Document:

Exhibit - 10.65

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

                        CALLABLE SECURED CONVERTIBLE NOTE

Clinton Township, Michigan
July 5, 2006                                                            $[_____]

         FOR  VALUE  RECEIVED,   MIDNIGHT  HOLDINGS  GROUP,   INC.,  a  Delaware
corporation  (hereinafter called the "BORROWER"),  hereby promises to pay to the
order  of  [_________]   or  registered   assigns  (the  "HOLDER")  the  sum  of
$[________],  on July 5, 2009 (the "MATURITY DATE"),  and to pay interest on the
unpaid principal  balance hereof at the rate of ten percent (10%) per annum from
July 5, 2006 (the "ISSUE DATE") until the same becomes due and payable,  whether
at maturity or upon  acceleration  or by prepayment or otherwise.  Any amount of
principal  or  interest  on this  Note  which is not paid  when due  shall  bear
interest  at the rate of  fifteen  percent  (15%)  per  annum  from the due date
thereof until the same is paid  ("DEFAULT  INTEREST").  Interest  shall commence
accruing on the issue date, shall be computed on the basis of a 365-day year and
the actual  number of days elapsed and shall be payable,  quarterly on March 31,
June 30,  September 30 and December 31 of each year beginning on the last day of
the first full quarter  after Issue Date.  All payments  due  hereunder  (to the
extent not  converted  into common  stock,  $.00005 par value per share,  of the
Borrower (the "COMMON STOCK") in accordance with the terms hereof) shall be made
in lawful money of the United States of America.  All payments  shall be made at
such  address as the Holder  shall  hereafter  give to the  Borrower  by written
notice made in accordance with the provisions of this Note.  Whenever any amount
expressed  to be due by the  terms of this Note is due on any day which is not a
business day, the same shall instead be due on the next  succeeding day which is
a business  day and, in the case of any  interest  payment date which is not the
date on which this Note is paid in full,  the  extension of the due date thereof
shall not be taken  into  account  for  purposes  of  determining  the amount of
interest due on such date. As used in this Note,  the term  "business day" shall
mean any day other than a Saturday, Sunday or a day on which commercial banks in
the city of New York,  New York are  authorized  or required by law or executive
order to remain closed. Each

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capitalized term used herein, and not otherwise defined,  shall have the meaning
ascribed thereto in that certain Securities  Purchase  Agreement,  dated July 5,
2006,  pursuant  to  which  this  Note  was  originally  issued  (the  "PURCHASE
AGREEMENT").

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

         The following terms shall apply to this Note:

                          ARTICLE I. CONVERSION RIGHTS

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

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<PAGE>

conversion  PLUS (2) accrued  and unpaid  interest,  if any,  on such  principal
amount at the interest rates  provided in this Note to the Conversion  Date PLUS
(3) Default  Interest,  if any, on the  amounts  referred to in the  immediately
preceding  clauses (1) and/or (2) PLUS (4) at the Holder's  option,  any amounts
owed to the Holder  pursuant  to Sections  1.3 and 1.4(g)  hereof or pursuant to
Section 2(c) of that certain Registration Rights Agreement,  dated as of July 5,
2006,  executed in  connection  with the  initial  issuance of this Note and the
other Notes issued on the Issue Date (the "REGISTRATION RIGHTS AGREEMENT").

         1.2 CONVERSION PRICE.

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

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

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<PAGE>

announces a tender offer to purchase 50% or more of the Borrower's  Common Stock
(or any other  takeover  scheme)  (the date of the  announcement  referred to in
clause (i) or (ii) is hereinafter referred to as the "ANNOUNCEMENT  DATE"), then
the Conversion Price shall,  effective upon the Announcement Date and continuing
through the Adjusted  Conversion Price  Termination Date (as defined below),  be
equal to the lower of (x) the Conversion  Price which would have been applicable
for a Conversion occurring on the Announcement Date and (y) the Conversion Price
that would otherwise be in effect.  From and after the Adjusted Conversion Price
Termination  Date, the Conversion Price shall be determined as set forth in this
Section 1.2(a).  For purposes hereof,  "ADJUSTED  CONVERSION  PRICE  TERMINATION
DATE" shall mean,  with respect to any proposed  transaction or tender offer (or
takeover scheme) for which a public announcement as contemplated by this Section
1.2(b) has been made,  the date upon which the  Borrower  (in the case of clause
(i) above) or the  person,  group or entity (in the case of clause  (ii)  above)
consummates or publicly announces the termination or abandonment of the proposed
transaction  or tender  offer (or  takeover  scheme)  which  caused this Section
1.2(b) to become operative.

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

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

                                       4
<PAGE>

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

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

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

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

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<PAGE>

         1.4 METHOD OF CONVERSION.

              (a) MECHANICS OF CONVERSION. Subject to Section 1.1, this Note may
be  converted  by the  Holder  in whole or in part at any time from time to time
after the Issue Date,  by (A)  submitting to the Borrower a Notice of Conversion
(by  facsimile or other  reasonable  means of  communication  dispatched  on the
Conversion  Date prior to 6:00 p.m., New York, New York time) and (B) subject to
Section 1.4(b), surrendering this Note at the principal office of the Borrower.

