Document:

<PAGE>

                                                                   EXHIBIT 10.11

                           FIRST AMENDMENT TO LEASE

          This FIRST AMENDMENT TO LEASE (this "Amendment") is entered into as of
March 31, 2000, by and between BLAZE SOFTWARE, INC., a California corporation
("Tenant"), and SJ PLAZA, LLC, a Delaware limited liability company
("Landlord"), with reference to the following facts:

          A.  Landlord and Tenant entered into that certain Office Lease, dated
as of November 12, 1999 (the "Lease"), for the lease by Tenant of approximately
27,586 square feet of space in Suites 800 and 900 in the building at 150 Almaden
Blvd., San Jose, California, as more particularly described in the Lease (the
"Original Leased Premises").  All capitalized terms referred to in this
Amendment shall have the same meaning defined in the Lease, except where
expressly defined to the contrary in this Amendment.

          B.  The parties desire to amend the Lease to reflect the lease by
Tenant of additional space, upon the following terms and conditions.

          NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

           1.   Expansion Space. Tenant desires to lease the space in Suite 1000
                ---------------
in the Building, which contains approximately 13,822 square feet of Rentable
Area, as outlined in Exhibit A attached hereto as the expansion space (the
"Expansion Space"). Effective as of the Expansion Commencement Date (as defined
below), Landlord leases to Tenant, and Tenant leases from Landlord, the
Expansion Space on the terms and conditions set forth in the Lease, except as
amended by this Amendment. As of the Expansion Commencement Date, the Leased
Premises shall mean the Original Premises and the Expansion Space, which
together contain approximately 41,408 square feet of Rentable Area.

                1.1   Commencement Date for the Expansion Space. The
                      -----------------------------------------
commencement of the Term of the Lease for the Expansion Space shall be the date
Landlord delivers possession of the Expansion Space to Tenant ("Expansion
Commencement Date") regardless of the status of the construction of the New
Tenant Improvements and even if Tenant is unable to physically occupy the
Expansion Space at the time. The parties acknowledge that the Expansion
Commencement Date will be the day following the last day of the term of the
lease for the Expansion Space with PriceWaterhouseCoopers, LLP pursuant to an
amendment of the lease between Landlord and PriceWaterhouseCoopers, LLP that is
a condition precedent to this Amendment as provided in section 7 hereof. Upon
request by Landlord, Tenant agrees to execute any acknowledgment or confirmation
to further evidence the actual Expansion Commencement Date, but the failure to
execute such a document shall not delay the Expansion Commencement Date.

                1.2   Term. The Term of the Lease for the Original Leased
                      ----
Premises is hereby extended to March 31, 2006. Landlord and Tenant hereby agree
that the Term of the lease for the Expansion Space shall commence on the
Expansion Commencement Date and shall expire on
<PAGE>

March 31, 2006, regardless of any delay in the construction of the New Tenant
Improvements or any delay in the Expansion Commencement Date.

                1.3   Delay in Delivery. If Landlord, for any reason whatsoever,
                      -----------------
cannot deliver the right to possession of the Expansion Space by the Expansion
Commencement Date, this Amendment and the Lease shall not be void or voidable,
nor shall Landlord be liable for any loss or damage resulting therefrom, but in
that event, the actual Expansion Commencement Date for the Expansion Space shall
not occur until Landlord offers to deliver the right to possession of such space
to Tenant, regardless of the status of construction of the New Tenant
Improvements. Notwithstanding the foregoing, if the Expansion Commencement Date
has not occurred by July 1, 2000, then Tenant shall have the right to terminate
this Amendment, but not the Lease, upon written notice to Landlord within the
earlier of (a) ten (10) days after receipt of written notice from Landlord that
there will be a delay beyond July 1, 2000 in the Expansion Commencement Date, or
(b) July 11, 2000.

          1.4  Failure to Take Possession.  Tenant's inability or failure to
               --------------------------
accept possession of any portion of the Expansion Space when delivery is offered
by Landlord shall not delay the Expansion Commencement Date for the Expansion
Space or the date when Tenant must commence paying Rent for such space.  Tenant
acknowledges that Landlord shall incur significant expenses upon the execution
of this Amendment, even if Tenant never takes possession of the Expansion Space,
including, without limitation, loss of rental income, brokerage commissions and
fees, legal or other professional fees.  Tenant acknowledges that all of said
expenses, in addition to all other expenses incurred and damages suffered by
Landlord, shall be included in measuring Landlord's damages should Tenant fail
to take possession as provided above.

          1.5  Condition and New Tenant Improvements.  Tenant agrees to accept
               -------------------------------------
possession of the Expansion Space in AS IS condition without the construction of
any improvements or the grant of any allowances, except for the removal of any
furniture and personal property of the previous tenant from the Expansion Space
and the construction of the New Tenant Improvements as provided in Exhibit B
                                                                   ---------
attached hereto.

          1.6  Measurement.  Landlord further reserves to itself the right to
               -----------
re-measure the Rentable Area of the Expansion Space at any time prior to
December 31, 2000 and such re-measurement shall be based on the definition of
Rentable Area in the Lease.  If such re-measurement indicates a square footage
of Rentable Area in the Expansion Space that is more or less than 13,822 square
feet, the parties agree that the Minimum Monthly Rent for the Expansion Space
and Tenant's Share will be adjusted to reflect such corrected square footage
amount and any overpayment or underpayment of Minimum Monthly Rent for the
Expansion Space shall be paid by the applicable party within thirty (30) days
after notice from Landlord of such calculation.  Any such re-measurement by
Landlord shall be subject to the reasonable approval of Tenant within ten (10)
days after receipt of notice of the re-measurement and supporting calculation.
If the parties do not agree and cannot resolve the dispute within twenty (20)
days after notice of Tenant's disapproval, then the matter shall be resolved by
Landlord's architect whose decision shall be binding on the parties.  If either
party so requests, such adjustments will be reflected in a Lease amendment
executed by both Landlord and Tenant.

     2.   Minimum Monthly Rent.  From and after the Expansion Commencement Date,
          --------------------
the Minimum Monthly Rent for the Original Leased Premises and the Expansion
Space shall be as follows:

                                      -2-
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<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
     Time Period                 Original Leased Premises      Expansion Space                 Total
-------------------------------------------------------------------------------------------------------
<S>                              <C>                           <C>                          <C>
Expansion                             $  86895.90                 $53,214.70                $140,110.60
 Commencement Date
- 3/31/01
-------------------------------------------------------------------------------------------------------
4/1/01 - 3/31/02                      $ 90,371.74                 $54,811.14                $145,182.88
-------------------------------------------------------------------------------------------------------
4/1/02 - 3/31/03                      $ 93,986.61                 $56,455.47                $150,442.08
-------------------------------------------------------------------------------------------------------
4/1/03 - 3/31/04                      $ 97,746.07                 $58,149.14                $155,895.21
-------------------------------------------------------------------------------------------------------
4/1/04 - 3/31/05                      $101,655.91                 $59,893.61                $161,549.52
-------------------------------------------------------------------------------------------------------
4/1/05 - 3/31/06                      $123,033.56                 $61,690.42                $184,723.98
-------------------------------------------------------------------------------------------------------
</TABLE>

     Prior to the Expansion Commencement Date, Tenant shall continue to pay
Minimum Monthly Rent based on the terms of the Lease for the Original Leased
Premises.  Concurrent with its execution of this Amendment, Tenant agrees to pay
$53,214.70 to Landlord as prepaid rent for the first month's adjusted Minimum
Month Rent for the Expansion Space.

     3.   Tenant's Share.  From and after Expansion Commencement Date, Tenant's
          --------------
Share shall be 20.53% (i.e., 41,408 square feet of Rentable Area for the Leased
Premises consisting of the Original Leased Premises and the Expansion Space
divided by 201,748 square feet of Rentable Area for the Building), and Tenant
shall pay all additional Rent that is based on Tenant's Proportionate Share
based on such increased percentage for Tenant's Propionate Share.

     4.   Security Deposit.  Tenant has previously made a Security Deposit under
          ----------------
the Lease in the amount of $434,480.00 in the form of a Letter of Credit as
provided in Addendum No. 1 comprising a part of the Lease.  Concurrent with its
execution of this Lease, Tenant shall pay an additional $266,073.00 for a total
Security Deposit of $700,553.00.

          (a) Form.  The additional amount for the Security Deposit shall be in
              ----
cash or in the form of a Letter of Credit in accordance with the provisions of
sections 5 and 5.1 of Addendum No. 1 comprising a part of the Lease.  If Tenant
elects to provide the additional amount in the form of the Letter of Credit,
Tenant may elect to provide a separate Letter of Credit for the additional
amount required hereunder, or amend the existing Letter of Credit that Tenant
provided for the initial Security Deposit or obtain a replacement Letter of
Credit for the total amount of the Security Deposit required under this
Amendment (in which case of a replacement Letter of Credit, Landlord agrees to
surrender the original Letter of Credit promptly after it receives the new
Letter of Credit).

          (b) Reduction after Time.  Section 5.2 of Addendum No. 1 is hereby
              --------------------
amended in its entirety as set forth in this paragraph.  The amount of the
Security Deposit may be reduced by $140,110.60 after each of the first four
annual anniversary dates commencing April 1, 2001; provided that (i) a default
(after notice and the expiration of the applicable cure period) by Tenant of any
provision of the Lease does not exist and no such default or breach occurred
during the year immediately prior to the effective date of the reduction under
this section; and (ii) at no time shall the Security Deposit be less than
$140,110.60.  If Tenant is entitled to reduce the amount of the Letter of Credit
pursuant to this paragraph and Tenant delivers to Landlord written notice of its
request to so reduce the amount of the Security Deposit, then Tenant may, not
less than (10) days after Landlord's receipt of such notice, either obtain and
deliver a new or

                                      -3-
<PAGE>

amended Letter of Credit to replace or amend, as the case may be, the then
existing Letter of Credit, in an amount required under this section.

     5.   5.   Option to Extend.  The option to extend the Term provided to
               ----------------
Tenant in Section 3 of Addendum No. 1 is applicable to all of the Leased
Premises (i.e., the Original Premises and the Expansion Space).  Under no
circumstances shall Tenant be able to exercise said option to extend for less
than all of the Leased Premises, as amended by this Amendment.

