Document:

NEITHER THESE  SECURITIES  NOR THE  SECURITIES  INTO WHICH THESE  SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE  COMMISSION OR
THE  SECURITIES  COMMISSION  OF ANY STATE IN  RELIANCE  UPON AN  EXEMPTION  FROM
REGISTRATION  UNDER  RULE  506  OF  REGULATION  D  PROMULGATED  UNDER  THE  U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED,  ASSIGNED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE
SECURITIES  ACT OR PURSUANT TO AN  AVAILABLE  EXEMPTION  OR  EXCLUSION  FROM THE
REGISTRATION  REQUIREMENTS  THEREUNDER AND IN COMPLIANCE WITH  APPLICABLE  STATE
SECURITIES LAWS.

No. _________
US $750,000

                   3% CONVERTIBLE DEBENTURE DUE _______, 200_

         THIS  DEBENTURE  is one of a duly  authorized  issue of  Debentures  of
Fusion  Networks  Holdings,   Inc.,  a  Delaware  corporation  (the  "Company"),
designated  as  its  3%  Convertible  Debentures,   due  ________,   200__  (the
"Debentures"), in an aggregate principal amount of up to US$750,000.

         FOR VALUE  RECEIVED,  the  Company  promises  to pay to [Name],  or its
registered  assigns (the  "Holder"),  the  principal  sum of Seven Hundred Fifty
Thousand Dollars (US $750,000),  on or prior to [Due Date],  200_ (the "Maturity
Date") and to pay  interest  to the Holder on the  principal  sum at the rate of
three percent (3%) per annum. Interest shall accrue daily commencing on the date
twelve (12) months after the Original Issue Date (as defined in Section 1 below)
and be payable  quarterly  on the first day of each _____,  ____,  ____ and ____
[insert months], commencing ___________, 200__ in the form of cash, common stock
of the Company or additional  Debentures  selected by the Company subject to the
provisions of Section 2(b) hereof,  until payment in full of the principal  sum,
together  with all accrued and unpaid  interest,  has been made or duly provided
for.  If at any time  after the  Original  Issue  Date an Event of  Default  has
occurred and is continuing, interest shall accrue at the rate of fifteen percent
(15%) per annum from the date of the Event of Default  and the  applicable  cure
period  through  and  including  the date of payment.  Interest  due and payable
hereunder  shall be paid to the person in whose name this  Debenture  (or one or
more successor Debentures) is registered on the records of the Company regarding
registration  and  transfers  of  the  Debentures  (the  "Debenture  Register");
provided,  however,  that  the  Company's  obligation  to a  transferee  of this
Debenture shall arise only if such transfer,  sale or other  disposition is made
in  accordance  with the  terms and  conditions  hereof  and of the  Convertible
Debenture Purchase Agreement by and between the Company and the Holder, dated as
of December __, 2000, as amended from time to time (the  "Purchase  Agreement"),
executed by the original  Holder.  A transfer of the right to receive  principal
and  interest  under  this  Debenture  shall be  transferable  only  through  an
appropriate entry in the Debenture Register as provided herein.
<PAGE>

         This Debenture is subject to the following additional provisions:

                   Section  1.  Definitions. Capitalized terms used and not
otherwise defined herein shall have the meanings given such terms in thePurchase
Agreement.  As  used  in  this  Agreement,  the following terms shall have  the
following meanings:

                  "Adjusted  Conversion  Price"  means  the  lesser of the Fixed
Conversion  Price or the Floating  Conversion  Price one day prior to the record
date set for the  determination of stockholders  entitled to receive  dividends,
distributions,  rights or warrants as provided for in Sections  4(c)(ii),  (iii)
and (iv) or on the day on which a quarterly interest payment is due.

                  "Attorney-in-Fact"  shall have the same meaning ascribed to it
in the Purchase Agreement.

                  "Conversion  Date"  means  the  date  on  which  a  Notice  of
Conversion is dated.

                  "Conversion  Ratio"  means,  at  any  time,  a  fraction,  the
numerator of which is the principal  amount  represented  by any Debenture  plus
accrued  but  unpaid  interest  thereon,  and the  denominator  of  which is the
Conversion Price at such time.

                  "Escrow  Agent"  shall have the meaning  ascribed to it in the
Purchase Agreement.

                  "Fixed  Conversion Price" means the lesser of (i) US$0.932 and
(ii) one hundred  thirty percent (130%) of the average of the two lowest closing
prices for the five Trading Days  immediately  prior to the date of the Purchase
Agreement.

                  "Floating Conversion Price" means eighty-five percent (85%) of
the average of the three (3) lowest volume  weighted  average  prices during the
thirty (30) Trading Days prior to the applicable Conversion Date.

                  "Junior  Securities"  means the Common Stock, all other equity
securities  of the  Company  and all  other  debt  that is  subordinated  to the
Debenture by its terms.

                  "Maximum Conversion Shares" means twelve million  (12,000,000)
shares of Common  Stock,  as such  number is adjusted  pursuant to Section  4(c)
hereof.

                  "Original  Issue  Date"  shall  mean  the  date  of the  first
issuance of this Debenture regardless of the number of transfers hereof.

                  Section 2.Denominations of Debentures; Interest on Debentures.

                  (a)  The  Debentures  are  issuable  in  denominations  of One
Thousand Dollars  (US$1,000.00)  and integral  multiples of One Thousand Dollars
(US$1,000.00)  in excess thereof.  The Debentures are  exchangeable for an equal
aggregate principal amount of Debentures of different authorized  denominations,
as requested by the Holder  surrendering  the same, but shall not be issuable in
denominations  of  less  than  integral   multiplies  of  One  Thousand  Dollars
(US$1,000.00).   No  service  charge  to  the  Holder  will  be  made  for  such
registration of transfer or exchange.

                                       2
<PAGE>

                  (b) The Company may elect to make any payment of interest  due
hereunder in Common Stock or Debentures, provided, that (i) there shall not have
occurred  or be  continuing  any Event of Default  (as  defined  in Section  3.I
hereof) and (ii) the Registration Statement is effective on the date of payment;
in the event that the Company  makes so elects,  shares of Common Stock shall be
valued for such purpose at  ninety-five  percent (95%) of the closing sale price
per share  thereof on the Nasdaq  National  Market  System on the  Business  Day
immediately preceding the date of payment.

                  Section 3.        Events of Default and Remedies.

         I. "Event of Default," when used herein, means any one of the following
events  (whatever  the reason and whether any such event shall be  voluntary  or
involuntary or effected by operation of law or pursuant to any judgment,  decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

                  (a) any default in the payment of the principal of or interest
on this  Debenture as and when the same shall  become due and payable  either at
the Maturity Date, by acceleration,  conversion,  or otherwise, and such default
shall not have been  remedied  within ten (10)  Business  Days after the date on
which written notice of such default shall have been given;

                  (b) the  Company  shall fail to  observe or perform  any other
covenant, agreement or warranty contained in, or otherwise commit any breach of,
this  Debenture,  and such failure or breach shall not have been remedied within
twenty (20) Business Days after the date on which written notice of such failure
or breach shall have been given;

                  (c) the  occurrence  of any event or breach or  default by the
Company under the Purchase Agreement or any other Transaction  Document and such
failure or breach shall not have been remedied  within twenty (20) Business Days
after the date on which written notice of such failure or breach shall have been
given by the Purchaser;

                  (d) the Company or any of its  subsidiaries  shall  commence a
voluntary  case under the United States  Bankruptcy  Code as now or hereafter in
effect or any successor thereto (the "Bankruptcy  Code"); or an involuntary case
is commenced  against the Company under the Bankruptcy  Code and the petition is
not controverted  within thirty (30) days, or is not dismissed within sixty (60)
days,  after  commencement  of the case;  or a  "custodian"  (as  defined in the
Bankruptcy  Code) is appointed  for, or takes charge of, all or any  substantial
part  of the  property  of  the  Company  or the  Company  commences  any  other
proceeding under any reorganization,  arrangement, adjustment of debt, relief of
debtors,   dissolution,   insolvency  or  liquidation  or  similar  law  of  any
jurisdiction whether now or hereafter in effect relating to the Company or there
is commenced  against the Company any such proceeding which remains  undismissed
for a period of sixty (60) days;  or the  Company is  adjudicated  insolvent  or
bankrupt;  or any  order of  relief or other  order  approving  any such case or
proceeding is entered;  or the Company  suffers any appointment of any custodian
or the like  for it or any  substantial  part of its  property  which  continues
undischarged  or unstayed for a period of thirty (30) days; or the Company makes
a general assignment for the benefit of creditors;  or the Company shall fail to
pay,  or shall  state that it is unable to pay,  or shall be unable to pay,  its
debts  generally as they become due; or the Company  shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debts;  or
the Company shall by any act or failure to act indicate its consent to, approval
of or acquiescence in any of the foregoing;  or any corporate or other action is
taken by the Company for the purpose of effecting any of the foregoing;

                                       3
<PAGE>

                  (e) the Company shall default in any of its obligations  under
any  mortgage,  indenture or instrument  under which there may be issued,  or by
which there may be secured or evidenced,  any  indebtedness of the Company in an
amount  exceeding  One Hundred  Thousand  Dollars  ($100,000.00),  whether  such
indebtedness  now exists or shall  hereafter be created and such  default  shall
result in such indebtedness  becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable;

