Document:

AGREEMENT

         This  Agreement  dated as of March __, 2001 (this  "Agreement")  by and
among American Jewelry Corp., a Delaware  corporation  (formerly known as United
Ventures  Group,  Inc.,  the  "Company"),   ________________________,   ________
____________________,  ___________________,  ___________________________ and
_____________________ (each a "Holder" and collectively, the "Holders").

                                   WITNESSETH

                  WHEREAS, reference is made to that certain Purchase Agreement,
dated as of the date hereof by and among the Holders and the Sellers  identified
therein (the  "Purchase  Agreement"),  providing that the Holders are purchasing
those certain 8%  Convertible  Debentures in the aggregate  principal  amount of
$1,000,000 (the  "Debentures")  from the Sellers in two tranches pursuant to the
Purchase Agreement; and

                  WHEREAS,   the  Company  desires  to  amend  and  restate  the
Debentures in certain respects; and

                  WHEREAS,  unless otherwise  defined herein,  capitalized terms
shall have the meaning set forth in the Debentures.

                  NOW THEREFORE,  in consideration of the covenants and promises
of the  parties  set  forth  in this  Agreement  and  other  good  and  valuable
consideration   ,  the  receipt  and  legal   sufficiency  of  which  is  hereby
acknowledged, each of the parties hereby agree as follows:

AGREEMENT

1.       Amendment to the Debentures
         ---------------------------

         The  Debentures  have been  amended and  restated in the form  attached
hereto as Exhibit A.

2.       Limitation of Conversion of the Debentures.
         -------------------------------------------

         The Holders hereby agree that they shall not, in the aggregate, convert
the  Debentures  into (i) more than 17 million shares of Common Stock during the
ninety day period  commencing  upon the  Closing  and  ending  ninety  (90) days
thereafter,  except as  permitted  by  section  (ii),  (ii) more than 12 million
shares  during the period  commencing  forty days after the  Closing  and ending
ninety days after the Closing (in addition to the conversions described in (i)),
(iii) more than 15 million shares of Common Stock for each of the two subsequent
ninety day periods  thereafter  (i.e.,  91-180 days after the Closing  being the
first 90 day  period  and  181-270  days  after the  Closing  being  the  second
subsequent  ninety day  period).  If the Company  fails to deliver to a Holder a
certificate or  certificates  pursuant to Section (b) of the Debenture  prior to
the 15th Trading Day after the Conversion  Date,  this paragraph 2 shall be null
and void with respect to such Holder.  The Holder shall have the right to pursue
equitable relief to obtain such certificate
<PAGE>

or certificates (including without limitation,  a decree of specific performance
and/or injunctive relief).

         The number of Debentures permitted to be converted by the Holders shall
be allocated among Cameron Worldwide Ltd., Rosebery Investments Limited,  Dahmer
Trading  Co., and Lawina  International  Ltd.  ("Group 1") and YGD  Incorporated
("Group  2") in  proportion  to the  number of shares  purchased  by each  Group
pursuant  to  the  Purchase  Agreement.   For  example,   and  for  purposes  of
illustration  only,  Group  1  purchased  $750,000  in  Debentures  and  Group 2
Purchased  $250,000 in Debentures.  With respect to subsection (i) above,  Group
shall be permitted to convert  Debentures into a maximum of 12,750,000 shares of
Common Stock and Group 2 shall be permitted to convert Debentures into a maximum
of  4,250,000  shares of Common  Stock.  To the extent  that one group  converts
Debentures into less than the maximum  limitations  described  above,  the other
group may not convert  Debentures  into more than its allotted  shares of Common
Stock without the consent of the other group.

3.       No Short Sales
         --------------

         The  Holders  further  covenant  that  neither  they  nor any of  their
affiliates  nor any entity managed by the Holders will engage in any short sales
of the Debentures or the shares of common stock of the Company or enter into any
agreement  or  arrangement  designed  to reduce  the risks  arising  out of this
Agreement  or  transactions   contemplated  hereby.   Notwithstanding   anything
contained herein to the contrary,  the Company and Holder  acknowledge and agree
that sales of the Common  Stock  after the  Conversion  Date (as  defined in the
Debenture)  but  prior to the date  the  Company  actually  delivers  the  stock
certificate  representing shares of common stock shall not be considered a short
sale. This provision shall survive termination of this Agreement.

4.       Change of Control
         -----------------

         In the event of the  consummation of a Change of Control (as defined in
the Debenture), this agreement shall terminate and be deemed null and void.

5.       Issuances of Convertible Debentures
         -----------------------------------

         In the event  that  during  twelve  months  from the date  hereof,  the
Company shall sell, or otherwise dispose of, securities  convertible into shares
of Common Stock at a conversion or issuance  price which is less than the market
price of the Common Stock at the time of issuance of such security or instrument
("Convertible  Securities"),  then  the  conversion  limitations  set  forth  in
paragraph 2 herein shall be null and void. Convertible Securities shall under no
circumstances include (i) options or warrants to employees,  officers, directors
or  consultants,  (ii) currently  outstanding  securities,  (iii) warrants to be
issued to Morse Financial Inc., its successors or assigns;  or (iv) warrants the
Company  may issue  after the date  hereof  which are  exercisable  to  purchase
500,000  shares of Common  Stock  (approximately  $50,000 of value);  or (v) the
Debentures or Common Stock issuable upon conversion of the Debentures.

                                      -2-
<PAGE>

6.       Representations of the Company.
         -------------------------------

         In connection with the purchase of the Debentures and in  consideration
for the Holders  agreement  provided  herein,  the Company  makes the  following
representations and warranties.

            (a)  Corporate  Organization.  The  Company  is a  corporation  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction of its incorporation.