     6.   Parking.  In addition to the parking spaces available to Tenant under
          -------
section 2.1 of Addendum No. 1 comprising a part of the Lease, Tenant shall have
the right to 27 parking spaces on levels P2 and P3 of the main parking garage at
Park Center Plaza for the Term of the Lease, as amended by this Amendment at the
then prevailing market rate as set forth by the tenant and/or operator of such
Parking Garage.  All of the other terms and provisions of section 2 and sections
2.2 through 2.6 of said Addendum No. 1 shall be applicable to the 27 parking
spaces available hereunder.  Landlord shall have the right in its sole and
absolute discretion to cause a valet and tandem parking program to be
implemented at the Parking Garage.  Tenant agrees to cooperate with such
program.

     7.   Condition Precedent.  The Expansion Space is currently leased to
          -------------------
PriceWaterhouseCoopers, LLP pursuant to a separate lease agreement between said
existing tenant and Landlord.  This Amendment, but not the Lease, is conditioned
upon Landlord and PriceWaterhouseCoopers, LLP executing and delivering a written
amendment to the existing lease between said parties to reflect the surrender
and termination of the lease of the Expansion Space by PriceWaterhouseCoopers,
LLP and otherwise on terms and in a form satisfactory to Landlord and
PriceWaterhouseCoopers, LLP in each party's sole and absolute discretion.
Landlord shall notify Tenant if this condition has been satisfied within thirty
(30) days after the date of this Amendment has been executed and delivered by
Landlord (which shall be evidenced by the date inserted below Landlord's
signature to this Amendment), unless the parties agree in each party's sole and
absolute discretion to extend the time for this condition to be satisfied.  If
Landlord notifies Tenant that this condition has not be satisfied as provided
above, then either party shall have the right to terminate this Amendment, but
not the Lease, upon written notice to the other within ten (10) days after the
end of said thirty (30) day time period (as such time period may be extended as
provided above.

     8.   General Provisions.
          ------------------

          8.1  Miscellaneous.  Landlord and Tenant each agree to execute any and
               -------------
all documents and agreements reasonably requested by the other party to further
evidence or effectuate this Amendment.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns.  As
amended hereby, the Lease shall remain in full force and effect.  In case of any
conflict between any term or provision of this Amendment and the Lease, the term
or provision of this Amendment shall govern.  This Amendment may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which when taken together shall constitute one agreement.

          8.2  Effectiveness.  The parties agree that the submission of a draft
               -------------
or copy of this Amendment for review or signature by a party is not intended,
nor shall it constitute or be deemed, by either party to be an offer to enter
into a legally binding agreement with respect to the subject matter hereof and
may not be relied on for any legal or equitable rights or obligations.  Any
draft or document submitted by Landlord or its agents to Tenant shall not
constitute a

                                      -4-
<PAGE>

reservation of or option or offer in favor of Tenant. The parties shall be
legally bound with respect to the subject matter hereof pursuant to the terms of
this Amendment only if, as and when all the parties have executed and delivered
this Amendment to each other. Prior to the complete execution and delivery of
this Amendment by all parties, each party shall be free to negotiate the form
and terms of this Amendment in a manner acceptable to each party in its sole and
absolute discretion. The parties acknowledge and agree that the execution and
delivery by one party prior to the execution and delivery of this Amendment by
the other party shall be of no force and effect and shall in no way prejudice
the party so executing this Amendment or the party that has not executed this
Amendment.

          8.3  Authority.  Each party represents and warrants to the other that
               ---------
it is duly authorized to enter into this Amendment and perform its obligations
without the consent or approval of any other party and that the person signing
on its behalf is duly authorized to sign on behalf of such party.

  [the balance of this page has been intentionally left blank; signature page
                                    follows]

                                      -5-
<PAGE>

     IN WITNESS WHEREOF, this Amendment has been executed as of the date first
set forth above.

LANDLORD:                                 TENANT:

SJ PLAZA, LLC                             BLAZE SOFTWARE, INC.,
a Delaware limited liability company      a California corporation

By: Divco West Group, LLC,                By: /s/ Gary Shroyer
                                             --------------------------------
    a Delaware limited liability company  Name:   Gary Shroyer
                                               ------------------------------
    Its Agent                             Its:    CFO
                                               ------------------------------

                                          Dated: March 3l,2000

By: /s/ Scott L. Smithers
   -------------------------------
Name: Scott L. Smithers
     -----------------------------
Its: President
    ------------------------------

Dated: April 12, 2000

                                      -6-
<PAGE>

                                   EXHIBIT A
                                   ---------

                           [DIAGRAM OF RENTED SPACE]

                                      -1-
<PAGE>

                                   EXHIBIT B
                                   ---------
                    WORK LETTER FOR NEW TENANT IMPROVEMENTS
                    ---------------------------------------

     This Exhibit B forms a part of that certain First Amendment to Lease (the
          ---------
"Amendment") by and between SJ PLAZA, LLC, a Delaware limited liability company,
as Landlord, and BLAZE SOFTWARE, INC., as Tenant, to which this Exhibit is
attached.  If there is any conflict between this Exhibit and the Amendment
regarding the construction of the New Tenant Improvements (hereinafter defined),
this Exhibit shall govern.

     1.   Defined Terms.  All defined terms referred to in this Exhibit shall
          -------------
have the same meaning as defined in the Amendment, except where expressly
defined to the contrary.

     2.   Additional Definitions.  Each of the following terms shall have the
          ----------------------
following meaning:

          "Construction Budget"- An estimate of the Construction Costs for the
           -------------------
New Tenant Improvements prepared by Landlord as provided in this Exhibit.

          "Construction Costs"- All costs and expenses approved by Landlord to
           ------------------
construct the New Tenant Improvements, including all fees and expenses for:

          (a) architectural/space planning services utilized by Landlord in the
preparation of any space plan;

          (b) architects, engineers and consultants in the preparation of the
Preliminary Plans, Construction Plans, including mechanical, electrical,
plumbing and structural drawings and of all other aspects of the Construction
Plans, and for processing governmental applications and applications for
payment, observing construction of the work, and other customary engineering,
architectural, interior design and space planning services;

          (c) surveys, reports, environmental and other tests and investigations
of the site and any improvements thereon;

          (d) labor, materials, equipment and fixtures supplied by the general
contractor, its subcontractors and/or materialmen;

          (e) the furnishing and installation of all heating, ventilation and
air conditioning duct work, terminal boxes, distributing defusers and
accessories required for completing the heating, ventilation and air-
conditioning system in the Expansion Space, including costs of meter and key
control for after-hour usage, if required by Landlord;

          (f) all electrical circuits, wiring, lighting fixtures, and tube
outlets furnished and installed throughout the Expansion Space, including costs
of meter and key control for after-hour electrical power usage;

                                      -1-
<PAGE>

          (g) all window and floor coverings in the Expansion Space;

          (h) all fire and life safety control systems, such as fire walls,
sprinklers and fire alarms, including piping, wiring and accessories installed
within the Expansion Space;

          (i) all plumbing, fixtures, pipes and accessories installed within the
Expansion Space;

          (j) fees charged by the city and/or county where the Building is
located (including, without limitation, fees for building permits and plan
checks) required for the Tenant improvement work in the Expansion Space;

          (k) supervision and administration expense, including the construction
supervision fee payable to Landlord's agent and property manager and/or
representative equal to seven (7%) of the Construction Costs;

          (l) all taxes, fees, charges and levies by governmental and quasi-
governmental agencies for authorization, approvals, licenses and permits; and
all sales, use and excise taxes for the materials supplied and services rendered
in connection with the installation and construction of the New Tenant
Improvements; and

          (m) all costs and expenses incurred to comply with all laws, rules,
regulations or ordinances of any governmental authority for any work at the
Building or Complex in order to construct the New Tenant Improvements.

     The term Construction Costs shall not include any fees, costs, expenses,
compensation or other consideration payable to Tenant, or any of its officers,
directors, employees or affiliates, or the cost of any of Tenant's furniture,
artifacts, trade fixtures, telephone and computer systems and related
facilities, or equipment.

          "Construction Plans" - The complete plans and specifications for the
           ------------------
construction of the New Tenant Improvements consisting of all architectural,
engineering, mechanical and electrical drawings and specifications which are
required to obtain all building permits, licenses and certificates from the
applicable governmental authority(ies) for the construction of the New Tenant
Improvements.  The Construction Plans shall be prepared by duly licensed and/or
registered architectural and/or engineering professionals selected by Landlord
in its sole and absolute discretion, and in all respects shall be in substantial
compliance with all applicable laws, rules, regulations, building codes for the
city and county where the Building is located.

          "Force Majeure Delays" - Any delay, other than a delay caused by
           --------------------
Tenant, by Landlord in completing the New Tenant Improvements by reason of (i)
any strike, lockout or other labor trouble or industrial disturbance (whether or
not on the part of the employees of either party hereto), (ii) governmental
preemption of priorities or other controls in connection with a national or
other public emergency, civil disturbance, riot, war, sabotage, blockade,
embargo, inability to secure customary materials, supplies or labor through
ordinary sources by reason of regulation or order of any government or
regulatory body, or (iii) shortages of fuel, materials, supplies or labor, (iv)
lightning, earthquake, fire, storm, tornado, flood, washout explosion, inclement
weather or any

                                      -2-
<PAGE>

other similar industry-wide or Building-wide cause beyond the reasonable control
of Landlord, or (v) any other cause, whether similar or dissimilar to the above,
beyond Landlord's reasonable control. The time for performance of any obligation
of Landlord to construct the New Tenant Improvements shall be extended at
Landlord's election by the period of any delay caused by any of the foregoing
events.

          "Landlord's Allowance" - An amount equal to $8.00 per square foot of
           --------------------
usable area in the Expansion Space based on the Architect's calculations of the
usable area in the Expansion Space using the standard approved June 7, 1996 by
the Building Owners and Managers Association International for measuring usable
area in office buildings.  Landlord's Allowance will be used by Landlord for the
Construction Costs for the New Tenant Improvements, which sum shall be paid
directly to the contracting parties entitled to payment.  Any unused portion of
Landlord's Allowance for the New Tenant Improvements shall remain the property
of Landlord, and Tenant shall have no interest in said funds.

          "Substantial Completion," "Substantially Complete," "Substantially
           ----------------------    ----------------------    -------------
Completed" - The terms Substantial Completion, Substantially Completed and
---------
Substantially Complete shall mean when Landlord has delivered to Tenant a
written notice stating that the New Tenant Improvements have been substantially
completed substantially in accordance with the Construction Plans, except "punch
list" items which may be completed without materially impairing Tenant's use of
the Expansion Space or a material portion thereof.

