Document:

f10qsb0307ex10o.htm

    INTELLECTUAL
      PROPERTY SECURITY
      AGREEMENT

     

    INTELLECTUAL
      PROPERTY SECURITY AGREEMENT (this “Agreement” dated as
      of November 6, 2007, by and among Midnight Holdings Group, Inc., a Delaware
      corporation (the “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 Intellectual Property (defined below) 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; and

     

    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.  Defined
      Terms.  Unless otherwise defined herein, terms which are
      defined in the Purchase Agreement and used herein are so used as so defined;
      and
      the following terms shall have the following meanings:

     

    “Software
      Intellectual
      Property”  shall mean:

     

    (a)  all
      software programs (including all source code, object code and all related
      applications and data files), whether now owned, upgraded, enhanced, licensed
      or
      leased or hereafter acquired by the Company, above;

     

    (b)  all
      computers and electronic data processing hardware and firmware associated
      therewith;

     

    (c)  all
      documentation (including flow charts, logic diagrams, manuals, guides and
      specifications) with respect to such software, hardware and firmware described
      in the preceding clauses (a) and (b); and

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)  all
      rights with respect to all of the foregoing, including, without limitation,
      any
      and all upgrades, modifications, copyrights, licenses, options, warranties,
      service contracts, program services, test rights, maintenance rights, support
      rights, improvement rights, renewal rights and indemnifications and
      substitutions, replacements, additions, or model conversions of any of the
      foregoing.

     

    “Copyrights”
shall
      mean (a) all copyrights, registrations and applications for registration, issued or filed,
      including any reissues, extensions or renewals thereof, by or with the United
      States Copyright Office or any similar office or agency of the United States,
      any state thereof, or any other country or political subdivision thereof, or
      otherwise, including, all rights in and to the material constituting the subject
      matter thereof, including, without limitation, any referred to in Schedule B hereto,
      and (b) any rights in any material which is copyrightable or which is protected
      by common law, United States copyright laws or similar laws or any law of any
      State, including, without limitation, any thereof referred to in Schedule B
      hereto.

     

    “Copyright
      License”
shall mean any agreement, written or oral, providing for a grant by
      the Company
      of any right in any Copyright, including, without limitation, any thereof
      referred to in Schedule B
      hereto.

     

    “Intellectual
      Property” shall means, collectively, the Software Intellectual Property,
      Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark
      Licenses and Trade Secrets.

     

    “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.

     

    “Patents”
shall
      mean
      (a) all letters patent of the United States or any other country or any
      political subdivision thereof, and all reissues and extensions thereof,
      including, without limitation, any thereof referred to in Schedule B hereto,
      and (b) all applications for letters patent of the United States and all
      divisions, continuations and continuations-in-part thereof or any other country
      or any political subdivision, including, without limitation, any thereof
      referred to in Schedule B
      hereto.

     

    “Patent
      License” shall
      mean all agreements, whether written or oral, providing for the grant by the
      Company of any right to manufacture, use or sell any invention covered by a
      Patent, including, without limitation, any thereof referred to in Schedule B
      hereto.

     

    “Security
      Agreement”
shall mean the a Security Agreement, dated the date hereof between Company
      and
      the Secured Party.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Trademarks”
shall
      mean (a) all trademarks, trade names, corporate names, company names, business
      names, fictitious business names, trade styles, service marks, logos and other
      source or business identifiers, and the goodwill associated therewith, now
      existing or hereafter adopted or acquired, all registrations and recordings
      thereof, and all applications in connection therewith, whether in the United
      States Patent and Trademark Office or in any similar office or agency of the
      United States, any state thereof or any other country or any political
      subdivision thereof, or otherwise, including, without limitation, any thereof
      referred to in Schedule B hereto,
      and (b) all reissues, extensions or renewals thereof.

     

    “Trademark
      License”
shall mean any agreement, written or oral, providing for the grant by
      the
      Company of any right to use any Trademark, including, without limitation, any
      thereof referred to in Schedule B
      hereto.

     

    “Trade
      Secrets” shall
      mean common law and statutory trade secrets and all other confidential or
      proprietary or useful information and all know-how obtained by or used in or
      contemplated at any time for use in the business of the Company (all of the
      foregoing being collectively called a “Trade Secret”),
      whether or not such Trade Secret has been reduced to a writing or other tangible
      form, including all documents and things embodying, incorporating or referring
      in any way to such Trade Secret, all Trade Secret licenses, including each
      Trade
      Secret license referred to in Schedule B hereto,
      and including the right to sue for and to enjoin and to collect damages for
      the
      actual or threatened misappropriation of any Trade Secret and for the breach
      or
      enforcement of any such Trade Secret license.

     

    2.  Grant
      of Security
      Interest.  In accordance with Section 3(m) of the Security
      Agreement, 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
      Intellectual Property (the “Security
      Interest”).

     

    3.  Representations
      and
      Warranties.  The Company hereby represents and warrants, 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
      the
      Intellectual Property is stored or located, except as has been disclosed to
      the
      Secured Party;

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (c)  Except
      as
      set forth on Schedule
      3(c), the Company is the sole owner of the Intellectual Property (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 Intellectual Property.  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
      Intellectual Property.  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), except for a financing statement
      covering assets acquired by the Company after the date hereof, provided that
      the
      value of the Intellectual Property covered by this Agreement along with the
      Collateral (as defined in the Security Agreement) is equal to at least 150%
      of
      the Obligations.

     

    (d)  The
      Company shall at all times maintain its books of account and records relating
      to
      the Intellectual Property at its principal place of business and may not
      relocate such books of account and records 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 the necessary documents have been filed and recorded
      and other steps have been taken to perfect the Security Interest to create
      in
      favor of the Secured Party valid, perfected and continuing first priority liens
      in the Intellectual Property to the extent they can be perfected through such
      filings.

     

    (e)  This
      Agreement creates in favor of the Secured Party a valid security interest in
      the
      Intellectual Property securing the payment and performance of the Obligations
      and, upon making the filings required hereunder, a perfected first priority
      security interest in such Intellectual Property to the extent that it can be
      perfected through such filings.

     

    (f)   Upon
      request of the Secured Party, the Company shall execute and deliver any and
      all
      agreements, instruments, documents, and papers as the Secured Party may request
      to evidence the Secured Party’s security interest in the Intellectual Property
      and the goodwill and general intangibles of the Company relating thereto or
      represented thereby, and the Company hereby appoints the Secured Party its
      attorney-in-fact to execute and file all such writings for the foregoing
      purposes, all acts of such attorney being hereby ratified and confirmed; such
      power being coupled with an interest is irrevocable until the Obligations have
      been fully satisfied and are paid in full.

     

    (g)  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.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (h)  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
      Intellectual Property to the extent they can be perfected by filing 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 Intellectual Property for the account of the Secured
      Party.  Without limiting the generality of the foregoing, the Company
      shall pay all fees, taxes and other amounts necessary to maintain the
      Intellectual Property 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.

     

    (i)  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 Intellectual Property without
      the prior written consent of the Secured Party.

     

    (j)  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
      Intellectual Property, and of the occurrence of any event which would have
      a
      material adverse effect on the value of the Intellectual Property or on the
      Secured Party’s security interest therein.

     

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

     

    (l)  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 Intellectual Property.

     

    (m)  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 Intellectual Property and of any other information received
      by the Company that may materially affect the value of the Intellectual
      Property, the Security Interest or the rights and remedies of the Secured Party
      hereunder.

     

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

     

    (o)  Schedule
      3(a) to the
      Purchase Agreement contains a list of all of the subsidiaries of
      Company.

     

    (p)  Schedule
      B attached
      hereto includes all Patents and Patent Licenses, if any, owned by the Company
      in
      its own name as of the date hereof.  Schedule B hereto
      includes all Trademarks and Trademark Licenses, if any, owned by the Company
      in
      its own name as of the date hereof.  

