Document:

buckeye_sb2-ex1011.htm

    Exhibit
      10.11

     

    
      

       

      INVESTOR
        REGISTRATION RIGHTS AGREEMENT

       

      THIS
        INVESTOR REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated
        as of June 29, 2007, by and among BUCKEYE VENTURES, INC., a
        Michigan corporation, with its principal office located at 4455 Lamont Street,
        Suite 3, San Diego, CA 92109 (the “Company”), and the undersigned
        investors (each, an “Investor” and collectively, the
“Investors”).

       

      WHEREAS:

       

      A.  In
        connection with the Securities Purchase Agreement by and among the parties
        hereto of even date herewith (the “Securities Purchase Agreement”), the
        Company has agreed, upon the terms and subject to the conditions of the
        Securities Purchase Agreement, to issue and sell to the Investors secured
        convertible debentures (the “Convertible Debentures”) which shall be
        convertible into that number of shares of the Company’s common stock, par value
        US$.001 per share (the “Common Stock”), pursuant to the terms of the
        Securities Purchase Agreement for an aggregate purchase price of up to Five
        Million U.S. Dollars ($5,000,000). Capitalized terms not defined herein shall
        have the meaning ascribed to them in the Securities Purchase
        Agreement.

       

      B.  To
        induce
        the Investors to execute and deliver the Securities Purchase Agreement, the
        Company has agreed to provide certain registration rights under the Securities
        Act of 1933, as amended, and the rules and regulations thereunder, or any
        similar successor statute (collectively, the “1933 Act”), and applicable
        state securities laws.

       

      NOW,
        THEREFORE, in consideration of the premises and the mutual covenants
        contained herein and other good and valuable consideration, the receipt and
        sufficiency of which are hereby acknowledged, the Company and the Investors
        hereby agree as follows:

       

      1.            DEFINITIONS.

       

      As
        used
        in this Agreement, the following terms shall have the following
        meanings:

       

      (a)  “Person”
        means a corporation, a limited liability company, an association, a partnership,
        an organization, a business, an individual, a governmental or political
        subdivision thereof or a governmental agency.

       

      (b)  “Register,”“registered,”
        and “registration” refer to a registration effected by preparing and
        filing one or more Registration Statements (as defined below) in compliance
        with
        the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor
        rule
        providing for offering securities on a continuous or delayed basis (“Rule
        415”), and the declaration or ordering of effectiveness of such Registration
        Statement(s) by the United States Securities and Exchange Commission (the
        “SEC”).

      

      
        
           

        

        
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      (c)  “Registrable
        Securities” means the shares of Common Stock issuable to Investors upon
        conversion of the Convertible Debentures pursuant to the Securities Purchase
        Agreement and the shares of Common Stock issuable to the Investors upon exercise
        of the Warrant issued pursuant to the Securities Purchase Agreement. As to
        any
        particular Registrable Securities, such securities will cease to be Registrable
        Securities when (a) they have been effectively registered under the 1933
        Act and
        disposed of in accordance with the Registration Statement covering them,
        (b)
        they are or may be freely traded without registration pursuant to Rule 144
        promulgated under the Securities Act, as such Rule may be amended from time
        to
        time, or (c) they have been otherwise lawfully and properly transferred and
        new
        certificates for them not bearing a restrictive legend have been issued by
        the
        Company and the Company shall not have “stop transfer” instructions against
        them.

       

      (d)  “Registration
        Statement” means a registration statement under the 1933 Act which covers
        the Registrable Securities.

       

      2.            REGISTRATION.

       

      (a)  Subject
        to the terms and conditions of this Agreement, the Company shall use its
        best
        efforts to prepare and file with the SEC, no later than forty-five (45) days
        from the First Closing Date (as such term is defined in the Securities Purchase
        Agreement, the “ScheduledFiling Deadline”), a Registration
        Statement on Form S-1 or SB-2 (or, if the Company is then eligible, on Form
        S-3)
        (the “Initial Registration Statement”) for the registration for the
        resale by all Investors who purchased Convertible Debentures pursuant to
        the
        Securities Purchase Agreement at least five (5) times the number of shares
        which
        are anticipated to be issued upon conversion of the Convertible Debentures
        issued pursuant to the Securities Purchase Agreement and the Investor’s Shares
        (subject to Rule 415 restrictions). Prior to the filing of the Registration
        Statement with the SEC, the Company shall furnish a copy of the Initial
        Registration Statement to the Investors and James G. Dodrill II, P.A. for
        their
        review and comment. The Investors and James G. Dodrill II, P.A. shall furnish
        comments on the Initial Registration Statement to the Company by the later
        of:
        (a) seventy-two (72) hours of the receipt thereof from the Company and (b)
        the
        close of the second business day following receipt thereof from the
        Company.

       

      (b)  Effectiveness
        of the Initial Registration Statement. The Company shall use its best
        efforts to (i) to have the Initial Registration Statement declared effective
        by
        the SEC no later than one hundred five (105) days after the First Closing
        Date
        (the “Scheduled EffectiveDeadline”) and (ii) to insure that the
        Initial Registration Statement and any subsequent Registration Statement
        remains
        in effect until all of the Registrable Securities have been sold, or cease
        to be
        outstanding, or the date on which all Registrable Securities may be sold
        in any
        ninety (90) day period under Rule 144 as determined by counsel to the Company
        pursuant to a written opinion letter to such effect delivered to the Investors
        and based on such representations as may be reasonably requested, whichever
        is
        earlier (the “Registration Period”). It shall be an event of default
        hereunder if the Initial Registration Statement is not declared effective
        by the
        SEC by the Scheduled Effective Deadline unless the SEC does not declare the
        Initial Registration. Statement effective solely due to objections based
        upon
        either: (a) Rule 415 or (b) the Investor.

