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[Amend] Optional form for annual and transition reports of small business issuers [Section 13 or 15(d), not S-B Item 405]

10KSB/A

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 10-KSB/A (Amendment No. 1) [X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934. For the fiscal year ended December 31, 2002 OR [ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from _________ to ___________ Commission File Number 001-15673 FRONTLINE COMMUNICATIONS CORPORATION ---------------------------------------------- (Name of Small Business Issuer in Its Charter) Delaware 13-3950283 -------------------------------- ------------------- (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) One Blue Hill Plaza, P.O. Box 1548, Pearl River, New York 10965 - --------------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (845) 623-8553 ------------------------------------------------ (Issuer's Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Exchange Act: Title of each class Name of each exchange on which registered - ------------------------------- ----------------------------------------- Series B Convertible Redeemable American Stock Exchange Preferred Stock, $.01 par value Common Stock, $.01 par value American Stock Exchange Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock Purchase Warrants Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

The issuer's revenues for the year ended December 31, 2002 were $5,047,098. The aggregate market value of the voting and non-voting common equity held by non-affiliates as of April 3, 2003 was $1,808,932. As of April 3, 2003, there were 10,169,972 shares of the issuer's Common Stock outstanding. Documents Incorporated by Reference: None.

PART I Item 1. Business. Overview Frontline Communications Corporation is a regional Internet service provider ("ISP") providing Internet access, web hosting, website design, and related services to residential and small business customers throughout the Northeast United States and, through a network partnership agreement, Internet access to customers nationwide. Primarily through 18 acquisitions, we grew our monthly revenue from $30,000 as of October 1998 to approximately $400,000 per month at December 31, 2002. During that same period, we expanded our owned Internet access geographic footprint from the New York/New Jersey metropolitan area, to a region that now includes Delaware, Eastern Pennsylvania, and Northern Virginia. At December 31, 2002, we owned and operated eight points-of-presence ("POPs") which, when combined with 1,100 POPs licensed from third parties, provide us with the capability to serve over 75% of the U.S. population. During year 2002, we concentrated our efforts and resources primarily on restructuring our operations to reduce costs, increasing operating efficiency and improving customer service. As a result of our restructuring, we reduced our staff from approximately 70 employees at March 2001 to 31 as of March 31, 2003, and closed two regional offices, consolidating those functions into our Pearl River, New York headquarters. We also streamlined our product offerings in 2002, eliminating certain low margin products and services, and added a broadband one-way satellite Internet access product line to our group of services. We also standardized our product pricing, and raised the monthly rates to most of our dial-up access customers to between $17.95 and $19.95 per month, depending on the term of service purchased. Frontline Communications Corporation was formed during February 1997 as a Delaware corporation under the name Easy Street Online, Inc. We changed our name to Frontline Communications Corporation in July 1997. Our principal executive offices are located at One Blue Hill Plaza, Pearl River, New York 10965, and our telephone number is (845) 623-8553. Our corporate websites are located at www.frontline.net and www.fcc.net. PlanetMedia(SM)'s Internet website is located at www.pnetmedia.com. Information on these Websites is not part of this report. Unless the context indicates otherwise, the terms "Frontline", "we," "our," "the Company" and "us" in this report include the operations of Frontline Communications Corporation and its wholly owned subsidiaries, WowFactor, Inc., FNT Communications Corp., Inc. and CLEC Communications Corp. Recent Developments On April 3, 2003, we completed the acquisition of all of the issued and outstanding stock of Proyecciones y Ventas Organizadas, S.A. de C.V., a corporation organized under the laws of the Republic of Mexico ("Provo"). Provo and its subsidiaries are engaged in distribution of prepaid calling card and cellular phone airtime in Mexico. 2

We issued to the two stockholders of Provo (the "Sellers") 220,000 shares of our Series C Convertible Preferred Stock (the "Series C Preferred"). Each share of Series C Preferred automatically converts into 150 shares of our common stock upon receipt of the approval of our stockholders (the "Requisite Approvals") of (i) the issuance of shares of common stock upon conversion of the Series C Preferred (ii) an increase in our authorized common stock to 75 million shares and (iii) a 1 for 1.5 share reverse split of our common stock. As a result, if the Requisite Approvals are obtained, we will issue 33 million shares of common stock (before giving effect to the proposed reverse split) to the Sellers and a change of control of our company will occur. In the event we do not receive the Requisite Approvals on or prior to July 18, 2003 or such later date as agreed to by the holders of a majority of the Series C Preferred, and which date shall be extended for a period of up to 30 days due to the actions or inactions of the Securities and Exchange Commission or American Stock Exchange in connection with the Company seeking the Requisite Approvals (the "Conversion Date"), the Series C Preferred will not convert into common stock and the compensation payable to the Sellers shall be increased by $20,000,000, payable in the form of a Note (the "Acquisition Note"). The increase in the purchase price will be effected as a result of our obligations arising under the Acquisition Note. The Acquisition Note is a $20,000,000 principal amount promissory note we issued to the Sellers in connection with the acquisition, which only takes effect if the Series C Preferred is not converted into common stock on the Conversion Date. The Acquisition Note bears interest at the rate of 8% per annum, is due 15 days after the Conversion Date and is secured by substantially all of our assets including the capital stock of Provo issued to us in the transaction. If the repayment obligations under the Acquisition Note become effective and the Company is not able to repay the Acquisition Note when due and the Sellers foreclose on the shares pledged as collateral then the Sellers will regain control of Provo. Moreover, after a foreclosure the Company may remain obligated to the Sellers if the value of the collateral is insufficient to cover the Company's obligations under the Acquisition Note. Each share of Series C Preferred has a liquidation preference of $.01 per share and ranks senior to our common stock but pari passau to our Series B preferred stock. The holders of Series C Preferred have no voting rights, except (i) as required by law and (ii) the holders of Series C Preferred vote separately as to (a) any amendment, alteration or repeal of the certificate of designation of Series C Preferred if the rights, preferences or privileges of the Series C Preferred are affected and (b) the creation, authorization or issuance by our company of any stock on parity with, or senior to the Series C Preferred as to dividends, liquidation, redemption, conversion, voting or assets, or any increase in the amount of authorized shares of any such stock ("Senior Stock"). In addition, prior to the Conversion Date, we may not do any of the following: (i) authorize any merger or certain other business combination transactions; (ii) take any action which would result in our voluntary or involuntary dissolution or winding-up; (iii) amend, repeal or add any provision to our certificate of incorporation or by-laws if it would materially adversely effect the holders of Series C Preferred; (iv) issue any options, warrants or other securities convertible into or exchangeable for Senior Stock; (v) incur, refinance or amend the terms of any indebtness or any other obligation for the payment of money in an aggregate amount of $1,000,000; or 3

(vi) enter into any agreement for the sale of our securities or any capital financing transaction in which the Company issues capital stock or other securities at per share (or effective per share price) less than $1.50. In connection with the acquisition, we issued an aggregate of 35,500 shares of our Series D Convertible Preferred Stock (the "Series D Preferred") to certain brokers, finders and insiders in accordance with the terms of certain consulting agreements. See Item 12- Certain Relationships and Related Transactions. In April 2003, we borrowed $550,000 from an unaffiliated entity ("Lender") and issued a secured promissory note ("Note") to the lender. The Note bears interest of 14% per annum and is secured by substantially all of our assets. Two of our officers, Mr. Nicko Feinberg and Mr. Stephen J. Cole-Hatchard have pledged shares of our common stock owned by them as additional collateral to the lender. In addition, Mr. Cole-Hatchard has personally guaranteed the repayment of the Note. In connection with the financing, we issued 500,000 shares of our common stock to the lender as additional consideration. The Note is repayable at the earlier of 90 days or upon financing of Provo's accounts receivable. Out of the proceeds, we used $200,000 to settle a promissory note, issued as part of a business acquisition, in the principal amount of $728,600. The balance of the $728,600 promissory note was repaid through issuance of 375,000 shares of our common stock to the promissory note holders. Provo's Business Provo was formed in 1995 as a private company with headquarters in Mexico City. Its primary business is the sale and distribution of prepaid Latadel public calling cards for Telmex, the dominant telecommunications provider in Mexico. Provo is also engaged in the sale and distribution of Multifon prepaid landline telephone time provided by Telmex and prepaid digital PCS cellular airtime provided by TelCel. TelCel is the dominant provider of cellular airtime in Mexico. Sales of Provo's pre-paid calling cards account for approximately 10% of all such sales in Mexico. Provo distributes its products through a network of approximately 60 independently-owned distributorships that collectively employ more than 400 sales people. Provo also employs its own in-house sales staff. Provo and its distributors have established a distribution network that includes over 20,000 point-of-sale locations. Provo competes with approximately 40 other distributors who also wholesale prepaid calling time purchased from Telmex and TelCel throughout Mexico. Two other distributors, Tarjetas Del Noreste and DiCasa, maintain market positions comparable to Provo's. All of Provo's revenues are currently generated in Mexico. As a result, Provo's business may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the level of governmental supervision and regulation of foreign businesses, the possibilities of political or economic instability and volatility in currency exchange rates. Acquisitions in Year 2000 In 2000, we acquired substantially all of the assets of The PressRoom Online Services, Application Resources Information Services, Inc d/b/a Way Communications, The First Street Corporation, Wizardnet, Inc., Delanet, Inc. (internet access service providers) and PNM Group, Inc., a Web design company. We also acquired certain 4

customers of Double D Network Services, Inc. pursuant to an agreement whereby we paid Double D a referral fee for each Double D customer who signed up for our dial-up service. Internet Products and Services Our products and services are focused around three key Internet business areas - access, presence, and development. Internet Access Products o Dial-Up Accounts: Frontline offers residential and business dial-up and ISDN Internet access on a national basis. Customers may order these products on our websites or by calling our 800 number. Utilizing our branded software, available via CD or downloadable from our website, customers can quickly order and activate a new account, billable to the client's credit card. The standard Frontline dial-up product provides clients two Internet e-mail addresses, a customizable homepage, access to our Customer Service telephone support center, and the latest access tools including browsers from Netscape and Microsoft. o Satellite Access: In late 2001, Frontline launched a line of broadband one-way satellite access products primarily for residential users. The satellite service provides customers with download speeds approximately 10 times faster than standard dial up accounts, uses a dial-up line for outbound service, and starts at $34.99 per month. A standard dial-up account is included with the service for outbound traffic and backup for downloading. o DSL: We are a reseller of Digital Subscriber Line high-speed Internet access services for DSL.net, Inc., and Covad Communications Company. We offer Digital Subscriber Line, ISDN Digital Subscriber Line, Asymmetric Digital Subscriber Line and Symmetric Digital Subscriber Line services in the Mid-Atlantic and Northeast United States. These products provide our residential and business customers with high-speed dedicated Internet connectivity at an affordable cost. o Dedicated Access: Frontline offers high-speed, high-bandwidth dedicated leased lines to customers, principally for business users who require high-speed internet connectivity 24 hours a day, seven days a week. Internet Presence Products o Virtual Website hosting: We offer virtual website hosting services to residential and small business customers who require 24 hour presence on the Internet. By renting space on our Internet servers, customers avoid costly hardware investment, maintenance, and other costs associated with operating their own servers. Marketed partly under our brand name FrontHost(SM), the Company's hosting services include domain name registration, e-mail addresses, file upload and download capability and statistical logs. o Dedicated Hosting: Frontline offers website hosting and maintenance services to clients wishing to rent secure web-servers. In addition, Frontline offers co-location services to those customers preferring to install their own equipment at our facilities and connect their systems directly to the Internet. 5

o FrontHost(SM): Our do-it-yourself web hosting service, which includes the "Website Wizard" products, assists customers in developing and hosting their own Websites and e-commerce `stores' by using our FrontHost(SM) user-friendly tools. The product line is simple, self service, and economical. Internet Development Services o Website design services: PlanetMedia(SM), our website design, consulting, and development division, assists business customers with Internet marketing strategy, graphic design and layout, writing and editing and Website information architecture (including Website navigation and searching systems). Our in-house professionals provide full life-cycle support to customers: from the design phase through website installation and maintenance. Marketing and Sales We currently handle sales and marketing utilizing in-house staff, including our customer service and technical groups. We market and sell our products through direct sales efforts, and a network of external, commissioned resellers we refer to as "Value Added Resellers" (VARs). Marketing activities focus primarily on regional efforts such as radio, trade and local business print media, as well as local event marketing in each of the different areas in which we have a physical presence, which includes the East coast from Virginia through the New York metropolitan area. POPS and Network infrastructure Our Internet access network is comprised primarily of a Company-managed network and third-party POPs provided primarily through an agreement with Megapop, Inc. The Company believes that this combination of owned and leased access enables Frontline to most economically provide Internet access services to its customers on a national level while leveraging the competitive advantages associated with the Company's own, uniquely-located, POPs. Broadband access to the Internet for Company-managed POPs is provided through high speed T1, T3, or Ethernet connections supplied under contracts with national broadband suppliers such as Verio, Inc. and by certain regional broadband suppliers such as Focal, Inc., and AboveNet, Inc. DSL access is similarly provided through direct connections or reseller agreements with Covad Communications Company and DSL.net, Inc. Network and service delivery stability is provided through the use of redundant computing and server facilities located at our larger owned POPs. We have duplicate bandwidth access at each of our major locations. We have installed backup power supply, remote alarm, computer virus protection, and monitoring software throughout our network, which is monitored 24 hours a day, 7 days-a-week. Customer and Product Support Services We believe that reliable customer and product support is critical to retaining existing subscribers and in attracting new customers. We provide the following Customer and Product support services: 6

o Toll-free, live telephone assistance available seven days a week, during peak load hours (10 hours per day; 8 hours on weekends); o Email-based assistance available seven days a week; o Internet help at our www.fcc.net Web site; o Fax support for higher-end business hosting customers. In 2001, we consolidated our Howell, New Jersey and Pearl River, New York customer service centers into the Pearl River location. All calls and emails for customer service are now received in Pearl River, of which we receive approximately 300, from both residential and business customers, per day. Product and Service Development Our Product Service Division develops proprietary applications, and reviews new technologies and third-party software products that are incorporated into our network and service products. A revised, interactive website (www.fcc.net) was activated by us during February 2001. In addition, a new broadband one-way satellite system was developed and launched in late 2001, and we distributed updated dial-up access CDs to our sales force and customers during March 2001, December 2001, and March 2002. Industry and Competition The market for Internet access, hosting, and web design and development services is highly competitive, rapidly evolving, and subject to technological change. There are no substantial barriers to entry, and we expect that competition will increase. Our current and prospective competitors include many large companies that have substantially greater market presence, financial, technical, and marketing and other resources than we have. We compete directly or indirectly with the following categories of companies: o Established online services, such as America Online, the Microsoft Network, and Earthlink; o Local, regional and national ISPs, public or privately owned; o National and regional telecommunications companies, such as AT&T; and Verizon; o Cable TV and online services; o Satellite companies, such as Direct TV and Starband; and o Large independent DSL providers. We believe that competition is likely to increase and that existing or future competitors may develop or offer services that are superior to ours at a lower price. These factors could have a material adverse effect on our business, financial condition, and results of operations. 7

Company Strategy and Restructuring Program During 1998, the Company announced, as a strategic goal, to become a leading provider of Internet access, development, and presence services for small and medium-sized businesses throughout the United States. To achieve this objective, we embarked on a program to expand our network infrastructure and internet dial-up access subscriber base by acquiring local and regional ISPs, utilizing acquired web-portal and e-commerce websites as a vehicle to promote the sale of our Internet services, and developing co-marketing alliances with value-added partners. During the period between October 1998 and September 2000, Frontline acquired 18 companies, and as a result grew our monthly revenue from $30,000 to approximately $400,000 per month at December 31, 2002, and acquired two web-portal websites: WoWFactor.com'r' and iShopNetworks(SM). Marketplace and technological changes during the year 2000 caused us to revise our strategy and restructure our operations during the last two quarters of the year 2000, in 2001 and 2002. We refined our product offerings to exclude numerous low margin products and services as well as those which were no longer in high demand, and raised our standard pricing for dial up customers to between $17.95 and $19.95 per month. As a result, our actual customer count decreased, while our revenue remained fairly constant. In an effort to offset the reduction in customers, we added a broadband satellite access product line in late 2001. In addition, the marketplace failure of many so-called dot-com companies and our inability to cost-effectively market our core products through our owned websites resulted in our decision to abandon the use of web-portals as a primary marketing tool of the Company. As a result, during January 2001, we announced the sale of a majority of our equity interest in iShopNetworks, Inc. and the closure of our WoWFactor.com'r' web-portal. We also announced that we would cease funding our subsidiary, CLEC Communications Corp. In 2001 and 2002 the DSL market also suffered turmoil with many substantial DSL providers entering bankruptcy or ceasing operations. As a result, we sustained a loss of certain DSL customers and revenues. However, we continue offering the DSL product line through Covad Communications Company and DSL.net, Inc. During the last quarter of 2000, we commenced a restructuring program (the "Restructuring Program") designed to consolidate our operations and improve cost-effectiveness, combine personnel of our key products and customer service divisions to leverage our manpower skills, and upgrade our access network infrastructure. As of March 31, 2003, we have accomplished the following in connection with our Restructuring Program: o Total workforce reduction of about 75%, from a high of approximately 120 employees to 31 employees as of March 31, 2003. o Elimination of our marginal products and services, reducing the number of discrete product offerings from over 100 to approximately 25; o Upgrading and improvement of our user-friendly website (www.fcc.net) promoting our products and services, and allowing for on line ordering; 8

o Development of a third-party network of selling agents (VARs) for the sales and marketing of our products and services, which had approximately 130 Frontline VARs registered as of March 14, 2003; o Closure of two of our four offices and the consolidation of two owned POPs; o Integration of our Product and Customer Service Divisions at our Pearl River, New York headquarters including closure of our Howell, New Jersey Call Center; and o Discontinuation of expenditures related to our CLEC Communications Corp. subsidiary. We intend to continue our efforts to reduce costs, without sacrificing the levels of service we provide to our customers, while adjusting our business strategy, where necessary, in response to changing technology, market conditions, and financial matters. Trademarks and Service Marks We have filed an application for Federal Trademark Registration and claim rights to the following mark: Frontline Communications Corp. We have been granted Federal Trademark Registrations for the following trademarks: Frontline.net and Frontline.net Effortless E-Commerce and Internet Access (name and two logos). All other trademarks and service marks used in this report are the property of their respective owners. Industry Regulation The following summary of regulatory developments and legislation relating to our Internet business does not describe all present and proposed federal, state and local regulations and legislation affecting us and our industry. Other proposed and existing federal, state and local legislation and regulations are currently the subject of judicial proceedings, legislative hearings and administrative proposals which could change the manner in which our industry operates. Neither the outcome of these proceedings, nor their impact upon us or our industry, can be predicted at this time. Internet Service Provider Regulation. Currently, few U.S. laws or regulations specifically regulate communications or commerce over the Internet. However, changes in the regulatory environment relating to the Internet connectivity market, including regulatory changes which directly or indirectly affect telecommunications costs or increase the likelihood or scope of competition from the regional Bell operating companies or other telecommunications carriers, could affect the prices at which we may sell our services and impact competition in our industry. Congress and the Federal Communications Commission will likely continue to explore the potential regulation of the Internet. For instance, the Federal Communications Commission may subject certain services offered by ISPs to regulation as "telecommunications service", which could result in us being subject to universal service fees, regulatory fees and other fees imposed on regulated telecommunications providers, which could cause our costs of doing business to increase substantially. Future laws and regulations could be adopted or modified to address matters such as user privacy, copyright and trademark protection, pricing, consumer protection, child protection, characteristics and quality of Internet services, libel and 9

defamation, and sales and other taxes. Internet-related legislation and regulatory policies are continuing to develop, and we could be subject to increased regulation in the future. Laws or regulations could be adopted in the future that may decrease the growth and expansion of the Internet's use, increase our costs, or otherwise adversely affect our business. In 1998, Congress passed the Digital Millennium Copyright Act. That act provides numerous protections from certain types of copyright liability to Internet service providers that comply with its requirements. We have adopted policies and procedures in accordance with the act, however, to the extent that we have not met those requirements, third parties could seek recovery from us for copyright infringements caused by our Internet customers. The law relating to the liability of Internet service providers for information carried on or disseminated through their networks is currently unsettled. It is possible that claims could be made against Internet service providers for defamation, negligence, copyright or trademark infringement or on other theories based on the nature and content of the materials disseminated through their networks. We could be required to implement measures to reduce our exposure to potential liability, which could include the expenditure of resources or the discontinuance or modification of certain product or service offerings. Costs that may be incurred as a result of contesting any claims relating to our services or the consequent imposition of liability could have a material adverse effect on our financial condition, results of operations and cash flow. Employees As of March 31, 2003, we had 31 full-time employees including 4 executive officers. We also engage part-time employees from time to time. None of our employees are represented by a union. We consider our employee relations to be good. Provo and its affiliates have 135 employees, 134 of whom are full time. Item 2. Properties Our executive offices are located in Pearl River, New York, where we lease approximately 12,000 square feet of space through a lease that expires in August of 2004. We also lease approximately 2,700 square feet of space in Babylon, New York that was assumed in connection with our purchase of PNM group, Inc. (d/b/a) Planet Media. The lease expires in August of 2003. The aggregate annual rent of the two offices is approximately $308,000. In 2001, as a part of our Restructuring Program, we closed our regional offices in Delaware and Virginia and have terminated the leases with the landlords. We lease approximately 2,400 square feet in Howell, New Jersey under a lease that expires in May 2004 and provides for monthly rental of approximately $3,500. We have closed our office at this location and are attempting to terminate the lease. We also lease space (typically, less than 100 square feet) in various geographic locations to house the telecommunications equipment for each of our POPs. Leases for the POPs have various expiration dates through (June 2003). Aggregate annual rentals for POPs are approximately $6,000. 10

Provo's principal office is a leased building located in Mexico City. Provo also leases 16 additional smaller offices at various locations throughout Mexico, where it maintains staff dedicated to sales and distribution. Item 3. Legal Proceedings The Company is subject to various proceedings in the normal course of its business. We do not anticipate any substantial impact or effect on the Company from any such proceedings. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. Market Information. Commencing on February 7, 2000 our Common Stock has been listed on the American Stock Exchange ("AMEX") under the symbol "FNT". From May 14, 1998 until February 7, 2000, our Common Stock was traded on the NASDAQ SmallCap Market under the symbol "FCCN". The following table sets forth, for the periods indicated, the range of the high and low closing prices for the Common Stock as reported by AMEX.

