Document:

exhibit_10-2.htm

    
      

    

    EXHIBIT
10.2

     

    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
CONVERTIBLE DEBENTURE

     

    C-MARK
INTERNATIONAL, INC.

     

    Secured
Convertible Debenture

     

    December
31,
2007

     

    

    
      	
              No.  

            	
              US$3,500,000

            

    

    

    This
Secured Convertible Debenture (the “Debenture”) is issued
on December 31, 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 by
December 31, 2009 (the “Maturity Date””) in lawful money of the United
States of America and in immediately available funds the principal sum of Three
Million Five Hundred Thousand U.S. Dollars (US$3,500,000) 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.  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).  The Company is hereby obligated to redirect payment of
all of its accounts receivable to the Holder, which shall deduct any fees,
Redemption Premium (as defined herein) and interest owing from the
receivables.

     

    

    
      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

          EXHIBIT
10.2 - continued

          SCHEDULE
A

          REPAYMENT
SCHEDULE

        

      

    

     

    

    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 $0.05 per share (the “Fixed Price”) The
Fixed Price may also be referred to as the “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.  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.  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.

     

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

     

    Section
1.04                                
..Borrowing Base Compliance Formula. The Borrowing Base Compliance Formula as set
forth below shall at all times be a minimum of Two Hundred Fifty Percent (250%).
The Borrowing Base Compliance Formula shall equal the sum of the backlog,
receivables and current projects divided by the sum of the trade payables (which
for purposes of this formula shall include the principal balance due under the
Convertible Debentures) and cost of goods to complete the current projects and
cost of goods to complete the backlog.. In the event the Company is not in
compliance with the Borrowing Base Compliance Formula, it shall be obligated to
reduce the principal balance due under the Convertible Debentures to an amount
that will bring it into compliance.

    

    Section
1.05                                
Repayment.  Subject
to compliance at all times with Section 1.04, hereof, the Company shall make
interest only payments for months one through six (1 – 6) following the Closing
Date.  Thereafter, the Company shall be obligated to make minimum
principal payments of one hundred thousand dollars ($100,000) per month in
months seven through nine (7 – 9) following the Closing
Date; one hundred fifty thousand dollars ($150,000) per month in months ten
through twelve (10 – 12) following the Closing Date; two hundred thousand
dollars ($200,000) per month in months thirteen through twenty-four (13 – 24)
following the Closing Date and a balloon payment of three hundred fifty thousand
dollars ($350,000) at maturity.  The Company shall pay a ten percent
(10%) premium for all principal amounts redeemed.  For the avoidance
of doubt, the parties have attached hereto as Schedule A the payment schedule
assuming only the minimum payments are made as set forth
above.  Additionally, the Company shall be obligated to redirect
payment of the accounts receivable on each project.  The Holder shall
deduct any fees, redemption premium, and interest owing from the
receivables.  Holder shall deduct two (2) interest payments at the
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.

     

    

    
      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

          EXHIBIT
10.2 - continued

          SCHEDULE
A

          REPAYMENT
SCHEDULE

        

      

    

     

     

    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 and by a direct participation in and direct
right of redirection of the payments relating to all of the Company’s account’s
receivable, 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.

     

    (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 ofexample, 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.

     

    

    
      
        
          
          

        

        
          A-3

          
            

          

        

        
          
          

          EXHIBIT
10.2 - continued

          SCHEDULE
A

          REPAYMENT
SCHEDULE

        

      

    

    

     

     

    (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.

     

    Section
1.09                                
Payment
by Account.  The Company shall inform each of its accounts that
on the business day prior to tendering any payment pursuant to such account’s
Job, the account shall provide notice by fax and email of such Account’s
name, the Job number and the amount being paid to:

     

    Trafalgar Capital
Advisors

    Attention: Ivy Press, V. P. Client
Services

    Facsimile: (786) 323-1651

    Email: ipress@trafcap.com

    

    The Account shall then be permitted to
tender payment for the Job to:

    

    The Bank of New York, NY

    Swift:  IRVTUS3N

    Account Name:  DZ Bank
International S.A.

               
                                           
Luxembourg

    Account # 
8900433892

    Reference:  For further credit to
Trafalgar Capital Specialized InvestmentFund

    Attn:  OS
Fondstransaktionen

     

     

    

    
      
        
          
          

        

        
          A-4

          
            

          

        

        
          
          

          EXHIBIT
10.2 - continued

          SCHEDULE
A

          REPAYMENT
SCHEDULE

        

      

    

    

     

    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.

     

    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.

     

    

    
      
        
          
          

        

        
          A-5

          
            

          

        

        
          
          

          EXHIBIT
10.2 - continued

          SCHEDULE
A

          REPAYMENT
SCHEDULE

        

      

    

     

     

    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.

     

     

    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

            
	 	 

    

    

    
      
        
          
          

        

        
          A-6

          
            

          

        

        
          
          

          EXHIBIT
10.2 - continued

          SCHEDULE
A

          REPAYMENT
SCHEDULE

        

      

    

    

    

    
      	
              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.

     

    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.

     

    

    
      
        
          
          

        

        
          A-7

          
            

          

        

        
          
          

          EXHIBIT
10.2 - continued

          SCHEDULE
A

          REPAYMENT
SCHEDULE

        

      

    

    

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

     

    
      	 	
              C-MARK
      INTERNATIONAL, INC.