            (b)  Corporate  Authority  and  Enforceability.  The Company has the
requisite  corporate  power and  authority to execute,  deliver and perform this
Agreement and the Debentures.  Each of this Agreement and the Debentures are the
valid and binding  obligation of the Company  enforceable in accordance with its
terms,  except as  enforceability  is limited by (A) any applicable  bankruptcy,
insolvency,  reorganization,  moratorium,  fraudulent  transfer,  or similar law
affecting  creditors'  rights  generally,  or (B) general  principles of equity,
whether  considered in a proceeding in equity or at law; or (C) applicable  laws
and court  decisions which may limit or render  unenforceable  certain terms and
provisions  contained  therein,  but which in our  opinion do not  substantially
interfere with the practical realization of the benefits thereof, except for the
economic  consequence of any procedural delay which may be imposed by, relate to
or result from such laws and court decisions.

            (c) Validity of Debentures.  The issuance of the Debentures has been
duly  authorized  and, when issued,  sold and  delivered in accordance  with the
terms of the Purchase Agreement and for the consideration  expressed herein, the
Debentures shall be validly issued, fully paid and non-assessable.

            (d)  Reservations  of Shares.  The  Company  shall  reserve and keep
available  at all times such number of shares of Common Stock for the purpose of
enabling  the  Company to satisfy  any  obligation  to issue  Common  Stock upon
conversion of Debentures in accordance  with the  limitations  on conversion set
forth herein.

         Simultaneously with the Closing,  the Company's counsel will deliver an
opinion  of  counsel  as to the  foregoing,  in form  and  substance  reasonably
acceptable to the Holders and their counsel.

7.       Subsequent Filings of Registration Statements
         ---------------------------------------------

         In the event that the Company  files with the  Securities  and Exchange
Commission a registration  statement to register any of its securities under the
Securities Act of 1933, as amended, on Form SB-2, S-1, S-3 (but not forms S-4 or
S-8 or any successor or similar form(s) (except registrations on such or similar
forms for  registration of securities in connection with (i) an employee benefit
plan or dividend reinvestment plan or a merger,  consolidation or other business
contributions,  (ii) debt securities that are not convertible into Common Stock;
and (iii)  securities  issuable upon  exercise of warrants  issued to any of the
Holders, Morse Financial Inc. (or any of their successors or assigns), the terms
contained  in  paragraph  2 shall  terminate  and be deemed null and void on the
thirtieth day following such filing.

                                      -3-
<PAGE>

8.       Miscellaneous
         -------------

            (a) Specific Enforcement, Consent to Jurisdiction.

                  (i) The  Company and the  Holders  acknowledge  and agree that
irreparable  damage would occur in the event that any of the  provisions of this
Agreement  were not performed in accordance  with their  specific  terms or were
otherwise breached.  It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce  specifically  the terms and provisions  hereof or
thereof,  this being in addition to any other remedy to which any of them may be
entitled by law or equity.

                  (ii)  Each  of  the   Company   and  the  Holders  (i)  hereby
irrevocably  submit to the  jurisdiction  of the courts of the State of New York
located  in New York  County and the  Federal  District  Court for the  Southern
District of New York for the purposes of any suit, action or proceeding  arising
out of or relating to this Agreement and (ii) hereby  waives,  and agrees not to
assert  in any  such  suit,  action  or  proceeding,  any  claim  that it is not
personally  subject to the jurisdiction of such court,  that the suit, action or
proceeding  is brought in an  inconvenient  forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Holders consent to
process  being served in any such suit,  action or  proceeding by mailing a copy
thereof  to such party at the  address  in effect  for  notices to it under this
Agreement  and agrees that such service  shall  constitute  good and  sufficient
service of process and notice  thereof.  Nothing in this Section shall affect or
limit any right to serve process in any other manner permitted by law.

            (b) Entire Agreement;  Amendment. This Agreement contains the entire
understanding  of the parties  with respect to the matters  covered  hereby and,
except as  specifically  set forth  herein,  neither the Company nor the Holders
make any representations, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by a
written  instrument  signed by the party  against whom  enforcement  of any such
amendment or waiver is sought.

            (c)  Notices.  Any  notice,   demand,   request,   waiver  or  other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received),  telecopy or facsimile at the address or number  designated below (if
delivered on a business day during normal business hours where such notice is to
be received),  or the first  business day following  such delivery (if delivered
other than on a business day during normal  business  hours where such notice is
to be received) or (b) on the second  business day following the date of mailing
by express courier service,  fully prepaid,  addressed to such address,  or upon
actual receipt of such mailing,  whichever shall first occur.  The addresses for
such communications shall be:

                                      -4-
<PAGE>

If to the Company:                  American Jewelry Corp.
                                    131 West 35th Street
                                    New York, NY 10001
                                    Attention:  Isaac Nussen
                                    Telephone: 212-736-0880
                                    Fax: 212-736-1190

with copies to:                     Jenkens & Gilchrist Parker Chapin LLP
                                    The Chrysler Building
                                    405 Lexington Avenue
                                    New York, NY 10174
                                    Attention:  Mitchell S. Nussbaum, Esq,
                                    Telephone:  212-704-6000
                                    Fax:  212-704-6288

If to the Holders:                  Zane and Rudofsky
                                    152 West 57th Street, 7th Floor
                                    New York, New York 10019
                                    Attention:  James B. Zane, Esq.
                                    Telephone: 212-245-2222
                                    Fax:  212-541-5555

         Any party  hereto may from time to time  change its address for notices
by giving at least ten (10) days written  notice of such changed  address to the
other party hereto.

            (d)  Waivers.  No waiver by either party of any default with respect
to any provision,  condition or requirement of this Agreement shall be deemed to
be a  continuing  waiver in the  future  or a waiver  of any  other  provisions,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.

            (e) Headings.  The article,  section and subsection headings in this
Agreement  are for  convenience  only and  shall not  constitute  a part of this
Agreement  for any other  purpose and shall not be deemed to limit or affect any
of the provisions hereof.