Fiscal Year Ended December 31, 2002 High Low - ----------------------------------- ---- --- First Quarter .29 .14 Second Quarter .31 .15 Third Quarter .43 .14 Fourth Quarter .36 .13
Fiscal Year Ended December 31, 2001 High Low - ----------------------------------- ---- --- First Quarter .31 .18 Second Quarter .59 .18 Third Quarter .27 .15 Fourth Quarter .38 .15
The number of record holders of our Common Stock was 237 as of April 3, 2003. We believe that there are in excess of 2,700 beneficial owners of our Common Stock. Dividend Policy. To date, we have not declared or paid any cash dividends on our common stock. The payment of dividends on our common stock, if any, in the future is within the discretion of the Board of Directors and will depend upon the Company's earnings, its capital requirements and financial condition and other relevant factors such as the rights of holders of capital stock that ranks senior with respect to dividends, such as our Series B Convertible Redeemable Preferred Stock. We presently 11

intend to retain any earnings to finance our business and do not expect to declare or pay any cash dividends on our common stock in the foreseeable future. Holders of our Series B Convertible Redeemable Preferred Stock are entitled to receive annual cumulative dividends of $.60 per share payable semi-annually in June and December of each year. The dividends are paid in cash or in shares of Common Stock, at our discretion. In June and December 2002, our directors elected not to declare a dividend on our Series B Convertible Redeemable Preferred Stock. Accrued expense at December 31, 2002 includes $297,867 representing unpaid dividends. Changes in Securities and Use of Proceeds During the three months ended December 31, 2002, we issued 51,000 shares of common stock upon conversion of 15,000 shares of Series B Convertible Redeemable preferred stock. The foregoing shares were issued pursuant to exemptions from registration under Sections 3(a)(9) and 4(2) of the Securities Act of 1933. Equity Plan Compensation Information The following table sets forth information as of December 31, 2002 regarding compensation plans under which our equity securities are authorized for issuance.

Number of Number of securities remaining Securities to be Weighted- available for future issued upon average issuance under exercise of exercise price equity compensation outstanding of outstanding plans (excluding options, warrants options, warrants securities reflected and rights and rights in column (a)) Plan Category (a) (b) (c) - ------------- ----------------- ----------------- -------------------- Equity compensation plans approved by security holders (1) 1,289,0000 $2.81 556,500 Equity compensation plans not Approved by security holders (2) 1,676,300 $3.00 ---------- ----- ------- Total 2,965,300 $2.92 556,500 ========== ===== =======
(1) Pursuant to our 1997 Stock Option Plan. (2) Outstanding warrants to acquire shares of common stock. The warrants expire at various times through 2005 and the warrant holders have certain anti-dilution rights. Excludes warrants to acquire 1,840,000 shares of common stock sold in our initial public offering. Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The Statements contained in this Item 6 and elsewhere in this Form 10-KSB which are not 12

historical facts are "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934. These "forward looking statements" are subject to a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such risk factors include, but are not limited to, risks associated with the Company's ability to attract and retain new subscribers, ability of the Company to successfully integrate newly acquired subscribers and business entities into its operations, ability to manage any future growth, uncertainties regarding future operating results, risks relating to changes in the market for internet services, regulatory and technological changes, possible inability to protect proprietary rights, changes in consumer preferences and demographics, competition, reliance on telecommunication carriers, ability to expand the Company's network structure, ability to obtain any necessary future financing, unfavorable general economic conditions, uncertainty of customer and supplier plans and commitments, risk related to the acquisition of Provo, the ability to maintain the American Stock Exchange and Nasdaq Small Cap Market listing of the Company's securities and other risks detailed in this report and in the Company's other Securities and Exchange Commission filings. The words "believe", "expect", "anticipate", "intend" and "plan" and similar expressions identify forward-looking statements, which speak only as of the date they were made. We undertake no obligation to update any forward-looking statements contained in this report. Overview During 2002 and 2001, a significant part of our revenues were derived from providing Internet access services to individuals and businesses. These revenues were comprised principally of recurring revenues from our customer base, leased line connections and various ancillary services. We charge subscription fees, which are billed monthly, quarterly, semi-annually or annually in advance, typically pursuant to pre-authorized credit card accounts. The balance of our revenues during those periods were derived from website design, development and hosting services. Monthly subscription service revenue for Internet access is recognized over the period in which services are provided. Fee revenues for website design, development and hosting services are recognized as services are performed. Deferred revenue represents prepaid access fees by customers. Restructuring Program. In October 2000, we initiated a Restructuring Program designed to, among other things, reduce our operating losses. The program consists of reductions of personnel, reduction in marketing and promotional expenses, consolidation of certain operations, exit from certain marginal product lines not related to our core business, and closure of regional offices. We believe that the Restructuring Program and related cost reductions, will permit us to maintain service quality to our customers while our more focused product offering portfolio will enhance our ability to grow our revenue base. To date we have realized significant cost reductions. However, there can be no assurance that the Restructuring Program will achieve the desired results, that there will not be any disruption of any services offered by us, or resulting loss of revenues from reduced product lines and marketing expenditures. The restructuring program was substantially completed by December 31, 2002. 13

Results of Operations Comparison of Years ended December 31, 2002 and 2001: Revenues. Revenues decreased for the year ended December 31, 2002 by $1,456,022 or 22.4% over the prior year. The decrease in revenues were in part due to closure of our unprofitable satellite offices and due to lesser website development work performed by us in 2002. Cost of Revenues. For the year ended December 31, 2002, cost of revenues decreased by $989,617 to $2,493,337. As a percentage of revenues, cost of revenues decreased to 49.4% from 53.6%. The decrease in cost of revenues was due to cost reductions realized through our Restructuring Program. Selling, General and Administrative. For the year ended December 31, 2002 selling, general and administrative expenses decreased by $1,414,183. As a percentage of revenues, selling, general and administrative expenses decreased from 59.4% in 2001 to 48.5% in 2002. The decrease in selling, general and administrative expenses was due to cost reductions realized through our Restructuring Program. The principal component of the decrease was in payroll and related costs due to workforce reduction. Depreciation and Amortization. For the year ended December 31, 2002, depreciation and amortization decreased by $2,198,543 to $745,135. The decrease was due to reduced amortization resulting from our intangibles written off as impaired in the fourth fiscal quarter of 2001. Non cash compensation charges. In September 2001, we granted 1,376,700 restricted shares of our common stock to our employees under the Company's 2001 Stock Incentive Plan. Accordingly, $206,505 representing the fair value of the shares granted, was charged to operations as a non-cash compensation charge. During 2002, we recognized a non-cash compensation charge of $58,500 for shares issued in exchange for services from consultants. Impairment of intangibles. During the year ended December 31, 2001, due to changes in circumstances, we determined that the carrying amount of intangible assets of The PressRoom Online Services, Wizardnet, Inc., Delanet and PNM Group, which we acquired in 2000, were impaired. Accordingly we recorded an impairment charge of approximately $2,800,000 on these assets. Interest Expense. Interest expense for 2002 was $95,417 compared to an interest expense of $131,778 for 2001. Interest expense decreased in 2002 due to decreased debt levels. Net loss. As a result of the foregoing, for the year ended December 31, 2002, net loss decreased by 88.8% or $6,241,762 to $787,525 compared to a net loss of $7,029,287 in 2001. We incurred significant losses as revenues generated were not sufficient to offset the substantial up-front expenditures and operating costs associated with attracting and retaining additional customers. 14

Liquidity and Capital Resources. Our working capital deficiency at December 31, 2002 was $2,655,722 compared with a working capital deficiency of $1,725,323 at December 31, 2001. The increase in working capital deficiency was primarily due to the effect of a promissory note that is payable in June 2003 in the principal amount of $728,600 becoming a current liability and also from operating losses. Our primary capital requirements are to fund acquisition of customer bases and related Internet businesses, install network equipment, and working capital. To date, we have financed our capital requirements primarily through issuance of debt and equity securities. We currently do not have any bank lines of credit. The availability of capital resources is dependent upon many factors, including, but not limited to, prevailing market conditions, interest rates, and our financial condition. In June 2002, we completed a private placement of 8% promissory notes and received proceeds of $200,000 (including $50,000 from our Officers and Directors). The promissory notes bear interest at 8% and mature in three years from the date of issuance. We have the option to convert the principal amount due under the promissory notes into shares of our common stock at a conversion price of $4.80 per share, under certain circumstances, as defined in the agreement with the promissory note holders, such as the market price of our common stock exceeding $6 per share. We also issued to the note holders warrants to purchase an aggregate of 1,000,000 shares of our common stock at an exercise price of $.08 per share. Out of the proceeds, $75,000 was allocated as the value of the warrants and deducted from the current value of the notes payable in the accompanying balance sheet (Discount). The debt issue discount arising from the value of the warrants is being amortized as additional interest over the life of the promissory notes. As discussed in Item 1-Business, in April 2003, we acquired Provo. If we receive the Requisite Approvals from our stockholders, which will result in the obligations under the Acquisition Note not becoming effective, we believe that the addition of Provo's operations to our operations will enable us to meet our obligations as they come due and that we will be able to continue as a going concern. If we are unable to obtain the Requisite Approvals from our stockholders which will result in our being liable to the Sellers under the Acquisition Note, then we will need additional financing in 2003 to continue operations as currently conducted. We have no available standby sources of financing and there can be no assurance that any additional financing will be available to us on acceptable terms, or at all. Critical Accounting Policies and Estimates Our discussion and analysis of our financial conditions and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of these financial statement requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, accounts receivable, long-lived assets and income taxes. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the current circumstances, the results of which form the basis for making judgments 15

about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our significant judgment and estimates use in preparation of our consolidated financial statements. Revenue Recognition During 2002 and 2001, a significant part of our revenues were derived from providing Internet access to individuals and businesses. These revenues were comprised principally of recurring revenues from our customer base, leased line connections and various ancillary services. We charge subscription fees, which are billed monthly, quarterly, and semi-annually or annually in advance, typically pursuant to pre-authorized credit card accounts. The balance of our revenues during those periods were derived from website design, development and hosting services. Monthly subscription revenue for Internet access is recognized over the period in which services are provided. Fee revenue for website design, development and hosting services are recognized as services are performed. Deferred revenue represents prepaid access fees by customers. Accounts Receivable Accounts receivable are reported at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. We estimate doubtful accounts based on historical bad debts, factors related to specific customers' ability to pay, and current economic trends. We write off accounts receivable against the allowance when a balance is determined to be uncollectible. Long-Lived Assets We assess the impairment of long-lived assets, which include property and equipment, intangibles and customer bases when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows from the use of these assets. When any such impairment exists, the related assets will be written down to fair value. Income Taxes Our net deferred tax assets, consisting of primarily federal and state net operating loss carry forwards, have been offset by a full valuation allowance. In determining the need for a valuation, we review both positive and negative evidence, including current and historical operating results. Based upon our assessment of all available evidence, we have concluded that it is more likely than not that deferred tax assets will not be realized. 16

Item 7. Financial Statements. The financial statements appear in a separate section of this report following Part III. Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Information regarding the Company's change in accountants may be found in the Company's Form 8-K for the event dated January 10, 2001. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act. The directors and executive officers of the Company are as follows: Name Age Position - ---- --- -------- Ventura Martinez Del Rio, Sr. 53 Chairman of the Board Stephen J. Cole-Hatchard 45 Chief Executive Officer and Director Nicko Feinberg 31 President, U.S. Operations and Director Vasan Thatham 45 Vice President and Chief Financial Officer Amy Wagner-Mele 34 Executive Vice President, Secretary and General Counsel Ventura Martinez Del Rio, Jr. 29 President, Mexican Operations and Director Ronald C. Signore 42 Director William A. Barron 53 Director Miguel Madero 54 Director Ventura Martinez Del Rio, Sr. has been our Chairman since April of 2003. Mr. Martinez Del Rio, Sr. earned an undergraduate degree in Economics from the Universidad Anahuac in Mexico in 1972 and an MBA from the University of Texas in 1974. He is currently the president of the Texas EX's in Mexico, a widely popular alumni organization. From 1983 to 1994, Mr. Martinez Del Rio, Sr. served in many executive leadership roles for the Mexican National Lottery, developing a vast business contact network that includes numerous senior Mexican government officials and the leaders of numerous senior Mexican government officials and the leaders of numerous prominent retail organizations throughout Mexico. He founded Provo in October of 1995. Mr. Martinez Del Rio, Sr. has served as chairman of the board of Provo since its inception. Stephen J. Cole-Hatchard has been our Chief Executive Officer since August 1997. Mr. Cole-Hatchard was our Vice President of Finance from February 1997 to August 1997, our President from August 1997 to July 2001, our Chairman from August 1997 to April 17

2003 and has been one of our directors since February 1997. Mr. Cole-Hatchard was Chief Financial Officer of Hudson Technologies, Inc., a refrigerant services company specializing in recovery and decontamination services, from 1993 to 1996, and has been a licensed attorney since 1988. Nicko Feinberg founded our Company in 1995, has been a director since November 1996, and was appointed as President, U.S Operations in April 2003. He was our Executive Vice President of Technology from November 1996 to July 2001, Chief Information Officer from August 1997 to July 2001 and President and Chief Operating Officer from July 2001 to April 2003. Mr. Feinberg was a Sales Manager and, from April 1991 to April 1994, a Sales Account Executive for Microage Computer Outlet, Inc., a company engaged in computer sales. Vasan Thatham has been our Vice President and Chief Financial Officer since February 1999. From 1994 through 1998, Mr. Thatham was Vice President and Chief Financial Officer of Esquire Communications Ltd., a company engaged in providing legal support services. Amy Wagner-Mele has been our Vice President and General Counsel since December 1998 and our Secretary since September 1998, and was our Vice President, Secretary and Corporate Counsel from September 1998 to December 1998. From September 1997 to August 1998, Ms. Wagner-Mele was an associate with the law firm of Winston & Strawn. From 1993 to August 1997, Ms. Wagner-Mele was an associate with the law firm of Podvey, Sachs, Meanor, Catenacci, Hildner & Cocoziello, P.C. Ventura Martinez Del Rio, Jr. has been our director since April 2003 and was appointed as President, Mexican operations in April 2003. Mr. Ventura Martinez Del Rio, Jr. earned a BBA degree from the Universidad Anahuac in Mexico in 1994 and a graduate degree in business from Ipade Business School ("IBS"). IBS is a highly-regarded (business management school based in Mexico City. He joined Provo in 1996 as its Chief Operating Officer, co-led the company through its rapid growth from 1996 to 2001 and was named its Chief Executive Officer in 2001. Ronald C. Signore has been one of our directors since December 1997. Mr. Signore has been a partner in the accounting firm of Gray, Signore & Co., LLP for more than the past five years. William A. Barron has been one of our directors since January 2000. Prior to retirement, Mr. Barron served as Vice President and Chief Financial Officer of Hudson Technologies, Inc. from July 1996 to March 1997. Prior to that, Mr. Barron was President and Chief Operating Officer for Diagnostek, Inc., a pharmacy benefit management company, from May 1994 to October 1995 and Executive Vice President and Chief Financial Officer for Diagnostek, Inc. from March 1993 to April 1994. From February 2001 through July 2001, as part of the Restructuring Program, Mr. Barron served as interim Vice President and Chief Operating Officer of the Company. Miguel Madero has been our director since April 2003. Mr. Miguel Madero earned a BA in Industrial Engineering from the Universidad Iberoamericana in Mexico City in 1971, and obtained an MBA from the University of Texas at Austin in 1975. In September 1985, he co-founded Fomento y Direccion Economica, S.A. de C.V., a financial advisory and investment banking firm in Mexico City where he currently serves as a Managing 18

Director. Mr. Madero sits on the Board of Directors of Credito Inmobiliario S.A. de C.V., a real estate financing company in Mexico. All directors hold office until the next annual meeting of stockholders for the ensuing year or until their successors have been duly elected and qualified. Officers are elected annually by the Board of Directors and serve at the discretion of the Board. Item 10. Executive Compensation. The following table sets forth compensation paid to our Chief Executive Officer and our two other most highly compensated executive officers (each of whom was serving at the end of our fiscal year ended December 31, 2002) during the years ended December 31, 2002, 2001 and 2000. No other executive officer of the Company received aggregate compensation which exceeded $100,000 during the year ended December 31, 2002. We refer to these three executive officers as our "Named Executives".

Long-Term Compensation Awards Name and Principal Securities Underlying Position Year Salary Bonus Options/SAR (#) - --------------------------- ---- ------ ----- ---------------------- Stephen J. Cole-Hatchard 2002 $112,482 Chief Executive Officer 2001 114,423 67,725 (1) 52,000 2000 117,692 34,500 25,000 Nicko Feinberg 2002 $107,761 President 2001 109,518 49,175 (2) 52,000 2000 110,000 24,500 27,000 Vasan Thatham 2002 $105,265 Chief Financial Officer 2001 109,518 15,051 (3) 27,000 2000 110,000 18,500 12,000
(1) Includes $43,725 representing the fair market value on the date of the award of 291,500 shares of common stock issued under our 2001 Stock Incentive Plan. (2) Includes $35,175 representing the fair market value on the date of the award of 234,500 shares of common stock issued under our 2001 Stock Incentive Plan. (3) Includes $13,425 representing the fair market value on the date of the award of 89,500 shares of common stock issued under our 2001 Stock Incentive Plan. The following table sets forth information regarding options granted during the year ended December 31, 2002 to our Named Executives: Options/SAR Grants in Year Ending December 31, 2002 Number of Shares % of Total Underlying Options/SAR 19

Options/ SARs Granted Exercise Price Expiration Granted in Year $/share) Date ---------------- ----------- -------------- ---------- Stephen J. Cole-Hatchard -- -- -- -- Nicko Feinberg -- -- -- -- Vasan Thatham -- -- -- -- The following table sets forth information concerning the number of options owned by our Named Executives, the value of any in-the-money unexercised options as of December 31, 2002 and information concerning options exercised by our Named Executives during the year ended December 31, 2002:

Aggregated Option Exercises and Year-End Option/SAR Values -------------------------------------------------------------------------------------- Shares Number of Securities Value of Unexercised Acquired Value Underlying Unexercised In-The-Money On Exercise Realized ($) Options/SARs at 12/31/2002 Options/SARs at 12/31/2002 ----------- ------------ --------------------------- --------------------------- Exercisable Unexercisable Exercisable Unexercisable ----------- ------------- ----------- ------------- Stephen J. Cole-Hatchard 0 $0 302,000 $2,080 Nicko Feinberg 0 $0 245,000 $2,080 Vasan Thatham 0 $0 100,000 $1,080
The year-end values for unexercised in-the-money options represent the positive difference between the exercise price of the options and the year-end market value of our common stock. An option is "in-the-money" if the year-end fair market value of our common stock exceeds the option exercise price. The closing sale price of our common stock on December 31, 2002 was $.26. Employment Agreements The Board of Directors has approved the adoption of employment agreements between the Company and/or its affiliates and Messrs. Thatham, Feinberg, Martinez del Rio Jr., Cole-Hatchard and Martinez del Rio Sr. that provide for an annual base compensation of not less than $115,000, $120,000, $120,000, $150,000 and $150,000, respectively. The agreements will provide for certain base salary increases in the event the Company completes an equity financing in excess of $7,000,000, and for certain bonuses in the event the Company achieves certain revenue objectives. The agreements will also allow for such bonuses as the Board of Directors may, in its sole discretion, from time to time determine. The employment agreements with Messrs. Thatham, Feinberg, Martinez Del 20

Rio Jr., Cole-Hatchard and Martinez Del Rio Sr. will expire in April 2005 subject to automatic successive one year renewals unless either we or the employee gives notice of intention not to renew the agreement. With the exception of Mr. Martinez del Rio Sr., the employment agreements will provide for employment on a full-time basis, and each of the agreements will contain a provision that the employee will not compete or engage in a business competitive with our current or anticipated business during the term of the employment agreement and for a period of two years thereafter. All of the employment agreements will provide that the employees shall be paid additional compensation equal to 295% of their annual base salary in the event of a change of ownership or effective control of our company (as defined in the agreements). The anticipated change in control as a result of the acquisition of Provo will not trigger the additional compensation clauses of the employment agreements. Director Compensation Each of our non-employee directors received $6,000 in 2002 for attending Board Meetings. 1997 Stock Option Plan In February 1997, our Board of Directors and stockholders adopted our 1997 Stock Option Plan, pursuant to which 500,000 shares of common stock were reserved for issuance upon exercise of options. In June 2000, the Board of Directors and our stockholders approved an amendment to increase to 2,000,000 the number of shares of common stock available for issuance upon exercise of options under the stock option plan. Our stock option plan is designed to serve as an incentive for retaining qualified and competent employees, directors and consultants. Our Board of Directors or a committee of our Board administers our stock option plan and is authorized, in its discretion, to grant options under our stock option plan to all eligible employees, including our officers, directors (whether or not employees) and consultants. Our stock option plan provides for the granting of both "incentive stock options" (as defined in Section 422 of the Internal Revenue Code of 1986, as amended) and non-qualified stock options. Options can be granted under our stock option plan on such terms and at such prices as determined by the Board of Directors or its committee, except that the per share exercise price of options will not be less than the fair market value of the common stock on the date of grant. In the case of an incentive stock option granted to a stockholder who owns stock possessing more than 10% of the total combined voting power of all of our classes of stock, the per share exercise price will not be less than 110% of the fair market value on the date of grant. The aggregate fair market value (determined on the date of grant) of the shares covered by incentive stock options granted under our stock option plan that become exercisable by a grantee for the first time in any calendar year is subject to a $100,000 limit. Options granted under our stock option plan will be exercisable during the period or periods specified in each option agreement. Options granted under our stock option plan are not exercisable after the expiration of 10 years from the date of grant (five years in the case of incentive stock options granted to a stockholder owning stock possessing more than 10% of the total combined voting power of all of our classes of 21

stock) and are not transferable other than by will or by the laws of descent and distribution. 2001 Stock Incentive Plan In June and July 2001, our Board of Directors and stockholders, respectively, adopted our 2001 Stock Incentive Plan ("Incentive Plan") pursuant to which the grant of any or all of the following types of awards may be made under the Incentive Plan (collectively, "Awards"): (1) stock options, (ii) restricted stock, (iii) deferred stock and (iv) other stock-based awards. Awards may be granted singly, in combination, or in tandem, as determined by the administrators of the Incentive Plan. A total of 1,800,000 shares of our common stock, subject to anti-dilution adjustment as provided in the Incentive Plan, have been reserved for distribution pursuant to the Incentive Plan. The maximum number of shares of common stock that may be issued upon the grant of an Award to any individual participant cannot exceed 500,000 shares during the term of the Incentive Plan. The Incentive Plan can be administered by our Board of Directors or a committee consisting of two or more non-employee members of the Board of Directors appointed by the Board. The Board or the committee will determine, among other things, the persons to whom Awards will be granted, the type of Awards to be granted, the number of shares subject to each Award and the share price. The Board or the committee will also determine the term of each Award, the restrictions or limitations thereon, and the manner in which each such Award may be exercised or, if applicable, the extent and circumstances under which common stock and other amounts payable with respect to an Award will be deferred. Unless sooner terminated, the Incentive Plan will expire at the close of business on June 20, 2011. The Incentive Plan provides for the grant of both incentive stock options and non-qualified stock options. The exercise price of an incentive stock option or a non-qualified stock option will not be less than the fair market value of the shares underlying the option on the date the option is granted, provided, however, that the exercise price of an incentive stock Option granted to a stockholder who possesses more than 10% of the combined voting power of all classes of our stock may not be less than 110% of such fair market value. The aggregate fair market value (determined at the time the option is granted) of the shares of common stock covered by an incentive stock option granted under the Incentive Plan that become exercisable by a grantee for the first time in any calendar year cannot exceed $100,000. The Incentive Plan contains anti-dilution provisions authorizing appropriate adjustments in certain circumstances. Shares of Common Stock subject to Awards which expire without being exercised or which are cancelled as a result of the cessation of employment are available for further grants. Options become exercisable in such amounts, at such intervals and upon such terms and conditions as the Board of Directors or the Committee provides. Under the Incentive Plan, the Board or the Committee may grant shares of restricted Common Stock either alone or in tandem with other Awards. Restricted and Deferred Stock awards give the recipient the right to receive a specified number of shares of common stock, subject to such terms, conditions and restrictions as the Board or the Committee deems appropriate. Other Stock-Based Awards, which may include performance shares and shares valued by reference to the performance of the Company or any parent or subsidiary of the 22

Company, may be granted under the Incentive Plan either alone or in tandem with other Awards. Item 11. Security Ownership of Certain Beneficial Owners and Management. The following table sets forth certain information, as of April 3, 2003 relating to the beneficial ownership of shares of Common Stock by: (i) each person or entity who is known by the Company to own beneficially five percent or more of the outstanding Common Stock; (ii) each of the Named Executives; (iii) each of the Company's directors; and (iv) all directors and executive officers of the Company as a group.

