Document:

exhibit_10-4.htm

    
      

    

    EXHIBIT
      10.4

    

     

    SECURITY
      AGREEMENT

     

    THIS
      SECURITY AGREEMENT (the
“Agreement”), is
      entered into and made
      effective as of December 31, 2007, by and between C-MARK INTERNATIONAL, INC.,
      (the “Company”), and the
      BUYER(S) listed on
      Schedule I attached to the Securities Purchase Agreement dated the date
      hereof (the “Secured
      Party”).

     

    WHEREAS,
the
      Company shall
      issue and sell to the Secured Party, as provided in the Securities Purchase
      Agreement dated the date hereof, and the Secured Party shall purchase Three
      Milltion Five Hundred Thousand Dollars ($3,500,000) of secured convertible
      debentures (the “Convertible
      Debentures”), which shall be convertible into shares of the Company’s
      common stock, par value $.0001 (the “Common Stock”) (as
      converted, the “Conversion Shares”),
      for a total purchase price of Three Million Five Hundred Thousand
      Dollars ($3,500,000), in the respective amounts set forth opposite each
      Buyer(s) name on Schedule I attached to the Securities Purchase
      Agreement;

     

    WHEREAS,
to
      induce the Secured
      Party to enter into the transaction contemplated by the Securities Purchase
      Agreement, the Secured Convertible Debenture, the Investor Registration Rights
      Agreement, the Irrevocable Transfer Agent Instructions, and the Escrow Agreement
      (collectively referred to as the “Transaction
      Documents”), the Company hereby grants to the Secured Party a security
      interest in and to the pledged property identified on Exhibit “A” hereto
      (collectively referred to as the “Pledged Property”)
      until the satisfaction of the Obligations, as defined herein below.

     

    NOW,
      THEREFORE, in
      consideration of the premises and the mutual covenants herein contained, and
      for
      other good and valuable consideration, the adequacy and receipt of which are
      hereby acknowledged, the parties hereto hereby agree as follows:

     

    ARTICLE
      1.

     

    DEFINITIONS
      AND
      INTERPRETATIONS

     

    
      	
              Section
                1.1.

            	
              Recitals.
                

            

    

     

    The
      above
      recitals are true and correct and are incorporated herein, in their entirety,
      by
      this reference.

     

    
      	
              Section
                1.2.

            	
              Interpretations.
                

            

    

     

    Nothing
      herein expressed or implied is intended or shall be construed to confer upon
      any
      person other than the Secured Party any right, remedy or claim under or by
      reason hereof.

     

    
      	
              Section
                1.3.

            	
              Obligations
                Secured. 

            

    

     

    The
      obligations secured hereby are any and all obligations of the Company now
      existing or hereinafter incurred to the Secured Party, whether oral or written
      and whether arising before, on or after the date hereof including, without
      limitation, those obligations of the Company to the Secured Party under the
      Securities Purchase Agreement, the Secured Convertible Debenture, the Investor
      Registration Rights Agreement and Irrevocable Transfer Agent Instructions,
      and
      any other amounts now or hereafter owed to the Secured Party by the Company
      thereunder or hereunder (collectively, the “Obligations”).

     

    

    
      
        
          
          

        

        
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          EXHIBIT
            10.4 - continued

        

      

    

    

     

    ARTICLE
      2.

     

    PLEDGED
      COLLATERAL,
      ADMINISTRATION OF COLLATERAL

    AND
      TERMINATION OF SECURITY
      INTEREST

     

    
      	
              Section
                2.1.

            	
              Pledged
                Property. 

            

    

     

    (a)           
      Company hereby pledges to the Secured Party, and creates in the Secured Party
      for its benefit, a security interest for such time until the Obligations are
      paid in full, in and to all of the property of the Company as set forth in
Exhibit “A”
      attached hereto, including specifically all of the Company’s account’s
      receivables (collectively, the “Pledged
      Property”):

     

    The
      Pledged Property, as set forth in Exhibit “A”
      attached hereto, and the products thereof and the proceeds of all such items
      are
      hereinafter collectively referred to as the “Pledged
      Collateral.”

     

    (b)           
      Simultaneously with the execution and delivery of this Agreement, the Company
      shall make, execute, acknowledge, file, record and deliver to the Secured Party
      any documents reasonably requested by the Secured Party to perfect its security
      interest in the Pledged Property. Simultaneously with the execution and delivery
      of this Agreement, the Company shall make, execute, acknowledge and deliver
      to
      the Secured Party such documents and instruments, including, without limitation,
      financing statements, certificates, affidavits and forms as may, in the Secured
      Party’s reasonable judgment, be necessary to effectuate, complete or perfect, or
      to continue and preserve, the security interest of the Secured Party in the
      Pledged Property, and the Secured Party shall hold such documents and
      instruments as secured party, subject to the terms and conditions contained
      herein.

     

    
      	
              Section
                2.2.

            	
              Rights;
                Interests;
                Etc.

            

    

     

    (a)           
      So long as no Event of Default (as hereinafter defined) shall have occurred
      and be continuing:

     

    (i)           
      the Company shall be entitled to exercise any and all rights pertaining to
      the
      Pledged Property or any part thereof for any purpose not inconsistent with
      the
      terms hereof; and

     

    (ii)           
      the Company shall be entitled to receive and retain any and all payments paid
      or
      made in respect of the Pledged Property.

     

    (b)           
      Upon the occurrence and during the continuance of an Event of
      Default:

     

    (i)           
      All rights of the Company to exercise the rights which it would otherwise be
      entitled to exercise pursuant to Section 2.2(a)(i) hereof and to
      receive payments which it would otherwise be authorized to receive and retain
      pursuant to Section 2.2(a)(ii) hereof shall be suspended, and all such
      rights shall thereupon become vested in the Secured Party who shall thereupon
      have the sole right to exercise such rights and to receive and hold as Pledged
      Collateral such payments; provided, however, that if
      the Secured Party shall become entitled and shall elect to exercise its right
      to
      realize on the Pledged Collateral pursuant to Article 5 hereof, then all
      cash sums received by the Secured Party, or held by Company for the benefit
      of
      the Secured Party and paid over pursuant to Section 2.2(b)(ii) hereof,
      shall be applied against any outstanding Obligations; and

     

    

    
      
        
          
          

        

        
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          EXHIBIT
            10.4 - continued

        

      

    

    

     

    (ii)           
      All interest, dividends, income and other payments and distributions which
      are
      received by the Company contrary to the provisions of
      Section 2.2(b)(i) hereof shall be received in trust for the benefit of
      the Secured Party, shall be segregated from other property of the Company and
      shall be forthwith paid over to the Secured Party; or

     

    (iii)           
      The Secured Party in its sole discretion shall be authorized to sell any or
      all
      of the Pledged Property at public or private sale in order to recoup all of
      the
      outstanding principal plus accrued interest owed pursuant to the Convertible
      Debenture as described herein

     

    (c)           
      Each of the following events shall constitute a default under this Agreement
      (each an “Event of
      Default”):

     

    (i)           
      any default, whether in whole or in part, shall occur in the payment to the
      Secured Party of principal, interest or other item comprising the Obligations
      as
      and when due or with respect to any other debt or obligation of the Company
      to a
      party other than the Secured Party;

     

    (ii)           
      any default, whether in whole or in part, shall occur in the due observance
      or
      performance of any obligations or other covenants, terms or provisions to be
      performed under this Agreement or the Transaction Documents;

     

    (iii)           
      the Company shall: (1) make a general assignment for the benefit of its
      creditors; (2) apply for or consent to the appointment of a receiver,
      trustee, assignee, custodian, sequestrator, liquidator or similar official
      for
      itself or any of its assets and properties; (3) commence a voluntary case
      for relief as a debtor under the United States Bankruptcy Code; (4) file
      with or otherwise submit to any governmental authority any petition, answer
      or
      other document seeking:  (A) reorganization, (B) an
      arrangement with creditors or (C) to take advantage of any other present or
      future applicable law respecting bankruptcy, reorganization, insolvency,
      readjustment of debts, relief of debtors, dissolution or liquidation;
      (5) file or otherwise submit any answer or other document admitting or
      failing to contest the material allegations of a petition or other document
      filed or otherwise submitted against it in any proceeding under any such
      applicable law, or (6) be adjudicated a bankrupt or insolvent by a court of
      competent jurisdiction; or

     

    (iv)           
      any case, proceeding or other action shall be commenced against the Company
      for
      the purpose of effecting, or an order, judgment or decree shall be entered
      by
      any court of competent jurisdiction approving (in whole or in
      part) anything specified in Section 2.2(c)(iii) hereof, or any
      receiver, trustee, assignee, custodian, sequestrator, liquidator or other
      official shall be appointed with respect to the Company, or shall be appointed
      to take or shall otherwise acquire possession or control of all or a substantial
      part of the assets and properties of the Company, and any of the foregoing
      shall
      continue unstayed and in effect for any period of thirty
      (30) days.

