Item Ids


    EXHIBIT
      4.1


     

    SECURITIES
      PURCHASE AGREEMENT

     

    THIS
      SECURITIES PURCHASE AGREEMENT (this
      “Agreement”),
      dated as
      of June 29, 2007, by and among Buckeye Ventures, Inc., a Michigan corporation,
      with headquarters located at 4455 Lamont Street, Suite 3, San Diego, CA 92109
      (the “Company”),
      and the
      Buyers listed on Schedule I attached hereto (individually, a “Buyer”
      or
      collectively “Buyers”).

     

    WITNESSETH:

     

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

     

    WHEREAS,
      the parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Buyer(s), as provided herein,
      and the Buyer(s) shall purchase, up to Five Million Dollars ($5,000,000) of
      the
      10% Secured Convertible Debentures to be issued by the Company substantially
      in
      the form of Exhibit A attached hereto (the “Convertible
      Debentures”)
      in the
      respective amounts set forth opposite each Buyer(s) name on Schedule I (the
      “Subscription Amount”) which shall be convertible into shares of the Company’s
      common stock, par value $.001, (the “Common
      Stock”)
      (as
      converted, the “Conversion
      Shares”)
      as set
      forth below in Section 1(a); and

     

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

     

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

     

    WHEREAS,
      contemporaneously
      with the execution and delivery of this Agreement, the Company is executing
      and
      delivering Irrevocable Transfer Agent Instructions substantially in the form
      attached hereto as Exhibit D (the “Irrevocable
      Transfer Agent Instructions”);
      and

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

     

    1.    PURCHASE
      AND SALE OF CONVERTIBLE DEBENTURES.

     

    (a)    Purchase
      of Convertible Debentures.
      Subject
      to the satisfaction (or waiver) of the terms and conditions of this Agreement,
      each Buyer agrees, severally and not jointly, to purchase at each Closing (as
      defined herein below) and the Company agrees to sell and issue to each Buyer,
      severally and not jointly, at such Closing, Convertible Debentures in an
      aggregate amount of Five Million Dollars ($5,000,000.00) (the “Purchase Price”)
      in amounts corresponding with the Subscription Amount set forth opposite each
      Buyer’s name on Schedule I hereto, as follows: (i) Buyer(s) shall purchase an
      aggregate of One Million Five Hundred Thousand Dollars ($1,500,000.00) of
      Convertible Debentures (the “First Closing”) on or before the date set forth in
      a letter from the Secretary of the Company certifying that the Company intends
      to consummate acquisitions in San Diego and Phoenix (or such other acquisitions
      as may be mutually agreed to by Buyers and the Company) on the date set forth
      in
      such letter (the “First Certificate”); (ii) One Million Seven Hundred Fifty
      Thousand Dollars ($1,750,000.00) of Convertible Debentures (the “Second
      Closing”) on or before the date set forth in a letter from the Secretary of the
      Company certifying that the Company intends to consummate an acquisition in
      Orlando (or such other acquisitions as may be mutually agreed to by Buyers
      and
      the Company) on the date set forth in such letter (the “Second Certificate”);
      and (iii) One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00)
      of
      Convertible Debentures (the “Third Closing”) on or before the date set forth in
      a letter from the Secretary of the Company certifying that the Company intends
      to consummate an acquisition in Los Molinos (or such other acquisitions as
      may
      be mutually agreed to by Buyers and the Company) on the date set forth in such
      letter (the “Third Certificate”) (each individually referred to as a “Closing”
and collectively referred to as the “Closings”). Upon execution hereof by a
      Buyer, the Buyer shall wire transfer the Subscription Amount set forth opposite
      his name on Schedule I in same-day funds or a check payable to: “James G.
      Dodrill II, P.A. as Escrow Agent for Buckeye Ventures./Trafalgar Capital
      Investment Fund”, which Subscription Amount shall be held in escrow pursuant to
      the terms of the Escrow Agreement (as hereinafter defined) and disbursed in
      accordance therewith.

