DEBENTURE

THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER
THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.

                               THE MNI GROUP INC.

                  10% Senior Subordinated Convertible Debenture
                               Due October 1, 2000

Registered                                                 Englewood, New Jersey
$_________                                                       October 1, 1999

         THE MNI GROUP INC., a New Jersey corporation (here- inafter called the
"Corporation"), for value received, hereby promises to pay to (the "Payee" or
"Holder"), or registered assigns, the principal sum of $_______________, in a
single installment on October 1, 2000 (the "Due Date"), and to pay interest from
the date hereof on the unpaid principal amount hereof at the rate of 10% per
annum, which interest shall accrue and be payable on the Due Date, and
thereafter at the rate of 14% per annum on any overdue principal amount and (to
the extent permitted by applicable law) on any overdue interest until paid;
provided, however, that all accrued interest shall be waived in the event this
Debenture shall be converted into shares of Common Stock as provided in Section
15(a).

         The payment of principal and interest, if applicable, on this Debenture
shall be made at its office or agency maintained as provided in subsection (a)
of Section 7 in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts, and
payment of interest on this Debenture at the option of the Board of Directors of
the Corporation shall be either in such currency or by means of the issuance and
delivery by the Corporation of a Debenture in principal amount equal to such
interest payment and otherwise having the same terms as this Debenture.

         For purposes of this Debenture, the following terms shall have the
respective meanings set forth below:

         "BANKRUPTCY LAW" shall mean Title 11 of the U.S. Code, as in effect
from time to time, or any similar Federal or state law for the relief of
debtors.
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         "BUSINESS DAY" shall mean any day other than a Satur day, a Sunday or a
legal holiday under the laws of the State of New York.

         "DEBT" shall mean any indebtedness, contingent or otherwise, of the
Corporation.

         "DEFAULT" shall mean any event which, with the giving of notice or
lapse of time or both, would constitute an Event of Default.

         "EVENT OF DEFAULT" shall have the meaning assigned to it in Section 10.

         "PERSON" shall mean an individual, a corporation, a partnership, a
joint venture, a firm, an enterprise, a trust, an unincorporated organization, a
government or any agency or polit ical subdivision thereof.

         "SENIOR DEBT" shall mean means the principal of, premium, if any, and
accrued and unpaid interest on Debt, whether outstanding on the date of issuance
of this Debenture or thereafter created, incurred or assumed, unless, in the
agreement or instrument creating or evidencing the same or pursuant to which the
same is outstanding, it is provided that such Debt is not superior in right of
payment to this Debenture. Notwithstanding the foregoing, "Senior Debt" with
respect to the Company shall not include (i) any Debt to any subsidiary or
affiliate (as such terms are defined in Rule 405 under the Act) or money
borrowed or advanced from such subsidiary or affiliate and (ii) any Debt
representing the redemption price of any preferred stock.

         1. DEBENTURES. This Debenture was issued by the Corporation pursuant to
a Private Offering Letter and the attachments thereto dated July 22, 1999
relating to an offering of Debentures.

         2. TRANSFER OR EXCHANGE OF DEBENTURES. The Corpora tion shall keep at
its office or agency maintained as provided in subsection (a) of Section 10 a
register in which the Corporation shall provide for the registration of
Debentures and for the registration of transfer and exchange of Debentures.

         3. LOSS, THEFT, DESTRUCTION OR MUTILATION OF DEBENTURE. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of this Debenture, and, in the case of any such loss, theft or
destruction, upon

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receipt of an affidavit of loss from the holder hereof reasonably satisfactory
to the Corporation, or, in the case of any such mutilation, upon surrender and
cancellation of this Debenture, the Corporation will make and deliver, in lieu
of this Debenture, a new Debenture of like tenor and unpaid principal amount.

         4. PERSONS DEEMED OWNERS; HOLDERS. The Corporation may deem and treat
the person in whose name any Debenture is registered as the owner and holder of
such Debenture for the purpose of receiving payment of principal of and interest
on such Debenture and for all other purposes whatsoever, whether or not such
Debenture shall be overdue. With respect to any Debenture at any time
outstanding, the term "holder," as used herein, shall be deemed to mean the
person in whose name such Debenture is registered as aforesaid at such time.