Number of Shares Name of Beneficial Owner Beneficially Owned (1) Percentage - ------------------------ ---------------------- ---------- Nicko Feinberg 866,500(2) 8.2% Stephen J. Cole-Hatchard 1,066,718(3) 10.0% Ronald Signore 329,032(4) 3.2% William Barron 178,972(5) 1.7% Ventura Martinez Del Rio, Sr. -- -- Ventura Martinez Del Rio, Jr. -- -- Miguel Madero -- -- Vasan Thatham 195,500(6) 1.9% All Directors and Executive Officers as a group (nine persons) 2,942,222(7) 25.5%
(1) Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of Common Stock beneficially owned by them. (2) Includes warrants to purchase 125,000 shares of Common Stock and options to purchase 245,000 shares of Common Stock. The address of Mr. Feinberg is c/o the Company at One Blue Hill Plaza, 7th Floor, Pearl River, New York 10965 (3) Includes 144,000 shares held by the Cole-Hatchard Family Limited Partnership, of which Mr. Cole-Hatchard is a general partner, options to purchase 302,000 shares of Common Stock and 171,530 shares of Common Stock issuable upon exercise of 50,450 shares of Series B Preferred Stock. The address of Mr. Cole-Hatchard is c/o the Company. (4) Includes warrants to purchase 125,000 shares of Common Stock and options to purchase 80,000 shares of Common Stock. (5) Includes options to purchase 87,000 shares of Common Stock and 680 shares of Common Stock issuable upon conversion of 200 Shares of Series B Preferred Stock. (6) Includes options to purchase 100,000 shares of Common Stock. (7) Includes options and warrants to purchase 1,214,000 shares of Common Stock and 172,210 shares of Common Stock issuable upon exercise of 50,650 shares of Series B Preferred Stock. Item 12. Certain Relationships and Related Transactions. In June 2002, Mr. Nicko Feinberg and Mr. Ronald Signore, our current directors, purchased $50,000 in aggregate principal amount of promissory notes pursuant to our June 2002 private placement, and received warrants to purchase 250,000 shares, in aggregate, of our common stock at an exercise price $.08 per share. These purchases were all on terms and conditions identical to those of the other investors in the private placement. 23

In connection with the acquisition of Provo, we issued to 18 individuals an aggregate of 35,500 shares of our Series D Convertible Preferred Stock (the "Series D Preferred"), including 10,000 shares to Stephen J. Cole-Hatchard, our Chairman of the Board and Chief Executive Officer, 10,000 shares to Nicko Feinberg, our President U.S Operations, and a director, 5,000 shares of Series D to Joseph Donohue, a then director, 1,000 shares of Series D to Vasan Thatham, our Vice President and Chief Financial Officer and 1,000 shares of Series D to Amy Wagner-Mele, our Executive Vice President and General Counsel. Each share of Series D Preferred is convertible into 150 shares of common stock upon receipt of the approval by our shareholders of (i) the issuance of common stock upon conversion of the Series D Preferred, (ii) an increase in our authorized common shares to 75 million and (iii) a 1 for 1.5 reverse split of our common stock (the "Series D Approvals"). Accordingly, if the Series D Approvals are obtained, the Series D Preferred will convert into an aggregate of 5,325,000 shares of common stock (without giving effect to the proposed reverse split), of which 1,500,000 shares will be issued to Mr. Cole-Hatchard, 1,500,000 shares will be issued to Mr. Feinberg, 750,000 shares will be issued to Mr. Donahue, 150,000 shares to Mr. Thatham and 150,000 shares to Ms. Mele. In April 2003, we borrowed $550,000 from an unaffiliated entity ("Lender") and issued a secured promissory note ("Note") to the lender. The Note bears interest of 14% and is secured by substantially all of our assets. Two of our officers, Messrs. Nicko Feinberg and Stephen J. Cole-Hatchard have pledged shares of common stock owned by them in our company as additional collateral to the lender. In addition, Mr. Cole-Hatchard has personally guaranteed the repayment of the Note. Item 13. Exhibits, Lists and Reports on Form 8-K. (a) Exhibits 2.1 Amended and Restated Stock Purchase Agreement between Frontline Communications Corporation, Proyecciones y Ventas Organizadas, S.A., Ventura Martinez del Rio Requejo and Ventura Martinez del Rio Arrangoz dated April 3, 2003. 3.1 Certificate of Incorporation of the Company.+ 3.2 Certificate of Amendment of the Certificate of Incorporation of the Company.+++ 3.3 Certificate of Amendment of the Certificate of Incorporation of the Company.* 3.4 By-Laws of the Company.+ 24

4.1 Certificate of Designation of Series A preferred stock.++ 4.2 Certificate of Designation of Series B preferred stock.* 4.3 Certificate of Designation of Series C preferred stock. 4.4 Certificate of Designation of Series D preferred stock. 10.1 Employment Agreements with Messrs. Stephen Cole-Hatchard and Nicko Feinberg.+# 10.2 Employment Agreement with Vasan Thatham.*# 10.3 2001 Stock Incentive Plan.***# 10.4 1997 Stock Option Plan of the Company.+ # 10.5 Office Lease between Registrant and Glorious Sun Robert Martin LLC.+ 10.6 Amendment No. 1 to Office Lease.* 10.7 Amendment No. 2 to Office Lease.* 10.8 Asset Purchase Agreement dated June 20, 2000 among Frontline Communications Corp., Delanet, Inc., Michael Brown and Donald McIntire.** 10.9 Asset Purchase Agreement dated June 20, 2000 among Frontline Communications Corp., Delanet, Inc., Michael Brown and Donald McIntire.** 10.10 Addendum to Amended and Restated Stock Purchase Agreement between Frontline Communications Corporation, Proyecciones y Ventas Organizadas, S.A., Ventura Martinez Del Rio, Sr. and Ventura Martinez Del Rio, Jr. dated April 3, 2003. 10.11 Registration Rights Agreement dated April 3, 2003 between Frontline Communications, Ventura Martinez Del Rio, Sr. and Ventura Martinez Del Rio, Jr.. 10.12 Security Agreement dated April 3, 2003 between Frontline Communications, Ventura Martinez Del Rio, Sr. and Ventura Martinez Del Rio Jr.. 10.13 Secured Promissory Note dated April 3, 2003 between Frontline Communications, Ventura Martinez Del Rio, Sr. and Ventura Martinez Del Rio, Jr.. 10.14 Term Loan and Security Agreement among Frontline Communications, Proyecciones y Ventas Organizadas, S.A., and IIG Equity Opportunities Fund Ltd. 25

10.15 Pledge Agreement between Stephen J. Cole-Hatchard, Nicko Feinberg, Elizabeth Feinberg and IIG Equity Opportunities Fund Ltd Dated April 3, 2003. 10.16 Registration Rights Agreement between Frontline Communications Corporation and IIG Equity Opportunities Fund Ltd dated April 3, 2003. 10.17 Limited guarantee agreement dated April 3, 2003 between Stephen J. Cole-Hatchard and IIG Equity Opportunities Fund Ltd dated April 3, 2003. 10.18 Mortgage by Stephen J. Cole-Hatchard in favor of IIG Equity Opportunities Fund Ltd dated April 3, 2003. 10.19 Mortgage and Security Agreement by Stephen J. Cole-Hatchard in favor of IIG Equity Opportunities Fund Ltd dated April 3, 2003. 10.20 Subordination Agreement between 8% Promissory Note Holders and IIG Equity Opportunities Fund Ltd dated April 3, 2003. 21.1 Subsidiaries of the Company. 23.1 Consent of Goldstein Golub and Kessler LLP. 99.1 Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.2 Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Footnotes from previous page) - ---------- * Incorporated by reference to the applicable exhibit contained in the Company's Registration Statement on Form SB-2 (file no.333-92969). + Incorporated by reference to the applicable exhibit contained in the Company's Registration Statement on Form SB-2 (file no. 333-34115). ++ Incorporated by reference to the applicable exhibit contained in the Company's Current Report on Form 8-K dated October 9, 1998. +++ Incorporated by reference to applicable exhibit contained in the Company's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 1999. ** Incorporated by reference to the applicable exhibit contained in the Company's Current Report on Form 8-K dated June 20, 2000. 26

*** Incorporated by reference to Appendix B to the Registrant's definitive proxy statement on Schedule 14A filed with the SEC on July 3, 2001. # Denotes a management compensation plan or arrangement. (b) Reports on Form 8-K filed during the quarter ended December 31, 2002: Not applicable. Item 14. Controls and Procedures Within 90-day period prior to the filing of this report, an evaluation was carried out under the supervision and with participation of our management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of our disclosure controls and procedures. Based on that evaluation, the CEO and CFO have concluded that our disclosure controls and procedures are effective to ensure that the information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Subsequent to the date of their evaluation, there were no significant changes in our internal controls or other factors that could significantly affect the internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses. 27

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly signed this report on its behalf by the undersigned, thereunto duly authorized on the 14th day of April 2003. FRONTLINE COMMUNICATIONS CORPORATION By: /s/ Stephen J. Cole-Hatchard ------------------------------------------------- Stephen J. Cole-Hatchard, Chief Executive Officer In accordance with the requirements of the Securities Exchange Act of 1934, this report was signed by the following persons in the capacities and on the dates stated. Signature Title Date - --------- ----- ---- /s/ Ventura Martinez Del Rio, Sr. - --------------------------------- Ventura Martinez Del Rio, Sr. Chairman of the Board April 14, 2003 /s/ Stephen J. Cole-Hatchard Chief Executive Officer, April 14, 2003 - --------------------------------- and Director (Principal Stephen J. Cole-Hatchard Executive Officer) /s/ Nicko Feinberg President U.S. Operations April 14, 2003 - --------------------------------- and Director Nicko Feinberg /s/ Vasan Thatham Chief Financial Officer April 14, 2003 - --------------------------------- and Vice President (Principal Vasan Thatham Financial and Accounting Officer) /s/ Ventura Martinez Del Rio, Jr. - --------------------------------- April 14, 2003 Ventura Martinez Del Rio, Jr. President Mexico Operations and Director /s/ Ronald C. Signore Director April 14, 2003 - --------------------------------- Ronald C. Signore /s/ William A. Barron Director April 14, 2003 - --------------------------------- William A. Barron 28

Certification of Principal Executive Officer I, Stephen J. Cole-Hatchard, Chief Executive Officer of Frontline Communications Corporation, certify that: 1. I have reviewed this annual report on Form 10-KSB of Frontline Communications Corporation; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 14, 2003 /s/ Stephen J. Cole-Hatchard ------------------------------------------ Stephen J. Cole-Hatchard Chief Executive Officer 29

Certification of Principal Financial Officer I, Vasan Thatham, Vice President and Chief Financial Officer of Frontline Communications Corporation, certify that: 1. I have reviewed this annual report on Form 10-KSB of Frontline Communications Corporation; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 14, 2003 /s/ Vasan Thatham ------------------------------------------ Vasan Thatham Vice President and Chief Financial Officer 30

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ Independent Auditor's Report F-1 - F-2 Consolidated Financial Statements: Balance Sheet F-3 Statement of Operations F-4 Statement of Stockholders' Equity (Deficiency) F-5 Statement of Cash Flows F-6 - F-7 Notes to Consolidated Financial Statements F-8 - F-16

INDEPENDENT AUDITOR'S REPORT To the Board of Directors Frontline Communications Corporation We have audited the accompanying consolidated balance sheet of Frontline Communications Corporation and Subsidiaries (the "Company") as of December 31, 2002 and the related consolidated statements of operations, stockholders' equity (deficiency), and cash flows for each of the two years in the period then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Frontline Communications Corporation and Subsidiaries as of December 31, 2002, and the results of their operations and their cash flows for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. In April 2003, as discussed in Note 10 of the notes to consolidated financial statements, the Company entered into an agreement with the shareholders of Proyecciones y Ventas Organizadas, S.A. de C.V. ("Provo"), a corporation organized under the laws of the Republic of Mexico to acquire Provo. Upon completion of the transaction described in Note 10 and the approval of the proposed stock conversion by the Company's shareholders, it is expected that the shareholders of Provo will control the Company. F-1

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 of the notes to consolidated financial statements, the Company has suffered recurring losses from operations, has a working capital deficiency and a stockholders' deficiency, which raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. GOLDSTEIN GOLUB KESSLER LLP New York, New York February 20, 2003, except for Note 10, as to which the date is April 3, 2003 F-2

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET ================================================================================

December 31, 2002 - ----------------------------------------------------------------------------------------------------- ASSETS Current: Cash and cash equivalents $ 208,502 Accounts receivable, less allowances for doubtful accounts of $25,000 212,397 Prepaid expenses and other 57,778 - ----------------------------------------------------------------------------------------------------- Total current assets 478,677 Property and Equipment, net 671,013 Other 108,877 - ----------------------------------------------------------------------------------------------------- Total Assets $ 1,258,567 ===================================================================================================== LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current Liabilities: Accounts payable $ 765,749 Accrued expenses 903,710 Current portion of long-term debt 940,202 Deferred revenue 524,738 - ----------------------------------------------------------------------------------------------------- Total current liabilities 3,134,399 Long-term Debt, less current portion 11,453 Promissory Notes Payable (face value $200,000, including $50,000 payable to officers and directors), net of unamortized discount of $58,333 141,667 - ----------------------------------------------------------------------------------------------------- Total liabilities 3,287,519 - ----------------------------------------------------------------------------------------------------- Commitments and Contingencies Stockholders' Deficiency: Preferred stock - $.01 par value; authorized 2,000,000 shares, issued and outstanding 496,445 shares (liquidation preference of $7,446,675) 4,964 Common stock - $.01 par value; authorized 25,000,000 shares, issued 9,940,424 shares 99,404 Additional paid-in capital 36,204,292 Accumulated deficit (37,466,196) - ----------------------------------------------------------------------------------------------------- (1,157,536) Treasury stock, at cost, 645,452 shares (871,416) - ----------------------------------------------------------------------------------------------------- Stockholders' deficiency (2,028,952) - ----------------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Deficiency $ 1,258,567 =====================================================================================================
See Notes to Consolidated Financial Statements F-3

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS ================================================================================

Year ended December 31, 2002 2001 - ------------------------------------------------------------------------------------------------ Revenue $ 5,047,098 $ 6,503,120 - ------------------------------------------------------------------------------------------------ Costs and expenses: Cost of revenue 2,493,337 3,482,954 Selling, general and administrative 2,446,816 3,860,999 Depreciation and amortization 745,135 2,943,678 Impairment of intangibles -- 2,827,993 Noncash compensation charge 58,500 206,505 - ------------------------------------------------------------------------------------------------ 5,743,788 13,322,129 - ------------------------------------------------------------------------------------------------ Loss from operations (696,690) (6,819,009) Other income (expense): Interest income 7,796 53,887 Interest expense (95,417) (131,778) Loss on disposal of property and equipment (3,214) (132,387) - ------------------------------------------------------------------------------------------------ Net loss (787,525) (7,029,287) Preferred dividends 297,867 320,910 - ------------------------------------------------------------------------------------------------ Net loss available to common shareholders $ (1,085,392) $ (7,350,197) ================================================================================================ Loss per share - basic and diluted $ (0.12) $ (1.00) ================================================================================================ Weighted-average number of shares outstanding - basic and diluted 9,119,533 7,333,221 ================================================================================================
See Notes to Consolidated Financial Statements F-4

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY) ================================================================================

Years ended December 31, 2002 and 2001 - --------------------------------------------------------------------------------------------------------------------- Additional Preferred Stock Common Stock Paid-in Shares Amount Shares Amount Capital - -------------------------------------------------------------------------------------------------------------------- Balance at December 31, 2000 597,800 $ 5,978 7,164,793 $ 71,648 $ 35,570,119 Purchase of treasury stock, at cost (6,800 shares) -- -- -- -- -- Conversion of Series B preferred stock (70,700) (707) 240,380 2,404 (1,697) Common stock issued for services -- -- 1,376,700 13,767 192,738 Dividends on preferred stock -- -- 779,324 7,793 313,117 Net loss -- -- -- -- -- - -------------------------------------------------------------------------------------------------------------------- Balance at December 31, 2001 527,100 5,271 9,561,197 95,612 36,074,277 Purchase of treasury stock, at cost (28,806 shares) -- -- -- -- -- Common stock issued for services -- -- 275,000 2,750 55,750 Conversion of Series B preferred stock (30,655) (307) 104,227 1,042 (735) Dividends on preferred stock -- -- -- -- -- Warrants issued with promissory notes payable -- -- -- -- 75,000 Net loss -- -- -- -- -- - -------------------------------------------------------------------------------------------------------------------- Balance at December 31, 2002 496,445 $ 4,964 9,940,424 $ 99,404 $ 36,204,292 ==================================================================================================================== Total Treasury Stockholders' Accumulated Stock, Equity Deficit at Cost (Deficiency) - ---------------------------------------------------------------------------------------------- Balance at December 31, 2000 $(29,030,607) $(860,539) $ 5,756,599 Purchase of treasury stock, at cost (6,800 shares) -- (4,113) (4,113) Conversion of Series B preferred stock -- -- -- Common stock issued for services -- -- 206,505 Dividends on preferred stock (320,910) -- -- Net loss (7,029,287) -- (7,029,287) - ---------------------------------------------------------------------------------------------- Balance at December 31, 2001 (36,380,804) (864,652) (1,070,296) Purchase of treasury stock, at cost (28,806 shares) -- (6,764) (6,764) Common stock issued for services -- -- 58,500 Conversion of Series B preferred stock -- -- -- Dividends on preferred stock (297,867) -- (297,867) Warrants issued with promissory notes payable -- -- 75,000 Net loss (787,525) -- (787,525) - ---------------------------------------------------------------------------------------------- Balance at December 31, 2002 $(37,466,196) $(871,416) $(2,028,952) ==============================================================================================
See Notes to Consolidated Financial Statements F-5

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS ================================================================================

Year ended December 31, 2002 2001 - -------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net loss $ (787,525) $(7,029,287) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 745,135 2,943,678 Debt discount amortization 16,667 -- Noncash compensation charge 58,500 206,505 Impairment of intangibles -- 2,827,993 Loss on disposal of property and equipment 3,214 132,387 Changes in operating assets and liabilities: Decrease in marketable securities -- 1,808,210 Decrease in accounts receivable 51,860 312,567 (Increase) decrease in prepaid expenses and other (24,755) 93,675 (Increase) decrease in other assets (4,488) 10,597 Decrease in accounts payable and accrued expenses (390,355) (563,729) Decrease in deferred revenue (90,612) (474,854) - -------------------------------------------------------------------------------------------------- Net cash provided by (used in) operating activities (422,359) 267,742 - -------------------------------------------------------------------------------------------------- Cash flows from investing activities: Acquisition of property and equipment (14,895) (51,148) Proceeds from disposal of property and equipment 5,000 51,886 - -------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities (9,895) 738 - -------------------------------------------------------------------------------------------------- Cash flows from financing activities: Principal payments on long-term debt (155,014) (442,915) Proceeds from issuance of promissory notes payable 200,000 -- Payments to acquire treasury stock (6,764) (4,113) - -------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 38,222 (447,028) - -------------------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (394,032) (178,548) Cash and cash equivalents at beginning of year 602,534 781,082 - -------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 208,502 $ 602,534 ================================================================================================== Supplemental disclosure of cash flow information: Cash paid during the year for interest $ 83,000 $ 132,000 ==================================================================================================
(continued) See Notes to Consolidated Financial Statements F-6

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS ================================================================================

Year ended December 31, 2002 2001 - --------------------------------------------------------------------------------------------- Supplemental schedule of noncash investing and financing activities: Warrants issued with promissory notes payable $ 75,000 -- ============================================================================================= Capital lease obligations incurred -- $ 48,098 ============================================================================================= Dividends on Series B preferred stock paid in common stock or accrued $297,867 $320,910 ============================================================================================= Common stock issued for services $ 58,500 -- =============================================================================================
See Notes to Consolidated Financial Statements F-7

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Frontline Communications Corporation ("Frontline" or the "Company") is an Internet company that offers Internet access, Web site development and Internet presence services. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations, has a net working capital deficiency of $2,655,722 and a stockholders' deficiency of $2,028,952 at December 31, 2002. These factors raise substantial doubt about its ability to continue as a going concern. Management has entered into an agreement with the shareholders of Proyecciones y Ventas Organizadas, S.A. de C.V. ("Provo"), a corporation organized under the laws of the Republic of Mexico to acquire Provo. This agreement, which is discussed in Note 10, is expected to transfer control of the Company to the shareholders of Provo upon approval by the Frontline shareholders. The Company's operations will then include the historical operations of the Company and the operations of Provo, which is engaged in the distribution of calling card and cellular phone airtime in Mexico. Management of the Company feels that the addition of Provo to the operations of the Company will enable it to continue to meet its obligations as they come due and to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated. In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates. Many of the Company's estimates and assumptions used in the financial statements are related to the Company's industry, which is subject to rapid technological change. It is reasonably possible that changes may occur in the near term that would affect management's estimates with respect to the carrying values of property and equipment and intangibles. Monthly subscription service revenue for Internet access is recognized over the period in which services are provided. Fee revenue for Web site development and Internet Web site presence services are recognized as services are performed. Deferred revenue represents prepaid access fees by subscribers. Accounts receivable are reported at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. The Company estimates doubtful accounts based on historical bad debts, factors related to specific customers' ability to pay, and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible. Property and equipment is stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed over the estimated useful lives of the assets using the straight-line method. F-8