            (f) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns;  provided,
however,  that the  parties  hereto may not amend this  Agreement  or assign any
rights or obligations hereunder without the prior written consent of the Company
and the Holders.  After the Closing, the assignment by a party to this Agreement
of any rights  hereunder  shall not affect the  obligations  of such party under
this Agreement.

                                      -5-
<PAGE>

            (g) Governing Law. This Agreement shall be governed by and construed
in accordance  with the internal laws of the State of New York,  without  giving
effect to the choice of law provisions.

            (h) Entire  Agreement.  The Company and the Holders  acknowledge and
agree that the Debentures  and this  Agreement  entered into between the Company
and the Holders simultaneously  herewith constitute the entire agreement between
the parties.  The Holders have no liability or responsibility to the Company for
contractual  agreements  with respect to the  Debentures  except as provided for
herein and in the Debentures.

            (i)  Counterparts.  This  Agreement may be executed in any number of
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties  hereto,  it being  understood that all
parties  need not sign the same  counterpart.  In the  event  any  signature  is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall cause four additional executed signature pages to be physically  delivered
to the other parties within five days of the execution and delivery hereof.

            (j) Severability.  In the event that any provision of this Agreement
becomes or is  declared  by a court of  competent  jurisdiction  to be  illegal,
unenforceable  or void,  this Agreement  shall continue in full force and effect
without said provision;  provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party.

            IN WITNESS  WHEREOF,  this  Agreement  has been duly executed by the
parties as of the date first written above.

                                         AMERICAN JEWELRY CORP.

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                      -6-

<PAGE>

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                      -7-THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE  COMMISSION 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.

                             AMERICAN JEWELRY CORP.
                                formerly known as
                           United Ventures Group, Inc.
                     (Incorporated in the State of Delaware)

                        8% CONVERTIBLE DEBENTURE DUE 2003

No. CD-_____                                   Principal Amount U.S. $_________
                                                    Issue Date: March __, 2001

      FOR  VALUE   RECEIVED,   American   Jewelry  Corp.,  a  corporation   duly
incorporated  and  existing  under  the  laws  of the  State  of  Delaware  (the
"Company"),     hereby     promises     to    pay    to     the     order     of
_____________________________,   or   registered   assigns   (hereinafter,   the
"Holder"),  the  principal sum of  ______________________________  United States
Dollars  ($__________)  on April 25,  2003 (the  "Maturity  Date"),  subject  to
earlier  conversion or redemption as provided  herein.  The  Debentures  will be
convertible into common stock,  $.001 per share, of the Company ("Common Stock")
on the terms and  subject to the  conditions  hereinafter  set forth at any time
after the date hereof. Interest shall be paid on the unpaid principal balance of
this Debenture at the rate of 8% per annum from the date hereof, payable, in the
manner  set  forth  below,  upon  conversion,  redemption  or  maturity  of this
Debenture  to the person that is the Holder on the date of such event.  Interest
hereon shall be calculated  on the basis of a 360-day year  consisting of twelve
30-day months.

     1. General. (a) This debenture is one of a duly authorized issue of
Debentures of the Company in original aggregate principal amount of $1,000,000
designated as its 8% Convertible Debentures due 2002 (herein called the
"Debentures"), issued pursuant to the authorization of the Board of Directors of
the Company and issued pursuant to a Securities Purchase Agreement, dated April
26, 1999, by and among the Company and the Purchasers identified therein (the
"Securities Purchase Agreement"). The Debentures were sold to the Holder, among
others, pursuant to an Agreement dated March 20, 2001, by and between the
Purchasers and the Holder, among others. The terms of the Debentures were
amended and restated pursuant to the authorization of the Board of Directors of
the Company on February 21, 2001.

     (b) The Debentures are issuable, without coupons, in principal
denominations of U.S. $10,000 and integral multiples thereof. The Debentures,
and transfers thereof, shall be in registered form as provided in Section 4
hereof. The registered holder of a Debenture shall (to the fullest extent
permitted by applicable law) be treated at all times, by all persons and for all

<PAGE>

purposes as the absolute owner of such Debenture, regardless of any notice of
ownership, theft or loss or of any writing thereon.

     2. Principal Payment. Payment of the principal of this Debenture shall be
made at the Maturity Date upon presentation of this Debenture at the Company's
principal office or surrender upon payment in full. The Company may prepay all
or any portion of this Debenture.

     3. Interest. Each Debenture shall be entitled to receive cumulative
interest at the rate of 8% per annum, compounded semi-annually, payable in
shares of Common Stock, on the principal amount thereof. Such interest shall be
due and payable upon conversion, redemption or Maturity of this Debenture.
Interest shall accrue from the Original Issue Date (as defined herein), whether
or not earned or declared, until maturity or such time as the Debenture has been
converted or redeemed as herein provided. The interest so payable will be paid
to the person in whose name the Debentures (or one or more predecessor
debentures) are registered on the records of the Company regarding registration
and transfers of the Debentures; provided, however, that the Company's
obligation to a transferee of a Debenture arises only if such transfer, sale or
other disposition is made in accordance with the terms and conditions hereof.

     4. Transfers. The Debentures have been issued subject to investment
representations of the original purchaser and may be transferred or exchanged
only in compliance with the Securities Act of 1933, as amended, and applicable
state securities laws. Prior to due presentment for transfer of each Debenture,
the Company may treat the Holder as the owner thereof for the purpose of
receiving payments as herein provided and all other purposes, and the Company
shall not be affected by any notice to the contrary.