                  (f) the  Company  shall  voluntarily  have  its  Common  Stock
deleted or  delisted,  as the case may be,  from the Nasdaq  National  Market or
other  national  securities  exchange  or market on which such  Common  Stock is
listed for trading or  suspended  from trading  thereon,  and shall not have its
Common Stock relisted or have such suspension lifted, as the case may be, within
five (5) Trading Days of such deletion or delisting;

                  (g)  notwithstanding  anything  herein  to the  contrary,  the
Company   shall  fail  to  deliver  to  the  Escrow  Agent  share   certificates
representing  the shares of Common  Stock to be issued  upon  conversion  of the
Debentures  within ten (10)  Business  Days  pursuant  to written  notice by the
Escrow Agent to the Company that additional  shares of Common Stock are required
to be placed in escrow  pursuant  to  Section  4.14 of the  Purchase  Agreement,
Article 2 of the Escrow Agreement, and/or Section 4(b) of this Debenture;

                  (h) the Company shall issue a press release, or otherwise make
publicly  known,  that it is not honoring a properly  executed  Holder Notice of
Conversions for any reason whatsoever;

                  (i) the  Registration  Statement  which is the  subject of the
Registration  Rights Agreement annexed as Exhibit C to the Purchase Agreement is
no longer effective as required under the Registration  Rights Agreement and the
Company does not cause such  Registration  Statement to become  effective within
twenty (20) Business Days of its not being effective;

                  (j) the Company  issues or enters into an  agreement  to issue
any  equity or equity  equivalent  security  with a  floating  conversion  price
substantially  similar to the Debentures other than any securities issued at any
time  or  from  time  to  time  to the  Purchasers  or any of  their  respective
Affiliates or assigns including,  without limitation,  GEM and GEM A, during the
period  commencing on the date hereof and ending on the first anniversary of the
date hereof.

         II. (a) If any Event of Default occurs and  continues,  beyond any cure
period, if any, then the Holder may, by notice to the Company, accelerate all of
the  payments due under this  Debenture by declaring  all amounts due under this
Debenture,  to be, whereupon the same shall become,  immediately due and payable
without presentment,  demand,  protest or other notice of any kind, all of which
are waived by the  Company,  notwithstanding  anything  herein  contained to the
contrary,  and the Holder may  immediately  and without  expiration of any grace
period  enforce any and all of its rights and remedies  hereunder  and all other
remedies available to it under applicable law. Such declaration may be rescinded
and annulled by Holder at any time prior to payment [in full] hereunder. No such
rescission or annulment  shall affect any subsequent  Event of Default or impair
any right  consequent  thereon.  This shall  include,  but not be limited to the
right to temporary,  preliminary  and permanent  injunctive  relief  without the
requirement of posting any bond or undertaking.

                                       4
<PAGE>

                  (b) Holder may  thereupon  proceed to protect  and enforce its
rights either by suit in equity and/or by action at law or by other  appropriate
proceedings  whether for the specific  performance  (to the extent  permitted by
law) of any covenant or agreement  contained in this  Debenture or in aid of the
exercise  of any power  granted in this  Debenture,  and  proceed to enforce the
payment of any of the  Debentures  held by it, and to enforce any other legal or
equitable right of such Holder.

                  (c) Except as  expressly  provided  for  herein,  the  Company
specifically  (i)  waives  all  rights it may have (A) to notice of  nonpayment,
notice of  default,  demand,  presentment,  protest  and notice of protest  with
respect to any of the  obligations  hereunder  or the shares of Common Stock and
(B) notice of acceptance hereof or of any other action taken in reliance hereon,
notice and opportunity to be heard before the exercise by Holder of the remedies
of self-help,  set-off,  or other summary  procedures  and all other demands and
notices of any type or  description  except for cure periods;  and (ii) releases
Holder, its officers, directors, agents, employees and attorneys from all claims
for loss or damage  caused by any act or  failure  to act on the part of Holder,
its  officers,  attorneys,  agents,  directors  and  employees  except for gross
negligence or willful misconduct.

                  (d) As a non-exclusive remedy, upon the occurrence of an Event
of  Default,  the Holder  may  convert  the  remaining  principal  amount of the
Debenture  and accrued  interest  thereon at the lesser of the Fixed  Conversion
Price or the Floating Conversion Price upon giving a notice of conversion to the
Company.  [Except as otherwise  provided herein,] the Company shall not have the
right  to  object  to the  conversion  or  the  calculation  of  the  applicable
Conversion  Price, and the Escrow Agent shall release the shares of Common Stock
from escrow upon notifying the Company of the conversion.

         III. To  effectuate  the terms and  provision  of this  Debenture,  the
Holder may give notice of any  default to the  Company's  attorney-in-fact  (the
"Attorney-in-Fact")  as set forth  herein and give a copy of such  notice to the
Company and its counsel,  simultaneously,  and request the  Attorney-in-Fact  to
comply  with the terms of this  Debenture  and the  Purchase  Agreement  and all
agreements  entered  into  pursuant to the  Purchase  Agreement on behalf of the
Company.

                                       5
<PAGE>

                  Section 4.        Conversion

                  (a) The unpaid  principal  amount of this  Debenture  shall be
convertible  into  shares of Common  Stock at the  Conversion  Ratio as  defined
below, and subject to the Limitation on Conversion  described in Section 4.19 of
the Purchase Agreement,  at the option of the Holder in whole or in part, at any
time, commencing on the Original Issue Date. The resale of such shares of Common
Stock has been registered under the Securities Act of 1933, as amended, pursuant
to the  Registration  Rights  Agreement.  Any conversion under this Section 4(a)
shall be for a minimum  principal  amount of $10,000.00  of Debentures  plus the
interest  accrued  and due  thereon.  The Holder  shall  effect  conversions  by
surrendering  the Debenture to be converted to the Escrow  Agent,  together with
the form of conversion  notice attached hereto as Exhibit A (a "Holder Notice of
Conversion") in the manner set forth in Section 4(j) hereof.  Each Holder Notice
of Conversion  shall specify the principal  amount of Debenture to be converted,
and the date on which such conversion is to be effected (the "Holder  Conversion
Date").  Subject to Section 4 hereof,  each Holder  Notice of  Conversion,  once
given,  shall be  irrevocable.  If the Holder is converting less than all of the
principal amount  represented by the Debenture(s)  tendered by the Holder in the
Holder  Notice of  Conversion,  the  Company  shall  deliver to the Holder a new
Debenture for such  principal  amount as has not been  converted  within two (2)
Business Days of the Holder  Conversion Date. In the event that the Escrow Agent
holds the Debentures on behalf of the Holder, the Company agrees that in lieu of
surrendering the Debenture upon every partial conversion, the Escrow Agent shall
give the Company and the Holder  written  notice of the amount of the  Debenture
left unconverted.  Upon conversion in full of the Debenture or upon the Maturity
Date,   the  Escrow  Agent  shall  return  the  Debenture  to  the  Company  for
cancellation.

                  (b) Not later than two (2) Business Days after the  Conversion
Date,  the  Escrow  Agent  shall  deliver to the  Holder  (i) a  certificate  or
certificates   which   shall  be  free  of   restrictive   legends  and  trading
restrictions,  representing  the number of shares of Common Stock being acquired
upon the  conversion  of the  Debenture,  and once the Debenture so converted in
part shall have been  surrendered  to the Company,  the Company shall deliver to
the  Holder  a  Debenture  in the  principal  amount  of the  Debenture  not yet
converted;  provided,  however, that the Company shall not be obligated to issue
certificates  evidencing the shares of Common Stock issuable upon  conversion of
the  Debenture,  until the Debenture is either  delivered for  conversion to the
Escrow Agent or the Company or any transfer  agent for the  Debentures or Common
Stock,  or the Holder  notifies the Company that such  Debenture  has been lost,
stolen  or  destroyed  and  provides  an  affidavit  of  loss  and an  agreement
reasonably  acceptable  to the Company  indemnifying  the Company  from any loss
incurred by it in connection with such loss,  theft or destruction.  In the case
of a conversion  pursuant to a Holder Notice of Conversion,  if such certificate
or certificates  are not delivered by the date required under this Section 4(b),
the Holder shall be entitled,  upon  providing  written notice to the Company at
any  time  on  or  before  its  receipt  of  such  certificate  or  certificates
thereafter,  to rescind  such  conversion,  in which  event,  the Company  shall
immediately return the Debenture tendered for conversion.

                   The  Company  agrees that at any time the  conversion  price
of the  Debentures  is such that the  number of shares of Common Stock in escrow
(the  "Debenture  Escrow Shares") is less than 200% of the  number of  shares of
Common Stock that would be needed  to  satisfy  full  conversion  of all  of the
Debentures  given  the  then  current  conversion  price (the  "Full  Conversion
Shares"),  upon five (5) days written notice of such circumstance to the Company
by the  Purchaser  and/or  the  Escrow Agent,  the  Company  shall  issue  share
certificates in the names of each of the  Purchasers in  denominations of 10,000
shares and deliver the same to the Escrow Agent, in such  number  that  the  new
number of Debenture Escrow Shares is equal to 200%of the Full Conversion Shares.

                                       6
<PAGE>

                  (c) (i) The  Conversion  Price for each Debenture in effect on
any  Conversion  Date shall be the lesser of the Fixed  Conversion  Price or the
Floating  Conversion  Price.  The conversion of the Debentures is subject to the
Limitation on Conversion set forth in Section 4.19 of the Purchase Agreement, as
set forth below.

