Document:

EXHIBIT 10.5

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

                        CALLABLE SECURED CONVERTIBLE NOTE

Clinton Township, Michigan
October 4, 2006                                                    $[__________]

                  FOR VALUE RECEIVED,  MIDNIGHT HOLDINGS GROUP, INC., a Delaware
corporation  (hereinafter called the "BORROWER"),  hereby promises to pay to the
order  of  [_________]  or its  registered  assigns  (the  "HOLDER")  the sum of
$[________],  on October 4, 2009 (the "MATURITY  DATE"),  and to pay interest on
the unpaid  principal  balance hereof at the rate of ten percent (10%) per annum
from October 4, 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

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remain closed.  Each  capitalized term used herein,  and not otherwise  defined,
shall have the meaning  ascribed  thereto in that  certain  Securities  Purchase
Agreement,  dated  October 4, 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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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 October
4, 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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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

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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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               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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                      (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,

                                       15
<PAGE>

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

                           ARTICLE IV. MISCELLANEOUS

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

               4.2    NOTICES.  Any notice  herein  required or  permitted to be
given shall be in writing and may be  personally  served or delivered by courier
or sent by United  States  mail and shall be  deemed  to have  been  given  upon
receipt if  personally  served  (which shall include  telephone  line  facsimile
transmission)  or sent by courier or three (3) days after being deposited in the
United States mail, certified,  with postage pre-paid and properly addressed, if
sent by mail.  For the  purposes  hereof,  the address of the Holder shall be as
shown on the records of the Borrower;  and the address of the Borrower  shall be
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 29th day of September, 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 October 4, 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.

                                       22-- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

AMENDMENT TO THE 

STOCKHOLDER PROTECTION RIGHTS AGREEMENT

     This Amendment dated as of October 8, 2006 (this “Amendment”) to the Stockholder Protection Rights Agreement, dated as of June 8, 1999 (the “Rights
Agreement”), between Mercantile Bankshares Corporation, a Maryland corporation (the “Company”), and Mercantile-Safe Deposit and Trust Company, a Maryland trust company, as Rights Agent
(the “Rights Agent”). Capitalized terms used herein and not defined shall have the meanings specified in the Rights Agreement.

     WHEREAS, the Company proposes to enter into an Agreement and Plan of Merger, dated as of October 8, 2006 (as amended, supplemented, modified or replaced from time to time, the “Merger
Agreement”), by and between the Company and The PNC Financial Services Group, Inc. (“PNC”), a Pennsylvania corporation, providing for the merger of the Company with and into PNC (the
“Merger”), with PNC continuing as the surviving corporation;

     WHEREAS, the Board of Directors of the Company has determined that the Merger Agreement and the terms and conditions set forth therein and the transactions contemplated thereby, including, without limitation, the
Merger, are in the best interests of the Company and its shareholders;

     WHEREAS, the Board of Directors of the Company has determined, in connection with its contemplation of the Merger Agreement, that an amendment to the Rights Agreement as set forth herein is necessary and desirable
to exempt the Merger Agreement and the transactions contemplated thereby, including, without limitation, the Merger, from the application of the Rights Agreement as set forth in this Amendment;

     WHEREAS, pursuant to Section 5.4 of the Rights Agreement, the Company may, and the Rights Agent shall, if the Company so directs, supplement or amend any provisions of the Rights Agreement, subject to the
limitations set forth in such Section 5.4; and

     WHEREAS, pursuant to Section 5.4 of the Rights Agreement, the Company hereby directs that the Rights Agreement should be amended as set forth herein;

     NOW, THEREFORE, in consideration of the promises and mutual agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending
to be legally bound, the Company and the Rights Agent hereby agree as follows:

      A.     Amendment of Certain Definitions.

     Section 1.1 of the Rights Agreement is supplemented to add the following definitions in the appropriate alphabetical locations:

  
    “Buyer” shall mean The PNC Financial Services Group, Inc., a Pennsylvania corporation.

  
    “Merger” shall mean the “Merger” as such term is defined in the Merger Agreement.

  
    “Merger Agreement” shall mean the Agreement and Plan of Merger, dated as of October 8, 2006, by and between the Company and Buyer, as it may be amended, supplemented, modified or replaced from time to time. 

     The definition of “Acquiring Person” in Section 1.1 of the Rights Agreement is hereby amended by adding the following sentence at the end thereof:

  
    “Notwithstanding anything in this Agreement to the contrary, neither Buyer, nor any of its Affiliates or Associates shall be deemed to be an Acquiring Person solely as a result of the approval, execution, delivery or performance of the
    Merger Agreement or the consummation of the Merger.”

