Document:

Exhibit 10.61

                          SECURITIES PURCHASE AGREEMENT

         SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of July 5,
2006, by and among Midnight Holdings Group, Inc., a Delaware corporation, with
headquarters located at 22600 Hall Road, Suite 205, Clinton Township, MI 48036
(the "COMPANY"), and each of the purchasers set forth on the signature pages
hereto (the "BUYERS").

     WHEREAS:

     A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
rules and regulations as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 ACT");

     B. Buyers desire to purchase and the Company desires to issue and sell,
upon the terms and conditions set forth in this Agreement (i) 10% secured
convertible notes of the Company, in the form attached hereto as EXHIBIT "A", in
the aggregate principal amount of Three Hundred Thousand Dollars ($300,000)
(together with any note(s) issued in replacement thereof or otherwise with
respect thereto in accordance with the terms thereof, the "Notes"), convertible
into shares of common stock, par value $.00005 per share, of the Company (the
"COMMON Stock"), upon the terms and subject to the limitations and conditions
set forth in such Notes and (ii) warrants, in the form attached hereto as
EXHIBIT "B", to purchase an aggregate of Six Hundred Thousand (600,000) shares
of Common Stock (the "WARRANTS");

     C. Each Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, such principal amount of Notes and number of Warrants as is set
forth immediately below its name on the signature pages hereto; and

     D. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as EXHIBIT "C" (the "REGISTRATION RIGHTS AGREEMENT"),
pursuant to which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.

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     NOW THEREFORE, the Company and each of the Buyers severally (and not
jointly) hereby agree as follows:

          1. PURCHASE AND SALE OF NOTES AND WARRANTS.

      a. PURCHASE OF NOTES AND WARRANTS. On the Closing Date (as defined below),
the Company shall issue and sell to each Buyer and each Buyer severally agrees
to purchase from the Company such principal amount of Notes and number of
Warrants as is set forth immediately below such Buyer's name on the signature
pages hereto.

      b. FORM OF PAYMENT. On the Closing Date (as defined below), (i)each Buyer
shall pay the purchase price for the Notes (less the purchase price paid with
respect to any Bridge Note) and the Warrants to be issued and sold to it at the
Closing (as defined below) (the "PURCHASE PRICE") by wire transfer of
immediately available funds to the Company, in accordance with the Company's
written wiring instructions, against delivery of the Notes in the principal
amount equal to the Purchase Price and the number of Warrants as is set forth
immediately below such Buyer's name on the signature pages hereto, and (ii) the
Company shall deliver such Notes and Warrants duly executed on behalf of the
Company, to such Buyer, against delivery of such Purchase Price.

      c. CLOSING DATE. Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Notes and the Warrants pursuant to this
Agreement (the "CLOSING DATE") shall be 12:00 noon, Eastern Standard Time on
July 5, 2006, or such other mutually agreed upon time. The closing of the
transactions contemplated by this Agreement (the "CLOSING") shall occur on the
Closing Date at such location as may be agreed to by the parties.

          2. BUYERS' REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and
     not jointly) represents and warrants to the Company solely as to such Buyer
     that:

      a. INVESTMENT PURPOSE. As of the date hereof, such Buyer is purchasing the
Notes and the shares of Common Stock issuable upon conversion of or otherwise
pursuant to the Notes (including, without limitation, such additional shares of
Common Stock, if any, as are issuable (i) on account of interest on the Notes,
(ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Notes
and Section 2(c) of the Registration Rights Agreement or (iii) in payment of the
Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant
to this Agreement, such shares of Common Stock being collectively referred to
herein as the "CONVERSION SHARES") and the Warrants and the shares of Common
Stock issuable upon exercise thereof (the "WARRANT SHARES" and, collectively
with the Notes, Warrants and Conversion Shares, the "SECURITIES") for its own
account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under
the 1933 Act; provided, however, that by making the representations herein, such
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act.

      b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D (an "ACCREDITED INVESTOR").

      c. RELIANCE ON EXEMPTIONS. Such Buyer understands that the Securities are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United

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States federal and state securities laws and that the Company is relying upon
the truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire the Securities.

      d. INFORMATION. Such Buyer and its respective advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been reasonably requested by such Buyer or its advisors. Such Buyer
and its respective advisors, if any, have been afforded the opportunity to ask
questions of the Company. Notwithstanding the foregoing, the Company has not
disclosed to such Buyer any material nonpublic information and will not disclose
such information unless such information is disclosed to the public prior to or
promptly following such disclosure to such Buyer. Neither such inquiries nor any
other due diligence investigation conducted by such Buyer or any of its
respective advisors or representatives shall modify, amend or affect Buyer's
right to rely on the Company's representations and warranties contained in
Section 3 below. Such Buyer understands that its investment in the Securities
involves a significant degree of risk.

      e. GOVERNMENTAL REVIEW. Such Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.

      f. TRANSFER OR RE-SALE. Such Buyer understands that (i) except as provided
in the Registration Rights Agreement, the sale or re-sale of the Securities have
not been and are not being registered under the 1933 Act or any applicable state
securities laws, and the Securities may not be transferred unless (a) the
Securities are sold pursuant to an effective registration statement under the
1933 Act, (b) such Buyer shall have delivered to the Company an opinion of
counsel that shall be in form, substance and scope customary for opinions of
counsel in comparable transactions to the effect that the Securities to be sold
or transferred may be sold or transferred pursuant to an exemption from such
registration, which opinion shall be accepted by the Company, (c) the Securities
are sold or transferred to an "affiliate" (as defined in Rule 144 promulgated
under the 1933 Act (or a successor rule) ("RULE 144")) of such Buyer who agrees
to sell or otherwise transfer the Securities only in accordance with this
Section 2(f) and who is an Accredited Investor, or (d) the Securities are sold
pursuant to Rule 144, and such Buyer shall have delivered to the Company an
opinion of counsel that shall be in form, substance and scope customary for
opinions of counsel in corporate transactions, which opinion shall be accepted
by the Company; (ii) any sale of such Securities made in reliance on Rule 144
may be made only in accordance with the terms of said Rule and further, if said
Rule is not applicable, any re-sale of such Securities under circumstances in
which the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder (in each case, other than pursuant to the Registration
Rights Agreement). Notwithstanding the foregoing or anything else contained
herein to the contrary, subject to applicable law, the Securities may be pledged
as collateral in connection with a bona fide margin account or other lending
arrangement. In the event that the Company does not accept an opinion of counsel
provided by such Buyer with respect to the transfer of Securities pursuant to an
exemption from registration, such as Rule 144, and such opinion is correct in
form and substance, within three (3) business days of delivery of the opinion to
the Company, the Company shall pay to such Buyer liquidated damages of three

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percent (3%) of the outstanding amount of the Notes held by such Buyer per month
plus accrued and unpaid interest on the Notes, prorated for partial months, in
cash or shares at the option of the Company ("STANDARD LIQUIDATED DAMAGES
AMOUNT"). If the Company elects to pay the Standard Liquidated Damages Amount in
shares of Common Stock, such shares shall be issued at the Conversion Price at
the time of payment.

      g. LEGENDS. Such Buyer understands that the Notes and the Warrants and,
until such time as the Conversion Shares and Warrant Shares have been registered
under the 1933 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,
the Conversion Shares and Warrant Shares may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such Securities):

          "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, assigned, or otherwise
          disposed of 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 under said Act."

     The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the 1933 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, (b) such holder provides the Company with 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
Security may be made without registration under the 1933 Act, which opinion
shall be accepted by the Company so that the sale or transfer is effected, or
(c) such holder provides the Company with reasonable assurances that such
Security shall be sold pursuant to Rule 144. Such Buyer agrees to sell all
Securities, including those represented by a certificate(s) from which the
legend has been removed, in compliance with applicable prospectus delivery
requirements, if any.

      h. AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration Rights
Agreement have been duly and validly authorized. This Agreement has been duly
executed and delivered on behalf of such Buyer, and this Agreement constitutes,
and upon execution and delivery by such Buyer of the Registration Rights
Agreement, such agreement will constitute, legal, valid and binding agreements
of such Buyer enforceable in accordance with their respective terms.

      i. RESIDENCY. Such Buyer is a resident of the jurisdiction set forth
immediately below such Buyer's name on the signature pages hereto.