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ Intangible assets consisted of purchased customer bases. Amortization was computed using the straight-line basis over three years. The intangible was fully amortized at December 31, 2002. Amortization expense for the years ended December 31, 2002 and 2001 amounted to $140,738 and $2,255,310, respectively. Long-lived assets, such as property and equipment, intangibles and customer bases, are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows from the use of these assets. When any such impairment exists, the related assets will be written down to fair value. During the year ended December 31, 2001, goodwill and purchased customer bases were written down by $2,827,993, due to impairment of such assets. Deferred income taxes are provided on differences between the financial reporting and income tax bases of assets and liabilities based upon statutory tax rates enacted for future periods. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and trade accounts receivable. The Company's cash investments are placed with high credit quality financial institutions and may, at times, exceed the amount of federal deposit insurance. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Company's customer base. The Company considers all highly liquid money market instruments purchased with an original maturity of three months or less to be cash equivalents. The Company applies Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations by recording compensation expense for the excess of fair market value over the exercisable price per share, as of the date of the grant, in accounting for its stock options. SFAS No. 123 requires the Company to provide pro forma information regarding net loss and net loss per share as if compensation cost for the Company's stock options had been determined in accordance with the fair-value-based method prescribed in SFAS No. 123. The Company estimates the fair value of each stock option at the date of the grant using the Black Scholes option-pricing model with the following weighted-average assumptions used for options in 2001: Year ended December 31, 2001 ------------------------------------------------------------------------- Risk-free interest rate 4.65% Expected life 5 years Expected volatility 169% Dividend yield None ------------------------------------------------------------------------- F-9

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ Under the accounting provisions of SFAS No. 123, the Company's net loss and loss per share would have been increased to the pro forma amounts indicated below: Year ended December 31, 2002 2001 ----------------------------------------------------------------------- Net loss available to common shareholders: As reported $(1,085,392) $(7,350,197) Stock-based compensation using the fair value method (55,991) (100,110) ----------------------------------------------------------------------- Pro forma (1,141,383) (7,450,307) Net loss per share (basic and diluted): As reported (0.12) (1.00) Pro forma (0.13) (1.02) ----------------------------------------------------------------------- All costs associated with advertising services are expensed in the period incurred. Advertising expense was approximately $43,000 and $130,000 for the years ended December 31, 2002 and 2001, respectively. The Company follows SFAS No. 128, Earnings per Share, which provides for the calculation of "basic" and "diluted" earnings per share ("EPS"). Basic EPS includes no dilution and is computed by dividing income or loss available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur through the effect of common shares issuable upon exercise of stock options and warrants and convertible securities. Potential common shares have not been included in the computation of diluted EPS since the effect would be antidilutive. In November 2002, the EITF issued EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables, which addresses certain aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. Specifically, EITF Issue No. 00-21 addresses how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting. EITF Issue No. 00-21 is effective for the Company for revenue arrangements entered into beginning July 1, 2003. The Company does not expect the adoption of EITF Issue No. 00-21 to have a material impact on its 2003 consolidated financial statements. The Company does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, will have a material effect on the Company's consolidated financial position or results of operations. F-10

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ 2. PROPERTY AND EQUIPMENT: Property and equipment, at cost, consists of the following at December 31, 2002:

Estimated Useful Life ---------------------------------------------------------------------------------------- Computer and office equipment $ 2,611,297 3 to 5 years Furniture and fixtures 74,825 5 years Leasehold improvements 149,365 Lease term ---------------------------------------------------------------------------------------- 2,835,487 Less accumulated depreciation and amortization (2,164,474) ---------------------------------------------------------------------------------------- $ 671,013 ========================================================================================
Depreciation and amortization for the years ended December 31, 2002 and 2001 amounted to approximately $604,000 and $689,000, respectively. 3. ACCRUED EXPENSES: Accrued expenses consist of the following at December 31, 2002: Accrued Internet connection and telephone $355,363 Lease cancellations and related costs 98,750 Dividends payable 297,867 Accrued professional fees 46,268 Accrued wages and salaries 82,896 Other 22,566 -------------------------------------------------------------------------- $903,710 ========================================================================== 4. LONG-TERM DEBT: Long-term debt consists of the following at December 31, 2002: Present value of net minimum lease payments (a) $223,055 Promissory note payable (b) 728,600 -------------------------------------------------------------------------- 951,655 Less current portion 940,202 -------------------------------------------------------------------------- $ 11,453 ========================================================================== (a) The Company leases computer and other equipment under capital leases. The assets acquired under capital leases have a cost of approximately $1,155,000 and accumulated depreciation of approximately $887,000 as of December 31, 2002. F-11

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ The following is a schedule of future minimum lease payments under capitalized leases, together with the present value of the net minimum lease payments at December 31, 2002: Year ending December 31, 2003 $222,073 2004 10,958 2005 1,279 -------------------------------------------------------------------------- Total minimum lease payments 234,310 Less amount representing interest 11,255 -------------------------------------------------------------------------- Present value of net minimum lease payments 223,055 Less current portion 211,602 -------------------------------------------------------------------------- Long-term lease obligations $ 11,453 ========================================================================== (b) A promissory note, issued as part of a business acquisition, in the principal amount of $728,600. The promissory note bears interest at 4% and is payable in June 2003. The Company has the option to convert the principal amount due under the promissory note to shares of its common stock at a conversion price of $8 per share (significantly greater than the market value of the common stock at the acquisition date), under certain circumstances, as defined in the acquisition agreement, such as the market price of the Company's common stock exceeding $10 per share. See Note 10. The carrying amount of the Company's long-term debt approximates fair value using the Company's estimated incremental borrowing rate. 5. PROMISSORY NOTES: In June 2002, the Company completed a private placement of 8% promissory notes and received proceeds of $200,000 (including $50,000 from officers and directors). The promissory notes bear interest at 8% and mature in three years from the date of issuance. The Company has the option to convert the principal amount due under the promissory notes into shares of its common stock at a conversion price of $4.80 per share, under certain circumstances, as defined in the agreement with the promissory note holders, such as the market price of the Company's common stock exceeding $6 per share. The Company also issued to the note holders warrants to purchase an aggregate of 1,000,000 shares of its common stock at an exercise price of $.08 per share. Out of the proceeds, $75,000 was allocated as the value of the warrants and is recorded as a discount on the notes payable in the accompanying consolidated balance sheet. The discount is being amortized as additional interest over the terms of the promissory notes. At December 31, 2002, the promissory notes payable included on the accompanying consolidated balance sheet amounting to $141,667 are net of unamortized discounts of $58,333. The fair value of the notes approximates the carrying amount based on rates available to the Company. F-12

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ 6. COMMITMENTS AND CONTINGENCIES: The Company rents office space and equipment under operating lease agreements expiring at various dates through 2005. Future minimum rental payments required under operating leases are approximately as follows: Year ending December 31, 2003 $379,000 2004 226,000 2005 5,000 -------------------------------------------------------------------------- $610,000 ========================================================================== Rental expense was approximately $341,000 and $438,000 for the years ended December 31, 2002 and 2001, respectively. In connection with the Company's lease for its main office space, the Company has opened an irrecoverable letter of credit with a bank for approximately $65,000 in lieu of a security deposit. 7. STOCK OPTIONS: The Company has a stock option plan (the "Plan") which authorizes the issuance of incentive options and nonqualified options to purchase up to 2,000,000 shares of common stock. The Plan has a 10-year term. The board retained the authority to determine the individuals to whom, and the times at which, stock options would be granted, along with the number of shares, vesting schedule and other provisions related to the stock options. A summary of the status of the Company's stock option plan as of December 31, 2002 and 2001, and changes during the years ended on those dates, is presented below:

December 31, 2002 2001 --------------------------------------------------------------------------------------- Weighted- Weighted- average average Exercise Exercise Shares Price Shares Price -------------------------------------------------------------------------------------- Outstanding at beginning of year 1,458,900 $ 2.67 1,347,768 $ 4.19 Granted 445,000 0.22 Forfeited (169,900) 1.68 (333,868) 4.97 -------------------------------------------------------------------------------------- Outstanding at end of year 1,289,000 $ 2.81 1,458,900 $ 2.67 ====================================================================================== Options exercisable at year-end 1,289,000 $ 2.81 1,442,900 $ 2.64 ====================================================================================== Weighted-average fair value of options granted during the year -- $ 0.21 ======================================================================================
F-13

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ The following table summarizes information about stock options outstanding and exercisable at December 31, 2002: Options Outstanding and Exercisable ------------------------------------------------- Number Weighted- Outstanding at Remaining average Range of December 31, Contractual Exercise Exercise Prices 2002 Life Price ---------------------------------------------------------------------- $0.22 to $1.00 501,000 3.1 years $0.31 $1.00 to $2.50 184,800 .9 2.37 $2.50 to $4.00 97,000 .8 3.58 $4.00 to $6.00 433,200 1.95 5.16 $6.00 to $6.75 73,000 1.1 6.10 ---------------------------------------------------------------------- 1,289,000 $2.81 ====================================================================== 8. STOCKHOLDERS' EQUITY (DEFICIENCY): In April 2000, the Company's board of directors authorized the Company to purchase up to $1,000,000 worth of its common stock from time to time, as the Company deems appropriate, through open market purchases or in privately negotiated transactions. As of December 31, 2002, the Company had acquired 413,932 shares of common stock for an aggregate consideration of approximately $607,000. In September 2001, the Company granted 1,376,700 restricted shares of its common stock to its employees under the Company's 2001 Stock Incentive Plan. Accordingly, $206,505, representing the fair value of the shares granted, was charged to operations as a noncash compensation charge. During 2001, the Company issued: (i) 240,380 shares of common stock upon conversion of 70,700 shares of Series B Convertible Redeemable preferred stock, and (ii) 779,324 shares of common stock as dividends to the holders of Series B Convertible Redeemable preferred stock. In May 2002, the Company entered into a consulting agreement for marketing services and issued to the consultant 250,000 shares of common stock as consideration for the services rendered by the consultant. Accordingly, $50,000, representing the fair value of the shares issued, was charged to operations. In June 2002, the Company issued, in a private sale of 8% promissory notes, warrants to purchase an aggregate of 1,000,000 shares of its common stock at an exercise price of $.08 per share. In August 2002, the Company entered into a consulting agreement for marketing services and issued to the consultant 25,000 shares of common stock as consideration for the services rendered by the consultant. Accordingly, $8,500, representing the fair value of the shares issued, was charged to operations. F-14

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ During 2002, the Company issued 104,227 shares of common stock upon conversion of 30,655 shares of Series B Convertible Redeemable preferred stock. In addition, at December 31, 2002, other warrants to purchase 2,516,300 shares of common stock were outstanding and exercisable at prices ranging between $4.80 and $8.50 per share, expiring at various times through 2004. 9. INCOME TAXES: At December 31, 2002, the tax effects of loss carryforwards and the valuation allowance that give rise to deferred tax assets are as follows: Net operating losses $ 7,650,000 Less valuation allowance (7,650,000) -------------------------------------------------------------------------- Deferred tax assets $ -0- ========================================================================== The provision (benefit) for income taxes differs from the amount computed using the federal statutory rate of 34% as a result of the following: December 31, 2002 2001 -------------------------------------------------------------------------- Federal statutory rate (34)% (34)% Increase in valuation allowance 34 34 -------------------------------------------------------------------------- -0-% -0-% ========================================================================== The Company had net operating loss carryforwards of approximately $22,500,000 at December 31, 2002, which expire through 2022. The tax benefit of these losses has been completely offset by a valuation allowance due to the uncertainty of its realization. Internal Revenue Code Section 382 provides for limitations on the use of net operating loss carryforwards in years subsequent to a more than 50% change in ownership (as defined by Section 382), which limitations can significantly impact the Company's ability to utilize its net operating loss carryforwards. As a result of the sale of the preferred shares in the public offering in February and March 2000, changes in ownership may have occurred which might result in limitations of the utilization of the net operating loss carryforwards. The extent of any limitations as a result of changes in ownership has not been determined by the Company. 10. SUBSEQUENT EVENT: In April 2003, the Company entered into an amended and restated stock purchase agreement with the two stockholders of Provo, a corporation organized under the laws of the Republic of Mexico, to acquire from them all the issued and outstanding shares of Provo. As consideration, the Company issued 220,000 shares of Series C Convertible Preferred Stock ("Series C Preferred") of the Company to the two stockholders of Provo. Provo and its subsidiaries are engaged in the distribution of prepaid calling cards and cellular phone airtime in Mexico. F-15

FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ Each share of Series C Preferred will automatically convert into 150 shares of the Company's common stock after the transaction is approved by the Company's shareholders. In connection with the transaction, the Company will require shareholder approval for (i) the issuance of shares of common stock upon conversion of Series C Preferred, (ii) the change in control contemplated by the Provo transaction, (iii) an increase in authorized common stock to 75,000,000 shares, and (iv) a reverse split of all of the issued and outstanding shares of common stock. Upon such approval, Series C Preferred will convert into common stock representing approximately 66% of the combined Company. The Company issued 35,500 Series D Preferred shares ("Series D Preferred") to certain brokers, finders and certain of the Company's officers and directors in accordance with the terms of certain consulting agreements. Each share of Series D Preferred can be converted into 150 shares of the Company's common stock after the shareholder approval is obtained for (i) the issuance of the shares of common stock upon conversion of the Series D Preferred, (ii) an increase in the Company's authorized common stock to 75,000,000 and (iii) a reverse split of the common stock. In the event the Company's shareholders do not approve the conversion of Series C Preferred into the Company's common stock, the Company will be obligated to pay $20,000,000 to the Series C Preferred stockholders. In April 2003, the Company borrowed $550,000 from an unaffiliated entity (the "Lender") and issued a secured promissory note (the "Note") to the Lender. The Note bears interest of 14% and is secured by substantially all of the Company's assets. Two officers have pledged shares of the Company's common stock owned by them as additional collateral to the Lender. In connection with the financing, the Company issued 500,000 shares of common stock to the Lender as additional consideration. The Note is payable at the earlier of 90 days or upon financing of Provo's accounts receivable. Out of the proceeds, the Company used $200,000 to settle a promissory note, issued as a part of a business acquisition, in the principal amount of $728,600. The balance of the promissory note was settled through issuance of 375,000 shares of common stock to the promissory note holders. F-16 STATEMENT OF DIFFERENCES ------------------------ The registered trademark symbol shall be expressed as................... 'r'

EXHIBIT 2.1 AMENDED AND RESTATED STOCK PURCHASE AGREEMENT This Amended and Restated Stock Purchase Agreement is entered into on this 3 day of April, 2003, by and between Frontline Communications Corp., a Delaware corporation ("Buyer" or "Frontline"); Proyecciones y Ventas Organizadas, S.A. de C.V., a corporation organized under the laws of the Republic of Mexico ("Provo"); Ventura Martinez del Rio Requejo ("Requejo"); and Ventura Martinez del Rio Arrangoiz ("Arrangoiz") (Provo, Requejo and Arrangoiz shall be referred to in the singular as "Seller" and collectively as "Sellers"). RECITALS WHEREAS, Arrangoiz and Requejo own all the issued and outstanding capital stock of Provo ("Provo Shares"); and WHEREAS, Buyer wishes to purchase the Provo Shares and ultimately give Buyer's common stock therefor, subject to certain terms and conditions described herein; and WHEREAS, Arrangoiz and Requejo are willing to sell the Provo Shares to Buyer, subject to certain terms and conditions described herein; and WHEREAS, the Buyer and Sellers are parties to a Stock Purchase Agreement dated January 24, 2003 as amended by (i) the Addendum to Stock Purchase and Acquisition Agreement, dated February 27, 2003 and (ii) the Second Addendum to Stock Purchase and Acquisition Agreement, dated March 11, 2003 (collectively, the "Original Agreement"), and WHEREAS, the parties wish to amend certain terms of the Original Agreement, NOW, THEREFORE, in consideration of the above recitals, the promises herein contained and such other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree that the Original Agreement shall be amended and restated in its entirety to read as follows: ARTICLE I Section 1.01. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: (a) "Agreement" shall mean this Stock Purchase and Acquisition Agreement including any appendices, schedules and exhibits. (b) "Best knowledge" and similar phrases shall mean (i) in the case of a natural person, the particular fact was known or not known, as the context requires, to such person after reasonable investigation and inquiry by such person, and (ii) in the case of entity, the particular fact was known or not known, as the context requires, to any executive officer of such entity after reasonable investigation and inquiry by the principal executive officers of such entity.

(c) "Certificates of Designation" shall mean (i) that certain Certificate of Designation of Series, and Determination of Rights and Preferences of Series C Preferred Stock, substantially in the form of Exhibit D, and (ii) that certain Certificate of Designation of Series, and Determination of Rights and Preferences of Series D Preferred Stock, substantially in the form of Exhibit E to be executed and filed by the Buyer on the Closing Date. (d) "Closing" shall mean the closing of the transactions contemplated by this Agreement, which shall occur at 10:00 A.M., local time, on the Closing Date in the offices of Swidler Berlin Shereff Friedman, LLP, the Chrysler Building, 405 Lexington Avenue, New York, New York, 10174, or at such other time and place as shall be agreed in writing among the parties. (e) "Closing Date" shall mean April 1, 2003, or such other date as agreed upon, in writing, among the parties. (f) "Conversion Date" shall mean the date which is the later of: (i) the date on which the Series C Preferred and Series D Preferred (as defined below) converts to common stock of the Buyer, in accordance with section 3.03 or (ii) May 15, 2003, or such later date as agreed upon in writing by the Holders of a majority of the Series C Preferred. In the event the Conversion Date is delayed due to the actions or inaction of the Commission or AMEX the Conversion Date shall be extended for a period of up to thirty (30) additional days. (g) "Debt" shall mean Frontline's senior secured obligation to pay Sellers the aggregate principal amount of twenty million Dollars ($20,000,000), in the terms and subject to the conditions of the Note and the Security Agreement. (h) "Dollar" or "Dollars" shall mean United States dollars. (i) "Encumbrance" shall mean any lien, security interest, claim or any other hindrance whatsoever. (j) "Exchange Act" shall mean the United States Securities Exchange Act of 1934, as amended. (k) "Financial Statements" shall have the meaning set forth in Section 6.01(k). (l) "GAAP" shall mean the generally accepted accounting principles applicable in the United States. (m) "Intellectual Property" shall mean (i) all inventions (patentable or unpatentable) including all improvements thereto, (ii) all trademarks, trade names, service marks or service names, copyrights, trade dress, logos and corporate names, including all good will associated therewith, and (iii) all trade secrets and confidential information. (n) "Note" shall mean that certain Secured Promissory Note substantially in the form attached hereto as Exhibit F to be executed by Buyer on the Closing Date. -2-

(o) "Person" shall mean an individual, corporation, partnership, joint venture, trust, association, unincorporated organization or other entity or governmental body or subdivision, agency, commission or authority thereof, or any equivalent entity under applicable law. (p) "Registration Rights Agreement" shall mean that certain Registration Rights Agreement substantially in the form attached hereto as Exhibit G to be entered into by and between Buyer and Sellers on the Closing Date. (q) "SEC" or "Commission" shall mean the Securities and Exchange Commission. (r) "Securities Act" shall mean the United States Securities Act of 1933, as amended. (s) "Security Agreement" shall mean that certain Security Agreement substantially in the form of Exhibit H to be entered into by and among Sellers and Buyer on the Closing Date. (t) "Transaction Documents" shall collectively mean this Agreement, the Registration Rights Agreement, the Certificates of Designations, the Note, the Security Agreement and any other written agreement signed by the parties that is expressly identified as a "Transaction Document" hereunder, and any exhibits or attachments to any of the foregoing, as the same may be amended from time to time. ARTICLE II STOCK PURCHASE Section 2.01. Stock Purchase. (a) Subject to the terms of this Agreement, Buyer hereby agrees to purchase and Arrangoiz and Requejo hereby agree to sell to Buyer all of the Provo Shares. The Provo Shares shall be fully paid, non-assessable and free of any and all Encumbrances. Upon Closing, Provo will become a wholly owned subsidiary of Buyer and shall continue in existence. (b) It is understood by the parties that Provo, Arrangoiz and Requejo may require certain documents to assist its accountants in obtaining tax free treatment in Mexico of the above described stock purchase and the Buyer agrees to provide such assistance. ARTICLE III CONSIDERATION Section 3.01. Consideration to Arrangoiz and Requejo. (a) In return for the sale of all right, title and interest in the Provo Shares, Arrangoiz and Requejo will receive an aggregate total of two hundred and twenty thousand (220,000) shares of Series C Convertible Preferred Stock (the "Series C Preferred") of Buyer and said shares shall be -3-

fully paid, non-assessable and free of any and all Encumbrances. The parties agree that the purchase price for the Provo Shares shall be P$123.20 Mexican Pesos per share and that the exchange rate used for all transactions hereunder shall be P$11.20 Mexican Peso : US$1 Dollar. Consequently, the tax basis for the Series C Preferred shall be $9.60 Dollars per share of Series C Preferred. The terms of the Series C Preferred shall be set forth in the Certificate of Designation of Series C Convertible Preferred Stock (the "Series C Certificate of Designation"). (b) In the event that the Buyer is unable to obtain the Requisite Approvals from its shareholders of the Actions (as those terms are defined in the Series C Certificate of Designation), the consideration to Sellers shall be increased by Twenty Million Dollars ($20,000,000), in order to compensate the Sellers for the fact that the Series C Preferred will not convert into shares of common stock par value $.01 per share (the "Common Stock") of the Buyer. The additional consideration shall be in the form of the Note, and shall be secured by the Security Agreement. Buyer shall issue and deliver the Note and Security Agreement to Sellers at the Closing, however, the obligations under the Note shall only become effective on the Conversion Date and if the Series C Preferred Stock is not converted into Common Stock. (c) In addition, the Buyer shall issue 35,500 Series D Preferred shares (the "Series D Shares") to certain brokers, finders and insiders (the "Brokers") and in accordance with the terms of certain consulting agreements executed simultaneously herewith. (d) All the Series C Preferred shares shall be issued as of the Closing Date and distributed in the proportion and in accordance with Schedule 3.01(d). (e) All the Series D Preferred shares shall be issued as of the Closing Date and distributed in the proportion and in accordance with the list provided by the Brokers. Section 3.02. Terms of Preferred Stock. The terms, rights and preferences of the Series C Preferred and Series D Preferred (collectively the "Preferred Stock") shall be as set forth in the respective Certificate of Designation. Section 3.03. Conversion. (a) Each share of Series C and Series D Preferred Stock shall be automatically converted (the "Automatic Conversion") into 150 shares of Frontline's common stock (the "Conversion Shares") immediately upon approval by Frontline's shareholders of all the following (the "Approval"): (i) the issuance of shares of Common Stock upon the conversion of the Series C Preferred Stock; (ii) the "change in control" contemplated by this Agreement and the Transaction Documents; (iii) an increase in Frontline's authorized common stock to seventy five million (75,000,000) shares; and (iv) a reverse split of all of the issued and outstanding shares of common stock of Buyer, at a ratio of 1.5 to 1 (the "Reverse Split"), or such other ratio as may be required to achieve the post-conversion ownership percentages set forth in Exhibit A. The Preferred Stock shall be subject to the Reverse Split. However, it is the parties intention that that Sellers receive the share consideration and post-conversion ownership percentages set forth in Exhibit A. (b) Upon obtaining the Requisite Approvals and the filing of an amendment to Frontline's Certificate of Incorporation, Buyer shall immediately issue and deliver to Sellers and the -4-