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

            
	 	
              Name:     
      Charles W. Jones, Jr.

            
	 	
              Title:       
      Chief Executive officer

            

    

    

    

    

    

     

    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:

            	 

    

    

    
      
        
          
          

        

        
          A-8

          
            

          

        

        
          
          

          EXHIBIT
10.2 - continued

          SCHEDULE
A

          REPAYMENT
SCHEDULE

        

      

    

    

    

    
      	
              Authorized
      Signature:

            	 
	
              Name:

            	 
	
              Title:

            	 
	
              Phone
      Number:

            	 
	
              Broker
      DTC Participant Code:

            	 
	
              Account
      Number:

            	 

    

     

     

    
 

    

     

     

     

     

    A-9exhibit_10-3.htm

    
      

    

    EXHIBIT
10.3

     

    WARRANT

     

    THE
SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT.

     

     

    C-MARK
INTERNATIONAL, INC.

     

    Warrant
To Purchase Common Stock

     

     

    

       

      
        	Warrant No.:
    	
                 Number of
      Shares: 7,500,000

              

      

    

     

    Date of
Issuance:  December 31, 2007

    

    C-Mark
International, Inc., a South Carolina corporation (the “Company”), hereby
certifies that, for Ten United States Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Trafalgar Capital Specialized Investment Fund, Luxembourg, (“Trafalgar”), the
registered holder hereof or its permitted assigns, is entitled, subject to the
terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time or times on or after the date hereof, but not after
11:59 P.M. Eastern Time on the Expiration Date (as defined herein) seven
million five hundred thousand (7,500,000) fully paid and nonassessable shares of
Common Stock (as defined herein) of the Company (the “Warrant Shares”) at
the exercise price per share provided in Section 1(b) below or as
subsequently adjusted; provided, however, that in no event shall the holder be
entitled to exercise this Warrant for a number of Warrant Shares in excess of
that number of Warrant Shares which, upon giving effect to such exercise, 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 exercise, except within sixty (60) days of the
Expiration Date.  For purposes of the foregoing proviso, the aggregate
number of shares of Common Stock beneficially owned by the holder and its
affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which the determination of such proviso
is being made, but shall exclude shares of Common Stock which would be issuable
upon (i) exercise of the remaining, unexercised Warrants beneficially owned
by the holder and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
beneficially owned by the holder and its affiliates (including, without
limitation, any convertible notes or preferred stock) subject to a limitation on
conversion or exercise analogous to the limitation contained
herein.  Except as set forth in the preceding sentence, for purposes
of this paragraph, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended.  For
purposes of this Warrant, in determining the number of outstanding shares of
Common Stock a holder may rely on the number of outstanding shares of Common
Stock as reflected in (1) the Company’s most recent Form 10-QSB or Form 10-KSB,
as the case may be, (2) a more recent public announcement by the Company or (3)
any other notice by the Company or its transfer agent setting forth the number
of shares of Common Stock outstanding.  Upon the written request of
any holder, the Company shall promptly, but in no event later than one (1)
Business Day following the receipt of such notice, confirm in writing to any
such holder the number of shares of Common Stock then outstanding.  In
any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the exercise of Warrants (as defined below) by such
holder and its affiliates since the date as of which such number of outstanding
shares of Common Stock was reported.

     

    

    
      
        
          
          

        

        
          1

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

     

    Section
1.

     

    (a)           
This Warrant is the common stock purchase warrant (the “Warrant”) issued
pursuant to an Amendment to Securities Purchase Agreement, Secured Convertible
Debenture and Security Agreement dated the date hereof by and between the
Company and Trafalgar.

     

    (b)           
Definitions.  The
following words and terms as used in this Warrant shall have the following
meanings:

     

    (i)           
“Approved Stock
Plan” means any employee benefit plan which has been approved by the
Board of Directors of the Company, pursuant to which the Company’s securities
may be issued to any employee, officer or director for services provided to the
Company.

     

    (ii)           
“Business Day”
means any day other than Saturday, Sunday or other day on which commercial banks
in the City of New York are authorized or required by law to remain
closed.

     

    (iii)           
“Closing Bid
Price” means the closing bid price of Common Stock as quoted on the
Principal Market (as reported by Bloomberg Financial Markets (“Bloomberg”) through
its “Volume at Price” function).

     

    (iv)           
“Common Stock”
means (i) the Company’s common stock, par value $.0001 per share, and
(ii) any capital stock into which such Common Stock shall have been changed
or any capital stock resulting from a reclassification of such Common
Stock.

     

    (v)           
“Excluded
Securities” means, provided such security is issued at a price which is
greater than or equal to the arithmetic average of the Closing Bid Prices of the
Common Stock for the ten (10) consecutive trading days immediately preceding the
date of issuance, any of the following: (a) any issuance by the Company of
securities in connection with a strategic partnership or a joint venture (the
primary purpose of which is not to raise equity capital), (b) any issuance by
the Company of securities as consideration for a merger orconsolidation or the acquisition of a business, product, license, or
other assets of another person or entity and (c) options to purchase shares of
Common Stock, provided (I) such options are issued after the date of this
Warrant to employees of the Company within thirty (30) days of such employee’s
starting his employment with the Company, and (II) the exercise price of such
options is not less than the Closing Bid Price of the Common Stock on the date
of issuance of such option.