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

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

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

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<PAGE>

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

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

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

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

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<PAGE>

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

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

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

         1.6 EFFECT OF CERTAIN EVENTS.

              (a) EFFECT OF  MERGER,  CONSOLIDATION,  ETC.  At the option of the
Holder,  the sale,  conveyance or disposition of all or substantially all of the
assets of the Borrower,  the  effectuation  by the Borrower of a transaction  or
series of related transactions in

                                       8
<PAGE>

which more than 50% of the voting  power of the  Borrower is disposed of, or the
consolidation, merger or other business combination of the Borrower with or into
any other  Person (as  defined  below) or Persons  when the  Borrower is not the
survivor  shall  either:  (i) be deemed to be an Event of Default (as defined in
Article  III)  pursuant  to which the  Borrower  shall be required to pay to the
Holder upon the consummation of and as a condition to such transaction an amount
equal to the  Default  Amount (as  defined  in  Article  III) or (ii) be treated
pursuant  to  Section  1.6(b)  hereof.   "PERSON"  shall  mean  any  individual,
corporation, limited liability company, partnership, association, trust or other
entity or organization.

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

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

                                       9
<PAGE>

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

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

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

                                       10
<PAGE>

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

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

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

                                       11
<PAGE>

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

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

                         ARTICLE II. CERTAIN COVENANTS

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

                                       12
<PAGE>

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

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

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

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

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

                         ARTICLE III. EVENTS OF DEFAULT

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

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

                                       13
<PAGE>

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

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

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

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

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

                                       14
<PAGE>

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

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

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

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

                                       15
<PAGE>

                           ARTICLE IV. MISCELLANEOUS

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

         4.2 NOTICES.  Any notice herein required or permitted to be given shall
be in writing and may be  personally  served or  delivered by courier or sent by
United  States  mail and  shall be deemed to have been  given  upon  receipt  if
personally served (which shall include telephone line facsimile transmission) or
sent by courier or three (3) days after  being  deposited  in the United  States
mail, certified,  with postage pre-paid and properly addressed, if sent by mail.
For the  purposes  hereof,  the  address of the Holder  shall be as shown on the
records of the  Borrower;  and the address of the  Borrower  shall be 22600 Hall
Road, Suite 205 Clinton Township, MI 48036, facsimile number: 586-468-8768. Both
the Holder and the  Borrower  may change the  address  for service by service of
written notice to the other as herein provided.

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

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

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

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

                                       16
<PAGE>

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

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

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

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

                                       17
<PAGE>

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

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

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

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

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

                                       18
<PAGE>

                             ARTICLE V. CALL OPTION

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       19
<PAGE>

                  IN WITNESS WHEREOF, Borrower has caused this Note to be signed
in its name by its duly authorized officer this 5th day of July, 2006.

                                            MIDNIGHT HOLDINGS GROUP, INC.

                                            By: _______________________________
                                                  Nicholas Cocco
                                                  Chief Executive Officer

                                       20
<PAGE>

                                    EXHIBIT A

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

                  The   undersigned   hereby   irrevocably   elects  to  convert
$__________  principal  amount of the Note (defined below) into shares of common
stock, par value $.00005 per share ("COMMON STOCK"), of Midnight Holdings Group,
Inc., a Delaware corporation (the "BORROWER") according to the conditions of the
convertible Notes of the Borrower dated as of July 5, 2006 (the "Notes"),  as of
the date written  below.  If securities are to be issued in the name of a person
other than the undersigned,  the undersigned will pay all transfer taxes payable
with respect thereto and is delivering  herewith such certificates.  No fee will
be charged to the Holder for any conversion,  except for transfer taxes, if any.
A copy of  each  Note  is  attached  hereto  (or  evidence  of  loss,  theft  or
destruction thereof).

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

         Name of DTC Prime Broker:________________________________________
         Account Number:__________________________________________________

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

         Name:____________________________________________________________
         Address:_________________________________________________________

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

                  Date of Conversion:___________________________
                  Applicable Conversion Price:__________________
                  Number of Shares of Common Stock to be Issued Pursuant to
                  Conversion of the Notes:______________
                  Signature:____________________________________
                  Name:_________________________________________
                  Address:______________________________________

                                       21
<PAGE>

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

                                       22Exhibit 10.1

 

Exhibit 10.1

EMPLOYMENT SEPARATION AGREEMENT AND MUTUAL

GENERAL RELEASE OF ALL CLAIMS

     This Employment Separation Agreement and Mutual General Release of All Claims (hereinafter
referred to as the “Agreement”) is hereby entered into by and between Ronni L. Sherman
(“Executive”) on the one hand, and Stratagene Corporation, a Delaware corporation (the
“Company”), on the other hand, as of October 6, 2006.

RECITALS

     WHEREAS, Executive is employed by the Company as the Company’s Executive Vice
President and General Counsel pursuant to an at-will employment arrangement between Executive and
the Company (the “Employment Arrangement”); and

     WHEREAS, both Executive and the Company have determined that it is in their mutual best
interests that Executive resign from her positions as Executive Vice President and General Counsel
of the Company and that their employment relationship be separated in the manner set forth in this
Agreement; and

     WHEREAS, both Executive and the Company voluntarily elect to terminate the employment
relationship and settle any disputes arising from such relationship.