                  "In  addition  to  and  not in  lieu  of  the  limitations  on
                  conversion  set forth in the  Debentures,  the  conversion and
                  exercise  rights  of each of the  Purchasers  set forth in the
                  Debentures and the Warrants, as applicable,  shall be limited,
                  solely to the extent  required,  from time to time, such that,
                  unless a Purchaser  gives written notice 75 days in advance to
                  the  Company  of such  Purchaser's  intention  to  exceed  the
                  Limitation on Conversions as defined  herein,  with respect to
                  all  or  a  specified   amount  of  the   Debentures  and  the
                  corresponding  number of the Underlying Shares, in no instance
                  shall the maximum  number of shares of Common  Stock which the
                  Purchasers  (singularly,  together with any Persons who in the
                  determination   of  such   Purchasers,   together   with  such
                  Purchasers, constitute a group as defined in Rule 13d-5 of the
                  Exchange Act) may receive in respect of any  conversion of the
                  Debentures  or exercise of the  Warrants,  exceed,  at any one
                  time,  an amount  equal to the  remainder  of (i) 4.99% of the
                  then  issued  and  outstanding  shares of Common  Stock of the
                  Company  following such  conversion or exercise minus (ii) the
                  number of shares of Common  Stock of the Company then owned by
                  any of the  Purchasers  (including  any shares of Common Stock
                  deemed  beneficially  owned due to ownership of the Debentures
                  and Warrants) (the foregoing  being herein  referred to as the
                  "Limitation  on  Conversion");  provided,  however,  that  the
                  Limitation  on  Conversion  shall not  apply to any  forced or
                  automatic  conversion by the Company  pursuant to Section 4(i)
                  and Section 5 of the Debentures;  and, provided further,  that
                  if ten (10) Business Days shall have elapsed from the time any
                  Purchaser  shall have  declared  an Event of Default  (as that
                  term is defined in the  Debenture)  and the Company  shall not
                  have cured  such  Event of  Default,  the  provisions  of this
                  Section  4.19 shall be null and void from and after such date.
                  The Company  shall,  promptly  upon its receipt of a Notice of
                  Conversion  tendered  by any of the  Purchasers  (or its  sole
                  designee)  under the Debentures,  as applicable,  and upon its
                  receipt  of a  notice  of  exercise  under  the  terms  of the
                  Warrants,  notify such Purchaser by telephone and by facsimile
                  of the number of shares of Common  Stock  outstanding  on such
                  date  and the  number  of  Underlying  Shares  which  would be
                  issuable to such Purchaser (or its sole designee,  as the case
                  may  be)  if  the  conversion  requested  in  such  Notice  of
                  Conversion  or exercise  requested  in such Notice of Exercise
                  were effected in full, whereupon,  notwithstanding anything to
                  the contrary set forth in the Debentures or the Warrants, such
                  Purchaser  may within one (1)  Business  Day of its receipt of
                  the Company notice  required by this Section 4.19 by facsimile
                  revoke such  conversion or exercise to the extent (in whole or
                  in part) that such purchaser  determines  that such conversion
                  or exercise would result in the ownership by such Purchaser of
                  shares  of  Common  Stock  in  excess  of  the  Limitation  on
                  Conversion."

                                       7
<PAGE>

                           (ii)    If the  Company,  at any  time  while  any of
the  Debentures is outstanding, (a) shall pay a stock dividend or otherwise make
a distribution or distributions on shares of its Common Stock  payable in shares
of its capital  stock  (whether payable  in  shares  of  its Common  Stock or of
capital  stock of any  class),  (b) subdivide outstanding shares of Common Stock
into a larger number of shares, (c) combine  outstanding  shares of Common Stock
into a smaller number of shares, or (d) issue by  reclassification  of shares of
Common  Stock any shares of capital stock of the Company,  the Fixed  Conversion
Price as applied in Section 4(c)(i)  shall  be  multiplied by  a  fraction,  the
numerator of which shall be the number of shares of Common  Stock of the Company
outstanding  before  such event and the denominator of which shall be the number
of shares of Common Stock  outstanding after such event.  Any  adjustment   made
pursuant to this Section  4(c)(ii) shall become  effective immediately after the
record date for the  determination  of stockholders  entitled  to  receive  such
dividend  or  distribution  and  shall  become  effective immediately after  the
effective  date in the case of a  subdivision, combination or re-classification.

                           (iii)    If, at  any  time while any  Debentures  are
outstanding,  the Company  issues or  sells shares of  Common Stock, or options,
warrants or other rights to subscribe for or  purchase  shares  of Common  Stock
(excluding  shares  of Common  Stock issuable upon exercise of options, warrants
or conversion  rights granted prior to the date hereof) and at a price per share
less than the Per Share Market Value of Common Stock at the issue date mentioned
below,  the Fixed  Conversion  Price  designated  in  Section  4(c)(i)  shall be
multiplied by a fraction, the numerator of which  shall be the  number of shares
of Common  Stock  (excluding treasury  shares,  if any) outstanding  on the date
of issuance  of such shares, options,  warrants  or rights  plus  the  number of
shares  which the  aggregate offering  price  of the  total number of shares  so
offered would  purchase at such Per Share  Market  Value,  and  the  denominator
of which shall  be the  number of  shares  of Common  Stock (excluding  treasury
shares,  if any) outstanding on the date  of issuance of such rights or warrants
plus the number of additional shares of Common Stock offered for subscription or
purchase.  Such adjustment shall be made  whenever  such rights or  warrants are
issued,  and shall become  effective immediately after the record date  for  the
determination of stockholders entitled  to  receive  such  rights  or  warrants.
However, upon the expiration of any right or warrant  to  purchase Common Stock,
the  issuance  of  which  resulted  in an  adjustment in  the  Conversion  Price
designated in Section  4(c)(i)  pursuant to this Section 4(c)(iii),  if any such
right or warrant shall expire and  shall not  have  been  exercised,  the  Fixed
Conversion  Price designated in  Section  4(c)(i) shall  immediately  upon  such
expiration be recomputed  and  effective  immediately upon  such  expiration  be
increased  to the price which  it  would  have  been (but  reflecting any  other
adjustments  in the Conversion  Price made pursuant  to the  provisions  of this
Section 4 after the issuance of such rights or warrants) had the  adjustment  of
the Conversion  Price made upon the issuance of  such  rights or  warrants  been
made on the basis of offering for  subscription  or purchase only that number of
shares of Common Stock  actually  purchased  upon the exercise of such rights or
warrants actually exercised.

                                       8
<PAGE>

                           (iv)      If,  at  any  time  while   Debentures  are
outstanding,  the Company  distributes to all  holders of Common  Stock (and not
to holders of  Debentures)  evidences  of Company  indebtedness  or  assets,  or
rights or  warrants  to  subscribe for or purchase any security (excluding those
referred to in Section 4(c)(iii) above), then, in each such case, the Conversion
Price  at  which  each   Debenture  shall  thereafter  be  convertible  shall be
determined by multiplying (A) the Fixed Conversion  Price in  effect immediately
prior to the  record  date  fixed for  determination  of  stockholders  entitled
to  receive  such  distribution  by a  fraction,  the  numerator  of which shall
be the Per Share  Market  Value of the  Common Stock determined as of the record
date mentioned above less the then fair market value at such record  date of the
portion of such assets or evidence of indebtedness so distributed  applicable to
one outstanding share of Common Stock as  determined  by the  Board of Directors
in good faith and the  denominator  of which shall be the Per Share Market Value
of Common Stock on such record date; provided,  however,  that in the event of a
distribution  exceeding ten percent (10%)  of the net  assets  of  the  Company,
such fair market value  shall be determined by a nationally  recognized or major
regional  investment  banking firm  or  firm  of  independent  certified  public
accountants  of  recognized  standing (which  may  be  the  firm  that regularly
examines the financial  statements of the Company) (an "Appraiser") selected  in
good faith by the holders of a majorityof the principal amount of the Debentures
then outstanding;  and provided, further, that the Company, after receipt of the
determination by such Appraiser,  shall  have  the right to select an additional
Appraiser,  in which case the fair market value  shall  be equal to the  average
of the  determinations  by  each  such Appraiser. In either case the adjustments
shall be  described  in a statement provided to the Holder and all other holders
of   Debentures  of  the portion  of  assets or  evidences  of  indebtedness  so
distributed or such subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such  distribution is  made and shall
become effective  immediately after the record date mentioned above.

                           (v)      All calculations  under this Section 4 shall
be made to the nearest 1/1000th  of a cent or the nearest  1/1000th of  a share,
as the case may be. Any calculation over .005  shall  be  rounded up to the next
cent or share and any calculation less than .005 shall be  rounded  down  to the
previous cent or share.

                           (vi)     In  the event  the Conversion  Price  is not
adjusted  pursuant  to  Section 4(c)(ii),  (iii),  (iv),  or (v), within two (2)
Business  Days  following  the occurrence  of an event  described  therein,  the
Holder shall have the right to require  the  Company  to  redeem the  Debentures
at  135%  of  par  value  and  simultaneously  pay  such  amount and all accrued
interest  and  dividends to the Holder pursuant to the written instructions
provided by the Holder.

