Document:

EXHIBIT 10.4

                      STANDBY EQUITY DISTRIBUTION AGREEMENT

         THIS  AGREEMENT   dated  as  of  the  25th  day  of  August  2004  (the
"Agreement")   between  CORNELL  CAPITAL   PARTNERS,   LP,  a  Delaware  limited
partnership (the "Investor"),  and CEC INDUSTRIES CORP., a corporation organized
and existing under the laws of the State of Nevada (the "Company").

         WHEREAS,  the parties  desire  that,  upon the terms and subject to the
conditions  contained herein,  the Company shall issue and sell to the Investor,
from time to time as provided  herein,  and the Investor shall purchase from the
Company up to Twenty Five Million U.S.  Dollars  ($25,000,000)  of the Company's
common stock, par value $.001 per share (the "Common Stock"); and

         WHEREAS,  such investments will be made in reliance upon the provisions
of Regulation D ("Regulation D") of the Securities Act of 1933, as amended,  and
the regulations  promulgated thereunder (the "Securities Act"), and or upon such
other exemption from the registration  requirements of the Securities Act as may
be available with respect to any or all of the investments to be made hereunder.

         WHEREAS, the Company has engaged Newbridge Securities  Corporation (the
"Placement  Agent"),  to act as  the  Company's  exclusive  placement  agent  in
connection with the sale of the Company's Common Stock to the Investor hereunder
pursuant to the Placement Agent Agreement dated the date hereof by and among the
Company, the Placement Agent and the Investor (the "Placement Agent Agreement").

         NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I.
                               CERTAIN DEFINITIONS

         Section 1.1.  "Advance" shall mean the portion of the Commitment Amount
requested by the Company in the Advance Notice.

         Section  1.2.  "Advance  Date" shall mean the date Butler  Gonzalez LLP
Escrow Account is in receipt of the funds from the Investor and Butler  Gonzalez
LLP, as the Investor's Counsel, is in possession of free trading shares from the
Company and  therefore an Advance by the Investor to the Company can be made and
Butler  Gonzalez LLP can release the free trading  shares to the  Investor.  The
Advance  Date  shall be the first  (1st)  Trading  Day after  expiration  of the
applicable Pricing Period for each Advance.

         Section  1.3.  "Advance  Notice"  shall  mean a  written  notice to the
Investor  setting  forth the Advance  amount that the Company  requests from the
Investor and the Advance Date.

         Section  1.4.  "Advance  Notice  Date" shall mean each date the Company
delivers to the  Investor an Advance  Notice  requiring  the Investor to advance
funds to the Company,  subject to the terms of this Agreement. No Advance Notice
Date shall be less than seven (7) Trading  Days after the prior  Advance  Notice
Date.

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         Section 1.5. "Bid Price" shall mean, on any date, the closing bid price
(as reported by Bloomberg  L.P.) of the Common Stock on the Principal  Market or
if the Common Stock is not traded on a Principal  Market,  the highest  reported
bid price for the Common  Stock,  as furnished by the  National  Association  of
Securities Dealers, Inc.

         Section 1.6. "Closing" shall mean one of the closings of a purchase and
sale of Common Stock pursuant to Section 2.3.

         Section 1.7.  "Commitment Amount" shall mean the aggregate amount of up
to Twenty Five Million U.S. Dollars  ($25,000,000) which the Investor has agreed
to provide to the  Company  in order to  purchase  the  Company's  Common  Stock
pursuant to the terms and conditions of this Agreement.

         Section 1.8.  "Commitment  Period" shall mean the period  commencing on
the earlier to occur of (i) the Effective Date, or (ii) such earlier date as the
Company and the  Investor  may  mutually  agree in writing,  and expiring on the
earliest to occur of (x) the date on which the Investor  shall have made payment
of Advances  pursuant to this  Agreement in the aggregate  amount of Twenty Five
Million U.S.  Dollars  ($25,000,000) , (y) the date this Agreement is terminated
pursuant to Section 2.5, or (z) the date occurring twenty-four (24) months after
the Effective Date.

         Section 1.9.  "Common Stock" shall mean the Company's common stock, par
value $.001 per share.

         Section 1.10. "Condition  Satisfaction Date" shall have the meaning set
forth in Section 7.2.

         Section 1.11. "Damages" shall mean any loss, claim, damage,  liability,
costs and expenses (including,  without limitation,  reasonable  attorney's fees
and disbursements and costs and expenses of expert witnesses and investigation).

         Section  1.12.  "Effective  Date"  shall mean the date on which the SEC
first declares effective a Registration  Statement registering the resale of the
Registrable Securities as set forth in Section 7.2(a).

         Section 1.13.  "Escrow Agreement" shall mean the escrow agreement among
the Company, the Investor, and Butler Gonzalez LLP, dated the date hereof.

         Section 1.14.  "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

         Section  1.15.  "Material  Adverse  Effect"  shall mean any  condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform any of its obligations
under this  Agreement  or the  Registration  Rights  Agreement  in any  material
respect.

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         Section 1.16.  "Market  Price" shall mean the lowest VWAP of the Common
Stock during the Pricing Period.

         Section 1.17.  "Maximum  Advance Amount" shall be Four Hundred Thousand
U.S. Dollars (US$400,000) per Advance Notice.

         Section 1.18. "NASD" shall mean the National  Association of Securities
Dealers, Inc.

         Section 1.19.  "Person"  shall mean an  individual,  a  corporation,  a
partnership, an association, a trust or other entity or organization,  including
a government or political subdivision or an agency or instrumentality thereof.

         Section  1.20.   "Placement  Agent"  shall  mean  Newbridge  Securities
Corporation, a registered broker-dealer.

         Section  1.21.  "Pricing  Period"  shall mean the five (5)  consecutive
Trading Days after the Advance Notice Date.

         Section 1.22. "Principal Market" shall mean the Nasdaq National Market,
the Nasdaq SmallCap Market, the American Stock Exchange,  the OTC Bulletin Board
or the New York Stock Exchange,  whichever is at the time the principal  trading
exchange or market for the Common Stock.

         Section  1.23.  "Purchase  Price" shall be set at ninety eight  percent
(98%) of the Market Price during the Pricing Period.

         Section 1.24. "Registrable  Securities" shall mean the shares of Common
Stock to be issued hereunder (i) in respect of which the Registration  Statement
has not been declared  effective by the SEC, (ii) which have not been sold under
circumstances  meeting  all of the  applicable  conditions  of Rule  144 (or any
similar  provision then in force) under the Securities Act ("Rule 144") or (iii)
which have not been otherwise  transferred to a holder who may trade such shares
without  restriction  under the Securities  Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend.

         Section  1.25.   "Registration   Rights   Agreement"   shall  mean  the
Registration Rights Agreement dated the date hereof, regarding the filing of the
Registration  Statement for the resale of the  Registrable  Securities,  entered
into between the Company and the Investor.

         Section  1.26.  "Registration  Statement"  shall  mean  a  registration
statement  on Form S-1 or SB-2  (if use of such  form is then  available  to the
Company  pursuant  to the  rules  of the SEC and,  if not,  on such  other  form
promulgated  by the SEC for which the Company then  qualifies  and which counsel
for the Company  shall deem  appropriate,  and which form shall be available for
the  resale  of  the  Registrable  Securities  to be  registered  thereunder  in
accordance  with the  provisions of this Agreement and the  Registration  Rights
Agreement,  and in accordance  with the intended  method of distribution of such
securities),  for  the  registration  of  the  resale  by  the  Investor  of the
Registrable Securities under the Securities Act.

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<PAGE>

         Section  1.27.  "Regulation  D" shall have the meaning set forth in the
recitals of this Agreement.

         Section 1.28. "SEC" shall mean the Securities and Exchange Commission.

         Section 1.29.  "Securities Act" shall have the meaning set forth in the
recitals of this Agreement.

         Section 1.30. "SEC Documents" shall mean Annual Reports on Form 10-KSB,
Quarterly  Reports  on  Form  10-QSB,  Current  Reports  on Form  8-K and  Proxy
Statements  of the  Company as  supplemented  to the date  hereof,  filed by the
Company for a period of at least twelve (12) months  immediately  preceding  the
date  hereof or the  Advance  Date,  as the case may be,  until such time as the
Company  no  longer  has  an  obligation  to  maintain  the  effectiveness  of a
Registration Statement as set forth in the Registration Rights Agreement.

         Section  1.31.  "Trading  Day" shall mean any day during  which the New
York Stock Exchange shall be open for business.

         Section 1.32.  "VWAP" shall mean the volume  weighted  average price of
the Company's Common Stock as quoted by Bloomberg, LP.

                                   ARTICLE II.
                                    ADVANCES

         Section 2.1. Investments.

                  (a) Advances.  Upon the terms and  conditions set forth herein
(including,  without  limitation,  the provisions of Article VII hereof), on any
Advance  Notice Date the  Company may request an Advance by the  Investor by the
delivery  of an Advance  Notice.  The number of shares of Common  Stock that the
Investor  shall  receive for each Advance  shall be  determined  by dividing the
amount of the Advance by the  Purchase  Price.  No  fractional  shares  shall be
issued.  Fractional  shares  shall be rounded to the next higher whole number of
shares.  The aggregate maximum amount of all Advances that the Investor shall be
obligated to make under this Agreement shall not exceed the Commitment Amount.

         Section 2.2. Mechanics.

                  (a) Advance Notice. At any time during the Commitment  Period,
the  Company  may  deliver an  Advance  Notice to the  Investor,  subject to the
conditions  set forth in Section  7.2;  provided,  however,  the amount for each
Advance as designated by the Company in the applicable Advance Notice, shall not
be more than the Maximum  Advance Amount.  The aggregate  amount of the Advances
pursuant to this Agreement shall not exceed the Commitment  Amount.  The Company
acknowledges  that the  Investor may sell shares of the  Company's  Common Stock
corresponding  with a particular Advance Notice on the day the Advance Notice is
received by the  Investor.  There  shall be a minimum of seven (7) Trading  Days
between each Advance Notice Date.

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<PAGE>

                  (b) Date of  Delivery  of Advance  Notice.  An Advance  Notice
shall be deemed  delivered on (i) the Trading Day it is received by facsimile or
otherwise by the Investor if such notice is received prior to 12:00 noon Eastern
Time,  or (ii) the  immediately  succeeding  Trading  Day if it is  received  by
facsimile or otherwise  after 12:00 noon Eastern Time on a Trading Day or at any
time on a day  which is not a  Trading  Day.  No  Advance  Notice  may be deemed
delivered on a day that is not a Trading Day.

                  (c)  Pre-Closing  Share  Credit.  Within two (2) business days
after the Advance  Notice Date, the Company shall credit shares of the Company's
Common Stock to the  Investor's  counsel's  balance  account with The Depository
Trust Company through its Deposit  Withdrawal At Custodian  system, in an amount
equal to the amount of the requested Advance divided by the closing Bid Price of
the Company's Common Stock as of the Advance Notice Date multiplied by one point
one  (1.1).  Any  adjustments  to the  number of shares to be  delivered  to the
Investor at the Closing as a result of  fluctuations in the closing Bid Price of
the  Company's  Common  Stock shall be made as of the date of the  Closing.  Any
excess  shares  shall be  credited  to the next  Advance.  In no event shall the
number of shares  issuable  to the  Investor  pursuant  to an Advance  cause the
Investor  to own  in  excess  of  nine  and  9/10  percent  (9.9%)  of the  then
outstanding Common Stock of the Company.

                  (d)  Hardship.  In the event the Investor  sells the Company's
Common Stock  pursuant to subsection  (c) above and the Company fails to perform
its obligations as mandated in Section 2.5 and 2.2 (c), and  specifically  fails
to  provide  the  Investor  with the shares of Common  Stock for the  applicable
Advance,  the Company  acknowledges  that the Investor  shall  suffer  financial
hardship  and  therefore  shall be liable for any and all  losses,  commissions,
fees, or financial hardship caused to the Investor.

         Section 2.3.  Closings.  On each Advance Date, which shall be the first
(1st) Trading Day after  expiration of the  applicable  Pricing  Period for each
Advance,  (i) the Company shall deliver to the  Investor's  Counsel,  as defined
pursuant  to the  Escrow  Agreement,  shares  of  the  Company's  Common  Stock,
representing  the amount of the Advance by the Investor  pursuant to Section 2.1
herein,  registered in the name of the Investor  which shall be delivered to the
Investor,  or otherwise in  accordance  with the Escrow  Agreement  and (ii) the
Investor shall deliver to Butler Gonzalez LLP (the "Escrow Agent") the amount of
the Advance  specified  in the Advance  Notice by wire  transfer of  immediately
available  funds  which shall be  delivered  to the  Company,  or  otherwise  in
accordance with the Escrow  Agreement.  In addition,  on or prior to the Advance
Date,  each of the Company and the Investor  shall  deliver to the other through
the Investor's Counsel,  all documents,  instruments and writings required to be
delivered by either of them pursuant to this Agreement in order to implement and
effect the transactions contemplated herein. Payment of funds to the Company and
delivery of the Company's Common Stock to the Investor shall occur in accordance
with the conditions set forth above and those contained in the Escrow Agreement;
provided,  however,  that to the  extent  the  Company  has not paid  the  fees,
expenses,  and  disbursements  of the  Investor  and the  Investor's  counsel in
accordance  with  Section  12.4,  the  amount  of  such  fees,   expenses,   and
disbursements may be deducted by the Investor (and shall be paid to the relevant
party) from the amount of the Advance  with no reduction in the amount of shares
of the Company's Common Stock to be delivered on such Advance Date.