     

    

    
      
        
          
          

        

        
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          EXHIBIT
            10.4 - continued

        

      

    

     

     

    ARTICLE
      3.

     

    ATTORNEY-IN-FACT;
      PERFORMANCE

     

    
      	
              Section
                3.1.

            	
              Secured
                Party
                Appointed Attorney-In-Fact. 

            

    

     

    Upon
      the
      occurrence of an Event of Default, the Company hereby appoints the Secured
      Party
      as its attorney-in-fact, with full authority in the place and stead of the
      Company and in the name of the Company or otherwise, from time to time in the
      Secured Party’s discretion to take any action and to execute any instrument
      which the Secured Party may reasonably deem necessary to accomplish the purposes
      of this Agreement, including, without limitation, to receive and collect all
      instruments made payable to the Company representing any payments in respect
      of
      the Pledged Collateral or any part thereof and to give full discharge for the
      same.  The Secured Party may demand, collect, receipt for, settle,
      compromise, adjust, sue for, foreclose, or realize on the Pledged Property
      as
      and when the Secured Party may determine.  To facilitate collection,
      the Secured Party may notify account debtors and obligors on any Pledged
      Property or Pledged Collateral to make payments directly to the Secured
      Party.

     

    
      	
              Section
                3.2.

            	
              Secured
                Party May
                Perform. 

            

    

     

    If
      the
      Company fails to perform any agreement contained herein, the Secured Party,
      at
      its option, may itself perform, or cause performance of, such agreement, and
      the
      expenses of the Secured Party incurred in connection therewith shall be included
      in the Obligations secured hereby and payable by the Company under
      Section 8.3.

     

    ARTICLE
      4.

     

    REPRESENTATIONS
      AND
      WARRANTIES

     

    
      	
              Section
                4.1.

            	
              Authorization;
                Enforceability. 

            

    

     

    Each
      of
      the parties hereto represents and warrants that it has taken all action
      necessary to authorize the execution, delivery and performance of this Agreement
      and the transactions contemplated hereby; and upon execution and delivery,
      this
      Agreement shall constitute a valid and binding obligation of the respective
      party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
      and similar laws affecting creditors’ rights or by the principles governing the
      availability of equitable remedies.

     

    
      	
              Section
                4.2.

            	
              Ownership
                of Pledged
                Property. 

            

    

     

    The
      Company warrants and represents that it is the legal and beneficial owner of
      the
      Pledged Property free and clear of any lien, security interest, option or other
      charge or encumbrance except for the security interest created by this
      Agreement.

     

    

    
      
        
          
          

        

        
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          EXHIBIT
            10.4 - continued

        

      

    

    

    ARTICLE
      4.2.1.

     

    DEFAULT;
      REMEDIES;
      SUBSTITUTE COLLATERAL

     

    
      	
              Section
                4.3.

            	
              Default
                and
                Remedies. 

            

    

     

    (a)           
      If an Event of Default described in Section 2.2(c)(i) and
      (ii) occurs, then in each such case the Secured Party may declare the
      Obligations to be due and payable immediately, by a notice in writing to the
      Company, and upon any such declaration, the Obligations shall become immediately
      due and payable.  If an Event of Default described in
      Sections 2.2(c)(iii) or (iv) occurs and is continuing for the
      period set forth therein, then the Obligations shall automatically become
      immediately due and payable without declaration or other act on the part of
      the
      Secured Party.

     

    (b)           
      Upon the occurrence of an Event of Default, the Secured Party shall: (i) be
      entitled to receive all distributions with respect to the Pledged Collateral,
      (ii) to cause the Pledged Property to be transferred into the name of the
      Secured Party or its nominee, (iii) to dispose of the Pledged Property, and
      (iv) to realize upon any and all rights in the Pledged Property then held
      by the Secured Party.

     

    
      	
              Section
                4.4.

            	
              Method
                of Realizing
                Upon the Pledged Property: Other Remedies.
                

            

    

     

    Upon
      the
      occurrence of an Event of Default, in addition to any rights and remedies
      available at law or in equity, the following provisions shall govern the Secured
      Party’s right to realize upon the Pledged Property:

     

    (a)           
      Any item of the Pledged Property may be sold for cash or other value in any
      number of lots at brokers board, public auction or private sale and may be
      sold
      without demand, advertisement or notice (except that the Secured Party shall
      give the Company ten (10) days’ prior written notice of the time and
      place or of the time after which a private sale may be made (the “Sale Notice”)), which
      notice period shall in any event is hereby agreed to be commercially
      reasonable.  At any sale or sales of the Pledged Property, the Company
      may bid for and purchase the whole or any part of the Pledged Property and,
      upon
      compliance with the terms of such sale, may hold, exploit and dispose of the
      same without further accountability to the Secured Party.  The Company
      will execute and deliver, or cause to be executed and delivered, such
      instruments, documents, assignments, waivers, certificates, and affidavits
      and
      supply or cause to be supplied such further information and take such further
      action as the Secured Party reasonably shall require in connection with any
      such
      sale.

     

    (b)           
      Any cash being held by the Secured Party as Pledged Collateral and all cash
      proceeds received by the Secured Party in respect of, sale of, collection from,
      or other realization upon all or any part of the Pledged Collateral shall be
      applied as follows:

     

    (i)           
      to the payment of all amounts due the Secured Party for the expenses
      reimbursable to it hereunder or owed to it pursuant to Section 8.3
      hereof;

     

    (ii)           
      to the payment of the Obligations then due and unpaid.

     

    

    
      
        
          
          

        

        
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          EXHIBIT
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    (iii)           
      the balance, if any, to the person or persons entitled thereto, including,
      without limitation, the Company.

     

    (c)           
      In addition to all of the rights and remedies which the Secured Party may have
      pursuant to this Agreement, the Secured Party shall have all of the rights
      and
      remedies provided by law, including, without limitation, those under the Uniform
      Commercial Code.

     

    (i)           
      If the Company fails to pay such amounts due upon the occurrence of an Event
      of
      Default which is continuing, then the Secured Party may institute a judicial
      proceeding for the collection of the sums so due and unpaid, may prosecute
      such
      proceeding to judgment or final decree and may enforce the same against the
      Company and collect the monies adjudged or decreed to be payable in the manner
      provided by law out of the property of Company, wherever situated.

     

    (ii)           
      The Company agrees that it shall be liable for any reasonable fees, expenses
      and
      costs incurred by the Secured Party in connection with enforcement, collection
      and preservation of the Transaction Documents, including, without limitation,
      reasonable legal fees and expenses, and such amounts shall be deemed included
      as
      Obligations secured hereby and payable as set forth in Section 8.3
      hereof.

     

    
      	
              Section
                4.5.

            	
              Proofs
                of
                Claim. 

            

    

     

    In
      case
      of the pendency of any receivership, insolvency, liquidation, bankruptcy,
      reorganization, arrangement, adjustment, composition or other judicial
      proceeding relating to the Company or the property of the Company or of such
      other obligor or its creditors, the Secured Party (irrespective of whether
      the
      Obligations shall then be due and payable as therein expressed or by declaration
      or otherwise and irrespective of whether the Secured Party shall have made
      any
      demand on the Company for the payment of the Obligations), subject to the rights
      of Previous Security Holders, shall be entitled and empowered, by intervention
      in such proceeding or otherwise:

     

    (i)           
      to file and prove a claim for the whole amount of the Obligations and to file
      such other papers or documents as may be necessary or advisable in order to
      have
      the claims of the Secured Party (including any claim for the reasonable legal
      fees and expenses and other expenses paid or incurred by the Secured Party
      permitted hereunder and of the Secured Party allowed in such judicial
      proceeding), and

     

    (ii)           
      to collect and receive any monies or other property payable or deliverable
      on
      any such claims and to distribute the same; and any custodian, receiver,
      assignee, trustee, liquidator, sequestrator or other similar official in any
      such judicial proceeding is hereby authorized by the Secured Party to make
      such
      payments to the Secured Party and, in the event that the Secured Party shall
      consent to the making of such payments directed to the Secured Party, to pay
      to
      the Secured Party any amounts for expenses due it hereunder.