Brokers, stock certificates representing the Conversion Shares. The Conversion Shares shall be fully paid, non-assessable and free of any and all of Encumbrances. Buyer shall distribute the Conversion Shares in the proportion and in accordance with the list provided by Arrangoiz and Requejo. Section 3.04. Consequences of Conversion. On the Conversion Date, the following transactions shall have been effected: (a) If the Approval is obtained on or before the Conversion Date, Frontline shall immediately notify Sellers in writing to such effect and deliver the stock certificates representing the Conversion Shares, pursuant to Section 3.03(b). Upon receipt of the Conversion Shares, the Sellers shall return to Frontline the following documents: (i) the stock certificates representing the Series C Preferred Shares; (ii) the Note duly cancelled; (iii) the Security Agreement; and (iv) all other documents and instruments incidental to the Debt, including any collateral held by Sellers. (b) If the Approval is not obtained by the Conversion Date, Frontline shall immediately notify Sellers in writing to that effect. Section 3.05. Registration Rights. The Buyer shall grant Sellers registration rights with respect to the Conversion Shares in the terms and subject to the conditions of the Registration Rights Agreement. ARTICLE IV CONDITIONS TO CLOSING Section 4.01. Conditions to Closing. The obligations of the parties to consummate the transactions contemplated by this Agreement in connection with the Closing are subject to the satisfaction of the following conditions: (a) The representations and warranties of each of the parties set forth in this Agreement shall be true and correct in all material respects when made and shall be deemed to have been made again at, and as of, the Closing Date, and each of the parties shall have performed and satisfied all obligations and conditions herein required to be performed or satisfied by each of them on or prior to the Closing. (b) Intentionally left blank. (c) No action, suit or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local or foreign jurisdiction which has the likelihood of resulting in an unfavorable injunction, judgment, order, decree, ruling or charge that would (i) prevent consummation of any of the material transactions contemplated by this Agreement, or (ii) cause any of the material transactions contemplated by this Agreement to be rescinded following consummation. (d) Frontline will have received a fairness opinion from a third party evaluation or investment banking firm that states the transactions contemplated by this Agreement are financially fair to the shareholders of Frontline. -5-

(e) Frontline shall have appointed Arrangoiz, Requejo, and an independent director of Sellers' choosing to its Board of Directors, which shall be comprised of seven (7) total members. (f) Frontline shall have received approval of this Agreement and the transactions contemplated hereby from a majority of its Board of Directors. (g) Each of the parties shall have completed all regulatory filings necessary for it to consummate the transactions contemplated by the terms of this Agreement, except for those filings permitted to be effected prior to the Conversion Date. (h) Frontline shall have arranged for a debt financing (the "Bridge Loan"), in a principal amount of no less than five hundred thousand Dollars ($500,000), which shall close simultaneously with the Closing. The terms and conditions of the Bridge Loan shall be previously approved by Provo and Sellers. The use of proceeds of the Bridge Loan shall be as set forth in Exhibit B. Each of the parties hereto may waive any conditions specified in this Section 4.01, provided that the party so waiving any such condition shall execute a written waiver thereof at or prior to the Closing. ARTICLE V REGULATORY FILINGS Section 5.01. Regulatory Filings. Prior to the Conversion Date, Frontline shall properly prepare and file with the Commission all documents required pursuant to the Exchange Act, in accordance with the execution, delivery and performance of this Agreement including, without limitation, any and all proxy materials deemed to be required to (i) complete the transactions contemplated by this Agreement; (ii) obtain the Approval; and (iii) any reports that may be required to be filed utilizing Form 8-K, as promulgated by the Commission (the "Filings"). Section 5.02. Frontline shall prepare and file with the American Stock Exchange (the "Exchange") all the documents required by the rules of the Exchange including, but not limited to, any proxy filings and reports on Form 8-K. Section 5.03. In addition to the Filings and any filings that may be required by the Exchange, the parties will cooperate with each other in order to make, as soon as appropriate, all governmental and regulatory filings necessary in connection with the execution, delivery and performance of this Agreement and any of the transactions contemplated hereby. ARTICLE VI REPRESENTATIONS AND WARRANTIES Section 6.01. The parties represent and warrant to each of the other parties herein that: (a) Each party is a corporation duly organized and validly existing under the laws of their respective jurisdictions and has the corporate power to own its assets and to carry on -6-

its business as now conducted. Each party currently holds all governmental and administrative consents, permits, appointments, approvals, licenses, certificates and franchises which are necessary for the operation of its business, all of which are in full force and effect. No material litigation, other than litigation in the ordinary course of business, or proceeding is pending or threatened against the party except those matters, if any, described by the parties in Schedule 6.01(a) attached and incorporated by reference hereto. Neither the execution or delivery by any Party of this Agreement will give rise to a material breach of any other agreement to which it is a party, or interfere with or otherwise adversely affect the ability of the Party to carry on its business after the Closing. (b) The Board of Directors of Frontline have approved this Agreement and the transactions contemplated hereby and have authorized their officers to execute this Agreement on behalf of Frontline. (c) Except as disclosed in Schedule 6.01(c), the execution, delivery and performance of this Agreement and the consummation of all transactions contemplated hereby or thereby will not conflict with, or result in any violation of, any provision of any of the party's corporate documents, including its Articles of Incorporation, Estatutos Sociales, or any law, statute, rule or regulation to which a party is subject. (d) No party is currently in bankruptcy or contemplating bankruptcy, in receivership or has made the assignment of any assets in satisfaction of outstanding debts to creditors. (e) Immediately prior to or at the time of Conversion Date, each of the party's outstanding and issued capital stock shall be the number of shares described in Exhibit "A" attached hereto and incorporated by reference herein. As reflected in Exhibit "A," Frontline shall authorize, as part of its proxy, the reverse split of its shares, and, to the extent possible, canceled warrants and options and done all such other things necessary so that the maximum amount of shares held by the shareholders of Frontline at the time of Closing shall be no more than twenty five percent (25%) of the outstanding and issued shares of Frontline. Other than that which is disclosed in Exhibit "A," no party is subject to any options, warrants, stock-based or stock-related awards, conversion privileges or other rights to acquire any shares of capital stock of or other ownership interest in such party. Frontline is not subject to any obligation, contingent or otherwise, to repurchase or otherwise acquire or retire any shares of its capital stock other than that which is disclosed in Exhibit "A." (f) All shares to be issued by Frontline to Arrangoiz and Requejo as a result of the transactions contemplated by this Agreement (i) will be duly issued, fully paid, non-assessable and have all the rights, privileges and immunity described in Frontline's Certificate of Incorporation, and (ii) will be free and clear of any Encumbrances, options, warrants, purchase rights, contracts, commitments, equities, claims and demands other than the transfer restrictions required by law or purchase rights inherent to said securities. (g) The shares sold to Frontline by Arrangoiz and Requejo are all of the existing and outstanding capital stock of Provo and no other outstanding and issued shares exist, and there are no restrictions on their transfer, Encumbrances, options, warrants, purchase rights, contracts, commitments, equities, claims and/or demands regarding such capital stock of Provo to be sold to Frontline. -7-

(h) Prior to the Closing Date, each of the parties will have exchanged with the other copies of its financial statements (balance sheet, statement of operations and statement of changes in stockholder's equity) for the prior three (3) fiscal years and including any stub period to October 31, 2002. Prior to the Conversion Date, the parties shall have completed their fiscal year end audit. Such financial statements shall be presented in accordance with U.S. GAAP, or if originally prepared under rules other than U.S. GAAP, reconciled to U.S. GAAP. Except as set forth in Schedule 6.01(l), there has been no material change in any party's financial condition as of the Closing Date. (i) Each party hereby agrees that it will maintain and continue to maintain a system of accounting established and administered in accordance with U.S. GAAP, that all books and records are and will be in all material respects true and complete, and maintained in accordance with good business practices and all applicable laws, and accurately represent and reflect in all material respects all of the transactions that are or should be therein described. Further, each party states, except as set forth in Schedule 6.01(m), as of the Closing, that it has no liabilities or obligations, contingent or otherwise, which would have a Material Adverse Effect on its condition, financial or otherwise, as disclosed in the above-described financial statements other than liabilities incurred subsequent to October 31, 2002, in the ordinary course of business consistent with past business practices and not resulting from any breach of agreement, breach of warranty, tort, infringement or violation of law or regulatory order. For the purposes of this Agreement, the term "Material Adverse Effect" shall mean liabilities of One Hundred Thousand Dollars ($100,000 U.S.) in the aggregate. The financial statements of the parties as of October 31, 2002 will be attached hereto as Exhibit "B" upon the Closing Date and each is incorporated by reference herein. (j) Exhibit C sets forth a true and complete list of all direct or indirect subsidiaries of Provo that are material to its financial condition, together with the jurisdiction of incorporation of each such subsidiary and the percentage of each such subsidiary's outstanding capital stock owned by Provo. Each such subsidiary is a duly organized corporation, validly existing and in good standing under the laws of the jurisdiction of its respective incorporation (as well as all applicable foreign jurisdictions necessary to its business operations) and has the requisite authority to own, operate or lease the properties that each purports to own, operate or lease and to carry on its business as it is now being conducted. (k) Provo shall take all necessary action so that as of the Closing Date, Provo shall own beneficially and of record all of the issued and outstanding capital stock and other securities of each of its subsidiaries. Notwithstanding the above, it is understood by the parties that Provo is currently negotiating with shareholders who hold a minority ownership in two of the Provo subsidiaries as described in Exhibit "C" and that such subsidiaries account for less than fifteen percent (15%) of the combined revenues of Provo and its subsidiaries. Provo will continue its negotiations to acquire the aforementioned shares; however, in the event Provo is unable to purchase the aforementioned subsidiary shares from the shareholders, then such failure shall not be a breach of this Agreement and the Closing shall not be affected thereby. (l) Except as described in Schedule 6.01(p), attached hereto, as of the Closing Date there is no investment banker, broker, finder or other intermediary that has been retained or authorized to act on behalf of any of the parties who might be entitled to any fee or commission from the parties upon the Closing of this Agreement. -8-

(m) Each of the Sellers is acquiring the shares of Frontline for their own account, not as a nominee or agent, for investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act. None of the Sellers has any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to any Person or to share or grant any rights with respect to the shares of Frontline. Sellers understand that the shares of Frontline to be issued them hereunder will contain a legend and that such shares are restricted securities and may not be transferred or sold without registration or an exemption therefrom. (n) Except as disclosed in Schedule 6.01(n), attached hereto, prior to the Closing Date, each of the parties will use their commercially reasonable efforts to keep their current business intact, including its present operations, physical facilities, working conditions and relationships with customers, lessors, licensors, suppliers, and distributors, and each hereby agrees to give the other parties notice in the event that any material relationship with a customer shall be canceled, terminated or expire whereby such party would experience a material impact upon its revenues. (o) Except as disclosed in Schedule 6.01(o), attached hereto, each of the parties material contracts is in full force and effect, there has been no threatened cancellation thereof, there are no ongoing negotiations to extend the sum thereof or renew any pending termination, expiration or cancellation thereof, and there are no outstanding disputes thereunder. (p) Except as disclosed in Schedule 6.01(p), attached hereto, each of the parties and their respective subsidiaries has filed all tax returns that it was required to file under applicable laws and regulations. All such tax returns were correct and complete in all material respects and have been prepared in substantial compliance with all applicable laws and regulations. All taxes due and owing by each of the parties and their subsidiaries have been paid. (q) True and correct lists of the customers of Provo and each of the subsidiaries and an aging report of their accounts receivable as of October 31, 2002 are attached hereto as Schedule 6.01(u). Provo agrees to continue to collect its accounts receivable in the ordinary course of its business and in the manner customary in Mexico. ARTICLE VII COVENANTS OF THE PARTIES Section 7.01. From the date hereof and to the Closing Date, the parties will permit representatives of the other parties to have full access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the party, to all premises, properties, appropriate personnel, books, records (including tax records), contracts and documents of or pertaining to their business, as well as make available its Directors, officers, employees, accountants, attorneys and other agents and representatives. Section 7.02. From the date hereof and to the Closing Date, and except as may be approved in advance by the other parties or as specifically contemplated by this Agreement, each party shall refrain from: (i) issuing any shares of capital stock or other securities, other than pursuant to the -9-

exercise of existing stock options or warrants; (ii) granting any stock options, warrants or other rights to acquire capital stock or other securities, other than pursuant to existing employee stock option plans and consistent with past practices; (iii) entering into, amending or voluntarily terminating any employment agreement with any new or existing employee, except for cause; (iv) granting any increases in the compensation, bonuses, benefits or other remuneration payable to any employee or consultant; (v) entering into, amending or voluntarily terminating any license, royalty or distribution agreement; and (vi) entering into, amending or voluntarily terminating any lease or rental agreement. Section 7.03. Each of the parties shall use its best efforts to cause all conditions precedent to his or its obligations (and to the obligations of the other party hereto) to consummate the transactions contemplated herein) to be satisfied, including, but not limited to, using all reasonable efforts to obtain all required consents, waivers, amendments, modifications, approvals, authorizations, novations and licenses; provided, however, that nothing herein contained shall be deemed to modify any of the absolute obligations imposed upon any of the parties hereto under this Agreement or any agreement executed and delivered pursuant hereto. Section 7.04. The parties hereby agree to cooperate and make further assurances to each other as follows: (a) Each of the parties hereto shall cooperate with the other parties hereto in preparing and filing any notices, applications, reports and other instruments and documents that are required by, or which are desirable in the reasonable opinion of any of the parties hereto, or their respective legal counsel, in respect of, any statute, rule, regulation or order of any governmental or administrative body in connection with the transactions contemplated by this Agreement. (b) Each of the parties hereto hereby further agrees to execute, acknowledge, deliver, file and/or record or cause such other parties to the extent permitted by law to execute, acknowledge, deliver, file and/or record such other documents as may be required by this Agreement or by their respective legal counsel in order to document and carry out the transactions contemplated by this Agreement. Section 7.05. Each party hereto agrees that prior to the Closing Date he or it will enter into no transaction and take no action, and will use his or its best efforts to prevent the occurrence of any event (but excluding events which occur in the ordinary course of business and events over which each party has no control), which will result in any of his or its representations, warranties or covenants contained in this Agreement, or in any agreement, document or instrument executed and delivered by him or it pursuant hereto not to be true and correct, or not to be performed as contemplated, at and as of the time immediately after the occurrence of such transaction or event. Section 7.06. The parties hereby agree to and shall give prompt notice to the other parties as the case may be, of (i) the occurrence, or non-occurrence, of any event the occurrence or non-occurrence of which would be likely to cause any representation contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Closing Date and (ii) any material failure of any of the parties to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under the terms of this Agreement; provided, however, that the -10-

delivery of any notice pursuant to this Section 7.06 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. Section 7.07. Provo hereby covenants and agrees that during the period from the date hereof to the Closing Date except pursuant to the terms hereof or unless Frontline shall otherwise agree, in writing, that its business shall be conducted only in the ordinary course of business and in the manner consistent with past practice and in compliance with applicable laws; it shall use its best efforts to preserve intact their assets, their business operations and their business organization, to keep available the services of the present officers, employees and consultants, and to preserve its present relationships with customers, suppliers and other persons with whom it has a business relationship. By way of illustration, and not limitation, Provo shall not, between the date of this Agreement and the Closing Date, unless specifically contemplated by this Agreement, directly or indirectly, do or propose or commit to do, any of the following without the prior written consent of Frontline: (a) (i) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of their common stock, or (ii) split, combine or reclassify any of their capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for their existing shares of capital stock, or otherwise; (b) authorize for issuance, issue, deliver, sell or agree to commit to issue, sell or deliver, (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise), pledge or otherwise encumber, any shares of their capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities, convertible securities or any other securities or equity equivalents; (c) (i) increase the compensation payable or to become payable to any officer, director, employee or consultant, except pursuant to the terms of existing contracts, policies or benefit arrangements in effect on the date hereof, or (ii) grant any severance or termination paid to, or enter into any employment or severance agreement with, any director, officer, other employee or consultant except pursuant to the terms of existing contracts, policies and benefit arrangements in effect on the execution date hereof, or (iii) establish, adopt enter into or amend any collective bargaining (other than in accordance with past practice), bonus, profit sharing, thrift, compensation, stock option, or restrictive stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directors, officers, employees or consultants; (iv) amend their Articles of Incorporation, Articles of Organization or any other documents related to their organization and capitalization including By-laws or other comparable charter or organizational documents or through merger, liquidation, reorganization, restructuring, or in any other fashion, alter their corporate structure or ownership; (d) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities, guarantee any debt securities of another person, or enter into any arrangement having an economic effect of any of the foregoing, except for short-term borrowings incurred in the ordinary course of business consistent with past practices; -11-

(e) except as contemplated hereby, acquire, or agree to acquire (i) by merging or consolidating with, or by purchasing a substantial portion of the stock or assets of, or by any other manner, any business or corporation, partnership, joint venture, association or other business organization or division thereof, or (ii) any assets that are material, individually or in the aggregate, except purchases consistent with its ordinary course of business or past practice in excess of Fifty Thousand Dollars ($50,000); (f) except as disclosed in Schedule 7.07(f) or in the ordinary course of business, enter into any agreement, contract, or commitment to purchase, sell, lease or otherwise dispose of assets or require payments in excess of Fifty Thousand Dollars ($50,000); (g) except as disclosed in Schedule 7.07(g), make any capital expenditures in excess of Fifty Thousand Dollars ($50,000); (h) extend credit or acquire merchandise, utilize or repay any bank line of credit other than in the normal course or conduct of business consistent with past practice; (i) adopt a plan of complete or partial liquidation or resolutions providing for authorizing such a liquidation or the dissolution, merger, consolidation, restructuring, recapitalization or reorganization other than that which is contemplated by the terms of this Agreement; (j) make or change any election, change an annual accounting period, adopt or change any accounting method, file an amended tax return, enter into any closing agreements, sell any tax claim or assessment, surrender any right to claim a refund of taxes, consent to an extension of or waiver of the limitation period applicable to any tax claim or assessment or take any other similar action related to the filing of any tax return or the payment of any tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would have the effect of increasing their tax liability for any period ending after October 31, 2002; and (k) except as disclosed in Schedule 7.01(j) settle or compromise any litigation to which they are a defendant (whether or not it commenced prior to the date of this Agreement) or settle, pay or compromise any claims not required to be paid, which payments are individually in an amount in excess of Ten Thousand Dollars ($10,000) and in the aggregate in an amount in excess of Fifty Thousand Dollars ($50,000). Section 7.08. Frontline covenants and agrees that, during the period from the date hereof to the Closing Date, except as required pursuant to the terms hereof or unless Provo shall otherwise agree, in writing, the Frontline business shall be conducted only, and Frontline shall not take any action, except in the ordinary course of business and in a manner consistent with past practice and in compliance with applicable laws; and Frontline shall use its best efforts to preserve intact the Frontline assets, the Frontline business operations and the business organization of Frontline, to keep available the services of its present officers, employees and consultants, and to preserve the present relationships of Frontline with its customers, suppliers and other persons with whom Frontline has a business relationship. By way of illustration, and not limitation, Frontline shall not, between the date of this Agreement and the Closing Date, unless specifically contemplated by this -12-

Agreement, directly or indirectly, do or propose or commit to do, any of the following without prior written consent of Provo: (a) (i) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of the Frontline capital stock or, (ii) except for the reverse stock split required by the terms of this Agreement, split, combine or re-classify any of the Frontline capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of the Frontline capital stock, or otherwise; (b) except as required under the terms of the currently issued Preferred Stock, authorize for issuance, issue, deliver, sell or agree to commit to issue, sell or deliver (whether through issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise), pledge or otherwise encumber any shares of Frontline capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities, convertible securities or any other securities or equity equivalents; (c) (i) increase the compensation payable or to become payable to any officer, director, employee or consultant of Frontline, except pursuant to the terms of existing contracts, policies or benefit arrangements in effect on the date hereof, or (ii) grant any severance or termination paid to, or enter into any employment or severance agreement with, any director, officer or other employee or consultant of Frontline or any of its subsidiaries, except pursuant to the terms of existing contracts, policies, and benefit arrangements in effect on the date hereof, or (iii) establish, adopt, enter into or amend any collective bargaining (other than in accordance with past practice) bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy, or arrangement for the benefit of any directors, officers, employees or consultants of Frontline; (d) amend the Certificate of Incorporation, bylaws or other comparable charter organization documents of Frontline, except as contemplated hereby; (e) except as contemplated hereby, acquire, or agree to acquire (i) by merging or consolidating with, or by purchasing a substantial portion of the stock or assets of, or by any other manner, any business or corporation, partnership, joint venture, association or other business organization or division thereof, or (ii) any assets that are material, individually or in the aggregate, except purchases consistent with its ordinary course of business or past practice in excess of Fifty Thousand Dollars ($50,000); (f) sell, lease, license, mortgage or otherwise encumber or subject to any lien, security interest, pledge or encumbrance or otherwise dispose of any of the Frontline assets, except sales in the ordinary course of business consistent with past practices; (g) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or the rights to secure any debt securities, guarantee any debt securities of any other person, or enter into any arrangement having the economic effect of any of the foregoing, except for the short term borrowings incurred in the ordinary course of business consistent with past practice; -13-