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          3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
     represents and warrants to each Buyer that:

      a. ORGANIZATION AND QUALIFICATION. The Company and each of its
Subsidiaries (as defined below), if any, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full power and authority (corporate and other) to
own, lease, use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted. SCHEDULE 3(A) sets forth
a list of all of the Subsidiaries (as defined below) of the Company and the
jurisdiction in which each is incorporated. The Company and each of its
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which its ownership or use of property or
the nature of the business conducted by it makes such qualification necessary
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means any material adverse
effect on the business, operations, assets, financial condition or prospects of
the Company or its Subsidiaries, if any, taken as a whole, or on the
transactions contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. "SUBSIDIARIES" means any corporation or
other organization, whether incorporated or unincorporated, in which the Company
owns, directly or indirectly, all of the equity or other ownership interests.

      b. AUTHORIZATION; ENFORCEMENT. (i) The Company has all requisite corporate
power and authority to enter into and perform this Agreement, the Registration
Rights Agreement, the Notes and the Warrants and, subject to the adoption of
necessary resolutions by the Board of Directors and the stockholders of the
Company to consummate the transactions contemplated hereby and thereby and to
issue the Securities, in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the Registration Rights Agreement, the
Notes and the Warrants by the Company and, the consummation by it of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Notes and the Warrants and the issuance and reservation for
issuance of the Conversion Shares and Warrant Shares issuable upon conversion or
exercise thereof) have been duly authorized by the Company's Board of Directors
and no further consent or authorization of the Company, its Board of Directors,
or its shareholders is required, (iii) this Agreement has been duly executed and
delivered by the Company by its authorized representative, and such authorized
representative is the true and official representative with authority to sign
this Agreement and the other documents executed in connection herewith and bind
the Company accordingly, and (iv) this Agreement constitutes, and upon execution
and delivery by the Company of the Registration Rights Agreement, the Notes and
the Warrants, each of such instruments will constitute, a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its respective terms.

      c. CAPITALIZATION. Except as set forth on SCHEDULE 3(C), as of June 30,
2006 hereof, the authorized capital stock of the Company consists of (i)
1,000,000,000 shares of Common Stock, par value $0.00005, of which 470,050,001
shares are issued and outstanding and (ii) 10,000,000 shares of preferred stock,
par value $0.001, of which no shares are issued and outstanding. All of such
outstanding shares of capital stock are, or upon issuance will be, duly
authorized, validly issued, fully paid and nonassessable. No shares of capital
stock of the Company are subject to preemptive rights or any other similar
rights of the shareholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company. Except as disclosed in
SCHEDULE 3(C), as of the date of this Agreement, (i) there are no outstanding
options, warrants, scrip, rights to subscribe for, puts, calls, rights of first
refusal, agreements, understandings, claims or other commitments or rights of
any character whatsoever relating to,

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or securities or rights convertible into or exchangeable for any shares of
capital stock of the Company or any of its Subsidiaries, or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries,
(ii) there are no agreements or arrangements under which the Company or any of
its Subsidiaries is obligated to register the sale of any of its or their
securities under the 1933 Act (except the Registration Rights Agreement) and
(iii) there are no anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Notes, the Warrants, the
Conversion Shares or Warrant Shares. The Company has made available to each
Buyer true copies of the Certificate of Incorporation as in effect on the date
hereof, the Company's By-laws, as in effect on the date hereof (the "BY-LAWS"),
and the terms of all securities convertible into or exercisable for Common Stock
of the Company and the material rights of the holders thereof in respect
thereto.

      d. ISSUANCE OF SHARES. The Conversion Shares and Warrant Shares are duly
authorized and reserved for issuance and, upon conversion of the Notes and
exercise of the Warrants in accordance with their respective terms, will be
validly issued, fully paid and non-assessable, and 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
Company and will not impose personal liability upon the holder thereof.

      e. ACKNOWLEDGMENT OF DILUTION. The Company understands and acknowledges
the potentially dilutive effect to the Common Stock upon the issuance of the
Conversion Shares and Warrant Shares upon conversion of the Note or exercise of
the Warrants. The Company further acknowledges that its obligation to issue
Conversion Shares and Warrant Shares upon conversion of the Notes or exercise of
the Warrants in accordance with this Agreement, the Notes and the Warrants is
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other shareholders of the Company.

      f. NO CONFLICTS. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Notes and the Warrants by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance of the Conversion Shares and Warrant Shares) will not (i) conflict
with or result in a violation of any provision of the Certificate of
Incorporation or By-laws or (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company
or any of its Subsidiaries is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities are currently subject)
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation, By-laws or other organizational documents
and neither the Company nor any of its Subsidiaries is in default (and no event
has occurred which with notice or lapse of time or both could put the Company or
any of its Subsidiaries in default) under, and neither the Company nor any of
its Subsidiaries has taken any action or failed to take any action that would
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company

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or any of its Subsidiaries is a party or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect. The businesses of the Company and its Subsidiaries, if any, are not
being conducted, and shall not be conducted so long as a Buyer owns any of the
Securities, in violation of any law, ordinance or regulation of any governmental
entity, which violation would cause a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under the 1933 Act
and any applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court, governmental agency, regulatory agency, self regulatory organization
or stock market or any third party in order for it to execute, deliver or
perform any of its obligations under this Agreement, the Registration Rights
Agreement, the Notes or the Warrants in accordance with the terms hereof or
thereof or to issue and sell the Notes and Warrants in accordance with the terms
hereof and to issue the Conversion Shares upon conversion of the Notes and the
Warrant Shares upon exercise of the Warrants. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or will be obtained
promptly after Closing effected on or prior to the date hereof.

      g. ABSENCE OF CERTAIN CHANGES. Since December 31, 2005, there has been no
material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results of
operations or prospects of the Company or any of its Subsidiaries.

      h. ABSENCE OF LITIGATION. There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company
or any of its Subsidiaries, or their officers or directors in their capacity as
such, that could have a Material Adverse Effect. SCHEDULE 3(H) contains a
complete list and summary description of any pending or threatened proceeding
against or affecting the Company or any of its Subsidiaries, without regard to
whether it would have a Material Adverse Effect. The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.

      i. PATENTS, COPYRIGHTS, ETC. The Company and each of its Subsidiaries owns
or possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
("INTELLECTUAL PROPERTY") necessary to enable it to conduct its business as now
operated (and, to the best of the Company's knowledge, as presently contemplated
to be operated in the future); there is no claim or action by any person
pertaining to, or proceeding pending, or to the Company's knowledge threatened,
which challenges the right of the Company or of a Subsidiary with respect to any
Intellectual Property necessary to enable it to conduct its business as now
operated (and, to the best of the Company's knowledge, as presently contemplated
to be operated in the future); to the best of the Company's knowledge, the
Company's or its Subsidiaries' current and intended products, services and
processes do not infringe on any Intellectual Property or other rights held by
any person; and the Company is unaware of any facts or circumstances which might
give rise to any of the foregoing. The Company and each of its Subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and
value of their Intellectual Property.

      j. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company nor any of
its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a

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Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.

      k. TAX STATUS. Except as set forth on SCHEDULE 3(K), the Company and each
of its Subsidiaries has made or filed all federal, state and foreign income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. To the Company's
knowledge, there are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction. The Company has not executed a waiver
with respect to the statute of limitations relating to the assessment or
collection of any foreign, federal, state or local tax. Except as set forth on
SCHEDULE 3(K), none of the Company's tax returns is presently being audited by
any taxing authority.

      l. CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE 3(L) and except
for arm's length transactions pursuant to which the Company or any of its
Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than the Company or any of its Subsidiaries could obtain from
third parties and other than the grant of stock options disclosed on SCHEDULE
3(C), none of the officers, directors, or employees of the Company is presently
a party to any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

      m. DISCLOSURE. All information relating to or concerning the Company or
any of its Subsidiaries set forth in this Agreement and provided to the Buyers
pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is, to the knowledge of the Company, true and
correct in all material respects and the Company has not omitted to state any
material fact necessary in order to make the statements made herein or therein,
in light of the circumstances under which they were made, not misleading. To the
knowledge of the Company, no event or circumstance has occurred or exists with
respect to the Company or any of its Subsidiaries or its or their business,
properties, prospects, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company's reports filed under the 1934 Act
are being incorporated into an effective registration statement filed by the
Company under the 1933 Act).

      n. ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF SECURITIES. The Company
acknowledges and agrees that the Buyers are acting solely in the capacity of
arm's length purchasers with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that no Buyer is acting as
a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
statement made by any Buyer

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or any of their respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is not advice or a
recommendation and is merely incidental to the Buyers' purchase of the
Securities. The Company further represents to each Buyer that the Company's
decision to enter into this Agreement has been based solely on the independent
evaluation of the Company and its representatives.

      o. NO INTEGRATED OFFERING. Except for sales of securities to the Buyers
and affiliates thereof heretofore consummated, neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
1933 Act of the issuance of the Securities to the Buyers. The issuance of the
Securities to the Buyers will not be integrated with any other issuance of the
Company's securities (past, current or future) for purposes of any shareholder
approval provisions applicable to the Company or its securities.

      p. NO BROKERS. The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, transaction fees or similar
payments relating to this Agreement or the transactions contemplated hereby.

      q. PERMITS; COMPLIANCE. The Company and each of its Subsidiaries is in
possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and
orders necessary to own, lease and operate its properties and to carry on its
business as it is now being conducted (collectively, the "COMPANY PERMITS"), and
there is no action pending or, to the knowledge of the Company, threatened
regarding suspension or cancellation of any of the Company Permits. Neither the
Company nor any of its Subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Since December 31,
2005, neither the Company nor any of its Subsidiaries has received any
notification with respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have a Material
Adverse Effect.

      r. ENVIRONMENTAL MATTERS.