     

    
      	
              Section
                4.6.

            	
              Duties
                Regarding
                Pledged Collateral. 

            

    

     

    The
      Secured Party shall have no duty as to the collection or protection of the
      Pledged Property or any income thereon or as to the preservation of any rights
      pertaining thereto, beyond the safe custody and reasonable care of any of the
      Pledged Property actually in the Secured Party’s possession.

     

    

    
      
        
          
          

        

        
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          EXHIBIT
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    ARTICLE
      5.

     

    AFFIRMATIVE
      COVENANTS

     

    The
      Company covenants and agrees that, from the date hereof and until the
      Obligations have been fully paid and satisfied, unless the Secured Party shall
      consent otherwise in writing (as provided in Section 8.4
      hereof):

     

    
      	
              Section
                5.1.

            	
              Existence,
                Properties,
                Etc.

            

    

     

    (a)           
      The Company shall do, or cause to be done, all things, or proceed with due
      diligence with any actions or courses of action, that may be reasonably
      necessary (i) to maintain Company’s due organization, valid existence and
      good standing under the laws of its state of incorporation, and (ii) to
      preserve and keep in full force and effect all qualifications, licenses and
      registrations in those jurisdictions in which the failure to do so could have
      a
      Material Adverse Effect (as defined below); and (b) the Company shall not
      do, or cause to be done, any act impairing the Company’s corporate power or
      authority (i) to carry on the Company’s business as now conducted, and
      (ii) to execute or deliver this Agreement or any other document delivered
      in connection herewith, including, without limitation, any UCC-1 Financing
      Statements required by the Secured Party to which it is or will be a party,
      or perform any of its obligations hereunder or thereunder.  For
      purpose of this Agreement, the term “Material Adverse
      Effect” shall mean any material and adverse affect as determined by
      Secured Party in its sole discretion, whether individually or in the aggregate,
      upon (a) the Company’s assets, business, operations, properties or
      condition, financial or otherwise; (b) the Company’s to make payment as and
      when due of all or any part of the Obligations; or (c) the Pledged
      Property.

     

    
      	
              Section
                5.2.

            	
              Financial
                Statements
                and Reports. 

            

    

     

    The
      Company shall furnish to the Secured Party such financial data as the Secured
      Party may reasonably request in writing.  Without limiting the
      foregoing, the Company shall furnish to the Secured Party (or cause to be
      furnished to the Secured Party) the following:

     

    (a)           
      as soon as practicable and in any event within ninety (90) days after the end
      of
      each fiscal year of the Company, the balance sheet of the Company as of the
      close of such fiscal year, the statement of earnings and retained earnings
      of
      the Company as of the close of such fiscal year, and statement of cash flows
      for
      the Company for such fiscal year, all in reasonable detail, prepared in
      accordance with generally accepted accounting principles consistently applied,
      certified by the chief executive and chief financial officers of the Company
      as
      being true and correct and accompanied by a certificate of the chief executive
      and chief financial officers of the Company, stating that the Company has kept,
      observed, performed and fulfilled each covenant, term and condition of this
      Agreement during such fiscal year and that no Event of Default hereunder has
      occurred and is continuing, or if an Event of Default has occurred and is
      continuing, specifying the nature of same, the period of existence of same
      and
      the action the Company proposes to take in connection therewith;

     

    

    
      
        
          
          

        

        
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    (b)           
      within thirty (30) days of the end of each calendar month, a balance sheet
      of
      the Company as of the close of such month, and statement of earnings and
      retained earnings of the Company as of the close of such month, all in
      reasonable detail, and prepared substantially in accordance with generally
      accepted accounting principles consistently applied, certified by the chief
      executive and chief financial officers of the Company as being true and correct;
      and

     

    (c)           
      promptly upon receipt thereof, copies of all accountants' reports and
      accompanying financial reports submitted to the Company by independent
      accountants in connection with each annual examination of the
      Company.

     

    
      	
              Section
                5.3.

            	
              Accounts
                and
                Reports. 

            

    

     

    The
      Company shall maintain a standard system of accounting in accordance with
      generally accepted accounting principles consistently applied and provide,
      at
      its sole expense, to the Secured Party the following:

     

    (a)           
      as soon as available, a copy of any notice or other communication alleging
      any
      nonpayment or other material breach or default, or any foreclosure or other
      action respecting any material portion of its assets and properties, received
      respecting any of the indebtedness of the Company in excess of $15,000 (other
      than the Obligations), or any demand or other request for payment under any
      guaranty, assumption, purchase agreement or similar agreement or arrangement
      respecting the indebtedness or obligations of others in excess of $15,000,
      including any received from any person acting on behalf of the Secured Party
      or
      beneficiary thereof; and

     

    (b)           
      within fifteen (15) days after the making of each submission or filing, a
      copy of any report, financial statement, notice or other document, whether
      periodic or otherwise, submitted to the shareholders of the Company, or
      submitted to or filed by the Company with any governmental authority involving
      or affecting (i) the Company that could have a Material Adverse Effect;
      (ii) the Obligations; (iii) any part of the Pledged Collateral; or
      (iv) any of the transactions contemplated in this Agreement or the Loan
      Instruments.

     

    
      	
              Section
                5.4.

            	
              Maintenance
                of Books
                and Records; Inspection. 

            

    

     

    The
      Company shall maintain its books, accounts and records in accordance with
      generally accepted accounting principles consistently applied, and permit the
      Secured Party, its officers and employees and any professionals designated
      by
      the Secured Party in writing, at any time to visit and inspect any of its
      properties (including but not limited to the collateral security described
      in
      the Transaction Documents and/or the Loan Instruments), corporate books and
      financial records, and to discuss its accounts, affairs and finances with any
      employee, officer or director thereof.

     

    
      	
              Section
                5.5.

            	
              Maintenance
                and
                Insurance. 

            

    

     

    (a)           
      The Company shall maintain or cause to be maintained, at its own expense, all
      of
      its assets and properties in good working order and condition, making all
      necessary repairs thereto and renewals and replacements thereof.

     

    

    
      
        
          
          

        

        
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    (b)           
      The Company shall maintain or cause to be maintained, at its own expense,
      insurance in form, substance and amounts (including deductibles), which the
      Company deems reasonably necessary to the Company’s business, (i) adequate
      to insure all assets and properties of the Company, which assets and properties
      are of a character usually insured by persons engaged in the same or similar
      business against loss or damage resulting from fire or other risks included
      in
      an extended coverage policy; (ii) against public liability and other tort
      claims that may be incurred by the Company; (iii) as may be required by the
      Transaction Documents and/or applicable law and (iv) as may be reasonably
      requested by Secured Party, all with adequate, financially sound and reputable
      insurers.

     

    
      	
              Section
                5.6.

            	
              Contracts
                and Other
                Collateral. 

            

    

     

    The
      Company shall perform all of its obligations under or with respect to each
      instrument, receivable, contract and other intangible included in the Pledged
      Property to which the Company is now or hereafter will be party on a timely
      basis and in the manner therein required, including, without limitation, this
      Agreement.

     

    
      	
              Section
                5.7.

            	
              Defense
                of Collateral,
                Etc.

            

    

     

    The
      Company shall defend and enforce its right, title and interest in and to any
      part of:  (a) the Pledged Property; and (b) if not included
      within the Pledged Property, those assets and properties whose loss could have
      a
      Material Adverse Effect, the Company shall defend the Secured Party’s right,
      title and interest in and to each and every part of the Pledged Property, each
      against all manner of claims and demands on a timely basis to the full extent
      permitted by applicable law.

     

    
      	
              Section
                5.8.

            	
              Payment
                of Debts,
                Taxes, Etc.

