Document:

<PAGE>

                                                                    Exhibit 10.1

                                  [Maxim Logo]

                           PLACEMENT AGENCY AGREEMENT

May 20, 2004

ADM Tronics Unlimited, Inc.
AA Northvale Medical Associates, Inc.
224-S Pegasus Avenue
Northvale, New Jersey 07647

Ladies and Gentlemen:

      This Placement Agency Agreement (the "AGREEMENT") confirms the retention
of Maxim Group LLC ("MAXIM") by ADM Tronics Unlimited, Inc., a Delaware
corporation ("ADM") and AA Northvale Medical Associates, Inc., a New Jersey
corporation and a majority-owned subsidiary of ADM ("AAN" and, collectively,
with ADM, the "COMPANY"), to provide, on an exclusive basis, certain investment
banking services in connection with a "best efforts" private placement of Units
(as defined below) consisting of securities of each of ADM and AAN (the "PRIVATE
PLACEMENT"). Each Unit ("UNIT") shall consist of: (i) one (1) $100,000 Joint
Unsecured 6% Convertible Note (the "CONVERTIBLE NOTES"); (ii) one (1) Class A
Common Stock Purchase Warrant of ADM (collectively, the "ADM WARRANTS"), and
(iii) one (1) Class A Common Stock Purchase Warrant of AAN (collectively, the
"AAN WARRANTS"). The Convertible Notes, the ADM Warrants and the AAN Warrants
are sometimes referred to herein as the "PRIVATE PLACEMENT SECURITIES" or the
"SECURITIES." The investors introduced by Maxim to the Company in connection
with the financing contemplated hereunder are referred to herein each as an
"INVESTOR" and collectively as the "INVESTORS."

      Following the assumed consummation of the Private Placement, the Company
shall retain Maxim on an exclusive basis in connection with a "best efforts"
private placement of shares of common stock, no par value per share, of AAN (the
"AAN COMMON STOCK") or shares of common stock, $0.0005 par value per share, of
ADM (the "ADM Common Stock") (the "SECOND FINANCING"), subject to certain
conditions. Additionally, the Company shall retain Maxim to act as its exclusive
advisor in connection with the Spin Off, as defined below, of the AAN Common
Stock and in connection with the public registration of the shares of AAN Common
Stock or ADM Common Stock, as the case may be, underlying the securities
included in the Units sold in the Private Placement, as well as any shares of
AAN Common Stock that may be sold in the Second Financing (the "RESALE
REGISTRATION"), in each case on terms to be agreed upon by the parties hereto.

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                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                    Page 2 of 27

1.    ENGAGEMENT

      The Company hereby confirms its engagement of Maxim, for the period
beginning on May 20, 2004 and ending on December 31, 2004 (the "ENGAGEMENT
PERIOD"), to act as the Company's exclusive financial advisor, lead placement
agent and/or underwriter and investment banker in connection with the Private
Placement, the Resale Registration (the "FINANCINGS") or any other financing, as
the case may be. In order to coordinate efforts most effectively, during the
Engagement Period, the Company shall inform Maxim of any discussions with third
parties relating to any financing, capital raising or other material transaction
of any nature involving the Company and/or its subsidiaries (a "TRANSACTION")
and shall promptly advise Maxim if it receives an inquiry concerning a
Transaction. During the Engagement Period, the Company will refrain from
directly or indirectly approaching, soliciting, or otherwise communicating with
any third party on topics relating to a Transaction without the prior written
consent of Maxim. Furthermore, the Company agrees that any information or advice
rendered by Maxim or its representatives in connection with its engagement
hereunder is solely for the Company's confidential use in connection with the
Financings or any Transaction. Except as otherwise required by law, the Company
will not, and will not permit any third party to, use, disclose or otherwise
refer to such advice or information without Maxim's prior written consent.

2.    DESCRIPTION OF THE TRANASACTIONS

      (a) Private Placement. The Private Placement shall be a "best efforts"
placement consisting of a minimum of twenty (20) Units at an offering price of
$100,000 per Unit, or Two Million Dollars ($2,000,000) (the "PRIVATE PLACEMENT
MINIMUM AMOUNT") and up to a maximum of thirty-five (35) Units at an offering
price of $100,000 per Unit, or Three Million Five Hundred Thousand Dollars
($3,500,000) (the "PRIVATE PLACEMENT MAXIMUM AMOUNT"). The Company and Maxim may
mutually agree to exercise an over-allotment option to sell up to an additional
ten (10) Units above the Private Placement Maximum Amount. The Convertible
Notes, the ADM Warrants and the AAN Warrants, or the other agreements or
instruments entered into in connection with the Private Placement shall have
such other features as are agreed to by the Company and Maxim and memorialized
in the Private Placement Memorandum (as defined below) including, without
limitation, the registration rights described in Section 2(c) below as well as
those described in the subscription documents attached as exhibits to the
Private Placement Memorandum, as defined below, for the shares of AAN Common
Stock and/or the shares of common stock, $.0005 par value per share, of ADM (the
"ADM COMMON STOCK") receivable upon the conversion of the Convertible Notes, or
upon the exercise of the AAN Warrants or the ADM Warrants, as the case may be.

      (b) Spin-Off. In the event that the Private Placement Minimum Amount is
raised in the Private Placement, ADM may effect a pro rata distribution to ADM's
stockholders (the "Spin Off") of a percentage (to be agreed upon by ADM and
Maxim) of the shares of AAN Common Stock. The shares of AAN Common Stock
distributed to ADM's stockholders in the Spin Off will be registered on a Form
SB-2 or other appropriate form (the "Spin Off Registration Statement") to be
filed with the SEC no later than sixty (60) days following the closing of the
Private Placement. ADM shall use its best efforts to have such Spin Off
Registration Statement declared effective by the SEC by no later than ninety
(90) days following the filing thereof. Upon the effectiveness of the Spin Off
Registration Statement: (i) AAN will be registered as a reporting company under
the Exchange Act, and (ii) the Placement Agent will seek to become a
market-maker of the shares of AAN Common Stock, with such shares originally to
be traded on the OTC Bulletin Board.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                    Page3 of 27

      (c) Resale Registration. In the event that the PRIVATE PLACEMENT MINIMUM
AMOUNT is raised, the Company agrees to file a registration statement, on a form
to be agreed upon by the Company and Maxim (the "REGISTRATION STATEMENT"), with
the Securities and Exchange Commission (the "SEC") no later than sixty (60) days
following the closing of the Private Placement covering the resale of the shares
of AAN Common Stock: (i) issuable upon the conversion of the Convertible Notes
and exercise of the AAN Warrants, and (ii) underlying any Placement Agent
Warrant (as defined below) issued to Maxim in connection with the Private
Placement. In addition, the Company shall use reasonable efforts to have such
Registration Statement declared effective by the SEC by no later than sixty (60)
days following the filing thereof with the SEC (the "TARGET EFFECTIVE DATE"),
and to maintain the effectiveness of such Registration Statement until the third
(3rd) anniversary of the date of such effectiveness. In the event the SPIN OFF
is not consummated by December 31, 2004 the Company shall file a Registration
Statement covering the resale of the shares of ADM Common Stock issuable upon
the conversion of the Convertible Notes, the ADM Warrants and the exercise of
any Placement Agent Warrant.

      (d) Private Placement. The Private Placement will be made pursuant to the
private placement memoranda described more fully below. Until the effectiveness
of the Resale Registration, the Private Placement Securities will not be
registered under the Securities Act of 1933, as amended, or any applicable
successor statute (the "Act"), but will be issued in reliance on the private
offering exemption available under Section 4(2) of the Act and the rules and
regulations promulgated thereunder, including Regulation D ("REGULATION D").
Maxim understands that all subscriptions for Securities are subject to
acceptance by the Company. The Company and Maxim reserve the right in their
reasonable discretion to accept or reject any or all subscriptions for
Securities in whole or in part, regardless whether any funds have been deposited
into an escrow account. Any subscription monies received by Maxim from Investors
will be handled in accordance with Rule 15c2-4 under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), whether or not Maxim is subject to the
Exchange Act, and as otherwise may be set forth in the Private Placement
Memorandum.

      (e) Escrow Matters. Until the closing of the Private Placement (the
"CLOSING" or "PRIVATE PLACEMENT Closing") is held, all subscription funds
received shall be held by American Stock Transfer & Trust Company (the "ESCROW
AGENT"). Maxim shall not have any independent obligation to verify the accuracy
or completeness of any information contained in any Subscription Documents (as
defined below) or the authenticity, sufficiency or validity of any check
delivered by any prospective Investor in payment for the Private Placement
Securities, nor shall Maxim incur any liability with respect to any such
verification or failure to verify. All subscription checks and funds shall be
promptly and directly delivered without offset or deduction to the Escrow Agent.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                    Page 4 of 27

3.    OFFERING MEMORANDA AND RELATED MATTERS

      (a) The Company has prepared a Confidential Private Placement Memorandum,
dated as of May 20, 2004, relating to the Private Placement (such memorandum,
together with the exhibits and attachments thereto or available thereunder and
any amendments or supplements thereto prepared and furnished by the Company,
being referred to herein as the "PRIVATE PLACEMENT MEMORANDUM"), which Private
Placement Memorandum, among other things, describes the Private Placement and
certain investment risks relating thereto. The Private Placement Memorandum
shall contain substantially all of the information required in a Registration
Statement on Form SB-2 under the Act.