     

    (b)    Closing
      Date.
      The
      First Closing of the purchase and sale of the Convertible Debentures shall
      take
      place at 10:00 a.m. Eastern Standard Time on or before the date set forth in
      the
      First Certificate, subject to notification of satisfaction of the conditions
      to
      the First Closing set forth in Sections 6 and 7 below, which shall be no later
      than July 31, 2007, which may be extended up to twenty additional days by the
      mutual agreement of the parties (or such later date as is mutually agreed to
      by
      the Company and the Buyer(s)) (the “First
      Closing Date”).
      The
      Second Closing of the purchase and sale of the Convertible Debentures shall
      take
      place at 10:00 a.m. Eastern Standard Time on or before the date set forth in
      the
      Second Certificate, subject to notification of satisfaction of the conditions
      to
      the Second Closing set forth in Sections 6 and 7 below (or such later date
      as is
      mutually agreed to by the Company and the Buyer(s)) (the “Second
      Closing Date”).
      The
      Third Closing of the purchase and sale of the Convertible Debentures shall
      take
      place at 10:00 a.m. Eastern Standard Time on or before the date set forth in
      the
      Third Certificate, subject to notification of satisfaction of the conditions
      to
      the Third Closing set forth in Sections 6 and 7 below (or such later date as
      is
      mutually agreed to by the Company and the Buyer(s)) (the “Third
      Closing”)(together
      with the
      First Closing Date and
      Second Closing Date, collectively referred to as the “Closing
      Dates”).
      The
      Closings shall occur on their respective Closing Dates at the offices of James
      G. Dodrill II, P.A., 5800 Hamilton Way, Boca Raton, FL 33496 (or such other
      place as is mutually agreed to by the Company and the Buyer(s)).

     

    
      
         

      

      
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    (c)    Escrow
      Arrangements; Form of Payment.
      Upon
      execution hereof by Buyer(s), the full amount of the portion of the Purchase
      Price for the Convertible Debentures to be purchased in the First Closing shall
      be deposited in a non-interest bearing escrow account with James G. Dodrill
      II,
      P.A., as escrow agent (the “Escrow
      Agent”),
      pursuant
      to the terms of the Escrow Agreement. Such portion of the Purchase Price for
      the
      Convertible Debentures to be purchased in the other Closings shall be deposited
      into the Escrow Account prior to such applicable Closing Date. Subject to the
      satisfaction of the terms and conditions of this Agreement, on each of the
      Closing Dates, (i) the Escrow Agent shall deliver to the Company in accordance
      with the terms of the Escrow Agreement that portion of the Escrow Funds (as
      that
      term is defined in the Escrow Agreement) equal to the gross amount of the
      Convertible Debentures being purchased by such Buyer(s) as set forth on Schedule
      I (minus the fees and expenses as set forth herein which shall be paid directly
      from the Escrow Funds at each Closing) by
      wire
      transfer of immediately available funds and (ii) the Company shall deliver
      to
      each Buyer,
      Convertible Debentures which such Buyer(s) is purchasing in amounts indicated
      opposite such Buyer’s name on Schedule I, duly executed on behalf of the
      Company.

     

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

     

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

     

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

     

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

     

    
      
         

      

      
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    2.    BUYER’S
      REPRESENTATIONS AND WARRANTIES. Each
      Buyer represents and warrants, severally and not jointly, that:

     

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

     

    (b)    Accredited
      Investor Status.
      Each
      Buyer, at the times such Buyer was offered the Convertible Debentures, was,
      and
      at the date hereof is, and on each date on which it purchases the Convertible
      Debentures and exercises any warrants to be issued to Buyer by the Company
      in
      connection with the transactions contemplated by the Transaction Documents
      or
      converts the Convertible Debentures, will be an “Accredited Investor” as defined
      in Rule 501 (a)(3) promulgated under the 1933 Act. Buyer is not required to
      be
      registered as a broker-dealer under Section 15 of the Securities Exchange Act
      of
      1934, as amended (the “Exchange Act”).