               (i) There are, to the Company's knowledge, with respect to the
          Company or any of its Subsidiaries or any predecessor of the Company,
          no present violations of Environmental Laws (as defined below),
          releases of any material into the environment, actions, activities,
          circumstances, conditions, events, incidents, or contractual
          obligations which may give rise to any common law environmental
          liability or any liability under the Comprehensive Environmental
          Response, Compensation and Liability Act of 1980 or similar federal,
          state, local or foreign laws and neither the Company nor any of its
          Subsidiaries has received any notice with respect to any of the
          foregoing, nor is any action pending or, to the Company's knowledge,
          threatened in connection with any of the foregoing. The term
          "ENVIRONMENTAL LAWS" means all material federal, state, local or
          foreign laws relating to pollution or protection of human health or
          the environment (including, without limitation, ambient air, surface
          water, groundwater, land surface or subsurface strata), including,
          without limitation, laws relating to emissions, discharges, releases
          or threatened releases of chemicals, pollutants contaminants, or toxic
          or hazardous substances or wastes (collectively, "HAZARDOUS
          MATERIALS") into the environment, or otherwise relating to the
          manufacture, processing, distribution, use, treatment, storage,
          disposal,

                                       9
<PAGE>

          transport or handling of Hazardous Materials, as well as all
          authorizations, codes, decrees, demands or demand letters,
          injunctions, judgments, licenses, notices or notice letters, orders,
          permits, plans or regulations issued, entered, promulgated or approved
          thereunder.

               (ii) Other than those that are or were stored, used or disposed
          of in compliance with applicable law, no Hazardous Materials are
          contained on or about any real property currently owned, leased or
          used by the Company or any of its Subsidiaries, and no Hazardous
          Materials were released on or about any real property previously
          owned, leased or used by the Company or any of its Subsidiaries during
          the period the property was owned, leased or used by the Company or
          any of its Subsidiaries, except in the normal course of the Company's
          or any of its Subsidiaries' business.

               (iii) There are no underground storage tanks on or under any real
          property owned, leased or used by the Company or any of its
          Subsidiaries that are not in compliance with applicable law.

      s. TITLE TO PROPERTY. Except as set forth on SCHEDULE 3(S), the Company
and its Subsidiaries have good and marketable title to all real property and
good and marketable title to all personal property owned by them which is
material to the business of the Company and its Subsidiaries, in each case free
and clear of all liens and encumbrances and, to the knowledge of the Company,
defects or such as would not have a Material Adverse Effect. To the knowledge of
the Company, any real property and facilities held under lease by the Company
and its Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as would not have a Material Adverse Effect.

      t. INSURANCE. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect. The Company has provided to Buyer true and correct copies of all
policies relating to directors' and officers' liability coverage, errors and
omissions coverage, and commercial general liability coverage.

      u. INTERNAL ACCOUNTING CONTROLS. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient, in the judgment of
the Company's board of directors, to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

      v. FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made

                                       10
<PAGE>

any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any foreign or domestic government official or employee.

      w. SOLVENCY. The Company (after giving effect to the transactions
contemplated by this Agreement) is solvent (i.e., its assets have a fair market
value in excess of the amount required to pay its probable liabilities on its
existing debts as they become absolute and matured) and currently the Company
has no information that would lead it to reasonably conclude that the Company
would not, after giving effect to the transaction contemplated by this
Agreement, have the ability to, nor does it intend to take any action that would
impair its ability to, pay its debts from time to time incurred in connection
therewith as such debts mature.

      x. NO INVESTMENT COMPANY. The Company is not, and upon the issuance and
sale of the Securities as contemplated by this Agreement will not be an
"investment company" required to be registered under the Investment Company Act
of 1940 (an "INVESTMENT COMPANY"). The Company is not controlled by an
Investment Company.

      y. BREACH OF REPRESENTATIONS AND WARRANTIES BY THE COMPANY. If the Company
breaches any of the representations or warranties set forth in this Section 3,
and in addition to any other remedies available to the Buyers pursuant to this
Agreement, the Company shall pay to the Buyers the Standard Liquidated Damages
Amount in cash or in shares of Common Stock at the option of the Company, until
such breach is cured. If the Company elects to pay the Standard Liquidated
Damages Amounts in shares of Common Stock, such shares shall be issued at the
Conversion Price at the time of payment.

          4. COVENANTS.

      a. BEST EFFORTS. The parties shall use their best efforts to satisfy
timely each of the conditions agreed to thereby described in Section 6 and 7 of
this Agreement.

      b. FORM D; BLUE SKY LAWS. The Company agrees to file a Form D with respect
to the Securities as required under Regulation D and to make available a copy
thereof to each Buyer promptly after such filing. The Company shall, on, before
or promptly after the Closing Date, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for sale to the
Buyers under applicable securities or "blue sky" laws of the states of the
United States (or to obtain an exemption from such qualification), and shall
make available evidence of any such action so taken to each Buyer on or prior to
the Closing Date.

          c. REPORTING STATUS; ELIGIBILITY TO USE FORM S-3, SB-2 OR FORM S-1.
     The Company represents and warrants that it shall use its best efforts to
     meet the requirements for the use of Form S-3 (or if the Company is not
     eligible for the use of Form S-3 as of the Filing Date (as defined in the
     Registration Rights Agreement), the Company may use the form of
     registration for which it is eligible at that time) for registration of the
     sale by the Buyer of the Registrable Securities (as defined in the
     Registration Rights Agreement). So long as any Buyer beneficially owns any
     of the Securities, the Company shall use its best efforts to timely file
     all reports required to be filed with the SEC pursuant to the 1934 Act, and
     the Company shall not terminate its status as an issuer required to file
     reports under the 1934 Act even if the 1934 Act or

                                       11
<PAGE>

     the rules and regulations thereunder would permit such termination. The
     Company further agrees that it shall use its best efforts to file all
     reports required to be filed by the Company with the SEC in a timely manner
     so as to become eligible, and thereafter to maintain its eligibility, for
     the use of Form S-3. The Company shall issue a press release describing the
     materials terms of the transaction contemplated hereby as soon as
     practicable following the Closing Date but in no event more than five (5)
     business days of the Closing Date, which press release shall be subject to
     prior review by the Buyers. The Company agrees that such press release
     shall not disclose the name of the Buyers unless expressly consented to in
     writing by the Buyers or unless required by applicable law or regulation,
     and then only to the extent of such requirement.

      d. USE OF PROCEEDS. The Company shall use the proceeds from the sale of
the Notes and the Warrants for general working capital purposes and shall not,
directly or indirectly, use such proceeds for any loan to or investment in any
other corporation, partnership, enterprise or other person (except in connection
with its currently existing direct or indirect Subsidiaries.

      e. FUTURE OFFERINGS. Subject to the exceptions described below, the
Company will not, without the prior written consent of a majority-in-interest of
the Buyers, not to be unreasonably withheld, negotiate or contract with any
party to obtain additional equity financing (including debt financing with an
equity component) that involves (A) the issuance of Common Stock at a discount
to the market price of the Common Stock on the date of issuance (taking into
account the value of any warrants or options to acquire Common Stock issued in
connection therewith) or (B) the issuance of convertible securities that are
convertible into an indeterminate number of shares of Common Stock or (C) the
issuance of warrants during the period (the "LOCK-UP PERIOD") beginning on the
Closing Date and ending on the later of (i) two hundred seventy (270) days from
the Closing Date and (ii) one hundred eighty (180) days from the date the
Registration Statement (as defined in the Registration Rights Agreement) is
declared effective (plus any days in which sales cannot be made thereunder). In
addition, subject to the exceptions described below, the Company will not
conduct any equity financing (including debt with an equity component) ("FUTURE
OFFERINGS") during the period beginning on the Closing Date and ending two (2)
years after the end of the Lock-up Period unless it shall have first delivered
to each Buyer, at least twenty (20) business days prior to the closing of such
Future Offering, written notice describing the proposed Future Offering,
including the terms and conditions thereof and proposed definitive documentation
to be entered into in connection therewith, and providing each Buyer an option
during the fifteen (15) day period following delivery of such notice to purchase
its pro rata share (based on the ratio that the aggregate principal amount of
Notes purchased by it hereunder bears to the aggregate principal amount of Notes
purchased hereunder) of the securities being offered in the Future Offering on
the same terms as contemplated by such Future Offering (the limitations referred
to in this sentence and the preceding sentence are collectively referred to as
the "CAPITAL RAISING LIMITATIONS"). In the event the terms and conditions of a
proposed Future Offering are amended in any respect after delivery of the notice
to the Buyers concerning the proposed Future Offering, the Company shall deliver
a new notice to each Buyer describing the amended terms and conditions of the
proposed Future Offering and each Buyer thereafter shall have an option during
the fifteen (15) day period following delivery of such new notice to purchase
its pro rata share of the securities being offered on the same terms as
contemplated by such proposed Future Offering, as amended. The foregoing
sentence shall apply to successive amendments to the terms and conditions of any
proposed Future Offering. The Capital Raising Limitations shall not apply to any
transaction involving (i) issuances of securities in a firm commitment
underwritten public offering (excluding a continuous offering pursuant to Rule
415 under the 1933 Act) or (ii) issuances of securities as consideration for a
merger, consolidation or purchase of assets, or in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise

                                       12
<PAGE>

equity capital), or in connection with the disposition or acquisition of a
business, product or license by the Company. The Capital Raising Limitations
also shall not apply to the issuance of securities upon exercise or conversion
of the Company's options, warrants or other convertible securities outstanding
as of the date hereof or to the grant of additional options or warrants, or the
issuance of additional securities, under any Company stock option or restricted
stock plan approved by the shareholders of the Company.

