions as are  reasonable and necessary
in the case of an emergency to secure the Premises and prevent further damage to
the Premises until permanent repairs can be made.

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<PAGE>

         (c) The  obligations  of Tenant  under this  Lease  shall  survive  the
termination of Tenant's  possession until fully paid. In addition to amounts due
under this Lease,  Tenant shall be liable for Landlord's  reasonable  attorney's
fees and costs  incurred in the  enforcement of this Lease and the collection of
amounts owed.

         (d) Landlord shall have the right,  but not the obligation,  to sub-let
the Premises on Tenant's  account for the  remainder  of the Lease term,  and to
hold  Tenant  liable  for the  difference  in  rent,  if any,  even if  Tenant's
possession has terminated because of Tenant's default under this Lease.

21.  Condemnation.  In the  event  that  all  of the  Premises  are  taken  by a
governmental  entity for public  purposes,  this Lease  shall  terminate  on the
effective date of such taking.  In the event that only a portion of the Premises
is taken  by a  governmental  entity  for  public  purposes,  there  shall be no
reduction in rent unless the portion of the Premises taken materially interferes
with  Tenant's use of the  Premises,  in which case Tenant shall either have the
right,  at its option,  to accept a reduction  in rent offered by Landlord or to
terminate this Lease. Any  condemnation  award in connection with either a total
or partial taking of the Premises by a governmental  entity for public  purposes
shall be apportioned between Landlord and Tenant as the parties may agree at the
time in  conjunction  with the taking.  Tenant shall have the right to appear on
its own behalf in any  condemnation  suit to defend  the value of its  leasehold
interest  at  Tenant's  expense.  If the  parties  are not  able to  agree on an
apportionment  of any award (and  apportionment  is not made in the condemnation
proceeding),  the apportionment  will be submitted to binding  arbitration under
the rules of the American Arbitration  Association,  with each party to bear its
own costs.  If the taking has  resulted in a loss of some of  Tenant's  space or
facilities,  but  Tenant  remains  in  possession  and  operation,  rent will be
adjusted proportionately for the loss of space or facilities.

22.  Notices.  Notices  that may be required  from time to time under this Lease
shall be in writing and shall be sent or delivered to the parties addressed,  as
follows:

To Landlord:                                Jerry Honeywell and Carol Honeywell,
                                            as Trustees of The Jerry Honeywell
                                            and Carol Honeywell Trust
                                            Post Office Box 917
                                            Park City, Utah 84060

                                                     With a copy to:

                                                     Mr. Gary W. Nielsen
                                                     Attorney At Law
                                                     4970 North 400 West
                                                     Park City, Utah 84098

To Tenant:                                  Videolocity, Inc.
                                            1762-A Prospector Drive
                                            Park City, Utah 84060
                                            Attention: Mr. Jerry E. Romney, Jr.,
                                                       President

         Notice shall be effective  upon  personal  delivery,  or three (3) days
after mailing by registered mail, return receipt  requested.  Notice may also be
given by  delivery to Federal  Express or another  national  overnight  delivery
service,  with notice so delivered being effective on the day of actual delivery
as shown on the records of such  delivery  service.  Either party may change its
address or request that  additional  notices be sent to others by written notice
given in accordance with this Paragraph 22.

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23.  Covenant  of  Quiet  Enjoyment;  Subordination.  For so long as  Tenant  is
faithfully  performing its obligations  under this Lease,  Landlord  promises to
provide  Tenant with quiet  enjoyment of the  Premises.  Landlord  shall pay all
mortgages or trust deed loans recorded against the Premises.  Tenant agrees that
this Lease shall be  subordinate  to any  mortgage or trust deed now recorded or
hereafter recorded against the Premises; provided, however, that any mortgage or
trust  deed   hereafter   recorded   against  the  Premises   shall   contain  a
non-disturbance   provision   for  Tenant's   benefit  as  a  condition  to  the
subordination of this Lease by Tenant.