     

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

     

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

     

    
      
         

      

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

     

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

     

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

     

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

     

    
      
         

      

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

     

    (h)    Organization, Authorization,
      Enforcement.
      Each
      Buyer is an entity duly organized, validly existing and in good standing under
      the laws of the jurisdiction of its organization with full right, corporate
      or
      partnership power and authority to enter into and consummate the transactions
      contemplated by the Transaction Documents and otherwise to carry out its
      obligations hereunder and thereunder. This Agreement has been duly and validly
      authorized, executed and delivered on behalf of such Buyer and is a valid and
      binding agreement of such Buyer enforceable in accordance with its terms, except
      as such enforceability may be limited by general principles of equity or
      applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
      and
      other similar laws relating to, or affecting generally, the enforcement of
      applicable creditors’ rights and remedies.

     

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

     

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

     

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

     

    
      
         

      

      
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    (l)    Non-U.S.
      Jurisdictions.
      Each
      Buyer acknowledges and agrees that no action has been or will be taken in any
      jurisdiction outside the United States by the Company that would permit an
      offering of the Convertible Debentures or the Conversion Shares in any
      jurisdiction outside the United States where legal action by the Company for
      that purpose is required. Each Buyer will comply with all applicable laws and
      regulations in each foreign jurisdiction, if any, in which it purchases, offers,
      sells or delivers the Convertible Debentures or Conversion Shares or has in
      its
      possession or distributes any offering material, in all cases at its own
      expense.

     

    (m)   Beneficial
      Ownership.
      Each
      Buyer will have sole beneficial ownership (as defined in Section 13(d) of the
      Exchange Act and the rules promulgated thereunder) of any securities issued
      to
      it by the Company under the Transaction Documents. Each Buyer is exercising
      its
      own independent judgment with respect to the purchase of such securities. Buyer
      is not acting as part of a group, or in concert with any other person, in
      connection with the purchase of the securities being issued under the
      Transaction Documents.

     

    (n)    Manipulation
      of Price.
      Buyer
      has not and, to its knowledge, no one acting on its behalf has, taken, directly
      or indirectly, any action designed to cause or to result in the stabilization
      or
      manipulation of the price of any security of the Company.

     

    3.    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    The
      Company represents and warrants as of the date hereof and as of each Closing
      Date to each of the Buyers that:

     

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

     

    (b)    Authorization,
      Enforcement, Compliance with Other Instruments.
      (i) The
      Company has the requisite corporate power and authority to enter into and
      perform the Transaction Documents, and any related agreements, and to issue
      the
      Convertible Debentures and the Conversion Shares in accordance with the terms
      hereof and thereof, (ii) the execution and delivery of the Transaction Documents
      and any related agreements by the Company and the consummation by it of the
      transactions contemplated hereby and thereby, including, without limitation,
      the
      issuance of the Convertible Debentures, the Conversion Shares and the
      reservation for issuance and the issuance of the Conversion Shares issuable
      upon
      conversion or exercise thereof, have been duly authorized by the Company’s Board
      of Directors and no further consent or authorization is required by the Company,
      its Board of Directors or its stockholders, (iii) the Transaction Documents
      and
      any related agreements have been duly executed and delivered by the Company,
      (iv) the Transaction Documents and any related agreements constitute the valid
      and binding obligations of the Company enforceable against the Company in
accordance
      with their terms, except as such enforceability may be limited by general
      principles of equity or applicable bankruptcy, insolvency, reorganization,
      moratorium, liquidation or similar laws relating to, or affecting generally,
      the
      enforcement of creditors’ rights and remedies. The Company knows of no reason
      why the Company cannot file the registration statement as required under the
      Investor Registration Rights Agreement or perform any of the Company’s other
      obligations or any other obligations of the Company to the Buyer.