      (b) The Company has been and will continue to be responsible for preparing
and filing required documentation, if any, with the authorities in the United
States or any state located therein (and subsequent to, if required by the laws
of any such jurisdiction) in connection with the distribution of the Memoranda
to prospective Investors (the parties acknowledging, however, that the Private
Placement is intended and expected to be wholly or partially exempt from filing
requirements in the United States by reason of an "accredited investor"
exemption).

      (c) Maxim and its counsel and the Company and its counsel have or will
jointly prepare a form of subscription agreement (the "SUBSCRIPTION AGREEMENT")
and a form of purchaser questionnaire (collectively, with the Subscription
Agreement, the form of Convertible Note, ADM Warrant and AAN Warrant, and any
other stock purchase or other documents required in connection with the Private
Placement, the "SUBSCRIPTION DOCUMENTS"), which Subscription Documents shall
contain such representations, warranties, conditions and covenants as are
customary in private placements of corporate debt and equity securities with
United States accredited investors. Maxim and its counsel have had or will have
an opportunity to review the final form of the Memoranda and Subscription
Documents prior to the distribution thereof to prospective Investors, and the
Memorandum and the Subscription Documents will be the only offering documents
(other than cover letters which may be used by Maxim, and any documents made
available to Investors in accordance with the terms of the Memorandum) shown to
prospective Investors. The Company and its counsel will advise Maxim and its
counsel in writing of those jurisdictions in which the Securities may lawfully
be offered and sold, and the manner in which the Securities may lawfully be
offered and sold in each such jurisdiction in connection with the Private
Placement, and Maxim agrees that the Securities will be offered or sold only in
such jurisdictions and in the manner specified by the Company; provided,
however, that Maxim shall not be responsible for independently verifying such
written advice with respect to the jurisdictions in which the Securities may be
offered and sold and with respect to the manner in which the Securities may be
offered and sold in such jurisdictions. Notwithstanding the foregoing, Maxim
shall determine whether it is licensed to offer and sell the Securities in each
jurisdiction in which it intends to do so.

      (d) The Private Placement will be made in accordance with the requirements
of Section 4(2) under the Act and/or Regulation D only to investors that qualify
as accredited investors, as defined in Rule 501(a) under the Act ("ACCREDITED
INVESTORS"), purchasing for their own account for investment purposes only and
not for distribution in violation of securities laws. Furthermore, prospective
Investors will have been provided with the Memoranda and access to the
management of the Company and afforded the opportunity to ask questions.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                    Page 5 of 27

      (e) The Company recognizes, agrees and confirms that Maxim (or any selling
agent permitted to be utilized by Maxim under Section 4(a) hereof): (i) will use
and rely primarily on the information contained in the Memoranda and the
Subsciption Documents and on information available from generally recognized
public sources in performing the services contemplated by this Agreement without
having independently verified the same; (ii) is authorized, as the Company's
exclusive financial advisor and placement agent in connection with the Private
Placement, to transmit to any prospective Investor a copy or copies of the
Memoranda, the Subsciption Documents and any other documentation supplied to
Maxim for transmission to any prospective Investor by or on behalf of the
Company or by any of the Company's officers, representatives or agents, in
connection with the performance of Maxim's services hereunder or any transaction
contemplated hereby; (iii) does not assume responsibility for the accuracy or
completeness of any information contained in the Memoranda and the Subsciption
Documents or any such other information; (iv) will not make an appraisal of the
Company or any assets of the Company or the securities being offered by the
Company in the Private Placement; and (v) retains the right to continue to
perform due diligence of the Company during the course of the Company's
engagement of Maxim.

4.    PLACEMENT AGENT MATTERS

      (a) Subject to the provisions of this Agreement and to the performance by
the Company of all of its obligations to be performed hereunder, Maxim agrees to
use its best efforts to assist in arranging for sales of Private Placement
Securities. The Company recognizes that "best efforts" does not assure that the
Private Placement will be consummated. It is understood and agreed that this
Agreement does not create any partnership, joint venture or other similar
relationship between or among Maxim and the Company, and that Maxim is acting
only as a sales agent. The Company hereby agrees that Maxim shall have the right
to utilize other selling broker-dealers in connection with the Private Placement
on terms approved by Maxim.

      (b) For the services of Maxim hereunder, the Company will pay or caused to
be paid to Maxim the following fees at each Closing in connection with the
Private Placement:

          (i) a cash payment equal to 8.0% of the gross proceeds received by the
Company from the sale of the Private Placement Securities, payable at each
applicable Private Placement Closing, in lawful money of the United States by
check or wire transfer of immediately available funds;

          (ii) a non-accountable expense allowance of 3.0% of the gross proceeds
received by the Company, $20,000 of which has previously been paid to Maxim,
from the sale of the Private Placement Securities, payable at each applicable
Private Placement Closing, in lawful money of the United States by check or wire
transfer of immediately available funds.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                    Page 6 of 27

          (iii) a warrant (the "PLACEMENT AGENT WARRANT I") to purchase such
number of shares of ADM Common Stock, equal to 8.0% of the aggregate number of
shares of ADM Common Stock into which the Convertible Notes sold in the Private
Placement are convertible, at 100% of the Valuation Price ("EXERCISE PRICE I"),
as defined in the Private Placement Memorandum, subject to certain anti-dilution
protection, exercisable from January 1, 2005 through December 31, 2009.

          (iv) a warrant (the "PLACEMENT AGENT WARRANT II") to purchase such
number of shares of AAN Common Stock, equal to 8.0% of the aggregate number of
shares of AAN Common Stock into which the Convertible Notes sold in the Private
Placement are convertible, at 100% of the Conversion Price ("EXERCISE PRICE
II"), as defined in the Private Placement Memorandum, subject to certain
anti-dilution protection, which shall expire on December 31, 2004.

          (v) a warrant (the "PLACEMENT AGENT WARRANT III") to purchase such
number of shares of ADM Common Stock, equal to 8.0% of the aggregate number of
shares of ADM Common Stock into which the ADM Warrants issued in the Private
Placement are exercisable, at 100% of the ADMT Valuation Price ("EXERCISE PRICE
III"), as defined in the Private Placement Memorandum, together with the
surrender of a proportionate number of Placement Agent Warrant III's to the
Company for no consideration.

          (vi) a warrant (the "PLACEMENT AGENT WARRANT IV") to purchase such
number of shares of AAN Common Stock, equal to 8.0% of the aggregate number of
shares of AAN Common Stock into which the AAN Warrants issued in the Private
Placement are exercisable, at 100% of the AAN Warrant Exercise Price ("EXERCISE
PRICE IV"), as defined in the Private Placement Memorandum, together with the
surrender of a proportionate number of Placement Agent Warrant IV's to the
Company for no consideration.

Placement Agent Warrant I, Placement Agent Warrant II, Placement Agent Warrant
III and Placement Agent Warrant IV shall collectively be referred to herein as
the "PLACEMENT AGENT WARRANTS." The Placement Agent Warrants will be issued at
the applicable Closing pursuant to Warrant Certificates to be signed by ADM and
AAN, as applicable. The Placement Agent Warrants shall provide, among other
things:

          (A) that the Placement Agent Warrants shall:

              (1) be exercisable at either Exercise Price I, Exercise Price II,
          Exercise Price III or Exercise Price IV, as applicable;

              (2) expire five (5) years from the date of issuance, unless
          otherwise agreed to; and

              (3) be non-redeemable,

          (B) for registration rights on the same terms granted to the
      Investors,

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                    Page 7 of 27

          (C) for the ability of a cashless exercise, and

          (D) for such other terms as are normal and customary for Placement
      Agent Warrants issued to placement agents.

              (vi) Upon the exercise of any ADM Warrant or AAN Warrant, the
          Placement Agent shall be entitled to receive a cash fee equal to five
          percent (5%) of the funds received by the Company upon any such
          exercise, payable immediately upon receipt by the Company.

              (vii) Upon completion of the initial Private Placement Closing,
          the Company shall enter into a one-year consulting agreement with
          Maxim, whereby Maxim will be entitled to receive a $5,000 monthly
          consulting fee, all of which shall be due and payable upon completion
          of the initial Private Placement Closing.

      (c) For the services of Maxim hereunder, AAN will pay or caused to be paid
to Maxim fees at each closing in connection with any such Financing, in an
amount to be negotiated and agreed upon between the parties

      (d) Notwithstanding any termination of this Agreement pursuant to the
terms hereof or otherwise, if at anytime commencing on the date hereof, and
ending on or before the eighteen (18) month anniversary of the Private Placement
Closing the Company enters into a commitment or letter of intent relating to any
offering of debt or equity securities of the Company or any other financing: (i)
with any financing source to whom the Company was introduced by Maxim or who was
contacted by Maxim in connection with its services for the Company hereunder, or
(ii) as a result of the use by the Company of materials or other work product
prepared by Maxim in connection with the Private Placement or any Transaction,
the Company shall pay to Maxim, at the closing of any such offering or
financing, the fees described in, and in accordance with the terms and
provisions of, Section 4(b) and Section 4(c) above.