                           (vii)    Whenever  the  Fixed   Conversion  Price  is
adjusted   pursuant  to  Section 4(c)(ii),(iii),  (iv) or (v), or this Debenture
is redeemed  pursuant to Section 4(c)(vi), the Company shall within two (2) days
after the  determination of the new Fixed  Conversion  Price mail and fax to the
Holder and to each other  holder of  Debentures, a  notice ("Company  Notice  of
Conversion") setting forth the Fixed Conversion  Price after such adjustment and
setting forth a brief  statement of the facts requiring such adjustment.

                                       9
<PAGE>

                           (viii)  In case of any reclassification of the Common
Stock,  any  consolidation or merger of the Company with or into another person,
the sale or transfer of all or substantially  all of the  assets of the  Company
or any compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property, then  each  holder of  Debentures  then
outstanding shall have the right thereafter to convert such Debentures only into
the shares of stock and other securities and property receivable upon or  deemed
to  be  held  by  holders  of  Common  Stock  following  such  reclassification,
consolidation,  merger,  sale, transfer or share exchange  (except in  the event
the property is cash,  then the Holder  shall  have  the  right  to  convert the
 Debentures  and receive cash in the same manner as other stockholders), and the
Holder shall be entitled upon such event to receive such  amount  of  securities
or property as  the  holder  of shares  of  the  Common  Stock  into which  such
Debentures could have been converted immediately prior to such reclassification,
consolidation,  merger,  sale,  transfer  or  share  exchange  would  have  been
entitled.  The terms of any such consolidation, merger, sale, transfer or  share
exchange shall include such terms so as to continue to give to  the  Holder  the
right to receive the securities or property set forth in this Section 4(c)(viii)
upon any conversion  following such  consolidation,  merger,  sale, transfer  or
share  exchange.     This   provision   shall  similarly  apply  to   successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.

                           (ix)     If:

                                    (A) the Company shall declare a dividend
                                        (or any other  distribution)  on
                                        its Common Stock; or

                                    (B) the Company shall declare a special
                                        non-recurring  cash dividend on or
                                        a redemption of its Common Stock; or

                                    (C) the  Company  shall   authorize  the
                                        grant to all  holders  of the Common
                                        Stock    rights   or   warrants   to
                                        subscribe for or purchase any shares
                                        of capital  stock of any class or of
                                        any rights; or

                                    (D) the approval of any  stockholders of
                                        the Company  shall be required in
                                        connection with any reclassification
                                        of  the  Common  Stock  of the
                                        Company (other than a subdivision or
                                        combination  of the  outstanding
                                        shares  of  Common  Stock),  any
                                        consolidation or merger to which the
                                        Company is a party, any sale or
                                        transfer of all or substantially all
                                        of  the  assets  of  the  Company,
                                        or any  compulsory  share  exchange
                                        whereby the Common Stock is converted
                                        into other  securities,  cash or
                                        property; or

                                       10
<PAGE>

                                    (E) the Company shall  authorize the
                                        voluntary or involuntary dissolution,
                                        liquidation or winding-up of the affairs
                                        of the Company;

then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Debentures,  and shall cause to be mailed and faxed
to the Holder  and each  other  holder of  Debentures  at their  last  addresses
appearing in the Debenture  Register at least thirty (30) calendar days prior to
the applicable record or effective date hereinafter  specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such  dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the  holders of Common  Stock of record to be  entitled  to
such  dividend,  distributions,   redemption,  rights  or  warrants  are  to  be
determined,  or (y) the  date on  which  such  reclassification,  consolidation,
merger, sale, transfer, share exchange,  dissolution,  liquidation or winding-up
is expected to become  effective,  and the date as of which it is expected  that
holders of Common Stock of record shall be entitled to exchange  their shares of
Common  Stock  for   securities  or  other   property   deliverable   upon  such
reclassification,   consolidation,   merger,  sale,  transfer,  share  exchange,
dissolution,  liquidation or winding-up;  provided, however, that the failure to
mail such  notice or any defect  therein  or in the  mailing  thereof  shall not
affect the  validity of the  corporate  action  required to be specified in such
notice.

                           (x)      [In the event that any  adjustment  is  made
pursuant to this Section 4  resulting in an increase in the number of shares  of
Common Stock into which this Debenture may be converted, the number of shares of
Common Stock constituting the Maximum Conversion Shares shall be adjusted pro
rata.]

                  (d) If at any time conditions  shall arise by reason of action
or inaction  taken by the Company,  which action or inaction,  in the opinion of
the Board of Directors of the Company,  is not  adequately  covered by the other
provisions  hereof and which might materially and adversely affect the rights of
the Holder and all other  holders of Debentures  (different  or  distinguishable
from the effect  generally  on rights of  holders of any class of the  Company's
capital  stock),  the Company shall, at least thirty (30) calendar days prior to
the effective date of such action,  mail and fax a written notice to each holder
of  Debentures  briefly  describing  the action  contemplated  and the  material
adverse  effects of such action on the rights of such holders,  and an Appraiser
selected  by the  holders of majority  in  principal  amount of the  outstanding
Debentures shall give its opinion as to the adjustment, if any (not inconsistent
with the  standards  established  in this  Section 4), of the  Conversion  Price
(including,  if  necessary,  any  adjustment  as to the  securities  into  which
Debentures may thereafter be convertible) and any distribution which is or would
be  required  to  preserve  without  diluting  the  rights  of  the  holders  of
Debentures;   provided,   however,  that  the  Company,  after  receipt  of  the
determination  by such  Appraiser,  shall have the right to select an additional
Appraiser,  in which case the  adjustment  shall be equal to the  average of the
adjustments  recommended by each such  Appraiser.  The Board of Directors of the
Company shall make the adjustment recommended forthwith upon the receipt of such
opinion or opinions or the taking of any such action  contemplated,  as the case
may be; provided, however, that no such adjustment of the Conversion Price shall
be made which, in the opinion of the Appraiser(s)  giving the aforesaid  opinion
or  opinions,  would  result in an  increase of the  Conversion  Price above the
Conversion Price then in effect.

                                       11
<PAGE>

                  (e) The Company  covenants  and agrees  that it shall,  at all
times,  reserve and keep  available out of its  authorized  and unissued  Common
Stock solely for the purpose of issuance upon conversion of Debentures as herein
provided,  free from preemptive rights or any other actual  contingent  purchase
rights of persons other than the holders of Debentures, such number of shares of
Common  Stock as shall be issuable  (taking  into  account the  adjustments  and
restrictions of Section 4(c) and Section 4(d) hereof) upon the conversion of the
aggregate principal amount of all outstanding Debentures.  The Company covenants
that all shares of Common Stock that shall be so issuable shall,  upon issuance,
be duly and validly authorized and issued and fully paid and non-assessable.

                  (f) No  fractional  shares of Common  Stock  shall be issuable
upon a  conversion  hereunder  and the  number of  shares to be issued  shall be
rounded up to the nearest whole share.  If a fractional  share  interest  arises
upon any conversion hereunder, the Company shall eliminate such fractional share
interest by issuing to the Holder an additional full share of Common Stock.

                  (g) The issuance of a certificate or  certificates  for shares
of Common Stock upon  conversion of Debentures  shall be made without  charge to
the Holder  for any  documentary  stamp or similar  taxes that may be payable in
respect of the  issuance  or  delivery of such  certificate,  provided  that the
Company  shall not be  required to pay any tax that may be payable in respect of
any transfer  involved in the issuance and delivery of any such certificate upon
conversion  in a name other than that of the Holder and the Company shall not be
required  to issue or deliver  such  certificates  unless or until the person or
persons  requesting  the  issuance  thereof  shall have paid to the  Company the
amount of such tax or shall have  established to the satisfaction of the Company
that such tax has been paid.

                  (h) Debentures converted into Common Stock shall be canceled
upon conversion.

                  (i) On the Maturity Date, the unconverted  principal amount of
the  Debentures and all interest due thereon shall either be paid off in full by
the Company or, if payment in full is not received within ten (10) Business Days
after the Maturity Date,  convert  automatically  into shares of Common Stock at
the lesser of the Fixed  Conversion  Price and the Floating  Conversion Price as
set forth in Section 4(c)(i).

                  (j) Each Notice of  Conversion  shall be given by facsimile to
the  Escrow  Agent no later  than 4:00 pm New York  Time.  Upon  receipt of such
Notice of  Conversion,  the Escrow Agent shall forward such Notice of Conversion
to the Company by  facsimile by the end of the Business Day on which such Notice
is received by the Escrow Agent, assuming such receipt by 4:00 pm New York Time,
and if received by the Escrow Agent thereafter, on the next Business Day, at the
facsimile number and address of the Company set forth in Section 10 hereof.  Any
such Notice or notice shall be deemed given and effective upon the  transmission
of such facsimile at the facsimile  number  specified in this Section 4(j) (with
printed confirmation of transmission), and if to the Company, with a copy to the
Escrow Agent. In the event that the Escrow Agent receives a Notice of Conversion
after 4:00 p.m.  New York Time on any  Business Day or at any time on a day that
is not a  Business  Day,  the  Conversion  Date  shall be  deemed to be the next
following  Business  Day. In the event that a Notice of Conversion is sent after
4:00 p.m.  on any  Business  Day or at any time on a day that is not a  Business
Day, notice will be deemed to have been given the next following Business Day.