     

    

    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

     

     

    (vi)           
“Expiration
Date” means the date five (5) years from the Issuance Date of this
Warrant or, if such date falls on a Saturday, Sunday or other day on which banks
are required or authorized to be closed in the City of New York or the State of
New York or on which trading does not take place on the Principal Exchange or
automated quotation system on which the Common Stock is traded (a “Holiday”), the next
date that is not a Holiday.

     

    (vii)           
“Issuance Date”
means the date hereof.

     

    (viii)          “Options” means any
rights, warrants or options to subscribe for or purchase Common Stock or
Convertible Securities.

     

    (ix)           
“Other
Securities” means (i) those options and warrants of the Company
issued prior to, and outstanding on, the Issuance Date of this Warrant, (ii) the
shares of Common Stock issuable on exercise of such options and warrants,
provided such options and warrants are not amended after the Issuance Date of
this Warrant and (iii) the shares of Common Stock issuable upon exercise of
this Warrant.

     

    (x)           
“Person” means
an individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.

     

    (xi)           
“Principal
Market” means the New York Stock Exchange, the American Stock Exchange,
the Nasdaq National Market, the Nasdaq SmallCap Market, whichever is at the time
the principal trading exchange or market for such security, or the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg or, if no bid or sale information is reported for such
security by Bloomberg, then the average of the bid prices of each of the market
makers for such security as reported in the “pink sheets” by the National
Quotation Bureau, Inc.

     

    (xii)           
“Securities
Act” means the Securities Act of 1933, as amended.

     

    (xiii)           “Warrant” means this
Warrant and all Warrants issued in exchange, transfer or replacement
thereof.

     

    (xiv)           “Warrant Exercise
Price” shall be $.001 or as subsequently adjusted as provided in
Section 8 hereof.

     

    (xv)           
“Warrant
Shares” means the shares of Common Stock issuable at any time upon
exercise of this Warrant.

     

    

    
      
        
          
          

        

        
          3

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

    

    (c)           
Other Definitional Provisions.

     

    (i)           
Except as otherwise specified herein, all references herein (A) to the
Company shall be deemed to include the Company’s successors and (B) to any
applicable law defined or referred to herein shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time.

     

    (ii)           
When used in this Warrant, the words “herein”, “hereof”, and “hereunder” and words of similar import,
shall refer to this Warrant as a whole and not to any provision of this Warrant,
and the words “Section”, “Schedule”, and “Exhibit” shall refer
to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.

     

    (iii)           
Whenever the context so requires, the neuter gender includes the masculine or
feminine, and the singular number includes the plural, and vice
versa.

     

    Section
2.                      
Exercise of
Warrant.  Subject to the terms and conditions hereof, this
Warrant may be exercised by the holder hereof then registered on the books of
the Company, pro rata as hereinafter provided, at any time on any Business Day
on or after the opening of business on such Business Day, commencing with the
first day after the date hereof, and prior to 11:59 P.M. Eastern Time on
the Expiration Date, by (i) delivery of a written notice, in the form of
the subscription notice attached as Exhibit A hereto (the
“Exercise
Notice”), of such holder’s election to exercise this Warrant, which
notice shall specify the number of Warrant Shares to be purchased,
(ii) payment to the Company of an amount equal to the Warrant Exercise
Price(s) applicable to the Warrant Shares being purchased, multiplied by the
number of Warrant Shares (at the applicable Warrant Exercise Price) as to
which this Warrant is being exercised (plus any applicable issue or
transfer taxes) (the “Aggregate Exercise
Price”) in cash or wire transfer of immediately available funds and (iii)
the surrender of this Warrant (or an indemnification undertaking with respect to
this Warrant in the case of its loss, theft or destruction) to a common carrier
for overnight delivery to the Company as soon as practicable following such
date.  In the event of any exercise of the rights represented by this
Warrant in compliance with this Section 2(a), the Company shall on the
fifth (5th) Business Day following the date of receipt of the Exercise
Notice, the Aggregate Exercise Price and this Warrant (or an indemnification
undertaking with respect to this Warrant in the case of its loss, theft or
destruction) and the receipt of the representations of the holder specified in
Section 6 hereof, if requested by the Company (the “Exercise Delivery
Documents”), and if the Common Stock is DTC eligible credit such
aggregate number of shares of Common Stock to which the holder shall be entitled
to the holder’s or its designee’s balance account with The Depository Trust
Company; provided, however, if the holder who submitted the Exercise Notice
requested physical delivery of any or all of the Warrant Shares, or, if the
Common Stock is not DTC eligible  then the Company shall, on or before
the fifth (5th)
Business Day following receipt of the Exercise Delivery Documents, issue and
surrender to a common carrier for overnight delivery to the address specified in
the Exercise Notice, a certificate, registered in the name of the holder, for
the number of shares of Common Stock to which the holder shall be entitled
pursuant to such request.  Upon delivery of the Exercise Notice and
Aggregate Exercise Price referred to in clause (ii) above the holder of
this Warrant shall be deemed for all corporate purposes to have become the
holder of record of the Warrant Shares with respect to which this Warrant has
been exercised.  In the case of a dispute as to the determination of
the Warrant Exercise Price, the Closing Bid Price or the arithmetic calculation
of the Warrant Shares, the Company shall promptly issue to the holder the number
of Warrant Shares that is not disputed and shall submit the disputed
determinations or arithmetic calculations to the holder via facsimile within one
(1) Business Day of receipt of the holder’s Exercise Notice.  If the
holder and the Company are unable to agree upon the determination of the Warrant
Exercise Price or arithmetic calculation of the Warrant Shares within one (1)
day of such disputed determination or arithmetic calculation being submitted to
the holder, then the Company shall immediately submit via facsimile (i) the
disputed determination of the Warrant Exercise Price or the Closing Bid Price to
an independent, reputable investment banking firm or (ii) the disputed
arithmetic calculation of the Warrant Shares to its independent, outside
accountant.  The Company shall cause the investment banking firm or
the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the holder of the results no later than
forty-eight (48) hours from the time it receives the disputed determinations or
calculations.  Such investment banking firm’s or accountant’s
determination or calculation, as the case may be, shall be deemed conclusive
absent manifest error.