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

       

      Schedule
        B hereto
        includes all Copyrights and Copyright Licenses, if any, owned by the Company
        in
        its own name as of the date hereof.  Schedule B hereto
        includes all Trade Secrets and Trade Secret Licenses, if any, owned by the
        Company as of the date hereof.  To the best of the Company’s
        knowledge, each License, Patent, Trademark, Copyright and Trade Secret is
        valid,
        subsisting, unexpired, enforceable and has not been abandoned.  Except
        as set forth in Schedule B, none
        of
        such Licenses, Patents, Trademarks, Copyrights and Trade Secrets is the subject
        of any licensing or franchise agreement.  To the best of the Company’s
        knowledge, no holding, decision or judgment has been rendered by any
        Governmental Body which would limit, cancel or question the validity of any
        License, Patent, Trademark, Copyright and Trade Secrets.  No action or
        proceeding is pending (i) seeking to limit, cancel or question the validity
        of
        any License, Patent, Trademark, Copyright or Trade Secret, or (ii) which,
        if
        adversely determined, would have a material adverse effect on the value of
        any
        License, Patent, Trademark, Copyright or Trade Secret.  The Company
        has used and will continue to use for the duration of this Agreement, proper
        statutory notice in connection with its use of the Patents, Trademarks and
        Copyrights and consistent standards of quality in products leased or sold
        under
        the Patents, Trademarks and Copyrights.

    

     

    (q)  With
      respect to any Intellectual Property:

     

    
      	
              (i)  

            	
              such
                Intellectual Property is subsisting and has not been adjudged invalid
                or
                unenforceable, in whole or in part;

            

    

     

    
      	
              (ii)  

            	
              such
                Intellectual Property is valid and
                enforceable;

            

    

     

    
      	
              (iii)  

            	
              the
                Company has made all necessary filings and recordations to protect
                its
                interest in such Intellectual Property, including, without limitation,
                recordations of all of its interests in the Patents, Patent Licenses,
                Trademarks and Trademark Licenses in the United States Patent and
                Trademark Office and in corresponding offices throughout the world
                and its
                claims to the Copyrights and Copyright Licenses in the United States
                Copyright Office and in corresponding offices throughout the
                world;

            

    

     

    
      	
              (iv)  

            	
              other
                than as set forth in Schedule
                B, the
                Company is the exclusive owner of the entire and unencumbered right,
                title
                and interest in and to such Intellectual Property and no claim has
                been
                made that the use of such Intellectual Property infringes on the
                asserted
                rights of any third party; and

            

    

     

    
      	
              (v)  

            	
              the
                Company has performed and will continue to perform all acts and has
                paid
                all required fees and taxes to maintain each and every item of
                Intellectual Property in full force and effect throughout the world,
                as
                applicable.

            

    

     

     

    
      
        
        

      

      
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    (r)  Except
      with respect to any Trademark or Copyright that the Company shall reasonably
      determine is of negligible economic value to the Company, the Company
      shall:

     

    (i)  maintain
      each Trademark and Copyright in full force free from any claim of abandonment
      for non-use, maintain as in the past the quality of products and services
      offered under such Trademark or Copyright;  employ such Trademark or
      Copyright with the appropriate notice of registration; not adopt or use any
      mark
      which is confusingly similar or a colorable imitation of such Trademark or
      Copyright unless the Secured Party shall obtain a perfected security interest
      in
      such mark pursuant to this Agreement; and not (and not permit any licensee
      or
      sublicensee thereof to) do any act or knowingly omit to do any act whereby
      any
      Trademark or Copyright may become invalidated;

     

    (ii)  not,
      except with respect to any Patent that it shall reasonably determine is of
      negligible economic value to it, do any act, or omit to do any act, whereby
      any
      Patent may become abandoned or dedicated; and

     

    (iii)  notify
      the Secured Party immediately if it knows, or has reason to know, that any
      application or registration relating to any Patent, Trademark or Copyright
      may
      become abandoned or dedicated, or of any adverse determination or development
      (including, without limitation, the institution of, or any such determination
      or
      development in, any proceeding in the United States Patent and Trademark Office,
      United States Copyright Office or any court or tribunal in any country)
      regarding its ownership of any Patent, Trademark or Copyright or its right
      to
      register the same or to keep and maintain the same.

     

    (s)  Whenever
      the Company, either by itself or through any agent, employee, licensee or
      designee, shall file an application for the registration of any Patent,
      Trademark or Copyright with the United States Patent and Trademark Office,
      United States Copyright Office or any similar office or agency in any other
      country or any political subdivision thereof or acquire rights to any new
      Patent, Trademark or Copyright whether or not registered, report such filing
      to
      the Secured Party within five business days after the last day of the fiscal
      quarter in which such filing occurs.

     

    (t)  The
      Company shall take all reasonable and necessary steps, including, without
      limitation, in any proceeding before the United States Patent and Trademark
      Office, United States Copyright Office or any similar office or agency in any
      other country or any political subdivision thereof, to maintain and pursue
      each
      application (and to obtain the relevant registration) and to maintain each
      registration of the Patents, Trademarks and Copyrights, including, without
      limitation, filing of applications for renewal, affidavits of use and affidavits
      of incontestability.

     

    (u)  In
      the
      event that any Patent, Trademark or Copyright included in the Intellectual
      Property is infringed, misappropriated or diluted by a third party, promptly
      notify the Secured Party after it learns thereof and shall, unless it shall
      reasonably determine that such Patent, Trademark or Copyright is of negligible
      economic value to it, which determination it shall promptly report to the
      Secured Party, promptly sue for infringement, misappropriation or dilution,
      to
      seek injunctive relief where appropriate and to recover any and all damages
      for
      such infringement, misappropriation or dilution, or take such other actions
      as
      it shall reasonably deem appropriate under the circumstances to protect such
      Patent, Trademark or Copyright.  

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

       

      If
        the
        Company lacks the financial resources to comply with this Section 3(t), the
        Company shall so notify the Secured Party and shall cooperate fully with
        any
        enforcement action undertaken by the Secured Party on behalf of the
        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;

     

    (b)  Any
      representation or warranty of the Company in this Agreement or in the 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 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 Intellectual Property 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 Intellectual
      Property and, for that purpose, enter, with the aid and assistance of any
      person, any premises where the Intellectual Property, or any part thereof,
      is or
      may be placed and remove the same, and the Company shall assemble the
      Intellectual Property 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 Intellectual Property in
      saleable or disposable form.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (b)  The
      Secured Party shall have the right to operate the business of the Company using
      the Intellectual Property and shall have the right to assign, sell, lease or
      otherwise dispose of and deliver all or any part of the Intellectual Property,
      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 Intellectual Property,
      the Secured Party may, unless prohibited by applicable law which cannot be
      waived, purchase all or any part of the Intellectual Property being sold, free
      from and discharged of all trusts, claims, right of redemption and equities
      of
      the Company, which are hereby waived and released.

     

    7.  Applications
      of
      Proceeds.  The proceeds of any such sale, lease or other
      disposition of the Intellectual Property 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 Intellectual Property, 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 Intellectual Property, 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
      Intellectual Property, 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
      Intellectual Property, 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 Intellectual Property 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 Intellectual Property, 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

        
          

        

      

      
        
        

      

    

     

    9.  Responsibility
      for
      Intellectual Property.  The Company assumes all liabilities and
      responsibility in connection with all Intellectual Property, 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 Intellectual Property 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 Intellectual Property, or any release or amendment or waiver of or
      consent to departure from any other Intellectual Property 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 Intellectual
      Property; or (e) any other circumstance which might otherwise constitute 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 Intellectual Property 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 Intellectual
      Property 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.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    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 Intellectual Property 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 Intellectual Property; (iii) to pay or discharge
      taxes, liens, security interests or other encumbrances at any time levied or
      placed on or threatened against the Intellectual Property; (iv) to demand,
      collect, receipt for, compromise, settle and sue for monies due in respect
      of
      the Intellectual Property; 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 Intellectual Property 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.

     

    (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
      Intellectual Property.

     

    (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
      Intellectual Property 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:

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

     

    
      	    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
                copies to: 

            	
              Anslow
                & Jaclin, LLP 

            

      	
               

            	
              195
                Route 9 South, Suite 204

            

    

    
      	
               

            	
              Manalapan,
                NJ  07726

            

    

    
      	
               

            	
              Attention:  Gregg
                E. Jaclin, Esq.