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the parties hereby agree as follows:

     1. Employment Status; Transition.

     (a) Executive shall remain employed by the Company on an at-will basis at her current
salary of $330,550 per year as Executive Vice President and General Counsel until October
13, 2006 (the “Resignation Date”). Executive hereby irrevocably resigns as an
employee of the Company effective as of the Resignation Date.

     (b) For a period of one year following the Resignation Date, Executive shall be
available as a consultant to the Company for general business advisory services (and not to
provide legal services) in accordance with the form of Consulting Agreement set forth as
Exhibit “A” hereto at an hourly rate of $250.00 per hour ($350.00 per hour for attendance at
trials, depositions, arbitrations or other legal proceedings as a witness or deponent
subject to an 8-hour per day limit) and subject to the retainer provisions of the Consulting
Agreement. Except in any case where Executive’s attendance at legal proceedings is pursuant
to subpoena or other legal process, written authorization by the Company’s Chief Executive
Officer, Chief Financial Officer or Vice President Corporate

Initial:             

 

 

Counsel will be required under the Consulting Agreement prior to initiation of work
under the Consulting Agreement.

     (c) Following termination of her employment on the Resignation Date, Executive shall be
entitled to continued medical insurance coverage under COBRA at no premium cost to Executive
for a period of up to 18 months or until Executive shall have medical benefits coverage
through employment with another employer.

     (d) Following the Resignation Date, Executive shall be entitled to retain: (i) one
Company personal computer and one printer/fax/scanner for home use (ii) the Company cellular
phone; provided that Executive will be responsible for all recurring charges after the
Resignation Date and (iii) one of her office file cabinets for home use.

     2. Consideration for Signing Agreement.

     (a) Executive acknowledges and agrees that her execution of this Agreement is a
condition of her receiving the following benefits:

     (i) continued employment until the Resignation Date;

     (ii) payment of a lump sum in the amount of $224,875 upon the Effective Date;

     (iii) Executive currently holds options to acquire 139,503 shares of the
Company’s common stock (12,703 stock options at an $8.00 per share exercise price of
which 7,623 currently are vested and exercisable; 50,000 stock options at an $8.11
per share exercise price of which all are vested and exercisable; 6,250 stock
options at a $12.00 per share exercise price of which all are vested and
exercisable; and 70,550 stock options at an exercise price of $12.00 per share
exercise price of which all are currently vested and exercisable). All options or
shares issued pursuant to the stock option agreements shall remain subject to all
covenants, conditions and restrictions contained in each applicable stock option
agreement and stock option plan and shall not be modified or amended by this
Agreement; and

     (iv) so long as Executive has not materially breached her obligations under
this Agreement, Executive shall receive four additional $10,000 payments on December
31, 2006, March 31, 2007, June 30, 2007 and September 30, 2007 (it being understood
and agreed that if the Company believes that Executive has materially breached or is
materially breaching her obligations hereunder, it shall promptly notify Executive
in writing of such breach and provide her with a reasonable opportunity to cure such
breach).

     (b) These additional separation benefits will become available only upon Executive’s
execution of this Agreement and the expiration of the revocation period(s) set forth in
Section 6 below (the “Effective Date”), and only if Executive has not revoked this
Agreement pursuant to Section 6.

     (c) Executive further understands that the foregoing benefits are the only benefits she
is entitled to receive from the Company for signing this Agreement, aside

	 	 	 	 	 
	 
	 	 2
	 	Initial:             

 

 

from any retirement benefits to which Executive may be entitled under the Company’s
401(k) program.

     3. Personal Time-Off and Other Benefits. The Company agrees to compensate Executive
for accrued, unused personal time-off earned through the Resignation Date (such amount to be paid
with Executive’s last regular paycheck). Such payments shall be based on Executive’s final salary
rate. Executive and the Company acknowledge and agree that, as of September 29, 2006, Executive
had 166.27 accrued personal time-off hours. Executive expressly waives her right to any bonus
payments under any of the Company’s bonus plans or programs or future stock option grants, except
as otherwise determined by the Company’s Board of Directors. Executive acknowledges and agrees
that upon her receipt of (a) the foregoing accrued personal time-off, (b) salary through the
Resignation Date and (c) the other benefits described in Section 2 above, she will have received
full payment and all monies that she earned or was otherwise entitled to during her employment by
the Company, and that pursuant to Company policy she is entitled to no additional monies or
benefits pursuant to her employment by the Company or as a result of her resignation.