     

    

    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

    

     

     

    (a)           
Unless the rights represented by this Warrant shall have expired or shall have
been fully exercised, the Company shall, as soon as practicable and in no event
later than five (5) Business Days after any exercise and at its own expense,
issue a new Warrant identical in all respects to this Warrant exercised except
it shall represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant exercised, less the number
of Warrant Shares with respect to which such Warrant is exercised.

     

    (b)           
No fractional Warrant Shares are to be issued upon any pro rata exercise of this
Warrant, but rather the number of Warrant Shares issued upon such exercise of
this Warrant shall be rounded up or down to the nearest whole
number.

     

    (c)           
If the Company or its Transfer Agent shall fail for any reason or for no reason
to issue to the holder within ten (10) days of receipt of the Exercise
Delivery Documents, a certificate for the number of Warrant Shares to which the
holder is entitled or to credit the holder’s balance account with The Depository
Trust Company for such number of Warrant Shares to which the holder is entitled
upon the holder’s exercise of this Warrant, the Company shall, in addition to
any other remedies under this Warrant or the Placement Agent Agreement or
otherwise available to such holder, pay as additional damages in cash to such
holder on each day the issuance of such certificate for Warrant Shares is not
timely effected an amount equal to 0.025% of the product of (A) the sum of the
number of Warrant Shares not issued to the holder on a timely basis and to which
the holder is entitled, and (B) the Closing Bid Price of the Common Stock for
the trading day immediately preceding the last possible date which the Company
could have issued such Common Stock to the holder without violating this
Section 2.

     

    (d)           
If within ten (10) days after the Company’s receipt of the Exercise Delivery
Documents, the Company fails to deliver a new Warrant to the holder for the
number of Warrant Shares to which such holder is entitled pursuant to Section 2
hereof, then, in addition to any other available remedies under this Warrant or
the Placement Agent Agreement, or otherwise available to such holder, the
Company shall pay as additional damages in cash to such holder on each day after
such tenth (10th) day
that such delivery of such new Warrant is not timely effected in an amount equal
to 0.25% of the product of (A) the number of Warrant Shares represented by
the portion of this Warrant which is not being exercised and (B) the
Closing Bid Price of the Common Stock for the trading day immediately preceding
the last possible date which the Company could have issued such Warrant to the
holder without violating this Section 2.

     

    

    
      
        
          
          

        

        
          5

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

    

     

    Section
3.                      
Covenants as to Common
Stock.  The Company hereby covenants and agrees as
follows:

     

    (a)           
This Warrant is, and any Warrants issued in substitution for or replacement of
this Warrant will upon issuance be, duly authorized and validly
issued.

     

    (b)           
All Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.

     

    (c)           
During the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved at least
one hundred percent (100%) of the number of shares of Common Stock needed to
provide for the exercise of the rights then represented by this Warrant and the
par value of said shares will at all times be less than or equal to the
applicable Warrant Exercise Price. If at any time the Company does not have a
sufficient number of shares of Common Stock authorized and available, then the
Company shall call and hold a special meeting of its stockholders within
sixty (60) days of that time for the sole purpose of increasing the number
of authorized shares of Common Stock.

     

    (d)           
If at any time after the date hereof the Company shall file a registration
statement, the Company shall include the Warrant Shares issuable to the holder,
pursuant to the terms of this Warrant and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all Warrant Shares
from time to time issuable upon the exercise of this Warrant; and the Company
shall so list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any other shares
of capital stock of the Company issuable upon the exercise of this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.

     

    (e)           
The Company will not, by amendment of its Articles of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed by it hereunder, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such
action as may reasonably be requested by the holder of this Warrant in order to
protect the exercise privilege of the holder of this Warrant against dilution or
other impairment, consistent with the tenor and purpose of this Warrant. The
Company will not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Warrant Exercise Price then in
effect, and (ii) will take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this
Warrant.