(h) except in the ordinary course of business, enter into any agreement, contract or commitment, involving a commitment on the part of Frontline to purchase, sell, lease or otherwise dispose of assets or acquire payment by Frontline in excess of Fifty Thousand Dollars ($50,000); (i) make any capital expenditures in excess of Twenty-Five Thousand Dollars ($25,000); (j) adopt a plan of complete or partial liquidation of Frontline or resolutions providing for or authorizing such liquidation or the dissolution, merger, consolidation, restructuring, or recapitalization or reorganization of Frontline other than that which is contemplated by the terms of this Agreement; (k) make or change any election, change in annual accounting, adopt or change any accounting method or principle, file an amended tax return, enter into any closing agreement, settle any tax claim or assessment relating to Frontline or any of its subsidiaries, surrender any right to claim a refund of taxes, consent to any extension of or waiver of the limitation period applicable to any tax claim or assessment relating to Frontline or its subsidiaries, or take any other similar action relating to the filing of any tax return or the payment of any tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would have the effect of increasing the tax liability of Frontline or any of its subsidiaries for a period ending after October 31, 2002 or decreasing any tax attribute of Frontline existing on the Closing Date; (l) settle or compromise any litigation to which Frontline is a defendant (whether or not commenced prior to the date of this Agreement) or settle, pay or compromise any claims not required to be paid, which payments are individually in an amount in excess of Ten Thousand Dollars ($10,000) and in the aggregate in an amount in excess of Fifty Thousand Dollars ($50,000); and (m) extend credit or acquire merchandise, utilize or repay any bank line of credit other than in the normal course of business consistent with past practice. Section 7.09. Each of the parties agree to use their reasonable efforts to cause the purchase of the Provo Shares to qualify as a tax free transaction in accordance with Mexican tax law. The parties agree to file all necessary returns and/or tax information to reflect the purchase of the Provo Shares as a tax free transaction under Mexican law and agree not to take any position thereon or otherwise that is or would be inconsistent with such treatment (except if such position would violate any law of any jurisdiction to which the Party is subject). Section 7.10. As soon as it is practicable after the date of this Agreement, Frontline shall, with the cooperation of Provo, prepare and file with the SEC all necessary filings and documents required by the consummation of the transactions contemplated by the terms of this Agreement including, but not limited to, any Form 8-K. It is further agreed that Frontline shall take the necessary steps and shall file the necessary documents in order to request that the holders of Frontline Series B Convertible Redeemable Preferred Stock convert their Preferred Stock to Frontline common stock and that such duly issued common stock will be part of and not in addition -14-

to, the outstanding issued shares allotted to Frontline shareholders upon the Closing hereof as set forth in Exhibit "A." Section 7.11. It is understood and agreed that Frontline shall file all necessary documents in order to request its shareholders to approve an amendment of its Certificate of Incorporation to effect the Reverse Split. Section 7.12. Frontline agrees to use its best efforts to, on or prior to the Conversion Date, cause its preferred shareholders to approve the conversion of all of the issued and outstanding shares of Series B Convertible Redeemable Preferred Stock of Buyer, at a ratio of 3.4 shares of preferred stock to 1 share of common stock (the "Preferred Conversion"). ARTICLE VIII REQUIREMENTS TO CLOSING Section 8.01. The respective obligations of Frontline to effect the purchase of the Provo Shares shall be subject to the fulfillment at or prior to the Closing Date of the following requirements, any or all of which may be waived by such party at its sole discretion: (a) The representations and warranties of Provo contained in this Agreement and any other document delivered by it in accordance with the terms of this Agreement shall have been true when made and, in addition, shall be true in all material respects on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. (b) Each of the parties shall have executed and delivered all of the Transaction Documents to which they are parties. (c) Provo shall have performed, observed and complied in all material respects with all of its obligations, covenants and agreements, and shall have satisfied or fulfilled in all material respects all conditions contained in any document referenced herein and required to be performed, observed or complied with, or to be satisfied or fulfilled by Provo at or prior to the Closing Date. (d) Intentionally left blank. (e) Frontline shall have received an opinion from counsel for Provo, dated as of the Closing Date, that the transactions contemplated herein have been properly authorized in accordance with the laws of the respective jurisdictions of Provo and its subsidiaries, and an opinion regarding the enforceability of the Transaction Documents from Swidler Berlin Shereff Friedman, LLP.. Such opinions shall be in a form acceptable to counsel for Frontline. (f) No order of any court or administrative agency shall be in effect which constrains or prohibits the transactions contemplated hereby, and no claim, suit, action, inquiry, investigation or proceeding in which it will be, or it is, sought to restrain, prohibit, or change the terms of or obtain damages or other relief in connection with this Agreement or any other transactions contemplated hereby, shall have been instituted or threatened by any person or entity, in which in the reasonable judgment of Frontline (based on the likelihood of success and material -15-

consequences of such claim, suit, action, inquiry or proceeding) makes it inadvisable to proceed with the consummation of such transactions. (g) All consents, waivers, approvals, licenses and authorizations third parties and governmental and administrative authorities (and all amendments or modifications to existing agreements with third parties) (the "Consents") required as a pre-condition to the performance by the parties of their obligations hereunder and under any agreement delivered pursuant hereto, or which in Frontline's reasonable judgment are necessary to continue unimpaired, subject to the Closing Date, any rights in and to the Provo assets, business or operations which could be impaired by the transactions contemplated herein, shall have been duly obtained and shall be in full force and effect. (h) The validity of all transactions contemplated by all of the Transaction Documents, as well as the form and substance of all agreements, instruments, opinions, certificates and other documents delivered by Provo pursuant hereto, shall be satisfactory in all material respects to Frontline and its counsel. (i) Except as otherwise provided by this Agreement, there shall not have occurred after the date hereof a Material Adverse Effect in the condition of Provo. (j) The American Stock Exchange ("AMEX") shall have orally advised the parties that the closing of the transactions contemplated by the Transaction Documents does not constitute as "change of control" in accordance with AMEX's rules and regulations. Section 8.02. The obligations of Provo to effect the purchase of the Provo Shares by Frontline shall be subject to the fulfillment at or prior to the Closing Date of the following requirements, any or all of which may be waived by the parties at their sole discretion: (a) The representations and warranties of Frontline contained in any Frontline documents delivered by Frontline shall have been true when made, and in addition, it shall be true in all material respects on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. (b) Frontline shall have performed, observed and complied in all material respects with all their obligations, covenants and agreements, and shall have satisfied or fulfilled in all material respects all conditions contained in any document referenced herein and required to be performed, observed or complied with, or to be satisfied or fulfilled by Frontline at or prior to the Closing Date. (c) Intentionally left blank. (d) Provo shall have received an opinion from Frontline's counsel, dated as of the Closing Date, that Frontline is a corporation validly existing under the laws of the State of Delaware, and that the transactions contemplated herein have been properly authorized in accordance with the laws of the State of Delaware and have been accomplished in compliance with the rules and regulations of the SEC. Such opinion shall be in the form acceptable to Provo's counsel. -16-

(e) No order of any court or administrative agency shall be in effect which constrains or prohibits the transactions contemplated hereby, and no claim, suit, action, inquiry, investigation or proceeding in which it will be, or it is, sought to restrain, prohibit, or change the terms of or obtain damages or other relief in connection with this Agreement or any other transactions contemplated hereby, shall have been instituted or threatened by any person or entity, in which in the reasonable judgment of Provo (based on the likelihood of success and material consequences of such claim, action, inquiry, investigation or proceeding) makes it inadvisable to proceed with the consummation of such transactions. (f) The validity of all transactions contemplated by the Transaction Documents, as well as the form and substance of all agreements, instruments, opinions, certificates and other documents delivered by Frontline pursuant hereto, shall be satisfactorily in all material respects to Provo's counsel. (g) AMEX shall have orally advised the parties that the closing of the transactions contemplated by the Transaction Documents does not constitute as "change of control" in accordance with AMEX's rules and regulations. (h) Except as otherwise permitted by this Agreement, there shall not have occurred after the date hereof any Material Adverse Effect in the condition of Frontline. (i) Frontline shall have received the proceeds of the Bridge Loan. Section 8.03. Deliveries by Arrangoiz and Requejo at Closing. Arrangoiz and Requejo shall deliver the following: (a) Frontline shall receive the stock certificates representing all of the issued and outstanding capital stock of Provo with proper instruments of transfer, transferring the ownership of the Provo Shares to Frontline; (b) Frontline shall receive duly executed copies of all Transaction Documents to which Provo, Arrangoiz and Requejo are a party; (c) Frontline shall receive a certificate executed by Requejo and Arrangoiz dated as of the Closing Date to the effect that all representations and warranties of Requejo and Arrangoiz and Provo are true and complete in all material respects and all covenants to be performed by them or Provo at or as of the Closing have been performed in all material respects and conditions to be satisfied at or as of the Closing have been satisfied in all material respects or waived in accordance with the terms of this Agreement. Section 8.04. Deliveries by Frontline at the Closing. At the Closing, Frontline shall deliver the following: (a) Sellers shall receive stock certificates representing the Series C Preferred shares to be issued to Arrangoiz and Requejo in accordance with the terms of this Agreement; (b) The Brokers shall receive stock certificates representing the Series D Preferred Shares to be issued to the Brokers; -17-

(c) Sellers shall receive duly executed copies of the Note, the Security Agreement and all other documents incidental to the Debt; (d) Provo and Sellers shall receive duly executed copies of all Transaction Documents to which Frontline is a party; (e) Provo and Sellers shall receive a Secretary's certificate certifying copies of (i) the resolutions adopted by the Frontline Board of Directors authorizing Frontline and its officers to execute and deliver the Frontline documents to which it is a party, to perform its obligations hereunder and to complete the issuance of shares to Provo as contemplated herein, and (ii) the resolution appointing Arrangoiz, Requejo, and one independent director of Seller's choosing to the Board of Directors of Frontline; (f) Provo shall receive a certificate of the Secretary of Frontline certifying as to the incumbency and signatures of the officers of Frontline executing the Frontline documents on behalf of such corporation; (g) Frontline shall have furnished Provo with a certificate executed by its President, dated as of the Closing Date, to the effect that all representation and warranties of Frontline and true and complete in all material respects and all covenants to be performed by Frontline at or as of the Closing have been performed in all material respects and the conditions to be satisfied at or as of the Closing have been satisfied in all material respects or waived in accordance with terms of this Agreement. ARTICLE IX INDEMNIFICATION Section 9.01. Subject to the provisions of this Article IX, each party (each an "Indemnifying Party") shall indemnify and save harmless each of the other parties and their respective officers, directors, employees, agents and successors and assigns, and each person who controls each of the parties within the meaning of the Securities Act or the Exchange Act, from and against any and all Liabilities, losses, damages, claims (whether or not meritorious), judgments, fines, settlements and other costs and expenses (including reasonable attorneys' fees and expenses) based upon, arising out of or resulting from any breach of any representation or warranty, or any breach of or failure to perform any covenant or agreement, by such Indemnifying party set forth in this Agreement or any of the other Transaction Documents or any Litigation brought by any third party arising out of the transactions contemplated hereby and thereby. The indemnification provisions of this Article IX shall survive for two (2) years from the Closing Date. Section 9.02. The party seeking indemnification under this Article IX (the "Indemnified Party") shall, promptly after the receipt of notice of the commencement of any Litigation against such Indemnified Party in respect of which indemnity may be sought under this Article IX, notify the Indemnifying Party in writing of the commencement thereof (the "Indemnification Notice"). The failure of any Indemnified Party to give the Indemnifying Party an Indemnification Notice shall not relieve the Indemnifying Party from any Liability which it may have to such Indemnified Party under this Article IX except to the extent that such Indemnifying Party shall have been prejudiced -18-

thereby. In case any such Litigation shall be brought against any Indemnified Party, the Indemnifying Party shall be entitled to participate therein, and to the extent that it may wish, to assume the defense thereof, with counsel reasonably satisfactory to such Indemnifying Party by giving written notice of the Indemnifying Party's election to assume the defense within thirty (30) days after its receipt of the Indemnification Notice, and after timely written notice from the Indemnifying Party to such Indemnified Party of its election so to assume the defense thereof, such Indemnifying Party will not be liable to such Indemnified Party under this Article IX for any legal expense subsequently incurred by such Indemnified Party in connection with the defense thereof nor for any settlement thereof entered into by the Indemnified Party without the consent of the corresponding Indemnifying Party; provided that (i) if an Indemnifying Party shall elect not to assume (or shall fail within the time period set forth above to elect to assume) the defense of such Litigation, or shall subsequently fail to diligently maintain the defense thereof, or (ii) if counsel for the Indemnified Party reasonably determines (x) that there may be a conflict between the positions of Indemnifying and of the Indemnifying and of the Indemnified Party in defending such Litigation or (y) that there may be legal defenses available to such Indemnifying Party different from or in addition to those available to such Indemnifying Party, then separate counsel for the Indemnified Party shall be entitled to participate in and conduct the defense, in the case of clauses (i) and (ii) (x), or such different defenses, in the case of clause (ii) (y), and such Indemnifying Party in connection therewith, and, in the case of clause (i), for any settlement of such Litigation entered into by the Indemnified Party. The corresponding Indemnifying Party shall not enter into any settlement of any such Litigation without the consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed. Section 9.03. Other than representations and warranties made by the parties in Section 6.01 hereof, each of the parties disclaim any other warranties, expressed or implied, written or oral, related to their business, including but not limited to, warranties or merchantability or fitness for any particular purpose. Section 9.04. An Indemnifying Party shall not be obligated to indemnify an Indemnified Party under this Article IX unless and until all losses with respect to which the Indemnifying Party has indemnification obligations hereunder exceed One Hundred Thousand Dollars ($100,000) in the aggregate, following which the Indemnifying Party shall be obligated to indemnity or hold harmless the Indemnified Party for all such losses in excess of such amount. In no event shall the indemnification obligations of each of the parties hereunder exceed Five Hundred Thousand Dollars ($500,000) in the aggregate. Section 9.05. The representations and warranties of Provo contained in this Agreement shall survive until the date that is two years after the Closing Date. The obligation of an Indemnifying Party to hold harmless an Indemnified Party shall be extended automatically to include any time necessary to resolve a claim for indemnification that was made in accordance with the terms hereof before the expiration of the survival period, but not resolved prior to its expiration and any such extension shall apply as to the specific claims asserted and not resolved within the survival period. The liability associated with any such item shall continue until such claim shall have been finally settled, decided or adjudicated. -19-

ARTICLE X DEFAULT Section 10.01. Default. The following are "Events of Default" under this Agreement: (h) a party shall duly fail to observe any other covenant, condition or agreement of this Agreement, which failure shall continue for thirty (30) days after written notice thereof is received from any of the other parties. (i) any warranty or representation made in this Agreement shall be breached by a party or shall prove to be false or misleading in any material respect at any time prior to or following the Closing. (j) if a party is or becomes the subject of a bankruptcy, reorganization, rearrangement, or voluntary insolvency proceeding under applicable bankruptcy, insolvency, creditor's rights or similar laws in effect in the jurisdiction of the party's organization or any other jurisdiction in which a party may seek or be subject to any such protection or proceedings, or in voluntary proceeding, if such proceeding is not dismissed within sixty (60) days. (k) if a party shall seek, consent to or acquiesce in the appointment of any trustee, receiver or liquidator of, or if a trustee, receiver or liquidator is otherwise appointed for it, or all or any material part of its assets. (l) if a party shall make any general assignment for the benefit of creditors. (m) in any proceeding a party shall be alleged to be insolvent or unable generally to pay its debts as they become due if such proceeding is not dismissed within sixty (60) days. (n) a party commences any one or more of the processes of dissolution, termination or liquidation. Notwithstanding the above provisions, any cure periods provided for in this Section shall not apply with respect to any Event of Default of the same type or nature which is repeated more than twice in any twelve month period. This section shall continue in full force and effect until the Conversion Date, at which time the default provisions set forth in this section shall cease. Section 10.02. The remedies identified in this Agreement shall be cumulative and not exclusive and the parties shall be entitled to all other remedies available under law or in equity. Section 10.03. The parties shall be entitled to enforce their rights under this Agreement specifically and to recover damages by reason of any Event of Default or any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree not to oppose any final judgments of specific performance. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party in its sole discretion may apply to any court of law or in equity of competent jurisdiction for specific performance or injunctive relief (without posting -20-

a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement. ARTICLE XI FURTHER ASSURANCES Section 11.01. Further Assurances. The parties agree that all transactions hereunder shall be done in the most efficient tax manner for Arrangoiz, Requejo and Provo, in order to minimize taxes for both parties in Mexico and the United States. To that end, following the Closing and subject to the opinion of tax advisors in Mexico and the United States, each of the parties hereto and their respective Affiliates, agree to use their best efforts to take, execute, acknowledge and deliver all such further acts, documents and assurances as are reasonably necessary, from time to time, in order to carry out more effectively the intent and purposes hereof and the other Transaction Documents. ARTICLE XII TERMINATION Section 12.01 Termination. This Agreement and the other transactions contemplated hereby may be terminated at any time prior to the Closing: (a) by mutual written agreement of the Parties; (b) by any party if the Closing shall have not been consummated by April 5, 2003; provided, however, that no party may terminate this Agreement pursuant to this clause (b) if the Closing shall not have been consummated by April 5, 2003 by reason (i) of the failure of such party or any of its affiliates to perform in all material respects any of its or their respective covenants or agreements contained in this Agreement; or (ii) actions of a third party regulatory agency, in which case the aforementioned date shall be extended for a period of time equal to the delay caused by the regulatory agency. (c) by either party if there shall be any applicable law that makes consummation of the transactions contemplated hereby illegal or otherwise prohibited or if consummation of the transactions contemplated hereby would violate any non-appealable final order, decree or judgment of any governmental authority having competent jurisdiction over such person. Any party desiring to terminate this Agreement pursuant to this Section 12.01 shall give written notice of such termination to the other parties. Section 12.02 Effect of Termination. (a) If this Agreement is terminated as permitted by Section 12.01, (i) this Agreement shall forthwith become void and of no further force and effect, except for the following provisions, which shall remain in full force and effect: (a) Section 13.02 (relating to confidentiality), (b) Section 13.09 (relating to expenses), (c) this Section 12.02 and (d) Sections 13.06 and 13.08; and (ii) such termination shall be without liability of any party (or any affiliate, stockholder, -21-

consultant or representative of such party) to the other parties to this Agreement; provided, however, that if the transactions contemplated hereby fail to close as a result of a breach of the provisions of this Agreement by any of the parties, such party shall be fully liable for any and all damages or losses incurred or suffered by the other parties as a result of all such breaches if the other party(ies) is/are ready, willing and able to otherwise satisfy its obligations under this Agreement. (b) The rights and remedies provided in this Section 12.02 shall be cumulative and not exclusive of any rights or remedies provided by applicable law. ARTICLE XIII MISCELLANEOUS Section 13.01. Miscellaneous. This Agreement shall be binding upon and inure to the benefit of the parties named in this Agreement and their respective successors and permitted assigns. No party may assign either this Agreement or any of its rights, interests or obligations hereunder or under any other Transaction Documents without the prior written approval of each of the other parties. Section 13.02. Except as otherwise required by law, including, without limitation, Frontline's reporting obligations under the Exchange Act, no public disclosure of the terms of the Contemplated Transactions shall be made by either party without the prior written consent of the other parties, which will not be unreasonably withheld or delayed. Each party shall furnish to the other parties advance copies of any releases which it proposes to make concerning the transaction. Section 13.03. All information obtained by the parties from each other will be treated as confidential and the parties agree not to disclose, disseminate, reveal, share, or release all or any portion of such information to third parties, including their respective parent, subsidiaries, or affiliates, without the express written consent of the party providing the information. Section 13.04. Any holding that a provision of this Agreement is unenforceable, in whole or in party, will not affect the validity of the other provisions of this Agreement. Section 13.05. This Agreement (including the exhibits, schedules and appendices attached hereto), including the documents referred to herein, embodies the entire agreement and understanding of the parties hereto and supersedes all prior agreements and understandings of the parties hereto relating to the subject matter herein contained, including, without limitation, that certain Stock Purchase and Acquisition Agreement, dated as of December 20, 2002, by and among, Frontline, Provo, Sellers and Kiboga Systems, Inc. Section 13.06. This Agreement shall be construed, interpreted, governed, and enforced by and under the laws of the State of New York, without giving effect to the conflicts of law principles thereof. Section 13.07. All notices under this Agreement, including reports, shall be in writing in the English language addressed to the appropriate party at the address set forth by its name on this Agreement, and shall be deemed given when received by the recipient and shall be delivered -22-

directly by hand to authorized personnel or by registered mail, return receipt requested, telex authenticated facsimile message or electronic mail, confirmed by registered mail. All notices shall be addressed: If to Provo, Arrangoiz, Requejo: Provo, S.A. de C.V. Quintana Roo No. 28 Col. Roma Sur 06760 Mexico, D.F. Fax: 525-264-6442 Attention: Ventura Martinez del Rio Arrangoiz With a copy, which shall not constitute notice, to: Swidler Berlin Sheriff Friedman, LLP The Washington Harbour 3000 K Street, N.W., Suite 300 Washington, D.C. 20007-5116 Attention: Ulises R. Pin If to Frontline: Frontline Communications Corp. One Blue Hill Plaza, 7th Floor Pearl River, New York 10965 Attention: Stephen Cole-Hatchard With a copy to: Amy Wagner-Mele One Blue Hill Plaza, 7th Floor Pearl River, New York 10965 Section 13.08. All controversies relating to the interpretation and/or enforcement of this Agreement and the transactions contemplated herein shall be settled by binding arbitration in accordance with the International Rules of Arbitration of the American Arbitration Association in effect on the date the notice for arbitration is given to the other party or parties. In the event of any conflict between those rules and the provisions of this Section 13.08, the provisions of this Section 13.08 shall govern. The parties shall attempt to select a single arbitrator, but if they are unable to agree within ten (10) days from the date of an arbitration demand served by any of the parties, then each of the parties shall appoint one arbitrator and the arbitrators so chosen shall in turn choose an additional arbitrator. If the arbitrators chosen by the parties cannot agree on the choice of the final arbitrator within a period of ten (10) days after their nomination, then the final arbitrator shall be appointed by the American Arbitration Association. Any arbitration proceedings initiated hereunder shall be held in New York, New York, or such other place as the parties may mutually agree. The arbitration shall take place in the English language. No decision of the arbitrator(s) shall be subject to appeal, and judgment on the award or decision rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. To assure predictability, any arbitrators chosen by the parties or otherwise pursuant to this section shall be attorneys-in-law with experience in sophisticated commercial transactions. The arbitrator(s) shall base the decision solely -23-

on the provisions of this Agreement; provided, however, that to the extent the subject matter for the decision is not provided for in such provisions, the decision shall be based on applicable principles of law and judicial precedent as established in the law of the jurisdiction provided under Section 13.06 and, upon request of a party, will include in the award findings of facts and conclusions of law upon which the award is based. The arbitrator(s) may grant such legal or equitable relief as appropriate, including money damages, specific performance and injunctive relief. Questions of whether the dispute is subject to arbitration shall also be decided by the arbitrator(s). The final arbitration award shall be issued within ninety (90) days after the arbitration is initiated. Subject to the award of the arbitrator(s), each party to the arbitration shall pay an equal share of the fees and costs of the arbitration, except the arbitrator(s) shall have the power to award all expenses (including attorneys' fees and costs) to the prevailing party, as determined by the arbitrator(s). Each of the parties waives any defense of inconvenient forum to the maintenance of an action or proceeding brought under this Section 13.08 and waives any bond, surety, or other security that might be required of any other party with respect thereto. Any party may make service on any other party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 13.07 above. Nothing in this Section 13.08, however, shall affect the right of any party to serve legal process in any other manner permitted by law. Each party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity. Section 13.09. Each of the parties shall bear and shall pay their respective costs and expenses (including reasonable legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. Section 13.10. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Section 13.11. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which, when executed and delivered, shall be effective for purposes of binding the parties hereto, but all of which shall together constitute one and the same instrument. Any signature page delivered by a fax machine or telecopy machine shall be binding to the same extent as an original signature page, with regard to any of the transaction documents or any amendment thereto. Any party who delivers such a signature page agrees to later deliver an original counterpart to any party which requests it. [SIGNATURE PAGE FOLLOWS] -24-