     4. Mutual General Release.

          (a) Executive unconditionally, irrevocably and absolutely releases and discharges the Company
and any parent and subsidiary corporations, divisions and affiliated corporations, partnerships or
other affiliated entities of the Company, past and present, as well as any of their present and
former employees, officers, directors, shareholders, consultants, insurers, representatives,
lawyers, predecessors, agents, successors and assigns (collectively, “Released Parties”) and the
Company hereby unconditionally, irrevocably and absolutely releases and discharges Executive from
all claims related in any way to the transactions or occurrences between them to date, to the
fullest extent permitted by law, including, but not limited to, Executive’s employment with the
Company, the cessation of Executive’s employment, and all other losses, liabilities, claims,
charges, demands and causes of action, known or unknown, suspected or unsuspected, arising directly
or indirectly out of or in any way connected with Executive’s employment with the Company. This
release is intended to have the broadest possible application and includes, but is not limited to,
any tort, contract, common law, constitutional or other statutory claims, including, but not
limited to: any claims arising out of Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act, as amended, the Age Discrimination in Employment Act, as amended, the Family and
Medical Leave Act of 1993, the California Fair Employment and Housing Act of 1993, as amended, the
California Labor Code (including but not limited to Section 970), the Fair Labor Standards Act, as
amended, Section 17200 of the Business and Professions Code, the federal and state wage and hour
laws, the Americans With Disabilities Act, as amended, the Immigration Reform and Control Act of
1986, the Employee Retirement Income Security Act of 1974, as amended, the Uniformed Services
Employment and Reemployment Rights Act, the Rehabilitation Act of 1973, as amended, the California
Family Rights Act, the Worker Adjustment and Retraining Notification Act, the California common law
of fraud, misrepresentation, negligence, defamation, infliction of emotional distress, breach of
contract, or wrongful termination, and/or any other local, state or federal law, rule or regulation
governing employment, discrimination in employment or the payment of wages and benefits.
Notwithstanding the foregoing, Executive shall not waive any right to indemnification, arising only
under the Company’s Second Amended Restated Articles of Incorporation and Amended and Restated
Bylaws, for acts or events occurring prior to Executive’s resignation on the Resignation Date.

	 	 	 	 	 
	 
	 	 3
	 	Initial:             

 

 

          (b) The parties acknowledge that they may discover facts or law different from, or in addition
to, the facts or law that they know or believe to be true with respect to the claims released in
this Agreement and agree, nonetheless, that this Agreement and the mutual release contained in it
shall be and remain effective in all respects notwithstanding such different or additional facts or
the discovery of them.

          (c) The parties declare and represent that they intend this Agreement to be complete and not
subject to any claim of mistake, and that the mutual release herein expresses a full and complete
release and the parties intend the mutual release herein to be final and complete. The parties
execute this mutual release with the full knowledge that this mutual release covers all possible
claims against each other, to the fullest extent permitted by law.

          (d) Executive and the Company expressly waive her and its right to recovery of any type,
including damages or reinstatement, in any administrative or court action, whether state or
federal, and whether brought by Executive or the Company on her or its behalf, related in any way
to the matters released herein.

     5. Mutual Release of Unknown Claims. The parties are aware of California Civil Code
Section 1542, which provides as follows:

     “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.”

          With full awareness and understanding of the above provision, the parties each hereby waives
any rights they may have under Section 1542, as well as under any other statutes or common law
principles of similar effect. The parties each intend to, and hereby do, release each other, and
Executive intends to, and hereby does, release the Released Parties, from claims which they do not
presently know or suspect to exist at this time.

     6. Rights Under the Older Workers Benefit Protection Act. In accordance with the
Older Workers Benefit Protection Act of 1990, Executive acknowledges that:

     (a) This Agreement includes a waiver and release of Executive’s claims under the Age
Discrimination in Employment Act, 29 U.S.C. § 621 et seq.;

     (b) Executive has the right to consult with an attorney before signing this Agreement;

     (c) Executive has twenty-one (21) days from October 6, 2006 to consider this Agreement,
although she may waive such period by signing this Agreement sooner; and

     (d) Executive has seven (7) days after signing this Agreement to revoke this Agreement
and this Agreement will not be effective until that revocation period has expired.

	 	 	 	 	 
	 
	 	 4
	 	Initial:             

 

 

     7. Confidentiality of Agreement. Except as may be required by law, neither party, nor
any person acting by, through, under or in concert with them, shall disclose the terms of this
Agreement to any individual or entity.

     8. Proprietary Information Clause. Executive acknowledges that the information,
observations and data obtained by her during the course of or related to her employment with the
Company (including, without limitation, financial information, shareholder information, product
design information, business plans, marketing plans or proposals and customer lists and other
customer information) are the sole property of the Company and constitute trade secrets of the
Company. Executive agrees to promptly return all files, customer lists, financial information or
other Company property which are in Executive’s possession or control without making copies
thereof; provided, however, that Executive shall retain any such materials to the extent reasonably
necessary for her to provide the consulting services contemplated hereunder, and; provided,
further, that Executive may retain any such materials that are publicly available or otherwise do
not contain proprietary non-public information. Executive further agrees that she will not
disclose to any person or use for her own account any such information, observations or data
without the written consent of the Company’s Chief Executive Officer, unless and to the extent that
the aforementioned matters become generally known to and available for use by the public, other
than as a result of Executive’s acts or omissions to act, which acts or omissions were unauthorized
and against the Company’s interest. Further, Executive acknowledges that any unauthorized use of
the above-described confidential information will cause irreparable harm to the Company and will
give rise to an immediate action by the Company for injunctive relief.