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<PAGE>

         Section 2.4. Termination of Investment.  The obligation of the Investor
to make an Advance to the Company  pursuant to this  Agreement  shall  terminate
permanently  (including  with  respect  to an  Advance  Date  that  has  not yet
occurred)  in the event that (i) there shall occur any stop order or  suspension
of the  effectiveness  of the  Registration  Statement for an aggregate of fifty
(50)  Trading  Days,  other  than due to the acts of the  Investor,  during  the
Commitment  Period,  and (ii) the Company  shall at any time fail  materially to
comply with the  requirements of Article VI and such failure is not cured within
thirty (30) days after receipt of written  notice from the  Investor,  provided,
however,  that  this  termination  provision  shall  not  apply  to  any  period
commencing upon the filing of a  post-effective  amendment to such  Registration
Statement  and ending upon the date on which such post  effective  amendment  is
declared effective by the SEC.

         Section 2.5. Agreement to Advance Funds.

                  (a) The Investor agrees to advance the amount specified in the
Advance  Notice to the Company  after the  completion  of each of the  following
conditions and the other conditions set forth in this Agreement:

                           (i) the  execution  and delivery by the Company,  and
the Investor, of this Agreement and the Exhibits hereto;

                           (ii)  Investor's  Counsel  shall  have  received  the
shares of Common  Stock  applicable  to the Advance in  accordance  with Section
2.2(c) hereof;

                           (iii)  the  Company's   Registration  Statement  with
respect to the resale of the Registrable Securities in accordance with the terms
of the Registration  Rights Agreement shall have been declared  effective by the
SEC;

                           (iv) the Company  shall have  obtained  all  material
permits and  qualifications  required by any applicable  state for the offer and
sale of the Registrable Securities, or shall have the availability of exemptions
therefrom.  The sale and issuance of the Registrable Securities shall be legally
permitted by all laws and regulations to which the Company is subject;

                           (v) the Company shall have filed with the  Commission
in a timely  manner all  reports,  notices  and other  documents  required  of a
"reporting   company"   under  the  Exchange  Act  and   applicable   Commission
regulations;

                           (vi) the  fees as set  forth in  Section  12.4  below
shall have been paid or can be withheld as provided in Section 2.3; and

                           (vii) the  conditions  set forth in Section 7.2 shall
have been satisfied.

                           (viii)  the  Company   shall  have  provided  to  the
Investor an  acknowledgement,  from Russell and Atkins, LLP as to its ability to
provide all  consents  required  in order to file a  registration  statement  in
connection with this transaction;

                           (ix)  The  Company's  transfer  agent  shall  be DWAC
eligible.

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<PAGE>

         Section 2.6. Lock Up Period.

                  (i) During the Commitment  Period, the Company shall not issue
or sell (i) any Common Stock or Preferred Stock without  consideration  or for a
consideration  per share less than the Bid Price on the date of issuance or (ii)
issue or sell any warrant,  option, right, contract,  call, or other security or
instrument granting the holder thereof the right to acquire Common Stock without
consideration  or for a  consideration  per share less than the Bid Price on the
date of issuance.

                  (ii) On the date  hereof,  the Company  shall obtain from each
officer and director a lock-up agreement,  as defined below, in the form annexed
hereto as  Schedule  2.6  agreeing  to only sell in  compliance  with the volume
limitation of Rule 144.

                                  ARTICLE III.
                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

         Investor  hereby  represents  and  warrants  to, and agrees  with,  the
Company  that the  following  are true and as of the date  hereof and as of each
Advance Date:

         Section  3.1.  Organization  and  Authorization.  The  Investor is duly
incorporated  or  organized  and  validly  existing in the  jurisdiction  of its
incorporation  or  organization  and has all  requisite  power and  authority to
purchase and hold the securities issuable hereunder.  The decision to invest and
the execution and delivery of this Agreement by such Investor,  the  performance
by such  Investor of its  obligations  hereunder  and the  consummation  by such
Investor of the transactions  contemplated  hereby have been duly authorized and
requires no other  proceedings on the part of the Investor.  The undersigned has
the right,  power and  authority to execute and deliver this  Agreement  and all
other  instruments  (including,  without  limitations,  the Registration  Rights
Agreement), on behalf of the Investor. This Agreement has been duly executed and
delivered by the Investor and,  assuming the  execution and delivery  hereof and
acceptance thereof by the Company,  will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance with
its terms.

         Section 3.2.  Evaluation of Risks.  The Investor has such knowledge and
experience in financial tax and business  matters as to be capable of evaluating
the  merits  and risks of,  and  bearing  the  economic  risks  entailed  by, an
investment  in the Company and of protecting  its  interests in connection  with
this  transaction.  It recognizes that its investment in the Company  involves a
high degree of risk.

         Section  3.3.  No  Legal   Advice  From  the   Company.   The  Investor
acknowledges  that it had the  opportunity  to  review  this  Agreement  and the
transactions  contemplated  by this  Agreement with his or its own legal counsel
and investment and tax advisors.  The Investor is relying solely on such counsel
and advisors and not on any statements or  representations of the Company or any
of its  representatives  or agents  for legal,  tax or  investment  advice  with
respect to this investment,  the transactions  contemplated by this Agreement or
the securities laws of any jurisdiction.

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<PAGE>

         Section 3.4. Investment Purpose.  The securities are being purchased by
the  Investor for its own account,  for  investment  and without any view to the
distribution, assignment or resale to others or fractionalization in whole or in
part.  The Investor  agrees not to assign or in any way transfer the  Investor's
rights to the  securities  or any  interest  therein and  acknowledges  that the
Company  will not  recognize  any  purported  assignment  or transfer  except in
accordance with applicable  Federal and state  securities  laws. No other person
has or will have a direct or indirect beneficial interest in the securities. The
Investor  agrees not to sell,  hypothecate or otherwise  transfer the Investor's
securities  unless the securities  are  registered  under Federal and applicable
state securities laws or unless,  in the opinion of counsel  satisfactory to the
Company, an exemption from such laws is available.

         Section  3.5.  Accredited  Investor.  The  Investor  is an  "Accredited
Investor"  as that term is  defined in Rule  501(a)(3)  of  Regulation  D of the
Securities Act.

         Section  3.6.  Information.  The  Investor  and its  advisors  (and its
counsel),  if any,  have  been  furnished  with all  materials  relating  to the
business,  finances  and  operations  of the Company and  information  it deemed
material  to  making an  informed  investment  decision.  The  Investor  and its
advisors,  if any,  have been afforded the  opportunity  to ask questions of the
Company and its  management.  Neither such inquiries nor any other due diligence
investigations  conducted  by such  Investor  or its  advisors,  if any,  or its
representatives  shall modify,  amend or affect the Investor's  right to rely on
the Company's  representations and warranties  contained in this Agreement.  The
Investor  understands  that its  investment  involves a high degree of risk. The
Investor is in a position  regarding the Company,  which, based upon employment,
family  relationship  or economic  bargaining  power,  enabled and enables  such
Investor to obtain  information from the Company in order to evaluate the merits
and risks of this investment. The Investor has sought such accounting, legal and
tax  advice,  as it has  considered  necessary  to make an  informed  investment
decision with respect to this transaction.

         Section 3.7.  Receipt of  Documents.  The Investor and its counsel have
received and read in their entirety: (i) this Agreement and the Exhibits annexed
hereto;  (ii) all due  diligence and other  information  necessary to verify the
accuracy and  completeness  of such  representations,  warranties and covenants;
(iii) the Company's Form 10-KSB for the year ended year ended March 31, 2004 and
Form  10-QSB  for the  period  ended  June 30,  2004;  and (iv)  answers  to all
questions the Investor  submitted to the Company  regarding an investment in the
Company;  and the Investor has relied on the information  contained  therein and
has  not  been  furnished  any  other  documents,   literature,   memorandum  or
prospectus.

         Section 3.8.  Registration  Rights Agreement and Escrow Agreement.  The
parties have  entered  into the  Registration  Rights  Agreement  and the Escrow
Agreement, each dated the date hereof.

         Section 3.9. No General  Solicitation.  Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities  Act) in connection  with the offer or sale of
the shares of Common Stock offered hereby.

         Section  3.10.  Not an  Affiliate.  The  Investor  is  not an  officer,
director  or  a  person  that  directly,  or  indirectly  through  one  or  more
intermediaries,  controls or is controlled  by, or is under common  control with
the Company or any  "Affiliate"  of the Company (as that term is defined in Rule
405 of the Securities Act).  Neither the Investor nor its Affiliates has an open
short position in the Common Stock of the Company,  and the Investor agrees that
it will not, and that it will cause its  Affiliates  not to, engage in any short
sales of or hedging transactions with respect to the Common Stock, provided that
the Company  acknowledges  and agrees that upon receipt of an Advance Notice the
Investor  will sell the  Shares to be issued  to the  Investor  pursuant  to the
Advance Notice, even if the Shares have not been delivered to the Investor.

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<PAGE>

         Section 3.11.  Trading  Activities.  The Investor's  trading activities
with  respect to the  Company's  Common  Stock shall be in  compliance  with all
applicable  federal and state  securities  laws,  rules and  regulations and the
rules and  regulations  of the Principal  Market on which the  Company's  Common
Stock is listed or traded.  Neither the Investor nor its  affiliates has an open
short  position  in the Common  Stock of the  Company  and,  except as set forth
below, the Investor shall not and will cause its affiliates not to engage in any
short  sale  as  defined  in any  applicable  SEC  or  National  Association  of
Securities Dealers rules on any hedging  transactions with respect to the Common
Stock. Without limiting the foregoing,  the Investor agrees not to engage in any
naked  short  transactions  in  excess  of the  amount  of  shares  owned (or an
offsetting long position)  during the Commitment  Period.  The Investor shall be
entitled to sell Common Stock during the applicable Pricing Period.

                                   ARTICLE IV.
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         Except as stated below, on the disclosure  schedules attached hereto or
in the SEC Documents (as defined  herein),  the Company  hereby  represents  and
warrants to, and  covenants  with,  the Investor that the following are true and
correct as of the date hereof:

         Section  4.1.  Organization  and  Qualification.  The  Company  is duly
incorporated  or  organized  and  validly  existing in the  jurisdiction  of its
incorporation  or  organization  and  has  all  requisite  power  and  authority
corporate  power to own its properties and to carry on its business as now being
conducted.  Each of the  Company and its  subsidiaries  is duly  qualified  as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the  business  conducted  by it makes such  qualification
necessary,  except to the extent  that the failure to be so  qualified  or be in
good standing  would not have a Material  Adverse  Effect on the Company and its
subsidiaries taken as a whole.

         Section  4.2.   Authorization,   Enforcement,   Compliance  with  Other
Instruments.  (i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement,  the Registration  Rights Agreement,  the
Escrow Agreement,  the Placement Agent Agreement and any related agreements,  in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement,  the Registration  Rights Agreement,  the Escrow Agreement,  the
Placement  Agent  Agreement  and any related  agreements  by the Company and the
consummation by it of the  transactions  contemplated  hereby and thereby,  have
been duly  authorized by the Company's Board of Directors and no further consent
or  authorization  is required by the  Company,  its Board of  Directors  or its
stockholders,  (iii) this Agreement,  the  Registration  Rights  Agreement,  the
Escrow Agreement,  the Placement Agent Agreement and any related agreements have
been duly  executed  and  delivered  by the Company,  (iv) this  Agreement,  the
Registration  Rights  Agreement,  the  Escrow  Agreement,  the  Placement  Agent
Agreement and assuming the execution and delivery  thereof and acceptance by the
Investor and any related agreements constitute the valid and binding obligations
of the Company  enforceable  against the Company in accordance with their terms,
except as such  enforceability may be limited by general principles of equity or
applicable bankruptcy,  insolvency,  reorganization,  moratorium, liquidation or
similar laws relating to, or affecting generally,  the enforcement of creditors'
rights and remedies.

                                        9
<PAGE>

         Section  4.3.  Capitalization.  As of the date hereof,  the  authorized
capital stock of the Company consists of  5,000,000,000  shares of Common Stock,
par value $0.001 per share and no shares of Preferred Stock of which  55,943,751
shares of Common  Stock were  issued and  outstanding.  All of such  outstanding
shares have been validly issued and are fully paid and nonassessable.  Except as
disclosed  in the SEC  Documents,  no  shares of Common  Stock  are  subject  to
preemptive  rights or any  other  similar  rights  or any liens or  encumbrances
suffered or permitted by the Company.  Except as disclosed in the SEC Documents,
as of the date hereof, (i) there are no outstanding  options,  warrants,  scrip,
rights  to  subscribe  to,  calls or  commitments  of any  character  whatsoever
relating to, or securities  or rights  convertible  into,  any shares of capital
stock of the  Company or any of its  subsidiaries,  or  contracts,  commitments,
understandings  or arrangements by which the Company or any of its  subsidiaries
is or may  become  bound to issue  additional  shares  of  capital  stock of the
Company  or any of its  subsidiaries  or  options,  warrants,  scrip,  rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company  or  any  of its  subsidiaries,  (ii)  there  are  no  outstanding  debt
securities (iii) there are no outstanding  registration statements other than on
Form S-8 and (iv)  there  are no  agreements  or  arrangements  under  which the
Company or any of its  subsidiaries  is obligated to register the sale of any of
their  securities  under the Securities Act (except pursuant to the Registration
Rights   Agreement).   There  are  no  securities  or   instruments   containing
anti-dilution or similar  provisions that will be triggered by this Agreement or
any related  agreement or the consummation of the transactions  described herein
or therein. The Company has furnished to the Investor true and correct copies of
the Company's  Certificate of Incorporation,  as amended and as in effect on the
date hereof (the "Certificate of Incorporation"),  and the Company's By-laws, as
in effect on the date hereof (the  "By-laws"),  and the terms of all  securities
convertible  into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.

