exhibit_10-20.htm


    
      

    

    Exhibit
      10.20

     

    SECURITIES
      PURCHASE AGREEMENT

     

    THIS
      SECURITIES PURCHASE AGREEMENT (this
“Agreement”), dated as of May 15_, 2007, by and among
C-Mark
      International, Inc., a South Carolina corporation, with headquarters
      located at 4130 E. Van Buren, Suite 325, Phoenix, AZ 85008 (the
“Company”), and the Buyers listed on Schedule I attached
      hereto (individually, a “Buyer” or collectively
“Buyers”).

     

     

    WITNESSETH:

     

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

     

    WHEREAS,
      the parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Buyer(s), as provided herein,
      and the Buyer(s) shall purchase Seven Hundred Thousand Dollars ($700,000) of
      secured convertible debentures (the “Convertible Debentures”), which
      shall be convertible into shares of the Company’s common stock, par value $.0001
      (the “Common Stock”) (as converted, the “Conversion Shares”), for
      a total purchase price Seven Hundred Thousand Dollars ($700,000), (the
“Purchase Price”) in the respective amounts set forth opposite each
      Buyer(s) name on Schedule I (the “Subscription Amount”); and

     

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

     

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

     

    WHEREAS,
      the parties hereto previously executed and delivered Irrevocable Transfer Agent
      Instructions substantially in the form attached hereto as Exhibit C (the
“Irrevocable Transfer Agent Instructions”); and

     

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

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering Irrevocable Transfer Agent Instructions
      (the
“Irrevocable Transfer Agent Instructions”)

     

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

     

    1.           PURCHASE
      AND SALE OF CONVERTIBLE DEBENTURES.

     

    (a)    Purchase
      of Convertible Debentures.  Subject to the satisfaction (or
      waiver) of the terms and conditions of this Agreement, each Buyer agrees,
      severally and not jointly, to purchase at Closing (as defined herein below)
      and
      the Company agrees to sell and issue to each Buyer, severally and not jointly,
      at Closing, Convertible Debentures in amounts corresponding with the
      Subscription Amount set forth opposite each Buyer’s name
      on
      Schedule I hereto.  Upon execution hereof by a Buyer, the Buyer shall
      wire transfer the Subscription Amount set forth opposite his name on Schedule
      I
      in same-day funds or a check payable to: ”James G. Dodrill II, P.A. as Escrow
      Agent for C-Mark International, Inc./Trafalgar Capital Investment Fund”, which
      Subscription Amount shall be held in escrow pursuant to the terms of the Escrow
      Agreement (as hereinafter defined) and disbursed in accordance
      therewith.  Notwithstanding the foregoing, a Buyer may withdraw his
      Subscription Amount and terminate this Agreement as to such Buyer at any time
      after the execution hereof and prior to Closing (as hereinafter
      defined).

     

    (b)    Closing
      Date.  The Closing of the purchase and sale of the Convertible
      Debentures shall take place at 10:00 a.m. Eastern Standard Time on the date
      hereof, subject to notification of satisfaction of the conditions to the Closing
      set forth herein and in Sections 6 and 7 below (or such later date as is
      mutually agreed to by the Company and the Buyer(s)) (the “Closing Date”),
      The  Closing shall occur on their respective Closing Dates at the
      offices of James G. Dodrill II, P.A., 5800 Hamilton Way, Boca Raton,
      FL  33496 (or such other place as is mutually agreed to by the Company
      and the Buyer(s)).

     

    (c)    Escrow
      Arrangements; Form of Payment.  Upon execution hereof by Buyer(s)
      and pending the Closing, the aggregate proceeds of the sale of the Convertible
      Debentures to Buyer(s) pursuant hereto shall be deposited in a non-interest
      bearing escrow account with James G. Dodrill II, P.A., as escrow agent (the
      “Escrow Agent”), pursuant to the terms of an escrow agreement between the
      Company, the Buyer(s) and the Escrow Agent in the form attached hereto as
Exhibit B (the “Escrow Agreement”).  Subject to the
      satisfaction of the terms and conditions of this Agreement, on the Closing
      Dates, (i) the Escrow Agent shall deliver to the Company in accordance with
      the
      terms of the Escrow Agreement such aggregate proceeds for the Convertible
      Debentures to be issued and sold to such Buyer(s), minus the fees and expenses
      as set forth herein which shall be paid directly from the gross proceeds held
      in
      escrow at each Closing by wire transfer of immediately available funds and
      (ii) the Company shall deliver to each Buyer, Convertible Debentures which
      such Buyer(s) is purchasing in amounts indicated opposite such Buyer’s name on
      Schedule I, duly executed on behalf of the Company.