     9. Unfair Competition.

     (a) For a period of three (3) years from the Resignation Date, Executive agrees not to
directly or indirectly (whether as an employee, director, owner, stockholder, consultant, limited
or general partner or otherwise), for herself or for any other person or entity, (i) solicit from
the Company any employee or customer who is or which as of the Resignation Date was a customer or
employee of the Company or its affiliates or whose identity is known to Executive as one whom the
Company or its affiliates intend to solicit, (ii) make known to any other organization or firm the
names of customers of the Company for purposes of competing with the Company, (iii) engage in any
unfair competition with the Company or (iv) otherwise interfere with the Company’s operations.

     (b) Executive acknowledges that any unauthorized solicitation, diversion of business or misuse
of trade secret or proprietary information belonging to the Company, or in violation of Sections 8
or 9 of this Agreement will result in irreparable harm to the Company and will give rise to an
immediate action by the Company for injunctive relief.

     10. No Lawsuits. Each party represents that there are no lawsuits pending by such
party against the other party (or the Released Parties, as applicable). Each party promises never
to file a lawsuit asserting any claims that are released in this Agreement or in the Amendment
required in Section 16(1) hereof.

     11. Cooperation Clause. Executive agrees to use all commercially reasonable efforts
to cooperate with the Company and its counsel in its defense of, or other participation in, any
administrative, judicial or other proceeding arising from any charge, complaint or other action

	 	 	 	 	 
	 
	 	 5
	 	Initial:             

 

 

which has been or may be filed relating to the period during which Executive was engaged in
employment with the Company. Executive further agrees to present a positive public image regarding
the Company and not to disparage or otherwise publish or communicate negative statements or
opinions about the Company in any way. Except in the capacity of an employee or consultant as
provided herein, Executive shall not communicate, directly or indirectly, with shareholders of the
Company or their representatives concerning the management of the Company, the operations of the
Company or the financial status of the Company. Executive shall take no action that is
intentionally detrimental to the interests of the Company or its management.

     12. Non-disparagement. Each party to this Agreement promises not to disparage or
otherwise publish or communicate derogatory statements or opinions about the other to any third
party.

     13. Breach of Agreement. Executive agrees that if she hereafter commences, joins in,
or in any manner seeks relief through any suit arising out of, based upon, or relating to any of
the claims released hereunder or in any manner asserts against the Company or the Released Parties,
or any of them, any of the claims released hereunder or to be released hereunder, Executive shall
pay to the Company or Released Parties, and each of them, in addition to any other damages caused
to the Released Parties thereby, all attorneys’ fees incurred by the Company or the Released
Parties in defending or otherwise responding to said suit or claim.

     14. Remedy for Executive’s Breach. In the event that Executive willfully breaches her
material obligations under this Agreement, in addition to whatever other rights the Company may
have, Executive shall forfeit her right to receive any further payments under this Agreement.

     15. Encouragement to Consult with Attorney; Tax Matters. Executive has the right to
consult with an attorney and is encouraged to do so before signing this Agreement. Executive
understands that whether or not to do so is Executive’s decision and if it is done, it is done at
Executive’s expense. Executive further acknowledges that the benefits provided in this Agreement
may have tax consequences, that the Company has not provided any tax advice and that Executive is
free to consult with an accountant, legal counsel or other tax advisor regarding the tax
consequences.

     16. Miscellaneous Provisions.

     (a) The provisions of this Agreement are severable. If any provision is held to be
invalid or unenforceable it shall not affect the validity or enforceability of any other
provision.

     (b) Executive acknowledges and agrees that she has read this Agreement carefully,
understands all of its terms and agrees to those terms voluntarily.

	 	 	 	 	 
	 
	 	 6
	 	Initial:             

 

 

     (c) This Agreement represents the sole and entire agreement between the parties and,
except as expressly stated herein, supersedes all prior agreements, negotiations and
discussions between Executive and the Company with respect to the subject matter contained
herein. The parties hereto agree that this Agreement supersedes the Employment Arrangement,
and that from the date hereof the Employment Arrangement will be null and void and of no
further force or effect.

     (d) No provision of this Agreement may be modified or amended unless such modification
or amendment is agreed to in writing and signed by duly authorized representatives of the
parties hereto, which writing expressly states the intent of the parties to modify this
Agreement.

     (e) This Agreement shall be construed as a whole in accordance with its fair meaning
and in accordance with the laws of the State of California. The language in the Agreement
shall not be construed for or against any particular party. The headings used herein are
for reference only and shall not effect the construction of this Agreement.

     (f) Both Executive and the Company understand and agree that neither the payment of any
sum of money nor the execution of this Agreement shall constitute or be construed as an
admission of any liability whatsoever by either party.