            

    

    
      	
               

            	
              Telephone:  732-409-1212

            

    

    
      	
               

            	
              Facsimile:   732-577-1188

            

    

     

    
      	
                  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
                  copies to:

              	
                Ballard
                  Spahr Andrews & Ingersoll, LLP

              

      

      
        	
                 

              	
                1735
                  Market Street, 51st
                  Floor

              

      

      
        	
                 

              	
                Philadelphia,
                  Pennsylvania  19103

              

      

      
        	
                 

              	
                Attention:  Gerald
                  J. Guarcini, Esquire

              

      

      
        	
                 

              	
                Facsimile:  215-864-8999

              

      

       

    

    14.  Other
      Security.  To the extent that the Obligations are now or
      hereafter secured by property other than the Intellectual Property 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.

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    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 Intellectual
      Property, 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 and the Security Agreement constitute 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 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 Intellectual Property which
      are
      governed by a jurisdiction other than the State of New York in which case such
      law shall govern.  

     

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

       

      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 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]

    

     

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    
 

    IN
      WITNESS WHEREOF, the parties hereto have caused this 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 S. Ribotsky

              
	 	
                Corey
                  S. Ribotsky

              
	 	
                Manager

              
	 
	
                AJW
                  OFFSHORE,
                  LTD.

                By:  First
                  Street Manager II, LLC

              
	 	 
	
                By:

              	
                /s/ 
                  Corey S. Ribotsky

              
	 	
                Corey
                  S. Ribotsky

              
	 	
                Manager

              
	 
	
                AJW
                  QUALIFIED PARTNERS,
                  LLC

                By:  AJW
                  Manager, LLC

              
	 	 
	
                By:

              	
                
                  /s/ 
                    Corey S. Ribotsky

                

              
	 	
                Corey
                  S. Ribotsky

              
	 	
                Manager

              
	 
	
                NEW
                  MILLENNIUM CAPITAL PARTNERS
                  II, LLC

                By:  First
                  Street Manager II, LLC

              
	 	 
	
                By:

              	
                
                  /s/ 
                    Corey S. Ribotsky

                

              
	 	
                Corey
                  S. Ribotsky

              
	 	
                Manager

              

      

    

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                Wholly-Owned
                  Subsidiaries
                  of

              
	
                Midnight
                  Holdings Group,
                  Inc.:

              
	 	 
	
                By:

              	/s/ 
                Nicholas Cocco 
	 	
                Nicholas
                  Cocco

                Chief
                  Executive Officer and/or President on behalf of the following
                  entities:

              
	 
	
                MIDNIGHT
                  AUTO HOLDINGS,
                  INC.,

                a
                  Michigan corporation

              
	 
	
                MIDNIGHT
                  AUTO FRANCHISE
                  CORP.,

                a
                  Michigan corporation

              
	 
	
                ALL
                  NIGHT AUTO® STORES,
                  INC.,

                a
                  Michigan corporation

              
	 
	
                ALL
                  NIGHT AUTO
                  INC.,

                a
                  Michigan corporation – business done as All Night Auto of
                  Troy

              
	 
	
                ALL
                  NIGHT AUTO-GROSSE POINTE,
                  INC.,

                a
                  Michigan corporation – business done as All Night Auto of Grosse
                  Pointe

              
	 
	
                ALL
                  NIGHT AUTO OF NORMAL
                  NORTH,

                a
                  Michigan corporation

              
	 
	
                ALL
                  NIGHT AUTO OF
                  AURORA,

                a
                  Michigan corporation

              
	 
	
                ALL
                  NIGHT AUTO OF
                  JOLIET,

                a
                  Michigan corporation

              
	 
	
                ALL
                  NIGHT AUTO OF FORT
                  WAYNE,

                a
                  Michigan corporation

              

      

    

     

     

     

     

     

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

     

     

    SCHEDULE
      A

     

    Principal
      Place of Business
      of the Company:

     

    22600
      Hall Road, 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

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      B

     

    

    
      A.  Licenses,
        Patents and Patent
        Licenses

       

      

      
        	
                Patent

              	
                Application
                  or
                  Registration No.

              	
                Country

              	
                Registration
                  or

                Filing
                  Date

              
	 	 	 	 

      

      

      

      B.  Trademarks
        and Trademark
        Licenses

       

      
        	
                Service
                  Mark

              	
                2,290,780.

              	
                USA

              	
                Registration
                  or

                Nov
                  9
                  1999

              

      

      

      

      

      C.  Copyrights
        and Copyright Licenses

       

      
        	
                Name

              	
                Application
                  or
                  Registration No.

              	
                Country

              	
                Registration
                  or

                Filing
                  Date

              
	 	 	 	 

      

      

       

      

      

      D.  Trade
        Secrets and Trade Secret Licenses

       

      
        	
                Name

              	
                Application
                  or
                  Registration No.

              	
                Country

              	
                Registration
                  or

                Filing
                  Date

              
	 	 	 	 

      

      

       

    

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

     

     

     

     

    Schedule
      C

     

    Jurisdictions

     

     

     

     

     

     

     

     

     

     

    
19f10qsb0307ex10p.htm

    REGISTRATION
      RIGHTS
      AGREEMENT

     

    REGISTRATION
      RIGHTS AGREEMENT (this “Agreement”), dated
      as
      of November 6, 2007, and among Midnight Holdings Group, Inc., a Delaware
      corporation with its headquarters located at 22600 Hall Road, Suite 205, Clinton
      Township, MI  48036 (the “Company”), and each of the
      undersigned (together with their respective affiliates and any assignee or
      transferee of all of their respective rights hereunder, the “Initial
      Investors”).

     

    WHEREAS:

     

    A.  In
      connection with the Securities Purchase Agreement by and among the parties
      hereto of even date herewith (the “Securities Purchase Agreement”), the Company
      has agreed, upon the terms and subject to the conditions contained therein,
      to
      issue and sell to the Initial Investors (i) secured convertible notes in
      the aggregate principal amount of up to Eight Hundred Thousand Dollars
      ($800,000) (the “Notes”) that are convertible into shares of the Company’s
      common stock (the “Common Stock”), upon the terms and subject to the limitations
      and conditions set forth in such Notes and (ii) warrants (the “Warrants”)
      to acquire an aggregate of 1,600,000 shares of Common Stock, upon the terms
      and
      conditions and subject to the limitations and conditions set forth in the
      Warrants; and

     

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

     

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

     

    1.  DEFINITIONS.

     

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

     

    (i)  “Investors”
means
      the Initial
      Investors and any transferee or assignee who agrees to become bound by the
      provisions of this Agreement in accordance with Section 9 hereof.

     

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

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iii)  “Registrable
      Securities” means
      the Conversion Shares issued or issuable upon conversion or otherwise pursuant
      to the Notes and Additional Notes (as defined in the Securities Purchase
      Agreement) including, without limitation, Damages Shares (as defined in the
      Notes) issued or issuable pursuant to the Notes, shares of Common Stock issued
      or issuable in payment of the Standard Liquidated Damages Amount (as defined
      in
      the Securities Purchase Agreement), shares issued or issuable in respect of
      interest or in redemption of the Notes in accordance with the terms thereof)
      and
      Warrant Shares issuable, upon exercise or otherwise pursuant to the Warrants
      and
      Additional Warrants (as defined in the Securities Purchase Agreement), and
      any
      shares of capital stock issued or issuable as a dividend on or in exchange
      for
      or otherwise with respect to any of the foregoing.

     

    (iv)  “Registration
      Statement” means
      a registration statement of the Company under the 1933 Act.

     

    b.  Capitalized
      terms used herein and not otherwise defined herein shall have the respective
      meanings set forth in the Securities Purchase Agreement or the Convertible
      Note.

