EX-10.5

       THE  SECURITIES  REPRESENTED  BY THIS  CERTIFICATE  HAVE  NOT BEEN
       REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS  AMENDED  (THE
       "ACT"). THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN
       THE  ABSENCE  OF  AN  EFFECTIVE  REGISTRATION  STATEMENT  FOR  THE
       SECURITIES  UNDER  SAID ACT,  OR AN  OPINION  OF  COUNSEL IN FORM,
       SUBSTANCE   AND  SCOPE   CUSTOMARY  FOR  OPINIONS  OF  COUNSEL  IN
       COMPARABLE  TRANSACTIONS  THAT  REGISTRATION IS NOT REQUIRED UNDER
       SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144  OR REGULATIONS UNDER
       SAID ACT.



                        CALLABLE SECURED CONVERTIBLE NOTE

Troy, Michigan
March 6, 2006                                                          $[______]

       FOR VALUE RECEIVED, MIDNIGHT HOLDINGS GROUP, INC., a Delaware corporation
(hereinafter  called the  "BORROWER"),  hereby  promises  to pay to the order of
[____________] or registered  assigns (the "HOLDER") the sum of $[   ], on March
6, 2009 (the  "MATURITY  DATE"),  and to pay  interest  on the unpaid  principal
balance  hereof at the rate of ten  percent  (10%) per annum  from March 6, 2006
(the "ISSUE  DATE") until the same becomes due and payable,  whether at maturity
or upon  acceleration or by prepayment or otherwise.  Any amount of principal or
interest on this Note which is not paid when due shall bear interest at the rate
of fifteen  percent  (15%) per annum from the due date thereof until the same is
paid ("DEFAULT  INTEREST").  Interest shall commence accruing on the issue date,
shall be computed on the basis of a 365-day  year and the actual  number of days
elapsed and shall be payable,  quarterly on March 31, June 30,  September 30 and
December  31 of each year  beginning  on the last day of the first full  quarter
after Issue Date.  All payments due hereunder (to the extent not converted  into
common stock,  $.00005 par value per share, of the Borrower (the "COMMON STOCK")
in accordance with the terms hereof) shall be made in lawful money of the United
States of  America.  All  payments  shall be made at such  address as the Holder
shall  hereafter give to the Borrower by written notice made in accordance  with
the  provisions  of this Note.  Whenever  any amount  expressed to be due by the
terms of this Note is due on any day which is not a business day, the same shall
instead be due on the next  succeeding  day which is a business  day and, in the
case of any  interest  payment  date which is not the date on which this Note is
paid in full,  the  extension  of the due date  thereof  shall not be taken into
account for purposes of determining  the amount of interest due on such date. As
used in this  Note,  the term  "business  day"  shall  mean any day other than a
Saturday, Sunday or a day on which commercial banks in the city of New York, New
York are authorized or required by law or executive order to remain closed. Each
capitalized term used herein, and not otherwise defined,  shall have the meaning
ascribed thereto

<PAGE>


in that certain Securities Purchase Agreement,  dated March 6, 2006, pursuant to
which this Note was originally issued (the "PURCHASE AGREEMENT").

       This Note is free from all taxes,  liens,  claims and  encumbrances  with
respect to the issue  thereof and shall not be subject to  preemptive  rights or
other  similar  rights  of  shareholders  of the  Borrower  and will not  impose
personal  liability  upon the holder  thereof.  The  obligations of the Borrower
under  this Note  shall be secured by that  certain  Security  Agreement  by and
between the Borrower and the Holder of even date herewith.

       The following terms shall apply to this Note:

                          ARTICLE I. CONVERSION RIGHTS

              1.1    CONVERSION RIGHT. The Holder shall have the right from time
to time, and at any time on or prior to the earlier of (i) the Maturity Date and
(ii) the date of  payment of the  Default  Amount  (as  defined in Article  III)
pursuant to Section  1.6(a) or Article III, the Optional  Prepayment  Amount (as
defined in Section 5.1) or (iii) any payments  pursuant to Section 1.7,  each in
respect of the remaining  outstanding  principal  amount of this Note to convert
all or any part of the outstanding and unpaid principal amount of this Note into
fully paid and  non-assessable  shares of Common  Stock,  as such  Common  Stock
exists on the Issue Date, or any shares of capital stock or other  securities of
the  Borrower  into  which  such  Common  Stock  shall  hereafter  be changed or
reclassified  at the conversion  price (the  "CONVERSION  PRICE")  determined as
provided herein (a "CONVERSION");  PROVIDED, HOWEVER, that in no event shall the
Holder be entitled to convert any portion of this Note in excess of that portion
of this Note  upon  conversion  of which the sum of (1) the  number of shares of
Common Stock  beneficially  owned by the Holder and its  affiliates  (other than
shares  of Common  Stock  which may be deemed  beneficially  owned  through  the
ownership  of the  unconverted  portion  of the  Notes  or  the  unexercised  or
unconverted  portion of any other security of the Borrower  (including,  without
limitation,  the  warrants  issued  by the  Borrower  pursuant  to the  Purchase
Agreement)  subject to a limitation on  conversion or exercise  analogous to the
limitations  contained  herein)  and (2) the  number of  shares of Common  Stock
issuable  upon the  conversion of the portion of this Note with respect to which
the  determination  of this proviso is being made,  would  result in  beneficial
ownership by the Holder and its affiliates of more than 4.9% of the  outstanding
shares of Common Stock. For purposes of the proviso to the immediately preceding
sentence,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended,  and Regulations 13D-G
thereunder,  except as  otherwise  provided in clause (1) of such  proviso.  The
number of shares of Common Stock to be issued upon each  conversion of this Note
shall be determined by dividing the Conversion  Amount (as defined below) by the
applicable  Conversion  Price then in effect on the date specified in the notice
of  conversion,  in the form  attached  hereto  as  Exhibit  A (the  "NOTICE  OF
CONVERSION"), delivered to the Borrower by the Holder in accordance with Section
1.4 below;  provided that the Notice of Conversion is submitted by facsimile (or
by other means resulting in, or reasonably expected to result in, notice) to the
Borrower  before 6:00 p.m., New York, New York time on such conversion date (the
"CONVERSION  DATE").  The term  "CONVERSION  AMOUNT" means,  with respect to any
conversion of this Note, the sum of (1) the principal  amount of this Note to be
converted in such  conversion PLUS (2) accrued and unpaid  interest,  if any, on
such principal amount at the interest

                                       2
<PAGE>


rates provided in this Note to the Conversion Date PLUS (3) Default Interest, if
any, on the amounts referred to in the immediately  preceding clauses (1) and/or
(2) PLUS (4) at the Holder's option,  any amounts owed to the Holder pursuant to
Sections  1.3 and 1.4(g)  hereof or  pursuant  to Section  2(c) of that  certain
Registration Rights Agreement, dated as of March 6, 2006, executed in connection
with the initial  issuance of this Note and the other Notes  issued on the Issue
Date (the "REGISTRATION RIGHTS AGREEMENT").

              1.2    CONVERSION PRICE.

                     (a)    CALCULATION  OF  CONVERSION  PRICE.  The  Conversion
Price  shall be the  lesser of (i) the  Variable  Conversion  Price (as  defined
herein) and (ii) the Fixed  Conversion  Price (as defined herein)  (subject,  in
each case, to equitable  adjustments for stock splits, stock dividends or rights
offerings  by  the  Borrower  relating  to  the  Borrower's  securities  or  the
securities of any  subsidiary of the Borrower,  combinations,  recapitalization,
reclassifications,   extraordinary   distributions  and  similar  events).   The
"VARIABLE  CONVERSION  PRICE" shall mean the  Applicable  Percentage (as defined
herein) multiplied by the Market Price (as defined herein). "MARKET PRICE" means
the average of the lowest  three (3) Trading  Prices (as defined  below) for the
Common Stock  during the twenty (20)  Trading Day period  ending one Trading Day
prior to the date the  Conversion  Notice is sent by the Holder to the  Borrower
via facsimile (the "CONVERSION  DATE").  "TRADING PRICE" means, for any security
as of any date,  the intraday  trading  price on the  Over-the-Counter  Bulletin
Board (the  "OTCBB")  as  reported  by a  reliable  reporting  service  mutually
acceptable to and  hereafter  designated by Holders of a majority in interest of
the Notes and the Borrower or, if the OTCBB is not the principal  trading market
for such security,  the intraday trading price of such security on the principal
securities  exchange or trading  market where such  security is listed or traded
or, if no intraday  trading  price of such  security is  available in any of the
foregoing  manners,  the average of the  intraday  trading  prices of any market
makers for such  security  that are listed in the "pink  sheets" by the National
Quotation  Bureau,  Inc.  If the Trading  Price  cannot be  calculated  for such
security on such date in the manner provided  above,  the Trading Price shall be
the fair market value as mutually  determined by the Borrower and the holders of
a majority in interest of the Notes being converted for which the calculation of
the Trading Price is required in order to determine the Conversion Price of such
Notes.  "TRADING DAY" shall mean any day on which the Common Stock is traded for
any  period on the  OTCBB,  or on the  principal  securities  exchange  or other
securities  market on which the Common Stock is then being  traded.  "APPLICABLE
PERCENTAGE" shall mean 25%; provided,  however,  that the Applicable  Percentage
shall be increased to (i) 30% in the event that the  Registration  Statement (as
defined in the Registration  Rights  Agreement) is filed on or before the Filing
Date (as defined in the Registration Rights Agreement) and (ii) 40% in the event
that  the  Registration   Statement  (as  defined  in  the  Registration  Rights
Agreement) becomes effective on or before the Effectiveness Deadline (as defined
in the Registration Rights Agreement).

