Document:

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                                                                    EXHIBIT 10.3

                          PLACEMENT AGENCY AGREEMENT

     THIS AGREEMENT ("Agreement"), made as of the 30th day of December 1999, by
and between Saf T Lok Incorporated, a Florida corporation ("Company"), and J.P.
Carey Securities, Inc., a Georgia corporation (the "Agent").

                                  WITNESSETH:

     WHEREAS, the Company proposes to issue and sell 6% Subordinated Convertible
Debentures (the "Securities") resulting in gross proceeds to the Company of a
maximum of $1,500,000 in an offering (the "Offering") not involving a public
offering without registration under the Securities Act of 1933, as amended (the
"Act"), pursuant to exemptions from the registration requirements of the Act
under Regulation D promulgated under the Act ("Regulation D") and or Rule 4(2)
under the Act as described below; and

     WHEREAS, the Agent has offered to assist the Company in placing the
Securities on a "best efforts" basis with respect to the sale of Debentures and
the Company desires to secure the services of the Agent on the terms and
conditions hereinafter set forth;

                                   AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the mutual
promises, conditions and covenants herein contained, the parties hereto do
hereby agree as follows:

     1.   Engagement of Agent. The Company hereby appoints the Agent as its non-
          -------------------
exclusive placement agent for the Offering, to sell on a "best efforts" basis up
to a maximum of $1,500,000 of Securities (the "Maximum Securities") in one or
more tranches. The parties hereto acknowledge that the Maximum Securities
includes any shares to be sold through the efforts of Alexander, Wescott & Co.,
Inc., which the Company has separately engaged and will compensate in connection
with the Offering. The Agent, on the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set forth,
accepts such appointment and agrees to use its best efforts to find purchasers
for the Securities. This appointment shall be irrevocable for the period
commencing on December 30, 1999, and ending thirty (30) days, which period maybe
extended by the consent of the Company and the Agent (the "Offering Period").

     2.   Representations and Warranties of the Company. In order to induce the
          ---------------------------------------------
Agent to enter into this Agreement, the Company hereby represents and warrants
to and agrees with the Agent as follows:

     2.1  Offering Documents.  The Company and the Placement Agent have
          ------------------
prepared a Securities Purchase Agreement, certain exhibits thereto, Registration
Rights Agreement, and the Debentures regarding the Securities, which documents
have been or will be sent to proposed investors.  Since January 1, 1997, the
documents which have been filed by the Company with the U.S. Securities and
Exchange Commission have been prepared in conformity with the requirements (to
the extent applicable) of the Securities and Exchange Act of 1934, as amended,
and the rules and regulations ("Rules and Regulations") of the Commission
promulgated thereunder.  As used in this Agreement, the term "Offering
Documents" refers to and means the SEC Documents, the Subscription Agreement and
all amendments,
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exhibits and supplements thereto, together with any other documents which are
approved for Agent's use by the Company for the purpose of this Offering.

     2.2  Provision of Offering Documents.  The Company shall deliver to
          -------------------------------
the Agent, without charge, as many copies of the Offering Documents as the Agent
may reasonably require for the purposes contemplated by this Agreement.  The
Company authorizes the Agent, in connection with the Offering of the Securities,
to use the Offering Documents as from time to time amended or supplemented in
connection with the offering and sale of the Securities and in accordance with
the applicable provisions of the Act and Regulation D. The Company consents to
the Agent's distribution of the Offering Documents to prospective subscribers as
a disclosure document about the Company, its business, prospects, financial
condition and other matters and is legally permitted to do so.

     2.3  Accuracy of Offering Documents.  Taken together, the Offering
          ------------------------------
Documents, at the time of delivery to subscribers for the Securities, conformed
in all material respects with the requirements, to the extent applicable, of the
Act and the applicable Rules and Regulations and did not 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, in light of the
circumstances under which they were made, not misleading.  On the Closing Date
(as hereinafter defined), the Offering Documents, taken together, will contain
all material statements which are required to be stated therein in accordance
with the Act and the Rules and Regulations for the purposes of the proposed
Offering, and all statements of material fact contained in the Offering
Documents will be true and correct, and the Offering Documents will not 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, in
light of the circumstances under which they were made, not misleading; provided,
                                                                       --------
however, that the Company does not make any representations or warranties as to
the information contained in or omitted from the Offering Documents in reliance
upon written information furnished on behalf of the Agent specifically for use
therein.

     2.4  Duty to Amend.  If during such period of time, as in the opinion of
          -------------
the Agent or its counsel, any Offering Documents relating to this Offering are
required to be delivered under the Act, any event occurs, or any event known to
the Company relating to or affecting the Company shall occur as a result of
which the Offering Documents as then amended or supplemented would include an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary at any time after
the date hereof to amend or supplement the Offering Documents to comply with the
Act or the applicable Rules and Regulations, the Company shall forthwith notify
the Agent thereof and shall prepare such further amendment or supplement to the
Offering Documents as may be required and shall furnish and deliver to the Agent
and to others, whose names and addresses are designated by the Agent, all at the
cost of the Company, a reasonable number of copies of the amendment or
supplement or of the amended or supplemented Offering Documents which, as so
amended or supplemented, will not contain an untrue statement of a material fact
or omit to state any material fact necessary in order to make the Offering
Documents not misleading in the light of the circumstances when it is delivered
to a purchaser or prospective purchaser, and which will comply in all respects
with the requirements (to the extent applicable) of the Act and the applicable
Rules and Regulations.

     2.5  Corporation Condition.  The Company's condition is as described
          ---------------------
in its Offering Documents, except for changes in the ordinary course of business
and normal year-end adjustments that are not in the aggregate materially adverse
to the Company.  The Offering Documents, taken as a whole, present fairly the
business and financial position of the Company as of the Closing Date.

     2.6  No Material Adverse Change. [LEFT INTENTIONALLY BLANK]
          --------------------------

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     2.7  No Defaults.  The execution and delivery of this Agreement, and
          -----------
the consummation of the transactions herein contemplated, and compliance with
the terms of this Agreement will not conflict with or result in a breach of any
of the terms, conditions or provisions of, or constitute a default under, the
Articles of Incorporation or By-Laws of the Company (in any respect that is
material to the Company), any material note, indenture, mortgage, deed of trust,
or other material agreement or instrument to which the Company is a party or by
which the Company or any property of the Company is bound, or to the Company's
knowledge, any existing law, order, rule, regulation, writ, injunction or decree
of any government, governmental instrumentality, agency or body, arbitration
tribunal or court, domestic or foreign, having jurisdiction over the Company or
any property of the Company.  The consent, approval, authorization or order of
any court or governmental instrumentality, agency or body is not required for
the consummation of the transactions herein contemplated except such as may be
required under the Act or under the Blue Sky or securities laws of any state or
jurisdiction.

     2.8  Incorporation and Standing.  The Company is, and at the Closing
          --------------------------
Date will be, duly formed and validly existing in good standing as a corporation
under the laws of the State of Florida with full power and authority (corporate
and other) to own its properties and conduct its business, present and proposed,
as described in the Offering Documents; the Company, has full power and
authority to enter into this Agreement; and the Company is duly qualified and in
good standing as a foreign entity in each jurisdiction in which the failure to
so qualify would have a material adverse effect on the Company or its
properties.

     2.9  Legality of Outstanding Securities.  Prior to the Closing Date,
          ----------------------------------
the outstanding securities of the Company have been duly and validly authorized
and issued, fully paid and nonassessable and conform in all material respects to
the statements with regard thereto contained in the Offering Documents.

     2.10 Legality of Securities. The Securities, when sold and delivered, will
          ----------------------
constitute legal, valid and binding obligations of the Company, enforceable in
accordance with the terms thereof, and shall be duly and validly issued and
outstanding, fully paid and nonassessable. The Common Stock into which the
Securities are convertible, upon conversion in accordance with the Company's
Debentures shall be duly and validly issued and outstanding, fully paid and non-
assessable.

     2.11 Litigation. Except as set forth in the Offering Documents, there is
          ----------
now, and at the Closing Date there will be, no action, suit or proceeding before
any court or governmental agency, authority or body pending or, to the knowledge
of the Company, threatened, which might result in judgements against the Company
not adequately covered by insurance or which collectively might result in any
material adverse change in the condition (financial or otherwise) or business of
the Company or which would materially adversely affect the properties or assets
of the Company.

     2.12 Finders.  The Company does not know of any outstanding claims
          -------
for services in the nature of a finder's fee or origination fees with respect to
the sale of the Securities hereunder for which the Agent may be responsible.

     2.13 Tax Returns.  The Company has filed all federal and state tax
          -----------
returns which are required to be filed, and has paid all taxes shown on such
returns and on all assessments received by it to the extent such taxes have
become due.  All taxes with respect to which the Company is obligated have been
paid or adequate accruals have been set up to cover any such unpaid taxes.