     (g) The parties in good faith shall seek to amicably resolve any disputes arising out
of or relating to this Agreement. If either party reasonably concludes that such a dispute
will not be resolved despite such good faith efforts, following sixty (60) day prior written
notice to the other party, such dispute shall be submitted to final, binding arbitration
before JAMS. The arbitration shall be administered by JAMS pursuant to its Streamlined
Arbitration Rules and Procedures, as modified below. The parties shall at all times and in
good faith use reasonable efforts to resolve the dispute before an arbitration proceeding is
instituted pursuant to this Agreement and shall, at all times after a dispute has been
submitted to arbitration, continue to act in good faith and continue to use reasonable
efforts to resolve the dispute. The arbitration shall take place in San Diego, California,
before a sole mutually acceptable arbitrator, in accordance with the laws of the State of
California for agreements made in and to be performed in that State and at the location
designated by the arbitrator. The parties to the dispute may mutually agree to another
location. If a party to a dispute fails to appear at any properly noticed arbitration
proceeding, an award may be entered against such party notwithstanding such failure to
appear. Judgment on the award may be entered in any court having jurisdiction. If the
parties to the dispute are unable to agree on the choice for an arbitrator within ten (10)
days after the matter has been submitted to arbitration, any party to the dispute may
request JAMS to furnish to the parties a list of five (5) available arbitrators. After
receipt of such list and an opportunity to consider the names, each party to the dispute may
designate in writing to JAMS not more than two (2) names to be eliminated from the selection
process. Failure of a party to the dispute to provide such designation in writing to JAMS
within ten (10) days after such party’s receipt of the list of arbitrators from JAMS shall
be deemed to be the party’s approval of all of the listed arbitrators. If more than one (1)
name remains after such eliminations are timely made, the selection of the arbitrator shall
be made by a lot from the remaining names. The expenses, wages and other compensation of
any witnesses called before the arbitrator or any expert retained in connection with the
arbitration shall be borne by the party to the

	 	 	 	 	 
	 
	 	 7
	 	Initial:             

 

 

dispute calling the witnesses or retaining the expert, as applicable. The fee for the
arbitration, the arbitrator’s fees and expenses, the cost of any hearing room, and the cost
of a shorthand or similar reporter and the original transcript shall all be borne equally by
the parties.

     (h) Notices and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or mailed by U.S. Mail,
return receipt requested, first-class or express postage prepaid, as follows:

     If to the Company:

Stratagene Corporation

11011 North Torrey Pines Road

La Jolla, California 92037

Attn.: Joseph A. Sorge

     with a copy to:

Latham & Watkins LLP

600 West Broadway, Suite 1800

San Diego, California 92101

Attn.: Thomas A. Edwards, Esq.

Telecopy: (619) 696-7419

     If to Executive:

     Such address as designated by the Executive;

     with a copy to:

Shearman & Sterling LLP

599 Lexington Avenue

New York, New York 10022

Attn.: John J. Cannon, III, Esq.

Telecopy: (646) 848-8159

or such other address as one party may have furnished to another party in writing in
accordance herewith, except that notices of change of address shall be effective only upon
receipt.

     (i) No waiver by any party hereto at any time of any breach of, or compliance with, any
condition or provision of this Agreement to be performed by the other party hereto shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.

     (j) This Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original as against any party that has signed it, but all of which together
will constitute one and the same instrument.

     (k) EACH PARTY HERETO ACKNOWLEDGES AND UNDERSTANDS
THAT THIS AGREEMENT INCLUDES A MUTUAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

     (l) Executive and the Company agree to execute the attached Amendment to this Agreement on or
about the Resignation Date in order to extend and reaffirm the promises and covenants made by her
or it in this Agreement, including, but not limited to, the mutual general release of all claims.
If Executive or the Company fails to execute the Amendment to this Agreement on or about the
Resignation Date, or if Executive effectively revokes the acceptance of the Amendment, the mutual
release will not be effective for the period between the Effective Date and the Resignation Date
and Executive will return all amounts received pursuant to Section 2(a)(ii) and (iv) of this
Agreement.

	 	 	 	 	 
	 
	 	 8
	 	Initial:             

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates indicated
below.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	STRATAGENE CORPORATION,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Joseph A. Sorge, M.D.
 

	 	 
	             /s/ Ronni L. Sherman
 

	 	 	 	Name:
	 	JOSEPH A. SORGE, M.D.
	 	 
	             RONNI L. SHERMAN

	 	 	 	Title:
	 	CEO	 	 
	 
	 	 	 	 	 	 	 	 
	Dated:October 6, 2006	 	 	 	Dated:October 6, 2006	 	 

	 	 	 	 	 
	 
	 	 9
	 	 

 

 

EXHIBIT “A”

FORM OF CONSULTING AGREEMENT

     This Consulting Agreement (the “Agreement’) is entered into by and between Stratagene
Corporation (the “Company”) and Ronni L. Sherman (the “Consultant”) effective as of October 13,
2006.

RECITALS

     WHEREAS, the Company and Consultant have entered into an Employment Separation Agreement and
Mutual General Release of all claims (the “Separation Agreement”) dated October 6, 2006; and

     WHEREAS, in accordance with the Separation Agreement, both the Company and the Consultant
believe that their mutual interests will be best served if the Company retains the services and
expertise of the Consultant to provide consulting services to the Company as described herein.