                     (b)    CONVERSION   PRICE   DURING   MAJOR   ANNOUNCEMENTS.
Notwithstanding  anything  contained in Section  1.2(a) to the contrary,  in the
event  the  Borrower  (i)  makes  a  public  announcement  that  it  intends  to
consolidate  or merge with any other  corporation  (other than a merger in which
the Borrower is the surviving or continuing corporation and its capital stock is
unchanged)  or sell or transfer  all or  substantially  all of the assets of the
Borrower or (ii) any person,  group or entity (including the Borrower)  publicly
announces a tender offer to purchase 50% or more of the Borrower's  Common Stock
(or any

                                       3
<PAGE>


other takeover scheme) (the date of the  announcement  referred to in clause (i)
or (ii)  is  hereinafter  referred  to as the  "ANNOUNCEMENT  DATE"),  then  the
Conversion  Price shall,  effective  upon the  Announcement  Date and continuing
through the Adjusted  Conversion Price  Termination Date (as defined below),  be
equal to the lower of (x) the Conversion  Price which would have been applicable
for a Conversion occurring on the Announcement Date and (y) the Conversion Price
that would otherwise be in effect.  From and after the Adjusted Conversion Price
Termination  Date, the Conversion Price shall be determined as set forth in this
Section 1.2(a).  For purposes hereof,  "ADJUSTED  CONVERSION  PRICE  TERMINATION
DATE" shall mean,  with respect to any proposed  transaction or tender offer (or
takeover scheme) for which a public announcement as contemplated by this Section
1.2(b) has been made,  the date upon which the  Borrower  (in the case of clause
(i) above) or the  person,  group or entity (in the case of clause  (ii)  above)
consummates or publicly announces the termination or abandonment of the proposed
transaction  or tender  offer (or  takeover  scheme)  which  caused this Section
1.2(b) to become operative.

              1.3    AUTHORIZED SHARES. Subject to the completion of the Charter
Amendment Actions (as defined in the Purchase Agreement), the Borrower covenants
that during the period the  conversion  right exists,  the Borrower will reserve
from its  authorized  and unissued  Common Stock a sufficient  number of shares,
free from  preemptive  rights,  to provide for the issuance of Common Stock upon
the full  conversion  of this Note and the other  Notes  issued  pursuant to the
Purchase Agreement. The Borrower is required at all times to have authorized and
reserved  two times the number of shares  that is  actually  issuable  upon full
conversion  of the  Notes  (based  on the  Conversion  Price of the Notes or the
Exercise  Price of the  Warrants  in effect  from time to time)  (the  "RESERVED
AMOUNT"). The Reserved Amount shall be increased from time to time in accordance
with  the  Borrower's  obligations  pursuant  to  Section  4(h) of the  Purchase
Agreement.  The Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable.  In addition, if the Borrower
shall issue any  securities  or make any change to its capital  structure  which
would  change the number of shares of Common Stock into which the Notes shall be
convertible at the then current Conversion Price, the Borrower shall at the same
time make proper provision so that thereafter there shall be a sufficient number
of shares of Common Stock authorized and reserved,  free from preemptive rights,
for conversion of the outstanding  Notes. The Borrower (i) acknowledges  that it
has  irrevocably  instructed  its transfer agent to issue  certificates  for the
Common Stock  issuable upon  conversion  of this Note,  and (ii) agrees that its
issuance of this Note shall constitute full authority to its officers and agents
who are charged with the duty of  executing  stock  certificates  to execute and
issue the necessary  certificates  for shares of Common Stock in accordance with
the terms and conditions of this Note.

              If,  at any  time a  Holder  of this  Note  submits  a  Notice  of
Conversion,  and the Borrower does not have  sufficient  authorized but unissued
shares of Common Stock  available to effect such  conversion in accordance  with
the  provisions of this Article I (a "CONVERSION  DEFAULT"),  subject to Section
4.8,  the  Borrower  shall issue to the Holder all of the shares of Common Stock
which are then  available  to effect such  conversion.  The portion of this Note
which the Holder included in its Conversion  Notice and which exceeds the amount
which is then  convertible  into  available  shares of Common Stock (the "EXCESS
AMOUNT") shall,  notwithstanding  anything to the contrary contained herein, not
be convertible  into Common Stock in accordance with the terms hereof until (and
at the Holder's option at any time after) the

                                       4
<PAGE>


date additional  shares of Common Stock are authorized by the Borrower to permit
such conversion,  at which time the Conversion Price in respect thereof shall be
the  lesser  of (i) the  Conversion  Price on the  Conversion  Default  Date (as
defined below) and (ii) the Conversion  Price on the Conversion  Date thereafter
elected by the Holder in respect thereof. In addition, the Borrower shall pay to
the Holder payments  ("CONVERSION DEFAULT PAYMENTS") for a Conversion Default in
the amount of (x) the SUM OF (1) the then  outstanding  principal amount of this
Note PLUS (2) accrued and unpaid interest on the unpaid principal amount of this
Note  through  the  Authorization  Date (as  defined  below)  PLUS  (3)  Default
Interest,  if any,  on the  amounts  referred  to in  clauses  (1)  and/or  (2),
MULTIPLIED BY (y) .24,  MULTIPLIED BY (z) (N/365),  where N = the number of days
from  the day the  holder  submits  a  Notice  of  Conversion  giving  rise to a
Conversion   Default  (the   "CONVERSION   DEFAULT   DATE")  to  the  date  (the
"AUTHORIZATION DATE") that the Borrower authorizes a sufficient number of shares
of Common Stock to effect  conversion of the full outstanding  principal balance
of this Note.  The Borrower shall use its best efforts to authorize a sufficient
number of shares of Common Stock as soon as practicable following the earlier of
(i) such  time  that the  Holder  notifies  the  Borrower  or that the  Borrower
otherwise becomes aware that there are or likely will be insufficient authorized
and  unissued  shares to allow full  conversion  thereof  and (ii) a  Conversion
Default.  The Borrower shall send notice to the Holder of the  authorization  of
additional  shares of Common  Stock,  the  Authorization  Date and the amount of
Holder's accrued  Conversion  Default Payments.  The accrued  Conversion Default
Payments for each calendar  month shall be paid in cash or shall be  convertible
into Common  Stock (at such time as there are  sufficient  authorized  shares of
Common Stock) at the applicable  Conversion Price, at the Borrower's  option, as
follows:

                     (a)    In the event  Holder  elects to take such payment in
cash,  cash payment  shall be made to Holder by the fifth (5th) day of the month
following the month in which it has accrued; and

                     (b)    In the event  Holder  elects to take such payment in
Common  Stock,  the Holder may convert such payment  amount into Common Stock at
the Conversion  Price (as in effect at the time of conversion) at any time after
the fifth  day of the  month  following  the  month in which it has  accrued  in
accordance  with  the  terms  of this  Article  I (so  long as  there  is then a
sufficient number of authorized shares of Common Stock).

              The Holder's  election shall be made in writing to the Borrower at
any time prior to 6:00 p.m.,  New York,  New York time,  on the third day of the
month following the month in which Conversion Default payments have accrued.  If
no election is made, the Holder shall be deemed to have elected to receive cash.
Nothing  herein shall limit the Holder's  right to pursue actual damages (to the
extent in excess of the Conversion  Default Payments) for the Borrower's failure
to maintain a sufficient  number of authorized  shares of Common Stock, and each
holder shall have the right to pursue all remedies available at law or in equity
(including degree of specific performance and/or injunctive relief).