                                       12
<PAGE>

                  Section 4.A.  Compliance with Nasdaq Rule 4350(i). In order to
assure  the  Company's  compliance  with  Nasdaq  Rule  4350(i)(1)(D)  requiring
stockholder  approval of any sale,  issuance or  potential  issuance by a Nasdaq
listed  company of common stock (or securities  convertible  into or exercisable
common  stock)  equal to 20% or more of the  common  stock or 20% or more of the
voting power  outstanding  before the issuance for less than the greater of book
or market value of the stock, the Company and Holder agree as follows:

                  (a) The  maximum  number  of  shares  which  will be issued on
conversion of the Debentures and exercise of the Warrants, if any, is 19.999% of
the  outstanding  shares of Common  Stock of the Company on the date hereof (the
"Share  Cap")  unless  and until the  stockholders  of the  Company  shall  have
approved the issuance of shares of Common Stock in excess of the Share Cap.

                  (b) The Company covenants and agrees to call a special meeting
of its  stockholders,  no later than ten days following the date of the Purchase
Agreement,  to be held as soon as practicable,  but not later than  seventy-five
(75) days  following  the date of the  Purchase  Agreement  for the  purpose  of
approving,  and shall recommend approval of, the issuance of shares in excess of
the Share Cap on conversion of the Debentures and exercise of the Warrants.

                  (c) If the stockholders  shall not have approved  issuances in
excess of the Share Cap and shares of Common  Stock shall have been issued in an
amount equal to the Share Cap, the holders of the  Debentures  shall be entitled
to  demand  redemption,  pro  rata,  of up to all of the  remaining  unconverted
Debentures at the Redemption Price set forth in Section 5(a) hereof.

                  Section 5.  Redemption  of Debentures If at any time after the
Closing  Date  and  prior  to the  Maturity  Date,  (i)  any  Debenture  remains
outstanding after the Holders shall have received the Maximum  Conversion Shares
upon  conversion of any portion of the  Debentures  and (ii) no Event of Default
shall have  occurred  that has not been cured,  then the Company  shall have the
option (A) to increase the number of the Maximum Conversion Shares or (B) redeem
the remaining Debentures in accordance with the following:

                  (a) The  Company  may,  upon no less  that  thirty  (30)  days
written notice given to the Holder with a copy to the Escrow Agent (a "Notice of
Redemption"),  redeem the Debentures at one hundred thirty percent (130%) of the
Per Debenture Consideration plus accrued interest (the "Redemption Price").

                  (b) Within five (5)  Business  Days after giving the Notice of
Redemption,  the Company shall deposit the Redemption  Price by wire transfer to
the IOLA account of the Escrow Agent.  Upon receipt of the Redemption Price, the
Escrow  Agent shall  release the  Redemption  Price to the Holder and return the
remaining Debentures and Underlying Shares to the Company.

                                       13
<PAGE>

                  (c) In the  event  that  the  Company  fails  to  deposit  the
Redemption Price in the Escrow Agent's IOLA account within the time allocated in
section (b) above, then the redemption shall be declared null and void.

                  (d) The number of Maximum  Conversion  Shares shall be subject
to  adjustment as provided in Section 4(c) hereof.

                  Section  6.  Absolute   Payment   Obligation;   Limitation  on
Prepayment.  Except as expressly provided herein, no provision of this Debenture
shall alter or impair the  obligation  of the  Company,  which is  absolute  and
unconditional,  to pay the principal of, and interest on, this  Debenture at the
time, place, and rate, and in the coin or currency, herein prescribed; provided,
however,  that the Company  shall have the right to prepay this  Debenture,  but
solely (a) upon at least three (3) days' prior written  notice to the Holder and
(b) by payment of the  principal  amount then  outstanding  plus thirty  percent
(30%) of such amount,  plus all  interest  accrued  thereon  through the date of
prepayment. This Debenture is a direct obligation of the Company. This Debenture
ranks pari passu with all other  Debentures  now or  hereafter  issued under the
terms  set  forth  herein.  The  Company  may  not  prepay  any  portion  of the
outstanding principal amount on the Debentures.

                  Section  7. No Rights  of  Stockholders.  Except as  otherwise
provided  herein,  this  Debenture  shall not  entitle  the Holder to any of the
rights of a stockholder of the Company,  including without limitation, the right
to vote, to receive dividends and other distributions,  or to receive any notice
of, or to attend,  meetings  of  stockholders  or any other  proceedings  of the
Company,  unless  and to the extent  converted  into  shares of Common  Stock in
accordance with the terms hereof.

                  Section 8. Loss,  Theft,  Mutilation or  Destruction.  If this
Debenture  shall be  mutilated,  lost,  stolen or  destroyed,  the Company shall
execute and deliver, in exchange and substitution for and upon cancellation of a
mutilated  Debenture,  or in lieu of or in  substitution  for a lost,  stolen or
destroyed debenture,  a new Debenture for the principal amount of this Debenture
so mutilated, lost, stolen or destroyed but only upon receipt of an affidavit of
such loss,  theft or  destruction  of such  Debenture,  and, if requested by the
Company, an agreement to indemnity the Company in form reasonably  acceptable to
the Company.

                  Section 9. Governing Law. This Debenture  shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
New York without  regard to the  principles  of  conflicts  of law thereof.  Any
action to enforce the terms of this  Debenture,  the  Purchase  Agreement or any
other  Transaction  Document  shall be  exclusively  brought in the state and/or
federal  courts in the State and  County of New York.  Service of process in any
action by the  Holder to  enforce  the  terms of this  Debenture  may be made by
serving a copy of the summons and  complaint,  in addition to any other relevant
documents,  by  commercial  overnight  courier to the Company at its address set
forth in the Purchase Agreement.

                  Section 10. Notices.  Except as otherwise  provided in Section
4(j)  hereof,  all notices or other  communications  required or permitted to be
given  hereunder  shall be deemed  duly given and  received  if in writing  upon
facsimile  transmission (with written  transmission  confirmation report) at the
number  designated  below for the  Company and at the  facsimile  number for the
Holder set forth in the Company register of Debenture  Holders (in each case, if
delivered on a Business Day during normal business hours where such notice is to
be received),  or the first  Business Day following  such delivery (if delivered
other than on a Business Day during normal  business  hours where such notice is
to  be  received)   whichever   shall  first  occur.   The  addresses  for  such
communications shall be:

                                       14
<PAGE>

                  If to the Company:        Fusion Networks Holdings, Inc.
                                            8115 NW 29th Street
                                            Miami, FL 33122
                                            Attn:  Gary Goldfarb, President
                                            Tel:  (305) 477-6701
                                            Fax:  (305) 477-6703

                  With copies to:           Vanderkam & Sanders
                                            440 Louisiana, Suite 475
                                            Houston, TX  77002
                                            Attn:  Michael Sanders, Esq.
                                            Tel:  (713) 547-8900
                                            Fax:  (713) 547-8910

                  If to the Holder:         To the address or facsimile number
                                            set forth in the Company's register
                                            of Debenture Holders

                  With copies to:           Kaplan Gottbetter & Levenson, LLP
                                            630 Third Avenue
                                            New York, NY 10017-6705
                                            Attn:  Adam S. Gottbetter, Esq.
                                            Tel:  (212) 983-6900
                                            Fax:  (212) 983-9210

                  If to Escrow Agent:       Kaplan Gottbetter & Levenson, LLP
                                            630 Third Avenue
                                            New York, NY 10017-6705
                                            Attn:  Adam S. Gottbetter, Esq.
                                            Tel:  (212) 983-6900
                                            Fax:  (212) 983-9210

or such other address as may be designated hereafter by notice given pursuant to
the terms of this Section 10.

                  Section 11. Waiver. Any waiver by the Company or the Holder of
a breach of any provision of this Debenture shall not operate as or be construed
to be a waiver of any other  breach of such  provision  or of any  breach of any
other provision of this  Debenture.  The failure of the Company or the Holder to
insist  upon  strict  adherence  to any  term of this  Debenture  on one or more
occasions  shall not be  considered  a waiver or deprive that party of the right
thereafter  to insist  upon strict  adherence  to that term or any other term of
this Debenture. Any waiver must be in writing.

                                       15
<PAGE>

                  Section 12. Invalidity.  If any provision of this Debenture is
held to be invalid,  illegal or  unenforceable,  the  balance of this  Debenture
shall remain in effect,  and if any provision is held to be  inapplicable to any
person or circumstance,  it shall  nevertheless  remain  applicable to all other
persons and circumstances.

                  Section 13. Payment  Dates.  Whenever  any  payment  or  other
obligation  hereunder  shall be due on a  day  other  than a  Business Day, such
payment shall be made on the next following Business Day.

                  Section 14. Transfer;  Assignment.  This Debenture may  not be
transferred or assigned,  in whole or in part, at any time, except in compliance
by  the  transferor  and  the transferee  with  applicable  federal  and  state
securities laws.

                  Section  15.  Fees of  Enforcement.  In the  event  any  Party
commences  legal  action  to  enforce  its  rights  under  this  Debenture,  the
non-prevailing  party shall pay all reasonable costs and expenses (including but
not limited to reasonable attorney's fees,  accountant's fees,  appraiser's fees
and investigative fees) incurred in enforcing such rights.

                  IN WITNESS WHEREOF,  the Company has caused this instrument to
be duly executed by an officer  thereunto  duly  authorized as of the date first
above indicated.

                                    FUSION NETWORKS HOLDINGS, INC.