24. Sale of Premises.  This Lease shall be binding on the successors and assigns
of Landlord  in the event of a sale or transfer of the title to the  Premises or
any part thereof. No sale or transfer of title shall disturb Tenant's possession
or quiet enjoyment of the Premises.

25.  Surrender of Premises.  Upon the  expiration or sooner  termination of this
Lease, Tenant shall surrender the Premises to Landlord in substantially the same
condition as existed on the date of commencement of this Lease,  normal wear and
tear excepted,  and broom clean and free of all personal  property and debris of
Tenant. Tenant may remove all of its trade fixtures and equipment.  Landlord may
dispose of and discard any  personal  property or debris left on the Premises by
Tenant at the cost and  expense of Tenant  and may  deduct the cost and  expense
thereof from Tenant's security deposit.

26. Estoppel  Certificate.  Upon the written  request of Landlord,  Tenant shall
provide a written statement to Landlord to the effect that this Lease is in full
force and  effect,  and that  Landlord is not in default on any  obligations  to
Tenant,  or if there are claims of default or offset  against  Landlord,  Tenant
shall  describe  those  claims.  Tenant's  failure  to  provide  such a  written
statement to Landlord within ten (10) days' after written request  therefor from
Landlord  shall  constitute a default  under this Lease and entitle  Landlord to
exercise all its remedies under this Lease.

27.  Attorney's  Fees.  If either party is required to bring suit to enforce the
terms of this  Lease,  the  prevailing  party  shall be  entitled to recover its
reasonable costs of enforcement,  including reasonable attorney's fees, from the
other party as additional damages and as a part of any judgment entered.

28. Commissions. The parties have negotiated this Lease themselves,  without the
involvement  of real estate  brokers or agents.  Each party shall  indemnify the
other from any claims from third party real estate brokers or agents  claiming a
right to a commission relating to this Lease.

29. Covenant of Cooperation. Landlord agrees to cooperate with Tenant by joining
in and executing any application  for a building,  sign, or similar permit which
may be required in order to make any alterations or improvements to the Premises
to which Landlord has consented in accordance with the terms of this Lease.

30.  Miscellaneous.  This  Lease will be  governed,  interpreted  and  construed
according  to the laws of the State of Utah.  This Lease  represents  the entire
agreement  between the parties  with  respect to the subject  matter  hereof and
supersedes any and all prior or contemporaneous  oral or written  understandings
or agreements  with respect to the subject matter hereof.  This Lease may not be
modified or amended  except in a writing  signed by the  parties.  Landlord  and

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<PAGE>

Tenant  agree to deal with one  another  fairly and in good faith in all matters
arising under this Lease.  Each party signing this Lease represents and warrants
to the other that such party has obtained all consents and approvals and has all
requisite  power and  authority to execute and deliver this Lease and to perform
all its terms and conditions.

31.  Counterparts;  Facsimile  Transmission.  This  Lease  may  be  executed  in
counterparts,  and all such  counterparts  taken together shall constitute but a
single agreement. The facsimile transmission of a signed original counterpart of
this  Lease or of an  amendment  thereto by one party to this Lease to the other
shall be deemed the same as delivery of a signed original.

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

Landlord:

                                        ___________________________________
                                        JERRY HONEYWELL, AS TRUSTEE OF THE
                                        JERRY HONEYWELL AND CAROL HONEYWELL
                                        TRUST

                                        ___________________________________
                                        CAROL HONEYWELL, AS TRUSTEE OF THE
                                        JERRY HONEYWELL AND CAROL HONEYWELL
                                        TRUST

Tenant:                                 VIDEOLOCITY, INC. (formerly named,
                                        Moviesonline, Inc.), a Nevada
                                        corporation

                                        By_________________________________
                                            Jerry E. Romney, Jr., President

                                       8
<PAGE>

                                   EXHIBIT "A"

                        INVENTORY 1762 A PROSPECTOR AVE.

THE FOLLOWING FURNITURE IS SUPPLIED TO VIDEOLOCITY,  INC. AS-IS AND AT NO CHARGE
FOR  THEIR  USE AS LONG AS THE  LEASE  BETWEEN  THEM  AND THE  JERRY  AND  CAROL
HONEYWELL TRUST IS IN EFFECT.