         Section 4.4. No Conflict.  The execution,  delivery and  performance of
this  Agreement  by the  Company  and the  consummation  by the  Company  of the
transactions  contemplated  hereby  will not (i)  result in a  violation  of the
Certificate of Incorporation, any certificate of designations of any outstanding
series of  preferred  stock of the Company or By-laws or (ii)  conflict  with or
constitute  a default  (or an event  which with  notice or lapse of time or both
would  become a default)  under,  or give to others  any rights of  termination,
amendment,   acceleration  or  cancellation  of,  any  agreement,  indenture  or
instrument to which the Company or any of its subsidiaries is a party, or result
in a  violation  of  any  law,  rule,  regulation,  order,  judgment  or  decree
(including  federal and state  securities laws and regulations and the rules and
regulations  of the  Principal  Market  on which  the  Common  Stock is  quoted)
applicable  to the Company or any of its  subsidiaries  or by which any material
property or asset of the Company or any of its subsidiaries is bound or affected
and which would cause a Material Adverse Effect.  Except as disclosed in the SEC
Documents,  neither the Company nor its subsidiaries is in violation of any term
of or in  default  under its  Articles  of  Incorporation  or  By-laws  or their
organizational  charter or  by-laws,  respectively,  or any  material  contract,
agreement, mortgage,  indebtedness,  indenture,  instrument, judgment, decree or
order or any  statute,  rule or  regulation  applicable  to the  Company  or its
subsidiaries.  The  business of the Company  and its  subsidiaries  is not being
conducted  in  violation  of any  material  law,  ordinance,  regulation  of any
governmental entity.  Except as specifically  contemplated by this Agreement and
as required under the Securities Act and any applicable  state  securities laws,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental  agency in order
for  it to  execute,  deliver  or  perform  any  of  its  obligations  under  or
contemplated  by  this  Agreement  or  the  Registration   Rights  Agreement  in
accordance  with the terms  hereof or  thereof.  All  consents,  authorizations,
orders,  filings  and  registrations  which the  Company is  required  to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date  hereof.  The Company and its  subsidiaries  are unaware of any fact or
circumstance which might give rise to any of the foregoing.

                                       10
<PAGE>

         Section 4.5. SEC  Documents;  Financial  Statements.  Since  becoming a
reporting  Company,  the  Company  has  filed  all  reports,  schedules,  forms,
statements and other documents  required to be filed by it with the SEC under of
the  Exchange   Act.   The  Company  has   delivered  to  the  Investor  or  its
representatives,    or   made   available   through   the   SEC's   website   at
http://www.sec.gov,  true and complete copies of the SEC Documents.  As of their
respective  dates, the financial  statements of the Company disclosed in the SEC
Documents  (the  "Financial  Statements")  complied  as to form in all  material
respects with  applicable  accounting  requirements  and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared  in  accordance   with  generally   accepted   accounting   principles,
consistently  applied,  during  the  periods  involved  (except  (i)  as  may be
otherwise  indicated in such financial  statements or the notes thereto, or (ii)
in the case of  unaudited  interim  statements,  to the extent  they may exclude
footnotes or may be condensed or summary  statements) and, fairly present in all
material respects the financial  position of the Company as of the dates thereof
and the  results of its  operations  and cash flows for the  periods  then ended
(subject,  in the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments).  No other  information  provided by or on behalf of the Company to
the  Investor  which is not  included in the SEC  Documents  contains any untrue
statement of a material  fact or omits to state any material  fact  necessary in
order to make the statements  therein,  in the light of the circumstances  under
which they were made, not misleading.

         Section  4.6.  10b-5.  The SEC  Documents  do not  include  any  untrue
statements  of  material  fact,  nor do they  omit to state  any  material  fact
required to be stated therein necessary to make the statements made, in light of
the circumstances under which they were made, not misleading.

         Section 4.7. No Default. Except as disclosed in the SEC Documents,  the
Company is not in default  in the  performance  or  observance  of any  material
obligation,  agreement,  covenant  or  condition  contained  in  any  indenture,
mortgage, deed of trust or other material instrument or agreement to which it is
a party or by which it is or its  property is bound and  neither the  execution,
nor the  delivery  by the  Company,  nor the  performance  by the Company of its
obligations  under this Agreement or any of the exhibits or  attachments  hereto
will  conflict  with or result in the breach or violation of any of the terms or
provisions  of, or  constitute a default or result in the creation or imposition
of any lien or  charge on any  assets or  properties  of the  Company  under its
Certificate of Incorporation, By-Laws, any material indenture, mortgage, deed of
trust or other  material  agreement  applicable  to the Company or instrument to
which the  Company is a party or by which it is bound,  or any  statute,  or any
decree, judgment, order, rules or regulation of any court or governmental agency
or body having  jurisdiction  over the Company or its  properties,  in each case
which  default,  lien or charge is likely to cause a Material  Adverse Effect on
the Company's business or financial condition.

                                       11
<PAGE>

         Section 4.8. Absence of Events of Default. Except for matters described
in the SEC Documents and/or this Agreement,  no Event of Default,  as defined in
the  respective  agreement to which the Company is a party,  and no event which,
with the giving of notice or the passage of time or both,  would become an Event
of Default (as so defined),  has occurred and is continuing,  which would have a
Material  Adverse  Effect  on the  Company's  business,  properties,  prospects,
financial condition or results of operations.

         Section  4.9.   Intellectual  Property  Rights.  The  Company  and  its
subsidiaries  own or possess  adequate  rights or licenses  to use all  material
trademarks,  trade names,  service marks,  service mark  registrations,  service
names, patents,  patent rights,  copyrights,  inventions,  licenses,  approvals,
governmental authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted.  The Company and its subsidiaries do not
have any knowledge of any  infringement  by the Company or its  subsidiaries  of
trademark,  trade name rights, patents, patent rights,  copyrights,  inventions,
licenses, service names, service marks, service mark registrations, trade secret
or other similar rights of others,  and, to the knowledge of the Company,  there
is no claim,  action or  proceeding  being  made or brought  against,  or to the
Company's  knowledge,  being threatened against, the Company or its subsidiaries
regarding trademark,  trade name, patents, patent rights, invention,  copyright,
license, service names, service marks, service mark registrations,  trade secret
or other  infringement;  and the Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.

         Section 4.10.  Employee  Relations.  Neither the Company nor any of its
subsidiaries  is involved in any labor  dispute  nor,  to the  knowledge  of the
Company or any of its subsidiaries,  is any such dispute threatened. None of the
Company's or its subsidiaries'  employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

         Section 4.11.  Environmental Laws. The Company and its subsidiaries are
(i) in compliance with any and all applicable material foreign,  federal,  state
and local laws and  regulations  relating to the  protection of human health and
safety,  the environment or hazardous or toxic substances or wastes,  pollutants
or contaminants ("Environmental Laws"), (ii) have received all permits, licenses
or other  approvals  required  of them under  applicable  Environmental  Laws to
conduct their  respective  businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval.

         Section  4.12.  Title.  Except as set forth in the SEC  Documents,  the
Company has good and  marketable  title to its  properties  and material  assets
owned by it, free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable  interest other than such as are not material to the business
of the Company. Any real property and facilities held under lease by the Company
and its  subsidiaries  are held by them under valid,  subsisting and enforceable
leases with such  exceptions as are not material and do not  interfere  with the
use made and proposed to be made of such  property and  buildings by the Company
and its subsidiaries.

                                       12
<PAGE>

         Section 4.13.  Insurance.  The Company and each of its subsidiaries are
insured by insurers of recognized financial  responsibility  against such losses
and risks and in such  amounts  as  management  of the  Company  believes  to be
prudent  and  customary  in  the   businesses  in  which  the  Company  and  its
subsidiaries  are engaged.  Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such  subsidiary has any reason to believe that it will not be able to renew
its existing  insurance  coverage as and when such coverage expires or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise,  or the earnings,  business or operations of the Company
and its subsidiaries, taken as a whole.

         Section  4.14.  Regulatory  Permits.  The Company and its  subsidiaries
possess all  material  certificates,  authorizations  and permits  issued by the
appropriate  federal,  state or  foreign  regulatory  authorities  necessary  to
conduct  their  respective  businesses,  and  neither  the  Company nor any such
subsidiary has received any notice of proceedings  relating to the revocation or
modification of any such certificate, authorization or permit.

         Section 4.15. Internal Accounting Controls. The Company and each of its
subsidiaries  maintain a system of internal  accounting  controls  sufficient to
provide  reasonable  assurance that (i)  transactions are executed in accordance
with  management's  general or specific  authorizations,  (ii)  transactions are
recorded  as  necessary  to  permit  preparation  of  financial   statements  in
conformity with generally accepted  accounting  principles and to maintain asset
accountability,  (iii) access to assets is  permitted  only in  accordance  with
management's   general  or  specific   authorization   and  (iv)  the   recorded
accountability  for assets is compared  with the existing  assets at  reasonable
intervals and appropriate action is taken with respect to any differences.

         Section 4.16. No Material Adverse Breaches, etc. Except as set forth in
the SEC Documents, neither the Company nor any of its subsidiaries is subject to
any charter,  corporate or other legal  restriction,  or any  judgment,  decree,
order, rule or regulation which in the judgment of the Company's officers has or
is expected  in the future to have a Material  Adverse  Effect on the  business,
properties,  operations, financial condition, results of operations or prospects
of the Company or its  subsidiaries.  Except as set forth in the SEC  Documents,
neither the Company nor any of its  subsidiaries is in breach of any contract or
agreement  which breach,  in the judgment of the Company's  officers,  has or is
expected  to  have  a  Material  Adverse  Effect  on the  business,  properties,
operations,  financial  condition,  results of  operations  or  prospects of the
Company or its subsidiaries.

                                       13
<PAGE>

         Section  4.17.  Absence of  Litigation.  Except as set forth in the SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board, government agency,  self-regulatory  organization
or body pending against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a Material Adverse Effect on the transactions  contemplated hereby (ii)
adversely affect the validity or enforceability  of, or the authority or ability
of the Company to perform its  obligations  under,  this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents,  have  a  Material  Adverse  Effect  on  the  business,   operations,
properties,  financial  condition or results of operation of the Company and its
subsidiaries taken as a whole.

         Section 4.18.  Subsidiaries.  Except as disclosed in the SEC Documents,
the Company  does not  presently  own or control,  directly or  indirectly,  any
interest in any other  corporation,  partnership,  association or other business
entity.

         Section 4.19. Tax Status. Except as disclosed in the SEC Documents, the
Company  and each of its  subsidiaries  has made or filed all  federal and state
income and all other tax  returns,  reports  and  declarations  required  by any
jurisdiction  to which it is subject and (unless and only to the extent that the
Company  and each of its  subsidiaries  has set  aside on its  books  provisions
reasonably adequate for the payment of all unpaid and unreported taxes) has paid
all taxes and other  governmental  assessments  and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except  those  being  contested  in good  faith  and has set  aside on its books
provision  reasonably  adequate  for  the  payment  of  all  taxes  for  periods
subsequent to the periods to which such returns,  reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction,  and the officers of the Company know of no basis
for any such claim.

         Section  4.20.  Certain  Transactions.  Except  as set forth in the SEC
Documents  none of the  officers,  directors,  or  employees  of the  Company is
presently a party to any  transaction  with the Company (other than for services
as employees,  officers and  directors),  including  any contract,  agreement or
other  arrangement  providing for the furnishing of services to or by, providing
for rental of real or  personal  property  to or from,  or  otherwise  requiring
payments to or from any officer,  director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer,  director,  or any such  employee has a  substantial  interest or is an
officer, director, trustee or partner.

         Section  4.21.  Fees and Rights of First  Refusal.  The  Company is not
obligated to offer the securities  offered hereunder on a right of first refusal
basis or otherwise to any third parties  including,  but not limited to, current
or former shareholders of the Company,  underwriters,  brokers,  agents or other
third parties.

         Section  4.22.  Use of Proceeds.  The Company  represents  that the net
proceeds  from  this  offering  will be used  for  general  corporate  purposes.
However,  in no event shall the net proceeds  from this  offering be used by the
Company for the  payment  (or loaned to any such person for the  payment) of any
judgment,  or other  liability,  incurred  by any  executive  officer,  officer,
director or  employee  of the  Company,  except for any  liability  owed to such
person for services rendered,  or if any judgment or other liability is incurred
by such person originating from services rendered to the Company, or the Company
has indemnified such person from liability.

                                       14
<PAGE>

         Section 4.23. Further Representation and Warranties of the Company. For
so  long as any  securities  issuable  hereunder  held  by the  Investor  remain
outstanding, the Company acknowledges,  represents,  warrants and agrees that it
will maintain the listing of its Common Stock on the Principal  Market.  Section
4.24.  Opinion of Counsel.  Investor shall receive an opinion letter from Schiff
Hardin, LLP, counsel to the Company, on the date hereof.

         Section  4.25.  Opinion of  Counsel.  The  Company  will obtain for the
Investor, at the Company's expense, any and all opinions of counsel which may be
reasonably  required in order to sell the securities  issuable hereunder without
restriction.

         Section  4.26.  Dilution.  The Company is aware and  acknowledges  that
issuance  of shares of the  Company's  Common  Stock  could  cause  dilution  to
existing shareholders and could significantly increase the outstanding number of
shares of Common Stock.

                                   ARTICLE V.
                                 INDEMNIFICATION

         The Investor and the Company  represent to the other the following with
respect to itself:

         Section 5.1. Indemnification.