       

      
        
           

        

        
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      (c)  Failure
        to File or Obtain Effectiveness of the Registration Statement. In the event
        the Registration Statement is not filed by the Scheduled Filing Deadline
        or is
        not declared
        effective by the SEC on or before the Scheduled Effective Date (subject to
        the
        caveat in the final sentence of 2(b) above), or if after the Registration
        Statement has been declared effective by the SEC, sales cannot be made pursuant
        to the Registration Statement (whether because of a failure to keep the
        Registration Statement effective, failure by the Company to disclose such
        information as is necessary for sales to be made pursuant to the Registration
        Statement, failure to register sufficient shares of Common Stock or otherwise,
        then as partial relief for the damages to any holder of Registrable Securities
        by reason of any such delay in or reduction of its ability to sell the
        underlying shares of Common Stock (which remedy shall not be exclusive of
        any
        other remedies at law or in equity), the Company will pay as liquidated damages
        (the “Liquidated Damages”) to the holder, at the holder’s option, either
        a cash amount or shares of the Company’s Common Stock within three (3) business
        days, after demand therefore, equal to two percent (2%) of the liquidated
        value
        of the Convertible Debentures then outstanding as Liquidated Damages for
        each
        thirty (30) day period (or any part thereof) after the Scheduled Filing Deadline
        or the Scheduled Effective Date as the case may be.

       

      (d)  Liquidated
        Damages. The Company and the Investor hereto acknowledge and agree that the
        sums payable under subsection 2(c) above shall constitute liquidated damages
        and
        not penalties and are in addition to all other rights of the Investor, including
        the right to call a default. The parties further acknowledge that (i) the
        amount
        of loss or damages likely to be incurred is incapable or is difficult to
        precisely estimate, (ii) the amounts specified in such subsection bear a
        reasonable relationship to, and are not plainly or grossly disproportionate
        to,
        the probable loss likely to be incurred in connection with any failure by
        the
        Company to obtain or maintain the effectiveness of a Registration Statement,
        (iii) one of the reasons for the Company and the Investor reaching an agreement
        as to such amounts was the uncertainty and cost of litigation regarding the
        question of actual damages, and (iv) the Company and the Investor are
        sophisticated business parties and have been represented by sophisticated
        and
        able legal counsel and negotiated this Agreement at arm’s length.

       

      (e)  Sufficient
        Number of Shares Registered. In the event the number of shares available
        under a Registration Statement filed pursuant to this Section 2 is insufficient
        to cover all of the Registrable Securities, the Company shall amend the
        Registration Statement, or file a new Registration Statement (on the short
        form
        available therefore, if applicable), or both, so as to cover all of such
        Registrable Securities as soon as practicable, but in any event not later
        than
        forty-five (45) days after the necessity therefore arises. The Company shall
        use
        it best efforts to cause such amendment and/or new Registration Statement
        to
        become effective as soon as practicable following the filing thereof. For
        purposes of the foregoing provision, the number of shares available under
        a
        Registration Statement shall be deemed "insufficient to cover all of the
        Registrable Securities" if at any time the number of Registrable Securities
        issuable on the delivery of a Conversion Notice (as defined in the Convertible
        Debentures) or an Exercise Notice (as defined in the Warrants) is greater
        than
        the number of shares available for resale under such Registration
        Statement.

       

      
        
           

        

        
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      3.            RELATED
        OBLIGATIONS.

       

      (a)  [Reserved]

       

      (b)  The
        Company shall use its best efforts to prepare and file with the SEC such
        amendments (including post-effective amendments) and supplements to the
        Registration Statement and the prospectus used in connection with such
        Registration Statement (which prospectus is to be filed pursuant to Rule
        424
        promulgated under the 1933 Act) as may be necessary to keep such Registration
        Statement effective at all times during the Registration Period, and, during
        such period, comply with the provisions of the 1933 Act with respect to the
        disposition of all Registrable Securities of the Company covered by such
        Registration Statement until such time as all of such Registrable Securities
        shall have been disposed of in accordance with the intended methods of
        disposition by the seller or sellers thereof as set forth in such Registration
        Statement or as otherwise provided in this Agreement. In the case of amendments
        and supplements to a Registration Statement which are required to be filed
        pursuant to this Agreement (including pursuant to this Section 3(b)) by reason
        of the Company’s filing a report on Form 10-KSB, Form 10-QSB or Form 8-K or any
        analogous report under the Securities Exchange Act of 1934, as amended (the
        “1934 Act”), the Company shall incorporate such report by reference into
        the Registration Statement, if applicable, or shall file such amendments
        or
        supplements with the SEC on the same day on which the 1934 Act report is
        filed
        which created the requirement for the Company to amend or supplement the
        Registration Statement.

       

      (c)  The
        Company shall furnish to each Investor whose Registrable Securities are included
        in any Registration Statement, without charge, (i) one (1) copy of such
        Registration Statement as declared effective by the SEC and any amendment(s)
        thereto, including financial statements and schedules, all documents
        incorporated therein by reference, all exhibits and each preliminary prospectus,
        (ii) one copy of the final prospectus included in such Registration Statement
        and all amendments and supplements thereto (or such other number of copies
        as
        such Investor may reasonably request in writing) and (iii) such other documents
        as such Investor may reasonably request in writing from time to time in order
        to
        facilitate the disposition of the Registrable Securities owned by such
        Investor.

       

      (d)  The
        Company shall use its best efforts to (i) register and qualify the Registrable
        Securities covered by a Registration Statement under such other securities
        or
“blue sky” laws of such jurisdictions in the United States as any Investor
        reasonably requests, (ii) prepare and file in those jurisdictions, such
        amendments (including post-effective amendments) and supplements to such
        registrations and qualifications as may be necessary to maintain the
        effectiveness thereof during the Registration Period, (iii) take such other
        actions as may be necessary to maintain such registrations and qualifications
        in
        effect at all times during the Registration Period, and (iv) take all other
        actions reasonably necessary or advisable to qualify the Registrable Securities
        for sale in such jurisdictions; provided, however, that the Company shall
        not be
        required in connection therewith or as a condition thereto to (w) make any
        change to its certificate of incorporation or by-laws, (x) qualify to do
        business in any jurisdiction where it would not otherwise be required to
        qualify
        but for this Section 3(d), (y) subject itself to general taxation in any
        such
        jurisdiction, or (z) file a general consent to service of process in any
        such
        jurisdiction. The Company shall promptly notify each Investor who holds
        Registrable Securities of the receipt by the Company of any notification
        with
        respect to the suspension of the registration or qualification of any of
        the
        Registrable Securities for sale under the securities or “blue
        sky” laws of any jurisdiction in the United States or its receipt of actual
        notice of the initiation or threat of any proceeding for such
        purpose.