     5. Conversion at the Option of the Holder . (a) (i) The Debentures shall be
convertible in increments of not less than $10,000 principal amount into shares
of Common Stock at the option of the Holder in whole or in part at any time
after the Original Issue Date. The Holders shall effect conversions by
surrendering the Debentures to be converted to the Company, together with the
form of conversion notice attached hereto as Exhibit 1 (the "Conversion
Notice"). The Conversion Notice may be delivered by facsimile, with the
Debenture to follow within three Trading Days. Each Conversion Notice shall
specify the principal amount of Debentures to be converted. The date as of which
such conversion is to be effected shall be the date the Holder delivers such
Conversion Notice by facsimile (the "Conversion Date") (if such date is not a
Business Day, then the Conversion Date will be the next following Business Day).
Subject to Sections 5(a)(ii) and 5(b) hereof, each Conversion Notice, once
given, shall be irrevocable. If the Holder is converting less than all of the
principal amount represented by the Debenture tendered by the Holder with the
Conversion Notice, or if a conversion hereunder cannot be effected in full for
any reason, the Company shall promptly deliver to such Holder, at the expense of
the Company (in the manner and within the time set forth in Section 5(b)), a new
Debenture representing the unconverted principal amount, to the same extent as
if the Debenture theretofore representing such unconverted principal amount had
not been surrendered on conversion.

          (ii) If on the Conversion Date applicable to any Conversion, (A) the
     Common Stock is then listed for trading on the Nasdaq National Market, the
     New York Stock Exchange, the American Stock Exchange or The Nasdaq Small
     Cap Market, (B) the

                                      -2-
<PAGE>

     Conversion Price then in effect is such that the aggregate number of shares
     of Common Stock that would then be issuable upon conversion of all the
     outstanding Debentures, together with any shares of Common Stock previously
     issued upon conversion of Debentures, would equal or exceed 20% of the
     number of shares of Common Stock outstanding on the Original Issue Date
     (the "Issuable Maximum"), and (C) the Company has not previously obtained
     (or attempted pursuant to clause (i) of this subsection to obtain)
     Shareholder Approval (as defined below), then the Company shall issue to
     any Holder so requesting conversion of Debentures its pro rata portion of
     the Issuable Maximum in the same ratio that the principal amount of
     Debentures then outstanding and, with respect to the aggregate principal
     amount of the Debentures that remains outstanding after such issuance (the
     "Remaining Principal Amount"), the Company shall at the Holder's request,
     (x) as promptly as possible but in no event later than 60 days after such
     Conversion Date, convene a meeting of the holders of the Common Stock and
     use its best efforts to obtain the Shareholder Approval or a waiver of such
     approval from the appropriate exchange and (y) as promptly as possible from
     time to time, after a written request by the Holder, issue shares of Common
     Stock at a Conversion Price equal to the Per Share Market Value on the
     Trading Day immediately preceding the date of such request for all or a
     portion of Remaining Principal Amount (plus any accrued interest thereon)
     held by such Holder (whether or not subject to the Conversion Notice
     specified above). "Shareholder Approval" means the approval by a majority
     of the total votes cast on the proposal, in person or by proxy, at a
     meeting of the shareholders of the Company held in accordance with the
     Company's certificate of incorporation and by-laws, of the issuance by the
     Company of shares of Common Stock exceeding the Issuable Maximum as a
     consequence of the conversion of the Debentures into Common Stock at a
     price less than the greater of the book or market value on the Original
     Issue Date.

          (iii) In no event shall a Holder be permitted to convert in excess of
     such principal amount of Debentures upon the conversion of which, (x) the
     number of shares of Common Stock owned by such Holder (other than shares of
     Common Stock issuable upon conversion of Debentures or upon exercise of the
     Warrants (as defined in the Securities Purchase Agreement) plus (y) the
     number of shares of Common Stock issuable upon such conversion of such
     Debentures, would be equal to or exceed (z) 9.999% of the number of shares
     of Common Stock then issued and outstanding, including shares issuable on
     conversion of the Debentures held by such Holder after application of this
     Section 5(a)(iii), to the extent that the limitation contained in this
     Section 5(a)(iii) applies, the determination of whether Debentures are
     convertible (in relation to other securities owned by a Holder) and of
     which Debentures are convertible shall be in the sole discretion of such
     Holder, and the submission of Debentures for conversion shall be deemed to
     be such Holder's determination of whether such Debentures are convertible
     (in relation to other securities owned by a Holder) and of which Debentures
     are convertible, in each case subject to such aggregate percentage
     limitation, and the Company shall have no obligation to verify or confirm
     the accuracy of such determination. Nothing contained herein shall be
     deemed to restrict the right of a Holder to convert such Debentures at such
     time as such conversion will not violate the provisions of this paragraph.
     The provisions of this Section 5(a)(iii) may be waived by a Holder of
     Debentures as to itself (and solely as to itself) upon not less than 60
     days prior notice to the Company, and the provisions of this Section
     5(a)(iii) shall continue to apply until such 60th day (or later, if stated
     in the

                                      -3-
<PAGE>

     notice of waiver). No conversion in violation of this paragraph but
     otherwise in accordance with this Debenture shall affect the status of the
     securities issued upon such conversion as validly issued, fully-paid and
     non-assessable.

     (b) (i) Not later than three (3) Trading Days after any Conversion Date,
provided that the Conversion Notice and Debentures have been delivered in
accordance with Section 5(a)(i), the Company will deliver to the applicable
Holder by express courier (A) a certificate or certificates representing the
number of shares of Common Stock being acquired upon the conversion of
Debentures bearing a restrictive legend from resale under the Securities Act of
1933, as amended, and (B) a new Debenture representing the unconverted principal
amount. If in the case of any Conversion Notice such new Debenture or Debentures
are not delivered to or as directed by the applicable Holder by the Seventh
Trading Day after the Conversion Date (the "Delivery Date"), the holder shall be
entitled by written notice to the Company at any time on or before its receipt
of such Debenture or Debentures thereafter, to rescind such conversion, in which
event the Company shall immediately return the Debentures tendered for
conversion, whereupon the Company and the Holder shall each be restored to their
respective positions immediately prior to the delivery of such notice of
revocation, except that any amounts described in Section 5(b)(ii) shall be
payable through the date notice of recision is given to the Company.