                  (a) In consideration of the Investor's  execution and delivery
of this  Agreement,  and in addition to all of the Company's  other  obligations
under this  Agreement,  the Company  shall defend,  protect,  indemnify and hold
harmless the Investor, and all of its officers,  directors,  partners, employees
and agents (including, without limitation, those retained in connection with the
transactions  contemplated  by  this  Agreement)  (collectively,  the  "Investor
Indemnitees")  from and against any and all  actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith  (irrespective of whether any such Investor Indemnitee is a
party  to the  action  for  which  indemnification  hereunder  is  sought),  and
including  reasonable   attorneys'  fees  and  disbursements  (the  "Indemnified
Liabilities"),  incurred by the Investor  Indemnitees or any of them as a result
of, or arising out of, or relating to (a) any misrepresentation or breach of any
representation  or  warranty  made  by the  Company  in  this  Agreement  or the
Registration  Rights Agreement or any other certificate,  instrument or document
contemplated  hereby or thereby,  (b) any breach of any  covenant,  agreement or
obligation of the Company contained in this Agreement or the Registration Rights
Agreement or any other certificate,  instrument or document  contemplated hereby
or thereby,  or (c) any cause of action,  suit or claim  brought or made against
such  Investor  Indemnitee  not  arising  out of any  action or  inaction  of an
Investor  Indemnitee,  and  arising  out of or  resulting  from  the  execution,
delivery,  performance or enforcement of this Agreement or any other instrument,
document  or  agreement   executed  pursuant  hereto  by  any  of  the  Investor
Indemnitees.  To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and  satisfaction of each of the Indemnified  Liabilities,  which is
permissible under applicable law.

                                       15
<PAGE>

                  (b) In consideration  of the Company's  execution and delivery
of this Agreement,  and in addition to all of the Investor's  other  obligations
under this  Agreement,  the Investor shall defend,  protect,  indemnify and hold
harmless the Company and all of its officers, directors, shareholders, employees
and agents (including, without limitation, those retained in connection with the
transactions  contemplated  by  this  Agreement)  (collectively,   the  "Company
Indemnitees") from and against any and all Indemnified  Liabilities  incurred by
the  Company  Indemnitees  or any of them as a result of, or arising  out of, or
relating  to (a)  any  misrepresentation  or  breach  of any  representation  or
warranty  made  by the  Investor  in this  Agreement,  the  Registration  Rights
Agreement, or any instrument or document contemplated hereby or thereby executed
by the Investor, (b) any breach of any covenant,  agreement or obligation of the
Investor(s)  contained in this Agreement,  the Registration  Rights Agreement or
any other  certificate,  instrument or document  contemplated  hereby or thereby
executed by the Investor,  or (c) any cause of action,  suit or claim brought or
made against such Company  Indemnitee  based on  misrepresentations  or due to a
breach by the  Investor  and arising  out of or  resulting  from the  execution,
delivery,  performance or enforcement of this Agreement or any other instrument,
document  or  agreement   executed   pursuant  hereto  by  any  of  the  Company
Indemnitees. To the extent that the foregoing undertaking by the Investor may be
unenforceable for any reason,  the Investor shall make the maximum  contribution
to the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.

                  (c)  The  obligations  of the  parties  to  indemnify  or make
contribution under this Section 5.1 shall survive termination.

                                   ARTICLE VI.
                            COVENANTS OF THE COMPANY

         Section  6.1.   Registration   Rights.  The  Company  shall  cause  the
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all material respects with the terms thereof.

         Section 6.2.  Listing of Common Stock.  The Company shall  maintain the
Common  Stock's  authorization  for  quotation  on the National  Association  of
Securities Dealers Inc.'s Over the Counter Bulletin Board.

         Section  6.3.  Exchange  Act  Registration.  The Company will cause its
Common Stock to continue to be  registered  under  Section 12(g) of the Exchange
Act, will file in a timely manner all reports and other documents required of it
as a reporting  company  under the  Exchange Act and will not take any action or
file any  document  (whether  or not  permitted  by  Exchange  Act or the  rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Exchange Act.

         Section  6.4.  Transfer  Agent  Instructions.  Not  later  than two (2)
business  days after each Advance  Notice Date and prior to each Closing and the
effectiveness  of the  Registration  Statement and resale of the Common Stock by
the Investor,  the Company will deliver  instructions  to its transfer  agent to
issue shares of Common Stock free of restrictive legends.

                                       16
<PAGE>

         Section  6.5.  Corporate  Existence.  The  Company  will take all steps
necessary to preserve and continue the corporate existence of the Company.

         Section  6.6.   Notice  of  Certain  Events   Affecting   Registration;
Suspension of Right to Make an Advance.  The Company will immediately notify the
Investor  upon its  becoming  aware of the  occurrence  of any of the  following
events in respect of a registration  statement or related prospectus relating to
an offering of Registrable Securities: (i) receipt of any request for additional
information  by the SEC or any other  Federal  or state  governmental  authority
during the period of effectiveness of the Registration  Statement for amendments
or supplements to the  registration  statement or related  prospectus;  (ii) the
issuance by the SEC or any other Federal or state governmental  authority of any
stop order suspending the  effectiveness  of the  Registration  Statement or the
initiation  of  any  proceedings   for  that  purpose;   (iii)  receipt  of  any
notification  with respect to the suspension of the  qualification  or exemption
from  qualification  of  any of  the  Registrable  Securities  for  sale  in any
jurisdiction  or the  initiation  or  threatening  of any  proceeding  for  such
purpose;  (iv) the happening of any event that makes any  statement  made in the
Registration  Statement or related  prospectus of any document  incorporated  or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration  Statement,  related
prospectus or documents so that, in the case of the Registration  Statement,  it
will not 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 not misleading,  and that in the case of the related prospectus, it will
not  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 the light of the  circumstances  under  which they were  made,  not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the  Registration  Statement would be appropriate;  and the Company
will promptly make available to the Investor any such supplement or amendment to
the related  prospectus.  The  Company  shall not  deliver to the  Investor  any
Advance Notice during the continuation of any of the foregoing events.

         Section 6.7.  Expectations  Regarding Advance Notices.  Within ten (10)
days after the commencement of each calendar quarter occurring subsequent to the
commencement of the Commitment Period, the Company must notify the Investor,  in
writing, as to its reasonable expectations as to the dollar amount it intends to
raise  during such  calendar  quarter,  if any,  through the issuance of Advance
Notices.  Such  notification  shall  constitute  only the  Company's  good faith
estimate and shall in no way  obligate the Company to raise such amount,  or any
amount,  or otherwise limit its ability to deliver Advance Notices.  The failure
by the  Company  to comply  with this  provision  can be cured by the  Company's
notifying  the  Investor,   in  writing,  at  any  time  as  to  its  reasonable
expectations with respect to the current calendar quarter.

         Section  6.8.   Restriction  on  Sale  of  Capital  Stock.  During  the
Commitment  Period,  the Company shall not issue or sell (i) any Common Stock or
Preferred Stock without consideration or for a consideration per share less than
the bid price of the Common Stock determined  immediately prior to its issuance,
(ii) issue or sell any Preferred Stock warrant,  option, right, contract,  call,
or other security or instrument granting the holder thereof the right to acquire
Common Stock without  consideration  or for a consideration  per share less than
such Common Stock's Bid Price determined  immediately prior to its issuance,  or
(iii) file any registration statement on Form S-8.

                                       17
<PAGE>

         Section 6.9. Consolidation;  Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into,  or a transfer  of all or  substantially  all the assets of the Company to
another  entity (a  "Consolidation  Event")  unless the  resulting  successor or
acquiring  entity  (if  not the  Company)  assumes  by  written  instrument  the
obligation to deliver to the Investor such shares of stock and/or  securities as
the Investor is entitled to receive pursuant to this Agreement.

         Section 6.10.  Issuance of the Company's  Common Stock. The sale of the
shares of Common  Stock  shall be made in  accordance  with the  provisions  and
requirements of Regulation D and any applicable state securities law.

                                  ARTICLE VII.
                CONDITIONS FOR ADVANCE AND CONDITIONS TO CLOSING

         Section 7.1.  Conditions  Precedent to the  Obligations of the Company.
The  obligation  hereunder of the Company to issue and sell the shares of Common
Stock to the Investor  incident to each Closing is subject to the  satisfaction,
or  waiver  by the  Company,  at or before  each  such  Closing,  of each of the
conditions set forth below.

                  (a) Accuracy of the Investor's Representations and Warranties.
The  representations and warranties of the Investor shall be true and correct in
all material respects.

                  (b)  Performance  by the  Investor.  The  Investor  shall have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions  required by this Agreement and the Registration Rights Agreement
to be performed,  satisfied or complied with by the Investor at or prior to such
Closing.

         Section  7.2.  Conditions  Precedent  to the  Right of the  Company  to
Deliver an Advance Notice and the Obligation of the Investor to Purchase  Shares
of Common Stock.  The right of the Company to deliver an Advance  Notice and the
obligation  of the  Investor  hereunder  to  acquire  and pay for  shares of the
Company's  Common Stock  incident to a Closing is subject to the  fulfillment by
the  Company,  on (i) the date of delivery of such  Advance  Notice and (ii) the
applicable Advance Date (each a "Condition  Satisfaction  Date"), of each of the
following conditions:

                  (a) Registration of the Common Stock with the SEC. The Company
shall have  filed  with the SEC a  Registration  Statement  with  respect to the
resale  of the  Registrable  Securities  in  accordance  with  the  terms of the
Registration  Rights  Agreement.   As  set  forth  in  the  Registration  Rights
Agreement, the Registration Statement shall have previously become effective and
shall remain effective on each Condition  Satisfaction  Date and (i) neither the
Company nor the Investor  shall have received  notice that the SEC has issued or
intends to issue a stop order with respect to the Registration Statement or that
the  SEC  otherwise  has  suspended  or  withdrawn  the   effectiveness  of  the
Registration  Statement,  either  temporarily or permanently,  or intends or has
threatened  to do so (unless  the SEC's  concerns  have been  addressed  and the
Investor  is  reasonably  satisfied  that the SEC no  longer is  considering  or
intends  to take  such  action),  and  (ii) no  other  suspension  of the use or
withdrawal  of  the  effectiveness  of the  Registration  Statement  or  related
prospectus  shall exist.  The  Registration  Statement  must have been  declared
effective by the SEC prior to the first Advance Notice Date.

                                       18
<PAGE>

                  (b) Authority. The Company shall have obtained all permits and
qualifications   required  by  any  applicable  state  in  accordance  with  the
Registration  Rights  Agreement  for the offer and sale of the  shares of Common
Stock,  or shall have the  availability  of exemptions  therefrom.  The sale and
issuance of the shares of Common  Stock shall be legally  permitted  by all laws
and regulations to which the Company is subject.

                  (c) Fundamental Changes. There shall not exist any fundamental
changes to the information set forth in the  Registration  Statement which would
require  the  Company to file a  post-effective  amendment  to the  Registration
Statement.

                  (d)  Performance  by  the  Company.  The  Company  shall  have
performed,  satisfied and complied in all material  respects with all covenants,
agreements  and  conditions  required  by  this  Agreement  (including,  without
limitation, the conditions specified in Section 2.5 hereof) and the Registration
Rights  Agreement to be performed,  satisfied or complied with by the Company at
or prior to each Condition Satisfaction Date.

                  (e) No Injunction.  No statute,  rule,  regulation,  executive
order,  decree,   ruling  or  injunction  shall  have  been  enacted,   entered,
promulgated  or endorsed by any court or  governmental  authority  of  competent
jurisdiction  that  prohibits  or  directly  and  adversely  affects  any of the
transactions  contemplated by this Agreement,  and no proceeding shall have been
commenced that may have the effect of prohibiting or adversely  affecting any of
the transactions contemplated by this Agreement.

                  (f) No  Suspension of Trading in or Delisting of Common Stock.
The trading of the Common  Stock is not  suspended  by the SEC or the  Principal
Market (if the Common  Stock is traded on a Principal  Market).  The issuance of
shares of Common Stock with respect to the applicable Closing, if any, shall not
violate the shareholder  approval  requirements of the Principal  Market (if the
Common  Stock is traded  on a  Principal  Market).  The  Company  shall not have
received any notice threatening the continued listing of the Common Stock on the
Principal Market (if the Common Stock is traded on a Principal Market).

                  (g) Maximum Advance Amount. The amount of an Advance requested
by the Company shall not exceed the Maximum Advance Amount.  In addition,  in no
event shall the number of shares issuable to the Investor pursuant to an Advance
cause the Investor to own in excess of nine and 9/10 percent  (9.9%) of the then
outstanding  Common Stock of the Company.

                  (h) No  Knowledge.  The Company has no  knowledge of any event
which  would  be more  likely  than  not to have  the  effect  of  causing  such
Registration Statement to be suspended or otherwise ineffective.

                  (i) Other. On each Condition  Satisfaction  Date, the Investor
shall have received the certificate executed by an officer of the Company in the
form of Exhibit A attached hereto.

                                       19
<PAGE>

                                  ARTICLE VIII.
         DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION

         Section  8.1.  Due  Diligence  Review.  Prior  to  the  filing  of  the
Registration  Statement the Company  shall make  available  for  inspection  and
review by the Investor,  its advisors and  representatives,  and any underwriter
participating in any disposition of the Registrable  Securities on behalf of the
Investor pursuant to the Registration Statement, any such registration statement
or amendment or supplement  thereto or any blue sky,  NASD or other filing,  all
financial and other  records,  all SEC Documents and other filings with the SEC,
and all other  corporate  documents  and  properties  of the  Company  as may be
reasonably  necessary  for the purpose of such review,  and cause the  Company's
officers,  directors  and  employees to supply all such  information  reasonably
requested by the Investor or any such representative,  advisor or underwriter in
connection with such Registration Statement (including,  without limitation,  in
response to all questions and other  inquiries  reasonably  made or submitted by
any of them),  prior to and from time to time after the filing and effectiveness
of the Registration  Statement for the sole purpose of enabling the Investor and
such representatives, advisors and underwriters and their respective accountants
and attorneys to conduct  initial and ongoing due diligence  with respect to the
Company and the accuracy of the Registration Statement.