      f. EXPENSES. At the Closing, the Company shall reimburse Buyers for
expenses incurred by them in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the other agreements
to be executed in connection herewith ("DOCUMENTS"), including, without
limitation, attorneys' and consultants' fees and expenses, transfer agent fees,
fees for stock quotation services, fees relating to any amendments or
modifications of the Documents or any consents or waivers of provisions in the
Documents, fees for the preparation of opinions of counsel, escrow fees, and
costs of restructuring the transactions contemplated by the Documents in an
amount not to exceed $30,000. When possible, the Company must pay these fees
directly, otherwise the Company must make immediate payment for reimbursement to
the Buyers for all fees and expenses immediately upon written notice by the
Buyer or the submission of an invoice by the Buyer. If the Company fails to
reimburse the Buyer in full within three (3) business days of the written notice
or submission of invoice by the Buyer, the Company shall pay interest on the
total amount of fees to be reimbursed at a rate of 15% per annum.

      g. FINANCIAL INFORMATION. The Company agrees to send the following reports
to each Buyer until such Buyer transfers, assigns, or sells all of the
Securities: (i) within ten (10) days after the filing with the SEC, a copy of
its Annual Report on Form 10-KSB its Quarterly Reports on Form 10-QSB and any
Current Reports on Form 8-K; (ii) within one (1) day after release, copies of
all press releases issued by the Company or any of its Subsidiaries; and (iii)
contemporaneously with the making available or giving to the shareholders of the
Company, copies of any notices or other information the Company makes available
or gives to such shareholders.

      h. AUTHORIZATION AND RESERVATION OF SHARES. The Company shall at all times
have authorized, and reserved for the purpose of issuance, a sufficient number
of shares of Common Stock to provide for the full conversion or exercise of the
outstanding Notes and Warrants and issuance of the Conversion Shares and Warrant
Shares in connection therewith (based on the Conversion Price of the Notes or
Exercise Price of the Warrants in effect from time to time) and as otherwise
required by the Notes. The Company shall not reduce the number of shares of
Common Stock reserved for issuance upon conversion of Notes and exercise of the
Warrants without the consent of each Buyer. The Company shall at all times
maintain the number of shares of Common Stock so reserved for issuance at an
amount ("RESERVED AMOUNT") equal to no less than two (2) times the number that
is then actually issuable upon full conversion of the Notes and upon exercise of
the Warrants (based on the Conversion Price of the Notes or the Exercise Price
of the Warrants in effect from time to time). If at any time the number of
shares of Common Stock authorized and reserved for issuance ("AUTHORIZED AND
RESERVED SHARES") is below the Reserved Amount, the Company will promptly take
all corporate action necessary to authorize and reserve a sufficient number of
shares, including, without limitation, calling a special meeting of shareholders
to authorize additional shares to meet the Company's obligations under this
Section 4(h), in the case of an insufficient number of authorized shares, obtain
shareholder approval of an increase in such authorized number of shares, and
voting the management shares of the Company in favor of an increase in the
authorized shares of the Company to ensure that the number of authorized shares
is sufficient to meet the Reserved Amount. If the Company fails to obtain such
shareholder approval within sixty (60) days following the date on which the
number of Reserved Amount exceeds the Authorized and Reserved Shares, the
Company shall pay to the

                                       13
<PAGE>

Buyers the Standard Liquidated Damages Amount, in cash or in shares of Common
Stock at the option of each Buyer. If a Buyer elects to be paid the Standard
Liquidated Damages Amount in shares of Common Stock, such shares shall be issued
at the Conversion Price at the time of payment. In order to ensure that the
Company has authorized a sufficient amount of shares to meet the Reserved Amount
at all times, the Company shall use its best efforts to deliver to a
representative for the Buyers at the end of every month a list detailing (1) the
current amount of shares authorized by the Company and reserved for the Buyers;
and (2) amount of shares issuable upon conversion of the Notes and upon exercise
of the Warrants and as payment of interest accrued on the Notes for one year. If
the Company fails to provide such list within five (5) business days of having
received a written demand therefor, the Company shall pay the Standard
Liquidated Damages Amount, in cash or in shares of Common Stock at the option of
the Buyer, until the list is delivered. If the Buyer elects to be paid the
Standard Liquidated Damages Amount in shares of Common Stock, such shares shall
be issued at the Conversion Price at the time of payment.

      i. LISTING. The Company shall use its best efforts to secure the listing
of the Conversion Shares and Warrant Shares upon each national securities
exchange or automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance) and, so long as
any Buyer owns any of the Securities, shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all Conversion Shares
and Warrant Shares from time to time issuable upon conversion of the Notes or
exercise of the Warrants. The Company will use best efforts to obtain and, so
long as any Buyer owns any of the Securities, maintain the listing and trading
of its Common Stock on the OTCBB or any equivalent replacement exchange, the
Nasdaq National Market ("NASDAQ"), the Nasdaq SmallCap Market ("NASDAQ
SMALLCAP"), the New York Stock Exchange ("NYSE"), or the American Stock Exchange
("AMEX") and will comply in all respects with the Company's reporting, filing
and other obligations under the bylaws or rules of the National Association of
Securities Dealers ("NASD") and such exchanges, as applicable. The Company shall
promptly provide to each Buyer copies of any notices it receives from the OTCBB
and any other exchanges or quotation systems on which the Common Stock is then
listed regarding the continued eligibility of the Common Stock for listing on
such exchanges and quotation systems.

      j. CORPORATE EXISTENCE. So long as a Buyer beneficially owns any Notes or
Warrants, the Company shall maintain its corporate existence and shall not sell
all or substantially all of the Company's assets, except in the event of a
merger or consolidation or sale of all or substantially all of the Company's
assets, where the surviving or successor entity in such transaction (i) assumes
the Company's obligations hereunder and under the agreements and instruments
entered into in connection herewith and (ii) is a publicly traded corporation
whose Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap,
NYSE or AMEX.

      k. NO INTEGRATION. The Company shall not make any offers or sales of any
security (other than the Securities) under circumstances that would require
registration of the Securities being offered or sold hereunder under the 1933
Act or cause the offering of the Securities to be integrated with any other
offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.

      l. BREACH OF COVENANTS. If the Company breaches any of the covenants set
forth in this Section 4, and in addition to any other remedies available to the
Buyers pursuant to this Agreement, the Company shall pay to the Buyers the
Standard Liquidated Damages Amount, in cash or in shares of Common Stock at the
option of the Company, until such breach is cured. If the Company elects to pay
the

                                       14
<PAGE>

Standard Liquidated Damages Amount in shares, such shares shall be issued at
the Conversion Price at the time of payment.

          5. TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable
     instructions to its transfer agent to issue certificates, registered in the
     name of each Buyer or its nominee, for the Conversion Shares and Warrant
     Shares in such amounts as specified from time to time by each Buyer to the
     Company upon conversion of the Notes or exercise of the Warrants in
     accordance with the terms thereof (the "IRREVOCABLE TRANSFER AGENT
     Instructions"). Prior to registration of the Conversion Shares and Warrant
     Shares under the 1933 Act or the date on which the Conversion Shares and
     Warrant Shares 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, all such certificates shall bear the restrictive legend
     specified in Section 2(g) of this Agreement. The Company warrants that no
     instruction other than the Irrevocable Transfer Agent Instructions referred
     to in this Section 5, and stop transfer instructions to give effect to
     Section 2(f) hereof (in the case of the Conversion Shares and Warrant
     Shares, prior to registration of the Conversion Shares and Warrant Shares
     under the 1933 Act or the date on which the Conversion Shares and Warrant
     Shares 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), will be given by the Company to its transfer agent and that the
     Securities shall otherwise be freely transferable on the books and records
     of the Company, subject to and to the extent provided in this Agreement and
     the Registration Rights Agreement. Nothing in this Section shall affect in
     any way each Buyer's obligations and agreement set forth in Section 2(g)
     hereof to comply with all applicable prospectus delivery requirements, if
     any, upon re-sale of the Securities. If a Buyer provides the Company with
     (i) an opinion of counsel in form, substance and scope customary for
     opinions in comparable transactions, to the effect that a public sale or
     transfer of such Securities may be made without registration under the 1933
     Act and such sale or transfer is effected or (ii) the Buyer provides
     reasonable assurances that the Securities can be sold pursuant to Rule 144,
     the Company shall permit the transfer, and, in the case of the Conversion
     Shares and Warrant Shares, promptly instruct its transfer agent to issue
     one or more certificates, free from restrictive legend, in such name and in
     such denominations as specified by such Buyer. The Company acknowledges
     that a breach by it of its obligations hereunder will cause irreparable
     harm to the Buyers, by vitiating the intent and purpose of the transactions
     contemplated hereby. Accordingly, the Company acknowledges that the remedy
     at law for a breach of its obligations under this Section 5 may be
     inadequate and agrees, in the event of a breach or threatened breach by the
     Company of the provisions of this Section, that the Buyers shall be
     entitled, in addition to all other available remedies, to an injunction
     restraining any breach and requiring immediate transfer, without the
     necessity of showing economic loss and without any bond or other security
     being required.