      (e) In addition to the foregoing, the Company hereby grants to Maxim the
exclusive right to manage any private or public offering of debt or equity or
other securities of the Company for a period of eighteen (18) months from the
Private Placement Closing. Subject to the provisions of Section 4(d) hereof, if
applicable, the terms of any such offering shall be mutually agreed upon by the
Company and Maxim. Furthermore, the Company hereby agrees that if the Company or
any Subsidiary (as defined below) or affiliate of the Company becomes a party to
any preliminary or binding letter of intent or agreement relating to any merger,
acquisition of assets or other business combination or reorganization involving
the Company or any Subsidiary that, for a period of twelve (12) months from the
Closing Date, the Company or such other applicable party shall engage Maxim as
the Company's or the applicable party's exclusive financial advisor in
connection with any such transaction or series of related transactions. Maxim
shall be paid reasonable and customary fees, and be reimbursed for its expenses
in accordance with customary terms, in connection with any transaction described
in this Section 4(e).

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                    Page 8 of 27

      (f) Upon receipt by the Company from a proposed Investor of completed
Subscription Documents, and such other documents as the Company requests, the
Company and Maxim will determine in their reasonable discretion whether they
wish to accept or reject the subscription.

5.    PAYMENT BY COMPANY OF EXPENSES

      The Company will pay for or promptly reimburse to Maxim, as the case may
be, and whether or not any Securities are sold in connection with the Private
Placement , all expenses of the Company and Maxim relating to the Private
Placement and any Transactions (including all reasonable legal fees incurred by
Maxim) and all other reasonable out-of-pocket expenses of Maxim relating to
activities under this Agreement, including, without limitation: (i) the
preparation, printing, reproduction, filing, distribution and mailing of the
Memoranda and all other documents relating to the Private Placement, and any
supplements or amendments thereto, including the fees and expenses of counsel to
the Company, and the cost of all copies thereof; (ii) the issuance, sale,
transfer and delivery of the Private Placement Securities, including any
transfer or other taxes payable thereon and the fees of any transfer agent or
registrar; (iii) the public registration and listing of, or registration and
qualification of the Securities pursuant to the Resale Registration or otherwise
and for the securing of an exemption therefrom under state of foreign "blue sky"
or securities laws, including, without limitation, filing fees payable in the
jurisdictions in which such registration or qualification or exemption therefrom
is sought, the costs of preparing preliminary, supplemental and final "blue sky
surveys" relating to the offer and sale of the Securities and the fees and
disbursements of counsel to Maxim in connection with such "blue sky" matters;
(iv) the filing fees, if any, payable to the applicable securities regulatory
authorities; (v) all Escrow Agent fees; and (vi) all road show expenses, travel,
legal, and other related expenses. Any expenses (other than Maxim's legal or
other professional expenses) in excess of $2,000 shall be subject to prior
approval by the Company, which approval shall not be unreasonably withheld or
delayed.

6.    TERMINATION OF PRIVATE PLACEMENT

      The Private Placement may be terminated: (i) by Maxim or the Company at
any time upon thirty (30) days prior written notice or (ii) immediately by Maxim
upon giving written notice to the Company, but only in the event that if:

      (a) in the opinion of Maxim, the Private Placement Memorandum contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary in order to make the statements appearing
therein not misleading in the light of the circumstances in which they were
made, and the Company shall not have corrected such untrue statement or omission
to the reasonable satisfaction of Maxim and its counsel within ten (10) days
after the Company receives notice of such untrue statement or omission, provided
that notwithstanding such ten (10) day period, neither Closing shall occur
hereunder until Maxim shall notify the Company that it is satisfied, in its
reasonable determination, that the Company has taken such steps (including
circulating amended offering materials and afforded prospective Investors a
reasonable opportunity to review such amendments) to allow the applicable
Closing to occur; or

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                    Page 9 of 27

      (b) the Company shall be in material breach of any representation,
warranty or covenant made by it in this Agreement, any Subscription Document or
any other document relating to the Private Placement; or

      (c) (i) any calamitous domestic or international event or act or
occurrence has taken place and, in Maxim's opinion, has or will materially
disrupt general securities markets in the United States in the immediate future;
or (ii) if trading on the New York Stock Exchange, the American Stock Exchange,
or in the over-the-counter market shall have been suspended or minimum or
maximum prices for trading shall have been fixed, or maximum ranges for prices
for securities shall have been required on the over-the-counter market by the
National Association of Securities Dealers, Inc. ("NASD") or by order of the SEC
or any other government authority having jurisdiction; or (iii) if the United
States shall have become subject to an act of terrorism or involved in a war,
major hostilities or the like; or (iv) if a banking moratorium has been declared
by a New York State or federal authority; or (v) if the Company shall have
sustained a material loss, whether or not insured, by reason of fire, flood,
accident or other calamity; or (vii) if there shall have been such material
adverse change in the conditions or prospects of the Company, involving a change
not contemplated by the Memorandum; or (viii) if there shall have been such
material adverse general market conditions as in Maxim's reasonable judgment
would make it inadvisable to proceed with the Private Placement or the sale or
delivery of the Securities.

7.    OFFERING PERIOD; CLOSINGS

      (a) Private Placement. Subject to the terms and conditions set forth
herein, the Units which are the subject of the Private Placement will be offered
on a "best efforts" basis for a period beginning from the date of the Private
Placement Memorandum and ending at 5:00 p.m., New York City time, on July 31,
2004, unless earlier terminated by the Company and/or Maxim or unless extended
one or more times by the Company and Maxim in their mutual discretion (without
notice to the Investors required) (such period, the "PRIVATE PLACEMENT OFFERING
Period"). Unless the Private Placement Minimum Amount is subscribed for and
accepted by the Company by the conclusion of the Private Placement Offering
Period, the Private Placement will be terminated and all subscription proceeds
will be returned to Investors without interest or deduction. If at least the
Private Placement Minimum Amount has been subscribed for and accepted by the
Company at any time during the Private Placement Offering Period, the Company
will promptly conduct a Private Placement Closing on the Units. Thereafter,
additional Private Placement Closings will occur until the first to occur of:
(i) the full subscription for an acceptance by the Company of the Private
Placement Maximum Amount, (ii) the conclusion of the Offering Period, or (iii)
the termination of the Private Placement or this Agreement. Any Closing shall be
undertaken in a manner agreed to by the Company and Maxim.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 10 of 27

      (b) Documents to be Delivered. At any Closing, the Company shall deliver
to the Investors instruments or share or warrant certificates representing the
securities underlying the Units and instruments representing the Placement Agent
Warrants, duly executed by the Company, together with such other closing
documentation as may be required by Maxim in its reasonable discretion in order
to affect the applicable Closing. Any date on which a Closing occurs is referred
to herein as a "CLOSING DATE."

8.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

      ADM and AAN, jointly and severally, hereby represent, warrant, covenant
and agree with and to Maxim: (i) as of the date hereof, (ii) as of each
applicable Closing Date and (iii) as of the date of the filing of the
Registration Statement (or any amendment or supplement thereto), as follows.
References in this Section 8 to the Memoranda are made on the assumption, and
the Company's agreement, that the Memoranda have been prepared to contain
substantially all of the information required in a Registration Statement on
Form SB-2 under the Act.

      (a) ADM has been validly formed and legally exists as a corporation in
good standing under the laws of the State of Delaware and AAN has been validly
formed and legally exists as a corporation in good standing under the laws of
the State of New Jersey. Each of ADM and AAN have full corporate power and
authority to conduct their businesses as currently conducted, and are in good
standing in each jurisdiction in which the conduct of their businesses or the
nature of their properties requires such qualification or authorization, except
where the failure to be so qualified or authorized and in good standing could
not reasonably be expected to have a material adverse effect on the business and
financial condition of either ADM or AAN or any other Subsidiary (as defined
below) of ADM, each taken as a whole (a "MATERIAL ADVERSE EFFECT"). As of the
date hereof, ADM does not have, directly or indirectly, any subsidiaries other
than AAN or as disclosed in the Company's filings with the SEC (each, a
"SUBSIDIARY" and collectively, the "SUBSIDIARIES"). Each Subsidiary has been
duly organized, is validly existing and in good standing under the laws of the
jurisdiction of its organization, has the power and authority to own its
properties and to conduct its business and is duly qualified and authorized to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or the nature of its properties requires such
qualification or authorization, except where the failure to be so qualified or
authorized and in good standing could not reasonably be expected to have a
Material Adverse Effect. 75.7% of the issued and outstanding capital stock of
AAN is owned by ADM, and all of the issued and outstanding capital stock each
other Subsidiary is owned by ADM, free and clear of any liens, and each of such
shares of capital stock has been duly authorized and validly issued, and is
non-assessable.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 11 of 27

      (b) The authorized capital stock of ADM consists of 155,000,000 shares of
capital stock, of which: (i) 150,000,000 are classified as ADM Common Stock, par
value $0.0005 per share, and (ii) 5,000,000 are classified as "blank check"
preferred stock, par value $0.0005 per share. As of the date hereof and as of
each Closing Date, 51,882,037 shares of ADM Common Stock, no shares of preferred
stock and no other shares of capital stock of ADM are or will be issued and
outstanding, and all such shares of capital stock are, as the case may be, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. The authorized capital stock of AAN consists of 10,000,000
shares of AAN Common Stock, no par value per share. As of the date hereof and as
of each Closing Date (except for the issuances contemplated by this Agreement),
2,641,000 shares of AAN Common Stock are or will be issued and outstanding, and
all such shares of common stock are, as the case may be, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. As of the date hereof, 75.7% of the issued and outstanding shares of AAN
Common Stock are owned by ADM.