     The definition of “Expiration Time” in Section 1.1 of the Rights Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof:

  
    “Expiration Time” shall mean the earliest of (i) the Exchange Time, (ii) the Redemption Time, (iii) the close of business on the tenth anniversary of the Record Time and (iv) the Effective Time (as defined in the Merger
    Agreement).

     The definition of “Flip-in Date” in Section 1.1 of the Rights Agreement is hereby amended by adding the following sentence at the end thereof:

  
    “Notwithstanding anything in this Agreement to the contrary, a Flip-in Date shall not be deemed to have occurred solely as the result of the approval, execution, delivery or performance of the Merger Agreement or the consummation of the
    Merger.”

     The definition of “Flip-over Transaction or Event” in Section 1.1 of the Rights Agreement is hereby amended by adding the following sentence at the end thereof:

  
    “Notwithstanding anything in this Agreement to the contrary, a Flip-over Transaction or Event shall not be deemed to have occurred solely as the result of the approval, execution, delivery or 

2

  
    performance of the Merger Agreement or the consummation of the Merger.”

     The definition of “Separation Time” in Section 1.1 of the Rights Agreement is hereby amended by adding the following sentence at the end thereof:

  
    “Notwithstanding anything in this Agreement to the contrary, a Separation Time shall not be deemed to have occurred solely as the result of the approval, execution, delivery or performance of the Merger Agreement or the consummation of
    the Merger.” 

     The definition of “Stock Acquisition Date” in Section 1.1 of the Rights Agreement is hereby amended by adding the following sentence at the end thereof:

  
    “Notwithstanding anything in this Agreement to the contrary, a Stock Acquisition Date shall not be deemed to have occurred solely as the result of the approval, execution, delivery or performance of the Merger Agreement or the
    consummation of the Merger.”

     B.     Amendment to Section 2.3. Section 2.3 of the Rights Agreement is amended to add the following sentence at the end thereof as a new Section 2.3(h):

  
    “      (h)      Nothing in this Agreement shall be construed to give any holder of Rights or any other Person any legal or equitable rights, remedies or claims under this Agreement by virtue of the approval, execution, delivery or performance of
    the Merger Agreement or the consummation of the Merger.”

     C.     Effect of Amendment. Except as expressly set forth herein, the Rights Agreement shall not by implication or otherwise be supplemented or amended by virtue of this Amendment, but
shall remain in full force and effect, as amended hereby. This Amendment shall be construed in accordance with and as a part of the Rights Agreement, and all terms, conditions, representations, warranties, covenants and agreements set forth in the
Rights Agreement and each other instrument or agreement referred to therein, except as herein amended, are hereby ratified and confirmed. In the event that the Merger Agreement is terminated by either the Company or PNC, in accordance with Section
8.1 thereof, this Amendment shall be deemed to be no longer in effect.

     D.     Waiver of Notice. The Rights Agent and the Company hereby waive any notice requirement with respect to each other under the Rights Agreement, if any, pertaining to the matters
covered by this Amendment.

     E.     Severability. If any term or provision hereof or the application thereof to any circumstance shall, in any jurisdiction and to any extent, be invalid or unenforceable, such term
or provision shall be ineffective as to such jurisdiction to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable the remaining terms and 

3

provisions hereof or the application of such term or provision to circumstances other than those as to which it is held invalid or unenforceable.

     F.     Governing Law. This Amendment shall be deemed to be a contract made under the laws of the State of Maryland and for all purposes shall be governed by and construed in accordance
with the laws of such state applicable to contracts to be made and performed entirely within such state.

     G.     Counterparts. This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.

     H.     Effective Date of Amendment. This Amendment shall be deemed effective as of the date first written above, as if executed on such date, when each party hereto shall have received
a counterpart hereof signed by the other party hereto.

     I.     Descriptive Headings. Descriptive headings appear herein for convenience only and shall not control or affect the meaning or construction of any of the provisions
hereof.

4

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above.

	 	
      MERCANTILE BANKSHARES	
	 	
      CORPORATION	
	 	 	 	 	 
	 	 	By:	/s/ Edward S. Kelly, III 
	 	 	 	
	

	 	 	 	Name:	Edward S. Kelly, III 	
	 	 	 	Title: 	Chairman, President & CEO 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	
      MERCANTILE-SAFE DEPOSIT AND	
	 	
      TRUST COMPANY	
	 	 	 	 	 
	 	 	By:	/s/ John L. Unger 
	 	 	 	
	

	 	 	 	Name: 	John L. Unger 
	 	 	 	Title:	Executive Vice President
	    & 

      General Counsel 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

5

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