AMENDMENT NO. 2

                                       TO

                           LOAN AND SECURITY AGREEMENT


     AMENDMENT  NO. 2 to Loan and Security  Agreement  dated and effective as of
the 12th day of November 1998 (the "Amendment No. 2") by and between Compu-DAWN,
Inc., a Delaware  Corporation  ("Lender") and LocalNet  Communications,  Inc., a
Florida corporation ("Borrower").

                                    RECITALS

     WHEREAS,  Lender and Borrower  entered  into a Loan and Security  Agreement
dated  October 6, 1998 (the "Loan and  Security  Agreement")  pursuant  to which
Lender agreed to loan up to $500,000 to Borrower.

     WHEREAS,  Lender and Borrower  entered into Amendment No. 1 to the Loan and
Security Agreement dated October 23, 1998 ("Amendment No. 1") pursuant to which,
among other things,  Lender agreed to loan Borrower up to a further $500,000 for
an aggregate loan of up to $1,000,000.

     WHEREAS,  Borrower desires to borrow from Lender and Lender desires to loan
to Borrower an additional  amount of up to $800,000,  or an aggregate loan of up
to $1,800,000 in principal,  of which $1,000,000 of such aggregate amount may be
convertible  into securities of the Borrower upon terms and conditions set forth
herein.

     WHEREAS,  Lender  and  Borrower  desire  to amend  the  Loan  and  Security
Agreement as amended by Amendment No. 1 upon the terms and  conditions set forth
herein.

     NOW,  THEREFORE,  in  consideration  of  the  respective   representations,
warranties,  agreements and covenants in this Amendment,  and for other good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged,  and subject to the conditions  contained in this  Amendment,  the
parties intending to be legally bound, hereby agree as follows:

                                    SECTION 1
                                   DEFINITIONS

     1. Capitalized  terms used but not defined herein,  shall have been meaning
ascribed to them in the Loan and Security Agreement. The term "Security and Loan
Agreement"  herein shall include  Amendment  No. 1, unless the context  requires
otherwise.



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                                    SECTION 2
                               SECTION AMENDMENTS

     2.1 Section  1.1(o) of the Loan and  Security  Agreement  is amended in its
entirety  to read as  follows:  " "Notes"  shall mean (A) The  $500,000  Secured
Promissory Note dated October 6, 1998 executed by Borrower pursuant to the terms
of the Loan and Security  Agreement,  (B) the $500,000  Secured  Promissory Note
dated October 23, 1998 (the "Second Note") executed by Borrower  pursuant to the
terms of the Loan and Security  Agreement as amended by Amendment No. 1, and (C)
the $800,000 Secured Promissory Note of even date (the "Third Note") executed by
Borrower  pursuant to the terms of the Loan and  Security  Agreement  as amended
hereby, collectively and singly.

     2.2 The  amount  provided  for in  Section  2.1 of the  Loan  and  Security
Agreement  is  amended  to read  One  Million  Eight  Hundred  Thousand  Dollars
($1,800,000) and the defined term "Amount" shall mean such $1,800,000.


                                    SECTION 3
                        ADDITIONAL CONDITIONS TO ADVANCES

     3.1 In addition to the  conditions set forth in Sections 2.6 and 2.7 of the
Loan  and  Security  Agreement  and  Section  3 of  Amendment  No.  1,  Lender's
obligation to make each Advance on or after the date hereof is conditioned upon,
and is subject to, the fulfillment of each of the following  conditions.  Lender
shall have received each of the following, in form and substance satisfactory to
Lender:

          (a) The duly executed copy of the Third Note.

          (b) An amendment to the Boca  Research,  Inc.  ("Boca")  Subordination
     Agreement  pursuant  to which  Boca  agrees  to  subordinate  any  security
     interest it may have in the Collateral to Compu-DAWN's security interest in
     such  Collateral  to  the  extent  of  the  principal  amount  of at  least
     $1,800,000  (plus  any  amount  which  Lender  is  required  to pay to Boca
     pursuant  to a  guaranty  under  a  Tripartite  Agreement  between  Lender,
     Borrower and Boca dated  October 28, 1998) plus  interest  accrued  thereon
     plus any costs incurred by the Lender in the collection of such amounts.

          (c)  Certified  copy  of  all  corporate  (including  stockholder,  if
     required),  action taken by Borrower to authorize (a) this  Amendment No. 2
     (b) the Borrowings  pursuant to this Amendment No. 2 and (c) the execution,
     delivery and  performance  by Borrower in  accordance  with the  respective
     terms of this Amendment No. 2 and any other document executed in connection
     with this Amendment No. 2.