     2.14 Authority.  The execution and delivery by the Company of this
          ---------
Agreement have been duly authorized by all necessary action, and this Agreement
is the valid, binding and legally enforceable obligation of the Company subject
to standard qualifications as to the availability of equitable remedies,

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the effect of bankruptcy and other laws relating to the protection of debtors
and public policy opinions promulgated by the Commission with respect to
indemnification against liabilities under the Act.

     2.15 Actions by the Company.  Except as contemplated hereby, the
          ----------------------
Company will not take any action which will impair the effectiveness of the
transactions contemplated by this Agreement.

     3.   Issue, Sale and Delivery of the Securities.
          ------------------------------------------

     3.1  Deliveries of Securities.  Certificates in such form that, subject
          ------------------------
to applicable transfer restrictions imposed by applicable law, and as described
in the Subscription Agreement, they can be negotiated by the purchasers thereof
(issued in such denominations and in such names as the Agent may direct the
Company to issue) for the Securities, and shares of Common Stock representing
the Agent's compensation described in Section 3.4 below (the "Agent Shares"),
shall be delivered by the Company to the Escrow Agent, with copies made
available to the Agent for checking at least one (1) full business day prior to
the Closing Date, it being understood that the directions from the Agent to the
Company shall be given at least two (2) full business days prior to the Closing
Date. The certificates for the Securities and the Warrants shall be delivered at
the Closing and at each Subsequent Closing (as defined hereinafter).

     3.2  Escrow of Funds.  Pursuant to the Escrow Agreement, a copy of
          ---------------
which is attached hereto as Exhibit "A" (the "Escrow Agreement"), executed by
the Company, the Agent and the escrow agent (the "Escrow Agent"), the
subscribers shall place all funds for purchase of Securities for each Closing in
an escrow account.  The Company shall have the right to approve or reject the
subscriptions of each subscriber, as described in the Subscription Agreement
prior to each closing.  At such time as subscribers subscribing for at least
$200,000 of Securities (but not more than the Maximum Securities, unless
otherwise agreed by the Company and Agent) have delivered to the Agent their
signed subscription documents, those subscribers have been approved by the
Company and all other Closing conditions have been met, Escrow Agent shall
release the subscription funds to the Company and the Agent shall release the
certificates representing the Securities to the subscribers (the "Initial
Closing").  In the event that the Initial Closing shall be for an amount of
Securities less than the Maximum Amount, the Offering may be continued, and
additional Closings may be held ("each a "Subsequent Closing") throughout the
Offering Period.  In addition, the Agent shall have the right to act as agent
for the sale of additional Debentures or Securities as set forth in Section 5
herein.

     3.3  Closing Date.  The Initial Closing and any Subsequent Closing
          ------------
shall take place at the offices of Sims Moss Kline & Davis LLP, 400 Northpark
Town Center, Suite 310, 1000 Abernathy Road, NE, Atlanta, Georgia 30328 at such
time and date ("Closing Date") as will be fixed either orally or in writing by
notice to be given by the Agent to the Company after consultation with the
Company, such Closing Date to be not less than one (1) full business day after
the date on which such notice shall have been given and not less than one (1)
and not more than three (3) full business days after the date on which the
Escrow Agent shall have given written notice to the Company and the Agent that
funds deposited with the Escrow Agent total at least the Minimum Proceeds.  The
Closing Date may be changed by mutual agreement of the Agent and the Company.

     3.4  Agent's Compensation.  The Company shall pay the Agent:
          --------------------

          (a)  A commission of six percent (6.0%) of the gross subscription
     proceeds of the Initial Offering and any subsequent Offerings; and

          (b)  In addition to the fees and reimbursement of costs set forth in
     Section 3.5 of this Agreement, the Company shall issue to the Agent six
     shares of the Company's Common Stock for each $100.00 of gross subscription
     proceeds raised by the Agent in the Offering (the "Agent

                                       4
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     Shares"). The Agent shares shall have piggy-back registration rights. The
     Agent Shares shall be delivered by the Company to the Agent simultaneous
     with each Closing. However, the Agent shares to be delivered at the first
     Closing shall be delivered to the Agent no later than 15 days following the
     first Closing.

     3.5  Payment of Fees.  The Escrow Agent shall be instructed to pay the
          ---------------
Escrow Agent's fees and commissions pursuant to section 3.4 of this Agreement,
directly to the Agent from the proceeds of the Closing and all Subsequent
Closing, simultaneous with the transfer of proceeds to the Company.

     4.  Offering of the Securities on Behalf of the Company.
         ---------------------------------------------------

     4.1  In offering the Securities for sale, the Agent shall offer them solely
as an agent for the Company, and such offer shall be made upon the terms and
subject to the conditions set forth in the Offering Documents. The Agent shall
commence making such offer as an agent for the Company as soon as possible
following delivery of the Offering Documents.

     4.2  The Agent will not make offers to sell the Securities to, or solicit
offers to subscribe for any Securities from, persons or entities that are not
"accredited investors" as defined in Regulation D.

     4.3  The Agent shall make offers and sales of the securities only in such
jurisdictions where it is permitted to do so in accordance with applicable law.

     5.   Right of First Refusal.  The Company hereby grants Agent rights
          ----------------------
of first refusal as follows:

    5.1  Beginning the date hereof and ending 90 days from the final Closing,
the Company grants to the Agent a right of first refusal to act as the Company's
exclusive placement agent for the sale of any debt or equity to be issued by the
Company ("Financing Transaction"). The Agent shall have five (5) business days
from the date of its receipt from the Company of a detailed and complete summary
of any proposed Financing Transaction to exercise its right of first refusal to
act as Agent upon the same terms and conditions on an all or nothing basis. In
the event that the Company materially changes or deviates from any of the terms
of the proposed Financing Transaction contained in such written notice, then
such changes or deviation shall be deemed to constitute a new proposed Financing
Transaction and the Company shall be required to submit a new written right of
first refusal notice to Agent and Agent shall have five (5) business days from
the date of such notice to exercise its right of first refusal as described
herein.

     5.2  The Company agrees to maintain the confidentiality of the Agent's
clients, except as required by applicable law. Such clients shall be those
entities which invest in the Offering (the "Clients"). For a period of two years
from the Closing (the "Exclusivity Period"), the Company will not solicit or
enter into any financing transaction ("Transaction") with the clients without
the written consent of Agent and payment to the Agent of like compensation as
the compensation described herein.

     5.3  In the event that Company breaches Section 5.2 of this Agreement and
engages in a Transaction with the Clients during the Exclusivity Period or
breaches Section 5.1 of this Agreement, Agent shall be entitled to receive
compensation in the same proportion to the financing done without Agent's
participation as the compensation to Agent under this Agreement bears to the
financing raised in this Offering.

     6(a) Covenants of the Company.  The Company covenants and agrees with
          ------------------------
the Agent that:

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     6.1  As a condition precedent to the Initial Closing, the Company will
deliver to the Agent a true and correct copy of the Articles of Incorporation of
the Company, and all amendments and certificates of designation of preferences
of preferred stock, including without limitation the certificate of designation
of preferences regarding the Securities, if applicable, certified by the
Secretary of State of Delaware.

     6.2  Prior to the Closing Date, the Company will cooperate with the Agent
          in such investigation as it may make or cause to be made of all of the
          properties, business and operations of the Company in connection with
          the Offering of the Securities. The Company will make available to it
          in connection therewith such information in its possession as the
          Agent may reasonably request and will make available to the Agent such
          persons as the Agent shall deem reasonably necessary and appropriate
          in order to verify or substantiate any such information so supplied,
          subject to the limitations arising pursuant to the federal securities
          laws.

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

     7.1  The Company agrees to indemnify and hold harmless the Agent, each
person who controls the Agent within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934, as amended, and the Agent's
employees, accountants, attorneys and agents (the "Agent's Indemnitees") against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act or any other statute or at
common law for any legal or other expenses (including the costs of any
investigation and preparation) incurred by them in connection with any
litigation, whether or not resulting in any liability, but only insofar as such
losses, claims, damages, liabilities and litigation arise out of or are based
upon any untrue statement of material fact contained in the Offering Documents
or any amendment or supplement thereto or the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, under the circumstances under which they were made, not misleading, all
as of the date of the Offering Documents or of such amendment as the case may
be; provided, however, that the indemnity agreement contained in this Section
    --------
7.1 shall not apply to amounts paid in settlement of any such litigation, if
such settlements are made without the consent of the Company, nor shall it apply
to the Agent's Indemnitees in respect to any such losses, claims, damages or
liabilities arising out of or based upon any such untrue statement or alleged
untrue statement or any such omission or alleged omission, if such statement or
omission was made in reliance upon information furnished in writing to the
Company by the Agent specifically for use in connection with the preparation of
the Offering Documents or any such amendment or supplement thereto.  This
indemnity agreement is in addition to any other liability which the Company may
otherwise have to the Agent's Indemnitees.  The Agent's Indemnitees agree,
within a reasonable time after the receipt by them of written notice of the
commencement of any action against them in respect to which indemnity may be
sought from the Company under this Section 7.1, to notify the Company in
writing of the commencement of such action, and if the Agent's Indemnitees shall
notify the Company of the commencement thereof, the Company shall be entitled to
participate in (and, to the extent that the Company shall wish, to direct) the
defense thereof at its own expense, but such defense shall be conducted by
counsel of recognized standing and reasonably satisfactory to the Agent's
Indemnitees, defendant or defendants, in such litigation.  The Company agrees to
notify the Agent's Indemnitees promptly of the commencement of any litigation or
proceedings against the Company or any of the Company's officers or directors of
which the Company may be advised in connection with the issue and sale of any of
the Securities and to furnish to the Agent's Indemnitees, at their request,
copies of all pleadings therein and to permit the Agent's Indemnities to be
observers therein and apprise the Agent's Indemnitees of all developments
therein, all at the Company's expense.