          "New Tenant Improvements" - The improvements to be installed by
           -----------------------
Landlord in the Expansion Space substantially in accordance with the
Construction Plans, which improvements shall be comparable in quality, design,
type and layout of the Tenant Improvements (as defined in Exhibit C to the
Lease) constructed by Landlord in the Original Leased Premises.

     3.   Preparation of Preliminary Plans and Construction Plans.
          -------------------------------------------------------

          3.1  Space Plan or Preliminary Plans.  Concurrent with its execution
               -------------------------------
of the Lease, Tenant shall submit to Landlord or its architect or designer all
additional information, including occupancy requirements for the New Tenant
Improvements in the Expansion Space ("Information"), necessary to enable the
architect, designer or contractor to prepare a space plan or preliminary plans
for the New Tenant Improvements containing all demising walls, corridors,
entrances, exits, doors, interior partitions, and the locations of all offices,
conference rooms, computer rooms, and other rooms and layout.  Landlord shall be
entitled to rely upon all plans, drawings and information supplied by or for
Tenant in preparing the space plan or preliminary plans.  Within five (5) days
after receipt of the space plan or preliminary plans, Tenant shall notify
Landlord in writing that (i) Tenant approved such space plan or preliminary
plans; or (ii) Tenant disapproves such preliminary plans in the particular
instances specified by Tenant in such notice (including, without limitation, the
specific changes requested by Tenant).  Tenant shall not unreasonably withhold
its approval to the space plan or preliminary plans.  The failure of Tenant to
provide such written notice within said five (5) day period shall be deemed as
approval by Tenant of such space plan or preliminary plans.  The preliminary
plans approved by the parties as provided above shall be referred to as the
"Preliminary Plans."

                                      -3-
<PAGE>

          3.2  Construction Plans.  After approval of the Preliminary Plans,
               ------------------
Landlord shall cause to be prepared Construction Plans for the construction of
the New Tenant Improvements and deliver the same to Tenant as soon as reasonably
possible.  Within five (5) days after receipt of the Construction Plans, Tenant
shall notify Landlord in writing that (i) Tenant approved the Construction
Plans; or (ii) Tenant disapproves the Construction Plans because they vary in
design from the Preliminary Plans approved by Landlord and Tenant in the
particular instances specified by Tenant in such notice (including, without
limitation, the specific changes requested by Tenant).  The failure of Tenant to
provide such written notice within said five (5) day period shall be deemed as
approval by Tenant of such plans.

     4.   Approval of the Construction Budget.  After approval of the
          -----------------------------------
Construction Plans by Landlord and Tenant as provided above, Landlord shall
prepare the Construction Budget for the Construction Costs.  The Construction
Budget shall not be subject to the prior written approval of Tenant, unless the
estimated Construction Costs exceed the amount of Landlord's Allowance.  If the
Construction Budget reflects Construction Costs in excess of Landlord's
Allowance, Landlord shall deliver a copy of such Construction Budget to Tenant
for its review and approval, which shall not be unreasonably withheld.  Tenant
shall notify Landlord in writing within five (5) days after receipt of the
Construction Budget that (a) Tenant approves the Construction Budget, or (b)
that Tenant disapproves of the Construction Budget because it varies from the
Construction Plans or contains specific costs not contained within the meaning
of Construction Costs.  The failure of Tenant to provide such written notice
within said five (5) day period shall be deemed an approval by Tenant.  Tenant
covenants and agrees to pay to Landlord the amount of the Construction Costs in
excess of the Landlord's Allowance within the time period provided in section 6
of this Exhibit.

     5.   Construction of the New Tenant improvements.  Landlord shall construct
          -------------------------------------------
the New Tenant Improvements substantially in accordance with the Construction
Plans.  Landlord agrees to use its good faith efforts to construct the New
Tenant Improvements with a commercially reasonable period of time after
obtaining all permits for such work.  The construction contract for constructing
the New Tenant Improvements and the contractor(s) to perform the work shall be
approved and/or selected, as the case may be, by Landlord at its sole and
absolute discretion without the consent of Tenant.  Tenant acknowledges and
agrees that the New Tenant Improvements will not be completed by the Expansion
Commencement Date, but such fact shall not relieve Tenant from the obligation to
commence paying Rent from and after the date provided in the Amendment.  Tenant
acknowledges and accepts the various inconveniences that may be associated with
the use of the Expansion Space and Common Areas during the construction of the
improvements, such as construction obstacles, noise and debris, the passage of
work crews, uneven air conditioning service and other typical conditions
incident to the construction of improvements.  Tenant agrees to cooperate with
Landlord's Contractor and all subcontractors and workers performing work for the
New Tenant Improvements.  In connection therewith, Tenant acknowledges that it
may have to vacate portions of the Expansion Space while the work is being
performed.  Tenant agrees that such inconveniences and annoyances shall not give
Tenant any rights against Landlord pursuant to the Lease or the Amendment.
During the construction of the improvements, Tenant shall continue to pay
Minimum Monthly Rent, additional rent and all other charges and sums required
under the Lease, as amended hereby.

     6.   Payment.  Landlord shall pay for the Construction Costs for the New
          -------
Tenant Improvements, not to exceed the amount of Landlord's Allowance.  Tenant
acknowledges and agrees

                                      -4-
<PAGE>

that it shall be responsible for payment of all Construction Costs in excess of
Landlord's Allowance, which payment shall be due and payable to Landlord within
ten (10) days after approval (or deemed approval) of the Construction Budget
under section 4 of this Exhibit, but in any event prior to the date Landlord
executes any construction contract for the work or commences construction of the
Tenant Improvements.

     7.   Changes.  Any changes in the Construction Plans or Construction
          -------
Budget, including, without limitation, any changes required by any applicable
law, rule, regulation or ordinance, shall require the prior written consent of
Landlord in its good faith discretion.  Any changes requested by Tenant and
approved by Landlord shall be prepared by Landlord's architect, engineer or
contractor.  The additional Construction Costs for such changes, including the
cost to revise the Construction Plans, obtain any additional permits and
construct any additional improvements required as a result thereof, and all
other additional costs incurred by Landlord from resulting delays in completing
the New Tenant Improvements, shall be paid out of Landlord's Allowance (only to
the extent funds are available and not committed for payment of other
Construction Costs).  If such costs for changes exceed the Landlord's Allowance,
such excess costs shall be paid by Tenant, at its sole cost and expense, to
Landlord within ten (10) days after Tenant's receipt of notice from Landlord.
If Landlord does not receive such payment within said ten (10) day period,
Landlord shall have the right, in addition to any other rights or remedies
available under the Lease, at law or in equity, to (i) discontinue all or any
portion of the work until it receives said payment; (ii) proceed with the other
work not affected by such change until such payment is received; (iii) proceed
with the work contemplated with such change; or (iv) proceed with the work
without making such change; in which case the commencement or completion of such
work shall not be deemed a waiver of Tenant's obligation to pay for same or any
additional costs or expenses incurred as a result thereof.  The cost of a change
order and any resulting delay in connection and additional cost incurred as a
result thereof shall be determined by Landlord's architect, which determination
shall be binding upon the parties.

     8.   Acceptance of Work.  At the time Landlord notifies Tenant that the New
          ------------------
Tenant Improvements have been Substantially Completed, Tenant and Landlord will
walk through the Expansion Space and prepare a punch list, if necessary, which
sets forth any corrective work to be performed by Landlord; provided, however,
that Tenant's obligation to pay Rent and other sums under the Lease, as amended
by the Amendment, shall not be affected thereby.  If the parties fail to prepare
such punch list by such time period, Tenant agrees that it will conclusively be
deemed to have inspected the work and found it to be in satisfactory condition,
with all work required of Landlord completed.

                                     -5-NEITHER  THIS  DEBENTURE  NOR  THE  SECURITIES  INTO  WHICH  THIS  DEBENTURE  IS
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 THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES LAWS.

No. ___                                                              $__________

                          FUSION NETWORKS HOLDINGS INC.
                        6% SECURED CONVERTIBLE DEBENTURE
                                DUE JUNE 13, 2001

     THIS DEBENTURE is one of a series of duly authorized and issued  debentures
of Fusion  Networks  Holdings Inc., a Delaware  corporation,  having a principal
place of  business  at 8115 NW 29th  Street,  Miami,  FL 33122 (the  "Company"),
designated as its 6% Secured Convertible  Debentures,  due June 13, 2001, in the
aggregate   principal   amount  of  Four  Million  Dollars   ($4,000,000)   (the
"Debentures").

     FOR VALUE RECEIVED,  the Company  promises to pay to [ ], or its registered
assigns (the "Holder"),  the principal sum of One Million Dollars  ($1,000,000),
on June  13,  2001 or  such  earlier  date as the  Debentures  are  required  or
permitted to be repaid as provided  hereunder (the  "Maturity  Date") and to pay
interest  to the  Holder  on the  aggregate  unconverted  and  then  outstanding
principal amount of this Debenture at the rate of 6% per annum,  payable on each
Conversion  Date (as defined herein) and on the Maturity Date, in cash or shares
of Common  Stock (as  defined in  Section  6).  The  Company  may not prepay any
portion of the principle  amount or interest on this  Debenture.  Subject to the
terms and conditions  herein,  the decision whether to pay interest hereunder in
shares of Common Stock or cash shall be at the  discretion  of the Company.  Not
less than ten Trading  Days (as  defined in Section 6) prior to each  Conversion
Date,  the Company shall provide the Holder with written  notice of its election
to pay interest  hereunder  either in cash or shares of Common Stock pursuant to
the terms of Section  4(a)(i)  (the Company may indicate in such notice that the
election  contained  in such  notice  shall  continue  for later  periods  until
revised).  Failure to timely  provide  such  written  notice  shall be deemed an
election by the Company to pay the interest on such Conversion Date in shares of
Common  Stock  pursuant  to the  terms of  Section  4(a)(i).  Interest  shall be
calculated  on the basis on a 360-day year and shall accrue daily  commencing on
the Original  Issue Date (as defined in Section 6) until  payment in full of the
principal sum,  together with all accrued and unpaid  interest and other amounts
which may become due hereunder,  has been made.  Interest hereunder will be paid
to the  Person  (as  defined  in  Section  6) in whose  name this  Debenture  is
registered on the records of the Company regarding registration and transfers of
Debentures (the "Debenture  Register").  All overdue accrued and unpaid interest
to be paid in cash  hereunder  shall  entail  a late  fee at the rate of 18% per
annum (or such lower  maximum  amount of interest  permitted to be charged under
applicable  law) (to accrue daily,  from the date such interest is due hereunder
through and including the date of payment),  payable in cash.  This Debenture is
subject to the following additional provisions:
<PAGE>

     Section 1. This Debenture is exchangeable for an equal aggregate  principal
amount of Debentures of different authorized denominations,  as requested by the
Holder  surrendering  the  same.  No  service  charge  will  be  made  for  such
registration of transfer or exchange.

