Document:

EXHIBIT 10.4

                          SECURITIES PURCHASE AGREEMENT

      THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"),  dated as of August
25,  2004,  by and  among  CEC  INDUSTRIES  CORP.,  a Nevada  corporation,  with
headquarters  located at 2999 N.E. 191st Street,  PH2,  Aventura,  Florida 33180
(the   "Company"),   and  the  Buyers  listed  on  Schedule  I  attached  hereto
(individually, a "Buyer" or collectively "Buyers").

                                   WITNESSETH:

      WHEREAS,  the Company and the Buyer(s) are executing and  delivering  this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("Regulation  D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act");

      WHEREAS,  the  parties  desire  that,  upon the terms and  subject  to the
conditions  contained herein,  the Company shall issue and sell to the Buyer(s),
as provided  herein,  and the Buyer(s) shall purchase up to One Million  Dollars
($1,000,000) of secured convertible  debentures (the "Convertible  Debentures"),
which shall be convertible  into shares of the Company's common stock, par value
$.001 (the "Common Stock") (as converted,  the "Conversion  Shares") which shall
be funded on the fifth  (5th)  business  day  following  the date  hereof (the "
Closing"),  (referred to as a "Closing" ), for a total  purchase  price of up to
One Million  Dollars  ($1,000,000),  (the  "Purchase  Price") in the  respective
amounts set forth  opposite each Buyer(s) name on Schedule I (the  "Subscription
Amount"); and

      WHEREAS,  contemporaneously  with  the  execution  and  delivery  of  this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement  substantially in the form attached hereto as Exhibit A (the "Investor
Registration  Rights  Agreement")  pursuant  to which the  Company has agreed to
provide  certain  registration  rights  under  the  1933 Act and the  rules  and
regulations promulgated there under, and applicable state securities laws; and

      WHEREAS, the aggregate proceeds of the sale of the Convertible  Debentures
contemplated  hereby shall be held in escrow  pursuant to the terms of an escrow
agreement  substantially in the form of the Escrow Agreement  attached hereto as
Exhibit B.

      WHEREAS,  contemporaneously  with  the  execution  and  delivery  of  this
Agreement,  the parties hereto are executing and delivering Irrevocable Transfer
Agent  Instructions  substantially in the form attached hereto as Exhibit C (the
"Irrevocable Transfer Agent Instructions").

      WHEREAS,  contemporaneously  with  the  execution  and  delivery  of  this
Agreement,  the parties hereto are executing and delivering a Security Agreement
substantially   in  the  form  attached  hereto  as  Exhibit  D  (the  "Security
Agreement")  pursuant  to which the  Company  has agreed to provide  the Buyer a
security interest in Pledged Collateral (as this term is defined in the Security
Agreement  dated the date  hereof) to secure  Company's  obligations  under this
Agreement,   the  Convertible   Debenture,   the  Investor  Registration  Rights
Agreement,  the Irrevocable Transfer Agent Instructions,  the Security Agreement
or any other obligations of the Company to the Investor; and
<PAGE>

      NOW,  THEREFORE,  in  consideration  of the  mutual  covenants  and  other
agreements  contained in this Agreement the Company and the Buyer(s)hereby agree
as follows:

            1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

                  (a)  Purchase  of  Convertible  Debentures.   Subject  to  the
satisfaction  (or waiver) of the terms and  conditions of this  Agreement,  each
Buyer  agrees,  severally  and not  jointly,  to purchase at Closing (as defined
herein below) and the Company agrees to sell and issue to each Buyer,  severally
and not jointly,  at Closing,  Convertible  Debentures in amounts  corresponding
with the Subscription  Amount set forth opposite each Buyer's name on Schedule I
hereto.  Upon  execution  hereof by a Buyer,  the Buyer shall wire  transfer the
Subscription  Amount set forth opposite his name on Schedule I in same-day funds
or a check payable to "Butler  Gonzalez LLP, as Escrow Agent for CEC  Industries
Corp. /Cornell Capital Partners, LP", which Subscription Amount shall be held in
escrow pursuant to the terms of the Escrow  Agreement (as  hereinafter  defined)
and disbursed in accordance  therewith.  Notwithstanding the foregoing,  a Buyer
may withdraw his  Subscription  Amount and terminate  this  Agreement as to such
Buyer  at any  time  after  the  execution  hereof  and  prior  to  Closing  (as
hereinafter defined).

                  (b) Closing Date.  The Closing of the purchase and sale of the
Convertible  Debentures  shall take place at 10:00 a.m. Eastern Standard Time on
the fifth (5th) business day following the date hereof,  subject to notification
of  satisfaction  of the  conditions  to the  Closing  set forth  herein  and in
Sections  6 and 7 below  (or such  later  date as is  mutually  agreed to by the
Company and the Buyer(s)) (the "Closing Date"),.  The Closing shall occur on the
Closing Date at the offices of Butler Gonzalez,  LLP, 1416 Morris Avenue,  Suite
207,  Union,  NJ 07083  (or such  other  place as is  mutually  agreed to by the
Company and the Buyer(s)).

                  (c)  Escrow  Arrangements;  Form of  Payment.  Upon  execution
hereof by Buyer(s) and pending the Closings,  the aggregate proceeds of the sale
of the Convertible  Debentures to Buyer(s) pursuant hereto shall be deposited in
a non-interest  bearing escrow account with Butler Gonzalez LLP, as escrow agent
(the "Escrow Agent"),  pursuant to the terms of an escrow agreement  between the
Company,  the  Buyer(s)  and the  Escrow  Agent in the form  attached  hereto as
Exhibit B (the "Escrow Agreement"). Subject to the satisfaction of the terms and
conditions of this Agreement,  on the Closing Dates,  (i) the Escrow Agent shall
deliver to the Company in accordance with the terms of the Escrow Agreement such
aggregate proceeds for the Convertible  Debentures to be issued and sold to such
Buyer(s), minus the fees and expenses of Butler Gonzalez LLP of Fifteen Thousand
Dollars  ($15,000) shall be paid directly from the gross proceeds held in escrow
of the Closing and the  retainer of Schiff  Harding LLP of  _____________Dollars
($_____)  shall be paid directly from the gross  proceeds of the Closing by wire
transfer of immediately available funds in accordance with the Company's written
wire instructions, and (ii) the Company shall deliver to each Buyer, Convertible
Debentures which such Buyer(s) is purchasing in amounts indicated  opposite such
Buyer's name on Schedule I, duly executed on behalf of the Company.

            2. BUYER'S REPRESENTATIONS AND WARRANTIES.

                                       2
<PAGE>

      Each Buyer represents and warrants, severally and not jointly, that:

                  (a)   Investment   Purpose.   Each  Buyer  is  acquiring   the
Convertible Debentures and, upon conversion of Convertible Debentures, the Buyer
will  acquire  the  Conversion  Shares  then  issuable,  for its own account for
investment only and not with a view towards,  or for resale in connection  with,
the public sale or distribution thereof,  except pursuant to sales registered or
exempted   under  the  1933  Act;   provided,   however,   that  by  making  the
representations  herein,  such  Buyer  reserves  the  right  to  dispose  of the
Conversion  Shares at any time in  accordance  with or pursuant to an  effective
registration statement covering such Conversion Shares or an available exemption
under the 1933 Act.

                  (b) Accredited  Investor Status.  Each Buyer is an "Accredited
Investor" as that term is defined in Rule 501(a)(3) of Regulation D.

                  (c) Reliance on Exemptions.  Each Buyer  understands  that the
Convertible  Debentures are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities  laws and that the  Company  is  relying  in part  upon the truth and
accuracy of, and such Buyer's compliance with, the representations,  warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in
order to determine the  availability  of such  exemptions and the eligibility of
such Buyer to acquire such securities.