      (c) This Agreement has been duly authorized, executed and delivered by
each of ADM and AAN and constitutes the legal, valid and binding obligation of
ADM and AAN, enforceable against ADM and AAN in accordance with its terms,
except insofar as enforcement of the indemnification or contribution provisions
hereof may be limited by applicable laws or principles of public policy and
except further as to enforcement, to the availability of equitable remedies and
limitations imposed by bankruptcy, insolvency, reorganization and other similar
laws and related court decisions relating to or affecting creditors' rights
generally.

      (d) Neither the Memoranda, the Registration Statement, the Subscription
Documents nor any of the Company's filings with the SEC (collectively, the
"COMPANY DOCUMENTS") contain or will contain any untrue statement of a material
fact, and the Company Documents will not omit to state any material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading, except that the Company shall have
no liability for any information provided to the Company in writing by, and
relating to, Maxim, for use in and used in the Memoranda. It is understood that
any summary in the Memoranda of a document which appears therein in full (either
as signed or substantially in the form to be signed) does not constitute an
untrue or misleading statement merely because it is a summary; provided,
however, that any such summary may not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading. If, at any time before the Private Placement is completed or
terminated or before all subscriptions are accepted by the Company, there should
be any change which would cause the Company Documents not to comply with this
Section 8(d), the Company will promptly advise Maxim thereof and make any
necessary corrective filings with the SEC and prepare and furnish Maxim with,
for distribution to Investors, after prior review and approval by Maxim and its
counsel (such approval not to be unreasonably withheld), such copies of such
supplements or amendments to the Memoranda and the Subscription Documents as
will cause the Memoranda and the Subscription Documents, as so supplemented or
amended, to comply with this Section 8(d), and will authorize Maxim to make to
Investors, if: (i) deemed necessary by counsel to Maxim and approved by Maxim,
or (ii) if deemed necessary by counsel to the Company, an offer of rescission.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 12 of 27

      (e) The execution, delivery and performance of this Agreement, all Company
Documents and all other documents to be entered into by the Company in
connection with any transaction described in the Memoranda or in connection with
the Private Placement, and the consummation of the transactions contemplated
hereby and thereby, have been or will be prior to such execution, delivery,
performance or consummation, as the case may be, duly and validly authorized by
the Company and do not and will not: (i) constitute, or result in, a breach or
violation of any of the terms, provisions or conditions of the Certificate or
Articles of Incorporation, Bylaws or other governing documents of either ADM,
AAN or any of the Subsidiaries, (ii) constitute, or result in, a material
violation of any applicable statute, law, ordinance or regulation of any state,
territory or other jurisdiction, or (iii) violate, constitute, or result in, a
default under (or an event which with the passing of time or the giving of
notice or both would constitute a default under) or breach of the terms,
provisions or conditions of any material indenture, note, contract, commitment,
instrument or document to which ADM, AAN or any of the Subsidiaries is or will
be a party or by which ADM, AAN, any of the Subsidiaries or any of their
respective properties are bound, or any award, judgment, decree, rule or
regulation of any court or governmental or regulatory agency or body having
jurisdiction over ADM, AAN or any of the Subsidiaries or their respective
activities or properties. No consent, approval, authorization or order of any
court or governmental or regulatory agency or body or any individual or entity
is required on the part of either ADM or AAN for the lawful consummation of the
transactions contemplated hereby and thereby, except for such consents and
approvals with respect to the offer and sale of the Securities in certain
jurisdictions which are identified to Maxim by counsel for the Company.

      (f) Each of ADM, AAN and the Subsidiaries is in compliance with all
applicable laws, rules, regulations, ordinances, directives, judgments, decrees
and orders, foreign and domestic.

      (g) Except as disclosed in the Memoranda or the Registration Statement,
there is no judicial, regulatory, arbitral or other legal or governmental
proceeding or other litigation or arbitration, domestic or foreign, pending to
which ADM, AAN or any Subsidiary is a party or of which any property, operations
or assets of ADM, AAN or any Subsidiary is the subject which, individually or in
the aggregate, if determined adversely to ADM, AAN or any Subsidiary, could
reasonably be expected to have a Material Adverse Effect. To the best of ADM's
knowledge, no such proceeding, litigation or arbitration is threatened or
contemplated, and the defense of all such proceedings, litigation and
arbitration against or involving ADM, AAN or any Subsidiary could not reasonably
be expected to have a Material Adverse Effect.

      (h) The financial statements, including the notes thereto, and the
supporting schedules included or incorporated by reference in the Memoranda
present fairly the financial position as of the dates indicated and the cash
flows and results of operations for the periods specified of ADM and its
consolidated Subsidiaries (including AAN) and the other entities for which
financial statements are included or incorporated by reference in the Memoranda.
Except as otherwise stated in the Memoranda, said financial statements have been
prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis throughout the periods involved. The
supporting schedules included or incorporated by reference in the Memoranda
present fairly the information required to be stated therein.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>
[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 13 of 27

      (i) ADM, AAN and the Subsidiaries maintain a system of internal accounting
and other controls sufficient to provide reasonable assurances 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 United States generally
accepted accounting principles and to maintain accountability for assets, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accounting for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.

      (j) Neither ADM, AAN nor any of their affiliates (within the meaning of
Rule 144 under the Securities Act) (collectively, "AFFILIATES") has, prior to
the date hereof, made any offer or sale of any securities which could be
"integrated" for purposes of the Act with the offer and sale of the Securities
pursuant to the Memoranda or the Registration Statement.

      (k) Except as disclosed in the Memoranda or the Registration Statement, no
holder of any security of ADM, AAN or any Subsidiary has any rights to require
registration of any such security as part or on account of, or otherwise in
connection with, the offer and sale of the Securities contemplated by the
Registration Statement, and any such rights so disclosed have either been fully
complied with by the applicable entity or effectively waived by the holders
thereof, and any such waivers remain in full force and effect.

      (l) Neither the Company nor any of its respective directors, officers,
employees, agents or representatives ("COMPANY REPRESENTATIVES") has taken or
will take any action which has caused or may cause the Private Placement not to
qualify for exemption from the registration requirements of the Act or of United
States federal, state or other securities or other laws. In connection with the
Private Placement, neither the Company nor the Company Representatives shall
offer or cause to be offered the Securities by any form of general solicitation
or general advertising as defined in Rule 502(c) of Regulation D. The Company
and the Company Representatives have not taken and shall not take any action
(except for actions contemplated by the Memorandum) that would cause the Private
Placement to be integrated with other transactions under Rule 502(a) of
Regulation D.

      (m) No relationship, direct or indirect, exists between or among any of
ADM, AAN or any Affiliate of them, on the one hand, and any director, officer,
shareholder, customer or supplier of ADM, AAN or any Affiliate of them, on the
other hand, which is required by the Act or the Exchange Act to be described in
the Memoranda which is not so described and described as required. There are no
outstanding loans, advances (except normal advances for business expenses in the
ordinary course of business) or guarantees of indebtedness by ADM or AAN to or
for the benefit of any of the officers or directors of ADM or AAN or any of
their respective family members, except as disclosed in the Memoranda. Neither
ADM nor AAN has, in violation of the Sarbanes-Oxley Act of 2002 ("SARB-OX"),
directly or indirectly, including through a Subsidiary (other than as permitted
under the Sarb-Ox for depositary institutions), extended or maintained credit,
arranged for the extension of credit, or renewed an extension of credit, in the
form of a personal loan to or for any director or executive officer of ADM or
AAN.

      (n) ADM is in material compliance with the provisions of Sarb-Ox and the
rules and regulations promulgated thereunder and related or similar rules and
regulations promulgated by NASDAQ or any other governmental or self regulatory
entity or agency, except for such violations which, singly or in the aggregate,
would not have a Material Adverse Effect.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>
[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 14 of 27

      (o) ADM, AAN and/or the Subsidiaries maintain insurance in such amounts
and covering such risks as they reasonably consider adequate for the conduct of
their businesses and the value of their properties and as is customary for
companies engaged in similar businesses in similar industries, all of which
insurance is in full force and effect. There are no claims by ADM, AAN or any
Subsidiary under any such policy or instrument as to which any insurance company
is denying liability or defending under a reservation of rights clause. ADM
reasonably believes that it (or AAN or the Subsidiaries, as applicable) will be
able to renew its existing insurance as and when such coverage expires or will
be able to obtain replacement insurance adequate for the conduct of the
businesses.