Attest: ______________________      By:______________________________
                                            Name:
                                            Title:Void after 5:00  p.m.,  New York Time on  _________,  200_  Warrant to  Purchase
___________ Shares of Common Stock

                        WARRANT TO PURCHASE COMMON STOCK

                                       OF

                         FUSION NETWORKS HOLDINGS, INC.

NEITHER THIS WARRANT NOR THE  SECURITIES  FOR WHICH THIS WARRANT IS  EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER  RULE  506  OF  REGULATION  D  PROMULGATED  UNDER  THE  U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, TRANSFERRED,  PLEDGED, ASSIGNED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE
SECURITIES  ACT OR PURSUANT TO AN  AVAILABLE  EXEMPTION  OR  EXCLUSION  FROM THE
REGISTRATION  REQUIREMENTS  THEREUNDER AND IN COMPLIANCE WITH  APPLICABLE  STATE
SECURITIES LAWS.

     FOR VALUE RECEIVED,  Fusion Networks Holdings, Inc., a Delaware corporation
(the "Company"), grants the following rights to GEM Global Yield Fund Limited, a
Nevis  corporation,  with an office at Hunkins  Waterfront  Plaza, P.O. Box 556,
Main Street, Nevis, West Indies and/or its assigns ("Holder"):

                            ARTICLE 1. DEFINITIONS.

     Capitalized  terms used and not  otherwise  defined  herein  shall have the
meanings given such terms in the Convertible Debenture Purchase Agreement by and
between the Company and the Holder and entered  into on  December __,  2000 (the
"Purchase Agreement"). As used in this Agreement, the following terms shall have
the following meanings:

     "Closing" shall have the same meaning as defined in the Purchase Agreement.

     "Corporate  Office" shall mean the office of the Company (or its successor)
at which at any particular time its principal business shall be administered.

<PAGE>

     "Escrow  Agent"  shall mean Kaplan  Gottbetter  & Levenson,  LLP, 630 Third
Avenue,  5th Floor,  New York,  NY 10017,  as the Company's escrow agent, or its
authorized successor, as such.

     "Escrow Agreement" means the escrow agreement by and among the Company, the
Holder and Kaplan  Gottbetter  &  Levenson,  LLP,  annexed as  Exhibit E  to the
Purchase Agreement.

     "Exercise Date" shall mean any date of which the Holder gives the Company a
Notice of Exercise  in  compliance  with the terms of Exhibit D to the  Purchase
Agreement.

     "Exercise Price" shall mean the Fixed Price per share of Common Stock as of
the date of the Purchase Agreement, subject to adjustment as provided herein.

     "Expiration Date" shall mean 5:00 p.m. (New York time) on _____, 200_.

     "Fixed Price" shall mean the lesser of  (i) US$0.932  and (ii) one  hundred
thirty  percent (130%) of the average of the two lowest closing prices per share
of  Common  Stock  for the  five  (5)  Trading  Days  immediately  prior  to the
applicable date.

     "SEC" shall mean the United States Securities and Exchange Commission.

     "Warrant  Shares" shall mean the shares of the Common Stock  issuable upon
exercise of this Warrant.

                      ARTICLE 2.  EXERCISE AND AGREEMENTS.

     2.1   Exercise  of  Warrant.  This  Warrant  shall  entitle  the  Holder to
purchase,  at the  Exercise  Price,  a number of shares of Common Stock equal to
twenty-five  percent  (25%) of the  Purchase  Price (as defined in the  Purchase
Agreement)  divided by 130% of the average of the two lowest  closing prices per
share of the Common Stock for the five (5) Trading Days prior to the date of the
Purchase Agreement (the "Warrant Shares").  This Warrant shall be exercisable at
any time and from time to time from the date hereof and prior to the  Expiration
Date (the  "Exercise  Period").  This Warrant and the right to purchase  Warrant
Shares hereunder shall expire and become void on the Expiration Date.

     2.2 Manner of Exercise.

     (a)  Holder  may  exercise  this  Warrant at any time and from time to time
during the Exercise  Period,  in whole or in part (but not in  denominations  of
fewer than 10,000 Warrant  Shares,  except upon an exercise of this Warrant with
respect to the remaining balance of Warrant Shares purchasable  hereunder at the
time of  exercise),  by  delivering to the Escrow Agent (as defined in an escrow
agreement dated the date hereof between the Company and the Holder, which escrow
agreement (the "Escrow  Agreement") is incorporated  herein by reference)  (i) a
duly  executed  Notice  of  Exercise  in  substantially  the  form  attached  as
Appendix 1 hereto, (ii) the Warrant

                                       2
<PAGE>

Certificate representing the Warrants, (iii) a bank cashier's or certified check
for the aggregate  Exercise  Price of the Warrant  Shares being  purchased,  and
(iv) a bank cashier's or certified  check or wire transfer of $350 to the Escrow
Agent for an exercise fee.

     (b) The Holder may,  at its option,  in lieu of paying cash for the Warrant
Shares,  exercise  this Warrant by an exchange,  in whole or in part (a "Warrant
Exchange"),  by delivery to the Escrow  Agent of (i) a duly  executed  Notice of
Exercise electing a Warrant Exchange, (ii) the Warrant Certificate  representing
this Warrant, and (iii) a bank cashier's or certified check or wire transfer for
$350 to the Escrow  Agent as and for the fee for  exercising  this  Warrant.  In
connection with any Warrant Exchange, the Holder shall be deemed to surrender or
exchange for the total number of Warrant Shares to be issued to it, the quotient
obtained by dividing (A) the product of the total  number of Warrant  Shares for
which the Warrant is then being  exercised  and the Exercise  Price,  by (B) the
average  Per  Share  Market  Value of a share of  Common  Stock for the ten (10)
Trading Days ending on the Exercise Date  determined in accordance with Appendix
II hereto.

     2.3   Termination.  All rights of the Holder in this Warrant, to the extent
they have not been exercised, shall terminate on the Expiration Date.

     2.4   No  Rights  Prior to  Exercise.  This  Warrant  shall not entitle the
Holder to any voting or other rights as a stockholder of the Company.

     2.5   Fractional  Shares.  No  fractional  shares  shall be  issuable  upon
exercise of this Warrant, and the number of Warrant Shares to be issued shall be
rounded up to the nearest whole number.  If, upon exercise of this Warrant,  the
Holder  hereof would be entitled to receive any  fractional  share,  the Company
shall issue to the Holder one  additional  share of Common Stock in lieu of such
fractional share.

     2.6   Escrow.  The Company agrees to enter into the Escrow Agreement and to
deposit  with the Escrow Agent (as defined in the Escrow  Agreement)  thereunder
stock certificates  registered in the name of the Holder and each representing a
number of shares of Common Stock (in  denominations  of 10,000 shares) equal, in
the  aggregate,  to the total number of Warrant Shares for which this Warrant is
exercisable,  assuming exercise of this Warrant in full on the date hereof.  The
Company shall deposit  additional  stock  certificates  for Termination  Warrant
Shares upon request by the Escrow Agent pursuant to Appendix II.

     2.7   Adjustments to Exercise Price and Number of Securities.

     (a)  Computation of Adjusted  Exercise  Price. In case the Company shall at
any time after the date hereof  issue or sell any shares of Common  Stock (other
than the  issuances or sales  referred to in Section 2.7 (g) hereof),  including
shares held in the Company's treasury and shares of Common Stock issued upon the
exercise of any options,  rights or warrants to  subscribe  for shares of Common
Stock and shares of Common Stock  issued upon the direct or indirect  conversion
or exchange of securities for shares of Common Stock (excluding shares of Common
Stock issuable upon exercise of options,  warrants or conversion  rights granted
as of the date hereof),  for a consideration  per share less than Exercise Price
on the date immediately prior to the issuance or sale of such shares, or without
consideration,  then  forthwith  upon such issuance or sale,  the Exercise Price
shall (until another such issuance or sale) be reduced to the price  (calculated
to the nearest  full cent)  equal to the  quotient  derived by  dividing  (A) an
amount equal to the sum of (X) the product of (a) the Exercise Price on the date
immediately prior to the issuance or sale of such shares,  multiplied by (b) the
total number of shares of Common  Stock  outstanding  immediately  prior to such
issuance or sale plus, (Y) the aggregate of the amount of all consideration,  if
any, received by the Company upon such issuance or sale, by (B) the total number
of shares of Common Stock  outstanding  immediately after such issuance or sale;
provided,  however,  that in no event  shall  the  Exercise  Price  be  adjusted
pursuant to this  computation  to an amount in excess of the  Exercise  Price in
effect  immediately  prior  to  such  computation,  except  in  the  case  of  a
combination  of outstanding  shares of Common Stock,  as provided by Section 2.7
(c) hereof.

                                       3
<PAGE>

     For the  purposes of any  computation  to be made in  accordance  with this
Section 2.7(a), the following provisions shall be applicable:

          (i) In case of the  issuance  or sale of shares of Common  Stock for a
     consideration  part or all of  which  shall  be cash,  the  amount  of cash
     consideration therefor shall be deemed to be the amount of cash received by
     the Company  for such shares (or, if shares of Common  Stock are offered by
     the Company for subscription,  the subscription price, or if either of such
     securities  shall be sold to  underwriters  or dealers for public  offering
     without a subscription  offering, the initial public offering price) before
     deducting  therefrom any compensation paid or discount allowed in the sale,
     underwriting  or  purchase  thereof  by  underwriters  or dealers or others
     performing  similar  services,  or  any  expenses  incurred  in  connection
     therewith.