         5. NO PREPAYMENTS. The Corporation may not prepay this Debenture prior
to the Due Date.

         6. NOTICES. All notices to be given to any holder of this Debenture
shall be given by registered or certified mail to the person in whose name this
Debenture is registered at its address designated on the register maintained by
the Corporation on the date of mailing such notice of prepayment or other
notice.

         7. AFFIRMATIVE COVENANTS. The Corporation covenants and agrees that, so
long as any Debenture shall be outstanding:

         (a) MAINTENANCE OF OFFICE. The Corporation will maintain an office or
     agency in Englewood, in the State of New Jersey (or such other place in the
     United States of America as the corporation may designate in writing to the
     registered holder hereof), where the Debentures may be presented for
     registration of transfer and for exchange as herein provided, where notices
     and demands to or upon the Corporation in respect of the Debentures may be
     served and where, at the option of the holders thereof, the Debentures may
     be presented for payment. Until the Corporation otherwise notifies the
     holders of the Debentures, said office shall be the principal office of the
     Corporation in the State of New Jersey as set forth in Subsection (a) of
     Section 20.

         (b) CORPORATE EXISTENCE. The Corporation will do or cause to be done
     all things necessary and lawful to preserve and keep in full force and
     effect its and its subsidiaries' corporate existence, rights and franchises
     under the laws of

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<PAGE>

     the United States or any State thereof or the District of Columbia.

         (c) AMENDMENT OF CERTIFICATE OF INCORPORATION. The Corporation will use
     its best efforts to effect an amendment to its Certificate of Incorporation
     (the "Recapitalization") as soon as practicable following the issue date of
     this Debenture, but in all events prior to the Due Date, increasing the
     Corporation's authorized capitalization to not less than 35,000,000 shares
     of Common Stock (as hereinafter defined).

         8. NEGATIVE COVENANTS. The Corporation covenants and agrees that, so
long as any Debenture shall be outstanding:

         (a) CONSOLIDATION, MERGER AND SALE. The Corporation will not
     consolidate or merge with or into, or sell or otherwise dispose of all or
     substantially all of its property to, any other person.

         (b) RESTRICTED PAYMENTS. The Corporation shall not declare or pay any
     dividend on, or authorize or make any distribution in respect of, shares of
     any class of its stock, or authorize or make any purchase, redemption or
     acquisition for value of, or permit any subsidiary to pur chase or
     otherwise acquire for value, any shares of any class of its stock other
     than a repurchase of stock from any employee of the Corporation or any
     subsidiary of the Corpo ration in the event that such employee ceases to be
     employed by the Corporation or such subsidiary.

         (c) SECURITIES ISSUANCES. Except for issuance under stock option or
     other similar plans in existence as of the issue date of this Debenture,
     the Corporation shall not issue any (i) shares of Common Stock for a
     consideration per share less than the Conversion Price (as hereinafter
     defined) or (ii) securities exercisable for, or convertible into, Common
     Stock at an exercise or conversion price less that the Conversion Price.

         9. MODIFICATION BY HOLDERS; WAIVER. The Corporation may, with the
written consent of the holders of not less than 51% in principal amount of the
Debentures then outstanding, modify the terms and provisions of the Debentures
or the rights of the holders of the Debentures or the obligations of the
Corporation thereunder, and the observance by the Corporation of any term or
provision of the Debentures may be waived with the written consent of the
holders of not less than 51% in principal amount

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<PAGE>

of the Debentures then outstanding; PROVIDED, HOWEVER, that no such modification
or waiver shall:

         (a) change the maturity of any Debenture or reduce the principal amount
     thereof or reduce the rate or extend the time of payment of interest
     thereon without the consent of the holder of each Debenture so affected; or

         (b) give any Debenture any preference over any other Debenture; or

         (c) change any provision of Section 10, 11, 12 or 13 without the
     consent of the holders of all outstanding Deben tures; or

         (d) reduce the applicable aforesaid percentages of Debentures, the
     consent of the holders of which is required for any such modification.

         Any such modification or waiver shall apply equally to all the holders
of the Debentures and shall be binding upon them, upon each future holder of any
Debenture and upon the Corpora tion, whether or not such Debenture shall have
been marked to indicate such modification or waiver, but any Debenture issued
thereafter shall bear a notation referring to any such modifica tion or waiver.
Promptly after obtaining the written consent of the holders as herein provided,
the Corporation shall transmit a copy of such modification or waiver to all the
holders of the Debentures at the time outstanding.