      (p) ADM, AAN and each Subsidiary owns or leases all such properties as are
necessary to the conduct of their businesses as presently operated and as
proposed to be operated as described in the Memoranda. ADM, AAN and each
Subsidiary have good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by them, in each case
free and clear of all liens and encumbrances, except such as are described in
the Memoranda or such as do not (individually or in the aggregate) materially
affect the business or prospects of ADM, AAN or any of the Subsidiaries. Any
real property and buildings held under lease or sublease by ADM, AAN and the
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material to, and do not interfere with, the use
made and proposed to be made of such property and buildings by ADM, AAN and the
Subsidiaries. Neither ADM, AAN nor any Subsidiary has received any notice of any
claim adverse to its ownership of any real or personal property or of any claim
against the continued possession of any real property, whether owned or held
under lease or sublease by ADM, AAN or any Subsidiary.

      (q) ADM, AAN and each Subsidiary: (i) owns or possesses adequate right to
use all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights, licenses,
formulae, customer lists, and know-how and other intellectual property
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures, "INTELLECTUAL PROPERTY")
necessary for the conduct of their respective businesses as being conducted and
as described in the Memoranda and (ii) does not believe that the conduct of
their respective businesses does or will conflict with, and have not received
any notice of any claim of conflict with, any such right of others. To the best
of the ADM's knowledge, all material technical information developed by and
belonging to ADM, AAN or any Subsidiary which has not been patented has been
kept confidential so as, among other things, all such information may be deemed
proprietary to the applicable entity. Neither ADM, AAN nor any Subsidiary has
granted or assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the current products and services of ADM, AAN or
any Subsidiary or those products and services described in the Memoranda. To the
ADM's knowledge, after due investigation, there is no infringement by third
parties of any such Intellectual Property; there is no pending or, to the ADM's
knowledge, threatened action, suit, proceeding or claim by others challenging
ADM's, AAN's or any Subsidiary's rights in or to any such Intellectual Property,
and ADM is unaware of any facts which would form a reasonable basis for any such
claim. There is no pending or, to the ADM's knowledge, threatened action, suit,
proceeding or claim by others that ADM, AAN or any Subsidiary infringes or
otherwise violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and ADM is unaware of any other fact which would
form a reasonable basis for any such claim.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>
[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 15 of 27

      (r) Except as disclosed in the Company Documents, and except for such
matters that, individually or in the aggregate, would not have a Material
Adverse Effect:

          (i) ADM and each of its Subsidiaries (including AAN) are, and have
been, in compliance with all Environmental Laws (as defined below), and neither
ADM nor any of its Subsidiaries (including AAN)has received any: (A)
communication that alleges that the Company or any such Subsidiary is in
violation of, or has liability under, any Environmental Law, (B) written request
for information pursuant to any Environmental Law, or (C) notice regarding any
requirement that is proposed for adoption or implementation under any
Environmental Law and that would be applicable to the operations of the Company
or any of its Subsidiaries;

          (ii) (A) the Company and each of its Subsidiaries have obtained and
are in compliance with all permits, licenses and governmental authorizations
pursuant to all Environmental Laws (collectively, "ENVIRONMENTAL Permits")
necessary for their operations as currently conducted, (B) all such
Environmental Permits are valid and in good standing, and (C) neither the
Company nor any of its Subsidiaries has been advised by any governmental entity
or authority of any actual or potential change in the status or terms and
conditions of any Environmental Permit;

          (iii) there are no Environmental Claims pending or, to the knowledge
of the Company, threatened, against the Company or any of its Subsidiaries;

          (iv) there have been no Releases of any Hazardous Material that could
reasonably be expected to form the basis of any Environmental Claim against the
Company or any of its Subsidiaries or against any person whose liabilities for
such Environmental Claims the Company or any of its Subsidiaries has, or may
have, retained or assumed, either contractually or by operation of law; and

          (v) (A) neither the Company nor any of its Subsidiaries has retained
or assumed, either contractually or by operation of law, any liabilities or
obligations that could reasonably be expected to form the basis of any
Environmental Claim against the Company or any Subsidiary, and (B) to the
knowledge of the Company, no Environmental Claims are pending against any person
or entity whose liabilities for such Environmental Claims the Company or any
Company Subsidiary has, or may have, retained or assumed, either contractually
or by operation of law.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>
[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 16 of 27

      As used in this Agreement, the terms: (A) "ENVIRONMENTAL CLAIM" means any
and all administrative, regulatory or judicial actions, suits, orders, demands,
directives, claims, investigations, proceedings or notices of violation by or
from any person or entity alleging liability of whatever kind or nature arising
out of, based on or resulting from (y) the presence or release of, or exposure
to, any Hazardous Materials at any location; or (z) the failure to comply with
any Environmental Law; (B) "ENVIRONMENTAL LAWS" means all applicable federal,
state, local and foreign laws, rules, regulations, orders, decrees, judgments,
legally binding agreements or Environmental Permits issued, promulgated or
entered into by or with any governmental entity or authority, relating to
pollution, natural resources or protection of endangered or threatened species,
human health or the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata); (C) "HAZARDOUS MATERIALS" means
(y) any petroleum or petroleum products, radioactive materials or wastes,
asbestos in any form, urea formaldehyde foam insulation and polychlorinated
biphenyls; and (z) any other chemical, material, substance or waste that in
relevant form or concentration is prohibited, limited or regulated under any
Environmental Law; and (D) "RELEASE" means any actual or threatened release,
spill, emission, leaking, dumping, injection, pouring, deposit, disposal,
discharge, dispersal, leaching or migration into or through the environment
(including ambient air, surface water, groundwater, land surface or subsurface
strata) or within any building, structure, facility or fixture.

      (s) Each of ADM, AAN and the Subsidiaries has accurately prepared and
timely filed all federal, state, foreign and other tax returns that are required
to be filed by it and has paid or made provision for the payment of all taxes,
assessments, governmental or other similar charges, including without
limitation, all sales and use taxes and all taxes which ADM, AAN or any
Subsidiary is obligated to withhold from amounts owing to employees, creditors
and third parties, with respect to the periods covered by such tax returns
(whether or not such amounts are shown as due on any tax return). No deficiency
assessment with respect to a proposed adjustment of ADM, AAN any Subsidiary's
federal, state, local or foreign taxes is pending or, to the best of ADM's
knowledge, threatened. The accruals and reserves on the books and records of
ADM, AAN and the Subsidiaries in respect of tax liabilities for any taxable
period not finally determined are adequate to meet any assessments and related
liabilities for any such period and, since the date of the ADM's most recent
audited financial statements, ADM, AAN and the Subsidiaries have not incurred
any liability for taxes other than in the ordinary course of its business. There
is no tax lien, whether imposed by any federal, state, foreign or other taxing
authority, outstanding against the assets, properties or business of ADM, AAN or
any Subsidiary.

      (t) Neither ADM, AAN, any Subsidiary nor, to ADM's knowledge, any of their
respective employees or agents has at any time during the last five (5) years:
(i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
that are not prohibited by the laws of the United States of any jurisdiction
thereof

      (u) No labor disturbance by the employees of ADM, AAN or any Subsidiary
currently exists or, to the best of the ADM's knowledge, is likely to occur.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 17 of 27

      (v) The Company has not offered, or caused Maxim to offer, the Securities
to any person or entity with the intention of unlawfully influencing: (i) a
customer or supplier of the Company or any Subsidiary to alter the customer's or
supplier's level or type of business with the Company or any Subsidiary or (ii)
a journalist or publication to write or publish favorable information about the
Company, any Subsidiary or its products or services.

      (w) The Company will not offer the Securities for sale hereunder on the
basis of any communications or documents relating to Maxim or the Securities
except the Memoranda and the exhibits thereto and documents described or
referred to therein, including the Subscription Documents.

      (x) So long as any of the Securities are "restricted securities" within
the meaning of Rule 144(a)(3) under the Act, the Company, during any period in
which it is not subject to and in compliance with Section 13 or 15(d) of the
Exchange Act, or is not exempt from such reporting requirements pursuant to and
in compliance with Rule 12g3-2b under the Exchange Act, provide to each holder
of Series A Preferred Stock and to each prospective purchaser (as designated by
such holder) of Series A Preferred Stock, upon the request of such holder or
prospective holder, any information required to be provided by Rule 144A(d)(4)
under the Act.

      (y) Neither ADM, AAN nor any Subsidiary is and, at all times up to and
including consummation of the transactions contemplated by this Agreement, and
after giving effect to application of the net proceeds of the Private Placement,
will not be, subject to registration as an "investment company" under the
Investment Company Act of 1940, as amended, and is not and will not be an entity
"controlled" by an "investment company" within the meaning of such act.

      (z) The shares of ADM Common Stock and AAN Common Stock underlying: (i)
the Convertible Notes, (ii) the ADM Warrants, (iii) the AAN Warrants; and (iii)
the Placement Agent Warrants, have been duly reserved, and when issued in
accordance with the terms of the Private Placement, will be validly issued,
fully paid and nonassessable and not subject to preemptive or any other similar
rights and no personal liability will attach to the ownership thereof.

      (aa) In addition to the foregoing, to the extent not set forth herein,
Maxim may rely on the representations and warranties made by the Company in the
Subscription Agreement provided by the Company and used in connection with the
Private Placement.