              1.4    METHOD OF CONVERSION.

                     (a)    MECHANICS  OF  CONVERSION.  Subject to Section  1.1,
this Note may be  converted  by the  Holder in whole or in part at any time from
time to time after the Issue Date, by (A) submitting to the Borrower a Notice of
Conversion (by facsimile or other reasonable

                                       5
<PAGE>


means of communication dispatched on the Conversion Date prior to 6:00 p.m., New
York, New York time) and (B) subject to Section 1.4(b),  surrendering  this Note
at the principal office of the Borrower.

                     (b)    SURRENDER OF NOTE UPON  CONVERSION.  Notwithstanding
anything to the  contrary  set forth  herein,  upon  conversion  of this Note in
accordance with the terms hereof, the Holder shall not be required to physically
surrender this Note to the Borrower unless the entire unpaid principal amount of
this Note is so converted.  The Holder and the Borrower shall  maintain  records
showing the principal  amount so converted and the dates of such  conversions or
shall use such  other  method,  reasonably  satisfactory  to the  Holder and the
Borrower,  so as not to require  physical  surrender of this Note upon each such
conversion.  In the event of any  dispute or  discrepancy,  such  records of the
Borrower  shall be  controlling  and  determinative  in the  absence of manifest
error.  Notwithstanding the foregoing,  if any portion of this Note is converted
as  aforesaid,  the Holder may not  transfer  this Note unless the Holder  first
physically  surrenders  this Note to the  Borrower,  whereupon the Borrower will
forthwith  issue and  deliver  upon the  order of the  Holder a new Note of like
tenor,  registered as the Holder (upon  payment by the Holder of any  applicable
transfer taxes) may request,  representing in the aggregate the remaining unpaid
principal  amount of this Note.  The Holder and any  assignee,  by acceptance of
this Note,  acknowledge  and agree  that,  by reason of the  provisions  of this
paragraph,  following  conversion  of a portion  of this  Note,  the  unpaid and
unconverted  principal  amount of this Note represented by this Note may be less
than the amount stated on the face hereof.

                     (c)    PAYMENT OF TAXES. The Borrower shall not be required
to pay any tax which may be payable in respect of any  transfer  involved in the
issue and delivery of shares of Common Stock or other  securities or property on
conversion  of this Note in a name  other  than that of the Holder (or in street
name),  and the  Borrower  shall not be  required  to issue or deliver  any such
shares or other  securities  or property  unless and until the person or persons
(other than the Holder or the  custodian in whose street name such shares are to
be held for the Holder's  account)  requesting  the issuance  thereof shall have
paid to the Borrower the amount of any such tax or shall have established to the
satisfaction of the Borrower that such tax has been paid.

                     (d)    DELIVERY  OF  COMMON  STOCK  UPON  CONVERSION.  Upon
receipt by the Borrower  from the Holder of a facsimile  transmission  (or other
reasonable  means  of  communication)  of a Notice  of  Conversion  meeting  the
requirements  for conversion as provided in this Section 1.4, the Borrower shall
issue and  deliver or cause to be issued and  delivered  to or upon the order of
the Holder  certificates  for the Common  Stock  issuable  upon such  conversion
within five (5)  business  days after such receipt  (and,  solely in the case of
conversion of the entire unpaid principal amount hereof, surrender of this Note)
(such second  business day being  hereinafter  referred to as the "Deadline") in
accordance with the terms hereof and the Purchase Agreement (including,  without
limitation,  in accordance with the requirements of Section 2(g) of the Purchase
Agreement  that  certificates  for shares of Common Stock issued on or after the
effective date of the Registration  Statement upon conversion of this Note shall
not bear any restrictive legend).

                     (e)    OBLIGATION OF BORROWER TO DELIVER COMMON STOCK. Upon
receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to
be the holder

                                       6
<PAGE>


of record of the Common Stock  issuable upon such  conversion,  the  outstanding
principal  amount  and the amount of accrued  and unpaid  interest  on this Note
shall be reduced to reflect such conversion,  and, unless the Borrower  defaults
on its obligations  under this Article I, all rights with respect to the portion
of this Note being so converted  shall forthwith  terminate  except the right to
receive the Common Stock or other  securities,  cash or other assets,  as herein
provided,  on such  conversion.  If the  Holder  shall  have  given a Notice  of
Conversion as provided  herein,  the Borrower's  obligation to issue and deliver
the  certificates  for  Common  Stock  shall  be  absolute  and   unconditional,
irrespective of the absence of any action by the Holder to enforce the same, any
waiver or consent with  respect to any  provision  thereof,  the recovery of any
judgment  against any person or any action to enforce  the same,  any failure or
delay in the  enforcement of any other  obligation of the Borrower to the holder
of record, or any setoff, counterclaim,  recoupment,  limitation or termination,
or any breach or alleged breach by the Holder of any obligation to the Borrower,
and  irrespective  of any other  circumstance  which might  otherwise limit such
obligation of the Borrower to the Holder in connection with such conversion. The
Conversion  Date  specified in the Notice of Conversion  shall be the Conversion
Date so long as the Notice of Conversion is received by the Borrower before 6:00
p.m., New York, New York time, on such date.

                     (f)    DELIVERY OF COMMON STOCK BY ELECTRONIC TRANSFER.  In
lieu of delivering physical certificates  representing the Common Stock issuable
upon conversion,  provided the Borrower's transfer agent is participating in the
Depository  Trust Company ("DTC") Fast Automated  Securities  Transfer  ("FAST")
program,  upon  request  of the Holder and its  compliance  with the  provisions
contained in Section 1.1 and in this  Section  1.4,  the Borrower  shall use its
best efforts to cause its transfer agent to  electronically  transmit the Common
Stock  issuable  upon  conversion  to the  Holder by  crediting  the  account of
Holder's Prime Broker with DTC through its Deposit  Withdrawal  Agent Commission
("DWAC") system.

                     (g)    FAILURE TO DELIVER  COMMON  STOCK PRIOR TO DEADLINE.
Without  in any way  limiting  the  Holder's  right to  pursue  other  remedies,
including  actual damages  and/or  equitable  relief,  the parties agree that if
delivery of the Common Stock issuable upon  conversion of this Note is more than
two (2) days after the Deadline  (other than a failure due to the  circumstances
described in Section 1.3 above, which failure shall be governed by such Section)
the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond
the Deadline  that the Borrower  fails to deliver such Common  Stock.  Such cash
amount shall be paid to Holder by the fifth day of the month following the month
in which it has accrued  or, at the option of the Holder (by  written  notice to
the Borrower by the first day of the month  following  the month in which it has
accrued),  shall be added to the  principal  amount of this Note, in which event
interest shall accrue thereon in accordance with the terms of this Note and such
additional principal amount shall be convertible into Common Stock in accordance
with the terms of this Note.

              1.5    CONCERNING THE SHARES.  The shares of Common Stock issuable
upon  conversion  of this Note may not be sold or  transferred  unless  (i) such
shares are sold pursuant to an effective registration statement under the Act or
(ii) the  Borrower  or its  transfer  agent  shall have been  furnished  with an
opinion  of  counsel  (which  opinion  shall be in  form,  substance  and  scope
customary for opinions of counsel in comparable transactions) to the effect that
the shares to be sold or transferred  may be sold or transferred  pursuant to an
exemption  from such

                                       7
<PAGE>


registration  or (iii) such shares are sold or transferred  pursuant to Rule 144
under  the Act (or a  successor  rule)  ("RULE  144") or (iv)  such  shares  are
transferred  to an  "affiliate"  (as  defined in Rule 144) of the  Borrower  who
agrees to sell or  otherwise  transfer the shares only in  accordance  with this
Section  1.5 and who is an  Accredited  Investor  (as  defined  in the  Purchase
Agreement).  Except as otherwise provided in the Purchase Agreement (and subject
to the removal  provisions  set forth  below),  until such time as the shares of
Common Stock issuable upon  conversion of this Note have been  registered  under
the Act as contemplated by the Registration Rights Agreement or otherwise may be
sold pursuant to Rule 144 without any restriction as to the number of securities
as of a particular date that can then be immediately  sold, each certificate for
shares of Common Stock  issuable upon  conversion of this Note that has not been
so included in an  effective  registration  statement  or that has not been sold
pursuant to an effective  registration  statement  or an exemption  that permits
removal of the legend,  shall bear a legend substantially in the following form,
as appropriate:

       "THE  SECURITIES  REPRESENTED  BY THIS  CERTIFICATE  HAVE NOT BEEN
       REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS  AMENDED.  THE
       SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
       OF AN EFFECTIVE  REGISTRATION  STATEMENT FOR THE SECURITIES  UNDER
       SAID ACT,  OR AN OPINION OF COUNSEL IN FORM,  SUBSTANCE  AND SCOPE
       CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
       REGISTRATION  IS NOT REQUIRED  UNDER SAID ACT UNLESS SOLD PURSUANT
       TO RULE 144 OR REGULATION S UNDER SAID ACT."