                  (d) Information.  Each Buyer and its advisors (and his or, its
counsel),  if any,  have  been  furnished  with all  materials  relating  to the
business,  finances  and  operations  of the Company and  information  he deemed
material to making an informed investment decision regarding his purchase of the
Convertible  Debentures and the Conversion Shares,  which have been requested by
such  Buyer.  Each  Buyer  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 Buyer or
its advisors,  if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's  representations and warranties contained
in  Section  3  below.  Each  Buyer  understands  that  its  investment  in  the
Convertible Debentures and the Conversion Shares involves a high degree of risk.
Each Buyer is in a position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and enables such Buyer
to obtain information from the Company in order to evaluate the merits and risks
of this investment. Each Buyer has sought such accounting, legal and tax advice,
as it has  considered  necessary to make an informed  investment  decision  with
respect to its  acquisition  of the  Convertible  Debentures  and the Conversion
Shares.

                  (e) No Governmental  Review.  Each Buyer  understands  that no
United States  federal or state agency or any other  government or  governmental
agency  has  passed  on  or  made  any  recommendation  or  endorsement  of  the
Convertible  Debentures or the Conversion Shares, or the fairness or suitability
of the investment in the Convertible  Debentures or the Conversion  Shares,  nor
have such authorities  passed upon or endorsed the merits of the offering of the
Convertible Debentures or the Conversion Shares.

                                       3
<PAGE>

                  (f) Transfer or Resale.  Each Buyer understands that except as
provided in the Investor  Registration  Rights  Agreement:  (i) the  Convertible
Debentures have not been and are not being  registered under the 1933 Act or any
state  securities  laws,  and may not be offered  for sale,  sold,  assigned  or
transferred  unless (A) subsequently  registered  thereunder,  or (B) such Buyer
shall have  delivered  to the  Company an opinion  of  counsel,  in a  generally
acceptable  form,  to the effect that such  securities  to be sold,  assigned or
transferred may be sold,  assigned or transferred  pursuant to an exemption from
such  registration  requirements;  (ii)  any  sale  of such  securities  made in
reliance on Rule 144 under the 1933 Act (or a  successor  rule  thereto)  ("Rule
144") may be made only in accordance with the terms of Rule 144 and further,  if
Rule 144 is not applicable, any resale of such securities under circumstances in
which the seller (or the person  through whom the sale is made) may be deemed to
be an  underwriter  (as  that  term is  defined  in the 1933  Act)  may  require
compliance  with  some  other  exemption  under  the 1933 Act or the  rules  and
regulations of the SEC  thereunder;  and (iii) neither the Company nor any other
person is under any obligation to register such securities under the 1933 Act or
any state  securities  laws or to comply  with the terms and  conditions  of any
exemption  thereunder.  The Company  reserves  the right to place stop  transfer
instructions against the shares and certificates for the Conversion Shares.

                  (g) Legends.  Each Buyer  understands that the certificates or
other instruments  representing the Convertible Debentures and or the Conversion
Shares shall bear a restrictive  legend in substantially the following form (and
a  stop  transfer   order  may  be  placed   against   transfer  of  such  stock
certificates):

            THE  SECURITIES  REPRESENTED  BY  THIS  CERTIFICATE  HAVE  NOT  BEEN
            REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED,  OR
            APPLICABLE  STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED
            SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND
            MAY NOT BE OFFERED FOR SALE,  SOLD,  TRANSFERRED  OR ASSIGNED IN THE
            ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT FOR THE  SECURITIES
            UNDER THE  SECURITIES ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE
            SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE
            FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
            STATE SECURITIES LAWS.

The  legend set forth  above  shall be removed  and the  Company  within two (2)
business days shall issue a certificate without such legend to the holder of the
Conversion  Shares upon which it is stamped,  if, unless  otherwise  required by
state securities laws, (i) in connection with a sale  transaction,  provided the
Conversion Shares are registered under the 1933 Act or (ii) in connection with a
sale  transaction,  after such holder  provides  the Company  with an opinion of
counsel,  which  opinion  shall be in form,  substance  and scope  customary for
opinions  of counsel in  comparable  transactions,  to the effect  that a public
sale,  assignment  or  transfer  of the  Conversion  Shares may be made  without
registration under the 1933 Act.

                                       4
<PAGE>

                  (h) Authorization,  Enforcement.  This Agreement has been duly
and validly authorized,  executed and delivered on behalf of such Buyer and is a
valid and binding  agreement of such Buyer  enforceable  in accordance  with its
terms,  except as such  enforceability  may be limited by general  principles of
equity  or  applicable  bankruptcy,  insolvency,   reorganization,   moratorium,
liquidation  and other  similar laws  relating to, or affecting  generally,  the
enforcement of applicable creditors' rights and remedies.

                  (i)  Receipt of  Documents.  Each Buyer and his or its counsel
has  received  and  read  in  their  entirety:   (i)  this  Agreement  and  each
representation,  warranty and covenant set forth herein, the Security Agreement,
the  Investor  Registration  Rights  Agreement,  the Escrow  Agreement,  and the
Irrevocable  transfer  Agent  Instructions;  (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 fiscal year ended March 31,  2004;  (iv) the  Company's  Form 10-QSB for the
fiscal  quarter ended June 30, 2004 and (v) answers to all questions  each Buyer
submitted to the Company regarding an investment in the Company;  and each Buyer
has relied on the information  contained  therein and has not been furnished any
other documents, literature, memorandum or prospectus.

                  (j) Due  Formation  of  Corporate  and  Other  Buyers.  If the
Buyer(s) is a  corporation,  trust,  partnership  or other entity that is not an
individual  person,  it has been  formed  and  validly  exists  and has not been
organized for the specific purpose of purchasing the Convertible  Debentures and
is not prohibited from doing so.

                  (k) No Legal Advice From the Company. Each Buyer 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.  Each Buyer 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.

            3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

      The Company  represents and warrants to each of the Buyers that, except as
set  forth in the SEC  Documents  (as  defined  herein):

                  (a)  Organization  and  Qualification.  The  Company  and  its
subsidiaries  are  corporations  duly  organized  and  validly  existing in good
standing under the laws of the jurisdiction in which they are incorporated,  and
have the requisite corporate power to own their properties and to carry on their
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.

                  (b)   Authorization,   Enforcement,   Compliance   with  Other
Instruments.  (i) The Company has the requisite corporate power and authority to
enter into and perform  this  Agreement,  the Security  Agreement,  the Investor
Registration Rights Agreement,  the Escrow Agreement,  the Irrevocable  Transfer
Agent  Instructions,  and any related  agreements,  and to issue the Convertible
Debentures  and the  Conversion  Shares in accordance  with the terms hereof and
thereof,  (ii) the  execution  and  delivery  of this  Agreement,  the  Security
Agreement, the Investor Registration Rights Agreement, the Escrow Agreement, the
Irrevocable  Transfer  Agent  Instructions  (as defined  herein) and any related
agreements  by the  Company  and  the  consummation  by it of  the  transactions
contemplated hereby and thereby, including,  without limitation, the issuance of
the  Convertible  Debentures  the  Conversion  Shares  and the  reservation  for
issuance and the issuance of the Conversion  Shares  issuable upon conversion or
exercise thereof,  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 Security Agreement, the
Investor  Registration Rights Agreement,  the Escrow Agreement,  the Irrevocable
Transfer Agent  Instructions and any related  agreements have been duly executed
and delivered by the Company, (iv) this Agreement,  the Security Agreement,  the
Investor  Registration Rights Agreement,  the Escrow Agreement,  the Irrevocable
Transfer Agent Instructions 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.  The  authorized  officer of the
Company  executing  this  Agreement,   the  Security  Agreement,   the  Investor
Registration Rights Agreement,  the Escrow Agreement,  the Irrevocable  Transfer
Agent Instructions and any related agreements knows of no reason why the Company
cannot  file  the   registration   statement  as  required  under  the  Investor
Registration  Rights Agreement or perform any of the Company's other obligations
under such documents.