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual promises contained herein and for other good
and valuable consideration, the adequacy of which is hereby acknowledged, the parties hereby agree
as follows:

     1. Consultant Services. Consultant agrees, for the period October 13, 2006 until
terminated pursuant to Section 8 hereof (the “Consulting Period”), to perform business advisory
consulting services for the Company and its counsel and accountants (but not legal services), if
and as requested and previously authorized by the Company’s Chief Executive Officer, Chief
Financial Officer or Vice President Corporate Counsel. Consultant’s services shall be of an
advisory nature and the Company shall not have any obligation to follow such advice. Consultant
will be available and is obligated to provide services, as reasonably requested from time to time
by the Company, so that the Company may obtain the full value of the retainer amounts stated in
Section 2(b) of this Agreement.

     2. Compensation.

          (a) The Company shall pay Consultant at the rate of $250 per hour for any consulting services
requested and provided pursuant to this Agreement. The Company agrees to increase this hourly rate
to $350 solely for attendance at trials, depositions, arbitrations or other legal proceedings where
Consultant’s presence as a witness or deponent was expressly requested and authorized by the
Company; provided, however, that Consultant shall not be compensated for more than eight billable
hours during any single calendar day for trial or deposition services.

          (b) The Company agrees that Consultant shall receive a $10,000 retainer payable in advance for
each of the first four three-month periods after the date of this

	 	 	 	 	 
	 
	 	Exhibit A-1
	 	Initial:             

 

 

Agreement. Half of the amounts of the bills for services performed by Consultant will be
credited first against any unused retainer amount and half of the amounts on the bills for services
shall be paid by the Company by check or wire transfer (within ten (10) business days following
receipt of invoices and descriptions therefor). At such point as the billings for such services
rendered in any three-month period exceed $20,000 and the $10,000 retainer amount shall have been
fully utilized, the Company will pay to Consultant by check or wire transfer any remaining amounts
due for services rendered hereunder within ten (10) business days following receipt of invoices and
descriptions therefor. In the event billings against the retainer for services requested and
performed during any three-month period are less than $10,000, Consultant shall not be required to
refund any unused retainer amounts to the Company. No further retainer amounts shall be required
after the first twelve months of this Agreement. The retainer payments described herein are
separate from, and in addition to, the payments described in Section 2(a)(iv) of the Separation
Agreement.

     3. Independent Contractor. During the Consulting Period, Consultant will not be an
employee of the Company, but will have the relationship of an independent contractor to the
Company. As an independent contractor, Consultant shall have the sole responsibility and
obligation to report his net earnings hereunder and otherwise as received as self-employment income
on Consultant’s tax returns and to pay such taxes as are required by law. The parties agree that
Consultant is an independent contractor and that, as such, the Company shall have no right,
responsibility or obligation to withhold income or payroll taxes under the United States Insurance
Contributions Act or under state unemployment, disability or other laws from amounts due to
Consultant from the Company hereunder or to pay employer payroll taxes thereon under such laws or
to withhold special or general funds, assessments, or taxes generally collected by employers for
the use and benefit of employees.

     4. Cooperation. After the conclusion of the Consulting Period, Consultant agrees to
cooperate fully with the Company and its counsel, accountants and investigators in its defense of,
or other participation in, any administrative, judicial, or other proceeding arising from any
charge, complaint, or other action which has been or may be filed relating to the period Consultant
was engaged in consulting with the Company, on reasonable terms and with reasonable notice as shall
be agreed by the parties.

     5. Proprietary/Privileged Information Clause. Consultant acknowledges that certain
information, observations, and data obtained by her during the course of the term of this Agreement
(including, without limitation, certain financial information, shareholder information, insurance
information, business plans, marketing plans or proposals and/or customer lists and other customer
information) are the sole property of the Company and constitute trade secrets of the Company.
Consultant agrees to promptly return all files, customer lists, financial information, or other
Company property without making copies thereof which are in Consultant’s possession or control;
provided, however, that Executive shall retain any such materials to the extent reasonably
necessary for her to provide the consulting services contemplated hereunder; and, provided,
further, that Executive may retain any such materials that are publicly available or otherwise do
not contain proprietary non-public information. Consultant further agrees that she will not
disclose to any person or use any such privileged, confidential, or trade secret information,
observations or data without the written consent of the Chief Executive Officer, Chief Financial
Officer or Vice President Corporate Counsel of the Company, unless and to the extent that the
aforementioned matters become generally known to and available for use by the public, other than as
a result of Consultant’s acts or omissions to act,

	 	 	 	 	 
	 
	 	Exhibit A-2
	 	Initial:             

 

 

which acts or omissions were unauthorized and against the Company’s interest. Further,
Consultant acknowledges that any unauthorized use of privileged, confidential or trade secret
information will cause irreparable harm to the Company and will give rise to an immediate action by
the Company for injunctive relief. If Consultant is served with a deposition subpoena or other
legal process calling for the disclosure of such information, or if she is contacted by any third
person requesting such information, she will immediately notify the Chief Executive Officer of the
Company and will fully cooperate with the Company in minimizing the disclosure thereof.

     6. Remedies for Breach. In the event that Consultant willfully and materially
breaches his obligations under this Agreement, in addition to whatever other rights the Company may
have, Consultant shall forfeit his right to receive any further payments or benefits under this
Agreement.

     7. Termination. This Agreement shall terminate on October 13, 2007 unless extended by
mutual agreement of the parties.

     8. Non-Waiver of Breach. Either party may waive any breach of this Agreement by the
other party, but no such waiver shall be deemed to have been given unless such waiver be in
writing, signed by the waiving party and specifically designate the breach waived, nor shall any
such waiver constitute a continuing waiver of similar or other breaches.