            

    

     

    The
      Company shall pay, or cause to be paid, all of its indebtedness and other
      liabilities and perform, or cause to be performed, all of its obligations in
      accordance with the respective terms thereof, and pay and discharge, or cause
      to
      be paid or discharged, all taxes, assessments and other governmental charges
      and
      levies imposed upon it, upon any of its assets and properties on or before
      the
      last day on which the same may be paid without penalty, as well as pay all
      other
      lawful claims (whether for services, labor, materials, supplies or
      otherwise) as and when due

     

    
      	
              Section
                5.9.

            	
              Taxes
                and Assessments;
                Tax Indemnity. 

            

    

     

    The
      Company shall (a) file all tax returns and appropriate schedules thereto
      that are required to be filed under applicable law, prior to the date of
      delinquency, (b) pay and discharge all taxes, assessments and governmental
      charges or levies imposed upon the Company, upon its income and profits or
      upon
      any properties belonging to it, prior to the date on which penalties attach
      thereto, and (c) pay all taxes, assessments and governmental charges or
      levies that, if unpaid, might become a lien or charge upon any of its
      properties; provided,
      however, that the Company in good faith may contest any such tax,
      assessment, governmental charge or levy described in the foregoing clauses
      (b)
      and (c) so long as appropriate reserves are maintained with respect
      thereto.

     

    

    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

          EXHIBIT
            10.4 - continued

        

      

    

     

    
      	
              Section
                5.9.1.

            	
              Compliance
                with Law
                and Other Agreements.

            

    

     

    The
      Company shall maintain its business operations and property owned or used in
      connection therewith in compliance with (a) all applicable federal, state
      and local laws, regulations and ordinances governing such business operations
      and the use and ownership of such property, and (b) all agreements,
      licenses, franchises, indentures and mortgages to which the Company is a party
      or by which the Company or any of its properties is bound.  Without
      limiting the foregoing, the Company shall pay all of its indebtedness promptly
      in accordance with the terms thereof.

     

    
      	
              Section
                5.10.

            	
              Notice
                of
                Default. 

            

    

     

    The
      Company shall give written notice to the Secured Party of the occurrence of
      any
      default or Event of Default under this Agreement, the Transaction Documents
      or
      any other Loan Instrument or any other agreement of Company for the payment
      of
      money, promptly upon the occurrence thereof.

     

    
      	
              Section
                5.11.

            	
              Notice
                of
                Litigation. 

            

    

     

    The
      Company shall give notice, in writing, to the Secured Party of (a) any
      actions, suits or proceedings wherein the amount at issue is in excess of
      $50,000, instituted by any persons against the Company, or affecting any of
      the
      assets of the Company, and (b) any dispute, not resolved within fifteen
      (15) days of the commencement thereof, between the Company on the one hand
      and
      any governmental or regulatory body on the other hand, which might reasonably
      be
      expected to have a Material Adverse Effect on the business operations or
      financial condition of the Company.

     

    ARTICLE
      6.

     

    NEGATIVE
      COVENANTS

     

    The
      Company covenants and agrees that, from the date hereof until the Obligations
      have been fully paid and satisfied, the Company shall not, unless the Secured
      Party shall consent otherwise in writing:

     

    
      	
              Section
                6.1.

            	
              Indebtedness.
                

            

    

     

    The
      Company shall not directly or indirectly permit, create, incur, assume, permit
      to exist, increase, renew or extend on or after the date hereof any indebtedness
      on its part, including commitments, contingencies and credit availabilities,
      or
      apply for or offer or agree to do any of the foregoing.

     

    
      	
              Section
                6.2.

            	
              Liens
                and
                Encumbrances. 

            

    

     

    The
      Company shall not directly or indirectly make, create, incur, assume or permit
      to exist any assignment, transfer, pledge, mortgage, security interest or other
      lien or encumbrance of any nature in, to or against any part of the Pledged
      Property or of the Company’s capital stock, or offer or agree to do so, or own
      or acquire or agree to acquire any asset or property of any character subject
      to
      any of the foregoing encumbrances (including any conditional sale contract
      or
      other title retention agreement), or assign, pledge or in any way transfer
      or
      encumber its right to receive any income or other distribution or proceeds
      from
      any part of the Pledged Property or the Company’s capital stock; or enter into
      any sale-leaseback financing respecting any part of the Pledged
      Property  as lessee, or cause or assist the inception or continuation
      of any of the foregoing.

     

    

    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

          EXHIBIT
            10.4 - continued

        

      

    

     

     

    
      	
              Section
                6.3.

            	
              Certificate
                of
                Incorporation, By-Laws, Mergers, Consolidations, Acquisitions and
                Sales. 

            

    

     

    Without
      the prior express written consent of the Secured Party, the Company shall
      not:  (a) Amend its Certificate of Incorporation or By-Laws; (b)
      issue or sell its stock, stock options, bonds, notes or other corporate
      securities or obligations; (c) be a party to any merger, consolidation or
      corporate reorganization, (d) purchase or otherwise acquire all or
      substantially all of the assets or stock of, or any partnership or joint venture
      interest in, any other person, firm or entity, (e) sell, transfer, convey,
      grant a security interest in or lease all or any substantial part of its assets,
      nor (f) create any subsidiaries nor convey any of its assets to any
      subsidiary.

     

    
      	
              Section
                6.4.

            	
              Management,
                Ownership. 

            

    

     

    The
      Company shall not materially change its ownership, executive staff or management
      without the prior written consent of the Secured Party.  The
      ownership, executive staff and management of the Company are material factors
      in
      the Secured Party's willingness to institute and maintain a lending relationship
      with the Company.

     

    
      	
              Section
                6.5.

            	
              Dividends,
                Etc.
                

            

    

     

    The
      Company shall not declare or pay any dividend of any kind, in cash or in
      property, on any class of its capital stock, nor purchase, redeem, retire or
      otherwise acquire for value any shares of such stock, nor make any distribution
      of any kind in respect thereof, nor make any return of capital to shareholders,
      nor make any payments in respect of any pension, profit sharing, retirement,
      stock option, stock bonus, incentive compensation or similar plan (except as
      required or permitted hereunder), without the prior written consent of the
      Secured Party.

     

    
      	
              Section
                6.6.

            	
              Guaranties;
                Loans. 

            

    

     

    The
      Company shall not guarantee nor be liable in any manner, whether directly or
      indirectly, or become contingently liable after the date of this Agreement
      in
      connection with the obligations or indebtedness of any person or persons, except
      for (i) the indebtedness currently secured by the liens identified on the
      Pledged Property identified on Exhibit A hereto and (ii) the endorsement of
      negotiable instruments payable to the Company for deposit or collection in
      the
      ordinary course of business.  The Company shall not make any loan,
      advance or extension of credit to any person other than in the normal course
      of
      its business, without the express written consent of the Secured
      Party.

     

    

    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

          EXHIBIT
            10.4 - continued

        

      

    

     

    
      	
              Section
                6.6.1.

            	
              Debt.

            

    

     

    The
      Company shall not create, incur, assume or suffer to exist any additional
      indebtedness of any description whatsoever in an aggregate amount in excess
      of
      $25,000 (excluding any indebtedness of the Company to the Secured Party, trade
      accounts payable and accrued expenses incurred in the ordinary course of
      business and the endorsement of negotiable instruments payable to the Company,
      respectively for deposit or collection in the ordinary course of business)
      without the express written consent of the Secured Party.

     

    
      	
              Section
                6.7.

            	
              Conduct
                of
                Business. 

            

    

     

    The
      Company will continue to engage, in an efficient and economical manner, in
      a
      business of the same general type as conducted by it on the date of this
      Agreement.

     

    
      	
              Section
                6.8.

            	
              Places
                of
                Business. 

            

    

     

    The
      location of the Company’s chief place of business is Phoenix, AZ.  The
      Company shall not change the location of its chief place of business, chief
      executive office or any place of business disclosed to the Secured Party or
      move
      any of the Pledged Property from its current location without thirty (30) days'
      prior written notice to the Secured Party in each instance.

     

    ARTICLE
      7.

     

    MISCELLANEOUS

     

    
      	
              Section
                7.1.

            	
              Notices.
                