       

      
        
           

        

        
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      (e)  As
        promptly as practicable after becoming aware of such event or development,
        taking into account the Company’s good faith assessment of any adverse
        consequences to the Company and its stockholders of the premature disclosure
        of
        such event, the Company shall notify each Investor in writing of the happening
        of any event as a result of which the prospectus included in a Registration
        Statement, as then in effect, includes an untrue statement of a material
        fact or
        omission to state a material fact required to be stated therein or necessary
        to
        make the statements therein, in light of the circumstances under which they
        were
        made, not misleading (provided that in no event shall such notice contain
        any
        material, nonpublic information), and promptly prepare a supplement or amendment
        to such Registration Statement to correct such untrue statement or omission,
        and
        deliver ten (10) copies of such supplement or amendment to each Investor.
        The
        Company shall also promptly notify each Investor in writing (i)
        when
        a
        prospectus or any prospectus supplement or post-effective amendment has been
        filed, and when a Registration Statement or any post-effective amendment
        has
        become effective (notification of such effectiveness shall be delivered to
        each
        Investor by facsimile on the same day of such effectiveness), (ii) of any
        request by the SEC for amendments or supplements to a Registration Statement
        or
        related prospectus or related information, and (iii) of the Company’s reasonable
        determination that a post-effective amendment to a Registration Statement
        would
        be appropriate.

       

      (f)  The
        Company shall use its best efforts to prevent the issuance of any stop order
        or
        other suspension of effectiveness of a Registration Statement, or the suspension
        of the qualification of any of the Registrable Securities for sale in any
        jurisdiction within the United States of America and, if such an order or
        suspension is issued, to obtain the withdrawal of such order or suspension
        at
        the earliest possible moment and to notify each Investor who holds Registrable
        Securities being sold of the issuance of such order and the resolution thereof
        or its receipt of actual notice of the initiation or threat of any proceeding
        for such purpose.

       

      (g)  The
        Company shall hold in confidence and not make any disclosure of information
        concerning an Investor provided to the Company unless (i) disclosure of such
        information is necessary to comply with federal or state securities laws,
        (ii)
        the disclosure of such information is necessary to avoid or correct a
        misstatement or omission in any Registration Statement, (iii) the release
        of
        such information is ordered pursuant to a subpoena or other final,
        non-appealable order from a court or governmental body of competent
        jurisdiction, or (iv) such information has been made generally available
        to the
        public other than by disclosure in violation of this Agreement or any other
        agreement. The Company agrees that it shall, upon learning that disclosure
        of
        such information concerning an Investor is sought in or by a court or
        governmental body of competent jurisdiction or through other means, give
        prompt
        written notice to such Investor and allow such Investor, at the Investor’s
        expense, to undertake appropriate action to prevent disclosure of, or to
        obtain
        a protective order for, such information.

       

      (h)  The
        Company shall use its best efforts either to cause all the Registrable
        Securities covered by a Registration Statement (i) to be listed on each
        securities exchange on which securities of the same class or series issued
        by
        the Company are then listed, if any, if the listing of such Registrable
        Securities is then permitted under the rules of such exchange or

      

      
        
           

        

        
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      (ii)
        the
        inclusion for quotation on the National Association of Securities Dealers,
        Inc.
        OTC Bulletin Board for such Registrable Securities. The Company shall pay
        all
        fees and expenses in connection with satisfying its obligation under this
        Section 3(h).

       

      (i)  The
        Company shall cooperate with the Investors who hold Registrable Securities
        being
        offered and, to the extent applicable, to facilitate the timely preparation
        and
        delivery of certificates (not bearing any restrictive legend) representing
        the
        Registrable Securities to be offered pursuant to a Registration Statement
        and
        enable such certificates to be in such denominations or amounts, as the case
        may
        be, as the Investors may reasonably request in writing and registered in
        such
        names as the Investors may request.

       

      (j)  The
        Company shall use its best efforts to cause the Registrable Securities covered
        by the applicable Registration Statement to be registered with or approved
        by
        such other governmental agencies or authorities as may be necessary to
        consummate the disposition of such Registrable Securities.

       

      (k)  The
        Company shall make generally available to its security holders as soon as
        practical, but not later than ninety (90) days after the close of the period
        covered thereby, an earnings statement (in form complying with the provisions
        of
        Rule 158 under the 1933 Act) covering a twelve (12) month period beginning
        not
        later than the first day of the Company’s fiscal quarter next following the
        effective date of the Registration Statement.

       

      (l)  The
        Company shall otherwise use its best efforts to comply with all applicable
        rules
        and regulations of the SEC in connection with any registration
        hereunder.

       

      (m)  Within
        two (2) business days after a Registration Statement which covers Registrable
        Securities is declared effective by the SEC, the Company shall deliver to
        the
        transfer agent for such Registrable Securities (with copies to the Investors
        whose Registrable Securities are included in such Registration Statement)
        confirmation that such Registration Statement has been declared effective
        by the
        SEC in the form attached hereto as Exhibit A.

       

      (n)  The
        Company shall take all other reasonable actions necessary to expedite and
        facilitate the lawful disposition by the Investors of Registrable Securities
        pursuant to a Registration Statement. Upon written request, the Company shall
        make available for inspection by (i) any Investor and (ii) one (1) firm of
        accountants or other agents retained by the Investors (collectively, the
        “Inspectors”) all pertinent financial and other records, and pertinent
        corporate documents and properties of the Company (collectively, the
“Records”), as shall be reasonably deemed necessary by each Inspector,
        and cause the Company’s officers, directors and employees to supply all
        information which any Inspector may reasonably request in writing; provided,
        however, that each Inspector shall agree, and each Investor hereby agrees,
        to
        hold in strict confidence and shall not make any disclosure (except to an
        Investor) or use any Record or other information which the Company determines
        in
        good faith to be confidential, and of which determination the Inspectors
        are so
        notified, unless (a) the disclosure of such Records is necessary to avoid
        or
        correct a misstatement or omission in any Registration Statement or is otherwise
        required under the 1933 Act, (b) the release of such Records is ordered pursuant
        to a final, non-appealable subpoena or order from a court or government body
        of
        competent jurisdiction, or (c) the information in such Records has been made
        generally available to the

      

      
        
           

        

        
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      public
        other than by disclosure in violation of this or any other agreement of which
        the Inspector and the Investor has knowledge. Each Investor agrees that it
        shall, upon learning that disclosure of such Records is sought in or by a
        court
        or governmental body of competent jurisdiction or through other means, give
        prompt notice to the Company and allow the Company, at its expense, to undertake
        appropriate action to prevent disclosure of, or to obtain a protective order
        for, the Records deemed confidential.