9.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF MAXIM

      Maxim hereby represents and warrants to, and covenants with, the Company
that:

      (a) This Agreement has been duly authorized, executed and delivered by
Maxim and constitutes the legal, valid and binding obligation of Maxim,
enforceable against it in accordance with its terms, except insofar as
enforcement of the indemnification or contribution provisions hereof may be
limited by applicable laws or principles of public policy and subject, as to
enforcement, to the availability of equitable remedies and limitations imposed
by bankruptcy, insolvency, reorganization and other similar laws and related
court decisions relating to or affecting creditors' rights generally.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>
[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 18 of 27

      (b) Maxim will cooperate with the Company to ensure that the offering and
sale of the Securities will comply with the requirements of the Act, including,
without limitation, the general conditions contained in Regulation D and the
federal securities laws, and will follow the reasonable advice of the Company
with respect to the manner in which to offer and sell the Securities so as to
ensure that the offering and sale thereof will comply with the securities laws
of any jurisdiction in which Securities are offered by Maxim, and Maxim will not
make an offer of Securities in any jurisdiction in which the Company advises it
in writing that such offer would be unlawful for Maxim to offer or sell
securities.

      (c) Maxim is: (i) a registered broker-dealer under the Exchange Act; (ii)
a member in good standing of the NASD; and (iii) registered as a broker-dealer
in each jurisdiction in which it is required to be registered as such in order
to offer and sell the Securities in such jurisdiction.

      (d) Maxim has not and will not make an offer of Securities (or of any
securities, the offering of which may be integrated with the Private Placement)
on the basis of any communications or documents relating to the Company or the
Securities except the Memoranda and the exhibits thereto and documents
described, referred to or incorporated by reference therein (including the
Subscription Documents). Maxim will deliver a copy of the Memorandum to each
prospective Investor solicited by it prior to such offeree's execution of the
Subscription Documents or, in the case of amendments or supplements to the
Memoranda (other than those amendments and supplements approved in writing by
the Company but designated in writing as not subject to this requirement), prior
to such offeree's execution of an acknowledgment of receipt of such amendment or
supplement and reconfirmation of intent to subscribe.

      (e) Maxim will not transmit to the Company any written offer from an
offeree to purchase Securities unless, immediately prior thereto, it reasonably
believes that: (i) the offeree is an Accredited Investor; and (ii) the offeree
meets all other offeree and/or purchaser suitability standards, if any, required
under applicable securities laws and regulations.

      (f) Maxim will periodically notify the Company of the jurisdiction in
which the Securities are being offered by it or will be offered by it pursuant
to this Agreement, and will periodically notify the Company of the status of the
offering conducted pursuant to this Agreement.

10.   COVENANTS

      The Company covenants to Maxim that it shall:

      (a) Notify Maxim as soon as practicable, and confirm such notice promptly
in writing: (i) when any event shall have occurred during the period commencing
on the date hereof and ending on the later of the Closing Date as a result of
which the Memorandum would include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (ii) of the receipt of any
notification with respect to the modification, rescission, withdrawal or
suspension of the qualification or registration of the Securities or of an
exemption from such registration or qualification in any jurisdiction. The
Company will use its reasonable best efforts to prevent the issuance of any such
modification, rescission, withdrawal or suspension and, if any such
modification, rescission, withdrawal or suspension is issued, to obtain the
lifting thereof as promptly as possible.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 19 of 27

      (b) Not supplement or amend the Memoranda unless Maxim and its counsel
shall have approved of such supplement or amendment in writing, such approval
not to be unreasonably withheld, delayed or conditioned. If, at any time during
the period commencing on the date hereof and ending on the Closing Date, any
event shall have occurred as a result of which the Memorandum contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
or if, in the opinion of counsel to the Company or counsel to Maxim, it is
necessary at any time to supplement or amend the Memoranda to comply with the
Act, Regulation D or any applicable securities or "blue sky" laws, the Company
will promptly prepare an appropriate supplement or amendment (in form and
substance reasonably satisfactory to Maxim and its counsel) which will correct
such statement or omission or which will effect such compliance.

      (c) Use its best good faith efforts to, within sixty (60) says of the
Closing, obtain a "key man" life insurance policy with a nationally recognized
carrier and with the Company as the beneficiary on the life of Andre' Di Mino in
an amount no less than $2,000,000 worth of coverage.

      (d) Deliver without charge to Maxim such number of copies of the Memoranda
and any supplement or amendment thereto as may reasonably be requested by Maxim.

      (e) Not, directly or indirectly, in connection with the Private Placement
or as otherwise agreed to in this Agreement, solicit any offer to buy from, or
offer to sell to, any person or entity any Securities or other securities of the
Company except through Maxim.

      (f) Not solicit any offer to buy or offer to sell Securities by any form
of general solicitation or advertising, including, without limitation, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over the Internet, television
or radio or at any seminar or meeting whose attendees have been invited by any
general solicitation or advertising.

      (g) At all times during the period commencing on the date hereof and
ending on the date of the final Closing, provide to each prospective Investor or
his purchaser representative, if any, on reasonable request, such information
(in addition to that contained in the Memorandum) concerning the Private
Placement, the Company, the Securities and any other relevant matters as it
possesses or can acquire without unreasonable effort or expense and extend to
each prospective investor or his purchaser representative, if any, the
opportunity to ask questions of, and receive answers from the Company concerning
the terms and conditions of the Private Placement and the business of the
Company and to obtain any other additional information, to the extent it
possesses the same or can acquire it without unreasonable effort or expense, as
such prospective Investor or purchaser representative may consider necessary in
making an informed investment decision or in order to verify the accuracy of the
information furnished to such prospective Investor or purchaser representative,
as the case may be.

      (h) Notify Maxim promptly of the acceptance or rejection of any
subscription.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>
[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 20 of 27

      (i) File five (5) copies of a Notice of Sales of Securities on Form D with
the SEC no later than 15 days after the first sale of the Securities, if
required by law. The Company shall file promptly such amendments to such Notices
on Form D as shall become necessary and shall also comply with any filing
requirement imposed by the laws of any province or jurisdiction in which offers
and sales are made. The Company shall furnish Maxim with copies of all such
filings.

      (j) Place the following legend on all certificates representing the
Securities:

          "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND
          NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
          TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
          EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN
          EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE
          OPINION OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE."

      (k) Not, directly or indirectly, engage in any act or activity which may
jeopardize the status of the offering and sale of the Securities as exempt
transactions under the Act or under the securities or "blue sky" laws of any
jurisdiction in which the Private Placement may be made.

      (l) Apply the net proceeds from the sale of the Securities for the
purposes set forth under the caption "Use of Proceeds" in the Memoranda in the
manner indicated thereunder.

      (m) Not, during the period commencing on the date hereof and ending on the
Closing Date, issue any press release or other communication or hold any press
conference with respect to the Company, its financial condition, results of
operations, business properties, assets, liabilities or future prospects of the
Private Placement, without the prior written consent of Maxim, which consent
will not be unreasonably withheld.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 21 of 27

      (n) Not, prior to the completion of the Private Placement, bid for,
purchase, attempt to induce others to purchase, or sell, directly or indirectly,
any shares of ADM Common Stock or any other securities in violation of the
provisions of Regulation M under the Exchange Act.

      (o) In addition to the foregoing, to the extent not set forth herein,
Maxim may rely on the covenants made by the Company in the Subscription
Documents used in connection with the Private Placement.

11.   CONDITIONS OF MAXIM'S OBLIGATIONS

      The obligations of Maxim pursuant to this Agreement shall be subject, in
its discretion, to the continuing accuracy of the representations and warranties
of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to Maxim or otherwise at any
Closing (including, without limitation, all Subscription Documents), as of the
date hereof and as of the Closing Date or the date of any Closing subsequent to
the Closing Date, to the performance by the Company of its obligations
hereunder, and to the following conditions:

      (a) At each Closing, Maxim shall have received the favorable legal opinion
of Frank J. Hariton, Esq., outside legal counsel to the Company, in the form and
substance reasonably satisfactory to Maxim and substantially to the effect that:

          (i) ADM and AAN have been duly organized and are validly existing and
in good standing under the laws of their respective states of incorporation,
have all requisite power and authority necessary to own or hold their respective
properties and conduct their respective businesses, and are duly qualified or
licensed to do business as a foreign corporation in each other jurisdiction in
which the ownership or leasing of their properties or the conduct of their
businesses requires such qualification, except where the failure to so qualify
or be licensed would not have a Material Adverse Effect;

          (ii) Each Subsidiary has been duly organized, is validly existing and
in good standing under the laws of the jurisdiction of its organization, has the
power and authority to own its properties and to conduct its business and is
duly qualified and authorized to transact business and is in good standing in
each jurisdiction in which the conduct of its business or the nature of its
properties requires such qualification or authorization, except where the
failure to be so qualified or authorized and in good standing could not
reasonably be expected to have a Material Adverse Effect. All of the issued and
outstanding capital stock of each Subsidiary is owned by ADM, free and clear of
any liens, and has been duly authorized and validly issued, and is
non-assessable.