     

    (d)    “Closing
      Date
      Exchange Rate” means the Euro to US dollar spot exchange rate as quoted in the
      London edition of the Financial Times on the Closing Date.

     

     

    
      
        
        

      

      
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    (e)    “Repayment
      Exchange Rate” means in relation to each date of a
      Conversion Notice or date of a Redemption Notice, the Euro
      to US dollar spot exchange rate as quoted by in the London edition of the
      Financial Times on such date.

     

    (f)    If
      on the
      date of any Conversion Notice or Redemption Notice, the Repayment Exchange
      Rate
      is less than the Closing Date Exchange Rate then the number of Shares to be
      issued shall be increased by the same percentage as results from dividing the
      Closing Date Exchange Rate by the relevant Repayment Exchange
      Rate.  By way of example, if the number of Shares to be issued in
      respect of a particular Conversion Notice or Redemption Notice would, but for
      this Clause 1(f), be 1,000 and if the Closing Date Exchange Rate is 1.80 and
      the
      relevant Repayment Exchange Rate is 1.75, then 1,029 Shares will be issued
      in
      relation to that Conversion Notice or Redemption Notice, as the case may
      be.

     

    (g)    If
      on the
      Repayment Date or any Interest Repayment Date, the Cash Payment Date Exchange
      Rate, as defined below is less than the Closing Date Exchange Rate then the
      amount of cash required to satisfy the amounts due at such time shall be
      increased by the same percentage as results from dividing the Closing Date
      Exchange Rate by the relevant Cash Payment Date Exchange Rate. “Cash Payment
      Date Exchange Rate” means in
      relation to each Repayment Date or Interest Repayment Date
      the Euro to US dollar spot exchange
      rate as quoted in the London edition of the Financial Times on such
      date.  By way of example, if the amount of cash required to repay all
      amounts due on such date would, but for this Clause 1(g), be $1,000 and if
      the
      Closing Date Exchange Rate is 1.80 and the relevant Repayment Date Exchange
      Rate
      is 1.75 then the amount of cash from the Cash Payment required to repay all
      amounts due on such date will be $1,028.57.

     

    2.           BUYER’S
      REPRESENTATIONS AND WARRANTIES.

    


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

     

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

     

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

     

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

     

     

    
      
        
        

      

      
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    (d)    Information.  Each
      Buyer and its advisors (and his or, its counsel), if any, have been furnished
      with all materials relating to the business, finances and operations of the
      Company and information he deemed material to making an informed investment
      decision regarding his purchase of the Convertible Debentures and the Conversion
      Shares, which have been requested by such Buyer.  Each Buyer and its
      advisors, if any, have been afforded the opportunity to ask questions of the
      Company and its management.  Neither such inquiries nor any other due
      diligence investigations conducted by such Buyer or its advisors, if any, or
      its
      representatives shall modify, amend or affect such Buyer’s right to rely on the
      Company’s representations and warranties contained in Section 3
      below.  Each Buyer understands that its investment in the Convertible
      Debentures and the Conversion Shares involves a high degree of
      risk.  Each Buyer is in a position regarding the Company, which, based
      upon employment, family relationship or economic bargaining power, enabled
      and
      enables such Buyer to obtain information from the Company in order to evaluate
      the merits and risks of this investment.  Each Buyer has sought such
      accounting, legal and tax advice, as it has considered necessary to make an
      informed investment decision with respect to its acquisition of the Convertible
      Debentures and the Conversion Shares.

     

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

     

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

     

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

     

    
      
        
        

      

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

            


    

     

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

     

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

     

    (i)    Receipt
      of
      Documents.  Each Buyer and his or its counsel has received and
      read in their entirety:  (i) this Agreement and each representation,
      warranty and covenant set forth herein, the Security Agreement, the Investor
      Registration Rights Agreement, the Escrow Agreement, and the Irrevocable
      transfer Agent Instructions; (ii) all due diligence and other information
      necessary to verify the accuracy and completeness of such representations,
      warranties and covenants; and (iii) answers to all questions each Buyer
      submitted to the Company regarding an investment in the Company; and each Buyer
      has relied on the information contained therein and has not been furnished
      any
      other documents, literature, memorandum or prospectus.