2 EA.             5' X 3' DESK/COMPUTER MODULES
2 EA.             CORNER COMPUTER TABLE MODULES
1 EA.             2' X 3' END TABLE MODULES
1 EA.             MOVABLE COMPUTER STANDS
1 EA.             2' X 4' SIDE DESK
2 EA.             3' X 6' DESK AND COMPUTER RETURN TABLES
1 EA.             3' X 5' DESK W/CURVED END
1 EA.             3' X 5' OAK CONFERENCE TABLE
6 EA.             OAK/BLUE UPHOLSTERY CONFERENCE TABLE CHAIRS
6 EA.             NS5E6(AM25) BURGUNDY UPHOLSTERED DESK CHAIRS
1 EA.             NS5E6(AM22) GRAY UPHOLSTERED DESK CHAIR
1 EA.             SUPERIOR GRAY UPHOLSTERED DESK CHAIR
1 EA.             4-DRAWER VERTICAL LEGAL FILE CABINET
2 EA.             ANDERSON/HICKEY 4-DRAWER VERTICAL FILE CABINET

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<PAGE>

                                                                     VIDEOLOCITY
                                                ................................
                                                         1762 A Prospector Drive
                                                           Park City, Utah 84060
                                                               Tel: 435-615-8338
                                                               Fax: 435-615-9979

August 31, 2001

Jerry Honeywell & Carol Honeywell, Trustees
of the Jerry Honeywell and Carol Honeywell Trust
P.O. Box 917
Park City, UT.   84060

Dear Mr. & Mrs. Honeywell,

Pursuant to paragraph 3 of that certain Lease Agreement dated as of December 26,
2000  by and  between  Videolocity,  Inc.  and the  Jerry  Honeywell  and  Carol
Honeywell Trust, Videolocity is exercising its option to extend the term of said
lease for the property  situated at 1762 A Prospector Drive, Park City, Utah for
one year  following the  expiration  of the term,  for both the first and second
floors of said property.  It is our  understanding  that the term of said Lease,
for both floors,  expires December 31, 2001.  Therefore,  the term of said Lease
would be extended  through  December 31, 2002 with the same terms and conditions
as set forth in said Lease,  including the following  request to be incorporated
in the  extension  of the  aforementioned  Lease  pursuant  to  this  notice  of
extension, with the following conditions, precedent.

Videolocity  requires  that  certain  fixtures on the second  floor be modified.
Specifically,  Videolocity  requires  that the  reception  desk and  surrounding
shelving  on  the  second   floor  be  removed  to  open  the  space  up  for  a
conference/reception  area.  Removing this fixture may necessitate the carpet be
replaced in the  immediate  area where the fixture was located and the  adjacent
wall  repainted  where the shelving was attached.  Please inform us as to if and
when this can be facilitated.

This notice is hereby given as of August 31, 2001.

Sincerely,

Jerry Romney, Jr.
President

                                       10
<PAGE>SECURITY AGREEMENT
                             (All Assets of Debtor)

         Agreement made this 1st day of April, 2002, by and between  VIDEOLOCITY
INTERNATIONAL,  INC. and its wholly owned subsidiary,  VIDEOLOCITY TECHNOLOGIES,
INC.,  collectively,  herein referred to as Debtor, and that group of holders of
promissory  notes executed by VIDEOLOCITY  INTERNATIONAL,  INC., as set forth in
Exhibit  "B"  hereto  and   incorporated   herein  by  this  reference,   herein
collectively  referred to as a "Lender".  The  security  interest in the subject
collateral as to each said Lender shall be an undivided  percentage interest set
forth in Exhibit "B".