                                       5
<PAGE>

                  (c)  Capitalization.  The  authorized  capital  stock  of  the
Company  consists of  5,000,000,000  shares of Common Stock, par value $.001 per
share and no shares of Preferred  Stock. As of the date hereof,  the Company has
55,943,751  shares  of  Common  Stock  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 (as defined in Section
3(f)),  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 of this
Agreement,  (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 and (iii) 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 1933 Act
(except  pursuant to the  Registration  Rights  Agreement) and (iv) there are no
outstanding registration statements and there are no outstanding comment letters
from  the  SEC or any  other  regulatory  agency.  There  are no  securities  or
instruments  containing   anti-dilution  or  similar  provisions  that  will  be
triggered by the  issuance of the  Convertible  Debentures  as described in this
Agreement. The Company has furnished to the Buyer 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 other than stock options issued to employees
and consultants.

                                       6
<PAGE>

                  (d) Issuance of  Securities.  The  Convertible  Debentures are
duly authorized and, upon issuance in accordance with the terms hereof, shall be
duly issued,  fully paid and  nonassessable,  are free from all taxes, liens and
charges with respect to the issue thereof.  The Conversion  Shares issuable upon
conversion of the Convertible  Debentures have been duly authorized and reserved
for issuance.  Upon  conversion or exercise in accordance  with the  Convertible
Debentures  the  Conversion   Shares  will  be  duly  issued,   fully  paid  and
nonassessable.

                  (e) No  Conflicts.  Except as disclosed in the SEC  Documents,
the  execution,  delivery  and  performance  of  this  Agreement,  the  Security
Agreement, the Investors Registration Rights Agreement, the Escrow Agreement and
the Irrevocable  Transfer Agent Instructions by the Company and the consummation
by the Company of the transactions  contemplated hereby will not (i) result in a
violation of the Certifictae of  Incorporation,  any certificate of designations
of any  outstanding  series of preferred  stock of the Company or the 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  National  Association  of
Securities  Dealers  Inc.'s  OTC  Bulletin  Board on which the  Common  Stock is
quoted)  applicable  to the Company or any of its  subsidiaries  or by which any
property  or  asset  of the  Company  or any of its  subsidiaries  is  bound  or
affected. 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 Certificate
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,  and shall not be conducted
in violation of any material law,  ordinance,  or regulation of any governmental
entity.  Except as  specifically  contemplated by this Agreement and as required
under the 1933 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.  Except as  disclosed  in the SEC  Documents,  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
facts or circumstance, which might give rise to any of the foregoing.

                                       7
<PAGE>

                  (f) 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  Securities  Exchange  Act of 1934,  as amended (the "1934 Act") (all of the
foregoing  filed prior to the date  hereof or amended  after the date hereof and
all exhibits included therein and financial statements and schedules thereto and
documents  incorporated by reference therein,  being hereinafter  referred to as
the  "SEC  Documents").  The  Company  has  delivered  to the  Buyers  or  their
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  Buyer  which  is not  included  in the SEC  Documents,  including,  without
limitation,  information  referred  to in this  Agreement,  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.

                  (g)  10(b)-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.

                  (h)  Absence of  Litigation.  Except as  disclosed  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 operations of the Company and its
subsidiaries taken as a whole.

                  (i)   Acknowledgment   Regarding   Buyer's   Purchase  of  the
Convertible Debentures. The Company acknowledges and agrees that the Buyer(s) is
acting solely in the capacity of an arm's length  purchaser with respect to this
Agreement  and  the  transactions   contemplated  hereby.  The  Company  further
acknowledges that the Buyer(s) is not acting as a financial advisor or fiduciary
of the Company (or in any similar  capacity)  with respect to this Agreement and
the transactions contemplated hereby and any advice given by the Buyer(s) or any
of their respective  representatives or agents in connection with this Agreement
and the transactions  contemplated  hereby is merely  incidental to such Buyer's
purchase of the  Convertible  Debentures or the Conversion  Shares.  The Company
further  represents to the Buyer that the Company's  decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.

                                       8
<PAGE>

                  (j) 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 1933 Act) in  connection  with the offer or sale of the
Convertible Debentures or the Conversion Shares.

                  (k) No Integrated  Offering.  Neither the Company,  nor any of
its  affiliates,  nor any person acting on its or their behalf has,  directly or
indirectly,  made any offers or sales of any security or solicited any offers to
buy any security,  under  circumstances  that would require  registration of the
Convertible Debentures or the Conversion Shares under the 1933 Act or cause this
offering of the Convertible Debentures or the Conversion Shares to be integrated
with prior offerings by the Company for purposes of the 1933 Act.

                  (l)  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.

                  (m)  Intellectual   Property  Rights.   The  Company  and  its
subsidiaries  own or possess  adequate rights or licenses to use all 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.

                  (n)  Environmental  Laws. The Company and its subsidiaries are
(i) in compliance with any and all applicable 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.

                                       9
<PAGE>

                  (o) Title.  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.

                  (p) 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.

                  (q)  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.

                  (r) 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,  and (iii) the recorded  amounts for assets is compared with the
existing  assets at reasonable  intervals and  appropriate  action is taken with
respect to any differences.

                  (s) 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.

                  (t) Tax Status. Except as set forth in the SEC Documents,  the
Company  and each of its  subsidiaries  has made and 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.

                                       10
<PAGE>

                  (u)  Certain  Transactions.  Except  as set  forth  in the SEC
Documents,  and  except  for arm's  length  transactions  pursuant  to which the
Company  makes  payments in the ordinary  course of business  upon terms no less
favorable  than the Company  could obtain from third  parties and other than the
grant of stock  options  disclosed 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.

                  (v) 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.

            4. COVENANTS.

                  (a) Best Efforts. Each party shall use its best efforts timely
to satisfy each of the  conditions to be satisfied by it as provided in Sections
6 and 7 of this Agreement.

                  (b) Form D. The Company  agrees to file a Form D with  respect
to the Conversion  Shares as required  under  Regulation D and to provide a copy
thereof to each Buyer  promptly  after such  filing.  The Company  shall,  on or
before the  Closing  Date,  take such  action as the  Company  shall  reasonably
determine is necessary to qualify the Conversion  Shares, or obtain an exemption
for the Conversion Shares for sale to the Buyers at the Closing pursuant to this
Agreement  under  applicable  securities or "Blue Sky" laws of the states of the
United  States,  and shall  provide  evidence of any such action so taken to the
Buyers on or prior to the Closing Date.

                  (c) Reporting Status.  Until the earlier of (i) the date as of
which the Buyer(s) may sell all of the  Conversion  Shares  without  restriction
pursuant to Rule 144(k)  promulgated under the 1933 Act (or successor  thereto),
or (ii) the date on which (A) the  Buyer(s)  shall have sold all the  Conversion
Shares  and  (B)  none  of  the  Convertible  Debentures  are  outstanding  (the
"Registration  Period"),  the Company  shall file in a timely manner all reports
required to be filed with the SEC  pursuant to the 1934 Act and the  regulations
of the SEC  thereunder,  and the Company  shall not  terminate  its status as an
issuer  required to file reports  under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would otherwise permit such termination.