          6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
     the Company hereunder to issue and sell the Notes and Warrants to a Buyer
     at the Closing is subject to the satisfaction, at or before the Closing
     Date of each of the following conditions thereto, provided that these
     conditions are for the Company's sole benefit and may be waived by the
     Company at any time in its sole discretion:

      a. The applicable Buyer shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Company.

                                       15
<PAGE>

      b. The applicable Buyer shall have delivered the Purchase Price in
accordance with Section 1(b) above.

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

      d. No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by or in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

          7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE. The obligation
     of each Buyer hereunder to purchase the Notes and Warrants at the Closing
     is subject to the satisfaction, at or before the Closing Date of each of
     the following conditions, provided that these conditions are for such
     Buyer's sole benefit and may be waived by such Buyer at any time in its
     sole discretion:

      a. The Company shall have executed this Agreement and the Registration
Rights Agreement, and delivered the same to the Buyer.

      b. The Company shall have delivered to such Buyer duly executed Notes (in
such denominations as the Buyer shall request) and Warrants in accordance with
Section 1(b) above.

      c. The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to a majority-in-interest of the Buyers, shall have been delivered
to and acknowledged in writing by the Company's Transfer Agent.

      d. The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at such time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Buyer shall have received a
certificate or certificates, executed by the chief executive officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by such Buyer including, but not
limited to certificates with respect to the Company's Articles of Incorporation,
By-laws and Board of Directors' resolutions relating to the transactions
contemplated hereby.

      e. No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by or in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

                                       16
<PAGE>

      f. No event shall have occurred which could reasonably be expected to have
a Material Adverse Effect on the Company.

      g. The Buyer shall have received an officer's certificate described in
Section 3(c) above, dated as of the Closing Date.

          8. GOVERNING LAW; MISCELLANEOUS.

      a. GOVERNING LAW. THIS AGREEMENT 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 PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE 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 AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.

      b. COUNTERPARTS; SIGNATURES BY FACSIMILE. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other
party. 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.

      c. HEADINGS. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement.

      d. SEVERABILITY. In the event that any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.

      e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein

                                       17
<PAGE>

and therein and, except as specifically set forth herein or therein, neither the
Company nor the Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.

      f. NOTICES. Any notices required or permitted to be given under the terms
of this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:

                           If to the Company:

                                    Midnight Holdings Group, Inc.
                                    22600 Hall Road, Suite 205
                                    Clinton Township, MI  48036
                                    Attention:  Chief Executive Officer
                                    Telephone:  586-468-8741
                                    Facsimile:   586-468-8768

                           With a copy to:

                                    Reitler Brown & Rosenblatt LLC
                                    800 Third Avenue, 21st Floor
                                    New York, NY  10022
                                    Attention:  Robert Steven Brown, Esq.
                                    Telephone:  212-209-3060
                                    Facsimile:   212-371-5500

         If to a Buyer: To the address set forth immediately below such Buyer's
name on the signature pages hereto.

                           With copy to:

                                    Ballard Spahr Andrews & Ingersoll, LLP
                                    1735 Market Street
                                    51st Floor
                                    Philadelphia, Pennsylvania  19103
                                    Attention:  Gerald J. Guarcini, Esq.
                                    Telephone:  215-864-8625
                                    Facsimile:  215-864-8999
                                    Email:  guarcini@ballardspahr.com

         Each party shall provide notice to the other party of any change in
address.

                                       18
<PAGE>

      g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and assigns. Neither the
Company nor any Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other. Notwithstanding the
foregoing, subject to Section 2(f), any Buyer may assign its rights hereunder to
any person who is an "Accredited Investor" that purchases Securities in a
private transaction from a Buyer or to any of its "affiliates," as that term is
defined under the 1934 Act, without the consent of the Company.

      h. THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.

      i. SURVIVAL. The representations and warranties of the Company and the
agreements and covenants set forth in Sections 3, 4, 5 and 8 shall survive the
closing hereunder notwithstanding any due diligence investigation conducted by
or on behalf of the Buyers. The Company agrees to indemnify and hold harmless
each of the Buyers and all their officers, directors, employees and agents for
loss or damage arising as a result of or related to any breach or alleged breach
by the Company of any of its representations, warranties and covenants set forth
in Sections 3 and 4 hereof or any of its covenants and obligations under this
Agreement or the Registration Rights Agreement, including advancement of
reasonable expenses as they are incurred.

      j. PUBLICITY. The Company and each of the Buyers shall have the right to
review a reasonable period of time before issuance of any press releases, SEC,
OTCBB or NASD filings, or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of each of the Buyers, to make any press
release or SEC, OTCBB (or other applicable trading market) or NASD filings with
respect to such transactions as is required by applicable law and regulations
(although each of the Buyers shall be consulted by the Company in connection
with any such press release prior to its release and shall be provided with a
copy thereof and be given an opportunity to comment thereon).

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

      l. NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

      m. REMEDIES. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Buyers by vitiating the
intent and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that the
Buyers 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 Agreement
and to enforce

                                       19
<PAGE>

specifically the terms and provisions hereof, without the necessity of showing
economic loss and without any bond or other security being required.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       20
<PAGE>

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

MIDNIGHT HOLDINGS GROUP, INC.

/s/ Nicholas Cocco
--------------------------------
Nicholas Cocco
Chief Executive Officer

AJW PARTNERS, LLC

By:  SMS Group, LLC

/s/ Corey S. Ribotsky
--------------------------------------
Corey S. Ribotsky
Manager

RESIDENCE:  Delaware

ADDRESS: 1044 Northern Boulevard
         Suite 302
         Roslyn, New York  11576
         Facsimile:  (516) 739-7115
         Telephone:  (516) 739-7110

AGGREGATE SUBSCRIPTION AMOUNT:

         Aggregate Principal Amount of Notes:                     $
         Number of Warrants:
         Aggregate Remaining Purchase Price (after
         accounting for any principal of Bridge Note):            $

                                       21
<PAGE>

AJW OFFSHORE, LTD.

By:  First Street Manager II, LLC

/s/ Corey S. Ribotsky
--------------------------------------
Corey S. Ribotsky
Manager

RESIDENCE:   Cayman Islands

ADDRESS:     AJW Offshore, Ltd.
             P.O. Box 32021 SMB
             Grand Cayman, Cayman Island, B.W.I.

AGGREGATE SUBSCRIPTION AMOUNT:

         Aggregate Principal Amount of Notes:                       $
         Number of Warrants:
         Aggregate Remaining Purchase Price (after
         accounting for any principal of Bridge Note):              $

                                       22
<PAGE>

AJW QUALIFIED PARTNERS, LLC
By:  AJW Manager, LLC

/s/ Corey S. Ribotsky
------------------------------------
Corey S. Ribotsky
Manager

RESIDENCE:  New York

ADDRESS:    1044 Northern Boulevard
            Suite 302
            Roslyn, New York  11576
            Facsimile:        (516) 739-7115
            Telephone:        (516) 739-7110

AGGREGATE SUBSCRIPTION AMOUNT:

         Aggregate Principal Amount of Notes:                         $
         Number of Warrants:
         Aggregate Remaining Purchase Price (after
         accounting for any principal of Bridge Note):                $

                                       23
<PAGE>

NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By:  First Street Manager II, LLP

/s/ Corey S. Ribotsky
------------------------------------
Corey S. Ribotsky
Manager

RESIDENCE:            New York

ADDRESS: 1044 Northern Boulevard
         Suite 302
         Roslyn, New York  11576
         Facsimile:        (516) 739-7115
         Telephone:        (516) 739-7110

AGGREGATE SUBSCRIPTION AMOUNT:

         Aggregate Principal Amount of Notes:                        $
         Number of Warrants:
         Aggregate Remaining Purchase Price (after
         accounting for any principal of Bridge Note):               $

                                       24Exhibit 10.62

                               SECURITY AGREEMENT

     SECURITY AGREEMENT (this "Agreement"), dated as of July 5, 2006, by and
among Midnight Holdings Group, Inc., a Delaware corporation ("Company"), and the
secured parties signatory hereto and their respective endorsees, transferees and
assigns (collectively, the "Secured Party").

                              W I T N E S S E T H:

     WHEREAS, pursuant to a Securities Purchase Agreement, dated the date
hereof, between Company and the Secured Party (the "Purchase Agreement"),
Company has agreed to issue to the Secured Party and the Secured Party has
agreed to purchase from Company certain of Company's 10% Secured Convertible
Notes, due three years from the date of issue (the "Notes"), which are
convertible into shares of Company's Common Stock, par value $.00005 per share
(the "Common Stock"). In connection therewith, Company shall issue the Secured
Party certain Common Stock purchase warrants dated as of the date hereof to
purchase the number of shares of Common Stock indicated below each Secured
Party's name on the Purchase Agreement (the "Warrants"); and

     WHEREAS, in order to induce the Secured Party to purchase the Notes,
Company has agreed to execute and deliver to the Secured Party this Agreement
for the benefit of the Secured Party and to grant to it a first priority
security interest in certain property of Company to secure the prompt payment,
performance and discharge in full of all of Company's obligations under the
Notes and exercise and discharge in full of Company's obligations under the
Warrants.

     NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:

     1. Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as "general intangibles" and "proceeds") shall have the respective
meanings given such terms in Article 9 of the UCC.