          (iii) each of this Agreement, the Escrow Agreement by and among Maxim,
the Company and the Escrow Agent, the Securities, the Placement Agent Warrant
and the Subscription Documents has been duly and validly authorized, executed
and delivered by ADM and AAN, as the case may be, and is the valid and binding
obligation of the ADM and AAN, as the case may be,, enforceable against them in
accordance with its terms, subject to any applicable bankruptcy, insolvency or
other laws affecting the rights of creditors generally and to general equitable
principles;

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 22 of 27

          (iv) the authorized capital stock of AAN and ADM as of the date hereof
(before giving effect to the transactions contemplated by this Agreement) is as
set forth in the Memoranda. Except for the Securities to be issued as
contemplated by this Agreement, there are no outstanding warrants, options,
agreements, convertible securities, preemptive rights or other commitments
pursuant to which the Company is, or may become, obligated to issue any shares
of its capital stock or other securities of the Company other than as set forth
in the Memoranda. All of the shares of capital stock of the Company have been
duly and validly authorized and issued, are fully paid and nonassessable and
have not been issued in violation of the preemptive rights of any security
holder of the Company. The offers and sales of such outstanding securities were
either registered under the Act and applicable state securities laws or exempt
from such registration requirements. Such shares have been duly authorized,
validly issued, fully paid and nonassessable and no personal liability will
attach to the ownership thereof. The AAN Common Stock underlying each of the
Convertible Notes, AAN Warrants and the Placement Agent Warrant, have been duly
reserved, and when issued in accordance with the terms of the Private Placement,
will be validly issued, fully paid and nonassessable and not subject to
preemptive or any other similar rights and no personal liability will attach to
the ownership thereof;

          (v) assuming: (i) the accuracy of the information provided by the
Investors in the Subscription Documents, and (ii) that Maxim has complied in all
material respects with the requirements of Section 4(2) of the Act (and the
provisions of Regulation D promulgated thereunder), the issuance and sale of the
Units, and the securities included therein, is exempt from registration under
the Act and Regulation D promulgated thereunder;

          (vi) To the best knowledge of such counsel, after due investigation,
neither the execution and delivery of this Agreement, nor compliance with the
terms hereof, nor the consummation of the transactions herein contemplated, has,
nor will, conflict with, result in a breach of, or constitute a default under
the Articles of Incorporation or Bylaws of the Company, or any material
contract, instrument or document to which the Company is a party, or by which it
or any of its properties is bound or violate any applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court having
jurisdiction over the Company or any of its properties or business;

          (vii) to the best knowledge of such counsel, there are no claims,
actions, suits, investigations or proceedings before or by any arbitrator,
court, governmental authority or instrumentality pending or threatened against
or affecting the Company or involving the properties of the Company which might
materially and adversely affect the business, properties or financial condition
of the Company or which might materially adversely affect the transactions or
other acts contemplated by this Agreement or the validity or enforceability of
this Agreement, except as set forth in or contemplated by the Memoranda or
Subscription Documents; and

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 23 of 27

          (viii) such counsel has participated in the preparation of the
Memoranda and the Company Documents and nothing has come to the attention of
such counsel to cause them to have reason to believe that the Memoranda or
Company Documents contained any untrue statement of a material fact required to
be stated therein or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.

      (b) To use its best good faith efforts to, within sixty (60) says of the
Closing, obtain a "key man" life insurance policy with a nationally recognized
carrier and with the Company as the beneficiary on the life of Andre' Di Mino in
an amount no less than $2,000,000 worth of coverage

      (c) At the initial Closing, Maxim shall have received "lock-up"
agreements, in the form to be agreed upon by the Company and Maxim, duly
executed by each director, officer and holder of ten percent (10%) or more of
AAN Common Stock, which" agreement shall provide that such persons shall not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any securities of the Company (or instruments exercisable into
securities of the Company) for a period of twelve (12) months from the date that
the Registration Statement is declared effective by the SEC.

      (d) At each Closing, Maxim shall have received a certificate of the chief
executive officer of both ADM and AAN, dated, as applicable, as of the Closing
Date or the date of such Closing, to the effect that, as of the date of this
Agreement and as of the applicable date, the representations and warranties of
ADM and AAN contained herein were and are accurate, and that, as of the
applicable date, the obligations to be performed by ADM and AAN hereunder on or
prior thereto have been fully performed.

      (e) All proceedings taken in connection with the issuance, sale and
delivery of the Securities and the Placement Agent Warrant shall be reasonably
satisfactory in form and substance to Maxim and its counsel, and Maxim shall
have received certified resolutions or minutes of the Board of Directors of ADM
and AAN authorizing each of the transactions contemplated by this Agreement.

      (f) Any certificate or other document signed by any officer of the Company
and delivered to Maxim and its counsel as required hereunder shall be deemed a
representation and warranty by the Company hereunder as to the statements made
therein. If any condition to Maxim's obligations hereunder have not been
fulfilled as and when required to be so fulfilled, Maxim may terminate this
Agreement or, if Maxim so elects, in writing waive any such conditions which
have not been fulfilled or extended the time for their fulfillment. In the event
that Maxim elects to terminate this Agreement, Maxim shall notify the Company of
such election in writing. Upon such termination, neither party shall have any
further liability nor obligation to the other except as provided in Section 12
hereof.

      (g) On or prior to or following the Closing Date, as the case may be,
Maxim shall have been furnished such information, documents and certificates as
it may reasonably require for the purpose of enabling it to review the matters
referred to in this Section 11 and in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties,
covenants, agreements or conditions herein contained, or as it may otherwise
reasonably request.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 24 of 27

      (h) If there is more than one Closing, then at each such Closing there
shall be delivered to Maxim updated opinions, certificates or other information
described in this Section 11.

12.   INDEMNIFICATION

      (a) Each of ADM and AAN, jointly and severally, agrees to indemnify and
hold harmless Maxim, any person who controls Maxim within the meaning of the
Act, Section 20(a) of the Exchange Act or any applicable statute, and each
partner, director, officer, employee, agent and representative of Maxim and its
representatives from and against any loss, damage, expense, liability or claim,
or actions or proceedings in respect thereof (including, without limitation,
reasonable attorneys' fees and expenses incurred in investigating, preparing or
defending against any litigation commenced) which any such person may incur or
which may be made or brought against any such person arising out of or based
upon: (i) any breach of any of the agreements, representations or warranties of
the Company contained in or contemplated by this Agreement or the Subscription
Documents, including, without limitation, those arising out of or based on any
alleged untrue statement of a material fact or omission to state a material fact
required to be stated in either Memoranda or the Subscription Documents or
necessary in order to make the statements appearing therein not misleading in
the light of the circumstances in which they were made, (ii) any violation of
any federal or state securities laws attributable to the Private Placement, or
(iii) any violation of law by ADM or AAN or any Affiliate thereof, or any
director, officer, employee, agent or representative of any of them, related to
or arising out of the Private Placement. This indemnity agreement by, and the
agreements, warranties and representations of, the Company shall survive the
offer, sale and delivery of the Securities and the termination of this Agreement
and shall remain in full force and effect regardless of any investigation made
by or on behalf of any person indemnified hereunder, and termination of this
Agreement and acceptance of any payment for the Securities hereunder.

      (b) Maxim agrees to indemnify and hold harmless the Company and its
affiliates, any person who controls any of them within the meaning of the Act,
Section 20(a) of the Exchange Act or any applicable statute, and each officer,
director, employee, agent and representative of the Company or any of its
affiliates from and against any loss, damage, expense, liability or claim or
actions or proceedings in respect thereof (including, without limitation,
reasonable attorneys' fees and expenses incurred in investigating, preparing or
defending against any litigation commenced) which any such person may incur or
which may be made or brought against any such person, but only to the extent the
same arises out of or is based upon: (i) any breach of any of the agreements,
representations or warranties of Maxim contained in this Agreement, or (ii) any
untrue statement of a material fact in any information provided to the Company
in writing by Maxim, expressly for use in and used in the Memorandum. This
indemnity agreement by, and the agreements, warranties and representations of,
Maxim shall survive the offer, sale and delivery of the Securities and shall
remain in full force and effect regardless of any investigation made by or on
behalf of any person indemnified hereunder, and termination of this Agreement
and acceptance of any payment for the Securities hereunder.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 25 of 27

      (c) If any action is brought against a party (the "INDEMNIFIED PARTY") in
respect of which indemnity may be sought against one or more other parties (the
"INDEMNIFYING PARTY" or "INDEMNIFYING PARTIES"), the Indemnified Party shall
promptly notify the Indemnifying Party or Parties in writing of the institution
of such action; provided, however, the failure to give such notice shall not
release the Indemnifying Party or Parties from its or their obligation to
indemnify the Indemnified Party hereunder except to the extent the Indemnifying
Party actually incurs damage by reason of such failure and shall not release the
Indemnifying Party or Parties from any other obligations or liabilities to the
Indemnified Party in any event. The Indemnifying Party or Parties may at its or
their own expense elect to assume the defense of such action, including the
employment of counsel reasonably acceptable to the Indemnified Party; provided,
however, that no Indemnifying or Indemnified Party shall consent to the entry of
any judgment or enter into any settlement by which the other party is to be
bound without the prior written consent of such other party, which consent shall
not be unreasonably withheld. In the event the Indemnifying Party or Parties
assume a defense hereunder, the Indemnified Party shall be entitled to retain
its own counsel in connection therewith and, except as provided below, shall
bear the fees and expenses of any such counsel, and counsel to the Indemnified
Party or Parties shall cooperate with such counsel to the Indemnifying Party in
connection with such proceeding. If an Indemnified Party reasonably determines
that there are or may be differing or additional defenses available to the
Indemnified Party which are not available to the Indemnifying Party, or that
there is or may be a conflict between the respective positions of the
Indemnifying Party and of the Indemnified Party in conducting the defense of any
action, then the Indemnifying Party shall bear the reasonable fees and expenses
of any counsel retained by the Indemnified Party in connection with such
proceeding. All references to the Indemnified Party contained in this Section
12(c) include, and extend to and protect with equal effect, any persons who may
control the Indemnified Party within the meaning of the Act, Section 20(a) of
the Exchange Act or any applicable statute, any successor to the Indemnified
Party and each of its partners, officers, directors, employees, agents and
representatives. The indemnity agreements set forth in this Section 11 shall be
in addition to any other obligations or liabilities of the Indemnifying Party or
Parties hereunder or at common law or otherwise. Notwithstanding anything herein
to the contrary, in no event shall Maxim be obligated to indemnify any person or
entity in an amount in excess of the gross consideration received by Maxim for
services rendered hereunder.