       

      4.  OBLIGATIONS
        OF THE INVESTORS.

       

      Each
        Investor agrees that, upon receipt of any notice from the Company of the
        happening of any event of the kind described in Section 3(f) or the first
        sentence of Section 3(e), such Investor will immediately discontinue disposition
        of Registrable Securities pursuant to any Registration Statement(s) covering
        such Registrable Securities until such Investor’s receipt of the copies of the
        supplemented or amended prospectus contemplated by Section 3(e) or receipt
        of
        notice that no supplement or amendment is required. Notwithstanding anything
        to
        the contrary, the Company shall cause its transfer agent to deliver unlegended
        certificates for shares of Common Stock to a transferee of an Investor in
        accordance with the terms of the Securities Purchase Agreement in connection
        with any sale of Registrable Securities with respect to which an Investor
        has
        entered into a contract for sale prior to the Investor’s receipt of a notice
        from the Company of the happening of any event of the kind described in Section
        3(f) or the first sentence of Section 3(e) and for which the Investor has
        not
        yet settled.

       

      5.  EXPENSES
        OF REGISTRATION.

       

      All
        expenses incurred in connection with registrations, filings or qualifications
        pursuant to Sections 2 and 3, including, without limitation, all registration,
        listing and qualifications fees, printers, legal and accounting fees shall
        be
        paid by the Company. In no event shall the Company be responsible for any
        broker
        or similar commissions or, except to the extent provided for in the Transaction
        Documents, any legal fees or other costs of the Investors.

       

      6.  INDEMNIFICATION.

       

      With
        respect to Registrable Securities which are included in a Registration Statement
        under this Agreement:

       

      (a)
        To
        the fullest extent permitted by law, the Company will, and hereby does,
        indemnify, hold harmless and defend each Investor, the directors, officers,
        partners, employees, agents, representatives of, and each Person, if any,
        who
        controls any Investor within the meaning of the 1933 Act or the 1934 Act
        (each,
        an “Indemnified Person”), against any losses, claims, damages,
        liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’
fees, amounts paid in settlement or expenses, joint or several (collectively,
        “Claims”) incurred in investigating, preparing or defending any action,
        claim, suit, inquiry, proceeding, investigation or appeal taken from the
        foregoing by or before any court or governmental, administrative or other
        regulatory agency, body or the SEC, whether pending or threatened, whether
        or
        not an indemnified party is or may be a party thereto (“Indemnified
        Damages”), to which any of them may become subject insofar as such Claims
        (or actions or proceedings, whether commenced or

      

      
        
           

        

        
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      threatened,
        in respect thereof) arise out of or are based upon: (i) any untrue statement
        or
        alleged untrue statement of a material fact in a Registration Statement or
        any
        post-effective amendment thereto or in any filing made in connection with
        the
        qualification of the offering under the securities or other “blue sky” laws of
        any jurisdiction in which Registrable Securities are offered (“Blue Sky
        Filing”), or the omission or alleged omission to state a material fact
        required to be stated therein or necessary to make the statements therein
        not
        misleading; (ii) any untrue statement or alleged untrue statement of a material
        fact contained in any final prospectus (as amended or supplemented, if the
        Company files any amendment thereof or supplement thereto with the SEC) or
        the
        omission or alleged omission to state therein any material fact necessary
        to
        make the statements made therein, in light of the circumstances under which
        the
        statements therein were made, not misleading; or (iii) any violation or alleged
        violation by the Company of the 1933 Act, the 1934 Act, any other law,
        including, without limitation, any state securities law, or any rule or
        regulation thereunder relating to the offer or sale of the Registrable
        Securities pursuant to a Registration Statement (the matters in the foregoing
        clauses (i) through (iii) being, collectively, “Violations”). The Company
        shall reimburse the Investors and each such controlling person promptly as
        such
        expenses are incurred and are due and payable, for any legal fees or
        disbursements or other reasonable expenses incurred by them in connection
        with
        investigating or defending any such Claim. Notwithstanding anything to the
        contrary contained herein, the indemnification agreement contained in this
        Section 6(a): (w) shall not apply to a Claim by an Indemnified Person arising
        out of or based upon a Violation which occurs in reliance upon and in conformity
        with information furnished in writing to the Company by such Indemnified
        Person
        expressly for use in connection with the preparation of the Registration
        Statement, the prospectus or form of prospectus, or in any amendment or
        supplement thereto, or any such amendment thereof or supplement thereto;
        (x)
        shall not be available to the extent such Claim is based on a failure of
        the
        Investor to timely deliver or to cause to be delivered the prospectus made
        available by the Company, if such prospectus was timely made available by
        the
        Company pursuant to Section 3(c); (y) shall not be available to the extent
        the
        claim arises from or is based upon the willful misfeasance of the Indemnified
        Person; and (z) shall not apply to amounts paid in settlement of any Claim
        if
        such settlement is effected without the prior written consent of the Company,
        which consent shall not be unreasonably withheld. Such indemnity shall remain
        in
        full force and effect regardless of any investigation made by or on behalf
        of
        the Indemnified Person.

       

      (b)
        In
        connection with a Registration Statement, each Investor agrees to severally
        and
        not jointly indemnify, hold harmless and defend, to the same extent and in
        the
        same manner as is set forth in Section 6(a), the Company, each of its directors,
        each of its officers, employees, representatives, or agents and each Person,
        if
        any, who controls the Company within the meaning of the 1933 Act or the 1934
        Act
        (each an “Indemnified Party”), against any Claim or Indemnified Damages
        to which any of them may become subject, under the 1933 Act, the 1934 Act
        or
        otherwise, insofar as such Claim or Indemnified Damages arise out of or is
        based
        upon any Violation, in each case to the extent, and only to the extent, that
        such Violation occurs in reliance upon and in conformity with written
        information furnished to the Company by such Investor expressly for use in
        connection with such Registration Statement, the prospectus or form of
        prospectus, or in any amendment or supplement thereto; and, subject to Section
        6(d), such Investor will reimburse any legal or other expenses reasonably
        incurred by them in connection with investigating or defending any such Claim;
        provided, however, that the indemnity agreement contained in this Section
        6(b)
        and the agreement with respect to