         In consideration of the mutual covenants and promises set forth herein,
Debtor and Lender agree:

                                   SECTION ONE
                          CREATION OF SECURITY INTEREST

         Debtor  hereby grants to Lender a security  interest in the  collateral
described in Section Two to induce  Lender to extend the due date on the subject
loans  evidenced by the  Promissory  Notes  identified  in Exhibit "B" hereto by
amount  and date,  and to secure  the  performance  and  payment of all loans or
credit between Debtor,  and Lender,  in such sums and amounts as loans or credit
may be  extended  by  Lender,  and to be payable  as may be  directed  under any
agreement  extending  credit,  and to assure  the prompt  payment by Debtor,  to
Lender of all  indebtedness  owing by Debtor to Lender,  whether now existing or
hereafter incurred.

                                   SECTION TWO
                            DESCRIPTION OF COLLATERAL

         The  collateral  of this  security  agreement,  herein  referred  to as
collateral, consists of the following described property:

         All assets of Debtor however  designated or classified as identified on
Exhibit "A" attached hereto and incorporated  herein by this reference,  and the
proceeds from  disposition or licensing of said patents and or products  created
or  manufactured  through  the use of said  patents  by  debtor,  its  agents or
contractors.

                                       1
<PAGE>

                                  SECTION THREE
                         DEBTOR'S OBLIGATIONS, GENERALLY

         (a)  Payment.  Debtor  shall pay to Lender all  obligations  and credit
extensions  when  due  under  existing  agreements  or  subsequent   agreements,
including  all loans  made or credit  extended  or any  renewals  or  extensions
thereof in accordance  with the terms of such  agreements or notes including the
subject Promissory Notes executed by Debtor identified in Exhibit "B" hereto.

         (b) Warranties and Representations. Debtor warrants and covenants that:

         (1) Except for the security interest hereby granted,  Debtor has, or on
acquisition  will  have,  title to the  subject  collateral  free from any lien,
security  interest,  encumbrance or claim, and Debtor will, at Debtor's expense,
defend any action that may affect the Lender's  security interest in or Debtor's
title to collateral.

         (2)  Collateral  is  used  or is  to be  used  primarily  for  business
purposes.

         (3) Debtor is a corporation and it is duly organized and existing under
the laws of the State of Nevada and is duly  qualified  and in good  standing in
every state in which it is doing business.

         (4) The  execution,  delivery and  performance  of this  agreement  are
within the Debtor's  corporate  powers,  have been duly  authorized,  are not in
contravention  of law  or  the  terms  of  Debtor's  charter,  bylaws  or  other
incorporation  papers,  or of any  indenture,  agreement or undertaking to which
Debtor is a party or by which it is bound.

         (5) Debtor shall give Lender  written  notice of each location in which
collateral  is or will be kept other than for temporary  processing,  storage or
similar purposes. Except as such notice is given, all collateral is and shall be
kept at Debtor's address as it appears at the beginning of this agreement.

         (6) Debtor shall give Lender written notice of each office of Debtor at
which records of Debtor pertaining to collateral are kept. Except as such notice
is given,  all records of Debtor  pertaining to the  collateral are and shall be
kept at Debtor's address as it appears at the beginning of this agreement.

         (7)  Subject  to  any  limitations  stated  therein  or  in  connection
therewith, all balance sheets, earning statements and other financial data which
have been or may  hereafter be furnished  Lender to induce it to enter into this
agreement or any other  agreement or otherwise  in  connection  herewith,  do or
shall fairly represent the financial condition of Debtor as of the dates and the
results of its operations for the periods for which the same are furnished,  and
all other  information,  reports and other  papers and data  furnished to Lender
are, or shall be at the time

                                       2
<PAGE>

they are so  furnished,  accurate  and  correct  in all  material  respects  and
complete  insofar as  completeness  may be  necessary  to give Lender a true and
accurate knowledge of the subject matter.

         (c)  Performance  of Agreement.  Debtor shall perform all covenants and
agreements set forth in this security agreement.

                                  SECTION FOUR
                               LENDER'S OBLIGATION

         Lender shall extend the due date of the Notes identified in Exhibit "B"
to  September  1,  2002 in  consideration  for  Debtor  granting  this  security
interest,  but  Lender  shall not be under any  obligation  to grant  additional
extensions  of credit to Debtor and may  terminate  grants of credit (other than
the subject  loan) to Debtor at any time  without  cause.  Debtor  shall  remain
liable and the  security  agreement  shall be in force as long as Debtor has any
outstanding  obligation to Lender whether arising under the identified  Notes or
other extension of credit now existing or hereafter incurred.