          (ii) The Company understands that a delay in the delivery of the
     shares of Common Stock upon conversion of Debentures and failure to deliver
     a new Debenture representing the unconverted principal amount beyond the
     Delivery Date could result in economic loss to the Holder. If the Company
     fails to deliver to the Holder such certificate other than due to the
     action of the Holder, the Company shall pay to such Holder, in cash an
     amount per Trading Day for each Trading Day until such certificates are
     delivered together with interest on such amount at a rate of 15% per annum,
     accruing until such amount and any accrued interest thereon is paid in
     full, equal to .5% of the aggregate remaining principal amount of the
     Debentures, plus the accrued and unpaid interest thereon, requested to be
     converted for the first eight Trading Days after the Delivery Date.

          (iii) Intentionally Omitted.

     (c) (i) The Conversion Price for the Debentures on the Conversion Date
shall be the lower of (i) 92% of the average of the closing sale price of the
Company's Common Stock for the five trading days prior to the Conversion Date,
or (ii) $0.015, subject to adjustment as provided below (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 security
     payable in shares of Common Stock, (b) subdivide outstanding shares of
     Common Stock into a larger number of shares, (c) combine outstanding shares
     of Common Stock into a smaller number of shares, or (d) issue by
     reclassification of shares of Common Stock any shares of capital stock of
     the Company, the 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)

                                      -4-
<PAGE>

     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 5(c)(ii) shall become effective
     immediately after the record date for the determination of shareholders
     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 Debentures are outstanding,
     shall sell or issue additional shares of Common Stock or rights or warrants
     to acquire shares of Common Stock at a price per share less than the
     Conversion Price, excluding any rights of the holder of the Debenture to
     acquire Common Stock, the Conversion Price shall be multiplied by a
     fraction, of which the denominator shall be the number of shares of Common
     Stock (excluding treasury shares, if any) outstanding on the date of
     issuance of such shares, 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 Common Stock (excluding
     treasury shares, if any) outstanding on the date of issuance of such
     shares, 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 Conversion Price. Any adjustment to be made pursuant to this paragraph
     shall be made whenever such shares, rights or warrants are issued, and
     shall become effective immediately after the issuance of such shares,
     rights or warrants or, if such rights or warrants are issued to
     shareholders of the Company, the record date for the determination of
     shareholders entitled to receive such rights or warrants. However, upon the
     expiration of any right or warrant to purchase Common Stock the issuance of
     which resulted in an adjustment in the Conversion Price pursuant to this
     Section 5(c)(iii), if any such rights or warrant shall expire and shall not
     have been exercised, the Conversion Price shall immediately upon such
     expiration be re-computed 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 5 after the issuance of such rights or warrants) had the adjustment
     of the Conversion Price made upon the issuance of such rights or warrants
     been made on the basis of offering for subscription or purchase only that
     number of shares of Common Stock actually purchased upon the exercise of
     such rights or warrants actually exercised.

          (iv) If the Company, at any time while Debentures are outstanding,
     shall distribute to all holders of Common Stock (and not to holders of
     Debentures) evidences of its indebtedness or assets or rights or warrants
     to subscribe for or purchase any security (excluding those referred to in
     Sections 5(c)(ii) and (iii) above), then in each such case the Conversion
     Price shall be multiplied by a fraction of which the denominator shall be
     the Per Share Market Value determined as of the record date fixed for
     determination of shareholders entitled to receive such distribution, and of
     which the numerator shall be such Per Share Market Value 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 Common Stock as determined by the Board of Directors
     in good faith; provided, however, that in the event of a distribution
     exceeding ten percent of the net assets of the Company, such fair market
     value shall be determined by an Independent Appraiser (as defined below)
     selected in good faith by the holders of a

                                      -5-
<PAGE>

     majority in interest of the principal amount of the Debentures then
     outstanding; and provided, further, that the Company, after receipt of the
     determination by such Independent Appraiser, shall have the right to select
     an additional Independent Appraiser, in good faith, in which case the fair
     market value shall be equal to the average of the determinations by each
     such Independent Appraiser. In either case the adjustments shall be
     described in a statement provided to the holders of Debentures of the
     portion of assets or evidences of indebtedness so distributed or such
     subscription rights applicable to one share of Common Stock. Such
     adjustment shall be made whenever any such distribution is made and shall
     become effective immediately after the record date mentioned above.

          (v) All calculations under this Section 5 shall be made to the nearest
     cent or the nearest l/100 of a share, as the case may be.

          (vi) Whenever the Conversion Price is adjusted pursuant to Section
     5(c)(ii), (iii) or (iv) (for purposes of this Section 5(c)(vi), each an
     "adjustment"), the Company shall cause its Chief Financial Officer to
     prepare and execute a certificate setting forth, in reasonable detail, the
     event requiring the adjustment, the amount of the adjustment, the method by
     which such adjustment was calculated (including a description of the basis
     on which the Board made any determination hereunder), and the Conversion
     Price after giving effect to such adjustment, and shall cause copies of
     such certificate to be delivered to each Holder promptly after each
     adjustment. Any dispute between the Company and the Holders with respect to
     the matters set forth in such certificate may at the option of the Holders
     be submitted to one of the national accounting firms currently known as the
     "big five" selected by the holders of a majority in interest of the
     principal amount of the Debentures then outstanding, provided that the
     Company shall have ten days after receipt of notice from such Holders of
     their selection of such firm to object thereto, in which case the holders
     of a majority in interest of the principal amount of the Debentures then
     outstanding shall select another such firm and the Company shall have no
     such right of objection. The firm selected by the holders of a majority in
     interest of the principal amount of the Debentures then outstanding as
     provided in the preceding sentence shall be instructed to deliver a written
     opinion as to such matters to the Company and the Holders within thirty
     days after submission to it of such dispute. Such opinion shall be final
     and binding on the parties hereto. The fees and expenses of such accounting
     firm shall be paid by the Company.