     7.2  The Agent agrees, in the same manner and to the same extent as set
forth in Section 7.1 above, to indemnify and hold harmless the Company, and the
Company's employees, accountants,

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attorneys and agents (the "Company's Indemnitees") with respect to (i) any
statement in or omission from the Offering Documents or any amendment or
supplement thereto or any application or any information furnished pursuant to
Section 3.4 hereof, if such statement or omission was made in reliance upon
information furnished in writing to the Company by the Agent or on its behalf
specifically for use in connection with the preparation thereof or supplement
thereto, or (ii) any untrue statement of a material fact made by the Agent or
its agents not based on statements in the Offering Documents or authorized in
writing by the Company, or with respect to any misleading statement made by the
Agent or its agents resulting from the omission of material facts which
misleading statement is not based upon the Offering Documents, or information
furnished in writing by the Company or, (iii) any breach of any representation,
warranty or covenant made by the Agent in this Agreement. The Agent shall not be
liable for amounts paid in settlement of any such litigation if such settlement
was effected without its consent. In case of the commencement of any action in
respect of which indemnity may be sought from the Agent, the Company's
Indemnitees shall have the same obligation to give notice as set forth in
Section 7.1 above, subject to the same loss of indemnity in the event such
notice is not given, and the Agent shall have the same right to participate in
(and, to the extent that it shall wish, to direct) the defense of such action at
its own expense, but such defense shall be conducted by counsel of recognized
standing reasonably satisfactory to the Company. The Agent agrees to notify the
Company's Indemnitees and, at their request, to provide copies of all pleadings
therein and to permit the Company's Indemnitees to be observers therein and
apprise them of all the developments therein, all at the Agent's expense.

     7.3  If for any reason the indemnity provided for in Section 7.1 or 7.2 is
unavailable to an Indemnified Person or insufficient to hold an Indemnified
Person harmless, then the Indemnifying Party, to the fullest extent permitted by
law, shall contribute to the amount paid or payable by such Indemnified Person
as a result of such claims, liabilities, losses, damages or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company on one hand and by the Agent on the other, from the transaction or
proposed transaction under this Agreement or if allocation on that basis is not
permitted under applicable law, in such proportion as is appropriate to reflect
not only the relative benefits received by the Company on the one hand and the
Agent on the other, but also the relative fault of the Company and the Agent, as
well as any relevant equitable considerations.  It is hereby further agreed that
the relative benefits to the Company on the one hand and the Agent on the other
with respect to any transaction contemplated by this Agreement shall be deemed
to be paid in the same proportion as (i) the total value of the transaction
bears to (ii) the fees paid to the Agent with respect to the transaction.  The
relative fault of the Company on the one hand and the Agent on the other with
respect to the transaction shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Agent and the parties relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.  The indemnity, contribution and expense reimbursement
obligations set forth herein (i) shall be in addition to any liability an
Indemnifying Party may have to any Indemnified Person at common law of
otherwise, (ii) shall survive the termination of this Agreement, (iii) shall
apply to any modification of this Agreement and shall remain in full force and
effect following the completion or termination of the Agreement, (iv) shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Agent or any other Indemnified Person, and (v) shall
be binding on any successor or assign of the Company or the Agent and the
respective successors or assigns to all or substantially all of the Company's or
the Agent's business and assets.

     8.   Effectiveness of Agreement.  This Agreement shall become effective at
          --------------------------
9:00 A.M., Atlanta, Georgia time, on the date hereof.

     9.   Conditions of the Agent's Obligations.  The Agent's obligations to act
          -------------------------------------
as agent of the Company hereunder and to find purchasers for the Securities
shall be subject to the accuracy, as of the

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Closing Date, of the representations and warranties on the part of the Company
herein contained, to the fulfillment of or compliance by the Company with all
covenants and conditions hereof, and to the following additional conditions:

     9.1  Counsel to the Agent shall not have objected in writing or shall not
have failed to give his consent to the Offering Documents (which objection or
failure to give consent shall not have been done unreasonably).

     9.2  The Agent shall not have disclosed to the Company that the Offering
Documents, or any amendment thereof or supplement thereto, contains an untrue
statement of fact, which, in the opinion of counsel to the Agent, is material,
or omits to state a fact, which, in the opinion of such counsel, is material and
is required to be stated therein, or is necessary to make the statements
therein, under the circumstances in which they were made, not misleading.

     9.3  Between the date hereof and the Closing Date, the Company shall not
have sustained any loss on account of fire, explosion, flood, accident, calamity
or any other cause of such character as would materially adversely affect its
business or property considered as an entire entity, whether or not such loss is
covered by insurance.

     9.4  Between the date hereof and the Closing Date, there shall be no
material litigation instituted or threatened against the Company, and there
shall be no proceeding instituted or threatened against the Company before or by
any federal or state commission, regulatory body or administrative agency or
other governmental body, domestic or foreign, wherein an unfavorable ruling,
decision or finding would materially adversely affect the business, franchises,
license, permits, operations or financial condition or income of the Company
considered as an entity.

     9.5  Except as contemplated herein or as set forth in the Offering
Documents, during the period subsequent to the most recent financial statements
contained in the Offering Documents, if any, and prior to the Closing Date, the
Company (i) shall have conducted its business in the usual and ordinary manner
as the same is being conducted as of the date hereof and (ii) except in the
ordinary course of business, the Company shall not have incurred any material
liabilities or obligations (direct or contingent) or disposed of any assets, or
entered into any material transaction or suffered or experienced any
substantially adverse change in its condition, financial or otherwise.  At the
Closing Date, and except as otherwise contemplated hereby, the equity account of
the Company shall be substantially the same as reflected in the most recent
balance sheet contained in the Offering Documents without considering the
proceeds from the sale of the Securities other than as may be set forth in the
Offering Documents.

     9.6  The authorization of the Securities by the Company and all proceedings
and other legal matters incident thereto and to this Agreement shall be
reasonably satisfactory in all respects to counsel to the Agent, who shall have
furnished the Agent on the Closing Date with such favorable opinion with respect
to the sufficiency of all corporate proceedings and other legal matters relating
to this Agreement as the Agent may reasonably require, and the Company shall
have furnished such counsel such documents as he may have requested to enable
him to pass upon the matters referred to in this subparagraph.

     9.7  The Company shall have furnished to the Agent the opinion, dated the
Closing Date, addressed to the Agent, from counsel to the Company, as required
by the Securities Purchase Agreement.

     9.8  The Company shall have furnished to the Agent a certificate of the
Chief Executive Officer or the Chief Financial Officer of the Company, dated as
of the Closing Date, in the form attached hereto.

                                       8
<PAGE>

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

     10.1 This Agreement may be terminated by the Agent by notice to the Company
in the event that the Company shall have failed or been unable to comply with
any of the terms, conditions or provisions of this Agreement on the part of the
Company to be performed, complied with or fulfilled within the respective times,
if any, herein provided for, unless compliance therewith or performance or
satisfaction thereof shall have been expressly waived by the Agent in writing.

     10.2 This Agreement may be terminated by the Company by notice to the Agent
in the event that the Agent shall have failed or been unable to comply with any
of the terms, conditions or provisions of this Agreement on the part of the
Agent to be performed, complied with or fulfilled within the respective times,
if any, herein provided for, unless compliance therewith or performance or
satisfaction thereof shall have been expressly waived by the Company in writing.

     10.3 This Agreement may be terminated by the Agent by notice to the Company
at any time, if, in the reasonable, good faith judgment of the Agent, payment
for and delivery of the Securities is rendered impracticable or inadvisable
because: (i) additional material governmental restrictions not in force and
effect on the date hereof shall have been imposed upon trading in securities
generally; (ii) a war or other national calamity shall have occurred; or (iii)
the condition of the market (either generally or with reference to the sale of
the Securities to be offered hereby other than the delisting of the Company's
shares on the Nasdaq SmallCap Market) or the condition of any matter affecting
the Company or any other circumstance is such that it would be undesirable,
impracticable or inadvisable, in the judgment of the Agent, to proceed with this
Agreement or with the Offering.