     

    2.  REGISTRATION.

     

    a.  Mandatory
      Registration.  The Company shall prepare, and, on or
      prior to one hundred and twenty (120) days from the date of Closing (as defined
      in the Securities Purchase Agreement) (the “Filing Date”), file with the
      SEC a Registration Statement on Form S-3 (or, if Form S-3 is not then available,
      on such form of Registration Statement as is then available to effect a
      registration of the Registrable Securities, subject to the consent of the
      Initial Investors, which consent will not be unreasonably withheld) covering
      the
      resale of the Registrable Securities underlying the Notes and Warrants issued
      or
      issuable pursuant to the Securities Purchase Agreement, which Registration
      Statement, to the extent allowable under the 1933 Act and the rules and
      regulations promulgated thereunder (including Rule 416), shall state that such
      Registration Statement also covers such indeterminate number of additional
      shares of Common Stock as may become issuable upon conversion of or otherwise
      pursuant to the Notes and exercise of the Warrants to prevent dilution resulting
      from stock splits, stock dividends or similar transactions.  The
      number of shares of Common Stock initially included in such Registration
      Statement shall be no less than an amount equal to two (2) times the sum of
      the
      number of Conversion Shares that are then issuable upon conversion of the Notes
      and Additional Notes (based on the Variable Conversion Price as would then
      be in
      effect and assuming the Variable Conversion Price is the Conversion Price at
      such time), and the number of Warrant Shares that are then issuable upon
      exercise of the Warrants, without regard to any limitation on the Investor’s
      ability to convert the Notes or exercise the Warrants.  The Company
      acknowledges that the number of shares initially included in the Registration
      Statement represents a good faith estimate of the maximum number of shares
      issuable upon conversion of the Notes and upon exercise of the
      Warrants.

     

    b.  Underwritten
      Offering.  If any offering pursuant to a Registration
      Statement pursuant to Section 2(a) hereof involves an underwritten offering,
      the
      Investors who hold a majority in interest of the Registrable Securities subject
      to such underwritten offering, with the consent of a majority-in-interest of
      the
      Initial Investors, shall have the right to select one legal counsel and an
      investment banker or bankers and manager or managers to administer the offering,
      which investment banker or bankers or manager or managers shall be reasonably
      satisfactory to the Company.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    c.  Payments
      by the
      Company.  The Company shall use its best efforts to
      obtain effectiveness of the Registration Statement as soon as
      practicable.  If (i) the Registration Statement(s) covering the
      Registrable Securities required to be filed by the Company pursuant to Section
      2(a) hereof is not filed by the Filing Date or declared effective by the SEC
      on
      or prior to one hundred and twenty (120) days from the Filing Date, or
      (ii) after the Registration Statement has been declared effective by the
      SEC, sales of all of the Registrable Securities cannot be made pursuant to
      the
      Registration Statement, or (iii) the Common Stock is not listed or included
      for quotation on the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap
      Market (“Nasdaq
      SmallCap”), the New York Stock Exchange (the “NYSE”) or the American
      Stock
      Exchange (the “AMEX”)
      after being so listed or included for quotation, or (iv) the Common Stock
      ceases to be traded on the Over-the-Counter Bulletin Board (the “OTCBB”) or any equivalent
      replacement exchange prior to being listed or included for quotation on one
      of
      the aforementioned markets, then the Company will make payments to the Investors
      in such amounts and at such times as shall be determined pursuant to this
      Section 2(c) as partial relief for the damages to the Investors by reason of
      any
      such delay in or reduction of their ability to sell the Registrable Securities
      (which remedy shall not be exclusive of any other remedies available at law
      or
      in equity).  The Company shall pay to each holder of the Notes or
      Registrable Securities an amount equal to the then outstanding principal amount
      of the Notes (and, in the case of holders of Registrable Securities, the
      principal amount of Notes from which such Registrable Securities were converted)
      (“Outstanding Principal
      Amount”), multiplied by the Applicable Percentage (as defined below)
      times the sum of:  (i) the number of months (prorated for partial
      months) after the Filing Date or the end of the aforementioned one hundred
      and
      twenty (120) day period and prior to the date the Registration Statement is
      declared effective by the SEC, provided, however, that there shall be excluded
      from such period any delays which are solely attributable to changes required
      by
      the Investors in the Registration Statement with respect to information relating
      to the Investors, including, without limitation, changes to the plan of
      distribution, or to the failure of the Investors to conduct their review of
      the
      Registration Statement pursuant to Section 3(h) below in a reasonably prompt
      manner; (ii) the number of months (prorated for partial months) that sales
      of
      all of the Registrable Securities cannot be made pursuant to the Registration
      Statement after the Registration Statement has been declared effective
      (including, without limitation, when sales cannot be made by reason of the
      Company’s failure to properly supplement or amend the prospectus included
      therein in accordance with the terms of this Agreement, but excluding any days
      during an Allowed Delay (as defined in Section 3(f)); and (iii) the number
      of
      months (prorated for partial months) that the Common Stock is not listed or
      included for quotation on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX
      or
      that trading thereon is halted after the Registration Statement has been
      declared effective.  The term “Applicable Percentage” means
      two hundredths (.02).  (For example, if the Registration Statement
      becomes effective one (1) month after the end of such one hundred and twenty
      (120) day period, the Company would pay $5,000 for each $250,000 of Outstanding
      Principal Amount.  If thereafter, sales could not be made pursuant to
      the Registration Statement for an additional period of one (1) month, the
      Company would pay an additional $5,000 for each $250,000 of Outstanding
      Principal Amount.)  Such amounts shall be paid in cash or, at the
      Company’s option, in shares of Common Stock priced at the Conversion Price (as
      defined in the Notes) on such payment date.

     

     

    
      
        
        

      

      
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    d.  Piggy-Back
      Registrations.  Subject to the last sentence of this
      Section 2(d), if at any time prior to the expiration of the Registration Period
      (as hereinafter defined) the Company shall determine to file with the SEC a
      Registration Statement relating to an offering for its own account or the
      account of others under the 1933 Act of any of its equity securities (other
      than
      on Form S-4 or Form S-8 or their then equivalents relating to equity securities
      to be issued solely in connection with any acquisition of any entity or business
      or equity securities issuable in connection with stock option or other bonafide,
      employee
      benefit plans), the Company shall send to each Investor who is entitled to
      registration rights under this Section 2(d) written notice of such determination
      and, if within fifteen (15) days after the effective date of such notice, such
      Investor shall so request in writing, the Company shall include in such
      Registration Statement all or any part of the Registrable Securities such
      Investor requests to be registered, except that if, in connection with any
      underwritten public offering for the account of the Company the managing
      underwriter(s) thereof shall impose a limitation on the number of shares of
      Common Stock which may be included in the Registration Statement because, in
      such underwriter(s)’ judgment, marketing or other factors dictate such
      limitation is necessary to facilitate public distribution, then the Company
      shall be obligated to include in such Registration Statement only such limited
      portion of the Registrable Securities with respect to which such Investor has
      requested inclusion hereunder as the underwriter shall permit. Any exclusion
      of
      Registrable Securities shall be made pro rata among the Investors seeking to
      include Registrable Securities in proportion to the number of Registrable
      Securities sought to be included by such Investors; provided, however,
      that the
      Company shall not exclude any Registrable Securities unless the Company has
      first excluded all outstanding securities, the holders of which are not entitled
      to inclusion of such securities in such Registration Statement or are not
      entitled to pro rata inclusion with the Registrable Securities; and provided, further,
however,
      that, after
      giving effect to the immediately preceding proviso, any exclusion of Registrable
      Securities shall be made pro rata with holders of other securities having the
      right to include such securities in the Registration Statement other than
      holders of securities entitled to inclusion of their securities in such
      Registration Statement by reason of demand registration rights.  No
      right to registration of Registrable Securities under this Section 2(d) shall
      be
      construed to limit any registration required under Section 2(a)
      hereof.  If an offering in connection with which an Investor is
      entitled to registration under this Section 2(d) is an underwritten offering,
      then each Investor whose Registrable Securities are included in such
      Registration Statement shall, unless otherwise agreed by the Company, offer
      and
      sell such Registrable Securities in an underwritten offering using the same
      underwriter or underwriters and, subject to the provisions of this Agreement,
      on
      the same terms and conditions as other shares of Common Stock included in such
      underwritten offering.  Notwithstanding anything to the contrary set
      forth herein, the registration rights of the Investors pursuant to this Section
      2(d) shall only be available in the event the Company fails to timely file,
      obtain effectiveness or maintain effectiveness of any Registration Statement
      to
      be filed pursuant to Section 2(a) in accordance with the terms of this
      Agreement.