     Section 2. This  Debenture  has been issued  subject to certain  investment
representations  of the original Holder set forth in the Purchase  Agreement (as
defined in Section 6) and may be  transferred  or exchanged  only in  compliance
with  the  Purchase  Agreement  and the  legend  set  forth  on the face of this
Debenture.  Prior  to due  presentment  to the  Company  for  transfer  of  this
Debenture,  the  Company  and any agent of the  Company may treat the Person (as
defined in Section 6) in whose name this  Debenture  is duly  registered  on the
Debenture  Register as the owner hereof for the purpose of receiving  payment as
herein  provided and for all other  purposes,  whether or not this  Debenture is
overdue,  and neither the Company nor any such agent shall be affected by notice
to the contrary.

     Section 3. Events of Default.

          (a) "Event of Default",  wherever  used  herein,  means any one of the
     following  events (whatever the reason and whether it 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):

               (i) any default in the payment of the principal  of,  interest on
          or liquidated damages in respect of, any Debentures, free of any claim
          of  subordination,  as and when the same shall  become due and payable
          (whether on a Conversion  Date or the Maturity Date or by acceleration
          or otherwise);

               (ii) the  Company  shall fail to  observe  or  perform  any other
          material  covenant or agreement  contained in, or otherwise commit any
          breach of any of the Transaction  Documents (as defined in Section 6),
          and such  failure or breach shall not have been  remedied  within five
          days after the date on which  notice of such  failure or breach  shall
          have been given, or any representation or warranty of the Company in a
          Transaction  Document  shall prove to have been false or  incorrect at
          the Closing Date;

               (iii) the Company,  Marketing Services Group ("MSGI"),  or any of
          their  respective  subsidiaries  shall  commence,  or  there  shall be
          commenced  against any of them a case under any applicable  bankruptcy
          or  insolvency  laws as now or  hereafter  in effect or any  successor
          thereto, or the Company, MSGI or any of their respective  subsidiaries
          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,  MSGI or any of their
          respective  subsidiaries  or there is  commenced  against the Company,
          MSGI or any of their  respective  subsidiaries  any  such  bankruptcy,
          insolvency or other proceeding which remains  undismissed for a period
          of  60  days;  or  the  Company,  MSGI  or  any  of  their  respective
          subsidiaries  is  adjudicated  insolvent or bankrupt;  or any order of
          relief  or other  order  approving  any  such  case or  proceeding  is
          entered; or the Company, MSGI or any of their respective  subsidiaries
          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 60 days; or the Company, MSGI or any of their
          respective  subsidiaries makes a general assignment for the benefit of
          creditors;   or  the  Company,   MSGI  or  any  of  their   respective
          subsidiaries  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,  MSGI or any of their  respective  subsidiaries
          shall  call a meeting  of its  creditors  with a view to  arranging  a
          composition, adjustment or restructuring of its debts; or the Company,
          MSGI  or any of  their  respective  subsidiaries  shall  by any act or
          failure to act  expressly  indicate  its  consent  to,  approval of or
          acquiescence in any of the foregoing; or any corporate or other action
          is taken by the Company, MSGI or any of their respective  subsidiaries
          for the purpose of effecting any of the foregoing;

                                       2
<PAGE>
               (iv) the Company (or any subsidiary  thereof if guaranteed by the
          Company)  shall  default  in any of its  obligations  under  any other
          Debenture  or  any  mortgage,  credit  agreement  or  other  facility,
          indenture  agreement,  factoring  agreement or other  instrument under
          which  there  may be  issued,  or by which  there  may be  secured  or
          evidenced any  indebtedness  for borrowed money or money due under any
          long term leasing or factoring arrangement of the Company in an amount
          exceeding  an aggregate of one hundred  thousand  dollars  ($100,000),
          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;

               (v) either the Common  Stock or the Common Stock of MSGI shall be
          delisted from the Nasdaq National Market  ("NASDAQ") or suspended from
          trading on the NASDAQ without  resuming  trading and/or being relisted
          or thereon or listed on the New York Stock  Exchange,  American  Stock
          Exchange or Nasdaq  SmallCap  Market (each, a "Subsequent  Market") or
          having  such  suspension  lifted,  in either  case,  for more than ten
          Trading Days (which need not be consecutive Trading Days);

               (vi)  the  Company  shall  be a party to any  Change  of  Control
          Transaction  (as defined in Section 6), shall agree to sell or dispose
          all or in  excess  of 40% of its  assets  in one or more  transactions
          (whether  or not  such  sale  would  constitute  a Change  of  Control
          Transaction),  or shall  redeem or  repurchase  more than a de minimis
          number of shares of Common  Stock or other  equity  securities  of the
          Company (other than  redemptions  of Underlying  Shares (as defined in
          Section 6));

               (vii) an Underlying Shares Registration  Statement (as defined in
          Section 6) shall not have been  declared  effective by the  Commission
          (as  defined in Section 6) by the 240th day after the  Original  Issue
          Date;

                                       3
<PAGE>
               (viii) if,  during the  Effectiveness  Period (as  defined in the
          Registration   Rights  Agreement  (as  defined  in  Section  6)),  the
          effectiveness of the Underlying Shares  Registration  Statement lapses
          for  any  reason  or the  Holder  shall  not be  permitted  to  resell
          Registrable   Securities  (as  defined  in  the  Registration   Rights
          Agreement)  under the Underlying  Shares  Registration  Statement,  in
          either case, for more than twenty Trading Days;

               (ix) an Event (as defined in the Registration  Rights  Agreement)
          shall not have been cured to the  satisfaction  of the Holder prior to
          the  expiration  of thirty days from the Event Date (as defined in the
          Registration  Rights Agreement)  relating thereto (other than an Event
          resulting  from  a  failure  of  an  Underlying  Shares   Registration
          Statement to be declared  effective by the  Commission  on or prior to
          the 240th day after the Original Issue Date, which shall be covered by
          Section 3(a)(vii));

               (x) the Company shall fail for any reason to deliver certificates
          to a Holder prior to the tenth day after a Conversion Date pursuant to
          and in  accordance  with  Section  4(b) or the Company  shall  provide
          notice to the Holder, including by way of public announcement,  at any
          time, of its intention not to comply with requests for  conversions of
          any Debentures in accordance with the terms hereof; or

               (xi) the Company shall fail for any reason to deliver the payment
          in cash  pursuant to a Buy-In (as defined  herein)  within  seven days
          after notice is delivered hereunder.

     (b) During the time that any portion of this Debenture remains outstanding,
if any Event of Default occurs and is continuing,  the full principal  amount of
this Debenture (and, at the Holder's  option,  all other Debentures then held by
such Holder), together with interest and other amounts owing in respect thereof,
to the date of acceleration  shall become, at the Holder's election  immediately
due and payable in cash.  The aggregate  amount payable upon an Event of Default
shall be equal to the sum of (i) the Mandatory  Prepayment Amount (as defined in
Section 6) plus (ii) the product of (A) the number of  Underlying  Shares issued
in  respect  of  conversions  hereunder  within  thirty  days  of the  date of a
declaration  of an Event of  Default  and then  held by the  Holder  and (B) the
Closing  Price (as  defined in Section 6) on the date  prepayment  is due or the
date the full  prepayment  price is paid,  whichever is greater.  Interest shall
accrue on the prepayment amount hereunder from the seventh day after such amount
is due (being the date of an Event of Default) through the date of prepayment in
full thereof at the rate of 18% per annum (or such lesser maximum amount that is
permitted  to be paid by  applicable  law),  to accrue  daily from the date such
payment  is due  hereunder  through  and  including  the  date of  payment.  All
Debentures and Underlying  Shares for which the full prepayment  price hereunder
shall have been paid in accordance  herewith shall promptly be surrendered to or
as directed by the Company.  The Holder need not provide and the Company  hereby
waives any  presentment,  demand,  protest or other notice of any kind,  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  hereunder.  No such rescission or annulment
shall  affect any  subsequent  Event of  Default or impair any right  consequent
thereon. Section 4. Conversion.

                                       4
<PAGE>

          (a) (i) Conversion at Option of Holder.  (A) This  Debenture  shall be
     convertible  into shares of Common  Stock at the option of the  Holder,  in
     whole  or in part at any time and from  time to time,  after  the  Original
     Issue Date (subject to the  limitations  on conversion set forth in Section
     4(a)(ii)  hereof).  The number of shares of Common  Stock  issuable  upon a
     conversion  hereunder  shall be  determined  by  adding  the sum of (i) the
     quotient obtained by dividing (x) the outstanding  principal amount of this
     Debenture to be converted and (y) the Conversion Price (as defined herein),
     and  (ii)  the  amount  equal  to (I) the  product  of (x) the  outstanding
     principal  amount of this  Debenture to be converted and (y) the product of
     (1) the quotient obtained by dividing .06 by 360 and (2) the number of days
     for which  such  principal  amount  was  outstanding,  divided  by (II) the
     Conversion  Price on the  Conversion  Date,  provided,  that if the Company
     shall have timely  elected to pay the interest due on a Conversion  Date in
     cash pursuant to the terms hereof, subsection (ii) shall not be used in the
     calculation  of the  number  of  shares of  Common  Stock  issuable  upon a
     conversion hereunder.