                                  SECTION FIVE
                             PROCEEDS OF COLLATERAL

         Debtor  hereby  grants  to  Lender a  security  interest  in and to all
proceeds of collateral as defined by Utah Code  Annotated.  This provision shall
not be construed to mean that Debtor is authorized to sell, lease, or dispose of
collateral without the prior consent of Lender, except in the ordinary course of
Debtor's business.

                                   SECTION SIX
                         DECREASE IN VALUE OF COLLATERAL

         If  in  the  reasonable  judgment  of  Lender,   collateral  materially
decreases in value, (which shall not be exercised unless there is at least a 20%
diminution  in value of the  collateral),  Debtor  shall  within  10 days  after
written  request either provide  additional  security  reasonably  sufficient to
satisfy  Lender  or  arrange  to  reduce  the  total  indebtedness  by an amount
sufficient to satisfy Lender.

                                  SECTION SEVEN
                               FINANCING STATEMENT

         At the  request  of  Lender,  Debtor  will  join in  executing  or will
execute, as appropriate,  all necessary  financing  statements in all states and
provinces as the Lender,  in its sole  discretion  deem  appropriate,  in a form
satisfactory to Lender,  and Debtor will pay the cost of filing such statements.
Debtor will further execute all other instruments deemed, under prudent business

                                       3
<PAGE>

standards, to be necessary by Lender to perfect its security interest as granted
herein and pay the cost of filing  such  instruments.  Debtor  warrants  that no
financing  statement covering the collateral or any part thereof or any proceeds
thereof is  presently  on file in any public  office in conflict  with  Lender's
security interest in the collateral.

                                  SECTION EIGHT
                    LOCATION AND IDENTIFICATION OF COLLATERAL

         As to all collateral that is tangible  personal  property,  Debtor will
keep such collateral  separate and  identifiable and at Debtor's address showing
in this agreement,  and will not remove collateral from such address without the
prior  written  consent of Lender  except in the ordinary  course of business of
Debtor.

                                  SECTION NINE
                                    INSURANCE

         As to all collateral that is tangible personal  property,  Debtor shall
insure collateral with companies  acceptable to Lender against casualties and in
such amounts as Lender shall require. Such insurance shall be for the benefit of
Debtor and Lender as their interests may appear.  Lender is hereby authorized to
collect sums that may become due that is insuring the collateral  under any such
insurance policies and apply the sums to the obligations hereby secured.

                                   SECTION TEN
                              TAXES AND ASSESSMENTS

         Debtor  shall  promptly  pay  when due all  taxes  and  assessments  on
collateral or for its use and operation.

                                 SECTION ELEVEN
                            PROTECTION OF COLLATERAL

         Debtor shall keep collateral in good order and repair ordinary wear and
tear  excepted and shall not waste or destroy  collateral  or any part  thereof.
Further,  Debtor  shall  not use  collateral  in  violation  of any  statute  or
ordinance.  Lender  shall have the right,  by or  through  any of its  officers,
agents,  attorneys  or  accountants,  to examine and inspect  collateral  at any
reasonable  time,  including the right to make extracts from Debtor's  books and
records and to arrange for verification of depreciation  accounts and transfers,
under reasonable procedures, directly with account Debtors or by other methods.

                                       4
<PAGE>

                                 SECTION TWELVE
                            REIMBURSEMENT OF EXPENSES

         At the option of Lender and at any time,  Lender may  discharge  taxes,
liens, or other encumbrances on collateral which non-discharge would endanger or
impair Lender's  security interest and, perform or cause to be performed for and
on behalf of Debtor any action,  condition,  obligation, or covenant that Debtor
fails or refuses to perform, or pay for the repair, maintenance and preservation
of collateral  which  non-discharge  would endanger or impair Lender's  security
interest.  All sums so expended by Lender shall bear  interest  from the date of
payment at the default rate  specified  in the Notes,  whether or not said Notes
shall have been discharged,  and shall be payable at the place designated in the
above-mentioned Notes, and shall be secured by this Security Agreement.