         Section 8.2. Non-Disclosure of Non-Public Information.

                  (a) The Company shall not disclose  non-public  information to
the Investor,  its advisors, or its representatives,  unless prior to disclosure
of such information the Company  identifies such information as being non-public
information and provides the Investor,  such advisors and  representatives  with
the  opportunity to accept or refuse to accept such  non-public  information for
review. The Company may, as a condition to disclosing any non-public information
hereunder,  require the Investor's  advisors and representatives to enter into a
confidentiality agreement in form reasonably satisfactory to the Company and the
Investor.

                  (b)  Nothing  herein  shall  require  the  Company to disclose
non-public  information to the Investor or its advisors or representatives,  and
the Company  represents that it does not disseminate  non-public  information to
any investors who purchase stock in the Company in a public  offering,  to money
managers or to securities  analysts,  provided,  however,  that  notwithstanding
anything  herein to the contrary,  the Company will,  as  hereinabove  provided,
immediately notify the advisors and representatives of the Investor and, if any,
underwriters,  of any event or the  existence of any  circumstance  (without any
obligation to disclose the specific event or  circumstance)  of which it becomes
aware,  constituting  non-public  information  (whether or not  requested of the
Company  specifically  or generally  during the course of due  diligence by such
persons or entities),  which, if not disclosed in the prospectus included in the
Registration  Statement  would  cause  such  prospectus  to  include a  material
misstatement  or to omit a material fact required to be stated  therein in order
to make the statements,  therein,  in light of the  circumstances  in which they
were made,  not  misleading.  Nothing  contained  in this  Section  8.2 shall be
construed to mean that such persons or entities other than the Investor (without
the written consent of the Investor prior to disclosure of such information) may
not obtain  non-public  information in the course of conducting due diligence in
accordance with the terms of this Agreement and nothing herein shall prevent any
such persons or entities from  notifying the Company of their opinion that based
on such due  diligence  by such  persons  or  entities,  that  the  Registration
Statement contains an untrue statement of material fact or omits a material fact
required to be stated in the  Registration  Statement  or  necessary to make the
statements  contained therein,  in light of the circumstances in which they were
made, not misleading.

                                       20
<PAGE>

                                   ARTICLE IX.
                           CHOICE OF LAW/JURISDICTION

         Section 9.1.  Governing  Law. This  Agreement  shall be governed by and
interpreted in accordance with the laws of the State of Nevada without regard to
the  principles of conflict of laws.  The parties  further agree that any action
between them shall be heard in Hudson County,  New Jersey, and expressly consent
to the  jurisdiction  and venue of the Superior Court of New Jersey,  sitting in
Hudson  County,  New Jersey and the United States  District Court of New Jersey,
sitting in Newark, New Jersey, for the adjudication of any civil action asserted
pursuant to this paragraph.

                                   ARTICLE X.
                             ASSIGNMENT; TERMINATION

         Section 10.1. Assignment.  Neither this Agreement nor any rights of the
Company hereunder may be assigned to any other Person.

         Section  10.2.  Termination.  The  obligations  of the Investor to make
Advances under Article II hereof shall terminate  twenty-four  (24) months after
the Effective Date.

                                   ARTICLE XI.
                                     NOTICES

         Section  11.1.  Notices.  Any  notices,  consents,  waivers,  or  other
communications  required  or  permitted  to be  given  under  the  terms of this
Agreement  must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered  personally;  (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S.  certified  mail,  return  receipt  requested;
(iii) three (3) days after being sent by U.S.  certified  mail,  return  receipt
requested,  or (iv)  one (1) day  after  deposit  with a  nationally  recognized
overnight  delivery  service,  in each case  properly  addressed to the party to
receive the same.  The addresses and facsimile  numbers for such  communications
shall be:

If to the Company, to:      CEC Industries Corp.
                            2999 N.E. 191st Street - PH2
                            Aventura, FL 33180
                            Attention:  Jeff Sternberg
                            Telephone:  (305) 692-1832
                            Facsimile:  (305) 692-1762

                                       21
<PAGE>

With a copy to:             Schiff Hardin, LLP
                            1101 Connecticut Avenue, N.W. - Suite 600
                            Washington, D.C., 20036
                            Attention:  Ernest M. Stern, Esq.
                            Telephone: (202) 778-6461
                            Facsimile: (202) 778-6460

If to the Investor(s):      Cornell Capital Partners, LP
                            101 Hudson Street -Suite 3700
                            Jersey City, NJ 07302
                            Attention: Mark Angelo
                                       Portfolio Manager
                            Telephone: (201) 985-8300
                            Facsimile: (201) 985-8266

With a Copy to:             Butler Gonzalez LLP
                            1416 Morris Avenue - Suite 207
                            Union, NJ 07083
                            Attention:  David Gonzalez, Esq.
                            Telephone:  (908) 810-8588
                            Facsimile:  (908) 810-0973

Each party shall provide five (5) days' prior written notice to the other party
of any change in address or facsimile number.

                                  ARTICLE XII.
                                  MISCELLANEOUS

         Section 12.1.  Counterparts.  This  Agreement may be executed in two or
more identical  counterparts,  all of which shall be considered one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered  to the other  party.  In the event any  signature  page is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered to the other party  within five (5) days of the  execution
and delivery hereof,  though failure to deliver such copies shall not affect the
validity of this Agreement.

         Section 12.2. Entire Agreement;  Amendments.  This Agreement supersedes
all other prior oral or written  agreements  between the Investor,  the Company,
their  affiliates and persons acting on their behalf with respect to the matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein
contain  the entire  understanding  of the parties  with  respect to the matters
covered  herein and therein  and,  except as  specifically  set forth  herein or
therein,  neither  the  Company  nor  the  Investor  makes  any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement  may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

         Section  12.3.  Reporting  Entity for the Common  Stock.  The reporting
entity relied upon for the  determination of the trading price or trading volume
of the Common Stock on any given Trading Day for the purposes of this  Agreement
shall be Bloomberg, L.P. or any successor thereto. The written mutual consent of
the  Investor  and the Company  shall be required to employ any other  reporting
entity.

                                       22
<PAGE>

         Section 12.4.  Fees and Expenses.  The Company hereby agrees to pay the
following fees:

                  (a) Legal Fees. Each of the parties shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection  with this  Agreement and the  transactions
contemplated  hereby,  except that the  Company  will pay Ten  Thousand  Dollars
($10,000)  to Butler  Gonzalez  LLP for legal,  administrative,  and escrow fees
shall be paid  directly  from the gross  proceeds  of the First  Closing  of the
Convertible  Debenture transaction pursuant to the Securities Purchase Agreement
dated the date hereof.  Subsequently  on each advance date, the Company will pay
Butler  Gonzalez  LLP,  the  sum of  Five  Hundred  Dollars  ($500)  for  legal,
administrative  and  escrow  fees  directly  out the  proceeds  of any  Advances
hereunder.

                  (b) Commitment Fees.

                           (i) On each Advance Date the Company shall pay to the
Investor,  directly from the gross  proceeds held in escrow,  an amount equal to
ten percent (10%) of the amount of each Advance.  The Company hereby agrees that
if such  payment,  as is  described  above,  is not made by the  Company  on the
Advance  Date,  such  payment  will be made at the  direction of the Investor as
outlined and mandated by Section 2.3 of this Agreement.

                           (ii) Upon the execution of this Agreement the Company
shall issue to the Investor  shares of the  Company's  Common Stock in an amount
equal to Three Hundred Seventy Thousand Dollars  ($370,000)  divided by the VWAP
of the Company's  Common Stock,  as quoted by Bloomberg,  LP, on the date hereof
(the "First Tranch of the Investor's Shares") and on the first (1st) anniversary
of the  execution  of this  Agreement  the Company  shall issue to the  Investor
shares of the Company's Common Stock in an amount equal to Three Hundred Seventy
Thousand Dollars  ($370,000)  divided by the VWAP of the Company's Common Stock,
as quoted  by  Bloomberg,  LP, on the date  hereof  (the  "Second  Tranch of the
Investor's  Shares") (the First and Second Tranch of the Investor's Shares shall
collectively be referred to as the "Investor's Shares").

                           (iii) Fully Earned.  The  Investor's  Shares shall be
deemed fully earned as of the date hereof.

                           (iv) Registration  Rights. The Investor's Shares will
have "piggy-back" registration rights.

         Section 12.5. Brokerage.  Each of the parties hereto represents that it
has had no  dealings  in  connection  with this  transaction  with any finder or
broker who will demand  payment of any fee or  commission  from the other party.
The  Company on the one hand,  and the  Investor,  on the other  hand,  agree to
indemnify  the  other  against  and hold  the  other  harmless  from any and all
liabilities  to any person  claiming  brokerage  commissions or finder's fees on
account  of  services   purported  to  have  been  rendered  on  behalf  of  the
indemnifying  party  in  connection  with  this  Agreement  or the  transactions
contemplated hereby.

                                       23
<PAGE>

         Section  12.6.  Confidentiality.  If for any  reason  the  transactions
contemplated by this Agreement are not  consummated,  each of the parties hereto
shall keep  confidential  any information  obtained from any other party (except
information  publicly  available  or in such  party's  domain  prior to the date
hereof,  and except as required by court order) and shall promptly return to the
other  parties  all  schedules,  documents,  instruments,  work  papers or other
written information without retaining copies thereof, previously furnished by it
as a result of this Agreement or in connection herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       24
<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have caused this Standby Equity
Distribution  Agreement  to be  executed  by  the  undersigned,  thereunto  duly
authorized, as of the date first set forth above.

                                   COMPANY:
                                   CEC INDUSTRIES CORP.

                                   By: :  /s/ Jeff Sternberg
                                   ----------------------------------
                                   Name:  Jeff Sternberg
                                   Title: Chief Executive Officer

                                   INVESTOR:
                                   CORNELL CAPITAL PARTNERS, LP

                                   BY:    YORKVILLE ADVISORS, LLC
                                   ITS:   GENERAL PARTNER

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

                                       25
<PAGE>

                                    EXHIBIT A

                      ADVANCE NOTICE/COMPLIANCE CERTIFICATE

                              CEC INDUSTRIES CORP.

      The undersigned, _______________________ hereby certifies, with respect to
the sale of shares of Common Stock of CEC Industries Corp., (the "Company"),
issuable in connection with this Advance Notice and Compliance Certificate dated
___________________ (the "Notice"), delivered pursuant to the Standby Equity
Distribution Agreement (the "Agreement"), as follows:

      1. The undersigned is the duly elected President of the Company.

      2. There are no fundamental changes to the information set forth in the
Registration Statement which would require the Company to file a post effective
amendment to the Registration Statement.

      3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the Advance Date
related to the Notice and has complied in all material respects with all
obligations and conditions contained in the Agreement.

      4. The Advance requested is _____________________.

      The   undersigned  has  executed  this   Certificate   this  ____  day  of
         .
--------
                                             CEC INDUSTRIES CORP.

                                             By:_________________________
                                             Name:
                                             Title:
<PAGE>

                                  SCHEDULE 2.6

                              CEC INDUSTRIES CORP.

         The undersigned  hereby agrees that for a period commencing on the date
hereof and expiring on the  termination  of the Agreement  dated August __, 2004
between CEC Industries Corp., (the "Company"), and Cornell Capital Partners, LP,
(the "Investor")  (the "Lock-up  Period"),  he, she or it will not,  directly or
indirectly,  without the prior written  consent of the Investor,  issue,  offer,
agree or offer to sell,  sell,  grant an  option  for the  purchase  or sale of,
transfer,  pledge,  assign,  hypothecate,  distribute  or otherwise  encumber or
dispose of except  pursuant  to Rule 144 of the  General  Rules and  Regulations
under the  Securities  Act of 1933,  any  securities  of the Company,  including
common  stock or  options,  rights,  warrants  or other  securities  underlying,
convertible  into,  exchangeable  or exercisable  for or evidencing any right to
purchase or subscribe for any common stock (whether or not beneficially owned by
the  undersigned),  or  any  beneficial  interest  therein  (collectively,   the
"Securities").

         In  order  to  enable  the  aforesaid  covenants  to be  enforced,  the
undersigned  hereby  consents  to the  placing of legends  and/or  stop-transfer
orders with the transfer agent of the Company's  securities  with respect to any
of the  Securities  registered in the name of the  undersigned  or  beneficially
owned by the undersigned,  and the undersigned hereby confirms the undersigned's
investment in the Company.

Dated: _______________, 2004

                                            Signature

                                            ------------------------------------
                                            Address:____________________________
                                            City, State, Zip Code:______________

                                            ------------------------------------
                                            Print Social Security Number
                                            or Taxpayer I.D. NumberEX-10.1

2005 PERFORMANCE PLAN

OF

THE GOODYEAR TIRE & RUBBER COMPANY

1. PURPOSE.

The purposes of the 2005 Performance Plan of The Goodyear Tire & Rubber Company (the “Plan”)
are to advance the interests of the Company and its shareholders by strengthening the ability of
the Company to attract, retain and reward highly qualified officers and other employees, to
motivate officers and other selected employees to achieve business objectives established to
promote the long term growth, profitability and success of the Company, and to encourage ownership
of the Common Stock of the Company by participating officers and other selected employees. The Plan
authorizes performance based stock and cash incentive compensation in the form of stock options,
stock appreciation rights, restricted stock, performance grants and awards, and other stock-based
grants and awards.