          (a) "Collateral" means the collateral in which the Secured Party is
granted a security interest by this Agreement and which shall include the
following, whether presently owned or existing or hereafter acquired or coming
into existence, and all additions and accessions thereto and all substitutions
and replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of the
Collateral and of insurance covering the same and of any tort claims in
connection therewith:

               (i) All Goods of the Company, including, without limitations, all
          machinery, equipment, computers, motor vehicles, trucks, tanks, boats,
          ships, appliances, furniture, special and general tools, fixtures,
          test and quality control devices and other equipment of every kind and
          nature and wherever situated, together with all documents of title and
          documents representing the same, all additions and accessions thereto,
          replacements therefor, all parts therefor, and all

<PAGE>

          substitutes for any of the foregoing and all other items used and
          useful in connection with the Company's businesses and all
          improvements thereto (collectively, the "Equipment"); and

               (ii) All Inventory of the Company; and

               (iii) All of the Company's contract rights and general
          intangibles, including, without limitation, all partnership interests,
          stock or other securities, licenses, distribution and other
          agreements, computer software development rights, leases, franchises,
          customer lists, quality control procedures, grants and rights,
          goodwill, trademarks, service marks, trade styles, trade names,
          patents, patent applications, copyrights, deposit accounts, and income
          tax refunds (collectively, the "General Intangibles"); and

               (iv) All Receivables of the Company including all insurance
          proceeds, and rights to refunds or indemnification whatsoever owing,
          together with all instruments, all documents of title representing any
          of the foregoing, all rights in any merchandising, goods, equipment,
          motor vehicles and trucks which any of the same may represent, and all
          right, title, security and guaranties with respect to each Receivable,
          including any right of stoppage in transit; and

               (v) All of the Company's documents, instruments and chattel
          paper, files, records, books of account, business papers, computer
          programs and the products and proceeds of all of the foregoing
          Collateral set forth in clauses (i)-(iv) above.

          (b) "Company" shall mean, collectively, Company and all of the
subsidiaries of Company, a list of which is contained in Schedule A, attached
hereto.

          (c) "Obligations" means all of the Company's obligations under this
Agreement and the Notes, in each case, whether now or hereafter existing,
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether or not
from time to time decreased or extinguished and later decreased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from the Secured Party as a preference, fraudulent
transfer or otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time.

          (d) "UCC" means the Uniform Commercial Code, as currently in effect in
the State of New York.

     2. Grant of Security Interest. As an inducement for the Secured Party to
purchase the Notes and to secure the complete and timely payment, performance
and discharge in full, as the case may be, of all of the Obligations, the
Company hereby, unconditionally and irrevocably, pledges, grants and
hypothecates to the Secured Party, a continuing security interest in, a
continuing first lien upon, an unqualified right to possession and disposition
of and a right of set-off against, in each case to the fullest extent permitted
by law, all of the Company's right, title and interest of whatsoever kind and
nature in and to the Collateral (the "Security Interest").

                                       2
<PAGE>

     3. Representations, Warranties, Covenants and Agreements of the Company.
The Company represents and warrants to, and covenants and agrees with, the
Secured Party as follows:

          (a) The Company has the requisite corporate power and authority to
enter into this Agreement and otherwise to carry out its obligations thereunder.
The execution, delivery and performance by the Company of this Agreement and the
filings contemplated therein have been duly authorized by all necessary action
on the part of the Company and no further action is required by the Company.
This Agreement constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally.

          (b) The Company represents and warrants that it has no place of
business or offices where its respective books of account and records are kept
(other than temporarily at the offices of its attorneys or accountants) or
places where Collateral is stored or located, except as has been disclosed to
the Secured Party;

          (c) Except as set forth on Schedule 3(c), the Company is the sole
owner or lessor (as the case may be) of the Collateral (except for non-exclusive
licenses granted by the Company in the ordinary course of business), free and
clear of any liens, security interests, encumbrances, rights or claims, and is
fully authorized to grant the Security Interest in and to pledge the Collateral.
There is not on file in any governmental or regulatory authority, agency or
recording office an effective financing statement, security agreement, license
or transfer or any notice of any of the foregoing (other than those that have
been filed in favor of the Secured Party pursuant to this Agreement) covering or
affecting any of the Collateral. So long as this Agreement shall be in effect,
the Company shall not execute and shall not knowingly permit to be on file in
any such office or agency any such financing statement or other document or
instrument (except to the extent filed or recorded in favor of the Secured Party
pursuant to the terms of this Agreement).

          (d) No part of the Collateral has been judged invalid or
unenforceable. No written claim has been received that any Collateral or the
Company's use of any Collateral violates the rights of any third party. There
has been no adverse decision to the Company's claim of ownership rights in or
exclusive rights to use the Collateral in any jurisdiction or to the Company's
right to keep and maintain such Collateral in full force and effect, and there
is no proceeding involving said rights pending or, to the best knowledge of the
Company, threatened before any court, judicial body, administrative or
regulatory agency, arbitrator or other governmental authority.

          (e) The Company shall at all times maintain its books of account and
records relating to the Collateral at its principal place of business and may
not relocate such books of account and records or tangible Collateral unless it
delivers to the Secured Party at least 30 days prior to such relocation (i)
written notice of such relocation and the new location thereof (which must be
within the United States) and (ii) evidence that appropriate financing
statements and other necessary documents have been filed and recorded and other
steps have been taken to

                                       3
<PAGE>

perfect the Security Interest to create in favor of the Secured Party valid,
perfected and continuing first priority liens in the Collateral.

          (f) This Agreement creates in favor of the Secured Party a valid
security interest in the Collateral securing the payment and performance of the
Obligations and, upon making the filings described in the immediately following
sentence, a perfected first priority security interest in such Collateral.
Except for the filing of financing statements on Form-1 under the UCC in the
proper jurisdiction, no authorization or approval of or filing with or notice to
any governmental authority or regulatory body is required either (i) for the
grant by the Company of, or the effectiveness of, the Security Interest granted
hereby or for the execution, delivery and performance of this Agreement by the
Company or (ii) for the perfection of or exercise by the Secured Party of its
rights and remedies hereunder.

          (g) On the date of execution of this Agreement, the Company will
deliver to the Secured Party one or more executed UCC financing statements on
Form-1 with respect to the Security Interest for filing in the proper
jurisdiction, attached hereto and in such other jurisdictions as may be
requested by the Secured Party.

          (h) The execution, delivery and performance of this Agreement does not
conflict with or cause a breach or default, or an event that with or without the
passage of time or notice, shall constitute a breach or default, under any
agreement to which the Company is a party or by which the Company is bound. No
consent (including, without limitation, from stock holders or creditors of the
Company) is required for the Company to enter into and perform its obligations
hereunder.

          (i) The Company shall at all times maintain the liens and Security
Interest provided for hereunder as valid and perfected liens and security
interests in the Collateral in favor of the Secured Party until this Agreement
and the Security Interest hereunder shall terminate pursuant to Section 11. The
Company hereby agrees to defend the same against any and all persons. The
Company shall safeguard and protect all Collateral for the account of the
Secured Party. At the request of the Secured Party, the Company will sign and
deliver to the Secured Party at any time or from time to time one or more
financing statements pursuant to the UCC (or any other applicable statute) in
form reasonably satisfactory to the Secured Party and will pay the cost of
filing the same in all public offices wherever filing is, or is deemed by the
Secured Party to be, necessary or desirable to effect the rights and obligations
provided for herein. Without limiting the generality of the foregoing, the
Company shall pay all fees, taxes and other amounts necessary to maintain the
Collateral and the Security Interest hereunder, and the Company shall obtain and
furnish to the Secured Party from time to time, upon demand, such releases
and/or subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.

          (j) The Company will not transfer, pledge, hypothecate, encumber,
license (except for non-exclusive licenses granted by the Company in the
ordinary course of business), sell or otherwise dispose of any of the Collateral
without the prior written consent of the Secured Party.

                                       4
<PAGE>

          (k) The Company shall keep and preserve its Equipment, Inventory and
other tangible Collateral in good condition, repair and order and shall not
operate or locate any such Collateral (or cause to be operated or located) in
any area excluded from insurance coverage.

          (l) The Company shall, within ten (10) days of obtaining knowledge
thereof, advise the Secured Party promptly, in sufficient detail, of any
substantial change in the Collateral, and of the occurrence of any event which
would have a material adverse effect on the value of the Collateral or on the
Secured Party's security interest therein.

          (m) The Company shall promptly execute and deliver to the Secured
Party such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take
such further action as the Secured Party may from time to time request and may
in its sole discretion deem necessary to perfect, protect or enforce its
security interest in the Collateral including, without limitation, the execution
and delivery of a separate security agreement with respect to the Company's
intellectual property ("Intellectual Property Security Agreement") in which the
Secured Party has been granted a security interest hereunder, substantially in a
form acceptable to the Secured Party, which Intellectual Property Security
Agreement, other than as stated therein, shall be subject to all of the terms
and conditions hereof.

          (n) The Company shall permit the Secured Party and its representatives
and agents to inspect the Collateral at any time, and to make copies of records
pertaining to the Collateral as may be requested by the Secured Party from time
to time.