     

    e.  Eligibility
      for Form S-3,
      SB-2 or S-1; Conversion to Form S-3.  If the Company is
      not currently eligible to use Form S-3, not later than five (5) business days
      after the Company first meets the registration eligibility and transaction
      requirements for the use of Form S-3 (or any successor form) for registration
      of
      the offer and sale by the Initial Investors and any other Investors of
      Registrable Securities, the Company shall file a Registration Statement on
      Form
      S-3 (or such successor form) with respect to the Registrable Securities covered
      by the Registration Statement on Form SB-2 or Form S-1, whichever is applicable,
      filed pursuant to Section 2(a) (and include in such Registration Statement
      on
      Form S-3 the information required by Rule 429 under the 1933 Act) or convert
      the
      Registration Statement on Form SB-2 or Form S-1, whichever is applicable, filed
      pursuant to Section 2(a) to a Form S-3 pursuant to Rule 429 under the 1933
      Act
      and cause such Registration Statement (or such amendment) to be declared
      effective no later than forty-five (45) days after filing.  In the
      event of a breach by the Company of the provisions of this Section 2(e), the
      Company will be required to make payments pursuant to Section 2(c)
      hereof.

     

     

    
      
        
        

      

      
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    3.  OBLIGATIONS
      OF THE
      COMPANY.

     

    In
      connection with the registration of the Registrable Securities, the Company
      shall have the following obligations:

     

    a.  The
      Company shall prepare promptly, and file with the SEC not later than the Filing
      Date, a Registration Statement with respect to the number of Registrable
      Securities provided in Section 2(a), and thereafter use its best efforts to
      cause such Registration Statement relating to Registrable Securities to become
      effective as soon as possible after such filing but in no event later than
      one
      hundred and twenty (120) days from the Filing Date), and keep the Registration
      Statement effective pursuant to Rule 415 at all times until such date as is
      the
      earlier of (i) the date on which all of the Registrable Securities have been
      sold and (ii) the date on which the Registrable Securities (in the opinion
      of
      counsel to the Initial Investors) may be immediately sold to the public without
      registration or restriction (including, without limitation, as to volume by
      each
      holder thereof) under the 1933 Act (the “Registration Period”), which
      Registration Statement (including any amendments or supplements thereto and
      prospectuses contained therein) shall not contain any untrue statement of a
      material fact or omit to state a material fact required to be stated therein,
      or
      necessary to make the statements therein not misleading.

     

    b.  The
      Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to the Registration Statements and
      the prospectus used in connection with the Registration Statements as may be
      necessary to keep the Registration Statements effective at all times during
      the
      Registration Period, and, during such period, comply with the provisions of
      the
      1933 Act with respect to the disposition of all Registrable Securities of the
      Company covered by the Registration Statements until such time as all of such
      Registrable Securities have been disposed of in accordance with the intended
      methods of disposition by the seller or sellers thereof as set forth in the
      Registration Statements.  In the event the number of shares available
      under a Registration Statement filed pursuant to this Agreement is insufficient
      to cover all of the Registrable Securities issued or issuable upon conversion
      of
      the Notes and exercise of the Warrants, the Company shall amend the Registration
      Statement, or file a new Registration Statement (on the short form available
      therefor, if applicable), or both, so as to cover all of the Registrable
      Securities, in each case, as soon as practicable, but in any event within
      fifteen (15) days after the necessity therefor arises (based on the market
      price
      of the Common Stock and other relevant factors on which the Company reasonably
      elects to rely).  The Company shall use its best efforts to cause such
      amendment and/or new Registration Statement to become effective as soon as
      practicable following the filing thereof, but in any event within thirty (30)
      days after the date on which the Company reasonably first determines (or
      reasonably should have determined) the need therefor.  The provisions
      of Section 2(c) above shall be applicable with respect to such obligation,
      with
      the ninety (90) days running from the day the Company reasonably first
      determines (or reasonably should have determined) the need
      therefor.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    c.  The
      Company shall furnish to each Investor whose Registrable Securities are included
      in a Registration Statement and its legal counsel (i) promptly (but in no
      event more than two (2) business days) after the same is prepared and publicly
      distributed, filed with the SEC, or received by the Company, one copy of each
      Registration Statement and any amendment thereto, each preliminary prospectus
      and prospectus and each amendment or supplement thereto, and, in the case of
      the
      Registration Statement referred to in Section 2(a), each letter written by
      or on
      behalf of the Company to the SEC or the staff of the SEC, and each item of
      correspondence from the SEC or the staff of the SEC, in each case relating
      to
      such Registration Statement (other than any portion of any thereof which
      contains information for which the Company has sought confidential treatment),
      and (ii) promptly (but in no event more than two (2) business days) after
      the Registration Statement is declared effective by the SEC, such number of
      copies of a prospectus, including a preliminary prospectus, and all amendments
      and supplements thereto and such other documents as such Investor may reasonably
      request in order to facilitate the disposition of the Registrable Securities
      owned by such Investor.  The Company will immediately notify each
      Investor by facsimile of the effectiveness of each Registration Statement or
      any
      post-effective amendment.  The Company will promptly (but in no event
      more than five (5) business days) respond to any and all comments received
      from
      the SEC (which comments shall promptly be made available to the Investors upon
      request), with a view towards causing each Registration Statement or any
      amendment thereto to be declared effective by the SEC as soon as practicable,
      shall promptly file an acceleration request as soon as practicable (but in
      no
      event more than two (2) business days) following the resolution or clearance
      of
      all SEC comments or, if applicable, following notification by the SEC that
      any
      such Registration Statement or any amendment thereto will not be subject to
      review and shall promptly file with the SEC a final prospectus as soon as
      practicable (but in no event more than two (2) business days) following receipt
      by the Company from the SEC of an order declaring the Registration Statement
      effective.  In the event of a breach by the Company of the provisions
      of this Section 3(c), the Company will be required to make payments pursuant
      to
      Section 2(c) hereof.

     

    d.  The
      Company shall use reasonable efforts to (i) register and qualify the
      Registrable Securities covered by the Registration Statements under such other
      securities or “blue sky” laws of such jurisdictions in the United States as the
      Investors who hold a majority in interest of the Registrable Securities being
      offered reasonably request, (ii) prepare and file in those jurisdictions
      such amendments (including post-effective amendments) and supplements to such
      registrations and qualifications as may be necessary to maintain the
      effectiveness thereof during the Registration Period, (iii) take such other
      actions as may be necessary to maintain such registrations and qualifications
      in
      effect at all times during the Registration Period, and (iv) take all other
      actions reasonably necessary or advisable to qualify the Registrable Securities
      for sale in such jurisdictions; provided, however,
      that the
      Company shall not be required in connection therewith or as a condition thereto
      to (a) qualify to do business in any jurisdiction where it would not
      otherwise be required to qualify but for this Section 3(d), (b) subject
      itself to general taxation in any such jurisdiction, (c) file a general
      consent to service of process in any such jurisdiction, (d) provide any
      undertakings that cause the Company undue expense or burden, or (e) make
      any change in its charter or bylaws, which in each case the Board of Directors
      of the Company determines to be contrary to the best interests of the Company
      and its shareholders.

     

     

    
      
        
        

      

      
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    e.  In
      the
      event Investors who hold a majority-in-interest of the Registrable Securities
      being offered in the offering (with the approval of a majority-in-interest
      of
      the Initial Investors) select underwriters for the offering, the Company shall
      enter into and perform its obligations under an underwriting agreement, in
      usual
      and customary form, including, without limitation, customary indemnification
      and
      contribution obligations, with the underwriters of such offering.