     

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

     

     

    
      
        
        

      

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

     

    
      3.           REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY.

       

      The
        Company represents and warrants as of the date hereof and as of each Closing
        Date 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 Security Agreement, the Investor Registration Rights
      Agreement, the Escrow Agreement, the Irrevocable Transfer Agent Instructions,
      and any related agreements, and to issue the Convertible Debentures and the
      Conversion Shares in accordance with the terms hereof and thereof, (ii) the
      execution and delivery of this Agreement, the Security Agreement, the Investor
      Registration Rights Agreement, the Escrow Agreement, the Irrevocable Transfer
      Agent Instructions (as defined herein) and any related agreements by the Company
      and the consummation by it of the transactions contemplated hereby and thereby,
      including, without limitation, the issuance of the Convertible Debentures,
      the
      Conversion Shares  and the reservation for issuance and the issuance
      of the Conversion Shares issuable upon conversion or exercise thereof, have
      been
      duly authorized by the Company’s Board of Directors and no further consent or
      authorization is required by the Company, its Board of Directors or its
      stockholders, (iii) this Agreement, the Security Agreement, the Investor
      Registration Rights Agreement, the Escrow Agreement, the Irrevocable Transfer
      Agent Instructions and any related agreements have been duly executed and
      delivered by the Company, (iv) this Agreement, the Security Agreement, the
      Investor Registration Rights Agreement, the Escrow Agreement, the Irrevocable
      Transfer Agent Instructions and any related agreements constitute the valid
      and
      binding obligations of the Company enforceable against the Company in accordance
      with their terms, except as such enforceability may be limited by general
      principles of equity or applicable bankruptcy, insolvency, reorganization,
      moratorium, liquidation or similar laws relating to, or affecting generally,
      the
      enforcement of creditors’ rights and remedies.  The authorized officer
      of the Company executing this Agreement, the Security Agreement, the Investor
      Registration Rights Agreement, the Escrow Agreement, the Irrevocable Transfer
      Agent Instructions and any related agreements knows of no reason why the Company
      cannot file the registration statement as required under the Investor
      Registration Rights Agreement or perform any of the Company’s other obligations
      under such documents.

     

     

    
      
        
        

      

      
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    (c)    Capitalization.  The
      authorized capital stock of the Company consists of 500 million shares of Common
      Stock, par value $.0001 per share and no shares of Preferred
      Stock.  As of the date hereof, the Company has 89,632,500 shares of
      Common Stock and no shares of Preferred Stock issued and
      outstanding.  All of such outstanding shares have been validly issued
      and are fully paid and nonassessable.  No shares of Common Stock are
      subject to preemptive rights or any other similar rights or any liens or
      encumbrances suffered or permitted by the Company.  As of the date of
      this Agreement, (i) there are no outstanding options, warrants, scrip, rights
      to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company or any of its subsidiaries, or contracts, commitments, understandings
      or
      arrangements by which the Company or any of its subsidiaries is or may become
      bound to issue additional shares of capital stock of the Company or any of
      its
      subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, any shares of capital stock of the Company or any of its
      subsidiaries, (ii) there are no outstanding debt securities and (iii) there
      are
      no agreements or arrangements under which the Company or any of its subsidiaries
      is obligated to register the sale of any of their securities under the 1933
      Act
      (except pursuant to the Registration Rights Agreement) and (iv) there are no
      outstanding registration statements and there are no outstanding comment letters
      from the SEC or any other regulatory agency.  There are no securities
      or instruments containing anti-dilution or similar provisions that will be
      triggered by the issuance of the Convertible Debentures as described in this
      Agreement.  The Company has furnished to the Buyer true and correct
      copies of the Company’s Certificate of Incorporation, as amended and as in
      effect on the date hereof (the “Certificate of Incorporation”), and the
      Company’s By-laws, as in effect on the date hereof (the “By-laws”), and
      the terms of all securities convertible into or exercisable for Common Stock
      and
      the material rights of the holders thereof in respect thereto other than stock
      options issued to employees and consultants.