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                                    SECTION 4
                               CONVERSION OF NOTES

     4.1  Conversion at the Option of the Holder.  The Borrower or holder of the
Note(s) (for the purposes of Sections 4,5 and 6 hereof each the  "Holder")  may,
at any time  and from  time to time on or after  the  date  hereof,  convert  (a
"Conversion")  up to $1,000,000  of the  principal  amount of the Note(s) to the
extent unpaid at the time of conversion (the "Conversion Principal Amount") into
a number of fully paid and  nonassessable  shares of Common Stock equal to forty
percent  (40%) of the  Borrower's  capital stock on a fully diluted basis if the
entire  Conversion  Principal Amount is converted,  or a pro rata amount of such
number of shares of Common  Stock if less than the entire  Conversion  Principal
Amount is converted,  and the  Conversion  Price shall be fixed  accordingly  to
effectuate the foregoing.

     4.2  Mechanics of  Conversion.  In order to effect  Conversion,  the Holder
shall:  (x) fax (or  otherwise  deliver)  a copy of a fully  executed  notice of
conversion in, or substantially in, the form attached hereto as Exhibit 4.2 (the
"Notice of  Conversion")  to the  Borrower  and (y)  surrender  to the  Borrower
therewith or as soon as practicable  thereafter the Note(s) or a notice that the
Note(s) has been lost, stolen or destroyed.  The Borrower shall not be obligated
to issue shares of Common Stock upon a conversion  unless  either the Note(s) is
delivered  to Borrower as provided  above,  or the Holder  notifies the Borrower
that such Note(s) has been lost, stolen or destroyed.

     4.3 Delivery of Common  Stock Upon  Conversion.  Upon the  surrender of the
Note(s)  accompanying  or following the delivery of a Notice of  Conversion  and
provided  that the Holder has complied  with the  provisions  of Section  4.2(x)
hereof,  the  Borrower  shall,  issue  and  deliver  to  the  Holder  (x)  stock
certificates  representing  that number of shares of Common Stock  issuable upon
conversion of the Conversion Principal Amount being converted and (y) a new Note
representing the portion of the Conversion Principal Amount not being converted,
if any.

     4.4 Taxes.  The  Borrower  shall pay any and all taxes which may be imposed
upon it with  respect to the issuance and delivery of the shares of Common Stock
upon the conversion of the Conversion Principal Amount.

     4.5 No Fractional Shares. If any conversion of Conversion  Principal Amount
would  result  in the  issuance  of a  fractional  share of Common  Stock,  such
fractional  share shall be disregarded  and the number of shares of Common Stock
issuable upon  conversion of the Conversion  Principal  Amount shall be the next
higher whole number of shares if such fractional share is one-half of a share or
more and the next lower whole number of shares if such fractional  share is less
than one-half of a share.




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                                    SECTION 5

                      RESERVATION OF SHARES OF COMMON STOCK

     5.1 The Borrower  shall reserve the number of shares of the  authorized but
unissued  shares of Common  Stock for  issuance  upon  conversion  of the entire
Conversion Principal Amount and thereafter the number of authorized but unissued
shares  of  Common  Stock so  reserved  (the  "Reserved  Amount")  shall  not be
decreased,  except  upon  issuances  of Common  Stock  pursuant  to  conversions
hereunder, and shall at all times be sufficient to provide for the conversion of
the Conversion Principal Amount at the then current Conversion Price.

                                    SECTION 6

                      ADJUSTMENTS TO THE CONVERSION PRICE.

     6.1 The Conversion  Price shall be subject to adjustment  from time to time
as follows:

     (a)  Stock  Splits,  Stock  Dividends,  Etc. If at any time on or after the
          date  hereof,  the  number of  outstanding  shares of Common  Stock is
          increased   by   a   stock   split,   stock   dividend,   combination,
          reclassification or other similar event, the Conversion Price shall be
          proportionately  reduced,  or if the number of  outstanding  shares of
          Common  Stock is decreased by a reverse  stock split,  combination  or
          reclassification  of shares,  or other similar  event,  the Conversion
          Price shall be proportionately increased.