          (vii) In case the Company after the Original Issue Date shall do any
     of the following (each, a "Triggering Event") (a) consolidate with or merge
     into any other person and the Company shall not be the continuing or
     surviving corporation of such consolidation or merger, or (b) permit any
     other person to consolidate with or merge into the Company and the Company
     shall be the continuing or surviving person but, in connection with such
     consolidation or merger, any capital stock of the Company shall be changed
     into or exchanged for securities of any other person or cash or any other
     property, or (c) transfer all or substantially all of its properties or
     assets to any other person, or (d) effect a capital reorganization or
     reclassification of its capital stock, the holders of the Debentures then
     outstanding shall have the right thereafter to convey such shares only 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 Triggering

                                      -6-
<PAGE>

     Event, 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 such Debentures could have been
     converted immediately prior to such Triggering Event would have been
     entitled; provided, however, that each Holder shall have the option to
     require the Company to redeem, from funds legally available therefor at the
     time of such redemption, such principal amount of its Debentures at a price
     equal to the aggregate principal amount of Debentures to be redeemed, plus
     accrued and unpaid interest thereon, (i) multiplied by the average Per
     Share Market Value for the five Trading Days immediately preceding (1) the
     effective date, the date of the closing or the date of the announcement, as
     the case may be, of the Triggering Event triggering such redemption right
     or (2) the date of payment in full by the Company of the redemption price
     hereunder, whichever is greater, and (ii) divided by the Conversion Price
     calculated on the date of the closing or the effective date, as the case
     may be, of the Triggering Event triggering such redemption right, as the
     case may be. The entire redemption price shall be paid in cash. If the
     Holder has requested that the Company redeem Debentures pursuant to this
     Section and the Company fails for any reason to pay the redemption price,
     as calculated pursuant to the immediately preceding sentence, within seven
     days after such notice is deemed delivered pursuant to the preceding
     sentence, the Company will pay interest on the redemption price at a rate
     of 15% per annum, in cash to such Holder, accruing from such seventh day
     until the redemption price and any accrued interest thereon is paid in full
     (which amount shall be paid as liquidated damages and not as a penalty).
     The terms of any such Triggering Event shall include such terms so as to
     continue to give to the holder of Debentures the right to receive the
     securities, cash or property set forth in this Section 5(c) (vii) upon any
     conversion or redemption following such Triggering Event. This provision
     shall similarly apply to successive Triggering Events. Notwithstanding the
     foregoing, if such Triggering Event is a merger in which the Company is the
     surviving corporation and there has been no Change of Control of the
     Company and provided the Company obtained the prior written consent to such
     Triggering Event of each of the Holders, which consent will not be
     unreasonably withheld, then the Holders will not have the right in the case
     of such Triggering Event to require the Company to redeem the Debentures as
     provided above in this Section 5(c) (vii).

          (viii) If:

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

               B.   the  Company  shall  declare  a  special  nonrecurring  cash
                    dividend on or a redemption of its Common Stock; or

               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; or

               D.   the  approval of any  shareholders  of the Company  shall be
                    required in connection with any Triggering Event; or

                                      -7-
<PAGE>

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

then the Company shall cause to be filed at each office or agency maintained for
the purpose of  conversion  of  Debentures,  and shall cause to be mailed to the
Holders of  Debentures  at their last  addresses  as they shall  appear upon the
stock books of the Company,  at least 30 calendar  days prior to the  applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the  purpose of such  dividend,  distribution,
redemption.  rights or warrants,  or if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such  dividend,
distributions;  redemption,  rights or warrants are to be  determined or (y) the
date on which such  reclassification,  consolidation,  merger, sale, transfer or
share  exchange  is expected to become  effective  or close,  and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange  their shares of Common Stock for  securities,  cash or other  property
deliverable upon such reclassification, consolidation. merger, sale, transfer or
share exchange;  provided.  however, that the failure to mail such notice or any
defect  therein or in the mailing  thereof  shall not affect the validity of the
corporate  action required to be specified in such notice.  Holders are entitled
to  convert  Debentures  during the 30-day  period  commencing  the date of such
notice to the effective date of the event triggering such notice.

     (d) Intentionally Omitted.

     (e) The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued Common Stock solely for the purpose
of issuance upon conversion of Debentures free from preemptive rights or any
other actual contingent purchase rights of persons other than the holders of
Debentures, not less than such number of shares of Common Stock as shall be
issuable (taking into account the adjustments and restrictions of Section 5(c) )
upon the conversion of all outstanding Debentures. 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, non-assessable and freely
tradable.

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

     (g) The issuance of certificates for shares of Common Stock on conversion
of 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.

     (h) Debentures converted into Common Stock shall be canceled and retired by
the Company.

                                      -8-
<PAGE>

     (i) Any and all notices or other communications or deliveries to be
provided by the holders of Debentures hereunder, including, without limitation,
any Conversion Notice, shall be in writing and delivered personally, by
facsimile or sent by a nationally recognized overnight courier service,
addressed to the attention of the President and to the Secretary of the Company
at the facsimile telephone number or address of the principal place of business
of the Company as set forth in the Securities Purchase Agreement. 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 or sent by
a nationally recognized overnight courier service, addressed to each Holder of
Debentures 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
earlier 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 5: 00 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 5: 00 p. m.,
New York City time, on any date and earlier than 11: 59 p. m., New York City
time, on such date, (iii) receipt, if sent by a nationally recognized overnight
courier service, or (iv) actual receipt by the party to whom such notice is
required to be given.

     (c) In the event a Holder shall elect to convert any Debentures as provided
herein, the Company cannot refuse conversion based on any claim that such Holder
or any one associated or affiliated with such Holder has been engaged in any
violation of law, unless, an injunction from a court, on notice, restraining
and/or adjoining conversion of all or of said Debentures shall have issued and
the Company posts a surety bond for the benefit of such Holder in the amount of
the principal amount of Debentures sought to be converted, which bond shall
remain in effect until the completion of arbitration/litigation of the dispute
and the proceeds of which shall be payable to such Holder in the event it
obtains judgment.