          (o) The Company will take all steps reasonably necessary to diligently
pursue and seek to preserve, enforce and collect any rights, claims, causes of
action and accounts receivable in respect of the Collateral.

          (p) The Company shall promptly notify the Secured Party in sufficient
detail upon becoming aware of any attachment, garnishment, execution or other
legal process levied against any Collateral and of any other information
received by the Company that may materially affect the value of the Collateral,
the Security Interest or the rights and remedies of the Secured Party hereunder.

          (q) All information heretofore, herein or hereafter supplied to the
Secured Party by or on behalf of the Company with respect to the Collateral is
accurate and complete in all material respects as of the date furnished.

          (r) Schedule 3(a) to the Purchase Agreement contains a list of all of
the wholly-owned subsidiaries of Company.

     4. Defaults. The following events shall be "Events of Default":

          (a) The occurrence of an Event of Default (as defined in the Notes)
under the Notes;

                                       5
<PAGE>

          (b) Any representation or warranty of the Company in this Agreement or
in the Intellectual Property Security Agreement shall prove to have been
incorrect in any material respect when made;

          (c) The failure by the Company to observe or perform any of its
obligations hereunder or in the Intellectual Property Security Agreement for ten
(10) days after receipt by the Company of notice of such failure from the
Secured Party; and

          (d) Any breach of, or default under, the Warrants.

     5. Duty To Hold In Trust. Upon the occurrence of any Event of Default and
at any time thereafter, the Company shall, upon receipt by it of any revenue,
income or other sums subject to the Security Interest, whether payable pursuant
to the Notes or otherwise, or of any check, draft, note, trade acceptance or
other instrument evidencing an obligation to pay any such sum, hold the same in
trust for the Secured Party and shall forthwith endorse and transfer any such
sums or instruments, or both, to the Secured Party for application to the
satisfaction of the Obligations.

     6. Rights and Remedies Upon Default. Upon occurrence of any Event of
Default and at any time thereafter, the Secured Party shall have the right to
exercise all of the remedies conferred hereunder and under the Notes, and the
Secured Party shall have all the rights and remedies of a secured party under
the UCC and/or any other applicable law (including the Uniform Commercial Code
of any jurisdiction in which any Collateral is then located). Without
limitation, the Secured Party shall have the following rights and powers:

          (a) The Secured Party shall have the right to take possession of the
Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be
placed and remove the same, and the Company shall assemble the Collateral and
make it available to the Secured Party at places which the Secured Party shall
reasonably select, whether at the Company's premises or elsewhere, and make
available to the Secured Party, without rent, all of the Company's respective
premises and facilities for the purpose of the Secured Party taking possession
of, removing or putting the Collateral in saleable or disposable form.

          (b) The Secured Party shall have the right to operate the business of
the Company using the Collateral and shall have the right to assign, sell, lease
or otherwise dispose of and deliver all or any part of the Collateral, at public
or private sale or otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in such parcel or
parcels and at such time or times and at such place or places, and upon such
terms and conditions as the Secured Party may deem commercially reasonable, all
without (except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to the Company or right of redemption of
the Company, which are hereby expressly waived. Upon each such sale, lease,
assignment or other transfer of Collateral, the Secured Party may, unless
prohibited by applicable law which cannot be waived, purchase all or any part of
the Collateral being sold, free from and discharged of all trusts, claims, right
of redemption and equities of the Company, which are hereby waived and released.

                                       6
<PAGE>

     7. Applications of Proceeds. The proceeds of any such sale, lease or other
disposition of the Collateral hereunder shall be applied first, to the expenses
of retaking, holding, storing, processing and preparing for sale, selling, and
the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable
attorneys' fees and expenses incurred by the Secured Party in enforcing its
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations, and to the payment of
any other amounts required by applicable law, after which the Secured Party
shall pay to the Company any surplus proceeds. If, upon the sale, license or
other disposition of the Collateral, the proceeds thereof are insufficient to
pay all amounts to which the Secured Party is legally entitled, the Company will
be liable for the deficiency, together with interest thereon, at the rate of 15%
per annum (the "Default Rate"), and the reasonable fees of any attorneys
employed by the Secured Party to collect such deficiency. To the extent
permitted by applicable law, the Company waives all claims, damages and demands
against the Secured Party arising out of the repossession, removal, retention or
sale of the Collateral, unless due to the gross negligence or willful misconduct
of the Secured Party.

     8. Costs and Expenses. The Company agrees to pay all out-of-pocket fees,
costs and expenses incurred in connection with any filing required hereunder,
including without limitation, any financing statements, continuation statements,
partial releases and/or termination statements related thereto or any expenses
of any searches reasonably required by the Secured Party. The Company shall also
pay all other claims and charges which in the reasonable opinion of the Secured
Party might prejudice, imperil or otherwise affect the Collateral or the
Security Interest therein. The Company will also, upon demand, pay to the
Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
the Secured Party may incur in connection with (i) the enforcement of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, or (iii) the exercise or
enforcement of any of the rights of the Secured Party under the Notes. Until so
paid, any fees payable hereunder shall be added to the principal amount of the
Notes and shall bear interest at the Default Rate.

     9. Responsibility for Collateral. The Company assumes all liabilities and
responsibility in connection with all Collateral, and the obligations of the
Company hereunder or under the Notes and the Warrants shall in no way be
affected or diminished by reason of the loss, destruction, damage or theft of
any of the Collateral or its unavailability for any reason.

     10. Security Interest Absolute. All rights of the Secured Party and all
Obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Notes, the Warrants or any agreement entered into in connection with the
foregoing, or any portion hereof or thereof; (b) any change in the time, manner
or place of payment or performance of, or in any other term of, all or any of
the Obligations, or any other amendment or waiver of or any consent to any
departure from the Notes, the Warrants or any other agreement entered into in
connection with the foregoing; (c) any exchange, release or nonperfection of any
of the Collateral, or any release or amendment or waiver of or consent to
departure from any other collateral for, or any guaranty, or any other security,
for all or any of the Obligations; (d) any action by the Secured Party to
obtain, adjust, settle and cancel in its sole discretion any insurance claims or
matters made or arising in connection with the Collateral; or (e) any other
circumstance which might otherwise constitute

                                       7
<PAGE>

any legal or equitable defense available to the Company, or a discharge of all
or any part of the Security Interest granted hereby. Until the Obligations shall
have been paid and performed in full, the rights of the Secured Party shall
continue even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or bankruptcy. The Company
expressly waives presentment, protest, notice of protest, demand, notice of
nonpayment and demand for performance. In the event that at any time any
transfer of any Collateral or any payment received by the Secured Party
hereunder shall be deemed by final order of a court of competent jurisdiction to
have been a voidable preference or fraudulent conveyance under the bankruptcy or
insolvency laws of the United States, or shall be deemed to be otherwise due to
any party other than the Secured Party, then, in any such event, the Company's
obligations hereunder shall survive cancellation of this Agreement, and shall
not be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation enforceable
in accordance with the terms and provisions hereof. The Company waives all right
to require the Secured Party to proceed against any other person or to apply any
Collateral which the Secured Party may hold at any time, or to marshal assets,
or to pursue any other remedy. The Company waives any defense arising by reason
of the application of the statute of limitations to any obligation secured
hereby.

     11. Term of Agreement. This Agreement and the Security Interest shall
terminate on the date on which all amounts outstanding under the Notes are no
longer outstanding and all other Obligations have been paid or discharged. Upon
such termination, the Secured Party, at the request and at the expense of the
Company, will join in executing any termination statement with respect to any
financing statement executed and filed pursuant to this Agreement.

     12. Power of Attorney; Further Assurances.

          (a) The Company authorizes the Secured Party, and does hereby make,
constitute and appoint it, and its respective officers, agents, successors or
assigns with full power of substitution, as the Company's true and lawful
attorney-in-fact, with power, in its own name or in the name of the Company, to,
after the occurrence and during the continuance of an Event of Default, (i)
endorse any notes, checks, drafts, money orders, or other instruments of payment
(including payments payable under or in respect of any policy of insurance) in
respect of the Collateral that may come into possession of the Secured Party;
(ii) to sign and endorse any UCC financing statement or any invoice, freight or
express bill, bill of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with accounts, and
other documents relating to the Collateral; (iii) to pay or discharge taxes,
liens, security interests or other encumbrances at any time levied or placed on
or threatened against the Collateral; (iv) to demand, collect, receipt for,
compromise, settle and sue for monies due in respect of the Collateral; and (v)
generally, to do, at the option of the Secured Party, and at the Company's
expense, at any time, or from time to time, all acts and things which the
Secured Party deems necessary to protect, preserve and realize upon the
Collateral and the Security Interest granted therein in order to effect the
intent of this Agreement, the Notes and the Warrants, all as fully and
effectually as the Company might or could do; and the Company hereby ratifies
all that said attorney shall lawfully do or cause to be done by virtue hereof.
This power of attorney is coupled with an interest and shall be irrevocable for
the term of this Agreement and thereafter as long as any of the Obligations
shall be outstanding.

                                       8
<PAGE>

          (b) On a continuing basis, the Company will make, execute,
acknowledge, deliver, file and record, as the case may be, in the proper filing
and recording places in any jurisdiction, all such instruments, and take all
such action as may reasonably be deemed necessary or advisable, or as reasonably
requested by the Secured Party, to perfect the Security Interest granted
hereunder and otherwise to carry out the intent and purposes of this Agreement,
or for assuring and confirming to the Secured Party the grant or perfection of a
security interest in all the Collateral.