     9. Non-Assignment. Neither party may assign its obligations hereunder without the
prior written consent of the other party.

     10. Miscellaneous Provisions.

     (a) Provisions of this Agreement are severable. If any provision is held to be invalid or
unenforceable it shall not affect the validity or enforceability of any other provision.

     (b) Consultant acknowledges and agrees that she has read this Agreement carefully, understands
all of its terms and agrees to those terms voluntarily.

     (c) This Agreement and the Separation Agreement represent the sole and entire agreements
between the parties and, except as expressly stated herein, supersedes all prior agreements,
negotiations and discussions between the Consultant and the Company with respect to the subject
matters contained herein.

     (d) This Agreement shall be construed as a whole in accordance with its fair meaning and in
accordance with the laws of the State of California. The language in the Agreement shall not be
construed for or against any particular party. The headings used herein are for reference only and
shall not affect the construction of this Agreement.

     (e) The parties agree that any and all disputes, controversies or claims arising out of or
relating to this Agreement, or breach thereof, shall be submitted to final and binding arbitration.
The arbitration shall take place in the State of California. Unless the parties mutually agree
otherwise, the arbitration shall be conducted in the same manner provided under Section 16(g) of
the Separation Agreement.

	 	 	 	 	 
	 
	 	Exhibit A-3
	 	Initial:             

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the day
and year first above written.

	 	 	 	 	 	 	 	 	 	 	 
	CONSULTANT	 	 	 	THE COMPANY	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	STRATAGENE CORPORATION,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Ronni L. Sherman	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 

					
	 
	 	Exhibit A-4
	 	 

 

 

EXHIBIT “B”

AMENDMENT TO EMPLOYMENT SEPARATION AGREEMENT

AND MUTUAL GENERAL RELEASE OF ALL CLAIMS

     This Amendment to the Employment Separation Agreement and Mutual General Release of All Claims
(“Amendment”) is made by Stratagene Corporation (the “Company”) and Ronni L. Sherman (“Executive”)
and amends the Employment Separation Agreement and Mutual General Release of All Claims between
those same parties (“Separation Agreement”) by extending the promises and mutual agreements of
each and every paragraph and subparagraph except section 6 of the Separation Agreement through the
Resignation Date.

     This Amendment also is intended to satisfy the Older Workers’ Benefit Protection Act, 29
U.S.C. Section 626(f). Accordingly, by signing this Amendment where indicated below, Executive
acknowledges that (a) she has read and understands the terms of this Amendment, (b) she has been
advised to consult an attorney at her own expense, if desired, and (c) she has considered such
legal counsel as she deems necessary, such that she is signing this Amendment freely, knowingly and
voluntarily. Executive acknowledges she will have twenty-one (21) days to consider whether or not
to sign this Amendment (although she may elect not to use the full 21-day period at her option).
After Executive signs this Amendment, she will promptly deliver it to the Company. Release of any
Age Discrimination in Employment Act (ADEA) claims contained in this Amendment shall not become
effective or enforceable until the eighth day after the Amendment is signed (“Amendment Effective
Date”). The remaining provisions of this Amendment, except for release of any ADEA claims, will
remain in effect notwithstanding any revocation. In other words, Executive may revoke her
acceptance of this Amendment to the extent it releases any ADEA claims within seven (7) days after
she signs it. Executive’s revocation must be in writing and received by the Company, on or before
the seventh day after it is signed, to be effective. If Executive does not revoke her acceptance
on or before that date, her acceptance of the release of her ADEA claims contained in this
Amendment shall become binding and enforceable on the eighth day after it is signed. Should
Executive exercise such a revocation, she shall also return funds representing her payments
received pursuant to Section 2(a)(ii) and (iv) of the Separation Agreement. The release of any
ADEA claims will become effective after the Amendment Effective Date, provided Executive has not
exercised her right to revoke such claims as described in this paragraph. This Amendment does not
waive or release any rights or claims that Executive may have under the Age Discrimination in
Employment Act that arise after the execution of this Amendment.

[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]

	 	 	 	 	 
	 
	 	Exhibit B-1
	 	Initial:             

 

 

     THE PARTIES TO THIS AMENDMENT HAVE READ THE FOREGOING AMENDMENT AND FULLY UNDERSTAND EACH AND
EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE FREELY AND VOLUNTARILY EXECUTED THIS
SEPARATION AGREEMENT ON THE DATES SHOWN BELOW.

	 	 	 	 	 	 	 
	Dated: October 13, 2006

	 	By:
	 	/s/ Ronni L. Sherman
 

	 	 
	 

	 	 	 	Ronni L. Sherman	 	 
	 
	 	 	 	 	 	 
	Dated: October 13, 2006

	 	 	 	STRATAGENE CORPORATION,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Steve Martin
 

	 	 
	 

	 	Name:
	 	Steve Martin	 	 
	 

	 	Title:
	 	Vice President and CFO	 	 

	 	 	 	 	 
	 
	 	Exhibit B-2
	 	Initial:

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