     6. Automatic Conversion. If on the Maturity Date any Debentures remain
outstanding, then such outstanding aggregate principal amount of Debentures plus
accrued interest shall automatically convert into shares of Common Stock at the
applicable Conversion Price, in accordance with this Section 6 (such date being
referred to herein as the "Automatic Conversion Date".

     (a) The Company will send each Holder written notice of any Automatic
Conversion Date and the place designated for automatic conversion of the
Debentures pursuant to this

     (b) All Debentures that are required to be surrendered for conversion in
accordance with the provisions hereof shall, from and after the Automatic
Conversion Date, be deemed to have been retired and canceled and the principal
amount of Debentures represented thereby converted into Common Stock for all
purposes, notwithstanding the failure of the Holder to surrender such Debentures
on or prior to such date.

                                      -9-
<PAGE>

     7. Events of Default.

     Each of the following shall constitute an event of default ("Event of
Default"), whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
administrative, governmental or non-governmental body or otherwise howsoever:

     (a) the Company shall default in any payment of any principal amounts due
when and as due (whether at maturity, upon acceleration or otherwise) ; or

     (b) the Company shall fail duly to perform or observe any term, covenant or
agreement contained in any of the Debentures for a period of seven days after
the date on which written notice of such failure shall first have been given to
the Company; or

     (c) (i) a final judgment shall be entered by any court against the Company
for the payment of money which together with all other outstanding final
judgments against the Company exceeds $1,000,000 in the aggregate, or (ii) a
warrant of attachment or execution or similar process shall be issued or levied
against any of the Company's property which exceeds in value $250,000 in the
aggregate, and if, within 30 days after the entry, issue or levy thereof, such
judgment, warrant or process shall not have been paid or discharged; or

     (d) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Company in an involuntary case or proceeding
under any applicable bankruptcy, insolvency, reorganization or other similar law
now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian trustee, sequestrator (or similar official) of the Company or for any
substantial part of the property of it or ordering the winding-up or liquidation
of the affairs of it and such decree or order shall remain unstayed and in
effect for a period of 30 days; or

     (e) the Company shall commence a voluntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of the Company or for any substantial part of
its property, or shall make any general assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts as they become due or
shall take any corporate action in furtherance of any of the foregoing; or

     (f) an event of default, as defined in any indenture or instrument
evidencing or under which the Company shall have outstanding indebtedness for
borrowed money in excess of $1,000,000, inclusive of accrued interest, accrued
premium, if any, or any additional amounts payable, shall happen and be
continuing and such default shall involve the failure to pay the principal of
such indebtedness (or any part thereof), when due and payable after the
expiration of any applicable grace period with respect thereto, or such
indebtedness shall have been accelerated so that the same shall be or become due
and payable prior to the date on which the same would otherwise have become due
and payable, and failure to pay shall not have been cured by the Company within
30 days after such failure or such acceleration shall not be

                                      -10-
<PAGE>

rescinded or annulled within 30 days after notice thereof shall have first been
given to the Company; provided that if such event of default under such
indenture or instrument shall be remedied or cured by the Company or waived by
the holders of such indebtedness, then the Event of Default hereunder by reason
thereof shall be deemed likewise to have been thereupon remedied, cured or
waived without further action upon the part of any of the holders of Debentures;
or

     (g) trading in the Common Stock shall have been suspended for more than ten
Trading Days on the OTC Bulletin Board or the Common Stock is delisted from any
principal market or exchange on which the Common Stock is then listed for
trading; or

     (h) the Company fails to timely deliver the shares of Common Stock to the
Holder or a replacement Debenture representing any unconverted portion of this
Debenture pursuant to this Debenture;

With the exception of an Event of Default specified in clauses (d) or (e) above,
upon the  occurrence  and  continuance  of an Event of  Default,  the Holder may
declare the  principal of and interest on the  Debentures  and all other amounts
owing under the Transaction  Documents to be forthwith due and payable by giving
written notice thereof to the Company without  presentment,  demand,  protest or
other notice of any kind, all of which are hereby expressly waived,  anything in
the Transaction Documents to the contrary  notwithstanding.  Upon the occurrence
and  continuance  of an Event of Default  specified in clauses (d) or (e) above,
such  principal,  interest and other  amounts shall  thereupon and  concurrently
therewith  become  automatically  due and  payable all without any action by the
Holder and without presentment, demand, protest or other notice of any kind, all
of which are  expressly  waived,  anything in the  Transaction  Documents to the
contrary notwithstanding.

Interest on overdue  principal  and interest (and other  amounts,  if any) shall
accrue from the date on which such principal and interest (and other amounts, if
any) were due and payable to the date such  principal  and  interest  (and other
amounts,  if any) are paid or duly  provided for, at a rate of 15% per annum (to
the extent payment of such interest shall be legally enforceable).

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

     "Change of Control" means the acquisition by an individual or legal entity
or "group" (as described in Rule 13d5(b)(1) promulgated under the Securities
Exchange Act of 1933, as amended) of in excess of 50% of the voting securities
of the Company or the replacement of more than one-half of the members of the
Board of Directors of the Company that is not approved by those individuals who
are members of the Board of Directors prior to the Triggering Event.

     "Common Stock" means the common stock, $.001 par value per share, of the
Company and stock of any other class into which such shares may hereafter have
been reclassified or changed.

     "Conversion Ratio" means the number of shares of Common Stock issuable upon
conversion of each Debenture determined by the application of the following
formula where "D"

                                      -11-
<PAGE>

equals the accrued and unpaid interest on the aggregate principal amount of
Debentures so converted as of the Conversion Date:

                      Principal Amount to be Converted +D
                      -----------------------------------
                      Conversion Price

     "Independent Appraiser" means a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements of the Company) that is regularly engaged in the business of
appraising the capital stock or assets of corporations or other entities as
going concerns, and which is not affiliated with either the Company or any
Holder.