              The legend set forth above shall be removed and the Borrower shall
issue to the Holder a new  certificate  therefor free of any transfer  legend if
(i) the  Borrower  or its  transfer  agent  shall  have  received  an opinion of
counsel,  in form,  substance  and scope  customary  for  opinions of counsel in
comparable  transactions,  to the effect  that a public sale or transfer of such
Common Stock may be made without  registration  under the Act and the shares are
so sold or  transferred,  (ii) such Holder provides the Borrower or its transfer
agent with reasonable  assurances that the Common Stock issuable upon conversion
of this Note (to the extent such  securities are deemed to have been acquired on
the  same  date)  can be sold  pursuant  to Rule 144 or (iii) in the case of the
Common Stock issuable upon  conversion of this Note, such security is registered
for sale by the Holder under an effective registration statement filed under the
Act or otherwise may be sold pursuant to Rule 144 without any  restriction as to
the number of  securities as of a particular  date that can then be  immediately
sold.  Nothing in this Note shall (i) limit the Borrower's  obligation under the
Registration Rights Agreement or (ii) affect in any way the Holder's obligations
to comply with applicable  prospectus  delivery  requirements upon the resale of
the securities referred to herein.

              1.6    EFFECT OF CERTAIN EVENTS.

                     (a)    EFFECT OF MERGER, CONSOLIDATION,  ETC. At the option
of the Holder,  the sale,  conveyance or disposition of all or substantially all
of the assets of the Borrower, the effectuation by the Borrower of a transaction
or series of related  transactions in which more than 50% of the voting power of
the  Borrower is disposed  of, or the  consolidation,  merger or other  business
combination  of the Borrower with or into any other Person (as defined

                                       8
<PAGE>


below) or Persons  when the Borrower is not the survivor  shall  either:  (i) be
deemed to be an Event of Default (as defined in Article  III)  pursuant to which
the Borrower shall be required to pay to the Holder upon the consummation of and
as a condition to such  transaction  an amount  equal to the Default  Amount (as
defined in Article III) or (ii) be treated  pursuant to Section  1.6(b)  hereof.
"PERSON" shall mean any  individual,  corporation,  limited  liability  company,
partnership, association, trust or other entity or organization.

                     (b)    ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If, at
any time when this Note is issued and outstanding and prior to conversion of all
of the Notes,  there  shall be any  merger,  consolidation,  exchange of shares,
recapitalization,  reorganization,  or other similar event, as a result of which
shares of  Common  Stock of the  Borrower  shall be  changed  into the same or a
different number of shares of another class or classes of stock or securities of
the Borrower or another  entity,  or in case of any sale or conveyance of all or
substantially  all of the assets of the Borrower other than in connection with a
plan of complete liquidation of the Borrower, then the Holder of this Note shall
thereafter  have the right to receive  upon  conversion  of this Note,  upon the
basis and upon the  terms and  conditions  specified  herein  and in lieu of the
shares of Common Stock immediately  theretofore  issuable upon conversion,  such
stock, securities or assets which the Holder would have been entitled to receive
in such  transaction had this Note been converted in full  immediately  prior to
such  transaction  (without  regard to any  limitations  on conversion set forth
herein), and in any such case appropriate  provisions shall be made with respect
to the  rights  and  interests  of the  Holder  of this Note to the end that the
provisions hereof (including,  without limitation,  provisions for adjustment of
the Conversion Price and of the number of shares issuable upon conversion of the
Note)  shall  thereafter  be  applicable,  as  nearly as may be  practicable  in
relation to any securities or assets thereafter  deliverable upon the conversion
hereof. The Borrower shall not effect any transaction  described in this Section
1.6(b) unless (a) it first gives,  to the extent  practicable,  thirty (30) days
prior written  notice (but in any event at least fifteen (15) days prior written
notice) of the record date of the special meeting of shareholders to approve, or
if  there  is  no  such  record  date,   the   consummation   of,  such  merger,
consolidation,  exchange of shares,  recapitalization,  reorganization  or other
similar event or sale of assets  (during which time the Holder shall be entitled
to convert this Note) and (b) the  resulting  successor or acquiring  entity (if
not the Borrower) assumes by written  instrument the obligations of this Section
1.6(b). The above provisions shall similarly apply to successive consolidations,
mergers, sales, transfers or share exchanges.

                     (c)    ADJUSTMENT  DUE TO  DISTRIBUTION.  If  the  Borrower
shall declare or make any  distribution  of its assets (or rights to acquire its
assets) to holders of Common Stock as a dividend,  stock  repurchase,  by way of
return of capital or otherwise  (including any dividend or  distribution  to the
Borrower's  shareholders  in cash or shares  (or  rights to  acquire  shares) of
capital stock of a subsidiary (i.e., a spin-off)) (a  "DISTRIBUTION"),  then the
Holder of this Note shall be entitled,  upon any  conversion  of this Note after
the date of record for determining  shareholders  entitled to such Distribution,
to receive the amount of such assets which would have been payable to the Holder
with respect to the shares of Common Stock  issuable  upon such  conversion  had
such Holder  been the holder of such  shares of Common  Stock on the record date
for the determination of shareholders entitled to such Distribution.

                                       9
<PAGE>


                     (d)    ADJUSTMENT DUE TO DILUTIVE ISSUANCE. If, at any time
when any Notes are issued and  outstanding,  the Borrower issues or sells, or in
accordance with this Section 1.6(d) hereof is deemed to have issued or sold, any
shares of Common Stock for no  consideration  or for a  consideration  per share
(before  deduction  of  reasonable   expenses  or  commissions  or  underwriting
discounts or allowances in connection  therewith) less than the Fixed Conversion
Price in effect on the date of such issuance (or deemed issuance) of such shares
of Common  Stock (a "DILUTIVE  ISSUANCE"),  then  immediately  upon the Dilutive
Issuance,  the Fixed  Conversion  Price  will be  reduced  to the  amount of the
consideration  per share  received by the  Borrower in such  Dilutive  Issuance;
PROVIDED that only one adjustment will be made for each Dilutive Issuance.

                     The Borrower  shall be deemed to have issued or sold shares
of Common  Stock if the  Borrower in any manner  issues or grants any  warrants,
rights or options, whether or not immediately  exercisable,  to subscribe for or
to purchase Common Stock or other  securities  convertible  into or exchangeable
for Common Stock ("CONVERTIBLE  SECURITIES") (such warrants,  rights and options
to purchase Common Stock or Convertible  Securities are hereinafter  referred to
as  "OPTIONS")  and the price per share for which Common Stock is issuable  upon
the  exercise of such  Options is less than the Fixed  Conversion  Price then in
effect,  then the Fixed Conversion Price shall be equal to such price per share.
For purposes of the  preceding  sentence,  the "price per share for which Common
Stock is issuable  upon the exercise of such  Options" is determined by dividing
(i) the  total  amount,  if any,  received  or  receivable  by the  Borrower  as
consideration for the issuance or granting of all such Options, plus the minimum
aggregate  amount of additional  consideration,  if any, payable to the Borrower
upon  the  exercise  of all  such  Options,  plus,  in the  case of  Convertible
Securities  issuable  upon the exercise of such Options,  the minimum  aggregate
amount of  additional  consideration  payable  upon the  conversion  or exchange
thereof at the time such  Convertible  Securities  first become  convertible  or
exchangeable,  by (ii) the  maximum  total  number of  shares  of  Common  Stock
issuable  upon the exercise of all such Options  (assuming  full  conversion  of
Convertible Securities, if applicable).  No further adjustment to the Conversion
Price  will be made upon the  actual  issuance  of such  Common  Stock  upon the
exercise of such  Options or upon the  conversion  or  exchange  of  Convertible
Securities issuable upon exercise of such Options.

                     Additionally,  the Borrower  shall be deemed to have issued
or sold shares of Common Stock if the Borrower in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than where
the same are issuable upon the exercise of Options), and the price per share for
which Common Stock is issuable upon such conversion or exchange is less than the
Fixed Conversion Price then in effect,  then the Fixed Conversion Price shall be
equal to such price per share. For the purposes of the preceding  sentence,  the
"price per share for which  Common  Stock is issuable  upon such  conversion  or
exchange" is determined by dividing (i) the total  amount,  if any,  received or
receivable by the Borrower as consideration for the issuance or sale of all such
Convertible  Securities,   plus  the  minimum  aggregate  amount  of  additional
consideration,  if any,  payable to the Borrower upon the conversion or exchange
thereof at the time such  Convertible  Securities  first become  convertible  or
exchangeable,  by (ii) the  maximum  total  number of  shares  of  Common  Stock
issuable upon the conversion or exchange of all such Convertible Securities.  No
further  adjustment to the Fixed  Conversion  Price will be made upon the actual
issuance of such Common Stock upon  conversion  or exchange of such  Convertible
Securities.