     

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

     

    (e)    No
      Conflicts.  The execution, delivery and performance of this
      Agreement, the Security Agreement, the Investors Registration Rights Agreement,
      the Escrow Agreement and the Irrevocable Transfer Agent Instructions by the
      Company and the consummation by the Company of the transactions contemplated
      hereby will not (i) result in a violation of the Certificate of Incorporation,
      any certificate of designations of any outstanding series of preferred stock
      of
      the Company or the By-laws or (ii) conflict with or constitute a default (or
      an
      event which with notice or lapse of time or both would become a default) under,
      or give to others any rights of termination, amendment, acceleration or
      cancellation of, any agreement, indenture or instrument to which the Company
      or
      any of its subsidiaries is a party, or result in a violation of any law, rule,
      regulation, order, judgment or decree (including federal and state securities
      laws and regulations and, once the Company’s common stock is quoted on the OTC
      Bulletin Board, the rules and regulations of The National Association of
      Securities Dealers Inc.’s OTC Bulletin Board) applicable to the Company or any
      of its subsidiaries or by which any property or asset of the Company or any
      of
      its subsidiaries is bound or affected.  Neither the Company nor its
      subsidiaries is in violation of any term of or in default under its Certificate
      of Incorporation or By-laws or their organizational charter or by-laws,
      respectively, or any material contract, agreement, mortgage, indebtedness,
      indenture, instrument, judgment, decree or order or any statute, rule or
      regulation applicable to the Company or its subsidiaries.  The
      business of the Company and its subsidiaries is not being conducted, and shall
      not be conducted in violation of any material law, ordinance, or regulation
      of
      any governmental entity.  Except as specifically contemplated by this
      Agreement and as required under the 1933 Act and any applicable state securities
      laws, the Company is not required to obtain any consent, authorization or order
      of, or make any filing or registration with, any court or governmental agency
      in
      order for it to execute, deliver or perform any of its obligations under or
      contemplated by this Agreement or the Registration Rights Agreement in
      accordance with the terms hereof or thereof.  All consents,
      authorizations, orders, filings and registrations which the Company is required
      to obtain pursuant to the preceding sentence have been obtained or effected
      on
      or prior to the date hereof.  The Company and its subsidiaries are
      unaware of any facts or circumstance, which might give rise to any of the
      foregoing.

     

     

    
      
        
        

      

      
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    (f)    [reserved]

     

    (g)    None
      of the
      Company’s public statements and none of the information provided to the Buyers
      include any untrue statements of material fact, nor do they omit to state any
      material fact required to be stated therein necessary to make the statements
      made, in light of the circumstances under which they were made, not
      misleading.

     

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

     

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

     

    


    
      
        
          
          

        

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

     

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

     

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

     

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

     

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

     

     

    
      
        
        

      

      
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    (o)    Title.  Any
      real property and facilities held under lease by the Company and its
      subsidiaries are held by them under valid, subsisting and enforceable leases
      with such exceptions as are not material and do not interfere with the use
      made
      and proposed to be made of such property and buildings by the Company and its
      subsidiaries.

     

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

     

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

     

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

     

    (s)    No
      Material Adverse Breaches, etc.  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.  Neither the Company nor any of its subsidiaries is in
      breach of any contract or agreement which breach, in the judgment of the
      Company’s officers, has or is expected to have a material adverse effect on the
      business, properties, operations, financial condition, results of operations
      or
      prospects of the Company or its subsidiaries.

     

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

     

     

    
      
        
        

      

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

     

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

     

    4.           COVENANTS.

     

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

     

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

     

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

     

    


    
      
        
          
          

        

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

     

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

     

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

     

    (g)           Fees
      and Expenses.

     

    (i)           Each
      of the Company and the Buyer(s) shall pay all costs and expenses incurred by
      such party in connection with the negotiation, investigation, preparation,
      execution and delivery of this Agreement, the Escrow Agreement, the Investor
      Registration Rights Agreement, the Security Agreement and the Irrevocable
      Transfer Agent Instructions.  The Company shall pay the Buyer a
      commitment fee of eight percent (8%) of the Purchase Price, which shall be
      paid
      directly from the proceeds of and proportionally upon each Closing.

     

    (ii)           The
      Company has agreed to pay a structuring fee to Buyer of Three Thousand Five
      Hundred Dollars ($3,500).

     

    (iii)           The
      Company shall pay to the Buyer a Facility Commitment Fee equal to two percent
      (2%) of the Purchase Price which shall be paid directly from the proceeds of
      and
      proportionally upon each Closing.

