exhibit_10-11.htm


    
      

    

    Exhibit
      10.11

     

    
       

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

       

      


       

      SECURED
        DEBENTURE

       

      C-MARK
        INTERNATIONAL, INC.

       

      Secured
        Convertible Debenture

       

      April
        17, 2007

       

      


      
        	
                No.  ___

              	
                US$400,000

              


      

      


      This
        Secured Debenture (the “Debenture”) is issued on April _17_, 2007
        (the “Closing Date”) by C-Mark International, Inc., a South
        Carolina corporation (the “Company”), to Trafalgar Capital Specialized
        Investment Fund, Luxembourg (together with its permitted successors and assigns,
        the “Holder”) pursuant to exemptions from registration under the
        Securities Act of 1933, as amended.

       

      ARTICLE
        I.

       

      Section
        1.01    Principal
        and Interest.  For value received, the
        Company hereby promises to pay to the order of the Holder on April ___,
        2009 in lawful money of the United States of America and in immediately
        available funds the principal sum of Four Hundred Thousand U.S.
        Dollars (US$400,000) together with interest on the unpaid
        principal of this Debenture at the following rate:  (a) twelve percent
        (12%) per annum compounded monthly from the date hereof until the date the
        registration statement (the “Registration Statement”) is filed, pursuant
        to the Investor Registration Rights Agreement dated the date hereof, with
        the
        United States Securities and Exchange Commission (the “Filing Date” (b) ten
        percent (10%) per annum, compounded monthly from the Filing Date until the
        SEC
        declares the Registration Statement Effective and (c) eight percent (8%)
        per
        annum compounded monthly from the date the SEC declares the Registration
        Statement Effective until paid.  Interest shall be computed on the
        basis of a 365-day year and the actual days elapsed and the Holder shall
        deduct
        two (2) interest payments at each Closing (as defined in the Securities Purchase
        Agreement).  At the Company’s option, the entire principal amount and
        all accrued interest shall be either (a) paid to the Holder on the second
        (2nd) year
        anniversary from the date hereof or (b) converted in accordance with
        Section 1.02 herein provided, however, that in no event shall the Holder be
        entitled to convert this Debenture for a number of shares of Common Stock
        in
        excess of that number of shares of Common Stock which, upon giving effect
        to
        such conversion, would cause the aggregate number of shares of Common Stock
        beneficially owned by the Holder and its affiliates to exceed 4.99% of the
        outstanding shares of the Common Stock following such conversion.

       


      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      


       

       

      Section
        1.02    Optional
        Conversion.  The Holder is entitled, at
        its option, to convert, and sell on the same day or at any subsequent time,
        at
        any time and from time to time, until payment in full of this Debenture,
        all or
        any part of the principal amount of the Debenture, plus accrued interest,
        into
        shares (the “Conversion Shares”) of the Company’s common stock, par value
        US$.0001 per share (“Common Stock”), at the price per share (the
“Conversion Price”) equal to: (1) prior to the Common Stock being
        declared eligible for trading on the Over-The-Counter Bulletin Board, an
        amount
        equal to sixty percent (60%) of the Company’s lowest daily closing bid price for
        the five (5) trading days immediately prior to the First Closing or (2) after
        the Common Stock begins trading on the Over-The-Counter Bulletin
        Board,  the lesser of (a) an amount equal to one hundred twenty
        percent (120%) of the Volume Weighted Average Price (“VWAP”) as quoted by
        Bloomberg L.P. (the “Fixed Price”) as of the date hereof, or
        (b) an amount equal to eighty percent (80%) of the lowest daily
        closing bid price  of the Company’s Common Stock, as quoted by
        Bloomberg, LP, for the five (5)  trading days immediately preceding
        the Conversion Date (as defined herein).  Subparagraphs (a)
        and (b) above are individually referred to as a “Conversion
        Price”.  As used herein, “Principal Market” shall mean The
        National Association of Securities Dealers Inc.’s Over-The-Counter Bulletin
        Board, Nasdaq SmallCap Market, or American Stock Exchange.  If the
        Common Stock is not traded on a Principal Market, the Closing Bid Price and/or
        the VWAP shall mean, the reported Closing Bid Price or the VWAP for the Common
        Stock, as furnished by the National Association of Securities Dealers, Inc.,
        for
        the applicable periods.  No fraction of shares or scrip representing
        fractions of shares will be issued on conversion, but the number of shares
        issuable shall be rounded to the nearest whole share.  To convert this
        Debenture, the Holder hereof shall deliver written notice thereof, substantially
        in the form of Exhibit “A” to this Debenture, with appropriate insertions
        (the “Conversion Notice”), to the Company at its address as set forth
        herein.  The date upon which the conversion shall be effective (the
“Conversion Date”) shall be deemed to be the date set forth in the
        Conversion Notice.  Within three (3) days of receipt of a Conversion
        Notice from the Holder, the Company may redeem any conversion for cash in
        lieu
        of issuing the Conversion Shares using the Redemption Premium when the price
        of
        the common stock is below the Fixed Price.

       

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

       


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      


       

       

      Section
        1.04    Right of
        Redemption.  The Company at its option shall have the
        right to redeem, with three (3) business days advance written notice (the
        “Redemption Notice”), a portion or all outstanding convertible
        debenture.  The redemption price shall be one hundred twenty percent
        (120%) of the amount redeemed including accrued interest (the “Redemption
        Amount”).  The Company shall deliver to the Holder the Redemption
        Amount on the third (3rd) business
        day
        after the Redemption Notice.