          (ii) In case of the issuance or sale  (otherwise than as a dividend or
     other  distribution  on any stock of the Company) of shares of Common Stock
     for a  consideration  part or all of which  shall be other than  cash,  the
     amount of the consideration  therefor other than cash shall be deemed to be
     the value of such consideration as determined in good faith by the Board of
     Directors of the Company.

          (iii)  Shares of Common  Stock  issuable  by way of  dividend or other
     distribution  on any  stock of the  Company  shall be  deemed  to have been
     issued  immediately  after the opening of business on the day following the
     record date for the determination of stockholders  entitled to receive such
     dividend  or other  distribution  and shall be  deemed to have been  issued
     without consideration.

          (iv) The  reclassification  of  securities  of the Company  other than
     shares of the Common Stock into securities including shares of Common Stock
     shall be deemed to involve the  issuance of such shares of Common Stock for
     a consideration  other than cash immediately prior to the close of business
     on the date fixed for the  determination  of security  holders  entitled to
     receive such shares,  and the value of the consideration  allocable to such
     shares of Common Stock shall be determined  as provided in subsection  (ii)
     of this Section 2.7(a).

                                       4
<PAGE>

          (v) The number of shares of Common  Stock at any one time  outstanding
     shall include the aggregate number of shares issued or issuable (subject to
     readjustment  upon  the  actual  issuance  thereof)  upon the  exercise  of
     options,   rights,   warrants  and  upon  the  conversion  or  exchange  of
     convertible or  exchangeable  securities;  provided,  however,  that shares
     issuable  upon the exercise of the  Warrants  shall not be included in such
     calculation.

     (b) Options,  Rights, Warrants and Convertible and Exchangeable Securities.
In case the  Company  shall at any time  after the date  hereof  issue  options,
rights or  warrants  to  subscribe  for  shares of  Common  Stock,  or issue any
securities  convertible  into or exchangeable  for shares of Common Stock, for a
consideration  per share less than the Exercise Price  immediately  prior to the
issuance of such options,  rights or warrants  (excluding shares of Common Stock
issuable upon exercise of options,  warrants or conversion  rights granted as of
the date  hereof and shares of Common  Stock  issuable  upon  exercise  of stock
options at or above the closing market price per share of Common Stock under any
stock  option  plan  of  the  Company),  or  such  convertible  or  exchangeable
securities,  or without consideration,  the Exercise Price in effect immediately
prior to the issuance of such options,  rights or warrants,  or such convertible
or  exchangeable  securities,  as the case may be,  shall be  reduced to a price
determined  by  making  a  computation  in  accordance  with  the  provision  of
Section 2.7(a) hereof, provided that:

          (i) The aggregate  maximum  number of shares of Common  Stock,  as the
     case may be,  issuable  under such  options,  rights or  warrants  shall be
     deemed to be issued and  outstanding  at the time such  options,  rights or
     warranties  were  issued,  and for a  consideration  equal  to the  minimum
     purchase price per share  provided for in such options,  rights or warrants
     at the time of issuance,  plus the  consideration  (determined  in the same
     manner  as  consideration  received  on the  issue  or  sale of  shares  in
     accordance with the terms of the Warrants), if any, received by the Company
     for such options, rights or warrants.

          (ii) The aggregate  maximum  number of shares of Common Stock issuable
     upon conversion or exchange of any  convertible or exchangeable  securities
     shall be deemed to be issued and  outstanding  at the time of  issuance  of
     such  securities,  and  for a  consideration  equal  to  the  consideration
     (determined  in the same manner as  consideration  received on the issue or
     sale of  shares  of  Common  Stock  in  accordance  with  the  terms of the
     Warrants)  received by the Company  for such  securities,  plus the minimum
     consideration,  if any,  receivable  by the Company upon the  conversion or
     exchange thereof.

          (iii) If any change shall occur in the price per share provided for in
     any of the options,  rights or warrants  referred to in  subsection  (a) of
     this  Section  2.7 (b),  or in the price per share at which the  securities
     referred to in subsection  (b) of this Section 2.7 (b) are  convertible  or
     exchangeable,  such  options,  rights or warrants or conversion or exchange
     rights,  as the case may be, shall be deemed to have expired or  terminated
     on the date when such price  change  became  effective in respect of shares
     not  theretofore  issued pursuant to the exercise or conversion or exchange
     thereof,  and the Company shall be deemed to have issued upon such date new
     options,  rights or warrants or convertible or  exchangeable  securities at
     the new price in respect of the number of shares issuable upon the exercise
     of such options,  rights or warrants or the  conversion or exchange of such
     convertible or exchangeable securities.

                                       5
<PAGE>

          (iv) If any options,  rights or warrants referred to in subsection (a)
     of this Section 2.7, or any convertible or exchangeable securities referred
     to in  subsection  (b) of this  Section 2.7,  expire or  terminate  without
     exercise or conversion,  as the case may be, then the Exercise Price of the
     remaining  outstanding  Warrants  shall be  readjusted  as if such options,
     rights or warrants or convertible or exchangeable  securities,  as the case
     may be, had never been issued.

     (c)  Subdivision  and  Combination.  In case the Company  shall at any time
subdivide or combine the outstanding  shares of Common Stock, the Exercise Price
shall  forthwith  be  proportionately  decreased in the case of  subdivision  or
increased in the case of combination.

     (d)  Adjustment  in  Number of  Securities.  Upon  each  adjustment  of the
Exercise  Price pursuant to the  provisions of this  Section 2.7,  the number of
Warrant  Shares  issuable upon the exercise of each Warrant shall be adjusted to
the nearest whole number by  multiplying a number equal to the Exercise Price in
effect  immediately  prior to such  adjustment  by the number of Warrant  Shares
issuable upon exercise of the Warrants  immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.

     (e) [Reserved].

     (f) Merger or  Consolidation.  In case of any  consolidation of the Company
with,  or merger of the Company  with,  or merger of the Company  into,  another
corporation  (other than a consolidation  or merger which does not result in any
reclassification  or change of the  outstanding  Common Stock),  the corporation
formed by such consolidation or merger shall execute and deliver to the Holder a
supplemental  warrant  agreement  providing that the Holder of each Warrant then
outstanding  or to be  outstanding  shall have the right  thereafter  (until the
expiration of such Warrant) to receive,  upon exercise of such Warrant, the kind
and amount of shares of stock and other  securities and property  (except in the
event the property is cash, then the Holder shall have the right to exercise the
Warrant and receive  cash in the same manner as other  stockholders)  receivable
upon such consolidation or merger, by a holder of the number of shares of Common
Stock  of  the  Company  for  which  such  warrant  might  have  been  exercised
immediately  prior  to  such  consolidation,  merger,  sale  or  transfer.  Such
supplemental  warrant  agreement  shall provide for  adjustments  which shall be
identical to the adjustments  provided in Section 2.7. The foregoing  provisions
of this  paragraph (f) shall  similarly  apply to successive  consolidations  or
mergers.

     (g) No Adjustment of Exercise Price in Certain Cases.  No adjustment of the
Exercise Price shall be made upon the issuance of Warrant Shares upon conversion
of the Debentures or this Warrant, or upon the exercise of any options,  rights,
or warrants  outstanding as of the date of the Purchase  Agreement and disclosed
in Section 3.1(c) therein.

                                       6
<PAGE>

     (h) Dividends and Other Distributions.  In the event that the Company shall
at any time prior to the exercise of all Warrants declare a dividend (other than
a dividend consisting solely of shares of Common Stock) or otherwise  distribute
to its stockholders  any assets,  property,  rights,  evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another, or any other thing of value, the Holders of the unexercised Warrants
shall thereafter be entitled, in addition to the shares of Common Stock or other
securities and property receivable upon the exercise thereof,  to receive,  upon
the exercise of such Warrants, the same property,  assets, rights,  evidences of
indebtedness,  securities  or any other thing of value that they would have been
entitled  to  receive at the time of such  dividend  or  distribution  as if the
Warrants had been exercised  immediately prior to such dividend or distribution.
At the time of any  such  dividend  or  distribution,  the  Company  shall  make
appropriate  reserves to ensure the timely performance of the provisions of this
subsection 2.7 (h).  Nothing  contained  herein shall provide for the receipt or
accrual by a Holder of cash  dividends  prior to the  exercise by such Holder of
the Warrants.

     2.8   Compliance with Nasdaq Rule 4350(i). In order to assure the Company's
compliance with Nasdaq Rule 4350(i)(1)(D)  requiring stockholder approval of any
sale,  issuance or potential issuance by a Nasdaq listed company of common stock
(or securities  convertible  into or  exercisable  common stock) equal to 20% or
more of the common stock or 20% or more of the voting power  outstanding  before
the issuance for less than the greater of book or market value of the stock, the
Company and Holder agree as follows:

     (a) The maximum  number of shares which will be issued on conversion of the
Debentures  and  exercise of  Warrants,  if any,  is 19.999% of the  outstanding
shares of Common  Stock of the  Company on the date  hereof  (the  "Share  Cap")
unless  and until the  stockholders  of the  Company  shall  have  approved  the
issuance of shares of Common Stock in excess of the Share Cap.

     (b) The  Company  covenants  and  agrees to call a special  meeting  of its
stockholders within ten (10) days after the date of the Purchase Agreement to be
held as soon as practicable, but not later than seventy-five (75) days after the
date of the Purchase Agreement for the purpose of approving, and shall recommend
approval of, the issuance of shares in excess of the Share Cap on  conversion of
the Debentures and exercise of the Warrants.