                                       10
<PAGE>


                     (e)    PURCHASE RIGHTS.  If, at any time when any Notes are
issued and outstanding, the Borrower issues any convertible securities or rights
to  purchase  stock,  warrants,  securities  or other  property  (the  "PURCHASE
RIGHTS") pro rata to the record  holders of any class of Common Stock,  then the
Holder of this Note will be entitled to acquire,  upon the terms  applicable  to
such Purchase Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of shares of Common Stock acquirable
upon  complete  conversion of this Note (without  regard to any  limitations  on
conversion  contained herein)  immediately  before the date on which a record is
taken for the grant,  issuance  or sale of such  Purchase  Rights or, if no such
record is taken,  the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.

                     (f)    NOTICE OF  ADJUSTMENTS.  Upon the occurrence of each
adjustment or  readjustment  of the  Conversion  Price as a result of the events
described  in this Section 1.6, the  Borrower,  at its expense,  shall  promptly
compute such adjustment or readjustment and prepare and furnish to the Holder of
a certificate  setting  forth such  adjustment  or  readjustment  and showing in
detail the facts  upon  which such  adjustment  or  readjustment  is based.  The
Borrower shall,  upon the written request at any time of the Holder,  furnish to
such  Holder  a  like   certificate   setting  forth  (i)  such   adjustment  or
readjustment,  (ii) the  Conversion  Price at the time in  effect  and (iii) the
number of shares of Common Stock and the amount,  if any, of other securities or
property which at the time would be received upon conversion of the Note.

              1.7    TRADING  MARKET   LIMITATIONS.   Unless  permitted  by  the
applicable rules and regulations of the principal securities market on which the
Common Stock is then listed or traded, in no event shall the Borrower issue upon
conversion  of or  otherwise  pursuant to this Note and the other  Notes  issued
pursuant to the  Purchase  Agreement  more than the maximum  number of shares of
Common Stock that the Borrower can issue  pursuant to any rule of the  principal
United  States  securities  market on which the Common Stock is then traded (the
"MAXIMUM SHARE AMOUNT"),  which shall be 19.99% of the total shares  outstanding
on the Closing Date (as defined in the Purchase Agreement), subject to equitable
adjustment from time to time for stock splits,  stock  dividends,  combinations,
capital  reorganizations  and  similar  events  relating  to  the  Common  Stock
occurring  after the date hereof.  Once the Maximum Share Amount has been issued
(the date of which is hereinafter referred to as the "MAXIMUM CONVERSION DATE"),
if the Borrower fails to eliminate any prohibitions  under applicable law or the
rules or  regulations of any stock  exchange,  interdealer  quotation  system or
other self-regulatory organization with jurisdiction over the Borrower or any of
its  securities  on the  Borrower's  ability to issue  shares of Common Stock in
excess of the Maximum Share Amount (a "TRADING  MARKET  PREPAYMENT  EVENT"),  in
lieu of any further right to convert this Note, and in full  satisfaction of the
Borrower's  obligations  under this Note,  the Borrower shall pay to the Holder,
within fifteen (15) business days of the Maximum  Conversion  Date (the "TRADING
MARKET PREPAYMENT  DATE"), an amount equal to 130% TIMES the SUM of (a) the then
outstanding  principal  amount of this Note  immediately  following  the Maximum
Conversion  Date, PLUS (b) accrued and unpaid  interest on the unpaid  principal
amount of this Note to the  Trading  Market  Prepayment  Date,  PLUS (c) Default
Interest,  if any,  on the  amounts  referred to in clause (a) and/or (b) above,
PLUS  (d)  any  optional  amounts  that  may be  added  thereto  at the  Maximum
Conversion  Date by the Holder in  accordance  with the terms  hereof  (the then
outstanding  principal  amount of this Note  immediately  following  the Maximum
Conversion  Date, PLUS the amounts referred to in clauses (b), (c) and (d) above
shall collectively be referred

                                       11
<PAGE>


to as the "REMAINING CONVERTIBLE AMOUNT"). With respect to each Holder of Notes,
the Maximum  Share  Amount shall refer to such  Holder's PRO RATA share  thereof
determined  in accordance  with Section 4.8 below.  In the event that the sum of
(x) the  aggregate  number of shares of Common Stock issued upon  conversion  of
this Note and the other Notes issued pursuant to the Purchase Agreement PLUS (y)
the  aggregate  number of  shares of Common  Stock  that  remain  issuable  upon
conversion  of this Note and the other Notes  issued  pursuant  to the  Purchase
Agreement,  represents at least one hundred  percent (100%) of the Maximum Share
Amount (the "TRIGGERING  EVENT"), the Borrower will use its best efforts to seek
and  obtain  Shareholder  Approval  (or obtain  such other  relief as will allow
conversions  hereunder  in  excess  of the  Maximum  Share  Amount)  as  soon as
practicable  following the  Triggering  Event and before the Maximum  Conversion
Date. As used herein,  "SHAREHOLDER APPROVAL" means approval by the shareholders
of the Borrower to authorize the issuance of the full number of shares of Common
Stock which would be issuable upon full conversion of the then outstanding Notes
but for the Maximum Share Amount.

              1.8    STATUS  AS  SHAREHOLDER.  Upon  submission  of a Notice  of
Conversion by a Holder,  (i) the shares covered  thereby (other than the shares,
if any, which cannot be issued because their issuance would exceed such Holder's
allocated  portion of the  Reserved  Amount or Maximum  Share  Amount)  shall be
deemed  converted into shares of Common Stock and (ii) the Holder's  rights as a
Holder of such  converted  portion  of this  Note  shall  cease  and  terminate,
excepting only the right to receive certificates for such shares of Common Stock
and to any remedies  provided herein or otherwise  available at law or in equity
to such Holder  because of a failure by the Borrower to comply with the terms of
this  Note.  Notwithstanding  the  foregoing,  if  a  Holder  has  not  received
certificates  for all shares of Common Stock prior to the tenth (10th)  business
day after the  expiration  of the Deadline  with respect to a conversion  of any
portion of this Note for any reason, then (unless the Holder otherwise elects to
retain its status as a holder of Common Stock by so notifying  the Borrower) the
Holder  shall  regain the  rights of a Holder of this Note with  respect to such
unconverted   portions  of  this  Note  and  the  Borrower  shall,  as  soon  as
practicable,  return such unconverted Note to the Holder or, if the Note has not
been  surrendered,  adjust its records to reflect that such portion of this Note
has not been converted.  In all cases, the Holder shall retain all of its rights
and remedies (including, without limitation, (i) the right to receive Conversion
Default Payments pursuant to Section 1.3 to the extent required thereby for such
Conversion  Default and any subsequent  Conversion Default and (ii) the right to
have the Conversion Price with respect to subsequent  conversions  determined in
accordance with Section 1.3) for the Borrower's failure to convert this Note.

                         ARTICLE II. CERTAIN COVENANTS

              2.1    DISTRIBUTIONS  ON CAPITAL  STOCK.  So long as the  Borrower
shall have any  obligation  under this Note,  the Borrower shall not without the
Holder's  written  consent (a) pay,  declare or set apart for such payment,  any
dividend or other distribution  (whether in cash,  property or other securities)
on shares of capital stock other than dividends on shares of Common Stock solely
in the form of  additional  shares of Common Stock or (b) directly or indirectly
or through any subsidiary  make any other payment or  distribution in respect of
its capital stock except for distributions  pursuant to any shareholders' rights
plan which is approved by a majority of the Borrower's disinterested directors.

                                       12
<PAGE>


              2.2    RESTRICTION ON STOCK  REPURCHASES.  So long as the Borrower
shall have any  obligation  under this Note,  the Borrower shall not without the
Holder's  written consent redeem,  repurchase or otherwise  acquire (whether for
cash or in exchange for property or other  securities  or  otherwise) in any one
transaction or series of related transactions any shares of capital stock of the
Borrower  or any  warrants,  rights or options to  purchase  or acquire any such
shares.

              2.3    BORROWINGS.   So  long  as  the  Borrower  shall  have  any
obligation under this Note, the Borrower shall not, without the Holder's written
consent,  create,  incur,  assume or suffer to exist any  liability for borrowed
money in excess of $50,000,  except (a)  borrowings in existence or committed on
the date hereof and of which the Borrower has informed  Holder in writing  prior
to  the  date  hereof,   (b)   indebtedness  to  trade  creditors  or  financial
institutions incurred in the ordinary course of business or (c) borrowings,  the
proceeds of which shall be used to repay this Note.