                                       11
<PAGE>

                  (d) Use of Proceeds.  The Company  will use the proceeds  from
the sale of the Convertible Debentures for general corporate and working capital
purposes.

                  (e)  Reservation of Shares.  The Company shall take all action
reasonably  necessary  to at all times have  authorized,  and  reserved  for the
purpose of issuance, such number of shares of Common Stock as shall be necessary
to effect the issuance of the Conversion Shares. If at any time the Company does
not have  available  such  shares of Common  Stock as shall from time to time be
sufficient  to effect  the  conversion  of all of the  Conversion  Shares of the
Company shall call and hold a special meeting of the shareholders  within thirty
(30) days of such  occurrence,  for the sole purpose of increasing the number of
shares authorized.  The Company's management shall recommend to the shareholders
to vote in favor of increasing the number of shares of Common Stock  authorized.
Management  shall also vote all of its shares in favor of increasing  the number
of authorized shares of Common Stock.

                  (f) Listings or Quotation.  The Company shall promptly  secure
the listing or quotation of the Conversion Shares upon each national  securities
exchange,  automated quotation system or The National  Association of Securities
Dealers Inc.'s  Over-The-Counter  Bulletin Board  ("OTCBB") or other market,  if
any,  upon which  shares of Common  Stock are then listed or quoted  (subject to
official notice of issuance) and shall use its best efforts to maintain, so long
as any other  shares of Common  Stock  shall be so listed,  such  listing of all
Conversion  Shares from time to time issuable under the terms of this Agreement.
The Company shall maintain the Common Stock's authorization for quotation on the
OTCBB.

                  (g) Fees and  Expenses.  Each of the Company and the  Buyer(s)
shall pay all costs and expenses  incurred by such party in connection  with the
negotiation,   investigation,   preparation,  execution  and  delivery  of  this
Agreement, the Escrow Agreement, the Investor Registration Rights Agreement, the
Security Agreement and the Irrevocable Transfer Agent Instructions. The Buyer(s)
shall be entitled to a ten percent (10%) discount on the Purchase Price.

                  (h) The costs and expenses of the Buyer(s) and Butler Gonzalez
LLP of  Fifteen  Thousand  Dollars  ($15,000)  shall be paid  directly  from the
proceeds of the Closing and the  retainer of Schiff  Hardin LLP of  ____________
Dollars  ($______)  shall be paid for by the  Company  directly  from the  gross
proceeds of the Closing .

                  (i)  Corporate  Existence.  So long as any of the  Convertible
Debentures  remain  outstanding,  the Company  shall not directly or  indirectly
consummate  any  merger,  reorganization,  restructuring,  reverse  stock  split
consolidation,  sale of all or substantially  all of the Company's assets or any
similar  transaction  or  related   transactions  (each  such  transaction,   an
"Organizational  Change") unless,  prior to the  consummation an  Organizational
Change, the Company obtains the written consent of each Buyer. In any such case,
the Company will make appropriate provision with respect to such holders' rights
and interests to insure that the provisions of this Section 4(h) will thereafter
be applicable to the Convertible Debentures.

                  (j) Transactions  With Affiliates.  So long as any Convertible
Debentures are  outstanding,  the Company shall not, and shall cause each of its
subsidiaries  not to, enter into,  amend,  modify or  supplement,  or permit any
subsidiary  to  enter  into,   amend,   modify  or  supplement   any  agreement,
transaction,  commitment,  or  arrangement  with any of its or any  subsidiary's
officers,  directors,  person who were  officers or directors at any time during
the previous two (2) years,  stockholders who beneficially own five percent (5%)
or more of the  Common  Stock,  or  Affiliates  (as  defined  below) or with any
individual  related by blood,  marriage,  or adoption to any such  individual or
with any entity in which any such entity or individual  owns a five percent (5%)
or more beneficial  interest (each a "Related Party"),  except for (a) customary
employment  arrangements  and benefit  programs  on  reasonable  terms,  (b) any
investment  in an  Affiliate  of the Company,  (c) any  agreement,  transaction,
commitment,  or arrangement  on an arms-length  basis on terms no less favorable
than  terms  which  would  have been  obtainable  from a person  other than such
Related Party, (d) any agreement transaction,  commitment,  or arrangement which
is approved by a majority of the  disinterested  directors of the  Company,  for
purposes  hereof,  any  director  who is also an officer  of the  Company or any
subsidiary of the Company shall not be a disinterested  director with respect to
any such agreement,  transaction,  commitment,  or arrangement.  "Affiliate" for
purposes hereof means,  with respect to any person or entity,  another person or
entity that, directly or indirectly,  (i) has a ten percent (10%) or more equity
interest  in that person or entity,  (ii) has ten  percent  (10%) or more common
ownership with that person or entity,  (iii) controls that person or entity,  or
(iv) shares common  control with that person or entity.  "Control" or "controls"
for  purposes  hereof  means that a person or entity  has the  power,  direct or
indirect, to conduct or govern the policies of another person or entity.

                                       12
<PAGE>

                  (k) Transfer Agent. The Company  covenants and agrees that, in
the event that the Company's agency  relationship with the transfer agent should
be  terminated  for any reason  prior to a date which is two (2) years after the
Closing Date,  the Company shall  immediately  appoint a new transfer  agent and
shall  require that the new transfer  agent execute and agree to be bound by the
terms of the Irrevocable Transfer Agent Instructions (as defined herein).

                  (l)  Restriction on Issuance of the Capital Stock.  So long as
any Convertible  Debentures are outstanding,  the Company shall not, without the
prior written  consent of the Buyer(s),  issue or sell shares of Common Stock or
Preferred Stock (i) without  consideration or for a consideration per share less
than the Bid  Price of the  Common  Stock  determined  immediately  prior to its
issuance,  (ii) any warrant,  option, right,  contract,  call, or other security
instrument  granting  the  holder  thereof,  the right to acquire  Common  Stock
without  consideration or for a consideration  less than such Common Stock's Bid
Price value determined immediately prior to it's issuance,  (iii) enter into any
security  instrument  granting  the  holder a security  interest  in any and all
assets of the Company, or (iv) file any registration statement on Form S-8.

            5. TRANSFER AGENT INSTRUCTIONS.

      The Company shall issue the Irrevocable Transfer Agent Instructions to its
transfer  agent  irrevocably  appointing  Butler  Gonzalez  LLP as its agent for
purpose of having certificates issued, registered in the name of the Buyer(s) or
its respective  nominee(s),  for the Conversion Shares representing such amounts
of Convertible  Debentures as specified from time to time by the Buyer(s) to the
Company  upon  conversion  of the  Convertible  Debentures,  for  interest  owed
pursuant to the Convertible  Debenture,  and for any and all Liquidated  Damages
(as this term is defined in the Investor Registration Rights Agreement).  Butler
Gonzalez LLP shall be paid a cash fee of Fifty Dollars ($50) for every  occasion
they act pursuant to the Irrevocable  Transfer Agent  Instructions.  The Company
shall not change its transfer agent without the express  written  consent of the
Buyer(s), which may be withheld by the Buyer(s) in its sole discretion. Prior to
registration of the Conversion  Shares under the 1933 Act, all such certificates
shall bear the restrictive  legend  specified in Section 2(g) of this Agreement.
The Company  warrants that no instruction  other than the  Irrevocable  Transfer
Agent Instructions referred to in this Section 5, and stop transfer instructions
to give  effect to Section  2(g)  hereof (in the case of the  Conversion  Shares
prior to  registration  of such shares  under the 1933 Act) will be given by the
Company to its transfer agent and that the Conversion  Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this  Agreement  and the  Investor  Registration  Rights  Agreement.
Nothing in this  Section 5 shall affect in any way the Buyer's  obligations  and
agreement  to  comply  with  all  applicable  securities  laws  upon  resale  of
Conversion  Shares.  If the  Buyer(s)  provides  the Company  with an opinion of
counsel,  in form,  scope and  substance  customary  for  opinions of counsel in
comparable  transactions  to the  effect  that  registration  of a resale by the
Buyer(s) of any of the Conversion Shares is not required under the 1933 Act, the
Company shall within two (2) business days instruct its transfer  agent to issue
one or more certificates in such name and in such  denominations as specified by
the  Buyer.  The  Company  acknowledges  that a breach by it of its  obligations
hereunder will cause  irreparable  harm to the Buyer by vitiating the intent and
purpose  of  the  transaction  contemplated  hereby.  Accordingly,  the  Company
acknowledges  that the remedy at law for a breach of its obligations  under this
Section 5 will be inadequate and agrees,  in the event of a breach or threatened
breach by the Company of the  provisions  of this  Section 5, that the  Buyer(s)
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring  immediate  issuance and transfer,  without
the necessity of showing  economic  loss and without any bond or other  security
being required.