      

      
        
           

        

        
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      contribution
        contained in Section 7 shall not apply to amounts paid in settlement of any
        Claim if such settlement is effected without the prior written consent of
        such
        Investor, which consent shall not be unreasonably withheld; provided, further,
        however, that the Investor shall be liable under this Section 6(b) for only
        that
        amount of a Claim or Indemnified Damages as does not exceed the net proceeds
        to
        such Investor as a result of the sale of Registrable Securities pursuant
        to such
        Registration Statement. Such indemnity shall remain in full force and effect
        regardless of any investigation made by or on behalf of such Indemnified
        Party.
        Notwithstanding anything to the contrary contained herein, the indemnification
        agreement contained in this Section 6(b) with respect to any prospectus shall
        not inure to the benefit of any Indemnified Party if the untrue statement
        or
        omission of material fact contained in the prospectus was corrected and such
        new
        prospectus was delivered to each Investor prior to such Investor’s use of the
        prospectus to which the Claim relates.

       

      (c)
        Promptly after receipt by an Indemnified Person or Indemnified Party under
        this
        Section 6 of notice of the commencement of any action or proceeding (including
        any governmental action or proceeding) involving a Claim, such Indemnified
        Person or Indemnified Party shall, if a Claim in respect thereof is to be
        made
        against any indemnifying party under this Section 6, deliver to the indemnifying
        party a writt en notice of the commencement thereof, and the indemnifying
        party
        shall have the right to participate in, and, to the extent the indemnifying
        party so desires, jointly with any other indemnifying party similarly noticed,
        to assume control of the defense thereof with counsel mutually satisfactory
        to
        the indemnifying party and the Indemnified Person or the Indemnified Party,
        as
        the case may be; provided, however, that an Indemnified Person or Indemnified
        Party shall have the right to retain its own counsel with the fees and expenses
        of not more than one (1) counsel for such Indemnified Person or Indemnified
        Party to be paid by the indemnifying party, if, in the reasonable opinion
        of
        counsel retained by the indemnifying party, the representation by such counsel
        of the Indemnified Person or Indemnified Party and the indemnifying party
        would
        be inappropriate due to actual or potential differing interests between such
        Indemnified Person or Indemnified Party and any other party represented by
        such
        counsel in such proceeding. The Indemnified Party or Indemnified Person shall
        cooperate fully with the indemnifying party in connection with any negotiation
        or defense of any such action or claim by the indemnifying party and shall
        furnish to the indemnifying party all information reasonably available to
        the
        Indemnified Party or Indemnified Person which relates to such action or claim.
        The indemnifying party shall keep the Indemnified Party or Indemnified Person
        fully apprised at all times as to the status of the defense or any settlement
        negotiations with respect thereto. No indemnifying party shall be liable
        for any
        settlement of any action, claim or proceeding effected without its prior
        written
        consent; provided, however, that the indemnifying party shall not unreasonably
        withhold, delay or condition its consent. No indemnifying party shall, without
        the prior writt en consent of the Indemnified Party or Indemnified Person,
        consent to entry of any judgment or enter into any settlement or other
        compromise which does not include as an unconditional term thereof the giving
        by
        the claimant or plaintiff to such Indemnified Party or Indemnified Person
        of a
        release from all liability in respect to such claim or litigation. Following
        indemnification as provided for hereunder, the indemnifying party shall be
        subrogated to all rights of the Indemnified Party or Indemnified Person with
        respect to all third parties, firms or corporations relating to the matter
        for
        which indemnification has been made. The failure to deliver written notice
        to
        the indemnifying party within a reasonable time of the commencement of any
        such
        action shall not relieve such indemnifying party of any liability to the
        Indemnified Person or Indemnified Party under this Section
        6, except to the extent that the indemnifying party is prejudiced in its
        ability
        to defend such action.

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

       

      (d)  The
        indemnification required by this Section 6 shall be made by periodic payments
        of
        the amount thereof during the course of the investigation or defense, as
        and
        when bills are received or Indemnified Damages are incurred.

       

      (e)  The
        indemnity agreements contained herein shall be in addition to (i) any cause
        of
        action or similar right of the Indemnified Party or Indemnified Person against
        the indemnifying party or others, and (ii) any liabilities the indemnifying
        party may be subject to pursuant to the law.

       

      7.  CONTRIBUTION.

       

      To
        the
        extent any indemnification by an indemnifying party is prohibited or limited
        by
        law, the indemnifying party agrees to make the maximum contribution with
        respect
        to any amounts for which it would otherwise be liable under Section 6 to
        the
        fullest extent permitted by law; provided, however, that: (i) no seller of
        Registrable Securities guilty of fraudulent misrepresentation (within the
        meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
        from
        any seller of Registrable Securities who was not guilty of fraudulent
        misrepresentation; and (ii) contribution by any seller of Registrable Securities
        shall be limited in amount to the net amount of proceeds received by such
        seller
        from the sale of such Registrable Securities.

       

      8.  REPORTS
        UNDER THE 1934 ACT.

       

      With
        a
        view to making available to the Investors the benefits of Rule 144 promulgated
        under the 1933 Act or any similar rule or regulation of the SEC that may
        at any
        time permit the Investors to sell securities of the Company to the public
        without registration (“Rule 144”) the Company agrees to:

       

      (a)  make
        and
        keep public information available, as those terms are understood and defined
        in
        Rule 144;

       

      (b)  file
        with
        the SEC in a timely manner all reports and other documents required of the
        Company under the 1933 Act and the 1934 Act so long as the Company remains
        subject to such requirements (it being understood that nothing herein shall
        limit the Company’s obligations under Section 4(c) of the Securities Purchase
        Agreement) and the filing of such reports and other documents as are required
        by
        the applicable provisions of Rule 144; and

       

      (c)  furnish
        to each Investor so long as such Investor owns Registrable Securities, promptly
        upon written reasonable request, (i) a written statement by the Company that
        it
        has complied with the reporting requirements of Rule 144, the 1933 Act and
        the
        1934 Act, (ii) a copy of the most recent annual or quarterly report of the
        Company and such other reports and documents so filed by the Company, and
        (iii)
        such other information as may be reasonably requested to permit the Investors
        to
        sell such securities pursuant to Rule 144 without registration.