     

    f.  As
      promptly as practicable after becoming aware of such event, the Company shall
      notify each Investor of the happening of any event, of which the Company has
      knowledge, as a result of which the prospectus included in any Registration
      Statement, as then in effect, includes an untrue statement of a material fact
      or
      omission to state a material fact required to be stated therein or necessary
      to
      make the statements therein not misleading, and use its best efforts promptly
      to
      prepare a supplement or amendment to any Registration Statement to correct
      such
      untrue statement or omission, and deliver such number of copies of such
      supplement or amendment to each Investor as such Investor may reasonably
      request; provided that, for not more than ten (10) consecutive trading days
      (or
      a total of not more than twenty (20) trading days in any twelve (12) month
      period), the Company may delay the disclosure of material non-public information
      concerning the Company (as well as prospectus or Registration Statement
      updating) the disclosure of which at the time is not, in the good faith opinion
      of the Company, in the best interests of the Company (an “Allowed Delay”); provided,
      further, that the Company shall promptly (i) notify the Investors in
      writing of the existence of (but in no event, without the prior written consent
      of an Investor, shall the Company disclose to such investor any of the facts
      or
      circumstances regarding) material non-public information giving rise to an
      Allowed Delay and (ii) advise the Investors in writing to cease all sales
      under such Registration Statement until the end of the Allowed Delay. Upon
      expiration of the Allowed Delay, the Company shall again be bound by the first
      sentence of this Section 3(f) with respect to the information giving rise
      thereto.

     

    g.  The
      Company shall use its best efforts to prevent the issuance of any stop order
      or
      other suspension of effectiveness of any Registration Statement, and, if such
      an
      order is issued, to obtain the withdrawal of such order at the earliest possible
      moment and to notify each Investor who holds Registrable Securities being sold
      (or, in the event of an underwritten offering, the managing underwriters) of
      the
      issuance of such order and the resolution thereof.

     

    h.  The
      Company shall permit a single firm of counsel designated by the Initial
      Investors to review such Registration Statement and all amendments and
      supplements thereto (as well as all requests for acceleration or effectiveness
      thereof) a reasonable period of time prior to their filing with the SEC, and
      not
      file any document in a form to which such counsel reasonably objects and will
      not request acceleration of such Registration Statement without prior notice
      to
      such counsel.  The sections of such Registration Statement covering
      information with respect to the Investors, the Investor’s beneficial ownership
      of securities of the Company or the Investors intended method of disposition
      of
      Registrable Securities shall conform to the information provided to the Company
      by each of the Investors.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

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

     

    j.  At
      the
      request of any Investor, the Company shall furnish, on the date that Registrable
      Securities are delivered to an underwriter, if any, for sale in connection
      with
      any Registration Statement or, if such securities are not being sold by an
      underwriter, on the date of effectiveness thereof (i) an opinion, dated as
      of such date, from counsel representing the Company for purposes of such
      Registration Statement, in form, scope and substance as is customarily given
      in
      an underwritten public offering, addressed to the underwriters, if any, and
      the
      Investors and (ii) a letter, dated such date, from the Company’s
      independent certified public accountants in form and substance as is customarily
      given by independent certified public accountants to underwriters in an
      underwritten public offering, addressed to the underwriters, if any, and the
      Investors.

     

    k.  The
      Company shall make available for inspection by (i) any Investor,
      (ii) any underwriter participating in any disposition pursuant to a
      Registration Statement, (iii) one firm of attorneys and one firm of
      accountants or other agents retained by the Initial Investors, (iv) one
      firm of attorneys and one firm of accountants or other agents retained by all
      other Investors, and (v) one firm of attorneys retained by all such
      underwriters (collectively, the “Inspectors”) all pertinent
      financial and other records, and pertinent corporate documents and properties
      of
      the Company, including without limitation, records of conversions by other
      holders of convertible securities issued by the Company and the issuance of
      stock to such holders pursuant to the conversions (collectively, the “Records”), as shall be
      reasonably deemed necessary by each Inspector to enable each Inspector to
      exercise its due diligence responsibility, and cause the Company’s officers,
      directors and employees to supply all information which any Inspector may
      reasonably request for purposes of such due diligence; provided, however,
      that each
      Inspector shall hold in confidence and shall not make any disclosure (except
      to
      an Investor) of any Record or other information which the Company determines
      in
      good faith to be confidential, and of which determination the Inspectors are
      so
      notified, unless (a) the disclosure of such Records is necessary to avoid
      or correct a misstatement or omission in any Registration Statement,
      (b) the release of such Records is ordered pursuant to a subpoena or other
      order from a court or government body of competent jurisdiction, or (c) the
      information in such Records has been made generally available to the public
      other than by disclosure in violation of this or any other
      agreement.  The Company shall not be required to disclose any
      confidential information in such Records to any Inspector until and unless
      such
      Inspector shall have entered into confidentiality agreements (in form and
      substance satisfactory to the Company) with the Company with respect thereto,
      substantially in the form of this Section 3(k).  Each Investor agrees
      that it shall, upon learning that disclosure of such Records is sought in or
      by
      a court or governmental body of competent jurisdiction or through other means,
      give prompt notice to the Company and allow the Company, at its expense, to
      undertake appropriate action to prevent disclosure of, or to obtain a protective
      order for, the Records deemed confidential.  Nothing herein (or in any
      other confidentiality agreement between the Company and any Investor) shall
      be
      deemed to limit the Investor’s ability to sell Registrable Securities in a
      manner which is otherwise consistent with applicable laws and
      regulations.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

    m.  The
      Company shall (i) cause all the Registrable Securities covered by the
      Registration Statement to be listed on each national securities exchange on
      which securities of the same class or series issued by the Company are then
      listed, if any, if the listing of such Registrable Securities is then permitted
      under the rules of such exchange, or (ii) to the extent the securities of
      the same class or series are not then listed on a national securities exchange,
      secure the designation and quotation, of all the Registrable Securities covered
      by the Registration Statement on Nasdaq or, if not eligible for Nasdaq, on
      Nasdaq SmallCap or, if not eligible for Nasdaq or Nasdaq SmallCap, on the OTCBB
      and, without limiting the generality of the foregoing, to arrange for at least
      two market makers to register with the National Association of Securities
      Dealers, Inc. (“NASD”)
      as such with respect to such Registrable Securities.

     

    n.  The
      Company shall provide a transfer agent and registrar, which may be a single
      entity, for the Registrable Securities not later than the effective date of
      the
      Registration Statement.

     

    o.  The
      Company shall cooperate with the Investors who hold Registrable Securities
      being
      offered and the managing underwriter or underwriters, if any, to facilitate
      the
      timely preparation and delivery of certificates (not bearing any restrictive
      legends) representing Registrable Securities to be offered pursuant to a
      Registration Statement and enable such certificates to be in such denominations
      or amounts, as the case may be, as the managing underwriter or underwriters,
      if
      any, or the Investors may reasonably request and registered in such names as
      the
      managing underwriter or underwriters, if any, or the Investors may request,
      and,
      within three (3) business days after a Registration Statement which includes
      Registrable Securities is ordered effective by the SEC, the Company shall
      deliver, and shall cause legal counsel selected by the Company to deliver,
      to
      the transfer agent for the Registrable Securities (with copies to the Investors
      whose Registrable Securities are included in such Registration Statement) an
      instruction in a form reasonably acceptable to the Investors and an opinion
      of
      such counsel in a form reasonably acceptable to the Investors.

     

    p.  At
      the
      request of the holders of a majority-in-interest of the Registrable Securities,
      the Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to a Registration Statement and
      any
      prospectus used in connection with the Registration Statement as may be
      necessary in order to change the plan of distribution set forth in such
      Registration Statement.

     

     

    
      
        
        

      

      
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    q.  From
      and
      after the date of this Agreement, the Company shall not, and shall not agree
      to,
      allow the holders of any securities of the Company to include any of their
      securities in any Registration Statement under Section 2(a) hereof or any
      amendment or supplement thereto under Section 3(b) hereof without the consent
      of
      the holders of a majority-in-interest of the Registrable
      Securities.

     

    r.  The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by the Investors of Registrable Securities pursuant
      to a
      Registration Statement.