                                       13
<PAGE>

            6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

      The obligation of the Company  hereunder to issue and sell the Convertible
Debentures to the Buyer(s) at the Closings is subject to the satisfaction, at or
before the Closing  Dates,  of each of the following  conditions,  provided that
these  conditions  are for the  Company's  sole benefit and may be waived by the
Company at any time in its sole discretion:

                  (a)  Each  Buyer  shall  have  executed  this  Agreement,  the
Security  Agreement,  the Escrow Agreement and the Investor  Registration Rights
Agreement and the Irrevocable Transfer Agent Instructions and delivered the same
to the Company.

                  (b) The Buyer(s)  shall have delivered to the Escrow Agent the
Purchase  Price for  Convertible  Debentures in respective  amounts as set forth
next to each Buyer as  outlined  on  Schedule  I attached  hereto and the Escrow
Agent shall have  delivered  the net proceeds to the Company by wire transfer of
immediately  available U.S. funds pursuant to the wire instructions  provided by
the Company.

                  (c) The  representations  and warranties of the Buyer(s) shall
be true and correct in all material  respects as of the date when made and as of
the Closing  Dates as though made at that time (except for  representations  and
warranties  that  speak as of a  specific  date),  and the  Buyer(s)  shall have
performed,  satisfied and complied in all material  respects with the covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by the Buyer(s) at or prior to the Closing Dates.

                                       14
<PAGE>

                  (d) The  Company  shall have filed a form UCC-1 with regard to
the  Pledged  Property  and  Pledged  Collateral  as  detailed  in the  Security
Agreement  dated  the date  hereof  and  provided  proof of such  filing  to the
Buyer(s).

            7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

      The  obligation  of the Buyer(s)  hereunder  to purchase  the  Convertible
Debentures  at the  Closing  is subject  to the  satisfaction,  at or before the
Closing Date, of each of the following conditions:

                  (a) The  Company  shall  have  executed  this  Agreement,  the
Security  Agreement,  the  Convertible  Debenture,  the  Escrow  Agreement,  the
Irrevocable   Transfer   Instructions  and  the  Investor   Registration  Rights
Agreement, and delivered the same to the Buyer(s).

                  (b) The Common Stock shall be authorized  for quotation on the
OTCBB,  trading in the Common Stock shall not have been suspended for any reason
and all of the Conversion  Shares  issuable upon  conversion of the  Convertible
Debentures shall be approved the OTCBB.

                  (c) The representations and warranties of the Company shall be
true and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such  representations  and warranties  shall be true and
correct  without further  qualification)  as of the date when made and as of the
Closing  Dates as  though  made at that time  (except  for  representations  and
warranties  that  speak  as of a  specific  date)  and the  Company  shall  have
performed,  satisfied and complied in all material  respects with the covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by the Company at or prior to the Closing  Dates.  If requested
by the Buyer,  the Buyer  shall have  received a  certificate,  executed  by the
President of the Company, dated as of the Closing Dates, to the foregoing effect
and as to  such  other  matters  as may be  reasonably  requested  by the  Buyer
including,  without  limitation an update as of the Closing Dates  regarding the
representation contained in Section 3(c) above.

                  (d) The  Company  shall have  executed  and  delivered  to the
Buyer(s) the Convertible Debentures in the respective amounts set forth opposite
each Buyer(s) name on Schedule I attached hereto.

                  (e) The  Buyer(s)  shall have  received  an opinion of counsel
from Anslow & Jacklin LLP in a form satisfactory to the Buyer(s).

                  (f)  The  Company  shall  have  provided  to  the  Buyer(s)  a
certificate of good standing from the secretary of state from the state in which
the company is incorporated.

                                       15
<PAGE>

                  (g) As of the Closing  Date,  the Company  shall have reserved
out of its  authorized  and  unissued  Common  Stock,  solely for the purpose of
effecting the conversion of the Convertible  Debentures,  shares of Common Stock
to effect the conversion of all of the Conversion Shares then outstanding.

                  (h) The Irrevocable  Transfer Agent Instructions,  in form and
substance   satisfactory  to  the  Buyer,  shall  have  been  delivered  to  and
acknowledged in writing by the Company's transfer agent.

                  (i)  The  Company  shall  have  provided  to the  Investor  an
acknowledgement, to the satisfaction of the Investor, from Russell & Atkins, LLC
as to  its  ability  to  provide  all  consents  required  in  order  to  file a
registration statement in connection with this transaction.

                  (j) The  Company  shall  have filed a form UCC-1 or such other
forms as may be required to perfect the Buyer's interest in the Pledged Property
and Pledged  Collateral  as detailed in the  Security  Agreement  dated the date
hereof and provided proof of such filing to the Buyer(s).

            8. INDEMNIFICATION.

                  (a) In consideration of the Buyer's  execution and delivery of
this  Agreement and  acquiring the  Convertible  Debentures  and the  Conversion
Shares  hereunder,  and in addition to all of the  Company's  other  obligations
under this  Agreement,  the Company  shall defend,  protect,  indemnify and hold
harmless the Buyer(s) and each other holder of the  Convertible  Debentures  and
the  Conversion  Shares,  and all of their  officers,  directors,  employees and
agents  (including,  without  limitation,  those retained in connection with the
transactions   contemplated  by  this  Agreement)   (collectively,   the  "Buyer
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 Buyer  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 Buyer 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,   the
Convertible  Debentures  or the Investor  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  Investor  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  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 Indemnities,  any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Convertible  Debentures or the status of the Buyer or holder
of the Convertible  Debentures the Conversion  Shares, as a Buyer of Convertible
Debentures in the Company.  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.

                                       16
<PAGE>

                  (b) In consideration  of the Company's  execution and delivery
of this Agreement, and in addition to all of the Buyer's other obligations under
this Agreement, the Buyer shall defend, protect, indemnify and hold harmless the
Company and all of its officers,  directors,  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 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
Buyer(s) in this  Agreement,  ,  instrument or document  contemplated  hereby or
thereby  executed by the Buyer,  (b) any breach of any  covenant,  agreement  or
obligation  of  the  Buyer(s)   contained  in  this   Agreement,   the  Investor
Registration  Rights Agreement or any other certificate,  instrument or document
contemplated  hereby  or  thereby  executed  by the  Buyer,  or (c) any cause of
action,  suit or claim brought or made against such Company  Indemnitee based on
material  misrepresentations  or due to a material  breach and arising out of or
resulting  from the  execution,  delivery,  performance  or  enforcement of this
Agreement,  the Investor  Registration Rights Agreement or any other instrument,
document  or  agreement   executed   pursuant  hereto  by  any  of  the  Company
Indemnities.  To the extent that the foregoing  undertaking by each Buyer may be
unenforceable for any reason, each Buyer shall make the maximum  contribution to
the payment and  satisfaction of each of the Indemnified  Liabilities,  which is
permissible under applicable law.