               (B) Notwithstanding anything to the contrary contained herein, if
          on any Conversion Date:

               (1) the number of shares of Common Stock at the time  authorized,
          unissued and unreserved for all purposes,  or held as treasury  stock,
          is insufficient to pay interest hereunder in shares of Common Stock;

               (2) such shares of Common Stock (x) are not registered for resale
          pursuant to an effective Underlying Shares Registration  Statement and
          (y) may not be  sold  without  volume  restrictions  pursuant  to Rule
          144(k) promulgated under the Securities Act (as defined in Section 6),
          as determined by counsel to the Company  pursuant to a written opinion
          letter,  addressed  to the  Company's  transfer  agent in the form and
          substance  acceptable to the applicable Holder and such transfer agent
          (if the  shares of  Common  Stock are  permitted  by the  Holder to be
          delivered  under this clause (2) prior to the  Effectiveness  Date (as
          defined  in the  Registration  Rights  Agreement)  and  thereafter  an
          Underlying Shares  Registration  Statement shall be declared effective
          by the Commission,  the Company shall, within three Trading Days after
          the date of such  declaration of  effectiveness,  exchange such shares
          for shares of Common Stock that are free of restrictive legends of any
          kind);

               (3) the Common  Stock is not listed or quoted on the NASDAQ or on
          a Subsequent Market;

               (4) the  Company  has  failed to timely  satisfy  its  conversion
          obligations hereunder; or

                                       5
<PAGE>
               (5) the issuance of such shares of Common Stock would result in a
          violation of Sections 4(a)(ii)(A) and (B),

          then, at the option of the Holder, the Company,  in lieu of delivering
          shares of Common  Stock  pursuant  to  Section  4(a)(i)(A)(ii),  shall
          deliver, within three Trading Days of each applicable Conversion Date,
          an  amount  in  cash  equal  to the  product  of (a)  the  outstanding
          principal  amount of the Debentures to be converted on such Conversion
          Date and (b) the product of (x) the quotient  obtained by dividing .06
          by 360 and (y) the number of days for which such principal  amount was
          outstanding.

               (C) The Holder  shall  effect  conversions  by  surrendering  the
          Debentures (or such portions  thereof) to be converted,  together with
          the  form  of  conversion  notice  attached  hereto  as  Exhibit  A (a
          "Conversion  Notice") to the  Company.  Each  Conversion  Notice shall
          specify  the  principal  amount of  Debentures  to be  converted,  the
          applicable  Conversion  Price and the date on which such conversion is
          to be  effected,  which  date  may  not  be  prior  to the  date  such
          Conversion  Notice  is  deemed to have  been  delivered  hereunder  (a
          "Conversion Date"). If no Conversion Date is specified in a Conversion
          Notice,  the  Conversion  Date shall be the date that such  Conversion
          Notice is deemed  delivered  hereunder.  Subject to Section 4(b), each
          Conversion Notice, 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 with the Conversion Notice, or if
          a conversion  hereunder cannot be effected in full for any reason, the
          Company  shall  honor  such  conversion  to  the  extent   permissible
          hereunder and shall promptly deliver to such Holder (in the manner and
          within the time set forth in Section  4(b)) a new  Debenture  for such
          principal amount as has not been converted.

               (ii) Certain Conversion Restrictions.

               (A) A Holder may not  convert  Debentures  or  receive  shares of
          Common  Stock as  payment of  interest  hereunder  to the extent  such
          conversion  or receipt of such  interest  payment  would result in the
          Holder,  together with any affiliate thereof,  beneficially owning (as
          determined  in  accordance  with Section 13(d) of the Exchange Act (as
          defined in Section 6) and the rules promulgated  thereunder) in excess
          of 4.999% of the then issued and  outstanding  shares of Common Stock,
          including  shares issuable upon conversion of, and payment of interest
          on, the  Debentures  held by such  Holder  after  application  of this
          Section.  Since  the  Holder  will not be  obligated  to report to the
          Company  the number of shares of Common  Stock it may hold at the time
          of a conversion hereunder, unless the conversion at issue would result
          in the  issuance of shares of Common  Stock in excess of 4.999% of the
          then  outstanding  shares of Common Stock without  regard to any other
          shares which may be  beneficially  owned by the Holder or an affiliate
          thereof,  the  Holder  shall  have the  authority  and  obligation  to
          determine whether the restriction contained in this Section will limit
          any particular  conversion hereunder and to the extent that the Holder
          determines that the limitation  contained in this Section applies, the
          determination  of which portion of the principal  amount of Debentures
          are  convertible  shall be the  responsibility  and  obligation of the
          Holder.  If  the  Holder  has  delivered  a  Conversion  Notice  for a
          principal  amount  of  Debentures  that,  without  regard to any other
          shares that the Holder or its affiliates may  beneficially  own, would
          result in the issuance in excess of the  permitted  amount  hereunder,
          the Company  shall  notify the Holder of this fact and shall honor the
          conversion for the maximum  principal amount permitted to be converted
          on such Conversion  Date in accordance  with the periods  described in
          Section  4(b) and,  at the  option of the  Holder,  either  retain any
          principal  amount  tendered for  conversion in excess of the permitted
          amount  hereunder  for  future   conversions  or  return  such  excess
          principal amount to the Holder.  The provisions of this Section may be
          waived by a Holder (but only as to itself and not to any other Holder)
          upon not less than 61 days prior notice to the Company.  Other Holders
          shall be unaffected by any such waiver.

                                       6
<PAGE>

               (B) A Holder may not  convert  Debentures  or  receive  shares of
          Common  Stock as  payment of  interest  hereunder  to the extent  such
          conversion  or receipt of such  interest  payment  would result in the
          Holder,  together with any affiliate thereof,  beneficially owning (as
          determined  in  accordance  with Section 13(d) of the Exchange Act and
          the  rules  promulgated  thereunder)  in  excess of 9.999% of the then
          issued  and  outstanding  shares of  Common  Stock,  including  shares
          issuable  upon   conversion  of,  and  payment  of  interest  on,  the
          Debentures  held by such Holder  after  application  of this  Section.
          Since the Holder  will not be  obligated  to report to the Company the
          number  of  shares  of  Common  Stock  it may  hold  at the  time of a
          conversion  hereunder,  unless the conversion at issue would result in
          the issuance of shares of Common Stock in excess of 9.999% of the then
          outstanding  shares of Common Stock without regard to any other shares
          which may be beneficially owned by the Holder or an affiliate thereof,
          the Holder  shall  have the  authority  and  obligation  to  determine
          whether  the  restriction  contained  in this  Section  will limit any
          particular  conversion  hereunder  and to the  extent  that the Holder
          determines that the limitation  contained in this Section applies, the
          determination  of which portion of the principal  amount of Debentures
          are  convertible  shall be the  responsibility  and  obligation of the
          Holder.  If  the  Holder  has  delivered  a  Conversion  Notice  for a
          principal  amount  of  Debentures  that,  without  regard to any other
          shares that the Holder or its affiliates may  beneficially  own, would
          result in the issuance in excess of the  permitted  amount  hereunder,
          the Company  shall  notify the Holder of this fact and shall honor the
          conversion for the maximum  principal amount permitted to be converted
          on such Conversion  Date in accordance  with the periods  described in
          Section  4(b) and,  at the  option of the  Holder,  either  retain any
          principal  amount  tendered for  conversion in excess of the permitted
          amount  hereunder  for  future   conversions  or  return  such  excess
          principal amount to the Holder.  The provisions of this Section may be
          waived by a Holder (but only as to itself and not to any other Holder)
          upon not less than 61 days prior notice to the Company.  Other Holders
          shall be unaffected by any such waiver.

                                       7
<PAGE>

               (b) (i) Not later than three  Trading  Days after any  Conversion
          Date,  the Company  will  deliver to the Holder (i) a  certificate  or
          certificates  which shall be free of  restrictive  legends and trading
          restrictions  (other  than those  required  by  Section  3.1(b) of the
          Purchase Agreement)  representing the number of shares of Common Stock
          being  acquired  upon the  conversion  of  Debentures  (subject to the
          limitations set forth in Section 4(a)(ii) hereof),  (ii) Debentures in
          a principal  amount equal to the principal  amount of  Debentures  not
          converted,  and (iii) a bank check in the amount of accrued and unpaid
          interest  (if the  Company  has timely  elected or is  required to pay
          accrued  interest in cash),  provided,  that the Company  shall not be
          obligated to issue certificates  evidencing the shares of Common Stock
          issuable upon conversion of the principal  amount of Debentures  until
          Debentures are delivered for conversion to the Company,  or the Holder
          notifies the Company that such  Debentures  have been lost,  stolen or
          destroyed and provides a bond (or other adequate security)  reasonably
          satisfactory  to the Company to  indemnify  the Company  from any loss
          incurred  by it in  connection  therewith.  The  Company  shall,  upon
          request of the Holder,  if available,  use its best efforts to deliver
          any  certificate  or  certificates  required  to be  delivered  by the
          Company under this Section electronically through the Depository Trust
          Corporation or another  established  clearing  corporation  performing
          similar  functions.  If in the  case  of any  Conversion  Notice  such
          certificate or certificates are not delivered to or as directed by the
          applicable  Holder by the third  Trading Day after a Conversion  Date,
          the Holder  shall be entitled by 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 certificates  representing the principal
          amount of Debentures tendered for conversion.

               (ii)  If  the  Company  fails  to  deliver  to  the  Holder  such
          certificate or  certificates  pursuant to Section 4(b)(i) by the third
          Trading Day after the  Conversion  Date, the Company shall pay to such
          Holder,  in cash, as liquidated  damages and not as a penalty,  $5,000
          for  each  Trading  Day  after  such  third  Trading  Day  until  such
          certificates  are  delivered.  Nothing  herein  shall limit a Holder's
          right to pursue actual damages or declare an Event of Default pursuant
          to Section 3 herein for the Company's failure to deliver  certificates
          representing  shares of Common Stock upon conversion within the period
          specified  herein and such  Holder  shall have the right to pursue all
          remedies  available  to it at  law  or in  equity  including,  without
          limitation, a decree of specific performance and/or injunctive relief.
          The  exercise of any such rights  shall not  prohibit the Holders from
          seeking to enforce  damages  pursuant to any other  Section  hereof or
          under applicable law. Further, if the Company shall not have delivered
          any cash due in respect of  conversions of Debentures or as payment of
          interest  thereon by the third Trading Day after the Conversion  Date,
          the Holder may, by notice to the Company, require the Company to issue
          shares of Common Stock pursuant to Section 4(c),  except that for such
          purpose the Conversion Price applicable thereto shall be the lesser of
          the Conversion  Price on the Conversion Date and the Conversion  Price
          on the date of such Holder demand.  Any such shares will be subject to
          the provision of this Section.