            

    

     

    All
      notices or other communications required or permitted to be given pursuant
      to
      this Agreement shall be in writing and shall be considered as duly given
      on:  (a) the date of delivery, if delivered in person, by
      nationally recognized overnight delivery service or
      (b) five (5) days after mailing if mailed from within the
      continental United States by certified mail, return receipt requested to the
      party entitled to receive the same:

     

    
      	 	
              If
                to the Secured Party:

            	
              Trafalgar
                Capital Specialized Investment Fund

            
	 	 	
              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

            

    

    

    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

          EXHIBIT
            10.4 - continued

        

      

    

    

    

    
      	 	 	 
	 	
              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

            
	 	 	 
	 	 	 
	 	
              And
                if to the Company:

            	
              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

            

    

    

    Any
      party
      may change its address by giving notice to the other party stating its new
      address.  Commencing on the tenth (10th) day
      after the giving of such notice, such newly designated address shall be such
      party’s address for the purpose of all notices or other communications required
      or permitted to be given pursuant to this Agreement.

     

    
      	
              Section
                7.2.

            	
              Severability.
                

            

    

     

    If
      any
      provision of this Agreement shall be held invalid or unenforceable, such
      invalidity or unenforceability shall attach only to such provision and shall
      not
      in any manner affect or render invalid or unenforceable any other severable
      provision of this Agreement, and this Agreement shall be carried out as if
      any
      such invalid or unenforceable provision were not contained herein.

     

    
      	
              Section
                7.3.

            	
              Expenses.
                

            

    

     

    In
      the
      event of an Event of Default, the Company will pay to the Secured Party the
      amount of any and all reasonable expenses, including the reasonable fees and
      expenses of its counsel, which the Secured Party may incur in connection
      with:  (i) the custody or preservation of, or the sale,
      collection from, or other realization upon, any of the Pledged Property;
      (ii) the exercise or enforcement of any of the rights of the Secured Party
      hereunder or (iii) the failure by the Company to perform or observe any of
      the provisions hereof.

     

    

    
      
        
          
          

        

        
          13

          
            

          

        

        
          
          

          EXHIBIT
            10.4 - continued

        

      

    

     

    
      	
              Section
                7.3.1.

            	
              Waivers,
                Amendments,
                Etc.

            

    

     

    The
      Secured Party’s delay or failure at any time or times hereafter to require
      strict performance by Company of any undertakings, agreements or covenants
      shall
      not waiver, affect, or diminish any right of the Secured Party under this
      Agreement to demand strict compliance and performance herewith.  Any
      waiver by the Secured Party of any Event of Default shall not waive or affect
      any other Event of Default, whether such Event of Default is prior or subsequent
      thereto and whether of the same or a different type.  None of the
      undertakings, agreements and covenants of the Company contained in this
      Agreement, and no Event of Default, shall be deemed to have been waived by
      the
      Secured Party, nor may this Agreement be amended, changed or modified, unless
      such waiver, amendment, change or modification is evidenced by an instrument
      in
      writing specifying such waiver, amendment, change or modification and signed
      by
      the Secured Party.

     

    
      	
              Section
                7.4.

            	
              Continuing
                Security
                Interest.

            

    

     

    This
      Agreement shall create a continuing security interest in the Pledged Property
      and shall: (i) remain in full force and effect until payment in full of the
      Obligations; and (ii) be binding upon the Company and its successors and
      heirs and (iii) inure to the benefit of the Secured Party and its
      successors and assigns.  Upon the payment or satisfaction in full of
      the Obligations, the Company shall be entitled to the return, at its expense,
      of
      such of the Pledged Property as shall not have been sold in accordance with
      Section 5.2 hereof or otherwise applied pursuant to the terms
      hereof.

     

    
      	
              Section
                7.5.

            	
              Independent
                Representation. 

            

    

     

    Each
      party hereto acknowledges and agrees that it has received or has had the
      opportunity to receive independent legal counsel of its own choice and that
      it
      has been sufficiently apprised of its rights and responsibilities with regard
      to
      the substance of this Agreement.

     

    
      	
              Section
                7.6.

            	
              Applicable
                Law:  Jurisdiction.

            

    

     

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

     

    
      	
              Section
                7.7.

            	
              Waiver
                of Jury
                Trial. 

            

    

     

    AS
      A
      FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO
      MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES
      ANY
      RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
      AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS
      TRANSACTION.

     

    

    
      
        
          
          

        

        
          14

          
            

          

        

        
          
          

          EXHIBIT
            10.4 - continued

        

      

    

     

    
      	
              Section
                7.7.1.

            	
              Entire
                Agreement.

            

    

     

    This
      Agreement constitutes the entire agreement among the parties and supersedes
      any
      prior agreement or understanding among them with respect to the subject matter
      hereof.

     

    

    IN
      WITNESS WHEREOF, the
      parties hereto have executed this Security Agreement as of the date first above
      written.

     

    

    
      	 	
              COMPANY:

            
	 	
              C-MARK
                INTERNATIONAL, INC.

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

            
	 	
              Name:    
                 Charles W. Jones, Jr.

            
	 	
              Title:      
                 Chief Executive Officer

            
	 	 
	 	 
	 	
              SECURED
                PARTY:

            
	 	
              TRAFALGAR
                CAPITAL SPECIALIZED

            
	 	
              INVESTMENT
                FUND, LUXEMBOURG

            
	 	
              By:           
                Trafalgar Capital Sarl

            
	 	
              Its:           
                General Partner

            
	 	 
	 	
              By:    
                /s/   Andrew Garai

            
	 	
              Name:        Andrew
                Garai

            
	 	
              Title:          Chairman
                of the Board

            

    

    

    

    

    

    

    
      
        
          
          

        

        
          15

          
            

          

        

        
          
          

          EXHIBIT
            10.4 - continued

        

      

    

    

    

     

    EXHIBIT
      A

     

    DEFINITION
      OF PLEDGED
      PROPERTY

     

     

    For
      the
      purpose of securing prompt and complete payment and performance by the Company
      of all of the Obligations, the Company unconditionally and irrevocably hereby
      grants to the Secured Party a continuing security interest in and to, and lien
      upon, the following Pledged Property of the Company as well as a direct
      right of
      participation in and the direct right of redirection of the Company’s
      Receivables.

     

     

    (a)           
      all goods of the Company, including, without limitation, machinery, equipment,
      furniture, furnishings, fixtures, signs, lights, tools, parts, supplies and
      motor vehicles of every kind and description, now or hereafter owned by the
      Company or in which the Company may have or may hereafter acquire any interest,
      and all replacements, additions, accessions, substitutions and proceeds thereof,
      arising from the sale or disposition thereof, and where applicable, the proceeds
      of insurance and of any tort claims involving any of the foregoing;

     

     

    (b)           
      all inventory of the Company, including, but not limited to, all goods, wares,
      merchandise, parts, supplies, finished products, other tangible personal
      property, including such inventory as is temporarily out of Company’s custody or
      possession and including any returns upon any accounts or other proceeds,
      including insurance proceeds, resulting from the sale or disposition of any
      of
      the foregoing;

     

     

    (c)           
      all contract rights and general intangibles of the Company, including, without
      limitation, goodwill, trademarks, trade styles, trade names, leasehold
      interests, partnership or joint venture interests, patents and patent
      applications, copyrights, deposit accounts whether now owned or hereafter
      created;

     

     

    (d)           
      all documents, warehouse receipts, instruments and chattel paper of the Company
      whether now owned or hereafter created;

     

     

    (e)           
      all accounts and other receivables, instruments or other forms of obligations
      and rights to payment of the Company (herein collectively referred to as “Accounts”), together
      with the proceeds thereof, all goods represented by such Accounts and all such
      goods that may be returned by the Company’s customers, and all proceeds of any
      insurance thereon, and all guarantees, securities and liens which the Company
      may hold for the payment of any such Accounts including, without limitation,
      all
      rights of stoppage in transit, replevin and reclamation and as an unpaid vendor
      and/or lienor, all of which the Company represents and warrants will be bona
      fide and existing obligations of its respective customers, arising out of the
      sale of goods by the Company in the ordinary course of business;

     

     

    (f)           
      to the extent assignable, all of the Company’s rights under all present and
      future authorizations, permits, licenses and franchises issued or granted in
      connection with the operations of any of its facilities;

     

     

    (g)           
      all products and proceeds (including, without limitation, insurance proceeds)
      from the above-described Pledged Property.