2. DEFINITIONS.

For the purposes of the Plan, the following terms shall have the following meanings:

(a) “ADJUSTED NET INCOME” means, with respect to any calendar or other fiscal year of the
Company, the amount reported as “Net Income” in the audited Consolidated Income Statement of the
Company and Subsidiaries for such year (as set forth in the Company’s Annual Report to Shareholders
for such year), adjusted to exclude any of the following items: (i) extraordinary items (as
described in Accounting Principles Board Opinion No. 30); (ii) gains or losses on the disposition
of discontinued operations; (iii) the cumulative effects of changes in accounting principles; (iv)
the writedown of any asset; and (v) charges for restructuring and rationalization programs.

(b) “ANNUAL NET INCOME PER SHARE” means, with respect to any calendar or other fiscal year of
the Company in respect of which a determination thereof is being or to be made, the Adjusted Net
Income for such year divided by the average number of shares of Common Stock outstanding during
such year.

(c) “AWARD” means any payment or settlement in respect of a grant made pursuant to the Plan,
whether in the form of shares of Common Stock or in cash, or in any combination thereof.

(d) “BOARD OF DIRECTORS” means the Board of Directors of the Company.

(e) “CODE” means the Internal Revenue Code of 1986, as amended and in effect from time to
time, or any successor statute thereto, together with the published rulings, regulations and
interpretations duly promulgated thereunder.

(f) “COMMITTEE” means the committee of the Board of Directors established and constituted as
provided in Section 5 of the Plan.

(g) “COMMON STOCK” means the common stock, without par value, of the Company, or any security
issued by the Company in substitution or exchange therefor or in lieu thereof.

(h) “COMMON STOCK EQUIVALENT” means a Unit (or fraction thereof, if authorized by the
Committee) substantially equivalent to a hypothetical share of Common Stock, credited to a
Participant and having a value at any time equal to the Fair Market Value of a share of Common
Stock (or such fraction thereof) at such time.

(i) “COMPANY” means The Goodyear Tire & Rubber Company, an Ohio corporation, or any successor
corporation.

(j) “COVERED EMPLOYEE” means any person who is a “covered employee” within the meaning of
Section 162(m) of the Code.

(k) “CUMULATIVE NET INCOME” means, in respect of any Performance Period, the aggregate
cumulative amount of the Adjusted Net Income for the calendar or other fiscal years of the Company
during such Performance Period.

(l) “CUMULATIVE NET INCOME PER SHARE” means, in respect of any Performance Period, the
aggregate cumulative amount of the Annual Net Income Per Share for the calendar or other fiscal
years of the Company during such Performance Period.

(m) “DIVIDEND EQUIVALENT” means, in respect of a Common Stock Equivalent and with respect to
each dividend payment date for the Common Stock, an amount equal to the cash dividend on one share
of Common Stock payable on such dividend payment date.

(n) “EMPLOYEE” means any individual, including any officer of the Company, who is on the
active payroll of the Company or a Subsidiary at the relevant time.

(o) “EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended and in effect from
time to time, including all rules and regulations promulgated thereunder.

(p) “FAIR MARKET VALUE” means, in respect of any date on or as of which a determination
thereof is being or to be made, the average of the high and low per share sale prices of the Common
Stock reported on the New York Stock Exchange Composite Transactions tape on such date, or, if the
Common Stock was not traded on such date, on the next preceding day on which sales of shares of the
Common Stock were reported on the New York Stock Exchange Composite Transactions tape.

(q) “INCENTIVE STOCK OPTION” means any option to purchase shares of Common Stock granted
pursuant to the provisions of Section 6 of the Plan that is intended to be and is specifically
designated as an “incentive stock option” within the meaning of Section 422(b) of the Code.

(r) “NON-QUALIFIED STOCK OPTION” means any option to purchase shares of Common Stock granted
pursuant to the provisions of Section 6 of the Plan that is not an Incentive Stock Option.

(s) “PARTICIPANT” means any Employee of the Company or a Subsidiary who

receives a grant or Award under the Plan.

(t) “PERFORMANCE GRANT” means a grant made pursuant to Section 9 of the Plan, the Award of
which is contingent on the achievement of specific Performance Goals during a Performance Period,
determined using a specific Performance Measure, all as specified in the grant agreement relating
thereto.

(u) “PERFORMANCE GOALS” mean, with respect to any applicable grant made pursuant to the Plan,
the one or more targets, goals or levels of attainment required to be achieved in terms of the
specified Performance Measure during the specified Performance Period, all as set forth in the
related grant agreement.

(v) “PERFORMANCE MEASURE” means, with respect to any applicable grant made pursuant to the
Plan, one or more of the criteria identified at Section 9(c) of the Plan selected by the Committee
for the purpose of establishing, and measuring attainment of, Performance Goals for a Performance
Period in respect of such grant, as provided in the related grant agreement.

(w) “PERFORMANCE PERIOD” means, with respect to any applicable grant made pursuant to the
Plan, the one or more periods of time, which may be of varying and overlapping durations, as the
Committee may select during which the attainment of one or more Performance Goals will be measured
to determine whether, and the extent to which, a Participant is entitled to receive payment of an
Award pursuant to such grant.

(x) “PLAN” means this 2005 Performance Plan of the Company, as set forth herein and as
hereafter amended from time to time in accordance with the terms hereof.

(y) “RESTRICTED STOCK” means shares of Common Stock issued pursuant to a Restricted Stock
Grant under Section 8 of the Plan so long as such shares remain subject to the restrictions and
conditions specified in the grant agreement pursuant to which such Restricted Stock Grant is made.

(z) “RESTRICTED STOCK GRANT” means a grant made pursuant to the provisions of Section 8 of the
Plan.

(aa) “STOCK APPRECIATION RIGHT” means a grant in the form of a right to benefit from the
appreciation of the Common Stock made pursuant to Section 7 of the Plan.

(bb) “STOCK OPTION” means and includes any Non-Qualified Stock Option and any Incentive Stock
Option granted pursuant to Section 6 of the Plan.

(cc) “SUBSIDIARY” means any corporation or entity in which the Company directly or indirectly
owns or controls 50% or more of the equity securities issued by such corporation or entity having
the power to vote for the election of directors.

(dd) “UNIT” means a bookkeeping entry used by the Company to record and account for the grant,
settlement or, if applicable, deferral of an Award until such time as such Award is paid, canceled,
forfeited or terminated, as the case may be, which, except as otherwise specified by the Committee,
shall be equal to one Common Stock Equivalent.

3. EFFECTIVE DATE; TERM.

(a) EFFECTIVE DATE. The Plan shall be effective on April 26, 2005, upon approval by the
shareholders of the Company at the 2005 annual meeting of shareholders or any adjournments thereof.

(b) TERM. The Plan shall remain in effect until April 26, 2008, unless sooner terminated by
the Board of Directors. Termination of the Plan shall not affect grants and Awards then
outstanding.

4. SHARES OF COMMON STOCK SUBJECT TO PLAN.

(a) MAXIMUM NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE PLAN. The maximum aggregate
number of shares of Common Stock which may be issued pursuant to the Plan, subject to adjustment as
provided in Section 4(b) of the Plan, shall be twelve million, plus any shares of Common Stock
issued under the Plan that are forfeited back to the Company or are canceled. The shares of Common
Stock which may be issued under the Plan may be authorized and unissued shares or issued shares
reacquired by the Company. No fractional share of the Common Stock shall be issued under the Plan.
Awards of fractional shares of the Common Stock, if any, shall be settled in cash.

(b) ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE. In the event of any change in the capital
structure, capitalization or Common Stock of the Company such as a stock dividend, stock split,
recapitalization, merger, consolidation, split-up, combination or exchange of shares or other form
of reorganization, or any other change affecting the Common Stock, such proportionate adjustments,
if any, as the Board of Directors in its discretion may deem appropriate to reflect such change
shall be made with respect to: (i) the maximum number of shares of Common Stock which may be (1)
issued pursuant to the Plan, (2) the subject of any type of grant or Award under the Plan, and (3)
granted, Awarded or issued to any Participant pursuant to any provision of the Plan; (ii) the
number of shares of Common Stock subject to any outstanding Stock Option, Stock Appreciation Right
or other grant or Award made to any Participant under the Plan; (iii) the per share exercise price
in respect of any outstanding Stock Options and Stock Appreciation Rights; (iv) the number of
shares of Common Stock and the number of Units or the value of such Units, as the case may be,
which are the subject of other grants and Awards then outstanding under the Plan; and (v) any other
term or condition of any grant affected by any such change.

5. ADMINISTRATION.

(a) THE COMMITTEE. The Plan shall be administered by the Committee to be appointed from time
to time by the Board of Directors and comprised of not less than three of the then members of the
Board of Directors who qualify as “non-employee directors” within the meaning of Rule 16(b)-3
promulgated under the Exchange Act and as “outside directors” within the meaning of Section 162(m)
of the Code. Members of the Committee shall serve at the pleasure of the Board of Directors. The
Board of Directors may from time to time remove members from, or add members to, the Committee. A
majority of the members of the Committee shall constitute a quorum for the transaction of business
and the acts of a majority of the members present at any meeting at which a quorum is present shall
be the acts of the Committee. Any one or more members of the Committee may participate in a meeting
by conference telephone or similar means where all persons participating in the meeting can hear
and speak to each other, which participation shall constitute presence in person at such meeting.
Action approved in writing by a majority of the members of the Committee then serving shall be
fully as effective as if the action had been taken by unanimous vote at a meeting duly called and
held. The Company shall make grants and effect Awards under the Plan in accordance with the terms
and conditions specified by the Committee, which terms and conditions shall be set forth in grant
agreements and/or other instruments in such forms as the Committee shall approve.

(b) COMMITTEE POWERS. The Committee shall have full power and authority to operate and
administer the Plan in accordance with its terms. The powers of the Committee include, but are not
limited to, the power to: (i) select Participants from among the Employees of the Company and
Subsidiaries; (ii) establish the types of, and the terms and conditions of, all grants and Awards
made under the Plan, subject to any applicable limitations set forth in, and consistent with the
express terms of, the Plan; (iii) make grants and pay or otherwise effect Awards subject to, and
consistent with, the express provisions of the Plan; (iv) establish Performance Goals, Performance
Measures and Performance Periods, subject to, and consistent with, the express provisions of the
Plan; (v) reduce the amount of any grant or Award; (vi) prescribe the form or forms of grant
agreements and other instruments evidencing grants and Awards under the Plan; (vii) pay and to
defer payment of Awards on such terms and conditions, not inconsistent with the express terms of
the Plan, as the Committee shall determine; (viii) direct the Company to make conversions, accruals
and payments pursuant to the Plan; (ix) construe and interpret the Plan and make any determination
of fact incident to the operation of the Plan; (x) promulgate, amend and rescind rules and
regulations relating to the implementation, operation and administration of the Plan; (xi) adopt
such modifications, procedures and subplans as may be necessary or appropriate to comply with the
laws of other countries with respect to Participants or prospective Participants employed in such
other countries; (xii) delegate to other persons the responsibility for performing administrative
or ministerial acts in furtherance of the Plan; (xiii) engage the services of persons and firms,
including banks, consultants and insurance companies, in furtherance of the Plan’s activities; and
(xiv) make all other determinations and take all other actions as the Committee may deem necessary
or advisable for the administration and operation of the Plan.

(c) COMMITTEE’S DECISIONS FINAL. Any determination, decision or action of the Committee in
connection with the construction, interpretation, administration or application of the Plan, and of
any grant agreement, shall be final, conclusive and binding upon all Participants, and all persons
claiming through Participants, affected thereby.

(d) ADMINISTRATIVE ACCOUNTS. For the purpose of accounting for Awards deferred as to payment,
the Company shall establish bookkeeping accounts expressed in Units bearing the name of each
Participant receiving such Awards. Each account shall be unfunded, unless otherwise determined by
the Committee in accordance with Section 15(d) of the Plan.

(e) CERTIFICATIONS. In respect of each grant under the Plan to a Covered Employee which the
Committee intends to be “performance based compensation” under Section 162(m) of the Code, the
provisions of the Plan and the related grant agreement shall be construed to confirm such intent,
and to conform to the requirements of Section 162(m) of the Code, and the Committee shall certify
in writing (which writing may include approved minutes of a meeting of the Committee) that the
applicable Performance Goal(s), determined using the Performance Measure specified in the related
grant agreement, was attained during the relevant Performance Period at a level that equaled or
exceeded the level required for the payment of such Award in the amount proposed to be paid and
that such Award does not exceed any applicable Plan limitation.

6. STOCK OPTIONS.

(a) IN GENERAL. Options to purchase shares of Common Stock may be granted under the Plan and
may be Incentive Stock Options or Non-Qualified Stock Options. All Stock Options shall be subject
to the terms and conditions of this Section 6 and shall contain such additional terms and
conditions, not inconsistent with the express provisions of the Plan, as the Committee shall
determine. Stock Options may be granted in addition to, or in tandem with or independent of, Stock
Appreciation Rights or other grants and Awards under the Plan. The Committee may grant Stock
Options that provide for the automatic grant of a replacement Stock Option if payment of the
exercise price and/or any related withholding taxes is made by tendering (whether by physical
delivery or by attestation) shares of Common Stock or by having shares of Common Stock withheld by
the Company. The replacement Stock Option would cover the number of shares of Common Stock tendered
or withheld, would have a per share exercise price equal to at least 100% of the Fair Market Value
of a share of Common Stock on the date of the exercise of the original Stock Option, and would have
such other terms and conditions as may be specified by the Committee and set forth in the related
grant agreement.