               (iii) In addition to any other rights available to the Holder, if
          the  Company  fails to  deliver  to the  Holder  such  certificate  or
          certificates  pursuant  to Section  4(b)(i) by the third  Trading  Day
          after the  Conversion  Date,  and if after such third  Trading Day the
          Holder purchases (in an open market  transaction or otherwise)  Common
          Stock to  deliver  in  satisfaction  of a sale by such  Holder  of the
          Underlying  Shares which the Holder  anticipated  receiving  upon such
          conversion (a "Buy-In"), then the Company shall (A) pay in cash to the
          Holder (in  addition to any  remedies  available  to or elected by the
          Holder)  the amount by which (x) the  Holder's  total  purchase  price
          (including  brokerage  commissions,  if any) for the  Common  Stock so
          purchased  exceeds  (y) the  product  of (1) the  aggregate  number of
          shares of Common Stock that such Holder anticipated receiving from the
          conversion  at issue  multiplied by (2) the market price of the Common
          Stock at the time of the sale giving rise to such purchase  obligation
          and (B) at the option of the  Holder,  either  reissue  Debentures  in
          principal  amount  equal  to the  principal  amount  of the  attempted
          conversion  or  deliver  to the  Holder the number of shares of Common
          Stock that would have been issued had the Company timely complied with
          its delivery  requirements under Section 4(b)(i).  For example, if the
          Holder purchases Common Stock having a total purchase price of $11,000
          to  cover  a  Buy-In  with  respect  to  an  attempted  conversion  of
          Debentures  with respect to which the market  price of the  Underlying
          Shares on the date of  conversion  was a total of $10,000 under clause
          (A) of the  immediately  preceding  sentence,  the  Company  shall  be
          required  to pay the Holder  $1,000.  The  Holder  shall  provide  the
          Company written notice indicating the amounts payable to the Holder in
          respect of the Buy-In.  Notwithstanding  anything  contained herein to
          the  contrary,  if a Holder  requires  the Company to make  payment in
          respect of a Buy-In for the  failure  to timely  deliver  certificates
          hereunder  and the  Company  timely  pays in full  such  payment,  the
          Company  shall not be required to pay such Holder  liquidated  damages
          under  Section  4(b)(ii) in respect of the  certificates  resulting in
          such Buy-In.

                                       8
<PAGE>

     (c) (i)(A) The conversion  price in effect on any Conversion  Date shall be
$1.75 (subject to adjustments as set forth herein) (the "Conversion Price").

          (ii) If the Company, at any time while any Debentures are outstanding,
     (a)  shall  pay a  stock  dividend  or  otherwise  make a  distribution  or
     distributions  on shares of its Common  Stock or any other equity or equity
     equivalent  securities  payable in shares of Common  Stock,  (b)  subdivide
     outstanding  shares of Common  Stock into a larger  number of  shares,  (c)
     combine  (including  by way of reverse stock split)  outstanding  shares of
     Common   Stock  into  a  smaller   number  of  shares,   or  (d)  issue  by
     reclassification  of shares of the Common Stock any shares of capital stock
     of the Company, then the Conversion Price shall be multiplied by a fraction
     of which the  numerator  shall be the  number  of  shares  of Common  Stock
     (excluding  treasury shares,  if any) outstanding  before such event and of
     which the  denominator  shall be the  number  of  shares  of  Common  Stock
     outstanding  after such event. Any adjustment made pursuant to this Section
     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  the  Company,   at  any  time  while  any   Debentures  are
     outstanding,  shall  issue  rights,  options or  warrants to all holders of
     Common  Stock  (and not to  Holders)  entitling  them to  subscribe  for or
     purchase  shares of Common Stock at a price per share less than the Closing
     Price at the record date mentioned  below,  then the Conversion Price shall
     be multiplied by a fraction,  of which the denominator  shall be the number
     of  shares  of  the  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,  and of which the numerator  shall be the number of shares of the
     Common Stock (excluding treasury shares, if any) outstanding on the date of
     issuance  of such rights or  warrants  plus the number of shares  which the
     aggregate  offering  price of the total  number of shares so offered  would
     purchase at such Closing Price. 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, options or warrants.  However, upon the expiration of any such
     right,  option  or  warrant  to  purchase  shares of the  Common  Stock the
     issuance  of  which  resulted  in an  adjustment  in the  Conversion  Price
     pursuant to this Section, if any such right, option or warrant shall expire
     and shall not have been exercised,  the Conversion Price 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  after  the  issuance  of such  rights or
     warrants) had the adjustment of the Conversion Price made upon the issuance
     of such rights,  options or warrants been made on the basis of offering for
     subscription  or purchase  only that  number of shares of the Common  Stock
     actually  purchased  upon the exercise of such rights,  options or warrants
     actually exercised.

                                       9
<PAGE>

          (iv) If the Company or any  subsidiary  thereof,  as  applicable  with
     respect to Common Stock  Equivalents (as defined below),  at any time while
     Debentures are  outstanding,  shall issue shares of Common Stock or rights,
     warrants,  options or other securities or debt that are convertible into or
     exchangeable  for  shares  of Common  Stock  ("Common  Stock  Equivalents")
     entitling any Person to acquire shares of Common Stock at a price per share
     less than the Conversion Price (if the holder of the Common Stock or Common
     Stock  Equivalent  so issued  shall at any time,  whether by  operation  of
     purchase price adjustments, reset provisions, floating conversion, exercise
     or exchange  prices or  otherwise,  or due to  warrants,  options or rights
     issued in connection  with such issuance,  be entitled to receive shares of
     Common Stock at a price less than the Conversion Price, such issuance shall
     be deemed to have occurred for less than the  Conversion  Price),  then, at
     the sole option of the  Holder,  either (1) the  Conversion  Price shall be
     multiplied  by a fraction,  the  numerator  of which shall be the number of
     shares of Common  Stock  outstanding  immediately  prior to the issuance of
     such  shares of Common  Stock or such  Common  Stock  Equivalents  plus the
     number of shares of Common Stock which the  offering  price for such shares
     of  Common  Stock  or  Common  Stock  Equivalents  would  purchase  at  the
     Conversion  Price,  and the  denominator  of which  shall be the sum of the
     number  of shares of Common  Stock  outstanding  immediately  prior to such
     issuance  plus the number of shares of Common  Stock so issued or issuable,
     or (2) the Conversion Price shall be replaced with the conversion, exchange
     or purchase  price for such Common Stock  Equivalents  (including any reset
     provisions  thereof),  provided,  that for purposes  hereof,  all shares of
     Common Stock that are  issuable  upon  conversion,  exercise or exchange of
     Common Stock Equivalents shall be deemed outstanding  immediately after the
     issuance of such Common Stock  Equivalents.  Such adjustment  shall be made
     whenever  such  shares of  Common  Stock or Common  Stock  Equivalents  are
     issued.  However,  upon the expiration of any Common Stock  Equivalents the
     issuance  of  which  resulted  in an  adjustment  in the  Conversion  Price
     pursuant to this Section, if any such Common Stock Equivalents shall expire
     and shall not have been exercised,  the Conversion Price 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  after the  issuance of such Common Stock
     Equivalents)  had the  adjustment  of the  Conversion  Price  made upon the
     issuance  of such  Common  Stock  Equivalents  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 Common Stock Equivalents
     actually exercised.

                                       10
<PAGE>

          (v) If the  Company,  at any time while  Debentures  are  outstanding,
     shall  distribute  to all  holders  of Common  Stock  (and not to  Holders)
     evidences of its  indebtedness or assets or rights or warrants to subscribe
     for or purchase any security,  then in each such case the Conversion  Price
     at which Debentures shall thereafter be convertible  shall be determined by
     multiplying the Conversion Price in effect  immediately prior to the record
     date fixed for  determination  of  stockholders  entitled  to receive  such
     distribution  by a fraction of which the  denominator  shall be the Closing
     Price  determined as of the record date mentioned  above,  and of which the
     numerator  shall be such  Closing  Price on such  record date 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 the Common Stock as  determined by the Board of Directors in good faith.
     In either case the adjustments  shall be described in a statement  provided
     to the Holders 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.

          (vi)  In case  of any  reclassification  of the  Common  Stock  or any
     compulsory  share exchange  pursuant to which the Common Stock is converted
     into other securities,  cash or property,  the Holders shall have the right
     thereafter to, at their option, (A) convert the then outstanding  principal
     amount, together with all accrued but unpaid interest and any other amounts
     then owing  hereunder in respect of this  Debenture only into the shares of
     stock and other securities,  cash and property receivable upon or deemed to
     be held by holders of the Common Stock following such  reclassification  or
     share  exchange,  and the Holders of the Debentures  shall be entitled upon
     such event to receive  such amount of  securities,  cash or property as the
     shares of the Common Stock of the Company  into which the then  outstanding
     principal  amount,  together  with all accrued but unpaid  interest and any
     other amounts then owing  hereunder in respect of this Debenture could have
     been converted immediately prior to such reclassification or share exchange
     would have been entitled or (B) require the Company to prepay the aggregate
     of its outstanding  principal  amount of Debentures,  plus all interest and
     other amounts due and payable thereon,  at a price determined in accordance
     with Section 3(b). The entire  prepayment price shall be paid in cash. This
     provision shall similarly  apply to successive  reclassifications  or share
     exchanges.

          (vii)  All  calculations  under  this  Section  4 shall be made to the
     nearest  cent or the  nearest  1/100th  of a share,  as the case may be. No
     adjustments in the Conversion Price shall be required if such adjustment is
     less than $0.01, provided, however, that any adjustments which by reason of
     this Section are not required to be made shall be carried forward and taken
     into account in any subsequent adjustment.

          (viii)  Whenever either the Conversion  Price is adjusted  pursuant to
     any of Section  4(c)(ii) - (v),  the Company  shall  promptly  mail to each
     Holder a notice  setting forth the Conversion  Price after such  adjustment
     and setting forth a brief statement of the facts requiring such adjustment.

                                       11
<PAGE>

          (ix) If (A)  the  Company  shall  declare  a  dividend  (or any  other
     distribution)  on the Common Stock; (B) the Company shall declare a special
     nonrecurring  cash dividend on or a redemption of the Common Stock; (C) the
     Company  shall  authorize  the  granting 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;  (D) the approval of any stockholders of the
     Company shall be required in connection  with any  reclassification  of the
     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,  of any  compulsory  share  exchange  whereby the Common  Stock is
     converted into other  securities,  cash or property;  (E) the Company shall
     authorize the voluntary or involuntary dissolution,  liquidation or winding
     up of the affairs of the Company;  then,  in each case,  the Company  shall
     cause to be filed at each  office or agency  maintained  for the purpose of
     conversion of the  Debentures,  and shall cause to be mailed to the Holders
     at their last  addresses  as they shall  appear upon the stock books of the
     Company,  at least 20  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 the 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  or share  exchange is expected to
     become  effective  or close,  and the date as of which it is expected  that
     holders of the Common Stock of record  shall be entitled to exchange  their
     shares  of  the  Common  Stock  for  securities,  cash  or  other  property
     deliverable  upon  such  reclassification,   consolidation,  merger,  sale,
     transfer or share exchange,  provided, 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.
     Holders  are  entitled  to convert  Debentures  during  the  20-day  period
     commencing  the date of such  notice  to the  effective  date of the  event
     triggering such notice.