     (c) If the stockholders  shall not have approved issuances in excess of the
Share Cap and shares of Common  Stock shall have been issued in an amount  equal
to the Share Cap, if all of the shares of Common Stock issuable upon  conversion
or the  Debentures  shall have been issued or all of the  Debentures  shall have
been redeemed in full,  the holders of the Warrants  shall be entitled to demand
redemption,  pro rata, with respect to the remaining  unexercised  Warrants at a
redemption price equal to the difference  between the Exercise Price on the date
of written  notice of  redemption  and the closing  price of the Common Stock on
that date (the "Warrant Redemption Price") and the Company shall pay the Warrant
Redemption Price within five business days following receipt of such notice.

                                       7
<PAGE>

                    ARTICLE 3.   REPRESENTATIONS, WARRANTIES
                          AND COVENANTS OF THE COMPANY

     3.1   Representations  and Warranties.  In addition to the  representations
and warranties  contained in Article 3.1 of the Convertible  Debenture  Purchase
Agreement, the Company hereby represents and warrants to the Holder as follows:

     (a) All shares which may be issued upon the exercise of the purchase  right
represented  by this  Warrant  shall,  upon  issuance,  (i) be duly  authorized,
validly  issued,  fully-paid  and non-  assessable,  (iii) free and clear of all
liens,  claims and encumbrances except for restrictions on transfer provided for
herein or under  applicable  federal and state securities laws, and (iii) not be
subject to any pre-emptive rights.

     (b) The Company is a corporation  duly organized and validly existing under
the laws of the State of Delaware, and has the full power and authority to issue
this Warrant and to comply with the terms hereof.  The  execution,  delivery and
performance  by the Company of its  obligations  under this Warrant,  including,
without limitation,  the issuance of the Warrant Shares upon any exercise of the
Warrant,  have been duly  authorized by all  necessary  corporate  action.  This
Warrant has been duly  executed and  delivered by the Company and is a valid and
binding  obligation of the Company,  enforceable  in accordance  with its terms,
except (i) as enforcement may be limited by applicable  bankruptcy,  insolvency,
reorganization  or similar laws affecting  enforceability  of creditors'  rights
generally and (ii) as the  availability  of the remedy of specific  enforcement,
injunctive  relief or other equitable relief may be subject to the discretion of
any court before which any proceeding therefor may be brought.

     (c)  The  Company  is not  subject  to or  bound  by any  provision  of any
certificate or articles of  incorporation or by-laws,  mortgage,  deed of trust,
lease, note, bond, indenture,  other instrument or agreement,  license,  permit,
trust, custodianship,  other restriction or any applicable provision of any law,
statute,  rule, regulation,  judgment,  order, writ, injunction or decree of any
court,  governmental  body,  administrative  agency or  arbitrator  which  could
prevent or be  violated  by or under which there would be a default (or right of
termination)  as a result of the  execution,  delivery  and  performance  by the
Company of this Warrant.

     (d) The Company is subject to the reporting  requirements  of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, and is current
in the filing of all  reports  required to be filed  thereunder.  The Company is
eligible to issue the  Warrants and the Warrant  Shares  pursuant to Rule 506 of
Regulation D promulgated under the Securities Act.

                           ARTICLE 4.   MISCELLANEOUS

     4.1 Transfer. This Warrant may not be offered, sold, transferred,  pledged,
assigned,  hypothecated  or otherwise  disposed of, in whole or in part,  at any
time, except in compliance with applicable  federal and state securities laws by
the transferor and the transferee (including,  without limitation,  the delivery
of  an  investment   representation   letter  and  a  legal  opinion  reasonably
satisfactory  to the Company);  provided  further,  that this Warrant may not be
transferred  or  assigned  such that either the Holder or any  transferee  will,
following such transfer or assignment,  hold a Warrant for the right to purchase
less than 10,000 Warrant Shares.

                                       8
<PAGE>

     4.2   Transfer Procedure.  Subject to the provisions of Section 4.1, Holder
may transfer or assign this Warrant by giving the Company  notice  setting forth
the name,  address  and  taxpayer  identification  number of the  transferee  or
assignee, if applicable (the "Transferee"), and surrendering this Warrant to the
Company  for  reissuance  to the  Transferee  and, in the event of a transfer or
assignment of this Warrant in part, the Holder. (Each of the persons or entities
in whose name any such new Warrant  shall be issued are herein  referred to as a
"Holder").

     4.3   Loss,  Theft, Destruction or Mutilation. If this Warrant shall become
mutilated or defaced or be destroyed,  lost or stolen, the Company shall execute
and deliver a new Warrant in exchange for and upon surrender and cancellation of
such mutilated or defaced  Warrant or, in lieu of and in  substitution  for such
Warrant so destroyed, lost or stolen, upon the Holder filing with the Company an
affidavit that such Warrant has been so mutilated,  defaced,  destroyed, lost or
stolen.  However, the Company shall be entitled, as a condition to the execution
and delivery of such new Warrant, to demand reasonably  acceptable  indemnity to
it and payment of the  expenses  and charges  incurred  in  connection  with the
delivery of such new Warrant. Any Warrant so surrendered to the Company shall be
canceled.

     4.4   Notices. All notices and other communications from the Company to the
Holder  or vice  versa  shall be  deemed  delivered  and  effective  when  given
personally,  by facsimile  transmission with confirmation  sheet at such address
and/or facsimile number as may have been furnished to the Company or the Holder,
as the case may be, in writing by the Company or the Holder from time to time.

     4.5   Waiver.  This Warrant and any term hereof may be changed,  waived, or
terminated  only by an instrument  in writing  signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.

     4.6   Governing  Law.  This Warrant  shall be governed by and  construed in
accordance with the laws of the State of New York,  without giving effect to its
principles  regarding  conflicts of law. Any action to enforce the terms of this
Warrant shall be  exclusively  heard in the State and Federal Courts of New York
County and State and Country of the United States of America.

     4.7   Signature.  In the  event  that  any  signature  on this  Warrant  is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  the  same,  with the  same  force  and  effect  as if such  facsimile
signature page were an original thereof.

     4.8 Legal  Fees.  In the  event  any  Person  commences  a legal  action or
proceeding to enforce its rights under this Warrant, the non-prevailing party to
such action or proceeding shall pay all reasonable costs and expenses (including
reasonable attorney's fees) incurred in enforcing such rights.

                                       9
<PAGE>

     4.9   Attorney-in-Fact.  To  effectuate  the  terms and  provisions  of the
Purchase Agreement,  the Escrow Agreement,  the Debentures and this Warrant, the
Company hereby agrees to grant a power of attorney to the attorney-in-fact named
therein (the  "Attorney-in-Fact")  substantially  in the form of by Exhibit F to
the Purchase Agreement (the "Power of Attorney"). All acts done under such power
of attorney are hereby  ratified  and approved and neither the  Attorney-in-Fact
nor any designee or agent  thereof shall be liable for any acts of commission or
omission,  for any error of  judgment or for any mistake of fact or law, as long
as the  Attorney-in-Fact is acting within the scope of the Power of Attorney and
within  the scope  of,  and in  accordance  with,  this  Warrant,  the  Purchase
Agreement,  the Debenture and the Escrow Agreement. The Power of Attorney, being
coupled with an interest, shall be irrevocable while any portion of this Warrant
remains  unexercised,  any amount of the Debenture  remains  unconverted  or any
provision of the Purchase Agreement or the Escrow Agreement remains unsatisfied.
In  addition,  the  Company  shall  deliver  to the  Attorney-in-Fact  a copy of
resolutions duly adopted by the Board of Directors of the Company,  as certified
by the President of the Company,  (a) authorizing  future issuances of shares of
Common Stock upon exercise of this Warrant and  conversion of the Debentures and
(b)  stating  that such  resolutions  are  irrevocable  while any  amount of the
Debentures remain  unconverted,  any portion of this Warrant remains unexercised
or any  provision of the  Purchase  Agreement  or the Escrow  Agreement  remains
unsatisfied.

Dated:  __________, 200_

FUSION NETWORKS HOLDINGS, INC.

By:
Name:
Title:

Attest:

Name:
Title:

                                       10
<PAGE>

                                   APPENDIX 1

                               NOTICE OF EXERCISE

1.   The undersigned hereby elects (please check the appropriate box and fill in
     the blank spaces):

     |_| to purchase  ______  shares of Common  Stock,  par value  $0.00001  per
     share, of Fusion Networks  Holdings,  Inc. at $___ per share for a total of
     $______ and  pursuant  to the terms of the  attached  Warrant,  and tenders
     herewith payment of the aggregate  Exercise Price of such Warrant Shares in
     full; or

     |_| to purchase  _______  shares of Common  Stock,  par value  $0.00001 per
     share, of Fusion Networks Holdings,  Inc. pursuant to the cashless exercise
     provision  under  Section  2.2 (b) of the  attached  Warrant,  and  tenders
     herewith the number of Warrant Shares to purchase such Warrant Shares based
     on the average  closing  bid price of the Common  Stock for the ten Trading
     Days prior to the date hereof of $____ per share.

2.   Please issue a certificate or certificates representing said Warrant Shares
     in the name of the undersigned or in such other name as is specified below:

Dated:                                   By:

                                         Name: ______________________________

                                         Title: _____________________________

                                       11

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