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

     "Per Share Market Value" means on any particular date (a) the closing bid
price per share of the Common Stock on such date on The Nasdaq Small-Cap Market,
the Nasdaq National Market or other registered national stock exchange on which
the Common Stock is then listed or if there is no such price on such date, then
the closing bid price on such exchange or quotation system on the date nearest
preceding such date, or (b) if the Common Stock is not listed then on The Nasdaq
Small-Cap Market, the Nasdaq National Market or any registered national stock
exchange, the closing bid price for a share of Common Stock in the
over-the-counter market. as reported by NASDAQ or in 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 Common Stock is 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 over-the-counter quotes on the
Electronic Bulletin Board of the National Association of Securities Dealers,
Inc. for the relevant conversion period, as determined in good faith by the
holder, or (d) if the Common Stock is not then publicly traded, then the fair
market value of a share of Common Stock as determined by an Independent
Appraiser selected in good faith by the holders of a majority in interest of the
shares of the Debentures; provided, however, that the Company, after receipt of
the determination by such Independent Appraiser, shall have the right to select
an additional Independent Appraiser, in which case, the fair market value shall
be equal to the average of the determinations by each such Independent
Appraiser; and provided, further that all determinations of the Per Share Market
Value shall be appropriately adjusted for any stock dividends, stock splits or
other similar transactions during such period. The determination of fair market
value by an Independent Appraiser shall be based upon the fair market value of
the Company determined on a going concern basis as between a willing buyer and a
willing seller and taking into account all relevant factors determinative of
value, and shall be final and binding on all parties. In determining the fair
market value of any shares of Common Stock, no consideration shall be given to
any restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.

     "Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company. government (or an agency or subdivision thereof)
or other entity of any kind.

                                      -12-
<PAGE>

     "Trading Day" means (a) a day on which the Common Stock is traded on The
Nasdaq Small-Cap Market, the Nasdaq National Market or other registered national
stock exchange on which the Common Stock has been listed, or (b) if the Common
Stock is not listed on The Nasdaq Small-Cap Market, the Nasdaq National Market
or any registered national stock exchange, a day or which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or
(c) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which
the Common Stock is 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, however, that in the
event that the Common Stock is 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.

     "Underlying Shares" means the number of shares of Common Stock into which
the Debentures are convertible in accordance with the terms hereof and the
Securities Purchase Agreement.

     9. The Taxes. Company shall pay any and all taxes attributable to the
issuance and delivery of Common Stock or other securities upon conversion of the
Debentures.

     10. No Impairment. The Company shall not by any action including, without
limitation, amending the articles of incorporation or the by-laws of the
Company, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this
Debenture, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder hereof against dilution (to the
extent specifically provided herein) or impairment. Without limiting the
generality of the foregoing, the Company will (i) not permit the par value, if
any, of its Common Stock to exceed the then effective Conversion Price, (ii) not
amend or modify any provision of the articles of incorporation or by-laws of the
Company in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of the
Common Stock or which would adversely affect the rights of the Holders of the
Debentures, (iii) take all such action as may be reasonably necessary in order
that the Company may validly and legally issue fully paid and non-assessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this
Debentures, and (iv) use its best efforts to obtain all such authorizations.
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be reasonably necessary to enable the Company to perform its
obligations under this Debenture.

     11. Governing Law. The Debentures shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts of law.

     12. Countersignature and Registration. This Debenture shall not become
valid or obligatory for any purpose until the Debentures shall have been duly
executed by the Company and such signature attested to by an authorized Officer
thereof.

                                      -13-
<PAGE>

     13. Warranty of the Company. The Company hereby certifies and warrants that
all acts, conditions and things required to be done and performed and to have
happened precedent to the creation and issuance of this Debenture, and to
constitute the same as legal, valid and binding obligations of the Company
enforceable in accordance with their terms, have been done and performed and
have happened in due and strict compliance with all applicable laws.

     14. Descriptive Headings. The descriptive headings appearing herein are for
convenience of reference only and shall not alter, limit or define the
provisions hereof.

     IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed in its corporate name by the manual or facsimile signature of a duly
authorized signator), as attested to by another duly authorized signatory of the
Company.

Dated: March __, 2001

                                    AMERICAN JEWELRY CORP.

                                    By:
                                       ---------------------------------------
                                       Name:
                                       Title:

ATTEST:

By:
   ---------------------------
   Name:
   Title:

                                      -14-
<PAGE>

EXHIBIT 1

CONVERSION NOTICE

Reference is made to the debenture certificate (the "Debenture  Certificate") of
American Jewelry Corp., a Delaware  corporation  (the "Company").  In accordance
with and pursuant to the Debenture Certificate, the undersigned hereby elects to
have the Company convert the principal  amount of the 8% Convertible  Debentures
due (the  "Debentures"),  of the Company,  indicated below into shares of Common
Stock, no par value per share (the "Common Stock"). of the Company, by tendering
the  certificate(s)  representing the Debentures  specified below as of the date
specified below.

     Date of Conversion:                                ------------------------

     Principal amount of Debentures to be converted:    ------------------------

     Certificate no(s). of Debentures to be converted:  ------------------------

Please confirm the following information:

     Conversion Price:                                  ------------------------

Please issue the Common Stock and, if applicable,  any check drawn on an account
of the Company into which the  Debentures  are being  converted in the following
name and to the following address:

     Issue to:                                         -------------------------
                                                       -------------------------
                                                       -------------------------
                                                       -------------------------

     Facsimile Number:                                 -------------------------

     Authorization:                                    -------------------------
                                                       By:----------------------
                                                       Title:-------------------

     Dated:                                            -------------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}]]