         10. EVENTS OF DEFAULT. Unless waived in writing by the holders of not
less than 51% in principal amount of the Debentures then outstanding, if any one
or more of the following events, herein called Events of Default, shall occur,
for any reason whatsoever, and whether such occurrence shall, on the part of the
Corporation, be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgement, decree or
order of a court of competent jurisdiction or any order, rule or regulation of
any administrative or other governmental authority and such Event of Default
shall be continuing:

         (a) default shall be made in the payment of the prin cipal of or
     interest on any Debenture when and as the same shall become due and payable
     and such default shall continue for a period of five (5) Business Days; or

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         (b) default shall be made in the performance by the Corporation of any
     other covenant or agreement contained in this Debenture; or

         (c) any representation or warranty made or given in this Debenture or
     in any other document or statement furnished at any time pursuant to or in
     connection with this Debenture shall prove to have been untrue, false or
     misleading in any material respect on the date as of which made; or

         (d) the Corporation shall (i) default in any payment of principal of or
     interest on any Senior Debt or (ii) default in the observance or
     performance of any agreement or condition relating to any such Senior Debt
     or any other event shall occur or condition exist, the effect of which
     default or other event or condition is to cause (immediately or with the
     giving of notice or lapse of time or both) any such Senior Debt to become
     due prior to its stated maturity;

then, subject to the provisions of Section 14, the holder or holders of at least
a majority in aggregate principal amount of the Debentures at the time
outstanding may, at its or their option, by written notice to the Corporation,
declare all the Debentures to be, and all the Debentures shall thereupon be and
become, forthwith due and payable without presentment, demand, protest or
further notice of any kind, all of which are expressly waived to the extent
permitted by law; PROVIDED, HOWEVER, that, subject to the provisions of Section
14, upon the occurrence and during the continuance of any of the events
specified in subsections (a) or (b) of this Section 10, the holder of any
Debenture at the time outstanding may, at its option by notice in writing to the
Corporation, declare any Debenture or Debentures then held by it to be, and such
Debenture or Debentures shall thereupon be and become, forthwith due and payable
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived to the extent permitted by law.

         At any time after any declaration of acceleration has been made as
provided in this Section 10, the holders of at least a majority in aggregate
principal amount of the Debentures then outstanding may, by notice to the
Corporation, rescind such declaration and its consequences, if all defaults and
Events of Default (other than nonpayments of principal and interest that have
become due solely by reason of acceleration) shall have been remedied or cured
or shall have been waived pursuant to this paragraph; PROVIDED, HOWEVER, that no
such rescission shall

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<PAGE>

extend to or affect any subsequent default or Event of Default or impair any
right consequent thereon.

         Without limiting the foregoing, the Corporation hereby waives any right
to trial by jury in any legal proceeding related in any way to this Debenture or
the Debentures and agrees that any such proceeding may, if the holder so elects,
be brought and enforced in the Supreme Court of the State of New York or the
United States District Court for the Southern District of New York and the
Corporation hereby waives any objection to jurisdic tion or venue in any such
proceeding commenced in such court. The Corporation further agrees that any
process required to be served on it for purposes of any such proceeding may be
served on it, with the same effect as personal service on it within the State of
New Jersey, by registered mail addressed to it at its office or agency set forth
in Section 20 for purposes of notices hereunder.

         11. SUITS FOR ENFORCEMENT. Subject to the provisions of Section 14, in
case any one or more of the Events of Default specified in Section 10 of this
Debenture shall happen, shall be continuing and shall not have previously been
waived as provided in said section 10, any holder of the Debentures then
outstanding may proceed to protect and enforce his or its rights by suit in
equity, action at law and/or by other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in the Debentures or
in aid of the exercise of any power granted in the Debentures, or to enforce any
legal or equitable right of the holders of the Debentures.

         Subject to the provisions of Section 14, in case of any default under
any Debenture, the Corporation will pay to the holder thereof such amounts as
shall be sufficient to cover the costs and expenses of such holder due to said
default, including, without limitation, collection costs and reasonable
attorneys' fees and disbursements, to the extent actually incurred.