IN WITNESS WHEREOF, and for the consideration herein stated, the parties have executed this Agreement the day and year first above written. /s/ Ventura Martinez del Rio Arrangoiz - -------------------------------------- Proyecciones y Ventas Organizadas, S.A. de C.V. By: Ventura Martinez del Rio Arrangoiz Title: Chairman /s/ Stephen Cole-Hatchard /s/ Ventura Martinez del Rio Arrangoiz - ----------------------------- ------------------------------------------------ Frontline Communications Ventura Martinez del Rio Arrangoiz, Individually By: Stephen Cole-Hatchard Title: CEO /s/ Ventura Martinez del Rio Requejo - ---------------------------------------------- Ventura Martinez del Rio Requejo, Individually

THE FOLLOWING EXHIBITS HAVE BEEN INTENTIONALLY OMITTED: EXHIBIT A -- Issued and Outstanding EXHIBIT B -- Fees and Expenses EXHIBIT C -- Subsidiaries of Provo 6.01(a) -- Material Litigation 6.01(c) -- Non-Contravention 6.01(l) -- Material Changes 6.01(m) -- Undisclosed Liabilities and Obligations 6.01(p) -- Brokers/Finders 6.01(n) -- Customer/Supplier Relationships 6.01(o) -- Material Contracts 6.01(p) -- Tax Returns 7.07(f) -- Material Dispositions of Assets 7.07(g) -- Capital Expenditures 7.07(j) -- Settlement of Litigation The Registrant will provide copies of the omitted Exhibits to the Securities and Exchange Commission upon request. -26-

Exhibit 4.3 CERTIFICATE OF DESIGNATION of Series C Convertible Preferred Stock of Frontline Communications Corporation Pursuant to Section 151 of the General Corporation Law of the State of Delaware Frontline Communications Corporation, a Delaware corporation (the "Corporation"), certifies that pursuant to the authority conferred upon the Board of Directors of the Corporation (the "Board") by the Amended Certificate of Incorporation of the Corporation (the "Certificate of Incorporation") and Section 151 of the General Corporation Law of the State of Delaware (the "DGCL"), the Board, at a special meeting held on March 13, 2003, duly adopted the following resolution creating a series of Preferred Stock, par value $.01 per share, designated as Series C Convertible Preferred Stock: RESOLVED, that Series C Convertible Preferred Stock, par value $.01 per share, of the Corporation be, and hereby is, created and that the designation and amount of, and the rights, powers, preferences, privileges, qualifications, limitations and restrictions of the shares of this series are as follows: Section 1. Designation, Number of Shares and Rank. (a) There will be one series of Preferred Stock designated as "Series C Convertible Preferred Stock" (the "Series C Preferred Stock") and the number of shares constituting such series will be 220,000 shares. (b) With respect to dividend rights and rights on liquidation, winding-up and dissolution, the Series C Preferred Stock will rank: (i) senior to: (A) the common stock, par value $1.00 per share (the "Common Stock") of the Corporation; (B) all other classes of common stock, (C) the Series D Convertible Preferred Stock, par value $.01 per share (the "Series D Preferred Stock") of the Corporation, and (D) each other class or series of preferred stock of the Corporation now or hereafter established by the Board of Directors (the "Board of Directors" or the "Board") of the Corporation, the terms of which do not expressly provide that it ranks senior to, or on a parity

with, the Series C Preferred Stock as to dividend and redemption rights and rights on liquidation, winding-up and dissolution of the Corporation; (ii) on a parity with each other class or series of preferred stock of the Corporation established hereafter by the Board of Directors, the terms of which expressly provide that such class or series will rank on a parity with the Series C Preferred Stock as to dividend and redemption rights and rights on liquidation, winding-up and dissolution; and (iii) junior to (x) the Series B Convertible Preferred Stock, par value $.01 per share of the Corporation and (y) each class or series of preferred stock of the Corporation established hereafter by the Board, the terms of which class or series expressly provide that such class or series will rank senior to the Series C Preferred Stock as to dividend and redemption rights or rights on liquidation, winding-up and dissolution of the Corporation. Section 2. Conversion (a) Upon (i) receipt of the approval of the Corporation's stockholders (the "Requisite Approvals") for the Corporation to (x) issue shares of Common Stock upon the conversion of the Series C Preferred Stock (y) effect a 1- for -1.5 share reverse split of the Common Stock (the "Reverse Split") and (z) increase the number of authorized shares of Common Stock to at least 75,000,000 shares (the matters referred to in clauses (x), (y) and (z) of this subsection 2(a)(1) are collectively referred to as the "Actions") and (ii) the filing of an amendment to the Certificate of Incorporation of the Corporation to effect the Actions (the "Amendment") with the Secretary of State of the State of Delaware, each share of Series C Preferred Stock will automatically convert into that number of fully paid and nonassessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) as shall be equal to the Conversion Rate (as hereinafter defined), in effect at the time of conversion. The "Conversion Rate" shall initially be 150 shares of Common Stock per each share of Series C Preferred Stock. For the avoidance of doubt, it is intended that after giving effect to the Actions, upon conversion of the Series C Preferred Stock, the holders of the Series C Preferred Stock shall be entitled to receive 22,000,000 shares of Common Stock after giving effect to the Reverse Split (and after appropriate adjustments in the event of further stock splits, stock dividends or similar capital adjustments). Notwithstanding the foregoing, this Series C Preferred Stock shall not convert into Common Stock if the Requisite Approvals are not obtained by the Conversion Date (as defined in the Amended and Restated Stock Purchase Agreement dated April 3, 2003 between the Corporation and Proyecciones y Ventas Organizadas, S.S. de C.V., Ventura Martinez del Rio Requejo and Ventura Martinez del Rio Arrangoiz). (b) The Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery upon conversion of -2-

shares of Common Stock or other securities or property in a name other than that of the holder of the shares of the Series C Preferred Stock being converted, and the Corporation shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of any such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. (c) The Corporation (and any successor corporation) shall take all action necessary so that a number of shares of the authorized but unissued Common Stock (or common stock in the case of any successor corporation) sufficient to provide for the conversion of the Series C Preferred Stock outstanding upon the basis hereinbefore provided are at all times reserved by the Corporation (or any successor corporation), free from preemptive rights, for such conversion, subject to the provisions of Section 2(d). If the Corporation shall issue any securities or make any change in its capital structure which would change the number of shares of Common Stock into which each share of the Series C Preferred Stock shall be convertible as herein provided, the Corporation shall at the same time also make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Series C Preferred Stock on the new basis. (d) In case of any consolidation or merger of the Corporation with any other corporation or in case of any sale or transfer of more than 50% of the assets of the Corporation, or in the case of any share exchange, in each case pursuant to which more than 50% of the outstanding shares of Common Stock are converted into other securities, cash or other property, the Corporation shall make appropriate provision or cause appropriate provision to be made so that each holder of shares of Series C Preferred Stock then outstanding shall have the right thereafter (in lieu of the right to convert into Common Stock, which right shall cease) to convert such shares of Series C Preferred Stock into the kind and amount of securities, cash or other property receivable upon such consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Common Stock into which such shares of Series C Preferred Stock could have been converted immediately prior to the effective date of such consolidation, merger, sale, transfer or share exchange. If, in connection with any such consolidation, merger, sale, transfer or share exchange, each holder of shares of Common Stock is entitled to elect to receive either securities, cash or other property upon completion of such transaction, the Corporation shall provide or cause to be provided each holder of Series C Preferred Stock the right to elect the securities, cash (other than by the exercise of appraisal rights) or other property into which the Series C Preferred Stock held by such holder shall be convertible after completion of any such transaction on the same terms and subject to the same conditions -3-

applicable to holders of the Common Stock (including, without limitation, notice of the right to elect, limitations on the period in which such election shall be made and the effect of failing to exercise the election). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges. (e) No fractional shares of Common Stock shall be issued upon conversion of Series C Preferred Stock but, in lieu of any fraction of a share of Common Stock which would otherwise be issuable in respect of the aggregate number of such shares surrendered for conversion at one time by the same holder, the aggregate number of shares of Common Stock shall be rounded to the nearest whole number of shares. (f) The Conversion Rate shall be adjusted from time to time under certain circumstances in case the Corporation shall (i) pay a dividend or make a distribution on its Common Stock in shares of its capital stock, (ii) subdivide its outstanding Common Stock into a greater number of shares, (iii) combine the shares of its outstanding Common Stock into a smaller number of shares (including as a result of the Reverse Split), or (iv) issue by reclassification of its Common Stock any shares of its capital stock, then in each such case the Conversion Rate in effect immediately prior thereto shall be proportionately adjusted so that the holder of any Series C Preferred Stock thereafter surrendered for conversion shall be entitled to receive, to the extent permitted by applicable law, the number and kind of shares of capital stock of the Corporation which it would have owned or have been entitled to receive after the happening of such event had such Series C Preferred Stock been converted immediately prior to the record date for such event (or if no record date has been established in connection with such event, the effective date for such action). An adjustment pursuant to this Section 2(f) shall become effective immediately after the record date in the case of a stock dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, or reclassification. (g) Except as otherwise provided above in this Section 2, no adjustment in the Conversion Rate shall be made in respect of any conversion for share distributions or dividends theretofore declared and paid or payable on the Common Stock. Section 3. Voting Rights. The holders of the Series C Preferred Stock will not have any voting rights except as set forth in this Section 3 or as otherwise from time to time required by law. (a) The affirmative vote or consent of the holders of at least a majority of the outstanding shares of the Series C Preferred Stock, voting separately as a -4-

class, will be required for (i) any amendment, alteration or repeal of this Certificate of Designation, if such amendment, alteration or repeal affects the rights, preferences or privileges of the Series C Preferred Stock or (ii) the creation, authorization or issuance, by reclassification or otherwise, of any class or series of any stock of the Corporation having preference equivalent to or senior to the Series C Preferred Stock as to dividends, liquidation, redemption, conversion, voting or assets (the "Senior Stock") or the increase in the amount of authorized shares of any such Senior Stock. Such right of the holders of Series C Preferred Stock to vote as hereinabove provided may be exercised at any annual meeting or at any special meeting called for such purpose as hereinafter provided or at any adjournment thereof. (b) In any case in which the holders of Series C Preferred Stock shall be entitled to vote pursuant to this Section 3 or pursuant to law, each holder of Series C Preferred Stock entitled to vote with respect to such matters shall be entitled to one vote for each share of Series C Preferred Stock held. Section 4. Covenants. Prior to the Conversion Date, the Corporation shall not, unless specifically contemplated by this Certificate of Designation, directly or indirectly, do or propose or commit to do, any of the following: (a) authorize any merger of the Corporation with another person or entity which would result in any transaction of series of related transactions constituting the sale, transfer, lease conveyance, exchange or other disposition of more than 50% of the consolidated assets , business or earning power of the Corporation or its subsidiaries; (b) take any action which would result in the voluntary or involuntary liquidation, dissolution or winding-up of the Corporation or its business; (c) amend, repeal or add any provision to the Corporation's Certificate of Incorporation or By-laws if the effect thereof would be materially adverse to the holders of the Series C Preferred Stock, provided, however, that it is specifically agreed that the transactions provided for in Section 2(a) hereof shall not be prohibited by this Section 4; (d) issue any options, warrants or other securities convertible into or exchangeable for shares of Senior Stock; (e) incur, refinance or amend the terms of any indebtedness or any other obligation for the payment of money in an aggregate amount of $1,000,000; or (f) enter into any agreement for the public or private sale of any of the Corporation's securities or engaging in any capital financing transaction in -5-

which the Company issues any shares of capital stock (including any options, warrants or other obligations or securities convertible or exchangeable for shares of the Corporation's capital stock) at a price per share lower than $1.50. Section 5. Preemptive Rights. The holders of the Series C Preferred Stock are not entitled to any preemptive rights. Section 6. Dividends and Distributions. The holders of shares of Series C Preferred Stock shall not be entitled to receive dividends. Section 7. Liquidation Preference. In the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of Series C Preferred Stock shall be entitled to receive out of the assets of the Corporation, whether such assets constitute stated capital or surplus of any nature, a sum in cash equal to $.01 per share (as appropriately adjusted in the event of stock splits, stock dividends or similar capital adjustments or recapitalization) (the "Liquidation Preference"), and no more; provided, however, that such rights shall accrue to the holders of Series C Preferred Stock only if the Corporation's payments with respect to the liquidation preference of the holders of Senior Stock are fully met. After the liquidation preferences of the Senior Stock are fully met, the entire assets of the Corporation available, for distribution shall be distributed ratably among the holders of the Series C Preferred Stock and any Parity Stock in proportion to the respective preferential amounts to which each is entitled (but only to the extent of such preferential amounts). After payment in full of the accrued and unpaid dividends and the Liquidation Preference of the shares of Series C Preferred Stock as provided in this Section 6, the holders of such shares shall not be entitled to any further participation in any distribution of assets by the Corporation. Neither a consolidation or merger of the Corporation with another corporation nor a sale or transfer of all or part of the Corporation's assets for cash, securities or other property will be considered a liquidation, dissolution or winding up of the Corporation. Section 8. No Sinking Fund. The shares of Series C Preferred Stock shall not be subject to the operation of a purchase, retirement or sinking fund. Section 9. Residual Rights. All rights accruing to the outstanding shares of the Corporation not expressly provided for to the contrary herein shall be vested in the Common Stock. Section 10. No Reissuance of Series C Preferred Stock. No share or shares of Series C Preferred Stock acquired by the Corporation by reason of purchase, conversion, redemption or otherwise will be sold or reissued, and, upon such event, all such shares will resume the status of authorized but unissued shares of Series C Preferred Stock. [SIGNATURE PAGE FOLLOWS] -6-

IN WITNESS WHEREOF, the undersigned hereby executes this document and affirms that the facts set forth herein are true under penalty of perjury this 3rd day of April 2003. FRONTLINE COMMUNICATIONS CORPORATION By: /s/ Stephen J. Cole-Hatchard -------------------------------- Name: Stephen J. Cole-Hatchard Title: Chief Executive Officer ATTEST: By: /s/ Amy Wagner-Mele --------------------- Name: Amy Wagner-Mele Title: Secretary

Exhibit 4.4 CERTIFICATE OF DESIGNATION of Series D Convertible Preferred Stock of Frontline Communications Corporation Pursuant to Section 151 of the General Corporation Law of the State of Delaware Frontline Communications Corporation, a Delaware corporation (the "Corporation"), certifies that pursuant to the authority conferred upon the Board of Directors of the Corporation (the "Board") by the Amended Certificate of Incorporation of the Corporation (the "Certificate of Incorporation") and Section 151 of the General Corporation Law of the State of Delaware (the "DGCL"), the Board, at a special meeting held on March 13, 2003, duly adopted the following resolution creating a series of Preferred Stock, par value $.01 per share, designated as Series D Convertible Preferred Stock: RESOLVED, that Series D Convertible Preferred Stock, par value $.01 per share, of the Corporation be, and hereby is, created and that the designation and amount of, and the rights, powers, preferences, privileges, qualifications, limitations and restrictions of the shares of this series are as follows: Section 1. Designation, Number of Shares and Rank. (a) There will be one series of Preferred Stock designated as "Series D Convertible Preferred Stock" (the "Series D Preferred Stock") and the number of shares constituting such series will be 35,500 shares. (b) With respect to dividend rights and rights on liquidation, winding-up and dissolution, the Series D Preferred Stock will rank: (i) senior to: (A) the common stock, par value $1.00 per share (the "Common Stock") of the Corporation; (B) all other classes of common stock; and (ii) junior to (A) the Series B Convertible Preferred Stock, par value $.01 per share of the Corporation; (B) the Series C Convertible Preferred Stock, par value $.01 per share of the Corporation and (C) each other class or series of preferred stock of the Corporation now or hereafter established by the Board of Directors (the "Board of Directors" or the "Board") of the Corporation, the terms of which do not expressly provide that it ranks senior to, or on a parity with, the Series

D Preferred Stock as to dividend and redemption rights and rights on liquidation, winding-up and dissolution of the Corporation; and (D) each class or series of preferred stock of the Corporation established hereafter by the Board, the terms of which class or series expressly provide that such class or series will rank senior to the Series D Preferred Stock as to dividend and redemption rights or rights on liquidation, winding-up and dissolution of the Corporation (iii) on a parity with each other class or series of preferred stock of the Corporation established hereafter by the Board of Directors, the terms of which expressly provide that such class or series will rank on a parity with the Series C Preferred Stock as to dividend and redemption rights and rights on liquidation, winding-up and dissolution.. Section 2. Conversion (a) Upon (i) receipt of the approval of the Corporation's stockholders (the "Requisite Approvals") for the Corporation to (x) issue shares of Common Stock upon the conversion of the Series D Preferred Stock (y) effect a 1- for -1.5 share reverse split of the Common Stock (the "Reverse Split") and (z) increase the number of authorized shares of Common Stock to at least 75,000,000 shares (the matters referred to in clauses (i), (ii) and (iii) of this Section 2(a) are collectively referred to as the "Actions") and (ii) the filing of an amendment to the Certificate of Incorporation of the Corporation to effect the Actions (the "Amendment") with the Secretary of State of the State of Delaware, each share of Series D Preferred Stock will automatically convert into that number of fully paid and nonassessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) as shall be equal to the Conversion Rate (as hereinafter defined), in effect at the time of conversion. The "Conversion Rate" shall initially be 150 shares of Common Stock per each share of Series D Preferred Stock. (b) The Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery upon conversion of shares of Common Stock or other securities or property in a name other than that of the holder of the shares of the Series D Preferred Stock being converted, and the Corporation shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of any such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. (c) The Corporation (and any successor corporation) shall take all action necessary so that a number of shares of the authorized but unissued Common Stock (or common stock in the case of any successor corporation) sufficient to provide for the conversion of the Series D Preferred Stock outstanding upon the basis hereinbefore provided are at all times reserved by the Corporation -2-

(or any successor corporation), free from preemptive rights, for such conversion, subject to the provisions of Section 2(d). If the Corporation shall issue any securities or make any change in its capital structure which would change the number of shares of Common Stock into which each share of the Series D Preferred Stock shall be convertible as herein provided, the Corporation shall at the same time also make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Series D Preferred Stock on the new basis. (d) In case of any consolidation or merger of the Corporation with any other corporation or in case of any sale or transfer of all or substantially all of the assets of the Corporation, or in the case of any share exchange, in each case pursuant to which all of the outstanding shares of Common Stock are converted into other securities, cash or other property, the Corporation shall make appropriate provision or cause appropriate provision to be made so that each holder of shares of Series D Preferred Stock then outstanding shall have the right thereafter (in lieu of the right to convert into Common Stock, which right shall cease) to convert such shares of Series D Preferred Stock into the kind and amount of securities, cash or other property receivable upon such consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Common Stock into which such shares of Series D Preferred Stock could have been converted immediately prior to the effective date of such consolidation, merger, sale, transfer or share exchange. If, in connection with any such consolidation, merger, sale, transfer or share exchange, each holder of shares of Common Stock is entitled to elect to receive either securities, cash or other property upon completion of such transaction, the Corporation shall provide or cause to be provided each holder of Series D Preferred Stock the right to elect the securities, cash (other than by the exercise of appraisal rights) or other property into which the Series D Preferred Stock held by such holder shall be convertible after completion of any such transaction on the same terms and subject to the same conditions applicable to holders of the Common Stock (including, without limitation, notice of the right to elect, limitations on the period in which such election shall be made and the effect of failing to exercise the election). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges. (e) No fractional shares of Common Stock shall be issued upon conversion of Series D Preferred Stock but, in lieu of any fraction of a share of Common Stock which would otherwise be issuable in respect of the aggregate number of such shares surrendered for conversion at one time by the same holder, the aggregate number of shares of Common Stock shall be rounded to the nearest whole number of shares. -3-

(f) The Conversion Rate shall be adjusted from time to time under certain circumstances in case the Corporation shall (i) pay a dividend or make a distribution on its Common Stock in shares of its capital stock, (ii) subdivide its outstanding Common Stock into a greater number of shares, (iii) combine the shares of its outstanding Common Stock into a smaller number of shares (including as a result of the Reverse Split), or (iv) issue by reclassification of its Common Stock any shares of its capital stock, then in each such case the Conversion Rate in effect immediately prior thereto shall be proportionately adjusted so that the holder of any Series D Preferred Stock thereafter surrendered for conversion shall be entitled to receive, to the extent permitted by applicable law, the number and kind of shares of capital stock of the Corporation which it would have owned or have been entitled to receive after the happening of such event had such Series D Preferred Stock been converted immediately prior to the record date for such event (or if no record date has been established in connection with such event, the effective date for such action). An adjustment pursuant to this Section 2(f) shall become effective immediately after the record date in the case of a stock dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, or reclassification. (g) Except as otherwise provided above in this Section 2, no adjustment in the Conversion Rate shall be made in respect of any conversion for share distributions or dividends theretofore declared and paid or payable on the Common Stock. Section 3. Voting Rights. (a) The holders of the Series D Preferred Stock will not have any voting rights except as set forth in this Section 3 or as otherwise from time to time required by law. (b) The affirmative vote or consent of the holders of at least a majority of the outstanding shares of the Series D Preferred Stock, voting separately as a class, will be required for any amendment, alteration or repeal of this Certificate of Designation, if such amendment, alteration or repeal materially and adversely affects the rights, preferences or privileges of the Series D Preferred Stock. The creation, authorization or issuance of any class or series or shares of any class or series of senior, parity or junior stock, or the increase or decrease in the amount of authorized capital stock of any such class shall not require the consent of holders of the Series D Preferred Stock and shall not be deemed to affect adversely the rights, preference or privileges of shares of Series D Preferred Stock. Such right of the holders of Series D Preferred Stock to vote as hereinabove provided may be exercised at any annual meeting or at any special meeting called for such purpose as hereinafter provided or at any adjournment thereof. -4-

(c) In any case in which the holders of Series D Preferred Stock shall be entitled to vote pursuant to this Section 3 or pursuant to law, each holder of Series D Preferred Stock entitled to vote with respect to such matters shall be entitled to one vote for each share of Series D Preferred Stock held. Section 4. Preemptive Rights. The holders of the Series D Preferred Stock are not entitled to any preemptive rights. Section 5. Dividends and Distributions. The holders of shares of Series D Preferred Stock shall not be entitled to receive dividends. Section 6. Liquidation Preference. In the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of Series D Preferred Stock shall be entitled to receive out of the assets of the Corporation, whether such assets constitute stated capital or surplus of any nature, a sum in cash equal to $.01 per share (the "Liquidation Preference"), and no more; provided, however, that such rights shall accrue to the holders of Series D Preferred Stock only if the Corporation's payments with respect to the liquidation preference of the holders of Senior Stock are fully met. After the liquidation preferences of the Senior Stock are fully met, the entire assets of the Corporation available, for distribution shall be distributed ratably among the holders of the Series D Preferred Stock and any Parity Stock in proportion to the respective preferential amounts to which each is entitled (but only to the extent of such preferential amounts). After payment in full of the accrued and unpaid dividends and the Liquidation Preference of the shares of Series D Preferred Stock as provided in this Section 6, the holders of such shares shall not be entitled to any further participation in any distribution of assets by the Corporation. Neither a consolidation or merger of the Corporation with another corporation nor a sale or transfer of all or part of the Corporation's assets for cash, securities or other property will be considered a liquidation, dissolution or winding up of the Corporation. Section 7. No Sinking Fund. The shares of Series D Preferred Stock shall not be subject to the operation of a purchase, retirement or sinking fund. Section 8. Residual Rights. All rights accruing to the outstanding shares of the Corporation not expressly provided for to the contrary herein shall be vested in the Common Stock. Section 9. No Reissuance of Series D Preferred Stock. No share or shares of Series D Preferred Stock acquired by the Corporation by reason of purchase, conversion, redemption or otherwise will be sold or reissued, and, upon such event, all such shares will resume the status of authorized but unissued shares of Series D Preferred Stock. [SIGNATURE PAGE FOLLOWS] -5-