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      9.  AMENDMENT
        OF REGISTRATION RIGHTS.

       

      Provisions
        of this Agreement may be amended and the observance thereof may be waived
        (either generally or in a particular instance and either retroactively or
        prospectively), only with the written consent of the Company and Investors
        who
        then hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
        or waiver effected in accordance with this Section 9 shall be binding upon
        each
        Investor and the Company. No such amendment shall be effective to the extent
        that it applies to fewer than all of the holders of the Registrable Securities.
        No consideration shall be offered or paid to any Person to amend or consent
        to a
        waiver or modification of any provision of this Agreement unless the same
        consideration also is offered to all of the parties to this
        Agreement.

       

      10.  MISCELLANEOUS.

       

      (a)  A
        Person
        is deemed to be a holder of Registrable Securities whenever such Person owns
        or
        is deemed to own of record such Registrable Securities. If the Company receives
        conflicting instructions, notices or elections from two (2) or more Persons
        with
        respect to the same Registrable Securities, the Company shall act upon the
        basis
        of instructions, notice or election received from the registered owner of
        such
        Registrable Securities.

       

      (b)  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
        receipt, when sent by facsimile (provided confirmation of transmission is
        mechanically or electronically generated and kept on file by the sending
        party);
        or (iii) one (1) business day after deposit with a nationally recognized
        overnight delivery service, in each case properly addressed to the party
        to
        receive the same. The addresses and facsimile numbers for such communications
        shall be:

       

      
        
          	
                  If
                    to 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 an
        Investor, to its address and facsimile number on the Schedule of Investors
        attached hereto, with copies to such Investor’s representatives as set forth on
        the Schedule of Investors or to such other address and/or facsimile number
        and/or to the attention of such other person as the recipient party has
        specified by written notice given to each other party five (5) days prior
        to the
        effectiveness of such change. Written confirmation of receipt (A) given by
        the
        recipient of such

      

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      notice,
        consent, waiver or other communication, (B) mechanically or electronically
        generated by the sender’s facsimile machine containing the time, date, recipient
        facsimile number and an image of the first page of such transmission or (C)
        provided by a courier or overnight courier service shall be rebuttable evidence
        of personal service, receipt by facsimile or receipt from a nationally
        recognized overnight delivery service in accordance with clause (i), (ii)
        or
        (iii) above, respectively.

       

      (c)  Failure
        of any party to exercise any right or remedy under this Agreement or otherwise,
        or delay by a party in exercising such right or remedy, shall not operate
        as a
        waiver thereof.

       

      (d)  The
        laws
        of the State of Michigan shall govern all issues concerning the relative
        rights
        of the Company and the Investors as its stockholders. All other questions
        concerning the construction, validity, enforcement and interpretation of
        this
        Agreement shall be governed by the internal laws of the State of Florida
        without
        giving effect to any choice of law or conflict of law provision or rule (whether
        of the State of Florida or any other jurisdiction) that would cause the
        application of the laws of any jurisdiction other than the State of Florida
        Each
        party hereby irrevocably submits to the non-exclusive jurisdiction of the
        State
        Courts of the State of Florida sitting in Broward County, Florida and federal
        courts for the Southern District of Florida for the adjudication of any dispute
        hereunder or in connection herewith or with any transaction contemplated
        hereby
        or discussed herein, and hereby irrevocably waives, and agrees not to assert
        in
        any suit, action or proceeding, any claim that it is not personally subject
        to
        the jurisdiction of any such court, that such suit, action or proceeding
        is
        brought in an inconvenient forum or that the venue of such suit, action or
        proceeding is improper. Each party hereby irrevocably waives personal service
        of
        process and consents to process being served in any such suit, action or
        proceeding by mailing a copy thereof to such party at the address for such
        notices to it under this Agreement and agrees that such service shall constitute
        good and sufficient service of process and notice thereof. Nothing contained
        herein shall be deemed to limit in any way any right to serve process in
        any
        manner permitted by law. 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. EACH PARTY HEREBY IRREVOCABLY WAIVES
        ANY
        RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
        OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
        AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

       

      (e)  This
        Agreement, the Irrevocable Transfer Agent Instructions, the Securities Purchase
        Agreement and related documents including the Convertible Debenture and the
        Escrow Agreement dated the date hereof by and among the Company, the Investors
        set forth on the Schedule of Investors attached hereto, and James G. Dodrill
        II,
        P.A. (the “EscrowAgreement”) and the Security Agreement dated the
        date hereof (the “Security Agreement”) constitute the entire agreement
        among the parties hereto with respect to the subject matter hereof and thereof.
        There are no restrictions, promises, warranties or undertakings, other than
        those set forth or referred to herein and therein. This Agreement, the
        Irrevocable Transfer Agent Instructions, the Securities Purchase Agreement
        and
        related documents including the Convertible Debenture,
        the Escrow Agreement and the Security Agreement supersede all prior agreements
        and understandings among the parties hereto with respect to the subject matter
        hereof and thereof.

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

       

      (f)  This
        Agreement shall inure to the benefit of and be binding upon the permitted
        successors and assigns of each of the parties hereto.

       

      (g)  The
        headings in this Agreement are for convenience of reference only and shall
        not
        limit or otherwise affect the meaning hereof.

       

      (h)  This
        Agreement may be executed in identical counterparts, each of which shall
        be
        deemed an original but all of which shall constitute one and the same agreement.
        This Agreement, once executed by a party, may be delivered to the other party
        hereto by facsimile transmission of a copy of this Agreement bearing the
        signature of the party so delivering this Agreement.

       

      (i)  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.

       

      (j)  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.

       

      (k)  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.

       

      IN
        WITNESS WHEREOF, the parties have caused this Investor Registration
        Rights Agreement to be duly executed as of day and year first above
        written.