     (b)  Adjustment  Due to Merger,  Consolidation,  Etc. If, at any time after
          the date hereof,  there shall be (i) any reclassification or change of
          the  outstanding  shares of Common  Stock  (other than a change in par
          value,  or from par value to no par value, or from no par value to par
          value,  or as a result  of a  subdivision  or  combination),  (ii) any
          consolidation  or merger of the Borrower  with any other entity (other
          than a merger in which the  Borrower is the  surviving  or  continuing
          entity and its capital stock is unchanged), (iii) any sale or transfer
          of all or substantially all of the assets of the Borrower, or (iv) any
          share  exchange  pursuant  to which all of the  outstanding  shares of
          Common Stock are converted into other  securities or property (each of
          (i) - (iv) above being a  "Corporate  Change"),  then the Holder shall
          thereafter have the right to receive upon  conversion,  in lieu of the
          shares of  Common  Stock  otherwise  issuable,  such  shares of stock,
          securities  and/or other property as would have been issued or payable
          in such Corporate Change with respect to or in exchange for the number
          of  shares  of Common  Stock  which  would  have  been  issuable  upon
          conversion had such Corporate  Change not taken place, and in any such
          case,  appropriate provisions shall be made with respect to the rights
          and  interests  of the  Holder to the end that the  provisions  hereof
          shall  thereafter be  applicable,  as nearly as may be  practicable in
          relation to any shares of stock or securities thereafter

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          deliverable upon the conversion of the Note(s).

     (c)  Adjustment Due to Distribution. If, at any time after the date hereof,
          the Borrower shall declare or make any  distribution of its assets (or
          rights to acquire its assets) to holders of Common  Stock as a partial
          liquidating  dividend,  by way  of  return  of  capital  or  otherwise
          (including any dividend or distribution to the Borrower's stockholders
          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
          shall be entitled,  upon any  conversion of the  Conversion  Principal
          Amount after the date of record for determining  stockholders 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 stockholders entitled to such Distribution.

     (d)  Purchase Rights.  If, at any time after the date hereof,  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 will be entitled to acquire,  upon the terms applicable to such
          Purchase Rights,  the aggregate Purchase Rights which the Holder could
          have  acquired  if the  Holder had held the number of shares of Common
          Stock acquirable upon complete conversion of the Conversion  Principal
          Amount  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.

     (e)  Notice of  Adjustments.  Upon the  occurrence  of each  adjustment  or
          readjustment  of the Conversion  Price pursuant to this Section 6, the
          Borrower,  at the  Borrower's  expense,  shall  promptly  compute such
          adjustment  or  readjustment  and  prepare and furnish to the Holder 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 the 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 Conversion Principal Amount.



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                                    SECTION 7

                      RIGHT TO MAINTAIN PERCENTAGE INTEREST

     7.1 Subject to the terms and conditions  specified in this Section 7.1, the
Borrower hereby grants to the Holder a right to maintain the Holder's percentage
ownership  interest in the Borrower with respect to future sales by the Borrower
of its New Securities (as hereinafter defined).

     Each time the Borrower proposes to offer any New Securities (subject to the
terms and  provisions of the Loan and Security  Agreement),  the Borrower  shall
concurrently make an offering of additional shares of such New Securities to the
Holder in accordance with the following provisions:

     (a)  The Borrower  shall deliver a notice  ("Notice") to the Holder stating
          (i) its bona fide  intention  to offer or issue  such New  Securities,
          (ii) the number of such New Securities to be offered, (iii) the price,
          if any,  for which it proposes to offer such New  Securities,  (iv) if
          known,  the names and  addresses  of the  proposed  offerees,  (v) the
          additional  number of such New Securities that are concurrently  being
          offered  to  the  Holder,  which  shall  be the  number  of  such  New
          Securities  required  for the  Holder to  maintain  its  fully-diluted
          percentage equity interest in the Borrower (the "Offered Securities"),
          and (vi) the date (not less than 10 days from the date of the  Notice)
          by which the Borrower requests that the Holder acknowledges the Notice
          or notify  the  Borrower  that the  Notice  fails to  comply  with the
          requirements of this Section 7.1(the "Notice Acknowledgment Date").

     (b)  Within 20 calendar days after the Holder  acknowledges to the Borrower
          in writing  that the Notice  complies  with the  requirements  of this
          Section 7.1, the Holder may elect to purchase or obtain,  at the price
          and on the terms  specified  in the Notice,  up to that portion of the
          Offered  Securities  which  equals the  proportion  that the number of
          shares of Common Stock Deemed  Outstanding  (as  hereinafter  defined)
          then held by the Holder  bears to the total number of shares of Common
          Stock Deemed Outstanding. On or before the Notice Acknowledgment Date,
          the Holder shall either deliver such acknowledgment to the Borrower or
          notify  the  Borrower  that  the  Notice  fails  to  comply  with  the
          requirements of this Section 7.1.

     (c)  For purposes hereof,  the term "New Securities"  shall mean any shares
          of capital stock of the Borrower,  or securities  (including,  without
          limitation,  options or warrants)  convertible into or exchangeable or
          exercisable for, any class or series of the Borrower's capital stock.