     

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

     

     

    


    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

     

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

    

     

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

     

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

     

    (l)    Restriction
      on
“Short” Position.  Neither the Buyer nor any of its affiliates
      have an open short position in the Common Stock of the Company, and the Buyer
      agrees that it shall not, and that it will cause its affiliates not to, engage
      in any short sales with respect to the Common Stock as long as any Convertible
      Debentures shall remain outstanding.

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    5.           TRANSFER
      AGENT INSTRUCTIONS.

     

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

     

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

     

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

     

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (b)    The
      Common
      Stock shall be authorized for quotation on the OTCBB within one hundred fifty
      (150) days from the date of the Closing.

     

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

     

    


    
      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

    

     

     

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

     

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

     

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

     

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

     

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

     

    (i)    The
      Company
      shall have provided to the Buyer an acknowledgement, to the satisfaction of
      the
      Buyer, from the Company’s independent certified public accountants as to its
      ability to provide all consents required in order to file a registration
      statement in connection with this transaction.

     

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

     

    (k)    The
      Company
      shall provide the Buyer a near term projection of the Company’s cash flow that
      brings its burn rate to zero and demonstrates the Company’s ability to fund its
      deficit until such time as this occurs.

     

    8.           INDEMNIFICATION.

     

    (a)    In
      consideration of the Buyer’s execution and delivery of this Agreement and
      acquiring the Convertible Debentures and the Conversion Shares hereunder, and
      in
      addition to all of the Company’s other obligations under this Agreement, the
      Company shall defend, protect, indemnify and hold harmless the Buyer(s) and
      each
      other holder of the Convertible Debentures and the Conversion Shares, and all
      of
      their officers, directors, employees and agents (including, without
      limitation, those retained in connection with the transactions contemplated
      by
      this Agreement) (collectively, the “Buyer Indemnitees”) from and against
      any and all actions, causes of action, suits, claims, losses, costs, penalties,
      fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Buyer Indemnitee is a party to the action
      for
      which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”), incurred by the
      Buyer Indemnitees or any of them as a result of, or arising out of, or relating
      to (a) any misrepresentation or breach of any representation or warranty made
      by
      the Company in this Agreement, the Convertible Debentures or the Investor
      Registration Rights Agreement or any other certificate, instrument or document
      contemplated hereby or thereby, (b) any breach of any covenant, agreement or
      obligation of the Company contained in this Agreement, or the Investor
      Registration Rights Agreement or any other certificate, instrument or document
      contemplated hereby or thereby, or (c) any cause of action, suit or claim
      brought or made against such Indemnitee and arising out of or resulting from
      the
      execution, delivery, performance or enforcement of this Agreement or any other
      instrument, document or agreement executed pursuant hereto by any of the
      Indemnities, any transaction financed or to be financed in whole or in part,
      directly or indirectly, with the proceeds of the issuance of the Convertible
      Debentures or the status of the Buyer or holder of the Convertible
      Debentures  the Conversion Shares,  as a Buyer of
      Convertible Debentures in the Company.  To the extent that the
      foregoing undertaking by the Company may be unenforceable for any reason, the
      Company shall make the maximum contribution to the payment and satisfaction
      of
      each of the Indemnified Liabilities, which is permissible under applicable
      law.

     

    


    
      
        
          
          

        

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

     

    9.           GOVERNING
      LAW: MISCELLANEOUS.

     

    (a)    Governing
      Law.  This Agreement shall be governed by and interpreted in
      accordance with the laws of the State of Florida without regard to the
      principles of conflict of laws.  The parties further agree that any
      action between them shall be heard in Broward County, Florida and expressly
      consent to the jurisdiction and venue of the State Court sitting in Broward
      County, Florida and the United States District Court for the Southern District
      of Florida for the adjudication of any civil action asserted pursuant to this
      Paragraph.

     

    (b)    Counterparts.  This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other
      party.  In the event any signature page is delivered by facsimile
      transmission, the party using such means of delivery shall cause four (4)
      additional original executed signature pages to be physically delivered to
      the
      other party within five (5) days of the execution and delivery
      hereof.

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      	
              If
                to the Company, to:

            	
              C-Mark
                International, Inc.

            
	 	
              4130
                E. Van Buren, Suite 325

            
	 	
              Phoenix,
                AZ 85008

            
	 	
              Attn:
                Mr. Charles Jones, CEO

            
	 	
              Telephone:
                (602) 443-8640

            
	 	
              Facsimile:
                (602) 443-8646

            
	 	 
	
              With
                a copy to:

            	
              The
                O’Neal Law Firm, P.C.