     10.4 Any termination of this Agreement pursuant to this Section shall be
without liability of any character (including, but not limited to, loss of
anticipated profits or consequential damages) on the part of any party thereto,
except that the Company shall remain obligated to pay the costs and expenses
provided to be paid by it specified in Sections 3.5; and the Company and the
Agent shall be obligated to pay, respectively, all losses, claims, damages or
liabilities, joint or several, under Section 7.1 in the case of the Company and
Section 7.2 in the case of the Agent.

     11.  Agent's Representations, Warranties and Covenants.  The Agent
          -------------------------------------------------
represents and warrants to and agrees with the Company that:

     11.1 Agent is a corporation duly incorporated and existing under the laws
of the state of Georgia.  Agent is registered with the Securities Exchange
Commission and the NASD and is authorized to receive the compensation from the
Company provided hereunder.

     11.2 All corporate actions by Agent required for the execution, delivery
and performance of this Agreement have been taken.  The execution and delivery
of this Agreement by the Agent, the observance and performance thereof, and the
consummation of the transactions contemplated herein or in the Memorandum do not
and will not constitute a material breach of, or a material default under, any
instrument or agreement by which the Agent is bound, and does not and will not,
to the best of the Agent's knowledge, contravene any existing law, decree or
order applicable to it.  This Agreement constitutes a valid and binding
agreement of Agent, enforceable in accordance with its terms.

     11.3 Agent understands that the Company is relying upon Agent's
representations and warranties in connection with the Offering and the sale of
the Securities contemplated by this Agreement.

     11.4 Agent's representations and warranties under this Section shall be
true and correct as of each Closing, and shall survive each Closing for a period
of six months.

                                       9
<PAGE>

     11.5 No Short Sales of the Common Stock.  The Agent shall not directly or
          ----------------------------------
indirectly engage in any short sales or third party short sales of the Company's
Common Stock or hold a "put equivalent position" with respect to the Common
Stock (as defined in Rule 16a-1 under the 1934 Act).  Notwithstanding anything
contained to the contrary in this section, in the event that the Company enters
into a private placement transaction (other than in connection with employee
benefit plans, employee or consultant compensation, or in connection with
mergers and acquisitions) which permits the investors rights to engage in short
sales of Common Stock, the restrictions contained in this section shall be
automatically modified to permit the Agent to engage in short sales of Common
Stock substantially to the extent permitted by the Company with respect to such
private placement investors.

     12.  Notices.  Except as otherwise expressly provided in this Agreement:
          -------

     12.1 Whenever notice is required by the provisions of this Agreement to be
given to the Company, such notice shall be in writing, addressed to the Company,
at:

     If to Company:      1101 Northpoint Parkway
                         West Palm Beach, Florida 33407
                         Telephone:  (561) 478-5625
                         Facsimile:  (561) 688-8784

     With a copy to:     Atlas Pearlman Trop & Borkson, P.A.
                         350 E. Las Olas Blvd.
                         Ft. Lauderdale, FL  33301
                         Attn: Steven Weinberger, Esq.
                         Telephone:  (954) 763-1200
                         Facsimile:  (954) 766-7800

     12.2 Whenever notice is required by the provisions of this Agreement to be
given to the Agent, such notice shall be given in writing, addressed to the
Agent, at:

     If to the Agent:    J.P. Carey Securities, Inc.
                         Atlanta Financial Center, East Tower
                         3343 Peachtree Road, Suite 500
                         Atlanta, Georgia 30326
                         Telephone:  (404) 816-5339
                         Facsimile:  (404) 816-6268

     with a copy to:     Raymond L. Moss, Esq.
                         Sims Moss Kline & Davis LLP
                         400 Northpark Town Center, Suite 310
                         1000 Abernathy Road, N.E.
                         Atlanta, Georgia 30328
                         Telephone:  (770) 481-7201
                         Facsimile:  (770) 481-7210

     12.3 Any notice instructing the Escrow Agent to distribute monies or
Securities held in Escrow must be signed by authorized agents of both the
Company and the Agent in order to be valid.

                                       10
<PAGE>

     13.  Miscellaneous.
          -------------

     13.1 Benefit.  This Agreement is made solely for the benefit of the Agent
          -------
and the Company, their respective officers and directors and any controlling
person referred to in Section 15 of the Act and their respective successors and
assigns, and no other person may acquire or have any right under or by virtue of
this Agreement, including, without limitation, the holders of any Securities.
The term "successor" or the term "successors and assigns" as used in this
Agreement shall not include any purchasers, as such, of any of the Securities.

     13.2 Survival.  The respective indemnities, agreements, representations,
          --------
warranties, covenants and other statements of the Company and the Agent, or the
officers, directors or controlling persons of the Company and the Agent as set
forth in or made pursuant to this Agreement and the indemnity agreements of the
Company and the Agent contained in Section 7 hereof shall survive and remain in
full force and effect, regardless of (i) any investigation made by or on behalf
of the Company or the Agent or any such officer, director or controlling person
of the Company or of the Agent; (ii) delivery of or payment for the Securities;
or (iii) the Closing Date, and any successor of the Company or the Agent or any
controlling person, officer or director thereof, as the case may be, shall be
entitled to the benefits hereof.

     13.3 Governing Law.  The validity, interpretation and construction of this
          -------------
Agreement and of each party hereof will be governed by the Laws of the State of
Georgia.  This Agreement and each Warrant Certificate hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
without regard to the principles of conflict of laws.  The parties further
agree that any action between them shall be heard in Atlanta, Georgia, and
expressly consent to the jurisdiction and venue of the Superior Court of Fulton
County, Georgia, and the United States District Court for the Northern District
of Georgia, Atlanta Division for the adjudication of any action asserted
pursuant to this Paragraph.

     13.4 Counterparts.  This Agreement may be executed in any number of
          ------------
counterparts, each of which may be deemed an original and all of which together
will constitute one and the same instrument.

     13.5 Confidential Information.  All confidential financial or business
          ------------------------
information (except publicly available or freely usable material otherwise
obtained from another source) respecting either party will be used solely by the
other party in connection with the within transactions, be revealed only to
employees or contractors of such other party who are necessary to the conduct of
such transactions, and be otherwise held in strict confidence.

     13.6 Public Announcements.  Except as required by law, prior to the Closing
          --------------------
Date, neither party hereto will issue any public announcement concerning the
within transactions without the approval of the other party.

     13.7 Finders.  The parties acknowledge that no person has acted as a finder
          -------
in connection with the transactions contemplated herein and each will agree to
indemnify the other with respect to any other claim for a finder's fee in
connection with the offering. However, the Company represents that it has
separately engaged, at its own cost and expense, Alexander, Wescott & Co., Inc.
on an non-exclusive basis in connection with the Offering and agrees to
indemnify and hold Agent harmless for any commissions, fees or other expenses
due or payable by the Company to Alexander, Wescott & Co., Inc..

     13.8 Recitals.  The recitals to this Agreement are a material part hereof,
          --------
and each recital is incorporated into this Agreement by reference and made a
part of this Agreement.

                                       11
<PAGE>

     13.9 Entire Agreement; Merger; Amendments. This Agreement and the
          ------------------------------------
agreements referred to herein constitute the entire agreement of the parties
hereto with respect to the subject matter and supersedes all other prior oral or
written agreements between the parties.  No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the parties
hereto.

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

                                       12
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to
be executed as of the day and year first above written.

                              "THE COMPANY"
                              SAF T LOK INCORPORATED

                              By: /s/ Franklin W. Brooks
                              ------------------------------
                              Name: Franklin W. Brooks
                                    ------------------------
                              Title: President and CEO
                                     -----------------------

                              "THE AGENT"
                              J.P. CAREY SECURITIES, INC.

                              By: /s/ James P. Canouse
                                  --------------------------
                              Name:   James P. Canouse
                                    ------------------------
                              Title:

                                       13<PAGE>

                                                                    EXHIBIT 10.4

                         SECURITIES PURCHASE AGREEMENT

    SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of December
_______, 1999, by and among Saf T Lok Incorporated, a Florida corporation, with
headquarters located at 1101 Northpoint Parkway, West Palm Beach, Florida 33407
(the "Company"), and the investor listed on the Schedule of Buyers attached
hereto (individually, a "Buyer" or collectively "Buyers").

     WHEREAS:

    A.    The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration pursuant to Section
4(2) and/or Regulation D of the Securities Act of 1933, as amended (the "1933
Act"),

    B.    The Company is offering for sale to the Buyer 6% Subordinated
Convertible Debentures (the "Debentures") of the Company, due on December
______, 2001, and offered in denominations of $2,500 up to an aggregate
principal amount of $1,500,000. The terms of the Debentures, including the terms
on which the Debentures may be converted into the common stock of the Company,
$0.01 par value, are set forth in the Debenture, in substantially the form
attached as Exhibit "A" hereto.