     

    
      
         

      

      
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    (c)    Capitalization.
      The
      authorized capital stock of the Company consists of 150,000,000 shares of Common
      Stock, par value $.001 per share and 3,000,000 shares of Preferred Stock. As
      of
      the date hereof, the Company has 103,988,618 shares of Common Stock and 998,086
      shares of Preferred Stock issued and outstanding. All of such outstanding shares
      have been validly issued and are fully paid and nonassessable. No shares of
      Common Stock are subject to preemptive rights or any other similar rights or
      any
      liens or encumbrances suffered or permitted by the Company. Except as a result
      of the transactions contemplated by the Transaction Documents and as set forth
      on Schedule 3.1(c), as of the date of this Agreement, (i) there are no
      outstanding options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, any shares of capital stock of the Company or any of its
      subsidiaries, or contracts, commitments, understandings or arrangements by
      which
      the Company or any of its subsidiaries is or may become bound to issue
      additional shares of capital stock of the Company or any of its subsidiaries
      or
      options, warrants, scrip, rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities or rights convertible into,
      any
      shares of capital stock of the Company or any of its subsidiaries, (ii) there
      are no outstanding debt securities and (iii) there are no agreements or
      arrangements under which the Company or any of its subsidiaries is obligated
      to
      register the sale of any of their securities under the 1933 Act (except pursuant
      to the Registration Rights Agreement) and (iv) there are no outstanding
      registration statements and there are no outstanding comment letters from the
      SEC or any other regulatory agency. There are no securities or instruments
      containing anti-dilution or similar provisions that will be triggered by the
      issuance of the Convertible Debentures as described in this Agreement. The
      Company has furnished to the Buyer true and correct copies of the Company’s
      Certificate of Incorporation, as amended and as in effect on the date hereof
      (the “Certificate
      of Incorporation”),
      and the
      Company’s By-laws, as in effect on the date hereof (the “By-laws”),
      and the
      terms of all securities convertible into or exercisable for Common Stock and
      the
      material rights of the holders thereof in respect thereto other than stock
      options issued to employees and consultants.

     

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

     

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

     

    
      
         

      

      
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    (f)    SEC
      Documents: Financial Statements.
      Since
      June 30, 2006, the Company has filed, or furnished, as applicable, all reports,
      schedules, forms, statements and other documents required to be filed by it
      with
      the SEC under the Exchange Act (the foregoing materials, including the exhibits
      and schedules thereto, and such financial statements and documents incorporated
      by reference therein, being hereinafter referred to as the “SEC Documents”).
      The
      Company has delivered to the Buyers or their representatives, or made available
      through the SEC’s website at ,
      true
      and complete copies of the SEC Documents. As of their respective dates, the
      financial statements of the Company included in the SEC Documents (the
“Financial
      Statements”)
      complied
      as to form in all material respects with the published rules and regulations
      of
      the SEC with respect thereto as in effect at the time of filing. Such financial
      statements have been prepared in accordance with U.S. generally accepted
      accounting principles, consistently applied, during the periods involved (except
      (i) as may be otherwise indicated in such Financial Statements or the notes
      thereto, or (ii) in the case of unaudited interim statements, to the extent
      they
      may exclude footnotes or may be condensed or summary statements) and, fairly
      present in all material respects the financial position of the Company as of
      the
      dates thereof and the results of its operations and cash flows for the periods
      then ended (subject, in the case of unaudited statements, to normal year-end
      audit adjustments).

     

    (g)    No
      Material Misstatement or Omission. None
      of
      the Company’s SEC Documents at the time of filing and none of the representation
      and warranties made in this Agreement or any of the other Transaction Documents
      include any untrue statements of material fact, nor do the Company’s SEC
      Documents at the time of filing and none of the representations and warranties
      made in this Agreement or any of the other Transaction Documents omit to state
      any
      material fact required to be stated therein necessary to make the statements
      made, in light of the circumstances under which they were made, not
      misleading.