     

    A-1exhibit_10-5.htm

    
      

    

    EXHIBIT
10.5

    
      

       

      ESCROW
AGREEMENT

       

      THIS ESCROW AGREEMENT (this
“Agreement”) is
made and entered into as of December 31, 2007 among C-MARK INTERNATIONAL, INC., a
South Carolina corporation (the “Company”); the
Buyer(s) listed on the Securities Purchase Agreement, dated the date
hereof (also referred to as the “Investor(s)”), and
JAMES G. DODRILL II,
P.A., as Escrow Agent hereunder (the “Escrow
Agent”).

       

       

      BACKGROUND

       

      WHEREAS, the Company and the
Investor(s) have entered into a Securities Purchase Agreement (the “Securities Purchase
Agreement”), dated as of the date hereof, pursuant to which the Company
proposes to sell secured convertible debentures (the “Convertible
Debentures”) which shall be convertible into the Company’s Common Stock,
par value US$.0001 per share (the “Common Stock”), at a
price per share equal to the Purchase Price, as that term is defined in the
Convertible Debentures.  The Securities Purchase Agreement provides
that the Investor(s) shall deposit the purchase amount in a segregated escrow
account to be held by Escrow Agent in order to effectuate a disbursement to the
Company at a closing to be held as set forth in the Securities Purchase
Agreement (the “Closing”).

       

      WHEREAS, the Company intends
to sell Convertible Securities (the “Offering”).

       

      WHEREAS, Escrow Agent has
agreed to accept, hold, and disburse the funds deposited with it in accordance
with the terms of this Agreement.

       

      WHEREAS, in order to establish
the escrow of funds and to effect the provisions of the Securities Purchase
Agreement, the parties hereto have entered into this Agreement.

       

      NOW THEREFORE, in
consideration of the foregoing, it is hereby agreed as follows:

       

      1.           
Definitions.  The
following terms shall have the following meanings when used herein:

       

      a.           
“Escrow Funds”
shall mean the funds deposited with Escrow Agent pursuant to this
Agreement.

       

      b.           
“Joint Written
Direction” shall mean a
written direction
executed by the Investor(s) and the Company directing Escrow Agent to disburse
all or a portion of the Escrow Funds or to take or refrain from taking any
action pursuant to this Agreement.

       

      c.           
“Escrow Period”
shall begin with the commencement of the Offering and shall terminate upon the
earlier to occur of the following dates:

       

      (i)           
The date upon which Escrow Agent confirms that it has received in the Escrow
Account all of the proceeds of the sale of the Convertible
Debentures;

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

          EXHIBIT
10.5 - continued

        

      

      (ii)           
The expiration of twenty (20) days from the date of commencement of the Offering
(unless extended by mutual written agreement between the Company and the
Investor(s) with a copy of such extension to Escrow Agent); or

       

      (iii)           
The date upon which a determination is made by the Company and the Investor(s)
to terminate the Offering prior to the sale of all the Convertible
Debentures.

       

      During
the Escrow Period, the Company and the Investor(s) are aware that they are not
entitled to any funds received into escrow and no amounts deposited in the
Escrow Account shall become the property of the Company or the Investor(s) or
any other entity, or be subject to the debts of the Company or the Investor(s)
or any other entity.

       

      2.           
Appointment
of and Acceptance by Escrow Agent.  The Investor(s)
and the Company hereby appoint Escrow Agent to serve as Escrow Agent
hereunder.  Escrow Agent hereby accepts such appointment and, upon
receipt by wire transfer of the Escrow Funds in accordance with Section 3 below,
agrees to hold, invest and disburse the Escrow Funds in accordance with this
Agreement.

       

      a.           
The Company hereby acknowledges that the Escrow Agent is counsel to the
Investor(s) in connection with the transactions contemplated and referred
herein. The Company agrees that in the event of any dispute arising in
connection with this Escrow Agreement or otherwise in connection with any
transaction or agreement contemplated and referred herein, the Escrow Agent
shall be permitted to continue to represent the Investor(s) and the Company will
not seek to disqualify such counsel.

       

      3.           
Creation
of Escrow Funds.  On or prior to
the date of the commencement of the Offering, the parties shall establish an
escrow account with the Escrow Agent, which escrow account shall be entitled as
follows:  C-Mark International, Inc./Trafalgar Capital Specialized
Investment Fund Escrow Account for the deposit of the Escrow
Funds.  The Investor(s) will instruct subscribers to wire funds to the
account of the Escrow Agent as follows:

       

      
        	
                Bank: 
      

              	
                Bank
      of America

              
	
                Routing
      #:

              	
                026009583

              
	
                Account
      #:

              	
                [------------]

              
	
                SWIFT
      #:

              	
                BOFAUS3N

              
	
                Name
      on Account:

              	
                James
      G. Dodrill II, P.A. as Escrow Agent

              
	
                Name
      on Sub-Account:

              	
                C-Mark
      International, Inc./ Trafalgar Capital Specialized Investment Fund Escrow
      account

              
	 	 

      

      4.           
Deposits
into the Escrow Account.  The Investor(s)
agrees that they shall promptly deliver funds for the payment of the Convertible
Debentures to Escrow Agent for deposit in the Escrow Account.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

          EXHIBIT
10.5 - continued

        

      

      5.           
Disbursements
from the Escrow Account.

       

      a.           
The Escrow Agent will continue to hold such funds until Trafalgar Capital Sarl
on behalf of the Investor(s) and Company execute a Joint Written Direction
directing the Escrow Agent to disburse the Escrow Funds pursuant to Joint
Written Direction signed by the Company and the Investor(s). In disbursing such
funds, Escrow Agent is authorized to rely upon such Joint Written Direction from
the Company and the Investor(s) and may accept any signatory from the Company
listed on the signature page to this Agreement and any signature from the
Investor(s) that the Escrow Agent already has on file.

       

      b.           
In the event Escrow Agent does not receive the amount of the Escrow Funds from
the Investor(s), Escrow Agent shall notify the Company and the Investor(s). Upon
receipt of payment instructions from the Company, Escrow Agent shall refund to
each subscriber without interest the amount received from each Investor(s),
without deduction, penalty, or expense to the subscriber. The purchase money
returned to each subscriber shall be free and clear of any and all claims of the
Company, the Investor(s) or any of their creditors.

       

      c.           
In the event Escrow Agent does receive the amount of the Escrow Funds prior to
expiration of the Escrow Period, in no event will the Escrow Funds be released
to the Company until such amount is received by Escrow Agent in collected funds.
For purposes of this Agreement, the term “collected funds” shall mean all funds
received by Escrow Agent which have cleared normal banking channels and are in
the form of cash.

       

      6.           
Collection
Procedure.  Escrow Agent is
hereby authorized to deposit the proceeds of each wire in the Escrow
Account.

       

      7.           
Suspension
of Performance: Disbursement Into Court.  If at any time,
there shall exist any dispute between the Company and the Investor(s) with
respect to holding or disposition of any portion of the Escrow Funds or any
other obligations of Escrow Agent hereunder, or if at any time Escrow Agent is
unable to determine, to Escrow Agent’s sole satisfaction, the proper disposition
of any portion of the Escrow Funds or Escrow Agent’s proper actions with respect
to its obligations hereunder, or if the parties have not within thirty (30) days
of the furnishing by Escrow Agent of a notice of resignation pursuant to Section
9 hereof, appointed a successor Escrow Agent to act hereunder, then Escrow Agent
may, in its sole discretion, take either or both of the following
actions:

       

      a.           
suspend the performance of any of its obligations (including without limitation
any disbursement obligations) under this Escrow Agreement until such dispute or
uncertainty shall be resolved to the sole satisfaction of Escrow Agent or until
a successor Escrow Agent shall be appointed (as the case may be); provided
however, Escrow Agent shall continue to invest the Escrow Funds in accordance
with Section 8 hereof; and/or

       

      b.           
petition (by means of an interpleader action or any other appropriate method)
any court of competent jurisdiction in any venue convenient to Escrow Agent, for
instructions with respect to such dispute or uncertainty, and to the extent
required by law, pay into such court, for holding and disposition in accordance
with the instructions of such court, all funds held by it in the Escrow Funds,
after deduction and payment to Escrow Agent of all fees and
expenses (including court costs and attorneys’ fees) payable to, incurred by, or
expected to be incurred by Escrow Agent in connection with performance of its
duties and the exercise of its rights hereunder.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

          EXHIBIT
10.5 - continued

        

      

       

      c.           
Escrow Agent shall have no liability to the Company, the Investor(s), or any
person with respect to any such suspension of performance or disbursement into
court, specifically including any liability or claimed liability that may arise,
or be alleged to have arisen, out of or as a result of any delay in the
disbursement of funds held in the Escrow Funds or any delay in with respect to
any other action required or requested of Escrow Agent.