    C.    The Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, an aggregate principal amount of up to $1,500,000 of Debentures
in the respective amounts set forth opposite each Buyer's name on the Schedule
of Buyers;

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

    NOW THEREFORE, the Company and the Buyer hereby agree as follows:

     1 .    PURCHASE AND SALE OF DEBENTURES.
            -------------------------------

         a.  Purchase of Debentures.  Subject to the satisfaction (or waiver)
             ----------------------
     of the conditions set forth in Sections 6 and 7 below, the Company shall
     issue and sell to the Buyers and the Buyers shall purchase from the Company
     an aggregate principal amount of not more than $1,500,000 Debentures, in
     the respective amounts set forth opposite each Buyer's name on the Schedule
     of Buyers (the "Closing").
<PAGE>

         b.  Closing Date.  The date and time of the Closing (the "Closing
             ------------
     Date") shall be 10:00 a.m. Eastern Standard Time, within five (5) business
     days following the date hereof, subject to notification of satisfaction (or
     waiver) of the conditions to the Closing set forth in Sections 6 and 7
     below (or such later date as is mutually agreed to by the Company and the
     Buyer).  The Closing shall occur on the Closing Date at the offices of Sims
     Moss Kline & Davis LLP, 400 Northpark Town Center, Suite 310, 1000
     Abernathy Road, N.E., Atlanta, Georgia 30328.

         c.  Form of Payment.  On the Closing Date, (i) the Escrow Agent shall
             ----------------
     pay the Purchase Price to the Company for the Debentures to be issued and
     sold to such Buyer at the Closing, by wire transfer of immediately
     available funds in accordance with the Company's written wire instructions,
     and (ii) the Company shall deliver to each Buyer, certificates representing
     such Debentures which such Buyer is then purchasing (as indicated opposite
     such Buyer's name on the Schedule of Buyers), duly executed on behalf of
     the Company and registered in the name of such Buyer or its designee (the
     "Certificates").

     2. BUYER'S REPRESENTATIONS AND WARRANTEES.
        --------------------------------------

         Each Buyer represents and warrants with respect to only itself that:

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

         b.  Accredited Investor/Tax Status.  Such Buyer is an "accredited
             ------------------------------
     investor" as that term is defined in Rule 501(a)(3) of Regulation D
     ("Regulation D") as promulgated by the United States Securities and
     Exchange Commission (the "SEC").  The Buyer is not subject to U.S.
     withholding tax or other similar state tax.

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

         d.  Information.  Such Buyer and its advisors, if any, have been
             -----------
     furnished with all appropriate materials relating to the business, finances
     and operations of the

                                       2
<PAGE>

     Company and materials relating to the offer and sale of the Debentures and
     Conversion Shares which have been requested by such Buyer. Such Buyer and
     its advisors, if any, have been afforded the opportunity to ask questions
     of the Company. Neither such inquiries nor any other due diligence
     investigations conducted by such Buyer or its advisors, if any, or its
     representatives shall modify, amend or affect such Buyer's right to rely on
     the Company's representations and warranties contained in Section 3 below.
     Such Buyer understands that its investment in the Debentures and the
     Conversion Shares involves a high degree of risk. Such Buyer has sought
     such accounting, legal and tax advice as it has considered necessary to
     make an informed investment decision with respect to its acquisition of the
     Debentures and the Conversion Shares.

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

         f.  Transfer or Resale.  Such Buyer understands that except as
             ------------------
     provided in the Registration Rights Agreement: (i) the Debentures and the
     Conversion Shares have not been and are not being registered under the 1933
     Act or any state securities laws, and may not be offered for sale, sold,
     assigned or transferred unless such sale, assignment, or transfer is
     approved (unless to an affiliate or successor entity) by the Company and
     (a)  subsequently registered thereunder, (b) such Buyer shall have
     delivered to the Company an opinion of counsel, in a generally acceptable
     form, to the effect that such securities to be sold, assigned or
     transferred may be sold, assigned or transferred pursuant to an exemption
     from such registration, or (c) such Buyer provides the Company with
     reasonable assurance that such securities can be sold, assigned or
     transferred pursuant to Rule 144 promulgated under the 1933 Act (or a
     successor rule thereto); (ii) any sale of such securities made in reliance
     on Rule 144 promulgated under the 1933 Act (or a successor rule thereto)
     ("Rule 144") may be made only in accordance with the terms of Rule 144 and
     further, if Rule 144 is not applicable, any resale of such securities under
     circumstances in which the seller (or the person through whom the sale is
     made) may be deemed to be an underwriter (as that term is defined in the
     1933 Act) may require compliance with some other exemption under the 1933
     Act or the rules and regulations of the SEC thereunder; and (iii) neither
     the Company nor any other person is under any obligation to register such
     securities under the 1933 Act or any state securities laws or to comply
     with the terms and conditions of any exemption thereunder.

         g.  Legends.  Such Buyer understands that the certificates or other
             -------
     instruments representing the Debentures, until such time as the sale of the
     Conversion Shares have been registered under the 1933 Act as contemplated
     by the Registration Rights Agreement, the stock certificates representing
     the Conversion Shares shall bear a restrictive legend in substantially the
     following form (and a stop transfer order may be placed against transfer of
     such stock certificates):

                                       3
<PAGE>

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
     APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
     ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
     SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
     REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
     SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
     ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
     SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
     PURSUANT TO RULE 144 UNDER SAID ACT.

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Debentures and the
Conversion Shares, upon which it is stamped, if, unless otherwise required by
applicable securities laws, (i) the sale of the Conversion Shares is registered
under the 1933 Act, (ii) in connection with a sale transaction, such holder
provides the Company with an opinion of counsel, reasonably satisfactory to the
Company, to the effect that a public sale, assignment or transfer of the
Debentures and the Conversion Shares may be made without registration under the
1933 Act, or (iii) such holder provides the Company with reasonable assurances
that the Debentures or the Conversion Shares can be sold pursuant to Rule 144
without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold.

     In addition to the foregoing, to the extent that the Holder receives a
certificate for Conversion Shares that does not contain the foregoing legend,
such holder understands that, (A) the Conversion Shares may be sold only by
means of a current prospectus or pursuant to an applicable exemption from
registration under the 1933 Act, (B) in connection with a prospectus sale, such
holder is required to deliver to the purchaser a current prospectus at the time
of resale of the Conversion Shares and (C) in that event, such holder is
responsible for determining that any such prospectus is current at the time of
resale. The Company undertakes to promptly notify the Holder in writing in the
event that facts and circumstances cause the prospectus to no longer be current
and shall indemnify and hold the Holder harmless from any costs, losses, or
damages, including reasonable attorney's fees that the Holder may suffer by
reason of the Company failing to provide such prompt notice. Holder hereby
indemnifies and holds the Company harmless from any costs, losses or damages,
including reasonable attorneys' fees, that the Company may suffer by reason of
holder's failure to comply with the provisions of this paragraph.

     h.  Authorization, Enforcement.  This Agreement has been duly and
         --------------------------
validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable in accordance with
its terms, subject as

                                       4
<PAGE>

     enforceability to general principles of equity and to applicable
     bankruptcy, insolvency, reorganization, moratorium, liquidation and other
     similar laws relating to, or affecting generally, the enforcement of
     applicable creditors' rights and remedies.

         i.    Residency.  Such Buyer is a resident of that state and country
               ---------
     specified in its address on the Schedule of Buyers.