     

    

    
      
        
          
          

        

        
          6

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

    

    (f)           
This Warrant will be binding upon any entity succeeding to the Company by
merger, consolidation or acquisition of all or substantially all of the
Company’s assets.

     

    Section
4.                      
Taxes.  The
Company shall pay any and all taxes, except any applicable withholding, which
may be payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.

     

    Section
5.                      
Warrant Holder Not
Deemed a Stockholder.  Except as otherwise specifically
provided herein, no holder, as such, of this Warrant shall be entitled to vote
or receive dividends or be deemed the holder of shares of capital stock of the
Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the holder of this Warrant of the Warrant Shares which he or she is
then entitled to receive upon the due exercise of this Warrant.  In
addition, nothing contained in this Warrant shall be construed as imposing any
liabilities on such holder to purchase any securities (upon exercise of this
Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the
Company.  Notwithstanding this Section 5, the Company will provide the
holder of this Warrant with copies of the same notices and other information
given to the stockholders of the Company generally, contemporaneously with the
giving thereof to the stockholders.

     

    Section
6.                      
Representations of
Holder.  The holder of this Warrant, by the acceptance hereof,
represents that it is acquiring this Warrant and the Warrant Shares for its own
account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution of this Warrant or the Warrant
Shares, except pursuant to sales registered or exempted under the Securities
Act; provided, however, that by making the representations herein, the holder
does not agree to hold this Warrant or any of the Warrant Shares for any minimum
or other specific term and reserves the right to dispose of this Warrant and the
Warrant Shares at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act.  The holder of
this Warrant further represents, by acceptance hereof, that, as of this date,
such holder is an “accredited investor” as such term is defined in
Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act (an “Accredited
Investor”).  Upon exercise of this Warrant the holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares so purchased are being acquired solely for the
holder’s own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale and that such holder is an
Accredited Investor.  If such holder cannot make such representations
because they would be factually incorrect, it shall be a condition to such
holder’s exercise of this Warrant that the Company receive such other
representations as the Company considers reasonably necessary to assure the
Company that the issuance of its securities upon exercise of this Warrant shall
not violate any United States or state securities laws.

     

    

    
      
        
          
          

        

        
          7

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

    

    Section
7.                      
Ownership and
Transfer.

     

    (a)           
The Company shall maintain at its principal executive offices (or such other
office or agency of the Company as it may designate by notice to the holder
hereof), a register for this Warrant, in which the Company shall record the name
and address of the person in whose name this Warrant has been issued, as well as
the name and address of each transferee. The Company may treat the person in
whose name any Warrant is registered on the register as the owner and holder
thereof for all purposes, notwithstanding any notice to the contrary, but in all
events recognizing any transfers made in accordance with the terms of this
Warrant.

     

    Section
8.                      
Adjustment of Warrant
Exercise Price and Number of Shares.  The Warrant Exercise
Price and the number of shares of Common Stock issuable upon exercise of this
Warrant shall be adjusted from time to time as follows:

     

    (a)           
Adjustment of Warrant
Exercise Price and Number of Shares upon Issuance of Common
Stock.  If and whenever on or after the Issuance Date of this
Warrant, the Company issues or sells, or is deemed to have issued or sold, any
shares of Common Stock (other than (i) Excluded Securities and (ii) shares
of Common Stock which are issued or deemed to have been issued by the Company in
connection with an Approved Stock Plan or upon exercise or conversion of the
Other Securities) for a consideration per share less than a price (the “Applicable Price”)
equal to the Warrant Exercise Price in effect immediately prior to such issuance
or sale, then immediately after such issue or sale the Warrant Exercise Price
then in effect shall be reduced to an amount equal to such consideration per
share.  Upon each such adjustment of the Warrant Exercise Price
hereunder, the number of Warrant Shares issuable upon exercise of this Warrant
shall be adjusted to the number of shares determined by multiplying the Warrant
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Warrant Exercise Price
resulting from such adjustment.

     

    (b)           
Effect on Warrant
Exercise Price of Certain Events.  For purposes of determining
the adjusted Warrant Exercise Price under Section 8(a) above, the following
shall be applicable:

     

    (i)           
Issuance of
Options.  If after the date hereof, the Company in any manner
grants any Options and the lowest price per share for which one share of Common
Stock is issuable upon the exercise of any such Option or upon conversion or
exchange of any convertible securities issuable upon exercise of any such Option
is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the
time of the granting or sale of such Option for
such price per share.  For purposes of this Section 8(b)(i), the
lowest price per share for which one share of Common Stock is issuable upon
exercise of such Options or upon conversion or exchange of such Convertible
Securities shall be equal to the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to any one share of
Common Stock upon the granting or sale of the Option, upon exercise of the
Option or upon conversion or exchange of any convertible security issuable upon
exercise of such Option.  No further adjustment of the Warrant
Exercise Price shall be made upon the actual issuance of such Common Stock or of
such convertible securities upon the exercise of such Options or upon
the actual issuance of such Common Stock upon conversion or exchange of such
convertible securities.