      (d) If recovery is not available under the foregoing indemnification
provisions of this Section 12, for any reason other than as specified therein,
the party entitled to indemnification by the terms thereof shall be entitled to
contribution to losses, damages, liabilities and expenses of the nature
contemplated by such indemnification provisions. In determining the amount of
such contribution, there shall be considered the relative benefits received by
the Company on the one hand, and Maxim on the other hand from the Private
Placement (which shall be deemed to be the portion of the proceeds of the
Private Placement realized by each party), the parties' relative knowledge and
access to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission, the
relative culpability of the parties, the relative benefits received by the
parties and any other equitable considerations appropriate under the
circumstances. No party shall be liable for contribution with respect to any
action or claim settled without its consent. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 11, notify such
party or parties from whom contribution may be sought, but the omission to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 12 or otherwise. For purposes of this Section 12, each person, if any,
who controls a party to this Agreement within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as that party to this Placement Agreement.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 26 of 27

      (e) In any claim for indemnification for United States Federal or state
securities law violations, the party seeking indemnification shall place before
the court the position of: (i) the SEC and (ii) if applicable, any state
securities commissioner or agency having jurisdiction with respect to the issue
of indemnification for securities law violations.

13.   MISCELLANEOUS

      (a) The agreements set forth in this Agreement have been made and are made
solely for the benefit of the Company, Maxim, and the respective Affiliates,
heirs, personal representatives and permitted successors and assigns thereof,
and except as expressly provided herein nothing expressed or mentioned herein is
intended or shall be construed to give any other person, firm or corporation any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any representation, warranty or agreement herein contained. The term
"successors and assigns" as used herein shall not include any purchaser of any
Securities merely because of such purchase.

      (b) Neither party will be liable to the other by reason of any failure in
performances of this Agreement if the failure arises out of the unavailability
of third party communication facilities or energy sources or acts of God, acts
of governmental authority, acts of terrorism, fires, strikes, delays in
transportation, riots or war, or any cause beyond the reasonable control of such
party.

      (c) Any notice or other communication required or appropriate under the
provisions of this Agreement shall be given in writing addressed (or sent by
facsimile transmission, with confirmation of receipt) as follows: (i) if to the
Company, at the address set forth above, Attention: President, Fax No.: (201)
784-6040; and (ii) if to Maxim, Maxim Group LLC, 405 Lexington Avenue, New York,
NY 10174, Attention: Mr. Anthony Sarkis, Fax No.: (212) 895-3783; with a copy to
Ellenoff Grossman & Schole LLP, 370 Lexington Avenue, New York, New York 10017,
Attention: Barry I. Grossman, Esq., Fax No.: (212) 370-7889, or at such other
address as any party may designate to the others in accordance with this Section
13(c).

      (d) This Agreement shall be governed and construed in accordance with the
laws of the State of New York, without giving effect to conflicts of law
provisions thereof.

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, IL
<PAGE>

[MAXIM GROUP LOGO]                                   ADM Tronics Unlimited, Inc.
                                                                    May 20, 2004
                                                                   Page 27 of 27

      (e) This Agreement constitutes the entire agreement between the parties
hereto with respect to the Private Placement and supercedes any and all prior
agreements, and may be amended or modified only by a duly authorized writing
signed by such parties. This Agreement may be executed in any number of
counterparts and by facsimile, each of which shall be deemed an original and all
of which shall constitute a single instrument.

      This Placement Agency Agreement is executed and shall be effective as of
May 20, 2004.

                                        Very truly yours,

                                        MAXIM GROUP LLC

                                        By: /s/ Authorized Person's Signature
                                            ----------------------------------
                                            Name:
                                            Title:

ACCEPTED AND AGREED TO:

ADM TRONICS UNLIMITED, INC.

By: /s/ Authorized Person's Signature
    ---------------------------------
    Name:
    Title:

AA NORTHVALE MEDICAL ASSOCIATES, INC.

By: /s/ Authorized Person's Signature
    ---------------------------------
    Name:
    Title:

--------------------------------------------------------------------------------
                               Members NASD & SIPC
                    405 Lexington Ave. * New York, NY 10174
          * tel (212) 895-3500 * (800) 724-0761 * fax (212) 895-3783 *
                                www.maximgrp.com
                  New York, NY * Long Island, NY * Chicago, ILEXHIBIT 10.1

                      STANDBY EQUITY DISTRIBUTION AGREEMENT

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

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

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

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

      NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I.
                               CERTAIN DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       2
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

                                       3
<PAGE>

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

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

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

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

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

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

                                   ARTICLE II.
                                    ADVANCES

      Section 2.1. Investments.

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

      Section 2.2. Mechanics.

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

                                       4
<PAGE>

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

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

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

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

                                       5
<PAGE>

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

      Section 2.5. Agreement to Advance Funds.

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

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

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

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

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

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

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

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

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

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

                                       6
<PAGE>

      Section 2.6. Lock Up Period.

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

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

                                  ARTICLE III.
                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

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

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

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

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

                                       7
<PAGE>

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

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

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

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

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

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

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

                                       8
<PAGE>

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

                                   ARTICLE IV.
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

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

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

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

                                       9
<PAGE>

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

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

                                       10
<PAGE>

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

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

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

                                       11
<PAGE>

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

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

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

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

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

                                       12
<PAGE>

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

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

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

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

                                       13
<PAGE>

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

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

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

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

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

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

                                       14
<PAGE>

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

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

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

                                   ARTICLE V.
                                 INDEMNIFICATION

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

      Section 5.1. Indemnification.

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

                                       15
<PAGE>

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

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

                                   ARTICLE VI.
                            COVENANTS OF THE COMPANY

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

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

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

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

                                       16
<PAGE>

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

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

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

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

                                       17
<PAGE>

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

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

                                  ARTICLE VII.
                CONDITIONS FOR ADVANCE AND CONDITIONS TO CLOSING

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

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

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

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

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

                                       18
<PAGE>

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

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

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

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

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

            (g) Maximum  Advance Amount.  The amount of an Advance  requested by
the Company  shall not exceed the Maximum  Advance  Amount.  In addition,  in no
event shall the number of shares issuable to the Investor pursuant to an Advance
cause the Investor to own in excess of nine and 9/10 percent  (9.9%) of the then
outstanding  Common Stock of the Company.  (h) No Knowledge.  The Company has no
knowledge of any event which would be more likely than not to have the effect of
causing such Registration Statement to be suspended or otherwise ineffective.

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

                                       19
<PAGE>

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

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

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

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

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

                                       20
<PAGE>

                                   ARTICLE IX.
                           CHOICE OF LAW/JURISDICTION

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

                                   ARTICLE X.
                             ASSIGNMENT; TERMINATION

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

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

                                   ARTICLE XI.
                                     NOTICES

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

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

                                       21
<PAGE>

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

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

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

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

                                  ARTICLE XII.
                                  MISCELLANEOUS

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

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

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

                                       22
<PAGE>

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

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

            (b) Commitment Fees.

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

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

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

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

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

                                       23
<PAGE>

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       24
<PAGE>

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

                                   COMPANY:
                                   CEC INDUSTRIES CORP.

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

                                   INVESTOR:
                                   CORNELL CAPITAL PARTNERS, LP

                                   BY:    YORKVILLE ADVISORS, LLC
                                   ITS:   GENERAL PARTNER

                                   By:______________________________
                                   Name:  Mark Angelo
                                   Title: Portfolio Manager

                                       25
<PAGE>

                                    EXHIBIT A

                      ADVANCE NOTICE/COMPLIANCE CERTIFICATE

                              CEC INDUSTRIES CORP.

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

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

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

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

      4. The Advance requested is _____________________.

      The   undersigned  has  executed  this   Certificate   this  ____  day  of
_________________.

                                             CEC INDUSTRIES CORP.

                                             By:_________________________
                                             Name:
                                             Title:
<PAGE>

                                  SCHEDULE 2.6

                              CEC INDUSTRIES CORP.

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

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

Dated: _______________, 2004

                                            Signature

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

                                            ____________________________________
                                            Print Social Security Number
                                            or Taxpayer I.D. Number

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