     3 .  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
          ---------------------------------------------

          The Company represents and warrants to each of the Buyers that:

          a.  Organization and Qualification.  The Company and its subsidiaries
              ------------------------------
     are corporations duly organized and validly existing in good standing under
     the laws of the jurisdiction in which they are incorporated, and have the
     requisite corporate power to own their properties and to carry on their
     business as now being conducted.  Each of the Company and its subsidiaries
     is duly qualified as a foreign corporation to do business and is in good
     standing in every jurisdiction in which the nature of the business
     conducted by it makes such qualification necessary, except to the extent
     that the failure to be so qualified or be in good standing would not have a
     material adverse effect on the Company and its subsidiaries taken as a
     whole.

          b.   Authorization, Enforcement, Compliance with Other Instruments.
               -------------------------------------------------------------
     (i) The Company has the requisite corporate power and authority to enter
     into and perform this Agreement, the Registration Rights Agreement and any
     related agreements, and to issue the Debentures, the Conversion Shares,  in
     accordance with the terms hereof and thereof, (ii) the execution and
     delivery of this Agreement, the Registration Rights Agreement and any
     related agreements by the Company and the consummation by it of the
     transactions contemplated hereby and thereby, including without limitation
     the issuance of the Debentures and the reservation for issuance and the
     issuance of the Conversion Shares issuable upon conversion or exercise
     thereof, have been duly authorized by the Company's Board of Directors and
     no further consent or authorization is required by the Company, its Board
     of Directors or its stockholders, (iii) this Agreement, the Registration
     Rights Agreement, and any related agreements have been duly executed and
     delivered by the Company, and (iv) this Agreement, the Registration Rights
     Agreement, 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.

          c.  Capitalization.  As of the date hereof, the authorized capital
              --------------
     stock of the Company consists of 20,000,000 shares of Common Stock, par
     value $0.01 per share, zero shares of  Preferred Stock and $375,000 in
     principal amount of 6% Convertible Debentures, of which as of the date
     hereof 13,983,615 shares of Common Stock and zero shares of Series
     Preferred Stock, and $175,000 in principal amount of 6% subordinated
     Convertible Debentures were issued and outstanding.  All of such
     outstanding shares

                                       5
<PAGE>

     have been validly issued and are fully paid and nonassessable. Except as
     disclosed in this Agreement or the SEC Documents (as defined herein), no
     shares of Common Stock or preferred 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 this Agreement or the SEC
     Documents (as defined herein), as of the effective date of this Agreement,
     (i) there are no outstanding options, warrants, scrip, rights to subscribe
     to, calls or commitments of any character whatsoever relating to, or
     securities or rights convertible into, any shares of capital stock of the
     Company or any of its subsidiaries, or contracts, commitments,
     understandings or arrangements by which the Company or any of its
     subsidiaries is or may become bound to issue additional shares of capital
     stock of the Company or any of its subsidiaries or options, warrants,
     scrip, rights to subscribe to, calls or commitments of any character
     whatsoever relating to, or securities or rights convertible into, any
     shares of capital stock of the Company or any of its subsidiaries, (ii)
     there are no outstanding debt securities and (iii) except as set forth in
     the Company's SEC Documents, there are no agreements or arrangements under
     which the Company or any of its subsidiaries is obligated to register the
     sale of any of their securities under the 1933 Act (except the Registration
     Rights Agreement). There are no securities or instruments containing anti-
     dilution or similar provisions that will be triggered by the issuance of
     the Debentures or the Conversion Shares as described in this Agreement. The
     Company has furnished to the Buyer true and correct copies of the Company's
     Certificate of Incorporation, as amended and as in effect on the date
     hereof (the "Certificate of Incorporation"), and the Company's By-laws, as
     in effect on the date hereof (the "By-laws"), and the terms of all
     securities convertible into or exercisable for Common Stock and the
     material rights of the holders thereof in respect thereto.

          d.  Issuance of Securities.  The Debentures are duly authorized and,
              ----------------------
     upon issuance in accordance with the terms hereof, shall be (i) validly
     issued, fully paid and nonassessable, are free from all taxes, liens and
     charges with respect to the issue thereof and are entitled to the rights
     and preferences set forth in the Debentures.  The Conversion Shares
     issuable upon conversion of the Debentures have been duly authorized and
     reserved for issuance.  Upon conversion or exercise in accordance with the
     Debentures, the Conversion Shares will be validly issued, fully paid and
     nonassessable and free from all taxes, liens and charges with respect to
     the issue thereof, with the holders being entitled to all rights accorded
     to a holder of Common Stock.

          e.  No Conflicts.  Except as disclosed in the SEC Documents, 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 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 material 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 or exchange on which the Common Stock is traded or
     listed) applicable to the Company or any of its subsidiaries or by which
     any property or

                                       6
<PAGE>

     asset of the Company or any of its subsidiaries is bound or affected.
     Neither the Company nor its subsidiaries is in violation of any term of or
     in default under its Certificate of Incorporation or Bylaws or their
     organizational charter or by-laws, respectively, or any material contract,
     agreement, mortgage, indebtedness, indenture, instrument, judgment, decree
     or order or any statute, rule or regulation applicable to the Company or
     its subsidiaries. The business of the Company and its subsidiaries is not
     being conducted, and shall not be conducted in violation of any law,
     ordinance, regulation of any governmental entity. Except as specifically
     contemplated by this Agreement and as required under the 1933 Act and any
     applicable state securities laws, to the best of the Company's knowledge,
     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 and 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 facts or circumstances which might give
     rise to any of the foregoing.

          f.  SEC Documents: Financial Statements.  Since January 1, 1997, the
              -----------------------------------
     Company had filed all reports, schedules, forms, statements and other
     documents required to be filed by it with the SEC pursuant to the reporting
     requirements of the Securities Exchange Act of 1934, as amended (the "1934
     Act") (all of the foregoing filed prior to the date hereof and all exhibits
     included therein and being hereinafter referred to as the "SEC Documents").
     The SEC Documents complied in all material respects with the requirements
     of the 1934 Act and the rules and regulations of the SEC promulgated
     thereunder applicable to the SEC Documents, and none of the SEC Documents,
     at the time they were filed with the SEC, contained any untrue statement of
     a material fact or omitted to state a material fact required to be stated
     therein or necessary in order to make the statements therein, in light of
     the circumstances under which they were made, not misleading.  As of their
     respective dates, the financial statements of the Company included in the
     SEC Documents complied as to form in all material respects with applicable
     accounting requirements and the published rules and regulations of the SEC
     with respect thereto.  Such financial statements have been prepared in
     accordance with generally accepted accounting principles, consistently
     applied, during the periods involved (except (i) as may be otherwise
     indicated in such financial statements or the notes thereto, or (ii) in the
     case of unaudited interim statements, to the extent they may exclude
     footnotes or may be condensed or summary statements) and fairly present in
     all material respects the financial position of the Company as of the dates
     thereof and the results of its operations and cash flows for the periods
     then ended (subject, in the case of unaudited statements, to normal year-
     end audit adjustments).  No other information provided by or on behalf of
     the Company to the Buyer which is not included in the SEC Documents,
     including, without limitation information referred to in Section 2(d) of
     this Agreement, contains any untrue statement of a material fact or omits
     to state any material fact necessary in order to make the statements
     therein, in the light of the circumstance under which they are or were
     made, not misleading.

                                       7
<PAGE>

          g.  Absence of Certain Changes.  The Company has not taken any steps,
              --------------------------
     and does not currently expect to take any steps, to seek protection
     pursuant to any bankruptcy law nor does the Company or its subsidiaries
     have any knowledge or reason to believe that its creditors intend to
     initiate involuntary bankruptcy proceedings.

          h.  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 or, to the knowledge of the Company or any of its
     subsidiaries, threatened 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 set forth 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.

          i.  No Undisclosed Events, Liabilities, Developments or Circumstances.
              -----------------------------------------------------------------
     No known event, liability, development or circumstance has occurred or
     exists, or is contemplated to occur, with respect to the Company or its
     subsidiaries or their respective business, properties, prospects,
     operations or financial condition, which could be material but which is not
     disclosed in an SEC Document or has not been publicly announced or
     disclosed in writing to the Buyer.

          j.  No General Solicitation.  Neither the Company, nor any of its
              -----------------------
     affiliates, nor any person acting on its or their behalf, has engaged in
     any form of general solicitation or general advertising (within the meaning
     of Regulation D under the 1933 Act) in connection with the offer or sale of
     the Debentures or the Conversion Shares.

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

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

                                       8
<PAGE>

          m.  Intellectual Property Rights.  To the best of the Company's
              ----------------------------
     knowledge, the Company and its subsidiaries own or possess adequate rights
     or licenses to use all trademarks, trade names, service marks, service mark
     registrations, service names, patents, patent rights, copyrights,
     inventions, licenses, approvals, governmental authorizations, trade secrets
     and rights necessary to conduct their respective businesses as now
     conducted.  Except as set forth in the SEC Documents, none of the Company's
     trademarks, trade names, service marks, service mark registrations, service
     names, patents, patent rights, copyrights, inventions, licenses, approvals,
     government authorizations, trade secrets or other intellectual property
     rights have expired or terminated, or are expected to expire or terminate
     in the near future.  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, or of any
     such development of similar or identical trade secrets or technical
     information by others and, except as disclosed in the SEC Documents, 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.  The Company and its subsidiaries have taken
     reasonable security measures to protect the secrecy, confidentiality and
     value of all of their intellectual properties.

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

          o.  Title.  The Company and its subsidiaries have good and marketable
              -----
     title in fee simple to all real property and good and marketable title to
     all personal property owned by them which is material to the business of
     the Company and its subsidiaries, in each case free and clear of all liens,
     encumbrances and defects except such as are disclosed in the SEC Documents
     or such as do not materially affect the value of such property and do not
     interfere with the use made and proposed to be made of such property by the
     Company and its subsidiaries.

          p.  Insurance.  The Company and each of its subsidiaries are insured
              ---------
     by insurers of recognized financial responsibility against such losses and
     risks and in such amounts as management of the Company believes to be
     prudent and customary in the businesses in which the Company and its
     subsidiaries are engaged.  Neither the Company nor any such subsidiary has
     been refused any insurance coverage sought or applied for

                                       9
<PAGE>

     and neither the Company nor any such subsidiary has any reason to believe
     that it will not be able to renew its existing insurance coverage as and
     when such coverage expires or to obtain similar coverage from similar
     insurers as may be necessary to continue its business at a cost that would
     not materially and adversely affect the condition, financial or otherwise,
     or the earnings, business or operations of the Company and its
     subsidiaries, taken as a whole.