     

     

    
      
        
          
          

        

        
          8

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

    

     

    (ii)           
Issuance of
Convertible Securities.  If the Company in any manner issues or
sells any convertible securities and the lowest price per share for which one
share of Common Stock is issuable upon the conversion or exchange thereof is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of
the issuance or sale of such convertible securities for such price per
share.  For the purposes of this Section 8(b)(ii), the lowest
price per share for which one share of Common Stock is issuable upon such
conversion or exchange shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to one
share of Common Stock upon the issuance or sale of the convertible security and
upon conversion or exchange of such convertible security.  No further
adjustment of the Warrant Exercise Price shall be made upon the actual issuance
of such Common Stock upon conversion or exchange of such convertible securities,
and if any such issue or sale of such convertible securities is made upon
exercise of any Options for which adjustment of the Warrant Exercise Price had
been or are to be made pursuant to other provisions of this Section 8(b), no
further adjustment of the Warrant Exercise Price shall be made by reason of such
issue or sale.

     

    (iii)           
Change in Option Price
or Rate of Conversion.  If the purchase price provided for in
any Options, the additional consideration, if any, payable upon the issue,
conversion or exchange of any convertible securities, or the rate at which any
convertible securities are convertible into or exchangeable for Common Stock
changes at any time, the Warrant Exercise Price in effect at the time of such
change shall be adjusted to the Warrant Exercise Price which would have been in
effect at such time had such Options or convertible securities provided for such
changed purchase price, additional consideration or changed conversion rate, as
the case may be, at the time initially granted, issued or sold and the number of
Warrant Shares issuable upon exercise of this Warrant shall be correspondingly
readjusted.  For purposes of this Section 8(b)(iii), if the terms of
any Option or convertible security that was outstanding as of the Issuance Date
of this Warrant are changed in the manner described in the immediately preceding
sentence, then such Option or convertible security and the Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such change.  No adjustment pursuant to
this Section 8(b) shall be made if such adjustment would result in an
increase of the Warrant Exercise Price then in effect.

     

    (c)           
Effect on Warrant
Exercise Price of Certain Events.  For purposes of determining
the adjusted Warrant Exercise Price under Sections 8(a) and 8(b), the
following shall be applicable:

     

    (i)           
Calculation of
Consideration Received.  If any Common Stock, Options or
convertible securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefore will be deemed to be the net
amount received by the Company therefore.  If any Common Stock,
Options or convertible securities are issued or sold for a consideration other
than cash, the amount of such consideration received by the Company will be the
fair value of such consideration, except where such consideration consists of
marketable securities, in which case the amount of consideration received by the
Company will be the market price of such securities on the date of receipt of
such securities.  If any Common Stock, Options or convertible
securities are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount of
consideration therefore will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such Common Stock, Options or convertible securities, as the case may
be.  The fair value of any consideration other than cash or securities
will be determined jointly by the Company and the holders of Warrants
representing at least two-thirds (b) of the Warrant Shares issuable upon
exercise of the Warrants then outstanding.  If such parties are unable
to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”),
the fair value of such consideration will be determined within five (5) Business
Days after the tenth (10th) day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the holders of Warrants representing at least
two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants then
outstanding.  The determination of such appraiser shall be final and
binding upon all parties and the fees and expenses of such appraiser shall be
borne jointly by the Company and the holders of Warrants.

     

    

    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

     

     

    (ii)           
Integrated
Transactions.  In case any Option is issued in connection with
the issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for a consideration of $.01.

     

    (iii)           
Treasury
Shares.  The number of shares of Common Stock outstanding at
any given time does not include shares owned or held by or for the account of
the Company, and the disposition of any shares so owned or held will be
considered an issue or sale of Common Stock.

     

    (iv)           
Record
Date.  If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (1) to receive a dividend or other
distribution payable in Common Stock, Options or in convertible securities or
(2) to subscribe for or purchase Common Stock, Options or convertible
securities, then such record date will be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.

     

    (d)           
Adjustment of Warrant
Exercise Price upon Subdivision or Combination of Common
Stock.  If the Company at any time after the date of issuance
of this Warrant subdivides (by any stock split, stock dividend, recapitalization
or otherwise) one or more classes of its outstanding shares of Common Stock into
a greater number of shares, any Warrant Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced and the number of
shares of Common Stock obtainable upon exercise of this Warrant will be
proportionately increased.  If the Company at any time after the date
of issuance of this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, any Warrant Exercise Price in effect immediately prior
to such combination will be proportionately increased and the number of Warrant
Shares issuable upon exercise of this Warrant will be proportionately
decreased.  Any adjustment under this Section 8(d) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.

     

    

    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

     

     

    (e)           
Distribution of
Assets.  If the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of
Common Stock, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement or other similar transaction) (a “Distribution”), at
any time after the issuance of this Warrant, then, in each such
case:

     

    (i)           
any Warrant Exercise Price in effect immediately prior to the close of business
on the record date fixed for the determination of holders of Common Stock
entitled to receive the
Distribution shall be reduced, effective as of the close of business on such
record date, to a price determined by multiplying such Warrant Exercise Price by
a fraction of which (A) the numerator shall be the Closing Sale Price of the
Common Stock on the trading day immediately preceding such record date minus the
value of the Distribution (as determined in good faith by the Company’s Board of
Directors) applicable to one share of Common Stock, and (B) the denominator
shall be the Closing Sale Price of the Common Stock on the trading day
immediately preceding such record date; and

     