                                SECTION THIRTEEN
                          TIME SHALL BE OF THE ESSENCE

         In performing any act under this agreement and the obligations and note
secured hereby, TIME SHALL BE OF THE ESSENCE.

                                SECTION FOURTEEN
                                     WAIVER

         The  failure  of Lender to  exercise  any  right or  remedy,  including
acceptance by Lender of partial or delinquent  payments,  shall not constitute a
waiver of any  obligation of Debtor or right of Lender or constitute a waiver of
any other similar default subsequently occurring.

                                 SECTION FIFTEEN
                                     DEFAULT

         If Debtor fails to pay any amount payable on the above  mentioned Notes
or on any other indebtedness secured hereby, or shall fail to observe or perform
any of the provisions of this  agreement,  or of any other  agreements as herein
mentioned,  Debtor  shall  be in  default.  In  addition,  any  or  all  of  the
liabilities  of Debtor to Lender  shall,  at the option of Lender but subject to
any time allowed by any instrument evidencing a liability,  including the notice
provisions in the Notes the subject of this security  interest,  be  immediately
due and  payable  without  notice  or  demand  on the  occurrence  of any of the
following events:

         (a) The  making by Debtor of any  misrepresentation  to Lender  for the
purpose of obtaining credit or an extension of credit;

         (b) The failure of Debtor after request by Lender to furnish  financial
information or to permit the inspection of books or records;

         (c) The issuance of an  injunction or  attachment  against  property of
Debtor;

                                       5
<PAGE>

         (d) The insolvency of Debtor or of any endorser,  guarantor,  or surety
on any liability of Debtor to Lender;

         (e) A change in the condition or affairs,  financial or  otherwise,  of
Debtor as in the opinion of Lender  impairs  Lender's  security or increases its
risk;

         (f)  Default of Debtor  under any loan,  credit or other  agreement  to
which Lender is also a party.

                                 SECTION SIXTEEN
                                    REMEDIES

         On any such default or election by Lender under Section Fifteen of this
Agreement, and at any time thereafter:

         (a) Lender may declare all obligations  secured hereby  immediately due
and payable and may proceed to enforce  payment and  exercise  any and all other
rights and remedies provided by the Utah Commercial Code, as well as any and all
other rights and remedies possessed by Lender.

         (b) Lender  shall  have the right to remove  collateral  from  Debtor's
premises. Lender may require Debtor to assemble collateral and make it available
to Lender at any place to be designated by Lender that is reasonably  convenient
to both parties. For purposes of removal and possession of collateral, Lender or
its representatives may enter any premises of Debtor without legal process,  and
Debtor  hereby  waives  and  releases  Lender of and from any and all  claims in
connection therewith or arising therefrom.

         (c) Unless collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Lender shall give
Debtor reasonable notice of the time and place of any public sale thereof, or of
the time after which any private sale or any other intended  disposition thereof
is to be made. The requirement of reasonable  notice shall be met if such notice
is mailed,  postage  prepaid,  to the address of Debtor  shown  herein,  or such
address as Debtor may hereafter  establish for conducting its business and shall
notify  Lender  thereof,  in writing,  at least ten (10) days before the time of
sale or disposition. Expenses of retaking, holding, preparing for sale, selling,
or the like shall  include  reasonable  attorney's  fees and legal  expenses  of
Lender.

                                SECTION SEVENTEEN
                                  GOVERNING LAW

         The validity of this security agreement and any provision thereof shall
be determined under and be construed according to the laws of the State of Utah,
and all obligations of the parties created  hereunder are to be performed in the
State of Utah.

                                       6
<PAGE>

         IN WITNESS  WHEREOF,  the parties have executed this  Agreement the day
and year first above written.