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

          r.  Internal Accounting Controls.  The Company and each of its
              ----------------------------
     subsidiaries maintain a system of internal accounting controls sufficient
     to provide reasonable assurance that (i) transactions are executed in
     accordance with management's general or specific authorizations, (ii)
     transactions are recorded as necessary to permit preparation of financial
     statements in conformity with generally accepted accounting principles and
     to maintain asset accountability, (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.

          s.  No Materially Adverse Contracts, Etc.  Except as disclosed 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
     disclosed in the SEC Documents, neither the Company nor any of its
     subsidiaries is a party to any contract or agreement which in the judgment
     of the Company's officers has or is expected to have a material adverse
     effect on the business, properties, operations, financial condition,
     results of operations or prospects of the Company or its subsidiaries.

          t.  Tax Status.  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 (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) and has paid all taxes and other
     governmental assessments and charges that are material in amount, shown or
     determined to be due on such returns, reports and declarations, except
     those being contested in good faith and has set aside on its books
     provision reasonably adequate for the payment of all taxes for periods
     subsequent to the periods to which such returns, reports or declarations
     apply.  There are no unpaid taxes in any material amount claimed to be due
     by the taxing authority of any jurisdiction, and the officers of the
     Company know of no basis for any such claim.

                                       10
<PAGE>

          u.  Certain Transactions.  Except as disclosed in the SEC Documents,
              --------------------
     and except for arm's length transactions pursuant to which the Company
     makes payments in the ordinary course of business upon terms no less
     favorable than the Company could obtain from third parties and other than
     the grant of stock options disclosed in the SEC Documents, none of the
     officers, directors, or employees of the Company is presently a party to
     any transaction with the Company (other than for services as employees,
     officers and directors), including any contract, agreement or other
     arrangement providing for the furnishing of services to or by, providing
     for rental of real or personal property to or from, or otherwise requiring
     payments to or from any officer, director or such employee or, to the
     knowledge of the Company, any corporation, partnership, trust or other
     entity in which any officer, director, or any such employee has a
     substantial interest or is an officer, director, trustee or partner.

          v.  Dilutive Effect.  The Company understands and acknowledges that
              ---------------
     the number of Conversion Shares issuable upon conversion of the Debentures
     will increase in certain circumstances.  The Company further acknowledges
     that its obligation to issue Conversion Shares upon conversion of the
     Debentures in accordance with this Agreement and the Debentures, in each
     case, absolute and unconditional regardless of the dilutive effect that
     such issuance may have on the ownership interests of other stockholders of
     the Company.

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

     4.   COVENANTS.
          ---------

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

          b.  Form D.  The Company agrees to file a Form D with respect to the
              ------
     Debentures and the Conversion Shares as required under Regulation D.  The
     Company has not registered its Shares in any of the states of the United
     States.

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

                                       11
<PAGE>

          d.  Use of Proceeds.  The Company will use the proceeds from the sale
              ---------------
     of the Debentures for working capital and research and development.

          e.  [INTENTIONALLY LEFT BLANK.]

          f.  Reservation of Shares.  The Company shall take all action
              ---------------------
     necessary to at all times have authorized, and reserved for the purpose of
     issuance, no less than 100% of the number of shares of Common Stock needed
     to provide for the issuance of the Conversion Shares, which could be issued
     at any time at the Floor Price as defined in the Debentures.

          g.  Listings.  The Company shall promptly secure the listing of the
              --------
     Conversion Shares upon each national securities exchange or automated
     quotation system, if any, upon which shares of Common Stock are then listed
     (subject to official notice of issuance) and shall maintain, so long as any
     other shares of Common Stock shall be so listed, such listing of all
     Conversion Shares from time to time issuable under the terms of this
     Agreement and the Registration Rights Agreement.  The Company shall use its
     best efforts to maintain the Common Stock's authorization for quotation in
     the NASDAQ Small Cap Market.

          h.  Expenses.  Each of the Company and the Buyer shall pay all costs
              --------
     and expenses incurred by such party in connection with the negotiation,
     investigation, preparation, execution and delivery of this Agreement and
     the Registration Rights Agreement.

          i.  [LEFT INTENTIONALLY BLANK]

          j.  Listing. [LEFT INTENTIONALLY BLANK]
              -------

          k.  Corporate Existence.  So long as any Debentures remain
              -------------------
     outstanding, the Company shall not directly or indirectly consummate any
     merger, reorganization, restructuring, consolidation, sale of all or
     substantially all of the Company's assets or any similar transaction or
     related transactions (each such transaction, a "Sale of the Company")
     except if the surviving or successor entity in such transaction (i)
     expressly assumes, in writing, the Company's obligations hereunder and
     under the Registration Rights Agreement, the Debentures and any other
     agreements and instruments entered into or delivered by the Company in
     connection herewith and (ii) is a publicly traded corporation whose Common
     Stock is listed for trading on the New York Stock Exchange, Inc., the
     American Stock Exchange or the NASDAQ National Market, NASDAQ SmallCap
     Market, or electric bulletin board.

          l.  Shareholder Approval.  The Company covenants to promptly submit to
              --------------------
     its shareholders at a shareholder's meeting a proposal for ratification of
     the issuance of the Debentures, the Conversion Shares, if and as required
     by the rules of the National Association of Securities Dealers, Inc.
     ("NASD") and any other applicable law, rules, and regulations applicable to
     the transaction. The Company represents and warrants that
                                       12
<PAGE>

     Affiliates of the Company, including the Company's officers and directors,
     have individually agreed in writing in their capacity as shareholders to
     vote their shares of Common Stock in favor of such a proposal at such
     meeting.

          m.  No Short Sales of the Common Stock.  So long as (i) a Buyer owns
              ----------------------------------
     at least $100,000 of Debentures, (ii) the Company has not issued any
     publicly traded convertible securities and (iii) the Issuer is not in
     material default under the terms of the Debentures, the Registration Rights
     Agreement, this Agreement or any related agreement, each Buyer shall not
     directly or indirectly engage in any short sales or third party short sales
     of the Company's Common Stock or hold a "put equivalent position" with
     respect to the Common Stock (as defined in Rule 16a-1 under the 1934 Act).
     Notwithstanding anything contained to the contrary in this section, in the
     event that the Company enters into a private placement transaction (other
     than in connection with employee benefit plans, employee or consultant
     compensation, or in connection with mergers and acquisitions) which permits
     the investors rights to engage in short sales of Common Stock, the
     restrictions contained in this section shall be automatically modified to
     permit the Buyer to engage in short sales of Common Stock substantially to
     the extent permitted by the Company with respect to such private placement
     investors.

     5.  TRANSFER AGENT INSTRUCTIONS.
         ---------------------------

          The Company shall issue irrevocable instructions to its transfer agent
to issue certificates, registered in the name of the Buyer or its respective
nominee(s), for the Conversion Shares in such amounts as specified from time to
time by the Buyer to the Company upon conversion of the Debentures (the
"Irrevocable Transfer Agent Instructions").  Prior to registration of the
Conversion Shares under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement.  The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior
to registration of such shares under the 1933 Act) will be given by the Company
to its transfer agent and that the Conversion Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement or the Registration Rights Agreement.  Nothing in
this Section 5 shall affect in any way the Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of the Debentures or the
Conversion Shares.  If the Buyer provides the Company with an opinion of
counsel, reasonably satisfactory in form, and substance to the Company, that
registration of a resale by the Buyer of any of the Debentures or the Conversion
Shares is not required under the 1933 Act, the Company shall permit the
transfer, and, in the case of the Conversion Shares, promptly instruct its
transfer agent to issue one or more certificates in such name and in such
denominations as specified by the Buyer.  The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Buyer by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section
5, that the Buyer shall be entitled, in addition to all other available
remedies, to an injunction

                                       13
<PAGE>

restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.

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

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

          a.  The Buyer shall have executed this Agreement and the Registration
     Rights Agreement and delivered the same to the Company.

          b.  The Buyer shall have delivered to the Escrow Agent the Purchase
     Price for the Debentures being purchased by the Buyer at the Closing by
     wire transfer of immediately available funds pursuant to the wire
     instructions provided by the Company.