          (x) In case of any (1) merger or  consolidation of the Company with or
     into another  Person,  or (2) sale by the Company of more than  one-half of
     the  assets of the  Company  (on an as valued  basis) in one or a series of
     related  transactions,  a Holder  shall have the right to (A) if  permitted
     under Section 3(b) hereof,  exercise its rights of prepayment under Section
     3(a) with respect to such event, (B) convert its aggregate principal amount
     of  Debentures  then  outstanding  into  the  shares  of  stock  and  other
     securities,  cash and  property  receivable  upon or  deemed  to be held by
     holders of Common Stock following such merger,  consolidation  or sale, and
     such Holder shall be entitled  upon such event or series of related  events
     to receive  such amount of  securities,  cash and property as the shares of
     Common Stock into which such aggregate principal amount of Debentures could
     have been  converted  immediately  prior to such merger,  consolidation  or
     sales  would  have  been  entitled,  or (C)  in the  case  of a  merger  or
     consolidation,  (x)  require  the  surviving  entity  to  issue  shares  of
     convertible  preferred stock or convertible  debentures with such aggregate
     stated  value or in such  face  amount,  as the  case may be,  equal to the
     aggregate principal amount of Debentures then held by such Holder, plus all
     accrued and unpaid  interest and other amounts owing  thereon,  which newly
     issued shares of preferred  stock or debentures  shall have terms identical
     (including  with  respect  to  conversion)  to the terms of this  Debenture
     (except,  in the case of preferred stock, as may be required to reflect the
     differences  between  equity and debt) and shall be  entitled to all of the
     rights and  privileges of a Holder of  Debentures  set forth herein and the
     agreements pursuant to which the Debentures were issued (including, without
     limitation,  as such  rights  relate to the  acquisition,  transferability,
     registration and listing of such shares of stock other securities  issuable
     upon conversion thereof),  and (y) simultaneously with the issuance of such
     convertible preferred stock or convertible debentures, shall have the right
     to convert such instrument only into shares of stock and other  securities,
     cash and property receivable upon or deemed to be held by holders of Common
     Stock  following such merger or  consolidation.  In the case of clause (C),
     the conversion  price applicable for the newly issued shares of convertible
     preferred stock or convertible debentures shall be based upon the amount of
     securities, cash and property that each share of Common Stock would receive
     in such transaction and the Conversion Price in effect immediately prior to
     the  effectiveness or closing date for such  transaction.  The terms of any
     such  merger,  sale or  consolidation  shall  include  such  terms so as to
     continue to give the Holders the right to receive the securities,  cash and
     property  set  forth in this  Section  upon any  conversion  or  redemption
     following such event.  This provision  shall  similarly apply to successive
     such events.

                                       12
<PAGE>

     (d) The  Company  covenants  that it will at all  times  reserve  and  keep
available out of its authorized  and unissued  shares of Common Stock solely for
the  purpose of  issuance  upon  conversion  of the  Debentures  and  payment of
interest on the Debentures, each as herein provided, free from preemptive rights
or any other  actual  contingent  purchase  rights  of  persons  other  than the
Holders,  not less than such  number  of  shares  of the  Common  Stock as shall
(subject to any additional requirements of the Company as to reservation of such
shares set forth in the Purchase Agreement) be issuable (taking into account the
adjustments  and  restrictions  of  Section  4(b))  upon the  conversion  of the
outstanding   principal  amount  of  the  Debentures  and  payment  of  interest
hereunder.  The Company  covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized,  issued and fully
paid,  nonassessable  and, if the Underlying Shares  Registration  Statement has
been declared effective under the Securities Act,  registered for public sale in
accordance with such Underlying Shares Registration Statement.

     (e) Upon a conversion  hereunder the Company shall not be required to issue
stock certificates representing fractions of shares of the Common Stock, but may
if otherwise permitted,  make a cash payment in respect of any final fraction of
a share based on the Closing Price at such time.  If the Company  elects not, or
is unable, to make such a cash payment, the Holder shall be entitled to receive,
in lieu of the final fraction of a share, one whole share of Common Stock.

     (f) The  issuance  of  certificates  for  shares  of the  Common  Stock  on
conversion of the Debentures shall be made without charge to the Holders thereof
for any documentary stamp or similar taxes that may be payable in respect of the
issue 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 of such  Debentures  so converted  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.

                                       13
<PAGE>

     (g) Any  and all  notices  or  other  communications  or  deliveries  to be
provided by the Holders hereunder, including, without limitation, any Conversion
Notice, shall be in writing and delivered  personally,  by facsimile,  sent by a
nationally  recognized  overnight  courier  service  or  sent  by  certified  or
registered  mail,  postage  prepaid,  addressed to the Company,  at 8115 NW 29th
Street,  Miami,  FL 33122 ,  Facsimile  No.:  (305)  477-6703,  attention  Chief
Financial Officer,  or such other address or facsimile number as the Company may
specify for such purposes by notice to the Holders  delivered in accordance with
this Section.  Any and all notices or other  communications  or deliveries to be
provided by the Company hereunder shall be in writing and delivered  personally,
by facsimile,  sent by a nationally recognized overnight courier service or sent
by certified or registered mail,  postage  prepaid,  addressed to each Holder at
the facsimile  telephone number or address of such Holder appearing on the books
of the Company,  or if no such facsimile telephone number or address appears, at
the principal place of business of the Holder. Any notice or other communication
or deliveries  hereunder  shall be deemed given and effective on the earliest of
(i) the date of  transmission,  if such notice or communication is delivered via
facsimile at the facsimile  telephone  number specified in this Section prior to
6:30 p.m. (New York City time), (ii) the date after the date of transmission, if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone  number  specified in this Section later than 6:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) four days after deposit in the United  States mail,  (iv) the Business Day
following  the  date of  mailing,  if sent by  nationally  recognized  overnight
courier service,  or (v) upon actual receipt by the party to whom such notice is
required to be given.

     Section 5. Prepayment at the Option of the Company.

     (a) The Company shall have the right at any time after the  Effective  Date
(as  defined in Section 6),  upon ten  Trading  Days'  notice to the Holders (an
"Optional  Prepayment  Notice"  and the date  such  notice  is  received  by the
Holders,  the "Notice Date"), to prepay, in each 30 calender day period, no less
than $500,000 of the principal amount of the Debentures then held by the Holders
and up to $1,000,000 of the principal  amount of the Debentures then held by the
Holders,  at a cash price  equal to the  Optional  Prepayment  Price (as defined
below).  The  prepayment  contemplated  by this Section (and the  threshold  and
maximum set forth in the  immediately  preceding  sentence) shall occur pro rata
among the Holders by reference to the original  principal  amount of  Debentures
acquired by all Holders on the Original Issue Date. The Company may only deliver
an Optional  Prepayment Notice to the Holders if, on the Notice Date: (i) either
there is an effective Underlying Shares Registration Statement pursuant to which
the Holders are permitted to utilize the prospectus  thereunder to resell all of
the issued  Underlying  Shares and all of the Underlying  Shares as are issuable
upon  conversion in full of the  Debentures  subject to the Optional  Prepayment
Notice nor may all of such issued or issuable  Underlying Shares be sold without
volume  restrictions  pursuant to Rule 144 promulgated under the Securities Act,
as determined by counsel to the Company  pursuant to a written  opinion  letter,
addressed and delivered prior to the Notice Date to the Company's transfer agent
in the form and substance  acceptable to the Holders and such transfer agent and
(ii)the  Common  Stock is listed for  trading  on the NASDAQ or on a  Subsequent
Market.  If any of the foregoing  conditions  shall cease to be in effect during
the period between the Notice Date and the date the Optional  Prepayment Date is
paid in full,  then the Holders subject to such prepayment may elect, by written
notice to the Company  given at any time after any of the  foregoing  conditions
shall  cease  to  be  in  effect,  to  invalidate  ab  initio  such  prepayment,
notwithstanding  anything  herein  contained  to the  contrary.  The Holders may
convert  any  portion  of the  outstanding  principal  amount of the  Debentures
subject to an Optional  Redemption  Notice  prior to the date that the  Optional
Prepayment Price is due and paid in full.

                                       14
<PAGE>

     (b) The Optional Prepayment Price is due on the tenth Trading Day following
the Notice Date.  If any portion of the Optional  Prepayment  Price shall not be
paid by the Company by  expiration  of such tenth  Trading Day,  interest  shall
accrue  thereon at the rate of 18% per annum (or the maximum  rate  permitted by
applicable law, whichever is less) until the Optional  Prepayment Price plus all
such  interest is paid in full.  In  addition,  if any  portion of the  Optional
Prepayment  Price remains  unpaid after such date,  the Holders  subject to such
prepayment  may  elect,  by  written  notice  to the  Company  given at any time
thereafter,  to invalidate ab initio such prepayment,  notwithstanding  anything
herein  contained  to the  contrary.  If a  Holder  elects  to  invalidate  such
prepayment the Company shall promptly,  and, in any event,  not later than three
Trading Days from receipt of such Holder's  notice of such  election,  return to
such Holder all of the Debentures for which the Optional  Prepayment Price shall
not have been paid in full.

     (c) The  "Optional  Prepayment  Price"  for  the  principal  amount  of the
Debentures to be prepaid shall equal the sum of (i) 120% of the principal amount
of the Debentures to be prepaid,  and (ii) all interest,  other amounts,  costs,
expenses and liquidated damages due in respect of such Debentures.

     Section 6. Definitions.  For the purposes hereof, the following terms shall
have the following meanings:

     "Business  Day"  means any day  except  Saturday,  Sunday and any day which
shall be a legal holiday or a day on which banking  institutions in the State of
New York or the State of Florida  are  authorized  or  required  by law or other
government action to close.