         12. REMEDIES CUMULATIVE. No remedy herein conferred upon the holder of
this Debenture is intended to be exclusive of any other remedy; and each and
every such remedy shall be cumula tive and shall be in addition to every other
remedy given hereun der or now or hereafter existing at law or in equity or by
stat ute or otherwise.

         13. REMEDIES NOT WAIVED. No course of dealing between the Corporation
and the holders of this Debenture or any delay on the part of the holder hereof
in exercising any rights hereunder

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shall operate as a waiver of any right of any holder of this Debenture.

         14. SUBORDINATION.

         (a) SUBORDINATION. Anything in this Debenture to the contrary
     notwithstanding, the obligations of the Corporation in respect of the
     principal of, and interest on, and all other amounts owing in respect of,
     this Debenture shall be subordinated and junior in right of payment, to the
     extent and in the manner hereinafter set forth, to the prior payment in
     full, in cash, of all Senior Debt.

         (b) SUBROGATION. To the extent that amounts otherwise payable under
     this Debenture have been paid to the holders of the Senior Debt and subject
     to the payment in full in cash of the Senior Debt, the holder of this
     Debenture shall be subrogated to the rights of the holders of Senior Debt
     to receive payments or distributions of assets of the Corpora tion made on
     the Senior Debt until the principal of and interest on this Debenture shall
     be paid in full.

         15. CONVERSION.

         (a) AUTOMATIC CONVERSION. Anything in this Debenture or in the
     Certificate of Incorporation of the Corporation to the contrary
     notwithstanding, all Debentures shall automatically be converted into
     shares of Common Stock at such time (the "Conversion Date") as the
     Corporation has effected the Recapitalization. The Corporation shall be
     cause written notice to be given to each holder of Debentures as soon as
     practicable following the Conversion Date. Upon receipt of such notice, the
     holder hereof shall surrender this Debenture to the Corporation at its
     principal office (or such other office or agency of the Corporation as the
     Corporation may designate by notice in writing to the holder or holders of
     this Debenture) at any time during its usual business hours following the
     Conversion Date set forth in such notice, together with a statement of the
     name or names (with address) in which the certificate or certifi cates for
     shares of Common Stock shall be issued. This Debenture shall not be
     convertible into shares of Common Stock except as provided in this Section
     15(a).

         (b) CONVERSION PRICE; NUMBER OF SHARES. On the Conversion Date, the
     principal balance of this Debenture shall be converted into such number of
     fully paid and nonassessable whole shares of Common Stock as is obtained by

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     dividing the principal amount of this Debenture so to be converted by the
     conversion price of $0.075 per share (the "Conversion Price").

         (c) ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED. Promptly after
     the surrender of this Debenture, the Corporation shall issue and deliver,
     or cause to be issued and delivered, to the holder, registered in such name
     or names as such holder may direct, a certificate or certificates for the
     number of whole shares of Common Stock issuable upon the conversion of such
     unpaid principal amount of this Debenture. To the extent permitted by law,
     such conversion shall be deemed to have been effected as of the close of
     business on the Conversion Date, irrespective of whether this Debenture
     shall have been physically sur rendered on such date, and at such time the
     rights (other that the right to have the Common Stock issuable upon
     conversion of this Debenture registered under the Act, as set forth below)
     of the holder of this Debenture shall cease, and the person or persons in
     whose name or names any certificate or certificates for shares of Common
     Stock shall be issuable upon such conversion shall be deemed to have become
     the holder or holders of record of the shares represented thereby.

         (d) FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No fractional
     shares shall be issued upon conversion of the principal amount of this
     Debenture. If any fractional interest in a share of Common Stock would,
     except for the provisions of the first sentence of this paragraph (d), be
     deliverable upon any such conversion, the Corporation, in lieu of
     delivering the fractional share thereof, shall pay to the holder
     surrendering this Debenture for conversion an amount in cash equal to such
     fractional interest multiplied by the Conversion Price.