     

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

     

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

     

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

     

    
      
         

      

      
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    (k)    No
      Integrated Offering.
      Assuming
      the accuracy of the Buyer(s)’ representations and warranties set forth in
      Section 2, neither the Company, nor any of its affiliates, nor any person acting
      on its or their behalf has, directly or indirectly, made any offers or sales
      of
      any security or solicited any offers to buy any security, under circumstances
      that would require registration of the Convertible Debentures or the Conversion
      Shares under the 1933 Act or cause this offering of the Convertible Debentures
      or the Conversion Shares to be integrated with prior offerings by the Company
      for purposes of the 1933 Act.

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
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    (q)    Regulatory
      Permits.
      The
      Company and its subsidiaries possess all certificates, authorizations and
      permits issued by the appropriate federal, state or foreign regulatory
      authorities necessary to conduct their respective businesses except where the
      failure to possess such certificates, authorizations or permits would not have
      or be reasonably expected to have a material adverse affect on the business
      of
      the Company, and neither the Company nor any such subsidiary has received any
      notice of proceedings relating to the revocation or modification of any such
      certificate, authorization or permit.

     

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

     

    (s)    No
      Material Adverse Breaches, etc.
      Neither
      the Company nor any of its subsidiaries is subject to any charter, corporate
      or
      other legal restriction, or any judgment, decree, order, rule or regulation
      which in the judgment of the Company’s officers has or is expected in the future
      to have a material adverse effect on the business, properties, operations,
      financial condition, results of operations of the Company or its subsidiaries.
      Neither the Company nor any of its subsidiaries is in breach of any contract
      or
      agreement which breach, in the judgment of the Company’s officers, has or is
      expected to have a material adverse effect on the business, properties,
      operations, financial condition, results of operations of the Company or its
      subsidiaries.

     

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

     

    (u)    Certain
      Transactions.
      Except
      as otherwise disclosed in the SEC Documents and in arm’s length transactions
      pursuant to which the Company makes payments in the ordinary course of business
      upon terms no less favorable than the Company could obtain from third parties,
      none of the officers, directors, or employees of the Company is presently a
      party to any transaction with the Company (other than for services as employees,
      officers and directors) exceeding $50,000, including any contract, agreement
      or
      other arrangement providing for
      the
      furnishing of services to or by, providing for rental of real or personal
      property to or from,
      or
      otherwise requiring payments to or from any officer, director or such employee
      or, to the knowledge of the Company, any corporation, partnership, trust or
      other entity in which any officer, director, or any such employee has a
      substantial interest or is an officer, director, trustee or
      partner.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

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

     

    4.    COVENANTS.

     

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

     

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

     

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

     

    (d)    Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Convertible Debentures for
      general corporate and working capital purposes, including, but not limited
      to,
      for the purposes set forth in Section 1(a).

     

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

     

    (f)    Fees
      and Expenses.

     

    (i)    Each
      of the
      Company and the Buyer(s) shall pay all costs and expenses incurred by such
      party
      in connection with the negotiation, investigation, preparation, execution and
      delivery of the Transaction Documents and any other documents relating to this
      transaction. The Company shall pay the Buyer(s) a commitment fee of seven
      percent (7%) of that portion of the Purchase Price
      paid at each Closing as set forth on Schedule I, which shall be disbursed by
      the
      Escrow Agent from the Escrow Funds upon each Closing.

     

    
      
         

      

      
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    (ii)    The
      Company shall pay Buyer a due diligence fee in the aggregate amount of $5,000
      (which amount shall be deemed to include all due diligence-related expenses
      incurred by Buyer(s)) for each planned acquisition referenced above in Section
      1(a), which shall include a visit by Buyer(s) or their representative(s) to
      the
      office of the proposed acquiree.

     

    (iii)    The
      Company has agreed to reimburse Buyer(s) Twenty Thousand Dollars ($20,000)
      for
      its legal fees and expenses, one-half of which has been paid prior to the
      execution of this Agreement and one-half of which shall be paid directly from
      the proceeds of the First Closing. In addition, the Company shall
      reimburse Buyer(s) for its legal fees and expenses in an aggregate amount
      up
      to Seven
      Thousand Five Hundred Dollars ($7,500) for each subsequent Closing hereunder,
      which reimbursement shall be disbursed by the Escrow Agent from the Escrow
      Funds
      at the Second Closing and Third Closing, as appropriate.