(b) ELIGIBILITY AND LIMITATIONS. Any officer of the Company and any other employee of the
Company or a Subsidiary may be granted Stock Options. The Committee shall determine, in its
discretion, the Employees to whom Stock Options will be granted, the timing of such grants, and the
number of shares of Common Stock subject to each Stock Option granted; provided, that (i) the
maximum aggregate number of shares of Common Stock which may be issued and delivered upon the
exercise of Non-Qualified Stock Options granted under the Plan shall be ten million, (ii) the
maximum aggregate number of shares of Common Stock which may be issued and delivered upon the
exercise of Incentive Stock Options shall be five million, (iii) the maximum number of shares of
Common Stock in respect of which Stock Options may be granted to any Employee during any calendar
year shall be 500,000, and (iv) in respect of Incentive Stock Options, the aggregate Fair Market
Value (determined as of the date the Incentive Stock Option is granted) of the shares of Common
Stock with respect to which an Incentive Stock Option becomes exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000, or such other limit as may be
required by the Code, except that, if authorized by the Committee and provided for in the related
grant agreement, any portion of any Incentive Stock Option that cannot be exercised as such because
of this limitation may be converted into and exercised as a Non-Qualified Stock Option. In no event
shall any Stock Option or Stock Appreciation Right be granted to a Participant in exchange for the
Participant’s agreement to the cancellation of one or more Stock Options or Stock Appreciation
Rights then held by such Participant if the exercise price of the new grant is lower than the
exercise price of the grant to be cancelled and in no event shall any Stock Option or Stock
Appreciation Right be amended to reduce the option price, except as contemplated by Section 4(b) of
the Plan.

(c) OPTION EXERCISE PRICE. The per share exercise price of each Stock Option granted under the
Plan shall be determined by the Committee prior to or at the time of grant, but in no event shall
the per share exercise price of any Stock Option be less than 100% of the Fair Market Value of the
Common Stock on the date of the grant of such Stock Option.

(d) OPTION TERM. The term of each Stock Option shall be fixed by the Committee; except that in
no event shall the term of any Stock Option exceed ten years after the date such Stock Option is
granted.

(e) EXERCISABILITY. A Stock Option shall be exercisable at such time or times and subject to
such terms and conditions as shall be determined by the Committee at the date of grant; provided,
however, that no Stock Option shall be exercisable during the first six months after the date such
Stock Option is granted. No Stock Option may be exercised unless the holder thereof is at the time
of such exercise an Employee and has been continuously an Employee since the date such Stock Option
was granted, except that the Committee may permit the exercise of any Stock Option for any period
following the Participant’s termination of employment not in excess of the original term of the
Stock Option on such terms and conditions as it shall deem appropriate and specify in the related
grant agreement.

(f) METHOD OF EXERCISE. A Stock Option may be exercised, in whole or in part, by giving
written notice of exercise to the Company specifying the number of shares of Common Stock to be
purchased. Such notice shall be accompanied by payment in full of the purchase price, plus any
required withholding taxes, in cash or, if permitted by the terms of the related grant agreement or
otherwise approved in advance by the Committee, in shares of Common Stock already owned by the
Participant valued at the Fair Market Value of the Common Stock on the date of exercise. The
Committee may also permit Participants, either on a selective or aggregate basis, to simultaneously
exercise Stock Options and sell the shares of Common Stock thereby acquired pursuant to a brokerage
or similar arrangement approved in advance by the Committee and to use the proceeds from such sale
to pay the exercise price and withholding taxes.

7. STOCK APPRECIATION RIGHTS.

(a) IN GENERAL. Stock Appreciation Rights in respect of shares of Common Stock may be granted
under the Plan alone, in tandem with, in addition to or independent of a Stock Option or other
grant or Award under the Plan. A Stock Appreciation Right entitles a Participant to receive an
amount equal to the excess of the Fair Market Value of a share of Common Stock on the date of
exercise over the Fair Market Value of a share of Common Stock on the date of grant of the Stock
Appreciation Right, or such other higher price as may be set by the Committee, multiplied by the
number of shares of Common Stock with respect to which the Stock Appreciation Right shall have been
exercised.

(b) ELIGIBILITY AND LIMITATIONS. Any officer of the Company and any other Employee of the
Company or a Subsidiary selected by the Committee may be granted Stock Appreciation Rights. The
Committee shall determine, in its discretion, the Employees to whom Stock Appreciation Rights will
be granted, the timing of such grants and the number of shares of Common Stock in respect of which
each Stock Appreciation Right is granted; provided that (i) the maximum aggregate number of shares
of Common Stock in respect of which Stock Appreciation Rights may be granted shall be 2.5 million,
(ii) the maximum aggregate number of shares of Common Stock which may be issued and delivered in
payment or settlement of Stock Appreciation Rights shall be two million, and (iii) the maximum
number of shares of Common Stock in respect of which Stock Appreciation Rights may be granted to
any Employee during any calendar year shall be 100,000.

(c) EXERCISABILITY; EXERCISE; FORM OF PAYMENT. A Stock Appreciation Right may be exercised by
a Participant at such time or times and in such manner as shall be authorized by the Committee and
set forth in the related grant agreement, except that in no event shall a Stock Appreciation Right
be exercisable within the first six months after the date of grant. The Committee may provide that
a Stock Appreciation Right shall be automatically exercised on one or more specified dates. No
Stock Appreciation Right may be exercised unless the holder thereof is at the time of exercise an
Employee and has been continuously an Employee since the date the Stock Appreciation Right was
granted, except that the Committee may permit the exercise of any Stock Appreciation Right for any
period following the Participant’s termination of employment not in excess of the original term of
the Stock Appreciation Right on such terms and conditions as it shall deem appropriate and specify
in the related grant agreement. A Stock Appreciation Right may be exercised, in whole or in part,
by giving the Company a written notice specifying the number of shares of Common Stock in respect
of which the Stock Appreciation Right is to be exercised. Stock Appreciation Rights may be paid
upon exercise in cash, in shares of Common Stock, or in any combination of cash and shares of
Common Stock as determined by the Committee.

8. RESTRICTED STOCK GRANTS AND AWARDS.

(a) IN GENERAL. A Restricted Stock Grant is the issue of shares of Common Stock in the name of
an Employee, which issuance is subject to such terms and conditions as the Committee shall deem
appropriate, including, without limitation, restrictions on the sale, assignment, transfer or
other disposition of such shares and the requirement that the Employee forfeit such shares back to
the Company (i) upon termination of employment for specified reasons within a specified period of
time, or (ii) if any specified Performance Goals are not achieved during a specified Performance
Period, or (iii) if such other conditions as the Committee may specify are not satisfied.

(b) ELIGIBILITY AND LIMITATIONS. Any officer of the Company and any other key Employee of the
Company or a Subsidiary selected by the Committee may receive a Restricted Stock Grant. The
Committee, in its sole discretion, shall determine whether a Restricted Stock Grant shall be made,
the Employee to receive the Restricted Stock Grant, and the conditions and restrictions imposed on
the Restricted Stock Grant. The maximum number of shares of Common Stock which may be issued as
Restricted Stock under the Plan shall be 500,000. The maximum number of shares of Common Stock
which may be issued to any Employee as Restricted Stock during any calendar year shall not exceed
100,000. The maximum amount any Employee may receive as a Restricted Stock Grant in any calendar
year shall not exceed $8 million, determined using the Fair Market Value of such Restricted Stock
Grant as at the date of the grant thereof.

(c) RESTRICTION PERIOD. Restricted Stock Grants shall provide that in order for a Participant
to receive shares of Common Stock free of restrictions, the Participant must remain in the
employment of the Company or its Subsidiaries, subject to such exceptions as the Committee may deem
appropriate and specify in the related grant agreement, for a period of not less than three years
commencing on the date of the grant and ending on such later date or dates as the Committee may
designate at the time of the grant (the “Restriction Period”). The Committee, in its sole
discretion, may provide for the lapse of restrictions in installments during the Restriction
Period. The Committee may also establish one or more Performance Goals that are required to be
achieved during one or more Performance Periods within the Restriction Period as a condition to the
lapse of the restrictions.

(d) RESTRICTIONS. The following restrictions and conditions shall apply to each Restricted
Stock Grant during the Restriction Period: (i) the Participant shall not be entitled to delivery of
the shares of the Common Stock; (ii) the Participant may not sell, assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of or realize on the shares of Common Stock subject to
the Restricted Stock Grant; and (iii) the shares of the Common Stock issued as Restricted Stock
shall be forfeited to the Company if the Participant for any reason ceases to be an Employee prior
to the end of the Restriction Period, except due to circumstances specified in the related grant
agreement or otherwise approved by the Committee. The Committee may, in its sole discretion,
include such other restrictions and conditions as it may deem appropriate.

(e) PAYMENT. Upon expiration of the Restriction Period and if all conditions have been
satisfied and any applicable Performance Goals attained, the shares of the Restricted Stock will be
made available to the Participant, subject to satisfaction of applicable withholding tax
requirements, free of all restrictions; provided, that the Committee may, in its discretion,
require (i) the further deferral of any Restricted Stock Grant beyond the initially specified
Restriction Period, (ii) that the Restricted Stock be retained by the Company, and (iii) that the
Participant receive a cash payment in lieu of unrestricted shares of Common Stock.

(f) RIGHTS AS A SHAREHOLDER. A Participant shall have, with respect to shares of Restricted
Stock, all of the rights of a shareholder of the Company, including the right to vote the shares
and receive any cash dividends paid thereon. Stock dividends distributed with respect to shares of
Restricted Stock shall be treated as additional shares under the Restricted Stock Grant and shall
be subject to the restrictions and other terms and conditions set forth therein.

9. PERFORMANCE GRANTS AND AWARDS.

(a) ELIGIBILITY AND TERMS. The Committee may grant to officers of the Company and other key
Employees of the Company and its Subsidiaries the prospective contingent right, expressed in Units,
to receive payments of shares of Common Stock, cash or any combination thereof, with each Unit
equivalent in value to one share of Common Stock, or equivalent to such other value or monetary
amount as may be designated or established by the Committee (“Performance Grants”), based upon
Company performance over a specified Performance Period. The Committee shall, in its sole
discretion, determine the officers of the Company and other key Employees eligible to receive
Performance Grants. At the time each Performance Grant is made, the Committee shall establish the
Performance Period, the Performance Measure and the targets to be attained relative to such
Performance Measure (the “Performance Goals”) in respect of such Performance Grant. The number of
shares of Common Stock and/or the amount of cash earned and payable in settlement of a Performance
Grant shall be determined at the end of the Performance Period (a “Performance Award”).

(b) LIMITATIONS ON GRANTS AND AWARDS. The maximum number of shares of Common Stock which may
be issued pursuant to Performance Grants shall be 3.75 million. The maximum number of shares which
may be the subject of Performance Grants made to any Participant in respect of any Performance
Period or during any calendar year shall be 200,000. The maximum amount any Participant may receive
during any calendar year as Performance Awards pursuant to Performance Grants shall not exceed $10
million, determined using the Fair Market Value of such Performance Awards as at the last day of
the applicable Performance Period or Periods or as at date or dates of the payment thereof,
whichever is higher.

(c) PERFORMANCE GOALS, PERFORMANCE MEASURES AND PERFORMANCE PERIODS. Each Performance Grant
shall provide that, in order for a Participant to receive an Award of all or a portion of the Units
subject to such Performance Grant, the Company must achieve certain Performance Goals over a
designated Performance Period having a minimum duration of one year, with attainment of the
Performance Goals determined using a specific Performance Measure. The Performance Goals and
Performance Period shall be established by the Committee in its sole discretion. The Committee
shall establish a Performance Measure for each Performance Period for determining the portion of
the Performance Grant which will be earned or forfeited based on the extent to which the
Performance Goals are achieved or exceeded. In setting Performance Goals, the Committee may use a
Performance Measure based on any one, or on any combination, of the following Company performance
factors as the Committee deems appropriate: (i) Cumulative Net Income Per Share; (ii) Cumulative
Net Income; (iii) return on sales; (iv) total shareholder return; (v) return on assets; (vi)
economic value added; (vii) cash flow; (viii) return on equity; (ix) cumulative operating income
(which shall equal consolidated sales minus cost of goods sold and selling, administrative and
general expense); (x) operating income before depreciation and amortization; and (xi) return on
invested capital. Performance Goals may include minimum, maximum and target levels of performance,
with the size of Performance Award based on the level attained. Once established by the Committee
and specified in the grant agreement, and if and to the extent provided in or required by the grant
agreement, the Performance Goals and the Performance Measure in respect of any Performance Grant
(or any Restricted Stock Grant or Stock-Based Grant that requires the attainment of Performance
Goals as a condition to the Award) shall not be changed. The Committee may, in its discretion,
eliminate or reduce (but not increase) the amount of any Performance Award (or Restricted Stock or
Stock-Based Award) that otherwise would be payable to a Participant upon attainment of the
Performance Goal(s).

(d) FORM OF GRANTS. Performance Grants may be made on such terms and conditions not
inconsistent with the Plan, and in such form or forms, as the Committee may from time to time
approve. Performance Grants may be made alone, in addition to, in tandem with, or independent of
other grants and Awards under the Plan. Subject to the terms of the Plan, the Committee shall, in
its discretion, determine the number of Units subject to each Performance Grant made to a
Participant and the Committee may impose different terms and conditions on any particular
Performance Grant made to any Participant. The Performance Goals, the Performance Period or
Periods, and the Performance Measure(s) applicable to a Performance Grant shall be set forth in the
relevant grant agreement.