         (e) STOCK TO BE ISSUED. The Corporation covenants that all shares of
     Common Stock which shall be issued upon conversion of the Debentures shall
     be duly and validly issued and fully paid and nonassessable and free from
     all taxes, liens and charges with respect to the issue thereof, and,
     without limiting the generality of the foregoing, the Corporation covenants
     that it will from time to time take all such action as may be requisite to
     assure that the par value per share of the Common Stock is at all times
     equal to or less than the effective Conversion Price. The Corporation will
     take all such action as may be necessary to assure that all such shares of
     Common Stock may be so issued without

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     violation of any applicable law or regulation, or of any requirements of
     any national securities exchange upon which the Common Stock of the
     Corporation may be listed.

         (f) ISSUE TAX. The issuance of certificates for shares of Common Stock
     upon conversion of the Debentures shall be made without charge to the
     holders thereof for any issuance tax in respect thereof, provided that the
     Corpora tion shall not be required to pay any tax which may be payable in
     respect of any transfer involved in the issuance and delivery of any
     certificate in a name other than that of the holder of the Debenture the
     principal amount of which is being converted.

         (g) DEFINITION OF COMMON STOCK. As used in this Sec tion 18, the term
     "Common Stock" shall mean and include the Corporation's authorized voting
     Common Stock, no par value, and shall also include any capital stock of any
     class of the Corporation thereafter authorized which shall not be limited
     to a fixed sum or percentage of par value in respect of the rights of the
     holders thereof to participate in dividends or in the distribution of
     assets upon the voluntary or involun tary liquidation, dissolution or
     winding up of the Corpo ration.

         16. REGISTRATION RIGHTS. The Holder shall have the following
registration rights with respect to the shares of Common Stock issuable upon
conversion of this Debenture (the "Registrable Securities"):

         (a) PIGGYBACK REGISTRATION RIGHTS. The Corporation shall advise the
     Holder or its transferee, whether the Holder holds the Debenture or after
     the Recapitalization holds the Common Stock issued upon the conversion of
     the Debenture, by written notice at least four weeks prior to the filing of
     any registration statement under the Act covering any securities of the
     Corporation, for its own account or for the account of others, and will,
     until two years after the issuance date hereof, upon the request of the
     Holder, register under the Act all or any portion of the Registrable
     Securities and cause such registration statement to become and remain
     effective as provided in Section 16(b) hereof. In the event that any
     registration pursuant to this Section 16(a) shall be, in whole or in part,
     an underwritten public offering of Common Stock, the number of shares of
     Registrable Securities to be included in such an underwriting may be
     reduced (PRO RATA among the requesting Holders of Registrable Securities
     based upon the number of

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<PAGE>

     shares of Registrable Securities so requested to be registered) if and to
     the extent that the managing underwriter shall be of the opinion that such
     inclusion would adversely affect the marketing of the securities to be sold
     by the Corporation therein; PROVIDED, HOWEVER, that such number of shares
     of Registrable Securities shall not be reduced if any shares are to be
     included in such underwriting for the account of any person other than the
     Holders of the Convertible Securities, as hereinafter defined, and the
     Corporation.

         (b) TERMINATION OF REGISTRATION RIGHTS. Notwith- standing anything to
     the contrary contained in this Section 16, the obligations of the
     Corporation to register Registrable Securities shall terminate with respect
     to a Holder if all of the Registrable Securities held by such Holder may be
     publicly sold without restriction pursuant to Rule 144(k) under the Act.

         17. COVENANTS BIND SUCCESSORS AND ASSIGNS. All the covenants,
stipulations, promises and agreements in this Deben ture contained by or on
behalf of the Corporation shall bind its successors and assigns, whether so
expressed or not.

         18. GOVERNING LAW. This Debenture shall be governed and construed in
accordance with the laws of the State of New Jersey.

         19. HEADINGS. The headings of the Sections and sub sections of this
Debenture are inserted for convenience only and do not constitute a part of this
Debenture.

         20. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by first-class registered
mail, postage prepaid,

         (a)      if to the Corporation, at:

                  The MNI Group Inc.
                  10 West Forest Avenue
                  Englewood, New Jersey 07631
                  Attention: President

         (b) if to the holder of this Debenture, to its address as set forth in
     the register maintained by the Corporation for the registration of transfer
     and exchange of Debentures.


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         IN WITNESS WHEREOF, THE MNI GROUP INC. has caused this Debenture to be
signed in its corporate name by one of its officers thereunto duly authorized
and to be dated as of the day and year first above written.

                                            THE MNI GROUP INC.


                                            By: _________________________



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