              2.4    SALE OF  ASSETS.  So long as the  Borrower  shall  have any
obligation under this Note, the Borrower shall not, without the Holder's written
consent,  sell,  lease or otherwise  dispose of any  significant  portion of its
assets outside the ordinary  course of business.  Any consent to the disposition
of any  assets  may be  conditioned  on a  specified  use  of  the  proceeds  of
disposition.

              2.5    ADVANCES AND LOANS.  So long as the Borrower shall have any
obligation under this Note, the Borrower shall not, without the Holder's written
consent,  lend money,  give credit or make advances to any person,  firm,  joint
venture or corporation,  including,  without  limitation,  officers,  directors,
employees, subsidiaries and affiliates of the Borrower, except loans, credits or
advances (a) in existence or committed on the date hereof and which the Borrower
has  informed  Holder  in  writing  prior  to the date  hereof,  (b) made in the
ordinary course of business or (c) not in excess of $50,000.

              2.6    CONTINGENT LIABILITIES.  So long as the Borrower shall have
any obligation  under this Note,  the Borrower  shall not,  without the Holder's
written consent, assume, guarantee,  endorse,  contingently agree to purchase or
otherwise  become liable upon the obligation of any person,  firm,  partnership,
joint  venture  or   corporation,   except  by  the  endorsement  of  negotiable
instruments  for  deposit  or  collection  and except  assumptions,  guarantees,
endorsements and  contingencies (a) in existence or committed on the date hereof
and which the Borrower has informed  Holder in writing prior to the date hereof,
and (b) similar transactions in the ordinary course of business.

                         ARTICLE III. EVENTS OF DEFAULT

              If any of the  following  events of  default  (each,  an "EVENT OF
DEFAULT") shall occur:

              3.1    FAILURE TO PAY PRINCIPAL OR INTEREST. The Borrower fails to
pay the principal hereof or interest  thereon when due on this Note,  whether at
maturity,  upon a Trading Market  Prepayment Event pursuant to Section 1.7, upon
acceleration or otherwise;

                                       13
<PAGE>


              3.2    CONVERSION  AND THE  SHARES.  The  Borrower  fails to issue
shares of Common Stock to the Holder (or announces or threatens that it will not
honor its  obligation  to do so) upon  exercise by the Holder of the  conversion
rights of the Holder in accordance  with the terms of this Note (for a period of
at least  sixty  (60)  days,  if such  failure  is  solely  as a  result  of the
circumstances governed by Section 1.3 and the Borrower is using its best efforts
to  authorize  a  sufficient  number  of  shares  of  Common  Stock  as  soon as
practicable),  fails  to  transfer  or cause  its  transfer  agent  to  transfer
(electronically  or in  certificated  form) any certificate for shares of Common
Stock issued to the Holder upon conversion of or otherwise pursuant to this Note
as and when required by this Note or the Registration Rights Agreement, or fails
to remove any restrictive legend (or to withdraw any stop transfer  instructions
in respect  thereof) on any certificate for any shares of Common Stock issued to
the Holder upon  conversion  of or  otherwise  pursuant to this Note as and when
required  by this  Note or the  Registration  Rights  Agreement  (or  makes  any
announcement,  statement  or  threat  that it  does  not  intend  to  honor  the
obligations  described in this  paragraph)  and any such failure shall  continue
uncured (or any  announcement,  statement or threat not to honor its obligations
shall not be rescinded  in writing)  for ten (10) days after the Borrower  shall
have been notified thereof in writing by the Holder;

              3.3    FAILURE TO TIMELY FILE REGISTRATION OR EFFECT REGISTRATION.
The Borrower  fails to file the  Registration  Statement  within sixty (60) days
following  the Closing  Date (as defined in the  Purchase  Agreement)  or obtain
effectiveness  with the Securities and Exchange  Commission of the  Registration
Statement  within two hundred  fifty (250) days  following  the Closing Date (as
defined in the Purchase  Agreement)  or such  Registration  Statement  lapses in
effect (or sales  cannot  otherwise  be made  thereunder  effective,  whether by
reason of the Borrower's failure to amend or supplement the prospectus  included
therein in accordance with the  Registration  Rights Agreement or otherwise) for
more than twenty (20)  consecutive  days or forty (40) days in any twelve  month
period after the Registration Statement becomes effective;

              3.4    BREACH OF  COVENANTS.  The  Borrower  breaches any material
covenant or other  material term or condition  contained in Sections 1.3, 1.6 or
1.7 of this Note, or Sections 4(c),  4(e), 4(h), 4(i), 4(j) or 5 of the Purchase
Agreement and such breach  continues for a period of ten (10) days after written
notice thereof to the Borrower from the Holder;

              3.5    BREACH   OF    REPRESENTATIONS    AND    WARRANTIES.    Any
representation  or warranty  of the  Borrower  made herein or in any  agreement,
statement  or  certificate  given in writing  pursuant  hereto or in  connection
herewith  (including,   without  limitation,  the  Purchase  Agreement  and  the
Registration  Rights  Agreement),  shall be false or  misleading in any material
respect  when made and the breach of which has (or with the passage of time will
have) a material adverse effect on the rights of the Holder with respect to this
Note, the Purchase Agreement or the Registration Rights Agreement;

              3.6    RECEIVER OR TRUSTEE.  The Borrower or any subsidiary of the
Borrower shall make an assignment for the benefit of creditors,  or apply for or
consent to the  appointment of a receiver or trustee for it or for a substantial
part of its property or business,  or such a receiver or trustee shall otherwise
be appointed;

                                       14
<PAGE>


              3.7    JUDGMENTS.  Any money  judgment,  writ or  similar  process
shall be entered or filed against the Borrower or any subsidiary of the Borrower
or any of its property or other assets for more than  $50,000,  and shall remain
unvacated,  unbonded  or  unstayed  for a period  of  twenty  (20)  days  unless
otherwise  consented to by the Holder,  which  consent will not be  unreasonably
withheld;

              3.8    BANKRUPTCY.  Bankruptcy,   insolvency,   reorganization  or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the  relief of debtors  shall be  instituted  by or  against  the
Borrower or any subsidiary of the Borrower;

              3.9    DELISTING  OF COMMON  STOCK.  The  Borrower  shall  fail to
maintain  the  listing  of the  Common  Stock on at least one of the OTCBB or an
equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap
Market, the New York Stock Exchange, or the American Stock Exchange; or

              3.10   DEFAULT UNDER OTHER NOTES. An Event of Default has occurred
and is continuing  under any of the other Notes issued  pursuant to the Purchase
Agreement, then, upon the occurrence and during the continuation of any Event of
Default  specified in Section 3.1, 3.2, 3.3, 3.4, 3.5, 3.7, 3.9, or 3.10, at the
option of the Holders of a majority  of the  aggregate  principal  amount of the
outstanding Notes issued pursuant to the Purchase Agreement  exercisable through
the delivery of written  notice to the  Borrower by such  Holders (the  "DEFAULT
NOTICE"),  and upon the  occurrence of an Event of Default  specified in Section
3.6 or 3.8, the Notes shall become  immediately due and payable and the Borrower
shall pay to the Holder, in full satisfaction of its obligations  hereunder,  an
amount  equal  to the  greater  of (i)  130%  TIMES  the  SUM  of (w)  the  then
outstanding  principal  amount of this Note PLUS (x) accrued and unpaid interest
on the  unpaid  principal  amount  of this  Note to the  date  of  payment  (the
"MANDATORY  PREPAYMENT DATE") PLUS (y) Default Interest,  if any, on the amounts
referred to in clauses  (w) and/or (x) PLUS (z) any  amounts  owed to the Holder
pursuant to Sections  1.3 and 1.4(g)  hereof or pursuant to Section  2(c) of the
Registration  Rights  Agreement (the then  outstanding  principal amount of this
Note to the date of payment PLUS the amounts referred to in clauses (x), (y) and
(z) shall collectively be known as the "DEFAULT SUM") or (ii) the "parity value"
of the  Default  Sum to be  prepaid,  where  parity  value means (a) the highest
number of shares  of Common  Stock  issuable  upon  conversion  of or  otherwise
pursuant to such Default Sum in accordance  with Article I, treating the Trading
Day immediately preceding the Mandatory Prepayment Date as the "Conversion Date"
for purposes of determining the lowest applicable  Conversion Price,  unless the
Default Event arises as a result of a breach in respect of a specific Conversion
Date  in  which  case  such  Conversion  Date  shall  be the  Conversion  Date),
MULTIPLIED  BY (b) the highest  Closing  Price for the Common  Stock  during the
period  beginning  on the date of first  occurrence  of the Event of Default and
ending one day prior to the Mandatory Prepayment Date (the "DEFAULT AMOUNT") and
all other amounts payable  hereunder shall  immediately  become due and payable,
all without  demand,  presentment  or notice,  all of which hereby are expressly
waived, together with all costs, including,  without limitation,  legal fees and
expenses, of collection,  and the Holder shall be entitled to exercise all other
rights and remedies  available at law or in equity. If the Borrower fails to pay
the Default  Amount  within five (5) business  days of written  notice that such
amount is due and payable,  then the Holder shall have the right at any time, so
long as the  Borrower  remains  in default  (and so long and to the extent  that
there are sufficient  authorized shares), to require the Borrower,  upon written
notice, to immediately issue, in lieu of the Default Amount,

                                       15
<PAGE>


the number of shares of Common Stock of the Borrower equal to the Default Amount
divided by the Conversion Price then in effect.