            9. GOVERNING LAW: MISCELLANEOUS.

                  (a)  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 and the United  States  District  Court for the  District  of New
Jersey sitting in Newark,  New Jersey for the  adjudication  of any civil action
asserted pursuant to this Paragraph.

                  (b)  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.

                  (c)  Headings.   The  headings  of  this   Agreement  are  for
convenience   of   reference   and  shall  not  form  part  of,  or  affect  the
interpretation of, this Agreement.

                  (d) Severability.  If any provision of this Agreement shall be
invalid   or   unenforceable   in   any   jurisdiction,   such   invalidity   or
unenforceability  shall  not  affect  the  validity  or  enforceability  of  the
remainder  of  this   Agreement  in  that   jurisdiction   or  the  validity  or
enforceability of any provision of this Agreement in any other jurisdiction.

                                       17
<PAGE>

                  (e) Entire Agreement,  Amendments.  This Agreement  supersedes
all other prior oral or written  agreements  between the Buyer(s),  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 any Buyer 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.

                  (f)  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 confirmation of receipt, when sent
by  facsimile;  (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

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 Transfer Agent, to:   Pacific Transfer Company
                                500 East Warm Springs Drive, Suite 240
                                Las Vegas, NV 89119
                                Attention:  Shelly Godfrey

With 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

      If to the  Buyer(s),  to its address and  facsimile  number on Schedule I,
with copies to the Buyer's  counsel as set forth on Schedule I. Each party shall
provide five (5) days' prior written  notice to the other party of any change in
address or facsimile number.

                                       18
<PAGE>

                  (g)  Successors and Assigns.  This Agreement  shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns.  Neither the Company nor any Buyer shall  assign this  Agreement or any
rights or obligations  hereunder  without the prior written consent of the other
party hereto.

                  (h) No Third Party  Beneficiaries.  This Agreement is intended
for the benefit of the parties hereto and their respective  permitted successors
and  assigns,  and is not for the  benefit of, nor may any  provision  hereof be
enforced by, any other person.

                  (i)  Survival.  Unless  this  Agreement  is  terminated  under
Section 9(l), the representations and warranties of the Company and the Buyer(s)
contained  in  Sections  2 and 3, the  agreements  and  covenants  set  forth in
Sections 4, 5 and 9, and the indemnification  provisions set forth in Section 8,
shall  survive the Closing for a period of two (2) years  following  the date on
which the  Convertible  Debentures  are converted in full. The Buyer(s) shall be
responsible  only  for  its  own  representations,  warranties,  agreements  and
covenants hereunder.

                  (j)  Publicity.  The Company and the  Buyer(s)  shall have the
right to  approve,  before  issuance  any  press  release  or any  other  public
statement  with  respect to the  transactions  contemplated  hereby  made by any
party; provided,  however, that the Company shall be entitled, without the prior
approval of the Buyer(s),  to issue any press release or other public disclosure
with respect to such transactions  required under applicable securities or other
laws or  regulations  (the  Company  shall use its best  efforts to consult  the
Buyer(s) in connection  with any such press  release or other public  disclosure
prior to its release and  Buyer(s)  shall be provided  with a copy  thereof upon
release thereof).

                  (k) Further  Assurances.  Each party shall do and perform,  or
cause to be done and  performed,  all such  further  acts and things,  and shall
execute and deliver all such other  agreements,  certificates,  instruments  and
documents,  as the other party may reasonably  request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                  (l) Termination.  In the event that the Closing shall not have
occurred with respect to the Buyers on or before five (5) business days from the
date  hereof  due to the  Company's  or  the  Buyer's  failure  to  satisfy  the
conditions  set forth in Sections 6 and 7 above (and the  non-breaching  party's
failure to waive such unsatisfied  condition(s)),  the non-breaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of  business  on such date  without  liability  of any party to any
other party;  provided,  however,  that if this  Agreement is  terminated by the
Company  pursuant to this Section 9(l),  the Company  shall remain  obligated to
reimburse the Buyer(s) for the fees and expenses of Butler Gonzalez described in
Section 4(g) above.

                  (m)  No  Strict  Construction.   The  language  used  in  this
Agreement  will be deemed to be the  language  chosen by the  parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.

                    [REMAINDER PAGE INTENTIONALLY LEFT BLANK]

                                       19
<PAGE>

      IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.

                                           COMPANY:
                                           CEC INDUSTRIES CORP.

                                           By:_____________________________
                                           Name:  Jeff Sternberg
                                           Title: Chief Executive Officer

                                       20
<PAGE>

                                                                       EXHIBIT A

                 FORM OF INVESTOR REGISTRATION RIGHTS AGREEMENT
<PAGE>

                                                                       EXHIBIT B

                            FORM OF ESCROW AGREEMENT
<PAGE>

                                                                       EXHIBIT C

                           TRANSFER AGENT INSTRUCTIONS
<PAGE>

                                   SCHEDULE I

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
                                                                                 ADDRESS/FACSIMILE             AMOUNT OF
               NAME                              SIGNATURE                        NUMBER OF BUYER             SUBSCRIPTION
--------------------------------    ---------------------------------    ---------------------------------   ---------------
<S>                                 <C>                                  <C>                                 <C>
Cornell Capital Partners, LP        By:      Yorkville Advisors, LLC     101 Hudson Street - Suite 3700      $ 1,000,000
                                    Its:     General Partner             Jersey City, NJ  07303
                                                                         Facsimile:        (201) 985-8266

                                    By:
                                    Name:    Mark A. Angelo
                                    Its:     Portfolio Manager
</TABLE>EXHIBIT 10.5

THIS  SECURED  DEBENTURE,  AND  THE  SECURITIES  INTO  WHICH  IT IS  CONVERTIBLE
(COLLECTIVELY,  THE  "SECURITIES"),  HAVE NOT BEEN  REGISTERED  WITH THE  UNITED
STATES  SECURITIES AND EXCHANGE  COMMISSION OR THE SECURITIES  COMMISSION OF ANY
STATE.  THE  SECURITIES  ARE  BEING  OFFERED  PURSUANT  TO A  SAFE  HARBOR  FROM
REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT").  THE SECURITIES ARE  "RESTRICTED" AND MAY NOT BE OFFERED OR
SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT,  PURSUANT TO REGULATION
D OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION  REQUIREMENTS OF THE
ACT AND THE  COMPANY  WILL BE  PROVIDED  WITH  OPINION  OF COUNSEL OR OTHER SUCH
INFORMATION  AS IT MAY  REASONABLY  REQUIRE TO CONFIRM THAT SUCH  EXEMPTIONS ARE
AVAILABLE. FURTHER HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE MADE
EXCEPT IN COMPLIANCE WITH THE ACT.

                                SECURED DEBENTURE

                              CEC INDUSTRIES CORP.

                        5% SECURED CONVERTIBLE DEBENTURE

                                 AUGUST 25, 2005

No. ___                                                             US$1,000,000

      This Secured Debenture (the "Debenture") is issued on August 25, 2004 (the
"Closing Date") by CEC Industries  Corp., a Nevada  corporation (the "Company"),
to CORNELL  CAPITAL  PARTNERS,  LP (together  with its permitted  successors and
assigns,  the  "Holder")  pursuant to  exemptions  from  registration  under the
Securities Act of 1933, as amended.