     "Change  of  Control  Transaction"  means the  occurrence  of any of (i) an
acquisition  after the date hereof by an  individual  or legal entity or "group"
(as  described  in Rule  13d-5(b)(1)  promulgated  under  the  Exchange  Act) of
effective  control  (whether  through legal or  beneficial  ownership of capital
stock of the  Company,  by  contract  or  otherwise)  of in excess of 40% of the
voting  securities of the Company in a transaction or series of transactions not
approved by the Board of  directors of the Company,  (ii) a  replacement  at one
time or over time of more than one-half of the members of the Company's board of
directors  which is not  approved  by a majority  of those  individuals  who are
members of the board of  directors  on the date hereof (or by those  individuals
who are  serving  as  members  of the  board  of  directors  on any  date  whose
nomination  to the board of directors  was approved by a majority of the members
of the board of directors who are members on the date hereof),  (iii) the merger
of the  Company  with or into  another  entity that is not  wholly-owned  by the
Company,  consolidation  or sale of 50% or more of the assets of the  Company in
one or a series of related transactions, or (iv) the execution by the Company of
an agreement to which the Company is a party or by which it is bound,  providing
for any of the events set forth above in (i), (ii) or (iii).

                                       15
<PAGE>

     "Closing  Price" means on any  particular  date (a) the closing sales price
per share of  Common  Stock on such  date on the  NASDAQ  or on such  Subsequent
Market on which the  shares of Common  Stock are then  listed or  quoted,  or if
there is no such price on such date,  then the closing sales price on the NASDAQ
or on such Subsequent  Market on the date nearest preceding such date, or (b) if
the  shares of Common  Stock  are not then  listed or quoted on the  NASDAQ or a
Subsequent  Market,  the closing  sales price for a share of Common Stock in the
OTC Bulletin Board, as reported by the National Quotation Bureau Incorporated or
similar  organization or agency succeeding to its functions of reporting prices)
at the close of business on such date,  or (c) if the shares of Common Stock are
not then  reported by the National  Quotation  Bureau  Incorporated  (or similar
organization or agency  succeeding to its functions of reporting  prices),  then
the average of the "Pink Sheet" quotes for the relevant  conversion  period,  as
determined in good faith by the Holder, or (d) if the shares of Common Stock are
not then  publicly  traded the fair market  value of a share of Common  Stock as
determined  by an Appraiser  selected in good faith by the Holders of a majority
in interest of the principal amount of Debentures then outstanding.

     "Commission" means the Securities and Exchange Commission.

     "Common Stock" means the common stock,  $.00001 par value per share, of the
Company and stock of any other class into which such shares may  hereafter  have
been reclassified or changed.

     "Effective Date" shall mean the date that an Underlying Shares Registration
Statement is declared effective by the Commission.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Mandatory Prepayment Amount" for any Debentures shall equal the sum of (i)
the greater of (A) 120% of the  principal  amount of  Debentures  to be prepaid,
plus all accrued and unpaid interest  thereon,  and (B) the principal  amount of
Debentures to be prepaid, plus all accrued and unpaid interest thereon,  divided
by the Conversion  Price on the date of  acceleration  multiplied by the Closing
Price on (x) the date the Mandatory  Prepayment  Amount is demanded or otherwise
due or (y) the date the Mandatory  Prepayment Amount is paid in full,  whichever
is greater, and (ii) all other amounts,  costs,  expenses and liquidated damages
due in respect of such Debentures.

     "Original  Issue  Date"  shall mean the date of the first  issuance  of the
Debentures regardless of the number of transfers of any Debenture and regardless
of the number of instruments which may be issued to evidence such Debenture.

     "Person" means a corporation, an association, a partnership,  organization,
a business,  an individual,  a government or political  subdivision thereof or a
governmental agency.

     "Purchase  Agreement" means the Convertible  Debenture Purchase  Agreement,
dated as of the  Original  Issue Date,  to which the  Company  and the  original
Holder are parties,  as amended,  modified or supplemented  from time to time in
accordance with its terms.

                                       16
<PAGE>

     "Registration  Rights  Agreement" means the Registration  Rights Agreement,
dated as of the  Original  Issue Date,  to which the  Company  and the  original
Holder are parties,  as amended,  modified or supplemented  from time to time in
accordance with its terms.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Trading  Day"  means  (a) a day on which the  shares  of Common  Stock are
traded on the NASDAQ or on such Subsequent  Market on which the shares of Common
Stock are then  listed or quoted,  or (b) if the shares of Common  Stock are not
listed on the NASDAQ or a Subsequent Market, a day on which the shares of Common
Stock are traded in the over-the-counter market, as reported by the OTC Bulletin
Board,  or (c) if the shares of Common  Stock are not quoted on the OTC Bulletin
Board,   a  day  on  which  the  shares  of  Common  Stock  are  quoted  in  the
over-the-counter   market  as  reported  by  the   National   Quotation   Bureau
Incorporated (or any similar  organization or agency succeeding its functions of
reporting prices);  provided,  that in the event that the shares of Common Stock
are not listed or quoted as set forth in (a),  (b) and (c) hereof,  then Trading
Day shall mean any day  except  Saturday,  Sunday  and any day which  shall be a
legal  holiday or a day on which banking  institutions  in the State of New York
are authorized or required by law or other government action to close.

     "Transaction  Documents"  shall have the meaning set forth in the  Purchase
Agreement.

     "Underlying  Shares"  means  the  shares  of  Common  Stock  issuable  upon
conversion of Debentures or as payment of interest in accordance  with the terms
hereof.

     "Underlying Shares Registration  Statement" means a registration  statement
meeting  the  requirements  set  forth  in the  Registration  Rights  Agreement,
covering among other things the resale of the  Underlying  Shares and naming the
Holder as a "selling stockholder" thereunder.

     Section 7.  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, interest and liquidated damages (if
any) on,  this  Debenture  at the  time,  place,  and  rate,  and in the coin or
currency,  herein  prescribed.  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.  As long as there  are
Debentures  outstanding,  the Company shall not and shall cause it  subsidiaries
not to,  without  the  consent  of the  Holders,  (i) amend its  certificate  of
incorporation,  bylaws or other charter  documents so as to adversely affect any
rights of the Holders; (ii) repay,  repurchase or offer to repay,  repurchase or
otherwise  acquire shares of its Common Stock or other equity  securities  other
than as to the Underlying  Shares to the extent  permitted or required under the
Transaction Documents;  or (iii) enter into any agreement with respect to any of
the foregoing. The Company may only voluntarily prepay the outstanding principal
amount on the Debentures in accordance with Section 5 hereof.

                                       17
<PAGE>
     Section 8. 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 9. 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
evidence  of such  loss,  theft or  destruction  of such  Debenture,  and of the
ownership hereof, and indemnity,  if requested,  all reasonably  satisfactory to
the Company.

     Section 10. No  indebtedness  of the Company is senior to this Debenture in
right of payment, whether with respect to interest,  damages or upon liquidation
or dissolution or otherwise. The Company will not and will not permit any of its
subsidiaries to, directly or indirectly,  enter into, create,  incur,  assume or
suffer to exist any  indebtedness  of any kind, on or with respect to any of its
property or assets now owned or hereafter  acquired or any  interest  therein or
any  income  or  profits  therefrom  that is senior  to or pari  passu  with the
indebtedness   under  this  Debenture.   Notwithstanding   the  foregoing,   IDM
Environmental  Corp.  may  incur  indebtedness  which is not  guaranteed  by the
Company.

     Section 11. This Debenture shall be governed by and construed in accordance
with the laws of the State of New York,  without  giving  effect to conflicts of
laws  thereof.  The Company  and the Holder  hereby  irrevocably  submits to the
exclusive  jurisdiction  of the state and federal  courts sitting in the City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction  contemplated hereby or discussed
herein,  and hereby  irrevocably  waives,  and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction  of any such  court,  or that such suit,  action or  proceeding  is
improper.  Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or  proceeding by receiving a copy thereof sent to the Company at the address in
effect for  notices to it under this  instrument  and agrees  that such  service
shall  constitute  good and  sufficient  service of process and notice  thereof.
Nothing  contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.

     Section  12.  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.

                                       18
<PAGE>
     Section 13. If any  provision  of this  Debenture  is  invalid,  illegal or
unenforceable,  the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance,  it shall  nevertheless
remain applicable to all other persons and  circumstances.  If it shall be found
that any interest or other amount deemed  interest due  hereunder  shall violate
applicable laws governing  usury,  the applicable rate of interest due hereunder
shall  automatically be lowered to equal the maximum permitted rate of interest.
The Company  covenants  (to the extent that it may lawfully do so) that it shall
not at any time insist upon,  plead, or in any manner  whatsoever  claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would  prohibit  or forgive  the  Company  from paying all or any portion of the
principal of or interest on the  Debentures  as  contemplated  herein,  wherever
enacted,  now or at any time  hereafter  in  force,  or  which  may  affect  the
covenants or the performance of this  indenture,  and the Company (to the extent
it may lawfully do so) hereby  expressly waives all benefits or advantage of any
such law,  and  covenants  that it will not, by resort to any such law,  hinder,
delay or impeded the  execution of any power herein  granted to the Holder,  but
will  suffer and permit  the  execution  of every such as though no such law has
been enacted.

     Section 14. 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
succeeding Business Day.

     Section  15.  The  payment   obligations   under  this  Debenture  and  the
obligations  of the Company to the Holder  arising upon the conversion of all or
any of the  Debentures  in  accordance  with the  provisions  hereof are secured
pursuant to the Pledge Agreement (as defined in the Purchase Agreement).

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGE FOLLOWS]

                                       19
<PAGE>

     IN WITNESS  WHEREOF,  the  Company  has  caused  this  Secured  Convertible
Debenture to be duly executed by a duly authorized  officer as of the date first
above indicated.

                                          FUSION NETWORKS HOLDINGS INC..

                                          By:
                                          Name:
                                          Title:

                                       20
<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION

(To be Executed by the Registered Holder
in order to Convert the Debenture)

The undersigned  hereby elects to convert the attached  Debenture into shares of
common  stock,  $.00001  par value per share  (the  "Common  Stock"),  of Fusion
Networks Holdings Inc. (the "Company") according to the conditions hereof, as of
the date written below. If shares are to be issued in the name of a person other
than  undersigned,  the  undersigned  will pay all transfer  taxes  payable with
respect  thereto and is delivering  herewith such  certificates  and opinions as
reasonably  requested  by the Company in  accordance  therewith.  No fee will be
charged to the holder for any  conversion,  except for such transfer  taxes,  if
any.

Conversion calculations:

         Date to Effect Conversion

         Principal Amount of Debentures to be Converted

         Number of shares of Common Stock to be Issued

         Conversion Price

         Signature

         Name

         Address

                                       21

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