Debtor:

VIDEOLOCITY INTERNATIONAL, INC.               VIDEOLOCITY TECHNOLOGIES, INC.

by__________________________________          by________________________________
    its C.E.O.                                    its C.E.O.

Attest:                                       Attest:
____________________________________          __________________________________
Secretary                                     Secretary

Lender:                                       CROWN JEWELS, LLC

_______________________________________       by________________________________
David B. Edwards                                  Its Member/Manager

_______________________________________
Lynette Edwards
                                              ISOZ, L.C.

_______________________________________       by________________________________
Bennie L. Williams                                Its Member/Manager

_______________________________________
Larry R. McNeill                              James C. Davis Trust 12/19/91

TO BE NAMED:___________________________       by________________________________
                                                  Its Trustee

by_____________________________________       W.A.J. ENTERPRISES, LLC

                                              by________________________________
                                                  Member/Manager

                                       7
<PAGE>

                                   EXHIBIT "A"
                            DESCRIPTION OF COLLATERAL

All patents issued or to be issued on those items as identified in the following
Provisional Patent Applications made by Videolocity Technologies, Inc.

     "Videolocity Digital Entertainment Solution"
          Application No. 60/297,791;
     "Videolocity Video Encoding & Compression Process"
          Application No. 60/336,703;
     "Videolocity Graphical User Interface"
          Application No. 60/336,701;
     "Videolocity Embedded Software Image"
          Application No. 60/336,702;
     "Videolocity Proprietary PCI Video Card"
          Application No. 60/338/772.
     "Videolocity Digital Entertainment System - Linux Version"
          Application Filed.

These patents  embrace the  proprietary  technology  and  intellectual  property
presently  owned and held by  Videolocity  Technologies,  Inc.,  a wholly  owned
subsidiary of Videolocity International, Inc.

VIDEOLOCITY INTERNATIONAL, INC
                                             Attest:

by___________________________                ________________________________
    its C.E.O.                                 Secretary

VIDEOLOCITY TECHNOLOGIES, INC
                                             Attest:

by___________________________                ________________________________
    its C.E.O.                                 Secretary

                                       8
<PAGE>

                                   EXHIBIT "B"
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
          PROMISSORY NOTES TO BE COLLATERALIZED BY PATENTED TECHNOLOGY
                    OWNED BY VIDEOLOCITY INTERNATIONAL, INC.
------------------------------------------------------------------------------------------------------
                                                                                    % Ownership in
          LENDER                        NOTE DATE                   AMOUNT          Sec Agreement
------------------------------------------------------------------------------------------------------
<S>                                    <C>                        <C>                    <C>
David B. Edwards and
Lynette Edwards, JTTEN                 July 30, 2001              $100,000.00             6.67%
------------------------------------------------------------------------------------------------------
Crown Jewels, LLC                      August 24, 2001            $100,000.00             6.67%
------------------------------------------------------------------------------------------------------
Bennie L. Williams                     August 24, 2001            $100,000.00             6.67%
------------------------------------------------------------------------------------------------------
ISOZ, LC.                              July 31, 2001              $215,000.00             14.32%
------------------------------------------------------------------------------------------------------
Larry R. McNeill                       July 31, 2001              $135,000.00             9.00%
------------------------------------------------------------------------------------------------------
James C. Davis Trust 12/19/91          July 30, 2001              $100,000.00             6.67%
------------------------------------------------------------------------------------------------------
W.A.J. Enterprises, LLC                December 6, 2001           $300,000.00            20.00%
------------------------------------------------------------------------------------------------------
TO BE NAMED                                                       $450,000.00            30.00%
------------------------------------------------------------------------------------------------------
TOTAL                                                           $1,500,000.00           100%
------------------------------------------------------------------------------------------------------
</TABLE>

VIDEOLOCITY INTERNATIONAL, INC
                                             Attest:

by___________________________                ________________________________
    its C.E.O.                                 Secretary

VIDEOLOCITY TECHNOLOGIES, INC
                                             Attest:

by___________________________                ________________________________

                                       9
<PAGE>

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