       

      Section
        1.05    Interest
        Payments.  The interest so payable will be paid monthly
        (the “Interest Payment Date”) to the person in whose name this Debenture is
        registered.  Holder shall deduct two (2) interest payments at each
        Closing on the then outstanding balance.  At the time such interest is
        payable, the Holder, in its sole discretion, may elect to receive the interest
        in cash (via wire transfer or certified funds) or in the form of Common
        Stock.  In the event of default, as described in Article III
        Section 3.01 hereunder, the Holder may elect that the interest be paid in
        cash (via wire transfer or certified funds) or in the form of Common
        Stock.  If paid in the form of Common Stock, the amount of stock to be
        issued will be calculated as follows: the value of the stock shall be the
        Closing Bid Price on:  (i) the date the interest payment is due;
        or (ii) if the interest payment is not made when due, the date the interest
        payment is made.  A number of shares of Common Stock with a value
        equal to the amount of interest due shall be issued.  No fractional
        shares will be issued; therefore, in the event that the value of the Common
        Stock per share does not equal the total interest due, the Company will pay
        the
        balance in cash.

       

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

       

      Section
        1.07    Secured
        Nature of Debenture.  This Debenture is secured by all of
        the assets and property of the Company as set forth on Exhibit A to the Security
        Agreement dated the date hereof between the Company and the Holder (the
“Security Agreement”).  As set forth in the Security Agreement,
        Holder’s security interest shall terminate upon the occurrence of an Expiration
        Event as defined in the Security Agreement.

       

      Section
        1.08    Currency
        Exchange Rate Protections.

       

      (a)    “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.

       

      (b)
                   “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.

       

       

       


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      


      (c)           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 Section 1.08, 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.

       

      (d)           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 Section 1.08, 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.


       

      ARTICLE
        II.

       

      Section
        2.01    Amendments
        and Waiver of Default.  The Debenture
        may not be amended.  Notwithstanding the above, without the consent of
        the Holder, the Debenture may be amended to cure any ambiguity, defect or
        inconsistency, or to provide for assumption of the Company obligations to
        the
        Holder.

       

      ARTICLE
        III.

       

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

       


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      


       

       

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

       

      ARTICLE
        IV.

       

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

       

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

       

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

       

      ARTICLE
        V.

       

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

       

      Section
        5.02    Consent  of
        Holder to Sell Capital Stock or Grant Security
        Interests.  Except for the Securities
        Purchase Agreement dated the date hereof between the Company and Trafalgar
        Capital Specialized Investment Fund, Luxembourg, so long as any of the principal
        of or interest on this Debenture remains unpaid and unconverted, the Company
        shall not, without the prior consent of the Holder, issue or sell (i) any
        Common Stock or Preferred Stock without consideration or for a consideration
        per
        share less than its fair market value determined immediately prior to its
        issuance, (ii) issue or sell any Preferred Stock, warrant, option, right,
        contract, call, or other security or instrument granting the holder thereof
        the
        right to acquire Common Stock without consideration or for a consideration
        per
        share less than such Common Stock’s fair market value determined immediately
        prior to its issuance, (iii) enter into any security instrument granting
        the
        holder a security interest in any of the assets of the Company, or (iv) file
        any
        registration statement on Form S-8.

       


      
        
          
          

        

        
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      ARTICLE
        VI.

       

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

       

      
        	
                If
                  to the Company, to:

              	
                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 Holder:

              	
                Trafalgar
                  Capital Specialized Investment Fund

              
	 	
                8-10
                  Rue Mathias Hardt

              
	 	
                BP
                  3023

              
	 	
                L-1030
                  Luxembourg

              
	 	
                Attention:  
                  Andrew Garai, Chairman of the Board of

              
	 	
                Facsimile:      011-44-207-405-0161
                  and

                                       001-786-323-1651

              
	 	 
	 	 
	
                With
                  a copy to:

              	
                James
                  G. Dodrill II, P.A.

              
	 	
                5800
                  Hamilton Way

              
	 	
                Boca
                  Raton, FL  33496

              
	 	
                Attention: 
                  James Dodrill, Esq.

              
	 	
                Telephone: 
                  (561) 862-0529

              
	 	
                Facsimile: 
                  (561) 892-7787

              
	 	 


      

      


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

       


      
        
          
          

        

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

       

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

       

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

       

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

       

      
        	 	
                CMARK
                  INTERNATIONAL, INC.

              
	 	 
	 	
                By: /s/
                  Charles W. Jones,
                  Jr.                                                                

              
	 	
                Name:
                  Charles W. Jones, Jr.     

              
	 	
                Title:President

              


      

      


      


      



      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      


      


       

      EXHIBIT
        “A”

       

       

      NOTICE
        OF CONVERSION

       

       

      (To
        be executed by the Holder in order to Convert the
        Debenture)

       

      


      
        	
                TO:

              	 


      

      


      The
        undersigned hereby irrevocably elects to convert US$ of the principal amount
        of
        the above Debenture into Shares of Common Stock of C-Mark International,
        Inc.,
        according to the conditions stated therein, as of the Conversion Date written
        below.

       

      
        	
                Conversion
                  Date:

              	 
	
                Applicable
                  Conversion Price:

              	 
	
                Signature:

              	 
	
                Name:

              	 
	
                Address:

              	 
	
                Amount
                  to be converted:

              	
                US$                                                                                      

              
	
                Amount
                  of Debenture unconverted:

              	
                US$                                                                                      

              
	
                Conversion
                  Price per share:

              	
                US$                                                                                      

              
	
                Number
                  of shares of Common Stock to be issued:

              	 
	
                Please
                  issue the shares of Common Stock in the following name and to the
                  following address:

              	 
	
                Issue
                  to:

              	 
	
                Authorized
                  Signature:

              	 
	
                Name:

              	 
	
                Title:

              	 
	
                Phone
                  Number:

              	 
	
                Broker
                  DTC Participant Code:

              	 
	
                Account
                  Number:

              	 


      

       

       

      A-1