       

      8.           
Investment
of Escrow Funds.
Escrow Agent shall deposit the Escrow Funds in a non-interest bearing
account.

       

      If Escrow
Agent has not received a Joint Written Direction at any time that an investment
decision must be made, Escrow Agent shall maintain the Escrow Funds, or such
portion thereof, as to which no Joint Written Direction has been received, in a
non-interest bearing account.

       

      9.           
Resignation
and Removal of Escrow Agent.  Escrow Agent may
resign from the performance of its duties hereunder at any time by giving thirty
(30) days’ prior written notice to the parties or may be removed, with or
without cause, by the parties, acting jointly, by furnishing a Joint Written
Direction to Escrow Agent, at any time by the giving of ten (10) days’ prior
written notice to Escrow Agent as provided herein below.  Upon any
such notice of resignation or removal, the representatives of the Investor(s)
and the Company identified in Sections 13a.(iv) and 13b.(iv), below, jointly
shall appoint a successor Escrow Agent hereunder, which shall be a commercial
bank, trust company or other financial institution with a combined capital and
surplus in excess of US$10,000,000.00.  Upon the acceptance in writing
of any appointment of Escrow Agent hereunder by a successor Escrow Agent, such
successor Escrow Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Escrow Agent, and the
retiring Escrow Agent shall be discharged from its duties and obligations under
this Escrow Agreement, but shall not be discharged from any liability for
actions taken as Escrow Agent hereunder prior to such
succession.  After any retiring Escrow Agent’s resignation or removal,
the provisions of this Escrow Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Escrow Agent under this
Escrow Agreement.  The retiring Escrow Agent shall transmit all
records pertaining to the Escrow Funds and shall pay all funds held by it in the
Escrow Funds to the successor Escrow Agent, after making copies of such records
as the retiring Escrow Agent deems advisable and after deduction and payment to
the retiring Escrow Agent of all fees and expenses (including court costs and
attorneys’ fees) payable to, incurred by, or expected to be incurred by the
retiring Escrow Agent in connection with the performance of its duties and the
exercise of its rights hereunder.

       

      10.           
Liability
of Escrow Agent.

       

      a.           
Escrow Agent shall have no liability or obligation with respect to the Escrow
Funds except for Escrow Agent’s willful misconduct or gross
negligence.  Escrow Agent’s sole responsibility shall be for the
safekeeping, investment, and disbursement of the Escrow Funds in accordance with
the terms of this Agreement.  Escrow Agent shall have no implied
duties or obligations and shall not be charged with knowledge or notice or any
fact or circumstance not specifically set forth herein.  Escrow Agent
may rely upon any instrument, not only as to its due execution, validity and
effectiveness, but also as to the truth and accuracy of any information
contained herein, which Escrow Agent shall in good faith believe to be genuine,
to have been signed or presented by the person or parties purporting to sign the
same and conform to the provisions of this Agreement.  In no event
shall Escrow Agent be liable for incidental, indirect, special, and
consequential or punitive damages.  Escrow Agent shall not be
obligated to take any legal action or commence any proceeding in connection with
the Escrow Funds, any account in which Escrow Funds are deposited, this
Agreement or the Purchase Agreement, or to appear in, prosecute or defend any
such legal action or proceeding.  Escrow Agent may consult legal
counsel selected by it in any event of any dispute or question as to
construction of any of the provisions hereof or of any other agreement or its
duties hereunder, or relating to any dispute involving any party hereto, and
shall incur no liability and shall be fully indemnified from any liability
whatsoever in acting in accordance with the opinion or instructions of such
counsel.  The Company and the Investor(s) jointly and severally shall
promptly pay, upon demand, the reasonable fees and expenses of any such
counsel.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

          EXHIBIT
10.5 - continued

        

      

       

       

      b.           
Escrow Agent is hereby authorized, in its sole discretion, to comply with orders
issued or process entered by any court with respect to the Escrow Funds, without
determination by Escrow Agent of such court’s jurisdiction in the
matter.  If any portion of the Escrow Funds is at any time attached,
garnished or levied upon under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in any case any order judgment or
decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ judgment or decree
which it is advised by legal counsel selected by it,  binding upon it,
without the need for appeal or other action; and if Escrow Agent complies with
any such order, writ, judgment or decree, it shall not be liable to any of the
parties hereto or to any other person or entity by reason of such compliance
even though such order, writ judgment or decree may be subsequently reversed,
modified, annulled, set aside or vacated.

       

      11.           
Indemnification
of Escrow Agent.  From and at all
times after the date of this Agreement, the parties jointly and severally,
shall, to the fullest extent permitted by law and to the extent provided herein,
indemnify and hold harmless Escrow Agent and each director, officer, employee,
attorney, agent and affiliate of Escrow Agent (collectively, the “Indemnified Parties”)
against any and all actions, claims (whether or not valid), losses, damages,
liabilities, costs and expenses of any kind or nature whatsoever (including
without limitation reasonable attorney’s fees, costs and expenses) incurred by
or asserted against any of the Indemnified Parties from and after the date
hereof, whether direct, indirect or consequential, as a result of or arising
from or in any way relating to any claim, demand, suit, action, or proceeding
(including any inquiry or investigation) by any person, including without
limitation the parties to this Agreement, whether threatened or initiated,
asserting a claim for any legal or equitable remedy against any person under any
statute or regulation, including, but not limited to, any federal or state
securities laws, or under any common law or equitable cause or otherwise,
arising from or in connection with the negotiation, preparation, execution,
performance or failure of performance of this Agreement or any transaction
contemplated herein, whether or not any such Indemnified Party is a party to any
such action or proceeding, suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Party shall have the right
to be indemnified hereunder for liability finally determined by a court of
competent jurisdiction, subject to no further appeal, to have resulted from the
gross negligence or willful misconduct of such Indemnified Party.  If
any such action or claim shall be brought or asserted against any Indemnified
Party, such Indemnified Party shall promptly notify the Company and the
Investor(s) hereunder in writing, and the Investor(s) and the Company shall
assume the defense thereof, including the employment of counsel and the payment
of all expenses.  Such Indemnified Party shall, in its sole
discretion, have the right to employ separate counsel (who may be selected by
such Indemnified Party in its sole discretion) in any such action and to
participate and to participate in the defense thereof, and the fees and expenses
of such counsel shall be paid by such Indemnified Party, except that the
Investor(s) and/or the Company shall be required to pay such fees and expense if
(a) the Investor(s) or the Company agree to pay such fees and expenses, or (b)
the Investor(s) and/or the Company shall fail to assume the defense of such
action or proceeding or shall fail, in the sole discretion of such Indemnified
Party, to employ counsel reasonably satisfactory to the Indemnified Party in any
such action or proceeding, (c) the Investor(s) and the Company
are  the plaintiff in any such action or proceeding or (d) the named
or potential parties to any such action or proceeding (including any potentially
impleaded parties) include both the Indemnified Party, the Company and/or the
Investor(s) and the Indemnified Party shall have been advised by counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the Company or the
Investor(s).  The Investor(s) and the Company shall be jointly and
severally liable to pay fees and expenses of counsel pursuant to the preceding
sentence, except that any obligation to pay under clause (a) shall apply only to
the party so agreeing.  All such fees and expenses payable by the
Company and/or the Investor(s) pursuant to the foregoing sentence shall be paid
from time to time as incurred, both in advance of and after the final
disposition of such action or claim.  The obligations of the parties
under this section shall survive any termination of this Agreement, and
resignation or removal of the Escrow Agent shall be independent of any
obligation of Escrow Agent.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

          EXHIBIT
10.5 - continued

        

      

       

      The
parties agree that neither payment by the Company or the Investor(s) of any
claim by Escrow Agent for indemnification hereunder shall impair, limit, modify,
or affect, as between the Investor(s) and the Company, the respective rights and
obligations of Investor(s), on the one hand, and the Company, on the other
hand.