    (ii)           
either (A) the number of Warrant Shares obtainable upon exercise of this Warrant
shall be increased to a number of shares equal to the number of shares of Common
Stock obtainable immediately prior to the close of business on the record date
fixed for the determination of holders of Common Stock entitled to receive the
Distribution multiplied by the reciprocal of the fraction set forth in the
immediately preceding clause (i), or (B) in the event that the Distribution is
of common stock of a company whose common stock is traded on a national
securities exchange or a national automated quotation system, then the holder of
this Warrant shall receive an additional warrant to purchase Common Stock, the
terms of which shall be identical to those of this Warrant, except that such
warrant shall be exercisable into the amount of the assets that would have been
payable to the holder of this Warrant pursuant to the Distribution had the
holder exercised this Warrant immediately prior to such record date and with an
exercise price equal to the amount by which the exercise price of this Warrant
was decreased with respect to the Distribution pursuant to the terms of the
immediately preceding clause (i).

     

    (f)           
Certain
Events.  If any event occurs of the type contemplated by the
provisions of this Section 8 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company’s Board of Directors will make an appropriate adjustment in the Warrant
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this Warrant so as to protect the rights of the holders of the Warrants;
provided, except as set forth in section 8(d),that no such adjustment pursuant
to this Section 8(f) will increase the Warrant Exercise Price or decrease the
number of shares of Common Stock obtainable as otherwise determined pursuant to
this Section 8.

     

    

    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

    

    (g)           
Notices.

     

    (i)           
Immediately upon any adjustment of the Warrant Exercise Price, the Company will
give written notice thereof to the holder of this Warrant, setting forth in
reasonable detail, and certifying, the calculation of such
adjustment.

     

    (ii)           
The Company will give written notice to the holder of this Warrant at least ten
(10) days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the Common
Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock or (C) for determining rights to vote with respect to any
Organic Change (as defined below), dissolution or liquidation, provided that
such information shall be made known to the public prior to or in conjunction
with such notice being provided to such holder.

     

    (iii)           
The Company will also give written notice to the holder of this Warrant at least
ten (10) days prior to the date on which any Organic Change, dissolution or
liquidation will take place, provided that such information shall be made known
to the public prior to or in conjunction with such notice being provided to such
holder.

     

    Section
9.                      
Purchase Rights;
Reorganization, Reclassification, Consolidation, Merger or
Sale.

     

    (a)           
In addition to any adjustments pursuant to Section 8 above, if at any time the
Company grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the “Purchase Rights”),
then the holder of this Warrant will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
holder could have acquired if such holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights.

     

    (b)           
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company’s assets to another Person or
other transaction in each case which is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as an “Organic
Change.”  Prior to the consummation of any (i) sale of all or
substantially all of the Company’s assets to an acquiring Person or (ii) other
Organic Change following which the Company is not a surviving entity, the
Company will secure from the Person purchasing such assets or the successor
resulting from such Organic Change (in each case, the “Acquiring Entity”) a
written agreement (in form and substance satisfactory to the holders of Warrants
representing at least two-thirds of the Warrant Shares issuable upon exercise of
the Warrants then outstanding) to deliver to each holder of Warrants in exchange
for such Warrants, a security of the Acquiring Entity evidenced by a written
instrument substantially similar in form and substance to this Warrant and
satisfactory to the holders of the Warrants (including an adjusted warrant
exercise price equal to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and exercisable for a corresponding number
of shares of Common Stock acquirable and receivable upon exercise of the
Warrants without regard to any limitations on exercise, if the value so
reflected is less than any Applicable Warrant Exercise Price immediately prior
to such consolidation, merger or sale).  Prior to the consummation of
any other Organic Change, the Company shall make appropriate provision (in form
and substance satisfactory to the holders of Warrants representing a
majority of the
Warrant Shares issuable upon exercise of the Warrants then outstanding) to
insure that each of the holders of the Warrants will thereafter have the right
to acquire and receive in lieu of or in addition to (as the case may be) the
Warrant Shares immediately theretofore issuable and receivable upon the exercise
of such holder’s Warrants (without regard to any limitations on exercise),
such shares of stock, securities or assets that would have been issued or
payable in such Organic Change with respect to or in exchange for the number of
Warrant Shares which would have been issuable and receivable upon the exercise
of such holder’s Warrant as of the date of such Organic Change (without taking
into account any limitations or restrictions on the exercisability of this
Warrant).

     

    

    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

     

     

    Section
10.                      
Lost, Stolen,
Mutilated or Destroyed Warrant.  If this Warrant is lost,
stolen, mutilated or destroyed, the Company shall promptly, on receipt of an
indemnification undertaking (or, in the case of a mutilated Warrant, the
Warrant), issue a new Warrant of like denomination and tenor as this Warrant so
lost, stolen, mutilated or destroyed.

     

    Section
11.                      
Notice.  Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Warrant must be in writing and will be deemed to
have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of receipt is received by the sending party transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business 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 Trafalgar:

            	
              Trafalgar
      Capital Specialized Investment Fund, Luxembourg

            
	 	
              8-10
      Rue Mathias Hardt

            
	 	
              BP
      3023

            
	 	
              L-1030
      Luxembourg

            
	 	
              Attention:     Andrew
      Garai, Chairman of the Board of

            
	 	
                                     Trafalgar
      Capital Sarl, General Partner

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

                                      001-786-323-1651

            
	 	 
	
              With
      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

            
	 	 

    

    

    
      
        
          
          

        

        
          13

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

    

    

    
      	
              If
      to the Company, to:

            	
              C-Mark
      International, Inc.