     

    4.  OBLIGATIONS
      OF THE
      INVESTORS.

     

    In
      connection with the registration of the Registrable Securities, the Investors
      shall have the following obligations:

     

    a.  It
      shall
      be a condition precedent to the obligations of the Company to complete the
      registration pursuant to this Agreement with respect to the Registrable
      Securities of a particular Investor that such Investor shall furnish to the
      Company such information regarding itself, the Registrable Securities held
      by it
      and the intended method of disposition of the Registrable Securities held by
      it
      as shall be reasonably required to effect the registration of such Registrable
      Securities and shall execute such documents in connection with such registration
      as the Company may reasonably request.  At least three (3) business
      days prior to the first anticipated filing date of the Registration Statement,
      the Company shall notify each Investor of the information the Company requires
      from each such Investor.

     

    b.  Each
      Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
      cooperate with the Company as reasonably requested by the Company in connection
      with the preparation and filing of the Registration Statements hereunder, unless
      such Investor has notified the Company in writing of such Investor’s election to
      exclude all of such Investor’s Registrable Securities from the Registration
      Statements.

     

    c.  In
      the
      event Investors holding a majority-in-interest of the Registrable Securities
      being registered (with the approval of the Initial Investors) determine to
      engage the services of an underwriter, each Investor agrees to enter into and
      perform such Investor’s obligations under an underwriting agreement, in usual
      and customary form, including, without limitation, customary indemnification
      and
      contribution obligations, with the managing underwriter of such offering and
      take such other actions as are reasonably required in order to expedite or
      facilitate the disposition of the Registrable Securities, unless such Investor
      has notified the Company in writing of such Investor’s election to exclude all
      of such Investor’s Registrable Securities from such Registration
      Statement.

     

    d.  Each
      Investor agrees that, upon receipt of any notice from the Company of the
      happening of any event of the kind described in Section 3(f) or 3(g), such
      Investor will immediately discontinue disposition of Registrable Securities
      pursuant to the Registration Statement covering such Registrable Securities
      until such Investor’s receipt of the copies of the supplemented or amended
      prospectus contemplated by Section 3(f) or 3(g) and, if so directed by the
      Company, such Investor shall deliver to the Company (at the expense of the
      Company) or destroy (and deliver to the Company a certificate of destruction)
      all copies in such Investor’s possession, of the prospectus covering such
      Registrable Securities current at the time of receipt of such
      notice.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    e.  No
      Investor may participate in any underwritten registration hereunder unless
      such
      Investor (i) agrees to sell such Investor’s Registrable Securities on the
      basis provided in any underwriting arrangements in usual and customary form
      entered into by the Company, (ii) completes and executes all
      questionnaires, powers of attorney, indemnities, underwriting agreements and
      other documents reasonably required under the terms of such underwriting
      arrangements, and (iii) agrees to pay its pro rata share of all
      underwriting discounts and commissions and any expenses in excess of those
      payable by the Company pursuant to Section 5 below.

     

    5.  EXPENSES
      OF
      REGISTRATION.

     

    All
      reasonable expenses, other than underwriting discounts and commissions, incurred
      in connection with registrations, filings or qualifications pursuant to Sections
      2 and 3, including, without limitation, all registration, listing and
      qualification fees, printers and accounting fees, the fees and disbursements
      of
      counsel for the Company, and the reasonable fees and disbursements of one
      counsel selected by the Initial Investors pursuant to Sections 2(b) and 3(h)
      hereof shall be borne by the Company.

     

    6.  INDEMNIFICATION.

     

    In
      the
      event any Registrable Securities are included in a Registration Statement under
      this Agreement:

     

    a.  To
      the
      extent permitted by law, the Company will indemnify, hold harmless and defend
      (i) each Investor who holds such Registrable Securities, (ii) the
      directors, officers, partners, employees, agents and each person who controls
      any Investor within the meaning of the 1933 Act or the Securities Exchange
      Act
      of 1934, as amended (the “1934
      Act”), if any, (iii) any underwriter (as defined in the 1933 Act)
      for the Investors, and (iv) the directors, officers, partners, employees
      and each person who controls any such underwriter within the meaning of the
      1933
      Act or the 1934 Act, if any (each, an “Indemnified Person”), against
      any joint or several losses, claims, damages, liabilities or expenses
      (collectively, together with actions, proceedings or inquiries by any regulatory
      or self-regulatory organization, whether commenced or threatened, in respect
      thereof, “Claims”) to
      which any of them may become subject insofar as such Claims arise out of or
      are
      based upon: (i) any untrue statement or alleged untrue statement of a material
      fact in a Registration Statement or the omission or alleged omission to state
      therein a material fact required to be stated or necessary to make the
      statements therein not misleading; (ii) any untrue statement or alleged untrue
      statement of a material fact contained in any preliminary prospectus if used
      prior to the effective date of such Registration Statement, or contained in
      the
      final prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the SEC) or the omission or alleged omission
      to state therein any material fact necessary to make the statements made
      therein, in light of the circumstances under which the statements therein were
      made, not misleading; or (iii) any violation or alleged violation by the Company
      of the 1933 Act, the 1934 Act, any other law, including, without limitation,
      any
      state securities law, or any rule or regulation thereunder relating to the
      offer
      or sale of the Registrable Securities (the matters in the foregoing clauses
      (i)
      through (iii) being, collectively, “Violations”).  

     

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

       

      Subject
        to the restrictions set forth in Section 6(c) with respect to the number
        of
        legal counsel, the Company shall reimburse the Indemnified Person, promptly
        as
        such expenses are incurred and are due and payable, for any reasonable legal
        fees or other reasonable expenses incurred by them in connection with
        investigating or defending any such Claim.  Notwithstanding anything
        to the contrary contained herein, the indemnification agreement contained
        in
        this Section 6(a): (i) shall not apply to a Claim arising out of or based
        upon a
        Violation which occurs in reliance upon and in conformity with information
        furnished in writing to the Company by any Indemnified Person or underwriter
        for
        such Indemnified Person expressly for use in connection with the preparation
        of
        such Registration Statement or any such amendment thereof or supplement thereto,
        if such prospectus was timely made available by the Company pursuant to Section
        3(c) hereof; (ii) shall not apply to amounts paid in settlement of any Claim
        if
        such settlement is effected without the prior written consent of the Company,
        which consent shall not be unreasonably withheld; and (iii) with respect
        to any
        preliminary prospectus, shall not inure to the benefit of any Indemnified
        Person
        if the untrue statement or omission of material fact contained in the
        preliminary prospectus was corrected on a timely basis in the prospectus,
        as
        then amended or supplemented, such corrected prospectus was timely made
        available by the Company pursuant to Section 3(c) hereof, and the Indemnified
        Person was promptly advised in writing not to use the incorrect prospectus
        prior
        to the use giving rise to a Violation and such Indemnified Person,
        notwithstanding such advice, used it.  Such indemnity shall remain in
        full force and effect regardless of any investigation made by or on behalf
        of
        the Indemnified Person and shall survive the transfer of the Registrable
        Securities by the Investors pursuant to Section 9.

    

     

    b.  In
      connection with any Registration Statement in which an Investor is
      participating, each such Investor agrees severally and not jointly to indemnify,
      hold harmless and defend, to the same extent and in the same manner set forth
      in
      Section 6(a), the Company, each of its directors, each of its officers who
      signs
      the Registration Statement, each person, if any, who controls the Company within
      the meaning of the 1933 Act or the 1934 Act, any underwriter and any other
      shareholder selling securities pursuant to the Registration Statement or any
      of
      its directors or officers or any person who controls such shareholder or
      underwriter within the meaning of the 1933 Act or the 1934 Act (collectively
      and
      together with an Indemnified Person, an “Indemnified Party”), against
      any Claim to which any of them may become subject, under the 1933 Act, the
      1934
      Act or otherwise, insofar as such Claim arises out of or is based upon any
      Violation by such Investor, in each case to the extent (and only to the extent)
      that such Violation occurs in reliance upon and in conformity with written
      information furnished to the Company by such Investor expressly for use in
      connection with such Registration Statement; and subject to Section 6(c) such
      Investor will reimburse any legal or other expenses (promptly as such expenses
      are incurred and are due and payable) reasonably incurred by them in connection
      with investigating or defending any such Claim; provided, however,
      that the
      indemnity agreement contained in this Section 6(b) shall not apply to amounts
      paid in settlement of any Claim if such settlement is effected without the
      prior
      written consent of such Investor, which consent shall not be unreasonably
      withheld; provided, further,
however,
      that the
      Investor shall be liable under this Agreement (including this Section 6(b)
      and
      Section 7) for only that amount as does not exceed the net proceeds to such
      Investor as a result of the sale of Registrable Securities pursuant to such
      Registration Statement.  