                           ARTICLE IV. MISCELLANEOUS

              4.1    FAILURE OR  INDULGENCE  NOT WAIVER.  No failure or delay on
the  part of the  Holder  in the  exercise  of any  power,  right  or  privilege
hereunder  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  of any  such  power,  right or  privilege  preclude  other or  further
exercise  thereof or of any other  right,  power or  privileges.  All rights and
remedies existing  hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.

              4.2    NOTICES.  Any notice  herein  required or  permitted  to be
given shall be in writing and may be  personally  served or delivered by courier
or sent by United  States  mail and shall be  deemed  to have  been  given  upon
receipt if  personally  served  (which shall include  telephone  line  facsimile
transmission)  or sent by courier or three (3) days after being deposited in the
United States mail, certified,  with postage pre-paid and properly addressed, if
sent by mail.  For the  purposes  hereof,  the address of the Holder shall be as
shown on the records of the Borrower;  and the address of the Borrower  shall be
3872 Rochester Road, Troy, MI 48083,  facsimile number:  586-783-1367.  Both the
Holder and the Borrower may change the address for service by service of written
notice to the other as herein provided.

              4.3    AMENDMENTS.  This Note and any provision hereof may only be
amended by an instrument in writing  signed by the Borrower and the Holder.  The
term "Note" and all reference thereto, as used throughout this instrument, shall
mean this  instrument  (and the other  Notes  issued  pursuant  to the  Purchase
Agreement) as originally executed, or if later amended or supplemented,  then as
so amended or supplemented.

              4.4    ASSIGNABILITY. This Note shall be binding upon the Borrower
and its successors and assigns,  and shall inure to be the benefit of the Holder
and  its  successors  and  assigns.  Each  transferee  of this  Note  must be an
"accredited   investor"   (as   defined  in  Rule   501(a)  of  the  1933  Act).
Notwithstanding  anything in this Note to the contrary, this Note may be pledged
as  collateral in  connection  with a BONA FIDE margin  account or other lending
arrangement.

              4.5    COST OF  COLLECTION.  If default is made in the  payment of
this  Note,  the  Borrower  shall pay the  Holder  hereof  costs of  collection,
including reasonable attorneys' fees.

              4.6    GOVERNING LAW. THIS NOTE SHALL BE ENFORCED, GOVERNED BY AND
CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK  APPLICABLE  TO
AGREEMENTS MADE AND TO BE PERFORMED  ENTIRELY WITHIN SUCH STATE,  WITHOUT REGARD
TO THE  PRINCIPLES  OF  CONFLICT OF LAWS.  THE  BORROWER  HEREBY  SUBMITS TO THE
EXCLUSIVE  JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
NEW YORK WITH RESPECT TO ANY DISPUTE  ARISING  UNDER THIS NOTE,  THE  AGREEMENTS
ENTERED INTO IN CONNECTION  HEREWITH OR THE TRANSACTIONS  CONTEMPLATED HEREBY OR
THEREBY.  BOTH PARTIES IRREVOCABLY WAIVE

                                       16
<PAGE>


THE  DEFENSE  OF AN  INCONVENIENT  FORUM  TO THE  MAINTENANCE  OF  SUCH  SUIT OR
PROCEEDING.  BOTH  PARTIES  FURTHER  AGREE THAT  SERVICE OF PROCESS UPON A PARTY
MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS  UPON THE PARTY IN ANY SUCH SUIT OR  PROCEEDING.  NOTHING  HEREIN  SHALL
AFFECT EITHER  PARTY'S  RIGHT TO SERVE PROCESS IN ANY OTHER MANNER  PERMITTED BY
LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR
PROCEEDING  SHALL BE CONCLUSIVE  AND MAY BE ENFORCED IN OTHER  JURISDICTIONS  BY
SUIT ON SUCH  JUDGMENT OR IN ANY OTHER LAWFUL  MANNER.  THE PARTY WHICH DOES NOT
PREVAIL IN ANY DISPUTE ARISING UNDER THIS NOTE SHALL BE RESPONSIBLE FOR ALL FEES
AND EXPENSES,  INCLUDING  ATTORNEYS'  FEES,  INCURRED BY THE PREVAILING PARTY IN
CONNECTION WITH SUCH DISPUTE.

              4.7    CERTAIN  AMOUNTS.   Whenever  pursuant  to  this  Note  the
Borrower  is required  to pay an amount in excess of the  outstanding  principal
amount (or the portion  thereof  required to be paid at that time) plus  accrued
and unpaid interest plus Default Interest on such interest, the Borrower and the
Holder  agree that the actual  damages  to the Holder  from the  receipt of cash
payment on this Note may be difficult to determine  and the amount to be so paid
by the Borrower represents  stipulated damages and not a penalty and is intended
to  compensate  the Holder in part for loss of the  opportunity  to convert this
Note and to earn a return from the sale of shares of Common Stock  acquired upon
conversion  of this Note at a price in excess of the price paid for such  shares
pursuant to this Note. The Borrower and the Holder hereby agree that such amount
of stipulated  damages is not plainly  disproportionate  to the possible loss to
the Holder from the receipt of a cash payment without the opportunity to convert
this Note into shares of Common Stock.

              4.8    ALLOCATIONS  OF MAXIMUM  SHARE AMOUNT AND RESERVED  AMOUNT.
The Maximum  Share Amount and Reserved  Amount shall be allocated pro rata among
the Holders of Notes based on the principal  amount of such Notes issued to each
Holder.  Each increase to the Maximum Share Amount and Reserved  Amount shall be
allocated pro rata among the Holders of Notes based on the  principal  amount of
such Notes held by each Holder at the time of the increase in the Maximum  Share
Amount  or  Reserved  Amount.  In the  event a Holder  shall  sell or  otherwise
transfer any of such Holder's Notes,  each  transferee  shall be allocated a pro
rata portion of such transferor's  Maximum Share Amount and Reserved Amount. Any
portion of the Maximum Share Amount or Reserved  Amount which remains  allocated
to any person or entity  which does not hold any Notes shall be allocated to the
remaining Holders of Notes, pro rata based on the principal amount of such Notes
then held by such Holders.

              4.9    DAMAGES  SHARES.  The  shares of Common  Stock  that may be
issuable to the Holder  pursuant to Sections 1.3 and 1.4(g)  hereof and pursuant
to Section 2(c) of the Registration Rights Agreement ("DAMAGES SHARES") shall be
treated as Common Stock  issuable upon  conversion of this Note for all purposes
hereof and shall be subject to all of the  limitations  and  afforded all of the
rights of the other shares of Common Stock issuable hereunder, including without
limitation,  the  right  to be  included  in the  Registration  Statement  filed
pursuant to the  Registration  Rights  Agreement.  For  purposes of  calculating
interest payable on the outstanding principal amount hereof, except as otherwise
provided herein, amounts convertible into Damages

                                       17
<PAGE>


Shares  ("DAMAGES  AMOUNTS") shall not bear interest but must be converted prior
to  the  conversion  of any  outstanding  principal  amount  hereof,  until  the
outstanding Damages Amounts is zero.

              4.10   DENOMINATIONS. At the request of the Holder, upon surrender
of this Note,  the  Borrower  shall  promptly  issue new Notes in the  aggregate
outstanding  principal amount hereof, in the form hereof, in such  denominations
of at least $50,000 as the Holder shall request.

              4.11   PURCHASE  AGREEMENT.  By its acceptance of this Note,  each
Holder agrees to be bound by the applicable terms of the Purchase Agreement.