            
	 	
              4180
      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

            
	 	
              17100
      E. Shea Blvd., Suite 400-D

            
	 	
              Fountain
      Hills, AZ  85268

            
	 	
              Attention:  William
      O’Neal, Esq.

            
	 	
              Telephone:
      (480) 812-5058

            
	 	
              Facsimile:
      (480) 816-9241

            

    

    

    If to a
holder of this Warrant, to it at the address and facsimile number set forth on
Exhibit C
hereto, with copies to such holder’s representatives as set forth on Exhibit C, or at
such other address and facsimile as shall be delivered to the Company upon the
issuance or transfer of this Warrant.  Each party shall provide five
days’ prior written notice to the other party of any change in address or
facsimile number.  Written confirmation of receipt (A) given by
the recipient of such notice, consent, facsimile, waiver or other communication,
(or (B) provided by a nationally recognized overnight delivery service
shall be rebuttable evidence of personal service, receipt by facsimile or
receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

     

    Section
12.                      
Date.  The
date of this Warrant is set forth on page 1 hereof.  This Warrant,
in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8(b) shall continue in full
force and effect after such date as to any Warrant Shares or other securities
issued upon the exercise of this Warrant.

     

    Section
13.                      
Amendment and
Waiver.  Except as otherwise provided herein, the provisions of
the Warrants may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the holders of Warrants
representing at least two-thirds of the Warrant Shares issuable upon exercise of
the Warrants then outstanding; provided that, except for Section 8(d), no such
action may increase the Warrant Exercise Price or decrease the number of shares
or class of stock obtainable upon exercise of any Warrant without the written
consent of the holder of such Warrant.

     

    Section
14.                      
Descriptive Headings;
Governing Law.  The descriptive headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and do
not constitute a part of this Warrant.  The corporate laws of the
State of Florida shall govern all issues concerning the relative rights of the
Company and its stockholders.  All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of Florida without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Florida or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Florida  Each party
hereby irrevocably submits to the exclusive jurisdiction of the state courts
sitting in Broward County, Florida and the United States District Court for the
Southern District of Florida for the adjudication of any dispute hereunder or in
connection herewith or therewith, or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.

     

    

    
      
        
          
          

        

        
          14

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

    

     

     

    Section
15.                      
Waiver of Jury
Trial.  AS A
MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED WITH THIS TRANSACTION.

     

    IN WITNESS WHEREOF, the
Company has caused this Warrant to be signed as of the date first set forth
above.

     

    
      	 	
              C-MARK
      INTERNATIONAL, INC.

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

            
	 	
              Name:     
      Charles W. Jones, Jr.

            
	 	
              Title:       
      Chief Executive Officer

            

    

    

    

    

    

    

    
      
        
          
          

        

        
          15

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

    

    

     

    EXHIBIT A TO
WARRANT

     

    EXERCISE
NOTICE

     

    TO
BE EXECUTED

     

    BY
THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

     

    C-MARK
INTERNATIONAL, INC.

     

    The
undersigned holder hereby exercises the right to purchase ______________ of the
shares of Common Stock (“Warrant Shares”) of
C-Mark International, Inc., a South Carolina corporation (the “Company”), evidenced
by the attached Warrant (the “Warrant”).  Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.

     

    1.           
Form of Warrant
Exercise Price.  The Holder intends that payment of the Warrant
Exercise Price shall be made as a “Cash Exercise” with
respect to ______________ Warrant Shares.

     

    2.           
Payment of Warrant
Exercise Price. The holder shall pay the sum of $______________ to the
Company in accordance with the terms of the Warrant.

     

    3.           
Delivery of Warrant
Shares.  The Company shall deliver to the holder __________
Warrant Shares in accordance with the terms of the Warrant.

     

    Date:
_______________ __, ______

    

    

    Name of
Registered Holder

    

    By:                                              
              

    Name:                                                        

    Title:                                               
          

    

    

    

    

    

    
      
        
          
            A-1

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          EXHIBIT
10.3 - continued

        

      

    

    

    

     

    EXHIBIT B TO
WARRANT

     

    FORM OF WARRANT
POWER

     

    FOR VALUE RECEIVED, the
undersigned does hereby assign and transfer to ________________, Federal
Identification No. __________, a warrant to purchase ____________ shares of
the capital stock of C-Mark International, Inc., a South Carolina corporation,
represented by warrant certificate no. _____, standing in the name of the
undersigned on the books of said corporation.  The undersigned does
hereby irrevocably constitute and appoint ______________, attorney to transfer
the warrants of said corporation, with full power of substitution in the
premises.

     

    
      	
              Dated:                        
                                               

            	                                           
                     
                    
	 	 
	 	
              By:                                     
                                    

            
	 	
              Name:                                           
                         

            
	 	
              Title:                                                                 

            
	 	 

    

    

     

     

     

     B-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]