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

       

      Such
        indemnity shall remain in full force and effect regardless of any investigation
        made by or on behalf of such Indemnified Party and shall survive the transfer
        of
        the Registrable Securities by the Investors pursuant to Section 9.
        Notwithstanding anything to the contrary contained herein, the indemnification
        agreement contained in this Section 6(b) with respect to any preliminary
        prospectus shall not inure to the benefit of any Indemnified Party if the
        untrue
        statement or omission of material fact contained in the preliminary prospectus
        was corrected on a timely basis in the prospectus, as then amended or
        supplemented.

    

     

    c.  Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action (including any governmental action),
      such Indemnified Person or Indemnified Party shall, if a Claim in respect
      thereof is to be made against any indemnifying party under this Section 6,
      deliver to the indemnifying party a written notice of the commencement thereof,
      and the indemnifying party shall have the right to participate in, and, to
      the
      extent the indemnifying party so desires, jointly with any other indemnifying
      party similarly noticed, to assume control of the defense thereof with counsel
      mutually satisfactory to the indemnifying party and the Indemnified Person
      or
      the Indemnified Party, as the case may be; provided, however,
      that an
      Indemnified Person or Indemnified Party shall have the right to retain its
      own
      counsel with the fees and expenses to be paid by the indemnifying party, if,
      in
      the reasonable opinion of counsel retained by the indemnifying party, the
      representation by such counsel of the Indemnified Person or Indemnified Party
      and the indemnifying party would be inappropriate due to actual or potential
      differing interests between such Indemnified Person or Indemnified Party and
      any
      other party represented by such counsel in such proceeding.  The
      indemnifying party shall pay for only one separate legal counsel
      for  the Indemnified Persons or the Indemnified Parties, as
      applicable, and such legal counsel shall be selected by Investors holding a
      majority-in-interest of the  Registrable Securities included in the
      Registration Statement to which the Claim relates (with the approval of a
      majority-in-interest of the Initial Investors), if the Investors are entitled
      to
      indemnification hereunder, or the Company, if the Company is entitled to
      indemnification hereunder, as applicable.  The failure to deliver
      written notice to the indemnifying party within a reasonable time of the
      commencement of any such action shall not relieve such indemnifying party of
      any
      liability to the Indemnified Person or Indemnified Party under this Section
      6,
      except to the extent that the indemnifying party is actually prejudiced in
      its
      ability to defend such action.  The indemnification required by this
      Section 6 shall be made by periodic payments of the amount thereof during the
      course of the investigation or defense, as such expense, loss, damage or
      liability is incurred and is due and payable.

     

    7.  CONTRIBUTION.

     

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

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    8.  REPORTS
      UNDER THE 1934
      ACT.

     

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

     

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

     

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

     

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

     

    9.  ASSIGNMENT
      OF REGISTRATION
      RIGHTS.

     

    The
      rights under this Agreement shall be automatically assignable by the Investors
      to any transferee of all or any portion of Registrable Securities if:
      (i) the Investor agrees in writing with the transferee or assignee to
      assign such rights, and a copy of such agreement is furnished to the Company
      within a reasonable time after such assignment, (ii) the Company is, within
      a reasonable time after such transfer or assignment, furnished with written
      notice of (a) the name and address of such transferee or assignee, and
      (b) the securities with respect to which such registration rights are being
      transferred or assigned, (iii) following such transfer or assignment, the
      further disposition of such securities by the transferee or assignee is
      restricted under the 1933 Act and applicable state securities laws, (iv) at
      or
      before the time the Company receives the written notice contemplated by clause
      (ii) of this sentence, the transferee or assignee agrees in writing with the
      Company to be bound by all of the provisions contained herein, (v) such transfer
      shall have been made in accordance with the applicable requirements of the
      Securities Purchase Agreement, and (vi) such transferee shall be an “accredited investor” as that
      term defined in Rule 501 of Regulation D promulgated under the 1933
      Act.

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

     

    10.  AMENDMENT
      OF REGISTRATION
      RIGHTS.

     

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with written consent of the Company, each of the Initial
      Investors (to the extent such Initial Investor still owns Registrable
      Securities) and Investors who hold a majority interest of the Registrable
      Securities.  Any amendment or waiver effected in accordance with this
      Section 10 shall be binding upon each Investor and the Company.

     

    11.  MISCELLANEOUS.

     

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

     

    b.  Any
      notices required or permitted to be given under the terms hereof 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:

     

    Anslow
      & Jaclin, LLP

    195
      Route
      9 South, Suite 204

    Manalapan,
      NJ  07726

    Attention:  Gregg
      E. Jaclin, Esq.

    Telephone:  732-409-1212

    Facsimile:   732-577-1188

     

    

     

    If
      to an
      Investor: to the address set forth immediately below such Investor’s name on the
      signature pages to the Securities Purchase Agreement.

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

    With
      a
      copy to:

     

    Ballard
      Spahr Andrews & Ingersoll, LLP

    1735
      Market Street

    51st
      Floor

    Philadelphia,
      Pennsylvania  19103

    Attention:  Gerald
      J. Guarcini, Esq.

    Telephone:  215-865-8625

    Facsimile:  215-864-8999

    Email:  guarcini@ballardspahr.com

     

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

     

    d.  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 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.

     

    e.  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.

     

    f.  This
      Agreement, the Notes, the Warrants and the Securities Purchase Agreement
      (including all schedules and exhibits thereto) constitute the entire agreement
      among the parties hereto with respect to the subject matter hereof and
      thereof.  

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

       

       

      There
        are
        no restrictions, promises, warranties or undertakings, other than those set
        forth or referred to herein and therein.  This Agreement and the
        Securities Purchase Agreement supersede all prior agreements and understandings
        among the parties hereto with respect to the subject matter hereof and
        thereof.

    

     

    g.  Subject
      to the requirements of Section 9 hereof, this Agreement shall be binding upon
      and inure to the benefit of the parties and their successors and
      assigns.

     

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

     

    i.  This
      Agreement may be executed in two 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.

     

    j.  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.

     

    k.  Except
      as
      otherwise provided herein, all consents and other determinations to be made
      by
      the Investors pursuant to this Agreement shall be made by Investors holding
      a
      majority of the Registrable Securities, determined as if the all of the Notes
      then outstanding have been converted into for Registrable
      Securities.

     

    l.  The
      Company acknowledges that a breach by it of its obligations hereunder will
      cause
      irreparable harm to each Investor by vitiating the intent and purpose of the
      transactions contemplated hereby.  Accordingly, the Company
      acknowledges that the remedy at law for 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 any of the provisions under this Agreement, that each
      Investor shall be entitled, in addition to all other available remedies in
      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 specifically the terms and provisions hereof,
      without the necessity of showing economic loss and without any bond or other
      security being required.

     

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

     

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

     

    IN
      WITNESS WHEREOF, the
      Company and the undersigned Initial Investors 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

     

    AJW
      OFFSHORE,
      LTD.

    By:  First
      Street Manager II, LLC

    

    /s/ 
Corey
      S.
      Ribotsky                  

    Corey
      S.
      Ribotsky

    Manager

     

    AJW
      QUALIFIED PARTNERS,
      LLC

    By:  AJW
      Manager, LLC

     

    /s/ 
Corey
      S.
      Ribotsky                  

    Corey
      S.
      Ribotsky

    Manager

     

    NEW
      MILLENNIUM CAPITAL PARTNERS II,
      LLC

    By:  First
      Street Manager II, LLC

     

    /s/ 
Corey
      S.
      Ribotsky                  

    Corey
      S.
      Ribotsky

    Manager

    
18

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