     

    (iv)    The
      Company shall issue to the Buyer a warrant to purchase five hundred thousand
      (500,000) shares of the Company’s Common Stock for a period of five (5) years at
      an exercise price equal to $0.001 per share and for each one hundred thousand
      dollars ($100,000) of Convertible Debentures purchased by the Buyer(s) at each
      Closing Date, an additional warrant to purchase fifty thousand (50,000) shares
      of the Company’s Common Stock for a period of five (5) years from the date of
      such purchase at an exercise price equal to the lower of the Closing Bid Price
      (as defined in such Warrant) on: (a) June 28, 2007 or (b) the day prior to
      the
      Closing Date of such purchase of Convertible Debentures by the Buyer(s) (each,
      a
“Warrant”)
      on such
      terms and conditions set forth in each such Warrant. The Warrant shall be
      exercised on a cash basis provided that the Company has not committed an Event
      of Default and the shares underlying the Warrants are subject to an effective
      registration statement.

     

    (v)    The
      Company shall issue to the Buyer(s) shares of the Company’s common stock as set
      forth on Schedule I equal to two and one-half percent (2.5%) of the Purchase
      Price (as calculated by dividing Purchase Price by the Company’s VWAP as defined
      in the Convertible Debentures on the day prior to the First Closing) which
      shall
      be due in full upon the First Closing.

     

    (g)    Corporate
      Existence.
      So long
      as any of the Convertible Debentures remain outstanding, the Company shall
      not
      directly or indirectly consummate any merger, reorganization, restructuring,
      reverse stock split consolidation, sale of all or substantially all of the
      Company’s assets or any similar transaction or related transactions (each such
      transaction, an “Organizational
      Change”)
      unless,
      prior to the consummation an Organizational Change, the Company obtains the
      written consent of those Buyers holding at least two-thirds (2/3) of the
      outstanding Convertible Debentures. In any such case, the Company will make
      appropriate provision with respect to such holders’ rights and interests to
      insure that the provisions of this Section 4(g) will thereafter be applicable
      to
      the Convertible Debentures.

     

    
      
         

      

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

     

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

     

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

     

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

     

    
      
         

      

      
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    5.    [Reserved].

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (a)    The
      Company shall have executed this Agreement, the Security Agreement, the
      Convertible Debenture (in such amounts as purchased by Buyer(s) hereunder),
      the
      Escrow Agreement, the Irrevocable Transfer Instructions, the Warrant and the
      Investor Registration Rights Agreement, and delivered the same to the
      Buyer(s).

     

    (b)    The
      trading in the Common Shares on the OTCBB shall not have been suspended for
      any
      reason.

     

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

     

    
      
         

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (k)    The
      Company and certain of its shareholders shall have executed the Pledge
      Agreement.

     

    8.    INDEMNIFICATION.

     

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

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

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

     

    9.    GOVERNING
      LAW: MISCELLANEOUS.

     

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

     

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

     

    (c)    Recitals
      and Headings.
      The
      recitals of this Agreement are an integral part of this Agreement and shall
      be
      incorporated herein as if made a part of this Agreement. The headings of this
      Agreement are for convenience of reference and shall not form part of, or affect
      the interpretation of, this Agreement.

     

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

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

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

     

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

    


    
      	If to the Company, to:	Buckeye Ventures, Inc.
              4455
                Lamont Street, Suite
                3

              San
                Diego, CA 92109

              Attention:
                Larry Weinstein

              Telephone:
                (858) 272-6600

              Facsimile:
                (858) 272-9714

            
	 	 
	With a copy to:	
              Neil
                W. Gurney, Esq.