     (d)  For the  purposes  hereof the term "Common  Stock Deemed  Outstanding"
          shall mean the sum of the number of shares of Common Stock then

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          outstanding  plus the number of shares of Common Stock then obtainable
          pursuant to (i) any options or warrants or purchase rights to purchase
          shares of Common Stock,  (ii) rights to subscribe for shares of Common
          Stock,   (iii)   securities  by  their  terms   convertible   into  or
          exchangeable  for shares of Common Stock, and (iv) options or warrants
          to  purchase  or  rights  to  subscribe   for  such   convertible   or
          exchangeable securities;

                                    SECTION 8

                                    EXPENSES

     The  Borrower  shall pay  $10,000 to Lender to cover the  Lender's,  costs,
expenses and disbursements (including, without limitation,  Lender's legal fees)
incurred in  connection  with this  transaction.  Such amount may be deducted by
Lender from the amounts to be loaned under this Amendment No. 2.

                                    SECTION 9

                              FULL FORCE AND EFFECT

     9.1 All the other terms and  provisions of the Loan and Security  Agreement
shall continue in full force and effect.

     IN WITNESS WHEREOF,  Borrower and Lender have executed this Amendment No. 2
by the duly authorized officers as of the date first above written.


                                     LENDER:

ATTEST:                              Compu-DAWN, Inc.


_____________________________        By:/s/ Mark Honigsfeld 
                                        ----------------------------------------
                                        Mark Honigsfeld
                                        Chief Executive Officer


                                     BORROWER:

ATTEST:                              LocalNet Communications, Inc.


_____________________________        By:/s/ Rudy C. Theale, Jr. 
                                        ----------------------------------------
                                        Rudy C. Theale, Jr.
                                        Chief Executive Officer


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                                   Exhibit 4.2

                              NOTE CONVERSION FORM

     The  undersigned  hereby  elects to convert  $______________  of Conversion
Principal  Amount of the LocalNet  Communications,  Inc.  (the  "Borrower")  12%
Secured  Promissory  Note  to  Compu-DAWN,  Inc.  dated  _________________  into
________ shares of Common Stock of the Borrower (the "Shares"),  at a Conversion
Price of $_____________ per share.

     The undersigned represents and warrants that the Shares purchased by it are
being acquired for its own account,  for investment purposes and not with a view
to any distribution within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"). The undersigned will not sell, assign, mortgage, pledge,
hypothecate,  transfer or  otherwise  dispose of any of the Shares  unless (i) a
registration  statement  under the  Securities  Act with  respect  thereto is in
effect and the prospectus  included therein meets the requirements of Section 10
of the  Securities  Act, or (ii) the Borrower has received a written  opinion of
his counsel that, after an investigation of the relevant facts,  such counsel is
of  the  opinion  that  such  proposed  sale,  assignment,   mortgage,   pledge,
hypothecation,  transfer or disposition does not require  registration under the
Securities Act or any state securities law.

     The  undersigned  understands  that the issuance of the Shares is not being
registered  under the  Securities  Act and the Shares must be held  indefinitely
unless they are  subsequently  registered  thereunder or an exemption  from such
registration is available.

     The  undersigned  represents and warrants  further that (i) it is either an
"accredited  investor," as such term is defined in Rule 501(a) promulgated under
the Securities Act, or, either alone or with its purchaser  representative,  has
such  knowledge  and  experience  in financial  and business  matters that it is
capable of  evaluating  the merits and risks of the  acquisition  of the Shares;
(ii) it is able to bear the  economic  risks  of an  investment  in the  Shares,
including,  without  limitation,  the  risk  of the  loss  of part or all of its
investment  and the  inability to sell or transfer the Shares for an  indefinite
period of time;  (iii) it has adequate  financial means of providing for current
needs and  contingencies  and has no need for liquidity in his investment in the
Shares; and (iv) it does not have an overall commitment to investments which are
not readily  marketable  that is  excessive  in  proportion  to net worth and an
investment  in the  Shares  will not cause  such  overall  commitment  to become
excessive.

     The undersigned  acknowledges that the following restrictive legend will be
placed on any instrument, certificate or other document evidencing the Shares:

               "The  shares  represented  by  this  certificate  have  not  been
               registered  under the Securities  Act of 1933.  These shares have
               been acquired for investment and not for  distribution.  They may
               not  be  sold,  assigned,   mortgaged,   pledged,   hypothecated,
               transferred  or  otherwise   disposed  of  without  an  effective
               registration  statement for such shares under the  Securities Act
               of 1933 or an opinion of counsel for the

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               Borrower that registration is not required under such Act."


Dated:________________

                                            ------------------------------
                                            Name of Holder


                                            ------------------------------
                                            Signature of authorized signor


                                            ------------------------------
                                            Name of signor

                                            -------------------------------
                                            Title of signor

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