(e) PAYMENT OF AWARDS. Each Participant shall be entitled to receive payment in an amount
equal to the aggregate Fair Market Value (if the Unit is equivalent to a share of Common Stock), or
such other value as the Committee shall specify, of the Units earned in respect of such Performance
Award. Payment in settlement of a Performance Award may be made in shares of Common Stock, in
cash, or in any combination of Common Stock and cash, and at such time or times, as the Committee,
in its discretion, shall determine.

10. OTHER STOCK-BASED GRANTS AND AWARDS.

(a) IN GENERAL. The Committee may make other grants and Awards pursuant to which Common Stock
is, or in the future may be, acquired by Participants, and other grants and Awards to Participants
denominated in Common Stock Equivalents or other Units (“Stock-Based Grants”). Such Stock-Based
Grants may be granted alone or in addition to, in tandem with, or independent of any other grant
made or Award effected under the Plan.

(b) ELIGIBILITY AND TERMS. The Committee may make Stock-Based Grants to officers of the
Company and other key Employees of the Company and its Subsidiaries. Subject to the provisions of
the Plan, the Committee shall have authority to determine the Employees to whom, and the time or
times at which, Stock-Based Grants will be made, the number of shares of Common Stock, if any, to
be subject to or covered by each Stock-Based Grant, and any and all other terms and conditions of
each Stock-Based Grant.

(c) LIMITATIONS. The aggregate number of shares of Common Stock issued to Participants
pursuant to Stock-Based Grants made and Awards effected pursuant to this Section 10 shall not
exceed 500,000. No Participant shall receive more than 50,000 shares of Common Stock in settlement
of Stock-Based Awards during any calendar year. The maximum amount any Participant may receive in
Stock-Based Awards during any calendar year shall not exceed $4 million, determined using the Fair
Market Value of any shares of Common Stock delivered in payment of the Stock-Based Awards on the
date or dates of the payment thereof.

(d) FORM OF GRANTS; PAYMENT OF AWARDS. Stock-Based Grants may be made in such form or forms
and on such terms and conditions, including the attainment of specific Performance Goals, as the
Committee, in its discretion, shall approve. Payment of Stock-Based Awards may be made in cash, in
shares of Common Stock, or in any combination of cash and shares of Common Stock, and at such time
or times, as the Committee shall determine.

11. DEFERRALS.

The Committee may, whether at the time of grant or at anytime thereafter prior to payment or
settlement, require a Participant to defer, or permit (subject to such conditions as the Committee
may from time to time establish) a Participant to elect to defer, receipt of all or any portion of
any payment of cash or shares of Common Stock that would otherwise be due to such Participant in
payment or settlement of any Award under the Plan. If any such deferral is required by the
Committee (or is elected by the Participant with the permission of the Committee), the Committee
shall establish rules and procedures for such payment deferrals. The Committee may provide for the
payment or crediting of interest, at such rate or rates as it shall in its discretion deem
appropriate, on such deferred amounts credited in cash and the payment or crediting of dividend
equivalents in respect of deferred amounts credited in Common Stock Equivalents. Deferred amounts
may be paid in a lump sum or in installments in the manner and to the extent permitted, and in
accordance with rules and procedures established, by the Committee.

12. NON-TRANSFERABILITY OF GRANTS AND AWARDS.

No grant or Award under the Plan, and no right or interest therein, shall be (i) assignable,
alienable or transferable by a Participant, except by will or the laws of descent and distribution,
or (ii) subject to any obligation, or the lien or claims of any creditor, of any Participant, or
(iii) subject to any lien, encumbrance or claim of any party made in respect of or through any
Participant, however arising. During the lifetime of a Participant, Stock Options and Stock
Appreciation Rights are exercisable only by, and shares of Common Stock issued upon the exercise of
Stock Options and Stock Appreciation Rights or in settlement of other Awards will be issued only
to, and other payments in settlement of any Award will be payable only to, the Participant or his
or her legal representative. The Committee may, in its sole discretion, authorize written
designations of beneficiaries and authorize Participants to designate beneficiaries with the
authority to exercise Stock Options and Stock Appreciation Rights granted to a Participant in the
event of his or her death. Notwithstanding the foregoing, the Committee may, in its sole discretion
and on and subject to such terms and conditions as it shall deem appropriate, which terms and
conditions shall be set forth in the related grant agreement: (i) authorize a Participant to
transfer all or a portion of any Non-Qualified Stock Option or Stock Appreciation Right, as the
case may be, granted to such Participant; provided, that in no event shall any transfer be made to
any person or persons other than such Participant’s spouse, children or grandchildren, or a trust
for the exclusive benefit of one or more such persons, which transfer must be made as a gift and
without any consideration; and (ii) provide for the transferability of a particular grant or Award
pursuant to a qualified domestic relations order. All other transfers and any retransfer by any
permitted transferee are prohibited and any such purported transfer shall be null and void. Each
Stock Option or Stock Appreciation Right which becomes the subject of permitted transfer (and the
Participant to whom it was granted by the Company) shall continue to be subject to the same terms
and conditions as were in effect immediately prior to such permitted transfer. The Participant
shall remain responsible to the Company for the payment of all withholding taxes incurred as a
result of any exercise of such Stock Option or Stock Appreciation Right. In no event shall any
permitted transfer of a Stock Option or Stock Appreciation Right create any right in any party in
respect of any Stock Option, Stock Appreciation Right or other grant or Award, other than the
rights of the qualified transferee in respect of such Stock Option or Stock Appreciation Right
specified in the related grant agreement.

13. CHANGE IN CONTROL.

(a) EFFECT ON GRANTS. In the event of a Change in Control (as defined below) of the Company,
except as the Board of Directors comprised of a majority of Independent Directors may expressly
provide otherwise, and notwithstanding any other provision of the Plan to the contrary: (i) all
Stock Options and Stock Appreciation Rights then outstanding shall become fully exercisable as of
the date of the Change in Control, whether or not then exercisable; (ii) all restrictions and
conditions in respect of all Restricted Stock Grants then outstanding shall be deemed satisfied as
of the date of the Change in Control; and (iii) all Performance Grants and Stock-Based Grants shall
be deemed to have been fully earned, at the maximum amount of the award opportunity specified in
the grant agreement, as of the date of the Change in Control.

(b) CHANGE IN CONTROL DEFINED. A “Change in Control” of the Company shall occur when: (i) any
Person (or group of Persons acting together or in concert) becomes the Beneficial Owner, directly
or indirectly, of twenty percent (20%) or more of the combined voting power of the Company’s
securities (including its Common Stock and any other voting securities) then outstanding; or (ii)
the shareholders of the Company approve a definitive agreement for a merger involving the Company
and/or any of its direct or indirect subsidiaries which would result in the Common Stock
outstanding immediately prior to such merger continuing to represent less than fifty percent of the
voting power of the Company outstanding immediately after such merger, or approve a merger,
consolidation or other similar transaction which would result in the Common Stock then outstanding
being converted into or exchanged for the securities of any other entity; or (iii) the shareholders
of the Company approve a plan of complete liquidation of the Company or an agreement for the sale
or other disposition of all or substantially all of the assets of the Company; or (iv) the
Independent Directors no longer constitute a majority of the Board of Directors. “Affiliate” shall
have the meaning set forth in Rule 12b-2 under the Exchange Act. “Beneficial Owner” shall have the
meaning set forth in Rule 13d-3 under the Exchange Act. “Independent Director” means any individual
who is a member of the Board of Directors on the date the Plan becomes effective and any new
director (other than a director whose initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to, a consent solicitation relating to
the election of directors of the Company, or a director who is a Person, or represents a Person or
Group of Persons acting together, who is, or who publicly announces the intention to become, the
Beneficial Owner, directly or indirectly, of 20% or more of the voting power of the Company’s
outstanding voting securities) whose election to the Board of Directors, or nomination for election
to the Board of Directors by the Company’s shareholders, was approved or recommended by the
affirmative vote of a majority of the directors then in office who either (i) were directors on the
date the Plan becomes effective or (ii) were elected or nominated for election as a director by a
Board of Directors comprised of a majority of directors in office on the date this Plan becomes
effective and/or their successors whose election, or nomination for election by the Company’s
shareholders, was previously so approved or recommended by a Board of Directors comprised of a
majority of Independent Directors. Persons shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall
not include (i) the Company and its Affiliates, (ii) the trustee or other fiduciary holding
securities under an employee benefit plan sponsored by the Company or any of its subsidiaries, or
(iii) underwriters temporarily holding securities pursuant to an offering of such securities by the
Company.

14. AMENDMENT AND TERMINATION.

The Board of Directors may terminate the Plan at any time, except with respect to grants then
outstanding. The Board of Directors may amend the Plan at any time and from time to time in such
respects as the Board of Directors may deem necessary or appropriate without approval of the
shareholders, unless such approval is necessary in order to comply with applicable laws, including
the Exchange Act and the Code. In no event may the Board of Directors amend the Plan without the
approval of the shareholders to (i) increase the maximum number of shares of Common Stock which may
be issued pursuant to the Plan, (ii) increase any limitation set forth in the Plan on the number of
shares of Common Stock which may be issued, or the aggregate value of Awards which may be made, in
respect of any type of grant to all Participants during the term of the Plan or to any Participant
during any specified period, (iii) reduce the minimum exercise price for Stock Options and Stock
Appreciation Rights, or (iv) change the Performance Measure criteria identified at Section 9(c) of
the Plan.

15. MISCELLANEOUS.

(a) WITHHOLDING TAXES. All Awards under the Plan will be made subject to any applicable
withholding for taxes of any kind. The Company shall have the right to deduct from any amount
payable under the Plan, including delivery of shares of Common Stock to be made under the Plan, all
federal, state, city, local or foreign taxes of any kind required by law to be withheld with
respect to such payment and to take such other actions as may be necessary in the opinion of the
Company to satisfy all obligations for the payment of such taxes. If shares of Common Stock are
used to satisfy withholding taxes, such shares shall be valued based on the Fair Market Value
thereof on the date when the withholding for taxes is required to be made. The Company shall have
the right to require a Participant to pay cash to satisfy withholding taxes as a condition to the
payment of any amount (whether in cash or shares of Common Stock) under the Plan.

(b) NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan nor the making of any grant or
Award shall confer upon any Employee any right to continued employment with the Company or any
Subsidiary, nor shall it interfere in any way with the right of the Company or any Subsidiary to
terminate the employment of any Employee at any time, with or without cause.

(c) UNFUNDED PLAN. The Plan shall be unfunded and the Company shall not be required to
segregate any assets that may at any time be represented by Awards under the Plan. Any liability of
the Company to any person with respect to any Award under the Plan shall be based solely upon any
contractual obligations that may be effected pursuant to the Plan. No such obligation of the
Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of
the Company.

(d) PAYMENTS TO TRUST. The Committee is authorized to cause to be established a trust
agreement or several trust agreements whereunder the Committee may make payments of amounts due or
to become due to Participants in the Plan.

(e) ENGAGING IN COMPETITION WITH COMPANY. In the event a Participant terminates his or her
employment with the Company or a Subsidiary for any reason whatsoever, and within eighteen (18)
months after the date thereof accepts employment with any competitor of, or otherwise engages in
competition with, the Company, the Committee, in its sole discretion, may require such Participant
to return, or (if not received) to forfeit, to the Company the economic value of any Award which is
realized or obtained (measured at the date of exercise, vesting or payment) by such Participant (i)
at any time after the date which is six months prior to the date of such Participant’s termination
of employment with the Company or (ii) during such other period as the Committee may determine. The
provisions of this Section 15(e) shall cease to have any force or effect whatsoever immediately
upon the occurrence of any Change in Control described at Section 13 hereof.

(f) OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Payments and other benefits received by a
Participant under an Award made pursuant to the Plan shall not be deemed a part of a Participant’s
regular, recurring compensation for purposes of any termination indemnity or severance pay law of
any country and shall not be included in, nor have any effect on, the determination of benefits
under any pension or other employee benefit plan or similar arrangement provided by the Company or
any Subsidiary, unless (i) expressly so provided by such other plan or arrangement or (ii) the
Committee expressly determines that an Award or a portion thereof should be included as recurring
compensation. Nothing contained in the Plan shall prohibit the Company or any Subsidiary from
establishing other special awards, incentive compensation plans, compensation programs and other
similar arrangements providing for the payment of performance, incentive or other compensation to
Employees. Payments and benefits provided to any Employee under any other plan, including, without
limitation, any stock option, stock award, restricted stock, deferred compensation, savings,
retirement or other benefit plan or arrangement, shall be governed solely by the terms of such
other plan.

(g) SECURITIES LAW RESTRICTIONS. In no event shall the Company be obligated to issue or
deliver any shares of Common Stock if such issuance or delivery shall constitute a violation of any
provisions of any law or regulation of any governmental authority or securities exchange. No shares
of Common Stock shall be issued under the Plan unless counsel for the Company shall be satisfied
that such issuance will be in compliance with all applicable Federal and state securities laws and
regulations and all requirements of any securities exchange on which the Common Stock is listed.

(h) GRANT AGREEMENTS. Each Participant receiving a grant under the Plan shall enter into a
grant agreement with the Company in a form specified by the Committee agreeing to the terms and
conditions of the grant and such related matters as the Committee shall, in its sole discretion,
determine.

(i) SEVERABILITY. In the event any provision of the Plan shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall not affect the remaining
provisions of the Plan.

(j) GOVERNING LAW. The Plan shall be governed by and construed in

accordance with the laws of the State of Ohio.

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