       

      12.           
Expenses
of Escrow Agent.  Except as set
forth in Section 11 the Company shall reimburse Escrow Agent for all of its
out-of-pocket expenses, including attorneys’ fees, travel expenses, telephone
and facsimile transmission costs, postage (including express mail and overnight
delivery charges), copying charges and the like.  All of the
compensation and reimbursement obligations set forth in this Section shall be
payable by the Company, upon demand by Escrow Agent.  The obligations
of the Company under this Section shall survive any termination of this
Agreement and the resignation or removal of Escrow Agent.

       

      13.           
Warranties.

       

      a.           
The Investor(s) makes the following representations and warranties to Escrow
Agent:

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

          EXHIBIT
10.5 - continued

        

      

      (i)           
The Investor(s) has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.

       

      (ii)           
This Agreement has been duly approved by all necessary action of the
Investor(s), including any necessary approval of the limited partner of the
Investor(s) or necessary corporate approval, as applicable, has been executed by
duly authorized officers of the Investor(s), enforceable in accordance with its
terms.

       

      (iii)           
The execution, delivery, and performance of the Investor(s) of this Agreement
will not violate, conflict with, or cause a default under any agreement of
limited partnership of Investor(s) or the certificate of incorporation or bylaws
of the Investor(s) (as applicable), any applicable law or regulation, any
court order or administrative ruling or degree to which the Investor(s) is a
party or any of its property is subject, or any agreement, contract, indenture,
or other binding arrangement.

       

      (iv)           
Andrew Garai has been duly appointed to act as the representative of the
Investor(s) hereunder and has full power and authority to execute, deliver, and
perform this Escrow Agreement, to execute and deliver any Joint Written
Direction, to amend, modify, or waive any provision of this Agreement, and to
take any and all other actions as the Investor(s)’s representative under this
Agreement, all without further consent or direction form, or notice to, the
Investor(s) or any other party.

       

      (v)           
No party other than the parties hereto and the Investor(s) have, or shall have,
any lien, claim or security interest in the Escrow Funds or any part thereof. No
financing statement under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing (whether specifically
or generally) the Escrow Funds or any part thereof.

       

      (vi)           
All of the representations and warranties of the Investor(s) contained herein
are true and complete as of the date hereof and will be true and complete at the
time of any disbursement from the Escrow Funds.

       

      b.           
The Company makes the following representations and warranties to the Escrow
Agent:

       

      (i)           
The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of South Carolina and has full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder.

       

      (ii)           
This Agreement has been duly approved by all necessary corporate action of the
Company, including any necessary shareholder approval, has been executed by duly
authorized officers of the Company, enforceable in accordance with its
terms.

       

      (iii)           
The execution, delivery, and performance by the Company of this Agreement is in
accordance with the Securities Purchase Agreement and will not violate, conflict
with, or cause a default under the certificate of incorporation or bylaws of the
Company, any applicable law or regulation, any court order or administrative
ruling or decree to which the Company is a party or any of its property is
subject, or any agreement, contract, indenture, or other binding arrangement,
including without limitation to the Securities Purchase Agreement, to which the
Company is a party.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

          EXHIBIT
10.5 - continued

        

      

       

       

      (iv)           
Charles Jones, Jr. has been duly appointed to act as the representative of the
Company hereunder and has full power and authority to execute, deliver, and
perform this Agreement, to execute and deliver any Joint Written Direction, to
amend, modify or waive any provision of this Agreement and to take all other
actions as the Company’s Representative under this Agreement, all without
further consent or direction from, or notice to, the Company or any other
party.

       

      (v)           
No party other than the parties hereto and the Investor(s) have, or shall have,
any lien, claim or security interest in the Escrow Funds or any part thereof. No
financing statement under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing (whether specifically
or generally) the Escrow Funds or any part thereof.

       

      (vi)           
All of the representations and warranties of the Company contained herein are
true and complete as of the date hereof and will be true and complete at the
time of any disbursement from the Escrow Funds.

       

      14.           
Consent
to Jurisdiction and Venue.  In the event that
any party hereto commences a lawsuit or other proceeding relating to or arising
from this Agreement, the parties hereto agree that the United States District
Court for the Southern District of Florida shall have the sole and exclusive
jurisdiction over any such proceeding.  If all such courts lack
federal subject matter jurisdiction, the parties agree that the State Courts of
Florida located in Broward_County shall have sole and exclusive
jurisdiction.  Any of these courts shall be proper venue for any such
lawsuit or judicial proceeding and the parties hereto waive any objection to
such venue.  The parties hereto consent to and agree to submit to the
jurisdiction of any of the courts specified herein and agree to accept the
service of process to vest personal jurisdiction over them in any of these
courts.

       

      15.           
Notice.  All notices and
other communications hereunder shall be in writing and shall be deemed to have
been validly served, given or delivered five (5) days after deposit in the
United States mails, by certified mail with return receipt requested and postage
prepaid, when delivered personally, one (1) day delivered to any overnight
courier, or when transmitted by facsimile transmission and upon confirmation of
receipt and addressed to the party to be notified as follows:

       

      
        	
                If
      to Investor(s), to:

              	
                Trafalgar
      Capital Specialized Investment Fund

              
	 	
                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

              
	 	 

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

          EXHIBIT
10.5 - continued

        

      

      

      
        	
                If
      to Escrow Agent, 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

              
	 	 
	
                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

              
	 	 

      

      Or to
such other address as each party may designate for itself by like
notice.

       

      16.           
Amendments
or Waiver.  This Agreement
may be changed, waived, discharged or terminated only by a writing signed by the
parties hereto.  No delay or omission by any party in exercising any
right with respect hereto shall operate as waiver.  A waiver on any
one occasion shall not be construed as a bar to, or waiver of, any right or
remedy on any future occasion.

       

      17.           
Severability.  To the extent any
provision of this Agreement is prohibited by or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition, or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

       

      18.           
Governing
Law.  This Agreement
shall be construed and interpreted in accordance with the internal laws of the
State of Florida without giving effect to the conflict of laws principles
thereof.

       

      19.           
Entire
Agreement.  This Agreement
constitutes the entire Agreement between the parties relating to the holding,
investment, and disbursement of the Escrow Funds and sets forth in their
entirety the obligations and duties of the Escrow Agent with respect to the
Escrow Funds.

       

      20.           
Binding
Effect.  All of the terms
of this Agreement, as amended from time to time, shall be binding upon, inure to
the benefit of and be enforceable by the respective heirs, successors and
assigns of the Investor(s), the Company, or the Escrow Agent.

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

          EXHIBIT
10.5 - continued

        

      

      21.           
Execution
of Counterparts.  This Agreement
and any Joint Written Direction may be executed in counter parts, which when so
executed shall constitute one and same agreement or direction.

       

      22.           
Termination.  Upon the first to
occur of the disbursement of all amounts in the Escrow Funds pursuant to Joint
Written Directions or the disbursement of all amounts in the Escrow Funds into
court pursuant to Section 7 hereof, this Agreement shall terminate and Escrow
Agent shall have no further obligation or liability whatsoever with respect to
this Agreement or the Escrow Funds.

       

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

       

       

       

       

      

      

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

          EXHIBIT
10.5 - continued

        

      

      

      IN WITNESS WHEREOF the parties
have hereunto set their hands and seals the day and year above set
forth.

       

      
        	 	
                C-MARK
      INTERNATIONAL, INC.

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

              
	 	
                Name:     
      Charles W. Jones, Jr.

              
	 	
                Title:       
      Chief Executive Officer

              
	 	 
	 	 
	 	
                TRAFALGAR
      CAPITAL SPECIALIZED

              
	 	
                INVESTMENT
      FUND, LUXEMBOURG

              
	 	 
	 	
                By:           
      Trafalgar Capital Sarl

              
	 	
                Its:           
      General Partner

              
	 	 
	 	
                By:  
      /s/     Andrew
      Garai            
      

              
	 	
                Name:        Andrew
      Garai

              
	 	
                Title:          Chairman
      of the Board

              
	 	 
	 	 
	 	
                JAMES
      G. DODRILL II, P.A.

              
	 	 
	 	
                By: 
       /s/       James Dodrill,
      Esq.

              
	 	
                Name:          James
      Dodrill, Esq.

              
	 	
                Title:           
      President

              

      

      

      
 

       11

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