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

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

          The obligation of the Buyer hereunder to purchase the Debentures at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for the
Buyer's sole benefit and may be waived by the Buyer at any time in its sole
discretion:

          a.  The Company shall have executed this Agreement and the
     Registration Rights Agreement, and delivered the same to the Buyer.

          b.  The Common Stock shall be authorized for quotation on the over-
     the-counter market, or the NASDAQ SmallCap Market , Inc., trading in the
     Common Stock shall not have been suspended for any reason.

          c.  The representations and warranties of the Company shall be true
     and correct in all material respects (except to the extent that any of such
     representations and warranties is already qualified as to materiality in
     Section 3 above, in which case, such representations and warranties shall
     be true and correct without further qualification) as of the date when made
     and as of the Closing Date as though made at that time (except for
     representations and warranties that speak as of a specific date) and the
     Company shall have performed, satisfied and complied in all material
     respects with the covenants, agreements and conditions required by this
     Agreement to be performed, satisfied or

                                       14
<PAGE>

     complied with by the Company at or prior to the Closing Date. The Buyer
     shall have received a certificate, executed by the Chief Executive Officer
     of the Company, dated as of the Closing Date, to the foregoing effect and
     as to such other matters as may be reasonably requested by the Buyer
     including, without limitation an update as of the Closing Date regarding
     the representation contained in Section 3(c) above.

          d.  The Buyer shall have received the opinion of the Company's counsel
     dated as of the Closing Date, in form, scope and substance reasonably
     satisfactory to the Buyer and in substantially the form of Exhibit "C"
     attached hereto.

          e.  The Company shall have executed and delivered to the Buyer the
     Certificates (in such denominations as the Buyer shall request) for the
     Debentures being purchased by the Buyer at the Closing.

          f.  The Board of Directors of the Company shall have adopted the
     resolutions in substantially the form of Exhibit "D" attached hereto.

          g.  As of the Closing Date, the Company shall have reserved out of its
     authorized and unissued Common Stock, solely for the purpose of effecting
     the conversion of the Debentures, such number of shares of Common Stock no
     less than 100% of the number of shares of Common Stock for which are
     issuable upon conversion of all of the Debentures which could be issued at
     any time at the Floor Price as defined in the Debentures.

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

     8.  INDEMNIFICATION.
         ---------------

          a.  In consideration of the Buyer's execution and delivery of this
     Agreement and acquiring the Debentures and the Conversion Shares, hereunder
     and in addition to all of the Company's other obligations under this
     Agreement, the Company shall defend, protect, indemnify and hold harmless
     the Buyer and each other holder of the Debentures, the Conversion Shares,
     and all of their officers, directors, employees and agents (including,
     without limitation, those retained in connection with the transactions
     contemplated by this Agreement) (collectively, the "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 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 Indemnitees or any of them as a result of,
     or arising out of, or relating to (a) any misrepresentation or breach of
     any representation or warranty made by the Company in this Agreement, the
     Debentures 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,

                                       15
<PAGE>

     the Debentures, 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 Indemnitee
     by any third party and arising out of or resulting from the execution,
     delivery, performance or enforcement of this Agreement or any other
     instrument, document or agreement executed pursuant hereto by any of the
     Indemnities, any transaction financed or to be financed in whole or in
     part, directly or indirectly, with the proceeds of the issuance of the
     Debentures or the status of the Buyer or holder of the Debentures, the
     Conversion Shares, as an investor in the Company. To the extent that the
     foregoing undertaking by the Company may be unenforceable for any reason,
     the Company shall make the maximum contribution to the payment and
     satisfaction of each of the Indemnified Liabilities which is permissible
     under applicable law.

          b.  Each Buyer agrees to severally and not jointly indemnify, hold
     harmless and defend, to the same extent and in the same manner as is set
     forth in Section 8a., the Company from Indemnified Liabilities, in each
     case to the extent, and only to the extent, that such Indemnified
     Liabilities are incurred by the Company arising out of or relating to a
     breach by that Buyer of (a) any misrepresentation or breach of any
     representation or warranty made by the Buyer in this Agreement, the
     Debentures 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 Buyer contained in this
     Agreement, the Debentures the Registration Rights Agreement, or any other
     certificate, instrument or document contemplated hereby or thereby,
     provided, further, however, that the Investor shall be liable under this
     Section 8b. for only that amount of Indemnified Liabilities as does not
     exceed the proceeds to such Buyer as a result of the sale of Registrable
     Securities pursuant to the Registration Statement.

     9.   GOVERNING LAW: MISCELLANEOUS.
          ----------------------------

          a.  Governing Law.  This Agreement shall be governed by and
              -------------
     interpreted in accordance with the laws of the State of Delaware without
     regard to the principles of conflict of laws.  Company acknowledges that
     upon any breach of Buyer's conversion rights hereunder, Buyer's resulting
     injury may not be adequately compensated by a remedy at law.  Accordingly,
     upon such breach, Buyer, at its election and without limitation of its
     other remedies, shall be entitled to pursue a claim for specific
     performance of this Agreement, and Company hereby waives the right to
     assert any defense thereto that Purchaser has an adequate remedy at law.
     The parties expressly consent to the jurisdiction and venue of the Superior
     Court of Fulton County, Georgia and the United States District Court for
     the Northern District of Georgia for the adjudication of any civil action
     asserted pursuant to this Paragraph.

          b.  Acknowledgment Regarding Buyer's Purchase of Debentures.  The
              -------------------------------------------------------
     parties acknowledge and agree that the Buyer is acting solely in the
     capacity of an arm's length purchaser with respect to this Agreement and
     the transactions contemplated hereby.  The parties further acknowledge that
     the Buyer is not acting as a financial advisor or fiduciary of the Company
     (or in any similar capacity) with respect to this Agreement and the

                                       16
<PAGE>

     transactions contemplated hereby and any advice given by the Buyer or any
     of their respective representatives or agents in connection with this
     Agreement and the transactions contemplated hereby is merely incidental to
     such Buyer's purchase of the Debentures or the Conversion Shares.  The
     parties further acknowledge Buyer that the Company's decision to enter into
     this Agreement has been based solely on the independent evaluation by the
     Company and its representatives.

          c.  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

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

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

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

          g.   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 (I) 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:

                                       17
<PAGE>

     If to the Company:

          1101 Northpoint Parkway
          West Palm Beach, Florida  33407

          Telephone:   (561) 478-5625
          Facsimile:   (561) 688-8784

     If to the Transfer Agent:

          Florida Atlantic Stock Transfer, Inc.
          7130 Nob Hill Road
          Tamarac, Florida  33321

          Telephone:   (954) 726-4954
          Facsimile:   (954) 726-6305

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

          h.  Successors and Assigns.  This Agreement shall be binding upon and
              ----------------------
     inure to the benefit of the parties and their respective successors and
     assigns.  The Company shall not assign this Agreement or any rights or
     obligations hereunder without the prior written consent of the Buyer.  The
     Buyer may assign its rights hereunder without the consent of the Company,
     provided, however, that any such assignment shall not release the Buyer
     from its obligations hereunder unless such obligations are assumed by such
     assignee and the Company has consented to such assignment and assumption.

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

          j.  Survival.  Unless this Agreement is terminated under Section 9(m),
              --------
     the representations and warranties of the Company and the Buyer contained
     in Sections 2 and 3, the agreements and covenants set forth in Sections 4,
     5 and 9, the indemnification provisions set forth in Section 8, shall
     survive the Closing.  The Buyer shall be responsible only for its own
     representations, warranties, agreements and covenants hereunder.

          k.  Publicity.  The Company and the Buyer shall have the right to
              ---------
     approve before issuance any press releases or any other public statements
     with respect to the transactions contemplated hereby; provided, however,
     that the Company shall be entitled, without the prior approval of the
     Buyer, to make any press release or other public

                                       18
<PAGE>

     disclosure with respect to such transactions as is required by applicable
     law and regulations.

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

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

          n.  Finder.  The Company acknowledges that it has engaged J.P. Carey
              ------
     Securities, Inc. as placement agent in connection with the sale of the
     Debentures, which placement agent may have formally or informally engaged
     other agents on its behalf.  The Company shall be responsible for the
     payment of any placement agent or brokers' fees (which includes cash and
     warrants to purchase Common Stock) relating to or arising out of the
     transactions contemplated hereby as described in the Placement Agency
     Agreement between the parties dated of even date herewith.

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

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

                                       19
<PAGE>

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

                              "COMPANY"
                              SAF T LOK INCORPORATED

                              By:_______________________________________
                              Name: ____________________________________
                              Its: _____________________________________

                              "BUYER"

                              ___________________________

                              By: ______________________________________
                              Name: ____________________________________
                              Title: ___________________________________

                                       20
<PAGE>

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
                     Address and Facsimile Number of           Face Amount of
Buyer's Name         Buyer                                     Debentures
------------------------------------------------------------------------------
<S>                  <C>                                       <C>

------------------------------------------------------------------------------

------------------------------------------------------------------------------

------------------------------------------------------------------------------
</TABLE>

                                       21

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