            
	 	
              17100
                E. Shea Blvd., Suite 400-D

            
	 	
              Fountain
                Hills, AZ  85268

            
	 	
              Attention: 
                William D. O’Neal, Esq.

            
	 	
              Telephone: 
                (480) 812-5058

            
	 	
              Facsimile: 
                (480) 816-9241

            
	 	 
	
              If
                to the Transfer Agent, to:

            	
              First
                American Stock Transfer

            
	 	
              706
                E. Bell Road

            
	 	
              Suite
                202

            
	 	
              Phoenix,
                AZ 85012

            
	 	
              Attention:
                Salli Marinov

            
	 	
              Telephone:
                (602) 485-1346

            
	 	
              Facsimile:
                (602) 788-0423

            
	 	 
	
              With
                Copy to:

            	
              James
                G. Dodrill II, P.A.

            
	 	
              5800
                Hamilton Way

            
	 	
              Boca
                Raton, FL  33496

            
	 	
              Attention: 
                Jim Dodrill, Esq.

            
	 	
              Telephone: 
                (561) 862-0529

            
	 	
              Facsimile: 
                (561) 892-7787

            
	 	 


    

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

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

     

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

     

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

     

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

     

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

    


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

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    


    [REMAINDER
      PAGE INTENTIONALLY LEFT BLANK]

     

     

     

     

     

     

     

     

     

    
 

    
      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

    

    


    


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

     

    


    
      	 	
              COMPANY:

            
	 	
              CMARK
                INTERNATIONAL, INC.

            
	 	 
	 	 
	 	
              By:   
                  /s/    Charles Jones,
                Jr.                    

            
	 	
              Name:         Charles
                Jones, Jr.

            
	 	
              Title:           President/CEO

            
	 	 


    

    


    
      	 	
              BUYER:

            
	 	
              TRAFALGAR
                CAPITAL SPECIALIZED

            
	 	
              INVESTMENT
                FUND, LUXEMBOURG

            
	 	
              By:           Trafalgar
                Capital Sarl

            
	 	
              Its:           General
                Partner

            
	 	 
	 	 
	 	
              By:         /s/  
                Andrew
                Garai                         
                

            
	 	
              Name:          Andrew
                Garai

            
	 	
              Title:           Chairman
                of the Board

            


    

    


    


    
      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

    

    


    


    EXHIBIT
      A

    


     

    FORM
      OF INVESTOR REGISTRATION RIGHTS AGREEMENT

     

     

     

     

     

     

     

     

     

     

     

    
 

    


    


    


    
      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

    

    


    


    EXHIBIT
      B

    


     

    FORM
      OF ESCROW AGREEMENT

     

     

     

     

     

     

     

     

     

     

    
 

    


    


    


    
      
        
          
          

        

        
          B-1

          
            

          

        

        
          
          

        

      

    

    


    


    EXHIBIT
      C

     

    TRANSFER
      AGENT INSTRUCTIONS

     

    


    


     

     

     

     

     

     

     

     

     

     

    
 

    


    
      
        
          
          

        

        
          C-1

          
            

          

        

        
          
          

        

      

    

    


    


     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS

     

    


    
      	
              
                Name

              

            	
              
                Signature

              

            	
              
                Address/Facsimile

                Number
                  of Buyer

              

            	
              
                Amount
                  of Subscription

              

            
	 	 	
              8-10
                Rue Mathias Hardt

            	 
	
              Trafalgar
                Capital Specialized

            	
              By:           Trafalgar
                Capital Sarl

            	
              BP
                3023

            	
              $        700,000

            
	
              Investment
                Fund, Luxembourg

            	
              Its:           General
                Partner

            	
              L-1030
                Luxembourg

            	 
	 	 	
              Facsimile:

            	 
	 	 	
              011-44-207-405-0161

            	 
	 	
              By:    /s/   Andrew
                Garai              

            	
              and

            	 
	 	
              Name:      Andrew
                Garai

            	
              001-786-323-1651

            	 
	 	
              Its:           Chairman
                of the Board

            	 	 


    

    


    Buyer’s
      Counsel:

    


    James
      G.
      Dodrill II, P.A.

    5800
      Hamilton Way

    Boca
      Raton, FL  33496

    Telephone:
      (561) 862-0529

    Facsimile:
      (561) 892-7787

     

     

     

     

     

     

     D-1