                                   ARTICLE I.

      Section 1.01  PRINCIPAL  AND  INTEREST.  For value  received,  the Company
hereby  promises  to pay to the order of the Holder on August 25, 2005 in lawful
money of the United  States of America and in  immediately  available  funds the
principal sum of One mIllion U.S. Dollars (US$1,000,000), together with interest
on the unpaid  principal of this  Debenture at the rate of five percent (5%) per
year  (computed on the basis of a 365-day year and the actual days elapsed) from
the date of this  Debenture  until paid.  At the  Company's  option,  the entire
principal amount and all accrued interest shall be either (a) paid to the Holder
on the third (3rd) year  anniversary  from the date hereof or (b)  converted  in
accordance with Section 1.02 herein  provided,  however,  that in no event shall
the Holder be  entitled  to  convert  this  Debenture  for a number of shares of
Common  Stock in excess of that  number of shares of Common  Stock  which,  upon
giving effect to such conversion,  would cause the aggregate number of shares of
Common Stock beneficially owned by the Holder and its affiliates to exceed 4.99%
of the outstanding shares of the Common Stock following such conversion.
<PAGE>

      Section 1.02 OPTIONAL CONVERSION.  The Holder is entitled,  at its option,
to convert,  and sell on the same day, at any time and from time to time,  until
payment in full of this  Debenture,  all or any part of the principal  amount of
the Debenture,  plus accrued interest,  into shares (the "Conversion Shares") of
the Company's common stock, par value US$.001 per share ("Common Stock"), at the
price per share (the  "Conversion  Price")  equal to the lesser of (a) an amount
equal to one  hundred  twenty  percent  (120%) of the  closing  bid price of the
Common Stock as listed on a Principal Market (as defined  herein),  as quoted by
Bloomberg L.P. (the "Fixed Price") as of the date hereof, or (b) an amount equal
to eighty percent (80%) of the closing bid price of the Company's  Common Stock,
as quoted by Bloomberg,  LP, for the five (5) trading days immediately preceding
the Conversion  Date (as defined  herein).  Subparagraphs  (a) and (b) above are
individually  referred to as a "Conversion  Price".  As used herein,  "Principal
Market"  shall  mean The  National  Association  of  Securities  Dealers  Inc.'s
Over-The-Counter  Bulletin  Board,  Nasdaq  SmallCap  Market,  or American Stock
Exchange.  If the Common Stock is not traded on a Principal Market,  the Closing
Bid Price and/or the VWAP shall mean, the reported Closing Bid Price or the VWAP
for the Common  Stock,  as furnished by the National  Association  of Securities
Dealers,  Inc.,  for the  applicable  periods.  No  fraction  of shares or scrip
representing fractions of shares will be issued on conversion, but the number of
shares  issuable  shall be rounded to the nearest  whole share.  To convert this
Debenture, the Holder hereof shall deliver written notice thereof, substantially
in the form of Exhibit "A" to this Debenture,  with appropriate  insertions (the
"Conversion  Notice"),  to the Company at its address as set forth  herein.  The
date upon which the conversion shall be effective (the "Conversion  Date") shall
be deemed to be the date set forth in the Conversion Notice.

      Section 1.03  RESERVATION  OF COMMON STOCK.  The Company shall reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of effecting the  conversion of this  Debenture,  such number of
shares of Common Stock as shall from time to time be  sufficient  to effect such
conversion, based upon the Conversion Price. If at any time the Company does not
have a sufficient number of Conversion Shares authorized and available, then the
Company shall call and hold a special meeting of its stockholders  within thirty
(30)  days of that  time  for the sole  purpose  of  increasing  the  number  of
authorized shares of Common Stock.

      Section 1.04 RIGHT OF REDEMPTION. The Company at its option shall have the
right to redeem,  with three (3)  business  days  advance  written  notice  (the
"Redemption Notice"), a portion or all outstanding  convertible  debenture.  The
redemption  price  shall be one  hundred  twenty  percent  (120%) of the  amount
redeemed plus accrued interest.

      In the event the Company exercises a redemption of either all or a portion
the Convertible Debenture,  the Holder shall receive a warrant to purchase fifty
thousand  (50,000)  shares of the  Company's  Common Stock for every One Hundred
Thousand U.S.  Dollars  (US$100,000)  redeemed,  pro rata (the  "Warrant").  The
Warrant shall be exercisable on a "cash basis" and have an exercise price of one
hundred twenty  percent (120%) of the Closing Bid Price of the Company's  Common
Stock on the  Closing  Date.  The  Warrant  shall have  "piggy-back"  and demand
registration rights and shall survive for two (2) years from the Closing Date.

                                       2
<PAGE>

      Section 1.05 REGISTRATION RIGHTS. The Company is obligated to register the
resale of the  Conversion  Shares under the  Securities Act of 1933, as amended,
pursuant to the terms of a Registration  Rights  Agreement,  between the Company
and  the  Holder  of even  date  herewith  (the  "Investor  Registration  Rights
Agreement").

      Section 1.06  INTEREST  PAYMENTS.  The interest so payable will be paid at
the time of maturity or conversion to the person in whose name this Debenture is
registered.  At the time such  interest  is  payable,  the  Holder,  in its sole
discretion,  may elect to receive  the  interest  in cash (via wire  transfer or
certified  funds) or in the form of Common  Stock.  In the event of default,  as
described in Article III Section 3.01  hereunder,  the Holder may elect that the
interest be paid in cash (via wire  transfer or certified  funds) or in the form
of Common Stock. If paid in the form of Common Stock,  the amount of stock to be
issued  will be  calculated  as  follows:  the value of the  stock  shall be the
Closing Bid Price on: (i) the date the  interest  payment is due; or (ii) if the
interest  payment is not made when due, the date the interest payment is made. A
number of shares of Common  Stock with a value  equal to the amount of  interest
due shall be issued.  No  fractional  shares will be issued;  therefore,  in the
event  that the value of the  Common  Stock  per share  does not equal the total
interest due, the Company will pay the balance in cash.

      Section 1.07 PAYING AGENT AND REGISTRAR.  Initially,  the Company will act
as paying  agent and  registrar.  The  Company  may  change  any  paying  agent,
registrar,  or  Company-registrar  by giving  the  Holder not less than ten (10)
business  days' written  notice of its election to do so,  specifying  the name,
address, telephone number and facsimile number of the paying agent or registrar.
The Company may act in any such capacity.

      Section 1.08 SECURED NATURE OF DEBENTURE. This Debenture is secured by all
of the  assets  and  property  of the  Company  as set forth on Exhibit A to the
Security Agreement dated the date hereof between the Company and the Holder (the
"Security Agreement"). As set forth in the Security Agreement, Holder's security
interest shall  terminate upon the occurrence of an Expiration  Event as defined
in the Security Agreement.

                                   ARTICLE II.

      Section 2.01  AMENDMENTS  AND WAIVER OF DEFAULT.  The Debenture may not be
amended.  Notwithstanding  the above,  without the  consent of the  Holder,  the
Debenture may be amended to cure any ambiguity,  defect or inconsistency,  or to
provide for assumption of the Company obligations to the Holder.

                                  ARTICLE III.