              Ulmer
                & Berne LLP

              1660
                West Second St., Ste. 1100

              Cleveland,
                Ohio 44113-1448

              Telephone:
                (216) 583-7028

              Facsimile:
                (216) 583-7029

            
	 	 
	If to the Transfer Agent,
              to:	
              
                American
                  Registrar & Transfer Company

                342
                  East 900 South

              

              Salt
                Lake City, UT 84000

              Attn:
                Richard Day

              Telephone:
                (801) 363-9065

              Facsimile:
                (801) 363-9066

            
	 	 
	With a copy to:	
              James
                G. Dodrill II, P.A.

              5800
                Hamilton Way

              Boca
                Raton, FL 33496

              Attention: Jim
                Dodrill, Esq.

              Telephone: (561)
                862-0529

              Facsimile: (561)
                892-7787

            


    

     

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

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

    (l)    Termination.
      This
      Agreement may be terminated by any party, by writt en notice to the other
      parties, if the First Closing has not been consummated on or before July 31,
      2007; provided, however, that no such termination will affect the right of
      any
      party to sue for any breach by the other party (or parties). Notwithstanding
      anything to the contrary herein, upon execution of this Agreement, the Company
      shall be liable for and agrees to pay: (a) the fees and expenses set forth
      in
      Section 4(f) of this Agreement and (b) all interest accruing on the Convertible
      Debenture to be issued in the First Closing, which the Company expressly
      acknowledges began accruing as of the date of this Agreement.

     

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

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    


    
      
         

      

      
        19

        
          

        

      

      
         

      

    


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

     

    
      	 	
              
                COMPANY:

                BUCKEYE
                  VENTURES, INC.

                 

                 

                By:

                Name:

                Title:

              

               

               

              BUYER:

              TRAFALGAR
                CAPITAL SPECIALIZED INVESTMENT
                FUND, LUXEMBOURG

              By:
                Trafalgar Capital Sarl

              Its: General
                Partner

               

               

              By:

              Name:
                Andrew Garai

              Title:
                Chairman of the Board

            


    

     

    
      
        


    


    
      
         

      

      
        20

        
          

        

      

      
         

      

    


    EXHIBIT
      A

    


    SECURED
      CONVERTIBLE DEBENTURES

    
 

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    


    EXHIBIT
      B

    


    FORM
      OF INVESTOR REGISTRATION RIGHTS AGREEMENT

     

    


    
      
         

      

      
        22

        
          

        

      

      
         

      

    


    EXHIBIT
      C

    


    FORM
      OF ESCROW AGREEMENT

     

    


    
      
         

      

      
        23

        
          

        

      

      
         

      

    


    EXHIBIT
      D

    


    TRANSFER
      AGENT INSTRUCTIONS

    


    


    
      
         

      

      
        24

        
          

        

      

      
         

      

    

     

    SCHEDULE
      I

     

     

    SCHEDULE
      OF BUYERS

     

    
      	 	 	 	
              Address/Facsimile

            	
              Amount
                of

            
	
              Name

            	 	
              Signature

            	
              Number
                of Buyer

            	
              Subscription

            
	 	 	 	
              8-10
                Rue Mathias Hardt

            	 
	
              Trafalgar
                Capital Specialized

            	
              By:

            	
              Trafalgar
                Capital Sarl

            	
              BP
                3023

            	
              $ 5,000,000

            
	
              Investment
                Fund, Luxembourg

            	
              Its:

            	
              General
                Partner

            	
              L-1030
                Luxembourg

            	 
	 	 	 	
              Facsimile:

            	 
	 	 	 	
              011-44-207-405-0161

            	 
	 	
              By:

            	 	
              and

            	 
	 	
              Name:

            	
              Andrew
                Garai

            	
              001-786-323-1651

            	 
	 	
              Its:

            	
              Chairman
                of the Board

            	 	 


    

     

    Buyer’s
      Counsel:

     

    James
      G.
      Dodrill II, P.A.

    5800
      Hamilton Way

    Boca
      Raton, FL 33496

    Telephone:
      (561) 862-0529

    Facsimile:
      (561) 892-7787

     

     

    25