              4.12   NOTICE OF CORPORATE  EVENTS.  Except as otherwise  provided
below,  the Holder of this Note shall have no rights as a Holder of Common Stock
unless and only to the extent that it converts this Note into Common Stock.  The
Borrower shall provide the Holder with prior  notification of any meeting of the
Borrower's  shareholders  (and copies of proxy  materials and other  information
sent to shareholders). In the event of any taking by the Borrower of a record of
its shareholders for the purpose of determining shareholders who are entitled to
receive  payment of any dividend or other  distribution,  any right to subscribe
for, purchase or otherwise acquire  (including by way of merger,  consolidation,
reclassification  or  recapitalization)  any  share of any  class  or any  other
securities  or property,  or to receive any other  right,  or for the purpose of
determining  shareholders  who  are  entitled  to vote in  connection  with  any
proposed sale, lease or conveyance of all or substantially  all of the assets of
the  Borrower  or any  proposed  liquidation,  dissolution  or winding up of the
Borrower,  the Borrower shall mail a notice to the Holder,  at least twenty (20)
days prior to the record  date  specified  therein (or thirty (30) days prior to
the consummation of the transaction or event, whichever is earlier), of the date
on which  any such  record  is to be taken  for the  purpose  of such  dividend,
distribution,  right or other event, and a brief statement  regarding the amount
and character of such dividend, distribution, right or other event to the extent
known at such time. The Borrower shall make a public  announcement  of any event
requiring notification to the Holder hereunder substantially simultaneously with
the  notification  to the Holder in  accordance  with the terms of this  Section
4.12.

              4.13   REMEDIES.  The Borrower acknowledges that a breach by it of
its  obligations  hereunder  will  cause  irreparable  harm  to the  Holder,  by
vitiating  the  intent  and  purpose  of the  transaction  contemplated  hereby.
Accordingly,  the Borrower  acknowledges  that the remedy at law for a breach of
its obligations under this Note will be inadequate and agrees, in the event of a
breach or threatened breach by the Borrower of the provisions of this Note, that
the Holder shall be entitled, in addition to all other available remedies at law
or in  equity,  and  in  addition  to the  penalties  assessable  herein,  to an
injunction or injunctions  restraining,  preventing or curing any breach of this
Note and to enforce  specifically the terms and provisions thereof,  without the
necessity of showing  economic loss and without any bond or other security being
required.

                                       18
<PAGE>


                             ARTICLE V. CALL OPTION

              5.1    CALL  OPTION.  Notwithstanding  anything  to  the  contrary
contained  in this  Article  V, so long as (i) no Event of  Default  or  Trading
Market Prepayment Event shall have occurred and be continuing, (ii) the Borrower
has a  sufficient  number of  authorized  shares of Common  Stock  reserved  for
issuance  upon full  conversion  of the Notes,  then at any time after the Issue
Date,  and (iii) the Common  Stock is  trading  at or below $.04 per share,  the
Borrower  shall have the right,  exercisable  on not less than ten (10)  Trading
Days prior  written  notice to the Holders of the Notes (which notice may not be
sent to the Holders of the Notes until the  Borrower is  permitted to prepay the
Notes pursuant to this Section 5.1), to prepay all of the  outstanding  Notes in
accordance  with this  Section  5.1.  Any  notice of  prepayment  hereunder  (an
"OPTIONAL  PREPAYMENT")  shall be delivered to the Holders of the Notes at their
registered  addresses  appearing  on the books and records of the  Borrower  and
shall state (1) that the Borrower is  exercising  its right to prepay all of the
Notes  issued on the Issue Date and (2) the date of  prepayment  (the  "OPTIONAL
PREPAYMENT NOTICE").  On the date fixed for prepayment (the "OPTIONAL PREPAYMENT
DATE"),  the Borrower shall make payment of the Optional  Prepayment  Amount (as
defined  below) to or upon the order of the Holders as  specified by the Holders
in writing to the  Borrower at least one (1)  business day prior to the Optional
Prepayment  Date. If the Borrower  exercises its right to prepay the Notes,  the
Borrower  shall make payment to the holders of an amount in cash (the  "OPTIONAL
PREPAYMENT  AMOUNT") equal to either (i) 135% (for prepayments  occurring within
thirty (30) days of the Issue Date), (ii) 145% for prepayments occurring between
thirty-one  (31) and  ninety  (90) days of the Issue  Date,  or (iii)  150% (for
prepayments  occurring after the ninetieth (90th) day following the Issue Date),
multiplied by the sum of (w) the then outstanding  principal amount of this Note
PLUS (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the  Optional  Prepayment  Date PLUS (y)  Default  Interest,  if any,  on the
amounts  referred  to in clauses  (w) and (x) PLUS (z) any  amounts  owed to the
Holder pursuant to Sections 1.3 and 1.4(g) hereof or pursuant to Section 2(c) of
the Registration Rights Agreement (the then outstanding principal amount of this
Note to the date of payment PLUS the amounts referred to in clauses (x), (y) and
(z)  shall   collectively   be  known  as  the   "OPTIONAL   PREPAYMENT   SUM").
Notwithstanding notice of an Optional Prepayment, the Holders shall at all times
prior to the Optional  Prepayment  Date maintain the right to convert all or any
portion of the Notes in  accordance  with  Article I and any portion of Notes so
converted  after  receipt  of an  Optional  Prepayment  Notice  and prior to the
Optional  Prepayment  Date set forth in such notice and payment of the aggregate
Optional  Prepayment Amount shall be deducted from the principal amount of Notes
which are  otherwise  subject to  prepayment  pursuant  to such  notice.  If the
Borrower  delivers an Optional  Prepayment  Notice and fails to pay the Optional
Prepayment  Amount due to the Holders of the Notes within two (2) business  days
following the Optional  Prepayment  Date, the Borrower shall forever forfeit its
right to redeem the Notes pursuant to this Section 5.1.



                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       19
<PAGE>


              IN WITNESS WHEREOF,  Borrower has caused this Note to be signed in
its name by its duly authorized officer this 6th day of March, 2006.


                                       MIDNIGHT HOLDINGS GROUP, INC.



                                       By: _______________________________
                                            Nicholas Cocco
                                            Chief Executive Officer


                                       20
<PAGE>


                                    EXHIBIT A

                              NOTICE OF CONVERSION
                    (To be Executed by the Registered Holder
                         in order to Convert the Notes)

              The undersigned hereby  irrevocably elects to convert  $__________
principal  amount of the Note (defined  below) into shares of common stock,  par
value $.00005 per share ("COMMON STOCK"),  of Midnight  Holdings Group,  Inc., a
Delaware  corporation  (the  "BORROWER")  according  to  the  conditions  of the
convertible Notes of the Borrower dated as of March 6, 2006 (the "Notes"), as of
the date written  below.  If securities are to be issued in the name of a person
other than the undersigned,  the undersigned will pay all transfer taxes payable
with respect thereto and is delivering  herewith such certificates.  No fee will
be charged to the Holder for any conversion,  except for transfer taxes, if any.
A copy of  each  Note  is  attached  hereto  (or  evidence  of  loss,  theft  or
destruction thereof).

              The  Borrower  shall  electronically  transmit  the  Common  Stock
issuable pursuant to this Notice of Conversion to the account of the undersigned
or its nominee with DTC through its Deposit  Withdrawal Agent Commission  system
("DWAC TRANSFER").

      Name of DTC Prime Broker:
                               -----------------------------------------
      Account Number:
                     ---------------------------------------------------

              In lieu of receiving  shares of Common Stock issuable  pursuant to
this Notice of  Conversion by way of a DWAC  Transfer,  the  undersigned  hereby
requests that the Borrower issue a certificate or certificates for the number of
shares of Common Stock set forth below (which  numbers are based on the Holder's
calculation  attached hereto) in the name(s) specified  immediately below or, if
additional space is necessary, on an attachment hereto:

      Name:
           -------------------------------------------------------------
      Address:
              ----------------------------------------------------------

              The undersigned  represents and warrants that all offers and sales
by the undersigned of the securities issuable to the undersigned upon conversion
of the Notes shall be made pursuant to registration of the securities  under the
Securities Act of 1933, as amended (the "ACT"), or pursuant to an exemption from
registration under the Act.

              Date of Conversion:______________________________________
              Applicable Conversion Price:_____________________________
              Number of Shares of Common Stock to be Issued Pursuant to
              Conversion of the Notes:_________________________________
              Signature:_______________________________________________
              Name:____________________________________________________
              Address:_________________________________________________


                                       21
<PAGE>


The  Borrower  shall issue and deliver  shares of Common  Stock to an  overnight
courier not later than three  business  days  following  receipt of the original
Note(s) to be converted,  and shall make payments  pursuant to the Notes for the
number of business days such issuance and delivery is late.