       

      
        	 	
                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	 

      

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

      SCHEDULE
        I

       

      SCHEDULE
        OF INVESTORS

       

      
        	
                Name

              	 	
                Signature

              	
                Address/Facsimile

                Number
                  of Buyer

              
	
                Trafalgar
                  Capital Specialized

              	
                By:

              	
                Trafalgar
                  Capital Sarl

              	
                8-10
                  Rue Mathias Hardt

                BP
                  3023

              
	
                Investment
                  Fund,

              	
                Its:

              	
                General
                  Partner

              	
                L-1030
                  Luxembourg

              
	
                Luxembourg

              	 	 	
                Facsimile:

              
	 	 	 	
                011-44-207-405-0161

              
	 	
                By:

              	 	
                and

              
	 	
                Name:

              	
                Andrew
                  Garai

              	
                001-786-323-1651

              
	 	
                Its:

              	
                Chairman
                  of the Board

              	 

      

      

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

      EXHIBIT
        A

       

      FORM
        OF NOTICE OF EFFECTIVENESS

      OF
        REGISTRATION STATEMENT

       

      Attention:

       

      Re:
        BUCKEYE VENTURES, INC. (the
“Company”) 

       

      Ladies
        and Gentlemen:

       

      Pursuant
        to certain Securities Purchase Agreement (the
“Securities Purchase Agreement”)
        entered into by and among the Company and the investors named therein
        (collectively, the “Investors”), the Company also has entered into a
        Registration Rights Agreement with the Investors (the “Investor Registration
        Rights Agreement”) pursuant to which the Company agreed, among other things,
        to register the Registrable Securities (as defined in the Registration Rights
        Agreement) under the Securities Act of 1933, as amended (the “1933 Act”).
        In connection with the Company’s obligations under the Registration Rights
        Agreement, on _____________,
        the
        Company filed a Registration Statement on Form ____ (File No.
        333-_______) (the “Registration Statement”) with the Securities and
        Exchange SEC
        (the
“SEC”) relating to the Registrable Securities which names each of the
        Investors as a selling stockholder there under.

       

      In
        connection with the foregoing, we advise you that a member of the SEC’s staff
        has advised our legal counsel by telephone that the SEC has entered an order
        declaring the Registration Statement effective under the 1933 Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF
        EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a
        member of the SEC’s staff, that any stop order suspending its effectiveness has
        been issued or that any proceedings for that purpose are pending before,
        or
        threatened by, the SEC and the Registrable Securities are available for resale
        under the 1933 Act pursuant to the Registration Statement.

       

      Very
        truly yours,

       

      By:           
        

       

      cc:
        [LIST NAMES OF INVESTORS]

       

       

       

       

       

      15buckeye_sb2-ex1012.htm

    Exhibit
      10.12

     

    
      

       

      SECURITY
        AGREEMENT

       

      THIS
        SECURITY AGREEMENT (the “Agreement”), is entered into and made
        effective as of June 29, 2007, by and between BUKEYE VENTURES, 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 between the Company
        and
        the Secured Party (the “Securities Purchase Agreement”), and the Secured Party
        shall purchase up to Five Million Dollars ($5,000,000) of secured convertible
        debentures (the “Convertible Debentures”), which shall be convertible
        into shares of the Company’s common stock, par value $.001 (the “Common
        Stock”) (as converted, the “Conversion Shares”, 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, the Warrant, the Pledge Agreement, and the Escrow Agreement,
        each
        as defined in the Securities Purchase Agreement (collectively referred to
        as the
“Transaction Documents”), the Company hereby grants to the Secured Party
        a security interest in and to the pledged collateral identified on Attachment
        1 hereto 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

      

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

      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”).

       

      ARTICLE
        2.

       

      PLEDGED
        COLLATERAL, ADMINISTRATION OF COLLATERAL

      AND
        TERMINATION OF SECURITY INTEREST

       

      Section
        2.1. Grant of Security Interest.

       

      (a)  As
        security for the Obligations, Company hereby pledges to Secured Party and
        grants
        to Secured Party a security interest in all right, title and interests of
        Company (and of all companies acquired by the Company that result in funding
        being provided to the Company by the Buyer under the Securities Purchase
        Agreement) in and to the property described in Attachment 1 hereto, and the
        products thereof and the proceeds of all such items whether now existing
        or
        hereafter from time to time acquired (collectively, 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 Collateral. 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 Collateral, 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 Collateral 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 Collateral.

       

      (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

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      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

       

      (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 Collateral 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)   
        An “Event of Default” shall have the same meaning as set forth in the
        Convertible Debentures.

       

      ARTICLE
        3.

      ATTORNEY-IN-FACT;
        PERFORMANCE 

       

      Section
        3.1. Secured Party Appointed Attorney-In-Fact.

       

      Upon
        the
        occurrence and during the continuance 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. Upon the occurrence and during the continuance
        of
        any Event of Default: (a) the Secured Party may demand, collect, receipt
        for,
        settle, compromise, adjust, sue for, foreclose, or realize on the Pledged
        Collateral as and when the Secured Party may determine. and (b) to facilitate
        collection, the Secured Party may notify account debtors and obligors on
        any
        Pledged Collateral 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.

      

      
        
           

        

        
          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 Collateral.

       

      Except
        for the liens and security interests described on Schedule 7.1 attached hereto,
        the Company warrants and represents that it is the legal and beneficial owner
        of
        the Pledged Collateral free and clear of any lien, security interest, option
        or
        other charge or encumbrance except for the security interest created by this
        Agreement.

       

      ARTICLE
        5.

      DEFAULT;
        REMEDIES; SUBSTITUTE COLLATERAL 

       

      Section
        5.1. 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 and during the continuance of an Event of Default, the Secured
        Party
        shall be entitled to; (i) receive all distributions with respect to the Pledged
        Collateral, (ii) cause the Pledged Collateral to be transferred to the Secured
        Party or its nominee, (iii) dispose of the Pledged Collateral, and (iv) realize
        upon any and all rights in the Pledged Collateral then held by the Secured
        Party.

       

      Section
        5.2. Method of Realizing Upon the Pledged Collateral: 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 Collateral:

       

      (a)
        Any
        item of the Pledged Collateral 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

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      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
        Collateral, the Company may bid for and purchase the whole or any part of
        the
        Pledged Collateral 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.

       

      (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.

       

      (d)  If
        the
        Company fails to pay any 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.

       

      (e)  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
        5.3. 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 senior or prior security holders, shall be entitled and empowered, by
        intervention in such proceeding or otherwise:

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      (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) deemed
        to be allowed claims, and

       

      (ii)  to
        the
        extent permitted by law, 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
        5.4. Duties Regarding Pledged Collateral.