          (c) The Company hereby irrevocably appoints the Secured Party as the
Company's attorney-in-fact, with full authority in the place and stead of the
Company and in the name of the Company, from time to time in the Secured Party's
discretion, to take any action and to execute any instrument which the Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including the filing, in its sole discretion, of one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral without the signature of the Company where permitted by law.

     13. Notices. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto, and
shall be deemed to have been duly given when (i) if delivered by hand, upon
receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, four days after
posting in the U.S. mails, in each case if delivered to the following addresses:

       If to the Company:             Midnight Holdings Group, Inc.
                                      22600 Hall Road, Suite 205
                                      Clinton Township, MI 48036
                                      Attention: Chief Executive Officer
                                      Telephone: 586-468-8741
                                      Facsimile:   586-468-8768

         With a copy to:              Reitler Brown & Rosenblatt LLC
                                      800 Third Avenue, 21st Floor
                                      New York, NY  10022
                                      Attention:  Robert Brown, Esq.
                                      Telephone:  212-209-3060
                                      Facsimile:   212-371-5500

                                       9
<PAGE>

         If to the Secured Party:     AJW Partners, LLC
                                      AJW Offshore, Ltd.
                                      AJW Qualified Partners, LLC
                                      New Millennium Capital Partners II, LLC
                                      1044 Northern Boulevard
                                      Suite 302
                                      Roslyn, New York  11576
                                      Attention:  Corey Ribotsky
                                      Facsimile:  516-739-7115

         With a copy to:

                                      Ballard Spahr Andrews & Ingersoll, LLP
                                      1735 Market Street, 51st Floor
                                      Philadelphia, Pennsylvania  19103
                                      Attention:  Gerald J. Guarcini, Esq.
                                      Facsimile: 215-864-8999

     14. Other Security. To the extent that the Obligations are now or hereafter
secured by property other than the Collateral or by the guarantee, endorsement
or property of any other person, firm, corporation or other entity, then the
Secured Party shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Party's rights and
remedies hereunder.

     15. Miscellaneous.

          (a) No course of dealing between the Company and the Secured Party,
nor any failure to exercise, nor any delay in exercising, on the part of the
Secured Party, any right, power or privilege hereunder or under the Notes shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.

          (b) All of the rights and remedies of the Secured Party with respect
to the Collateral, whether established hereby or by the Notes or by any other
agreements, instruments or documents or by law shall be cumulative and may be
exercised singly or concurrently.

          (c) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and is intended to supersede all prior
negotiations, understandings and agreements with respect thereto. Except as
specifically set forth in this Agreement, no provision of this Agreement may be
modified or amended except by a written agreement specifically referring to this
Agreement and signed by the parties hereto.

          (d) In the event that any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any reason, unless
such provision is narrowed by judicial construction, this Agreement shall, as to
such jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this

                                       10
<PAGE>

Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.

          (e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.

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

          (g) Each party shall take such further action and execute and deliver
such further documents as may be necessary or appropriate in order to carry out
the provisions and purposes of this Agreement.

          (h) This Agreement shall be construed in accordance with the laws of
the State of New York, except to the extent the validity, perfection or
enforcement of a security interest hereunder in respect of any particular
Collateral which are governed by a jurisdiction other than the State of New York
in which case such law shall govern. Each of the parties hereto irrevocably
submit to the exclusive jurisdiction of any New York State or United States
Federal court sitting in Manhattan county over any action or proceeding arising
out of or relating to this Agreement, and the parties hereto hereby irrevocably
agree that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. The parties hereto agree
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. The parties hereto further waive any objection to venue
in the State of New York and any objection to an action or proceeding in the
State of New York on the basis of forum non conveniens.

          (i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO
A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY
HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL

                                       11
<PAGE>

FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

          (j) This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement. In the event that
any signature is delivered by facsimile transmission, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       12
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.

                                   MIDNIGHT HOLDINGS GROUP, INC.

                                   By:   /s/ Nicholas Cocco
                                      ------------------------------------------
                                         Nicholas Cocco
                                         Chief Executive Officer

                                   AJW PARTNERS, LLC
                                   By:  SMS Group, LLC

                                   By:   /s/ Corey Ribotsky
                                      ------------------------------------------
                                         Corey S. Ribotsky
                                         Manager

                                   AJW OFFSHORE, LTD.
                                   By:  First Street Manager II, LLC

                                   By:   /s/ Corey Ribotsky
                                      ------------------------------------------
                                         Corey S. Ribotsky
                                         Manager

                                   AJW QUALIFIED PARTNERS, LLC
                                   By:  AJW Manager, LLC

                                   By:   /s/ Corey Ribotsky
                                      ------------------------------------------
                                         Corey S. Ribotsky
                                         Manager

                                   NEW MILLENNIUM CAPITAL PARTNERS II, LLC
                                   By: First Street Manager II, LLC

                                   By:    /s/ Corey Ribotsky
                                      ------------------------------------------
                                          Corey S. Ribotsky
                                          Manager

                                       13
<PAGE>

                                   WHOLLY-OWNED SUBSIDIARIES OF MIDNIGHT
                                   HOLDINGS GROUP, INC.:

                                   MIDNIGHT AUTO HOLDINGS, INC.,
                                   a Michigan corporation

                                   By: Midnight Holdings Group, Inc., its parent

                                   By:   /s/ Nicholas Cocco
                                      ------------------------------------------
                                         Nicholas Cocco
                                         Chief Executive Officer

                                   MIDNIGHT AUTO FRANCHISE CORP.,
                                   a Michigan corporation

                                   By: Midnight Holdings Group, Inc., its parent

                                   By:   /s/ Nicholas Cocco
                                      ------------------------------------------
                                         Nicholas Cocco
                                         Chief Executive Officer

                                   ALL NIGHT AUTO(R) STORES, INC.,
                                   a Michigan corporation

                                   By: Midnight Holdings Group, Inc., its parent

                                   By:    /s/ Nicholas Cocco
                                      ------------------------------------------
                                          Nicholas Cocco
                                          Chief Executive Officer

                                       14
<PAGE>

                                   ALL NIGHT AUTO INC.,
                                   a Michigan corporation -does business as All
                                   Night Auto of Troy

                                   By: Midnight Holdings Group, Inc., its parent

                                   By:   /s/ Nicholas Cocco
                                      ------------------------------------------
                                         Nicholas Cocco
                                         Chief Executive Officer

                                   ALL NIGHT AUTO-GROSSE POINTE, INC.,
                                   a Michigan corporation - did business as All
                                   Night Auto of Grosse Pointe (Facility is now
                                   shut down.)

                                   By: Midnight Holdings Group, Inc., its parent

                                   By:   /s/ Nicholas Cocco
                                      ------------------------------------------
                                         Nicholas Cocco
                                         Chief Executive Officer

                                   ALL NIGHT AUTO OF NORMAL NORTH,
                                   a Michigan corporation

                                   By: Midnight Holdings Group, Inc., its parent

                                   By:   /s/ Nicholas Cocco
                                      ------------------------------------------
                                         Nicholas Cocco
                                         Chief Executive Officer

                                       15
<PAGE>

                                   ALL NIGHT AUTO OF AURORA,
                                   a Michigan corporation

                                   By: Midnight Holdings Group, Inc., its parent

                                   By:   /s/ Nicholas Cocco
                                      ------------------------------------------
                                         Nicholas Cocco
                                         Chief Executive Officer

                                   ALL NIGHT AUTO OF JOLIET,
                                   a Michigan corporation

                                   By: Midnight Holdings Group, Inc., its parent

                                   By:   /s/ Nicholas Cocco
                                      ------------------------------------------
                                         Nicholas Cocco
                                         Chief Executive Officer

                                   ALL NIGHT AUTO OF FORT WAYNE,
                                   a Michigan corporation

                                   By: Midnight Holdings Group, Inc., its parent

                                   By:   /s/ Nicholas Cocco
                                      ------------------------------------------
                                         Nicholas Cocco
                                         Chief Executive Officer

                                       16
<PAGE>

                                   SCHEDULE A

Principal Place of Business of the Company:
-------------------------------------------

         22600 Hall Road, Suite 205 Clinton Township, MI  48036

Locations Where Collateral is Located or Stored:
------------------------------------------------

         3872 Rochester Road, Troy, MI 48083
         989 S. Eola Road, Aurora, IL  60504
         13 Westport Court, Bloomington, IL 61704
         9500 West 179th Street, Tinley Park, IL  60477
         9502 West 179th Street, Tinley Park, IL  60477
         1835 East Guadalupe, Suite 116, Tempe, AZ  85283

List of Subsidiaries of the Company:
------------------------------------

         Midnight Auto Holdings, Inc.
         Midnight Auto Franchise Corp.
         All Night Auto, Inc.
         All Night Auto Grosse Pointe, Inc.
         All Night Auto Stores, Inc.
         All Night Auto of Normal North, Inc.
         All Night Auto of Aurora, Inc.
         All Night Auto of Joliet, Inc.
         All Night Auto of Fort Wayne, Inc.

                                       17

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