      Section 3.01 EVENTS OF DEFAULT. An Event of Default is defined as follows:
(a) failure by the Company to pay amounts due hereunder within fifteen (15) days
of the date of maturity of this Debenture;  (b) failure by the Company to comply
with the terms of the Irrevocable  Transfer Agent  Instructions  attached to the
Securities  Purchase  Agreement;  (c) failure by the Company's transfer agent to
issue freely  tradeable  Common Stock to the Holder  within five (5) days of the
Company's receipt of the attached Notice of Conversion from Holder;  (d) failure
by the  Company  for ten (10) days after  notice to it to comply with any of its
other agreements in the Debenture; (e) events of bankruptcy or insolvency; (f) a
breach by the Company of its obligations under the Securities Purchase Agreement
or the Investor  Registration Rights Agreement which is not cured by the Company
within  ten  (10)  days  after  receipt  of  written  notice  thereof.  Upon the
occurrence  of an Event of  Default,  the Holder  may,  in its sole  discretion,
accelerate  full repayment of all debentures  outstanding  and accrued  interest
thereon or may,  notwithstanding  any  limitations  contained in this  Debenture
and/or the  Securities  Purchase  Agreement  dated the date  hereof  between the
Company  and  Cornell  Capital   Partners,   L.P.  (the   "Securities   Purchase
Agreement"),  convert all debentures  outstanding and accrued  interest  thereon
into shares of Common Stock pursuant to Section 1.02 herein.

                                       3
<PAGE>

      Section 3.02 FAILURE TO ISSUE  UNRESTRICTED  COMMON STOCK. As indicated in
Article III Section 3.01, a breach by the Company of its  obligations  under the
Investor  Registration  Rights  Agreement  shall be deemed an Event of  Default,
which if not cured within ten (10) days,  shall entitle the Holder to accelerate
full repayment of all debentures  outstanding and accrued  interest  thereon or,
notwithstanding   any  limitations   contained  in  this  Debenture  and/or  the
Securities Purchase Agreement, to convert all debentures outstanding and accrued
interest  thereon into shares of Common  Stock  pursuant to Section 1.02 herein.
The Company  acknowledges  that  failure to honor a Notice of  Conversion  shall
cause irreparable harm to the Holder.

                                   ARTICLE IV.

      Section 4.01 RIGHTS AND TERMS OF CONVERSION.  This Debenture,  in whole or
in part, may be converted at any time following the Closing Date, into shares of
Common  Stock at a price equal to the  Conversion  Price as described in Section
1.02 above.

      Section 4.02 RE-ISSUANCE OF DEBENTURE. When the Holder elects to convert a
part of the  Debenture,  then the Company  shall  reissue a new Debenture in the
same form as this Debenture to reflect the new principal amount.

      Section 4.03  TERMINATION  OF  CONVERSION  RIGHTS.  The Holder's  right to
convert the Debenture  into the Common Stock in accordance  with  paragraph 4.01
shall  terminate on the date that is the third (3rd) year  anniversary  from the
date hereof and this Debenture shall be automatically  converted on that date in
accordance  with  the  formula  set  forth  in  Section  4.01  hereof,  and  the
appropriate shares of Common Stock and amount of interest shall be issued to the
Holder.

                                   ARTICLE V.

      Section  5.01  ANTI-DILUTION.  In the event that the Company  shall at any
time subdivide the  outstanding  shares of Common Stock,  or shall issue a stock
dividend  on the  outstanding  Common  Stock,  the  Conversion  Price in  effect
immediately  prior to such subdivision or the issuance of such dividend shall be
proportionately  decreased,  and in the event that the Company shall at any time
combine the outstanding  shares of Common Stock,  the Conversion Price in effect
immediately  prior  to such  combination  shall  be  proportionately  increased,
effective at the close of business on the date of such subdivision,  dividend or
combination as the case may be.

                                       4
<PAGE>

      Section  5.02 CONSENT OF HOLDER TO SELL  CAPITAL  STOCK OR GRANT  SECURITY
INTERESTS.  Except for the Standby Equity Distribution  Agreement dated the date
hereof between the Company and Cornell Capital  Partners,  LP, so long as any of
the principal of or interest on this Debenture  remains unpaid and  unconverted,
the Company shall not,  without the prior  consent of the Holder,  issue or sell
(i)  any  Common  Stock  or  Preferred  Stock  without  consideration  or  for a
consideration  per share less than its fair market value 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  fair  market  value
determined  immediately  prior to its  issuance,  (iii) enter into any  security
instrument  granting the holder a security  interest in any of the assets of the
Company, or (iv) file any registration statement on Form S-8.

                                   ARTICLE VI.

      Section 6.01 NOTICE. Notices regarding this Debenture shall be sent to the
parties at the following  addresses,  unless a party notifies the other parties,
in writing, of a change of address:

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

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 Holder:             Cornell Capital Partners, LP
                              101 Hudson Street, Suite 3700
                              Jersey City, NJ 07303
                              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

                                       5
<PAGE>

      Section 6.02  GOVERNING  LAW.  This  Debenture  shall be deemed to be made
under and shall be construed in accordance  with the laws of the State of Nevada
without giving effect to the principals of conflict of laws thereof. Each of the
parties consents to the  jurisdiction of the U.S.  District Court sitting in the
District  of the State of New  Jersey  or the  state  courts of the State of New
Jersey  sitting in Hudson  County,  New Jersey in  connection  with any  dispute
arising under this Debenture and hereby waives,  to the maximum extent permitted
by law, any objection,  including any objection based on forum non conveniens to
the bringing of any such proceeding in such jurisdictions.

      Section 6.03 SEVERABILITY. The invalidity of any of the provisions of this
Debenture shall not invalidate or otherwise  affect any of the other  provisions
of this Debenture, which shall remain in full force and effect.

      Section 6.04 ENTIRE  AGREEMENT AND AMENDMENTS.  This Debenture  represents
the entire  agreement  between  the parties  hereto with  respect to the subject
matter  hereof  and there are no  representations,  warranties  or  commitments,
except as set forth herein.  This Debenture may be amended only by an instrument
in writing executed by the parties hereto.

      Section  6.05  COUNTERPARTS.  This  Debenture  may be executed in multiple
counterparts,  each of which  shall be an  original,  but all of which  shall be
deemed to constitute on instrument.

      IN  WITNESS  WHEREOF,  with the  intent to be legally  bound  hereby,  the
Company as executed this Debenture as of the date first written above.

                                         CEC INDUSTRIES CORP.

                                         By:_______________________________
                                         Name:  Jeff Sternberg
                                         Title: Chief Executive Officer

                                       6
<PAGE>

                                   EXHIBIT "A"

                              NOTICE OF CONVERSION

        (TO BE EXECUTED BY THE HOLDER IN ORDER TO CONVERT THE DEBENTURE)

TO:

      The undersigned  hereby irrevocably elects to convert US$ of the principal
amount of the above  Debenture  into  Shares of Common  Stock of CEC  Industries
Corp.,  according to the conditions  stated  therein,  as of the Conversion Date
written below.

CONVERSION DATE:                          ______________________________________

APPLICABLE CONVERSION PRICE:              ______________________________________

SIGNATURE:                                ______________________________________

NAME:                                     ______________________________________

ADDRESS:                                  ______________________________________

AMOUNT TO BE CONVERTED:                   US$___________________________________

AMOUNT OF DEBENTURE UNCONVERTED:          US$___________________________________

CONVERSION PRICE PER SHARE:               US$___________________________________

NUMBER OF SHARES OF COMMON
STOCK TO BE ISSUED:                       ______________________________________

PLEASE ISSUE THE SHARES OF
COMMON STOCK IN THE FOLLOWING
NAME AND TO THE FOLLOWING
ADDRESS:                                  ______________________________________

ISSUE TO:                                 ______________________________________

AUTHORIZED SIGNATURE:                     ______________________________________

NAME:                                     ______________________________________

TITLE:                                    ______________________________________

PHONE NUMBER:                             ______________________________________

BROKER DTC PARTICIPANT CODE:              ______________________________________

ACCOUNT NUMBER:                           ______________________________________

                                      A-1

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