       

      The
        Secured Party shall have no duty as to the collection or protection of the
        Pledged Collateral 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 Collateral actually in the Secured Party’s possession.

       

      ARTICLE
        6.

      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
        6.1.  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 Collateral.

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

      Section
        6.2. Financial Statements and Reports.

       

      The
        Company shall furnish to the Secured Party such financial data as the Secured
        Party may reasonably request. 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;

       

      (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
        6.3. 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 $25,000 (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 $25,000
        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 Transaction Documents.

      

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

       

      Section
        6.4. Maintenance of Books and Records; Inspection.

       

      The
        Company shall permit the Secured Party, its officers and employees and any
        professionals designated by the Secured Party in writing, at any time following
        the occurrence of an Event of Default and once every six (6) month period
        before
        the occurrence of an Event of Default to visit and inspect any of its properties
        (including but not limited to the Pledged collateral), corporate books and
        financial records, and to discuss its accounts, affairs and finances with
        any
        employee, officer or director thereof; provided that Secured Party shall
        give
        the Company reasonable prior notice of any visit or inspection and such visits
        and inspections shall take place during normal business hours.

       

      Section
        6.5. 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, normal wear and
        tear
        excepted, making all necessary repairs thereto and renewals and replacements
        thereof.

       

      (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; and (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
        6.6. 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
        Collateral 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, to the extent the failure to perform would have a Material Adverse
        Effect.

       

      Section
        6.7. Defense of Collateral, Etc.

       

      The
        Company shall defend and enforce its right, title and interest in and to
        any
        part of its assets and properties, including specifically the Pledged Collateral
        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 Collateral, each against all manner of claims and demands on a timely
        basis to the full extent permitted by applicable law.

       

      Section
        6.8. 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

      

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

       

      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, to the extent the failure to do so would have
        a
        Material Adverse Effect.

       

      Section
        6.9. 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.

       

      Section
        6.10. Compliance with Law and Other Agreements.

       

      The
        Company shall maintain its business operations and property owned or used
        in
        connection therewith in material 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
        6.11. 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 agreement of Company for the payment of money, promptly upon the
        occurrence thereof.

       

      Section
        6.12. 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.

       

      ARTICLE
        7.

      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:

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

       

      Section
        7.1.  Indebtedness.

       

      Other
        than in the ordinary course of business consistent with past practice, 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
        7.2.  Liens and Encumbrances.

       

      Except
        for the liens and security interests described on Schedule 7.1 attached hereto,
        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 Collateral 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 Collateral or the Company’s capital stock;
        or enter into any sale-leaseback financing respecting any part of the Pledged
        Collateral as lessee, or cause or assist the inception or continuation of
        any of
        the foregoing.

       

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

       

      Other
        than in the ordinary course of business consistent with past practice, 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
        7.4. 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
        7.5. 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.

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      Section
        7.6. 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 Collateral 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.

       

      Section
        7.7. Debt.

       

      Other
        than in the ordinary course of business, 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).

       

      Section
        7.8. Conduct of Business.

       

      The
        Company will continue to engage in a business of the same general type as
        conducted by it on the date of this Agreement.

       

      Section
        7.9. Places of Business.

       

      The
        location of the Company’s chief place of business is at the address set forth in
        Section 8.1 hereof. 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 Collateral from its current location
        (other than in the ordinary course of business) without thirty (30) days'
        prior
        written notice to the Secured Party in each instance.

       

      ARTICLE
        8.

      MISCELLANEOUS 

       

      Section
        8.1.  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:

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      

      
        
          	
                  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

                
	 	 	
                  001-786-323-165
                    1

                
	 	 	 
	
                  With
                    Copy to:

                	
                  James
                    G. Dodrill II, P.A.

                
	 	
                  5800
                    Hamilton Way

                
	 	
                  Boca
                    Raton, FL 33496

                
	 	
                  Attention:

                	
                  James
                    Dodrill, Esq.

                
	 	
                  Telephone:

                	
                  (561)
                    862-0529

                
	 	
                  Facsimile:

                	
                  (561)
                    892-7787

                
	 	 	 
	
                  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

                

        

      

       

      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
        8.2. 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.

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

       

      Section
        8.3. 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 Collateral; (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.

       

      Section
        8.4. 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
        8.5. Continuing Security Interest.

       

      This
        Agreement shall create a continuing security interest in the Pledged Collateral
        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
        Collateral as shall not have been sold in accordance with Section 5.2 hereof
        or
        otherwise applied pursuant to the terms hereof.

       

      Section
        8.6. 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
        8.7. 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.

      

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

      Section
        8.8. 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.

       

      Section
        8.9. 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.

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

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

       

      
        	 	
                COMPANY:

                BUCKEYE VENTURES, INC.

              	 
	 	 	 	 
	
                 

              	
                By:
                  

              	 	 
	 	Name:	 	 
	 	Title:	CEO	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	SECURED
                PARTY:	 
	 	TRAFALGAR
                CAPITAL SPECIALIZED INVESTMENT FUND, LUXEMBOURG 	 
	 	By:
                Trafalgar Capital Sarl	 
	 	Its:
                General Partner	 
	 	 	 	 
	 	By:	 	 
	 	Name:	 	 
	 	Title:
                Portfolio Manager	 

      

       

       

      

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

      EXHIBIT
        A

      DEFINITION
        OF PLEDGED COLLATERAL

       

      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, all of the assets of the Company and of any company acquired by the
        Company which results in funding being provided to the Company by the Buyers
        under the Securities Purchase Agreement, including specifically the following
        pledged collateral of the Company and any such acquired
        company(ies):

       

      (a)  all
        goods
        of the Company and such acquired company(ies), 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 such acquired company(ies) or in which
        the
        Company or such acquired company(ies) 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 and such acquired company(ies) , 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 or such acquired 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 or such acquired
        company(ies), 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
        or
        such acquired company(ies) 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 or such acquired company(ies) (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 or such acquired company’s customers, and all proceeds
        of any insurance thereon, and all guarantees, securities and liens which
        the
        Company or such acquired company(ies) 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 or such acquired company(ies) represent and warrant 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 and such acquired 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 Collateral.

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

       

      Schedule
        7.1

       

      Purchase
        money security interests granted in the ordinary course of business to secure
        the acquisition of equipment and vehicles.

       

       

       

       

       

       

       

       

       

      17

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