IN WITNESS WHEREOF, the undersigned hereby executes this document and affirms that the facts set forth herein are true under penalty of perjury this 3rd day of April 2003. FRONTLINE COMMUNICATIONS CORPORATION By: /s/ Stephen J. Cole-Hatchard -------------------------------- Name: Stephen J. Cole-Hatchard Title: Chief Executive Officer ATTEST: By: /s/ Amy Wagner-Mele ---------------------- Name: Amy Wagner-Mele Title: Secretary

Exhibit 10.10 ADDENDUM TO AMENDED AND RESTATED STOCK PURCHASE AND ACQUISITION AGREEMENT DATED APRIL 3, 2003 This addendum ("Addendum"), dated April 3, 2003, modifies and supplements the Amended and Restated Stock Purchase and Acquisition Agreement dated April 3, 2003 (the "Original Agreement") by and among Frontline Communications Corp. ("Frontline"), Proyecciones y Ventas Organizadas, S.A. de C.V. ("Provo"), Ventura Martinez del Rio Requejo ("Requejo") and Ventura Martinez del Rio Arrangoiz ("Arrangoiz"). In the event of a conflict between the Original Agreement and this Addendum, the terms of this Addendum shall control. 1. Page 2, Section 1.01 (f) of the Agreement shall be stricken in its entirety and replaced by the following: "Conversion Date" shall mean the date which is the later of: (i) the date on which the Series C Preferred and Series D Preferred (as defined below) converts to common stock of the Buyer, in accordance with section 3.03 or (ii) July 18, 2003, or such later date as agreed upon in writing by the Holders of a majority of the Series C Preferred. In the event the Conversion Date is delayed due to the actions or inaction of a third party regulatory or governmental agency, the Conversion Date shall be extended for an additional thirty (30) day period. 2. The Original Agreement, as modified by this Addendum, is hereby ratified and confirmed in all respects, is in full force and effect, and is binding on and enforceable against the parties in accordance with its terms. 3. This Addendum may be executed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 4. This Addendum shall be governed by the laws of the State of New York. [SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, each of the parties has caused its duly authorized representative to execute this Amendment on the day and year first above written. Frontline Communications Corp. By: /s/ Stephen J. Cole-Hatchard By: /s/ Ventura Martinez Del Rio Arrangoiz Proyecciones y Ventas Organizadas, S.S. de C.V. By: /s/ Ventura Martinez del Rio Requejo /s/ Ventura Martinez del Rio Arrangoiz

Exhibit 10.11 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of April 3, 2003, by and between FRONTLINE COMMUNICATIONS CORP., a Delaware corporation (the "Company"), and Ventura Martinez del Rio Arrangoiz ("Arrangoiz") and Ventura Martinez del Rio Requejo ("Requejo" and together with Arrangoiz "Sellers"). W I T N E S S E T H: WHEREAS, Sellers, the Company and others have entered into that certain Stock Purchase Agreement dated January 24, 2003 (the "Purchase Agreement") pursuant to which, among other things, Sellers are receiving Two Hundred Twenty Thousand (220,000) shares of Series C Convertible Preferred Stock of the Company, par value $.01 ("Series C Preferred Stock"), which is convertible into Twenty Two Million shares of common stock of the Company, par value $0.01 per share ("Common Stock"); WHEREAS, it is a condition of the Purchase Agreement that the Company grant to Sellers registration rights with respect to the Common Stock; and WHEREAS, the Company desires to grant to Sellers registration rights with respect to the Common Stock. NOW, THEREFORE, in consideration of the premises and mutual covenants and conditions contained herein and of other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE I. DEFINITIONS SECTION 1.1 Definitions. The following terms shall have the meanings ascribed to them below. "Commission" means the United States Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act. "Common Stock" has the meaning set forth in the recitals to this Agreement. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Company" has the meaning set forth in the preamble of this Agreement.

"Conversion Date" means the date that the Series C Preferred Stock is converted into Common Stock, as set forth in the Certificate of Designation of Series C Convertible Preferred Stock. "Damages" has the meaning set forth in Section 4.1 hereof. "Demand Registration" has the meaning set forth in Section 2.1(a) hereof. "Indemnified Party" has the meaning set forth in Section 4.3 hereof. "Indemnifying Party" has the meaning set forth in Section 4.3 hereof. "Inspectors" has the meaning set forth in Section 3.1(k) hereof. "Purchase Agreement" has the meaning set forth in the recitals of this Agreement. "NASD" means the National Association of Securities Dealers, Inc. "Notices" has the meaning set forth in Section 6.7 hereof. "Person" means any natural person, corporation, general partnership, limited partnership, proprietorship, other business organization, trust, union or association. "Piggy-Back Registration" has the meaning set forth in Section 2.2 hereof. "Registrable Securities" means the shares of Common Stock now owned or hereafter acquired by Sellers, until (i) a Registration Statement with respect to the sale of such shares of Common Stock has been declared effective by the Commission and such shares of Common Stock have been disposed of pursuant to such effective Registration Statement, or (ii) such shares of Common Stock are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met, or (iii) such shares of Common Stock have been otherwise transferred and the Company has delivered a new certificate or other evidence of ownership for such Common Stock not bearing a restrictive legend and not subject to any stop order and such Common Stock may be publicly resold by the person receiving such certificate without complying with the registration requirements of the Securities Act, or (iv) such shares of Common Stock shall have ceased to be outstanding. "Registration Expenses" has the meaning set forth in Section 3.2 hereof. "Registration Statement" means any registration statement of the Company which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the prospectus, amendments and supplements to such registration statement, including post-effective 2

amendments, all exhibits and all material incorporated by reference in such registration statement. "Securities Act" means the United States Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Series C Preferred Stock" has the meaning set forth in the recitals to the Agreement. "Underwriter" means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering and not as part of such dealer's market-making activities. ARTICLE II. REGISTRATION RIGHTS SECTION 2.1 Demand Registration. (a) Request for Registration by Sellers. At any time following the one-year anniversary of the Conversion Date, Sellers may make written requests on the Company for the registration of the offer and sale of all or part of the Registrable Securities under the Securities Act (a "Demand Registration"). Subject to Section 2.1(b), the Company shall have no obligation to file more than two (2) registration statements under the Securities Act with respect to a Demand Registration. Any such request will specify the number of shares of Registrable Securities proposed to be sold and will also specify the intended method of disposition thereof. The Company shall use its best efforts to effect the Demand Registration within sixty (60) days after the giving of such written notice. (b) Effective Registration. A registration will not be deemed to have been effected pursuant to Section 2.1(a) unless the Registration Statement relating thereto has been declared effective by the Commission and the Company has complied in all material respects with its obligations under this Agreement and any underwriting or other distribution agreement relating to such distribution with respect thereto and in the case of an underwritten offering, all the Registrable Securities offered have been purchased by the underwriters; provided that if, after the Registration Statement has become effective, the offering and/or sale of Registrable Securities pursuant to such Registration Statement is or becomes the subject of any stop order, injunction or other order or requirement of the Commission or any other governmental or administrative agency, or if any court or other governmental or quasi-governmental agency prevents or otherwise limits the offer and/or sale of the Registrable Securities pursuant to the Registration Statement, such registration will be deemed not to have been effected. 3

(c) Selection of Underwriter. If the offering of such Registrable Securities pursuant to such Demand Registration is in the form of an underwritten offering, the Sellers shall consent to the Company's selection of such Underwriter(s), which consent shall not be unreasonably withheld. SECTION 2.2 Piggy-Back Registration. (a) If at any time during the first year following the Conversion Date, the Company proposes to register any of its securities under the Securities Act and the registration form to be used may be used for registration of the Registrable Securities, then the Company shall give prompt written notice of such proposed filing to Sellers as soon as practicable (but in no event less than thirty (30) days before the anticipated filing date), and such notice shall offer Sellers the opportunity to register no more than thirty-percent (30%) of the Registrable Securities as Sellers may request (which request shall specify the Registrable Securities intended to be disposed of by Sellers and the intended method of distribution thereof) (a "Piggy-Back Registration"). If at any time following the one-year anniversary of the Conversion Date, the Company proposes to register any of its securities under the Securities Act and the registration form to be used may be used for registration of the Registrable Securities, then the Company shall give prompt written notice of such proposed filing to Sellers as soon as practicable (but in no event less than thirty (30) days before the anticipated filing date), and such notice shall offer Sellers the opportunity to register up to 100% of the Registrable Securities as Sellers may request (which request shall specify the Registrable Securities intended to be disposed of by Sellers and the intended method of distribution thereof). The Company shall use its best efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit such Registrable Securities requested to be included in a Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Company or any other security holder included therein and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method of distribution thereof. Sellers shall have the right to withdraw its request for inclusion of its Registrable Securities in any Registration Statement pursuant to this Section 2.2 by giving written notice to the Company of their request to withdraw, provided that, except as otherwise set forth in Section 2.3(c), in the event of such withdrawal, Sellers shall be responsible for all fees and expenses (including fees and expenses of counsel) incurred by Sellers prior to such withdrawal. The Company may withdraw a Piggy-Back Registration at any time prior to the time it becomes effective. (b) No failure to effect a registration under this Section 2.2 and to complete the sale of Registrable Securities in connection therewith shall relieve the Company of any other obligation under this Agreement (including, without limitation, the Company's obligations under Sections 3.2 and 4.1). 4

SECTION 2.3 Reduction of Offering. (a) Demand Registration. Subject to Sellers' prior written consent, the Company may include in a Demand Registration pursuant to Section 2.1 securities of the same class as the Registrable Securities for the account of the Company and any other Persons who hold securities of the same class as the Registrable Securities on the same terms and conditions as the Registrable Securities to be included therein. (b) Reduction of Offering. In the event that the managing Underwriter of any underwritten offering described in Section 2.1 or 2.2 shall determine in good faith that a limitation of the total number of shares to be included in the offering is required or there will be an adverse effect on the offering price, timing or distribution of the shares to be distributed, then the number of shares to be included in such registration shall be reduced or limited to the extent necessary to reduce the total number of shares requested to be included in such offering to the number of shares, if any, recommended by such managing Underwriter in the following order of priority: (i) If the offering is a Demand Registration, (A) first, the number of shares to be offered by all Persons other than Sellers to the extent necessary to reduce the total number of shares as recommended by such managing Underwriter, pro rata in proportion to the respective total number of shares owned by such Persons, (B) second, if further reduction or limitation is required, the number of shares to be offered by the Company for its own account shall be reduced or limited, and (C) third, if further reduction or limitation is required, the number of shares to be offered by Sellers. (ii) If the offering is a Piggy-Back Registration, (A) first, the number of shares to be offered by the Persons other than Sellers holding securities who are using a piggy-back registration right, pro rata in proportion to the respective total number of shares owned by such Persons; (B) second, if further reduction or limitation is required, the number of shares to be offered by Sellers; (C) third, if further reduction or limitation is required, the number of shares to be offered by the Persons holding securities who demanded such registration pro rata in proportion to the respective total number of shares owned by such Persons, and (D) fourth, if further reduction or limitation is required, the number of shares to be offered by the Company for its own account shall be reduced or limited. (c) If, as a result of the proration provisions of this Section 2.3, Sellers shall not be entitled to include all Registrable Securities in a Demand Registration or Piggy-Back Registration that Sellers has requested to be included, Sellers may elect to withdraw its request to include Registrable Securities in such registration; provided that in the event of such withdrawal, the Company shall be responsible for all fees and expenses (including fees and expenses of counsel) incurred by Sellers prior to such withdrawal. 5

SECTION 2.4 Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of Sellers, enter into any other agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 2.1 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of its securities will not reduce the amount of Registrable Securities of Sellers which are included. ARTICLE III. REGISTRATION PROCEDURES SECTION 3.1 Filings; Information. Whenever the Company is required to effect or cause the registration of Registrable Securities pursuant to Section 2.1 or Section 2.2, the Company will use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof as quickly as practicable, and in connection with any such request: (a) The Company promptly will prepare and file with the Commission a Registration Statement with respect to the offer and sale of such securities and use its best efforts to cause such Registration Statement to become and remain effective until the completion of the distribution contemplated thereby; provided, however, the Company shall not be required to keep such Registration Statement effective for more than 180 days (or such shorter period which will terminate when all Registrable Securities covered by such Registration Statement have been sold, but not prior to the expiration of the applicable period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable). (b) The Company promptly will prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep such Registration Statement effective for as long as such registration is required to remain effective pursuant to the terms hereof; cause the prospectus to be supplemented by any required prospectus supplement, and, as so supplemented, to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act applicable to it with respect to the disposition of all Registrable Securities covered by such Registration Statement during the applicable period in accordance with the intended methods of disposition by Sellers set forth in such Registration Statement or supplement to the prospectus. (c) The Company, at least ten (10) days prior to filing a Registration Statement or at least five (5) days prior to filing a prospectus or any amendment or supplement to such Registration Statement or prospectus, will furnish to (i) Sellers, (ii) counsel representing Sellers, (iii) each Underwriter, if any, of the Registrable Securities covered by such Registration Statement copies of such Registration Statement as proposed to be filed, together with exhibits thereto, which documents will be subject to review and approval by each of the foregoing within 6

ten (10) days after delivery (except that such review and approval of any prospectus or any amendment or supplement to such Registration Statement or prospectus must be within five (5) days after delivery), and thereafter, furnish to Sellers, counsel to Sellers and Underwriters, if any, for their review and comment such number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such Registration Statement (including each preliminary prospectus) and such other documents or information as Sellers, counsel to Sellers or the Underwriters may reasonably request in order to facilitate the disposition of the Registrable Securities; provided, however, that notwithstanding the foregoing, if the Company intends to file any prospectus, prospectus supplement or prospectus sticker which does not make any material changes in the documents already filed (including, without limitation, any prospectus under Rule 430A or 424(b)), then counsel for Sellers will be afforded such opportunity to review such documents prior to filing consistent with the time constraints involved in filing such document, but in any event no less than three (3) days. (d) The Company shall furnish to Sellers and to each Underwriter, if any, such number of copies of the Registration Statement (including each preliminary prospectus) as such Persons may reasonably request in order to facilitate the intended disposition of the Registrable Securities covered by such Registration Statement. (e) If the offering is an underwritten offering, at the request of Sellers, the Company shall use its reasonable efforts to furnish on the date that Registrable Securities are delivered to the Underwriters for sale pursuant to such Registration Statement: (i) an opinion dated such date of counsel representing the Company for the purposes of such registration, addressed to the Underwriters and to Sellers, stating that (A) such Registration Statement has become effective under the Securities Act, (B) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act, (C) the Registration Statement complies as to form in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder, and such counsel has no reason to believe that the Registration Statement or any amendment thereto (including any documents incorporated in the prospectus), as of its respective effective date (or as of its date of filing) contains any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading (except that such counsel need not express any opinion as to financial statements contained therein) and (D) to such other effects as reasonably may be requested by counsel for the Underwriters or by Sellers or its counsel, considering customary comparable underwritten transactions and (ii) on such date and as of the date of the underwriting agreement, a letter dated such date from the independent public accountants or chartered accountants retained by the Company, addressed to the Underwriters and to Sellers, stating that they are independent public accountants within the meaning of the Securities Act and that, in the opinion of such 7

accountants, the financial statements of the Company included in the Registration Statement, comply as to form in all material respects with the applicable accounting requirements of the Securities Act, and such letter shall additionally cover such other financial matters (including information as to the period ending no more than five (5) Business Days prior to the date of such letter) with respect to such registration as such Underwriters reasonably may request considering customary comparable underwritten transactions. (f) The Company promptly will notify Sellers of (and in any event within twenty-four (24) hours of the receipt of) any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it at the earliest possible moment if entered. (g) On or prior to the date on which the Registration Statement is declared effective by the Commission, the Company will use all reasonable efforts to (i) register or qualify the Registrable Securities under such other securities or blue sky laws of such other jurisdictions as Sellers reasonably (in light of Sellers' intended plan of distribution) requests, and (ii) file documents required to register such Registrable Securities with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be reasonably necessary or advisable to enable Sellers to consummate the disposition of the Registrable Securities owned by Sellers; provided that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (g), (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction. (h) The Company will notify Sellers, counsel to Sellers and any Underwriter promptly (and in any event within 24 hours) and (if requested by any such Person) confirm such notice in writing, (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or prospectus or for additional information to be included in any Registration Statement or prospectus or otherwise, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement or the initiation or threatening of any proceedings for that purpose, (iv) of the issuance by any state securities commission or other regulatory authority of any order suspending the qualification or exemption from qualification of any of the Registrable Securities under state securities or "blue sky" laws or the initiation of any proceedings for that purpose, and (v) of the happening of any event which makes any statement made in a Registration Statement or related prospectus or any document incorporated or deemed to be incorporated by reference therein untrue or which requires the making of any changes in such Registration Statement, prospectus or documents so that they will not contain any untrue 8

statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements in the Registration Statement and prospectus not misleading in light of the circumstances in which they were made; and, as promptly as practicable thereafter, prepare and file with the Commission and furnish a supplement or amendment to such prospectus so that, as thereafter deliverable to the purchasers of such Registrable Securities, such prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (i) If requested by the managing Underwriter or Underwriters, Sellers or Sellers' counsel, the Company will, unless otherwise advised by counsel, promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing Underwriter or Underwriters requests, or Sellers' counsel requests, to be included therein, including, without limitation, with respect to the Registrable Securities being sold by Sellers to such Underwriter or Underwriters, the purchase price being paid therefor by such Underwriter or Underwriters and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering, and promptly make all required filings of such prospectus supplement or post-effective amendment. (j) The Company will enter into customary agreements reasonably satisfactory to the Company (including, if applicable, an underwriting agreement in customary form and which is reasonably satisfactory to the Company) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities (Sellers, at its option may, require that any or all of the representations, warranties and covenants of the Company to or for the benefit of such Underwriters also be made to and for the benefit of Sellers). (k) The Company will make available to Sellers (and will deliver to their counsel) and each Underwriter, if any, subject to restrictions imposed by the United States federal government or any agency or instrumentality thereof, copies of all correspondence between the Commission and the Company, its counsel or auditors and will also make available for inspection at reasonable times at the Company's offices by Sellers, any Underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other professional retained by Sellers or any Underwriter (collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of the Company as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers and employees to supply all information reasonably requested by any Inspectors in connection with such registration statement. (l) In connection with an underwritten offering, the Company will participate, to the extent reasonably requested by the managing Underwriter or Underwriters for the offering 9

or Sellers, in customary efforts to sell the securities under the offering, including, without limitation, participating in "road shows"; provided that the Company shall not be obligated to participate in more than two such selling efforts in any 12-month period. (m) The Company, during the period when the prospectus is required to be delivered under the Securities Act, promptly will file all documents required to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act. (n) The Company will use all reasonable efforts to obtain a cold comfort letter from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters, as Sellers may request. (o) The Company shall cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed. (p) The Company shall provide a transfer agent and registrar for all Registrable Securities registered pursuant to such Registration Statement and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. (q) The Company shall otherwise comply with all applicable rules and regulations of the Commission. (r) The Company may require Sellers to promptly furnish in writing to the Company such information regarding the distribution of the Registrable Securities as the Company may from time to time reasonably request and such other information as may be legally required in connection with such registration including, without limitation, all such information as may be requested by the Commission or the National Association of Securities Dealers, Inc. (s) Sellers agree that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.1(h) hereof, Sellers will forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until Sellers' receipt of the copies of the supplemented or amended prospectus contemplated by Section 3.1(h) hereof, and, if so directed by the Company, Sellers will deliver to the Company all copies, other than permanent file copies then in Sellers' possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. In the event the Company shall give such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective (including the period referred to in Section 3.1(a) hereof) by the number of days during the period from and including the date of the giving of notice pursuant to Section 3.1(h) hereof to the 10

date when the Company shall make available to Sellers covered by such Registration Statement a prospectus supplemented or amended to conform with the requirements of Section 3.1(h) hereof. SECTION 3.2 Registration Expenses. The Company shall pay the following registration expenses incurred in connection with the registration (the "Registration Expenses"): (i) all registration and filing fees, (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) processing, duplicating and printing expenses, (iv) the Company's internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (v) the fees and expenses incurred in connection with the listing of the Registrable Securities, (vi) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses of any comfort letters or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters requested but not the cost of any audit other than a year end audit), (vii) the fees and expenses of any special experts retained by the Company in connection with such registration, (viii) reasonable fees and expenses of one firm of counsel for Sellers and (ix) any fees and disbursements of underwriters customarily paid by issuers or sellers of securities. The Company shall have no obligation to pay any other underwriting fees, discounts or commissions attributable to the sale of Registrable Securities; such costs shall be borne by Sellers. ARTICLE IV. INDEMNIFICATION AND CONTRIBUTION SECTION 4.1 Indemnification by the Company. The Company shall, to the full extent permitted by law, indemnify and hold harmless Sellers from and against any loss, claim, damage, liability, reasonable attorneys' fees, cost or expense and costs and expenses of investigating and defending any such claim, joint or several, and any action in respect thereof (collectively, the "Damages") to which Sellers may become subject under the Securities Act or otherwise, insofar as such Damages (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or prospectus relating to the Registrable Securities or any amendment or supplement thereto, or arises out of, or are based upon, any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation by the Company of any federal or state securities laws or any rule or regulation thereof, except insofar as the same are based upon information furnished in writing to the Company by Sellers expressly for use therein, and shall reimburse Sellers for any legal and other expenses reasonably incurred by Sellers in investigating or defending or preparing to defend against any such Damages or proceedings; provided, however, that the Company shall not be liable to Sellers to the extent that any such Damages (or action or proceeding in respect thereof) arise out of or are based upon an untrue 11

statement or omission made in any preliminary prospectus if (i) Sellers failed to send or deliver a copy of the final prospectus with or prior to the delivery of written confirmation of the sale by Sellers to the Person asserting the claim from which such Damages arise, and (ii) the final prospectus would have corrected such untrue statement or such omission; provided further, that the Company shall not be liable to Sellers in any such case to the extent that any such Damages arise out of or are based upon an untrue statement or omission in any prospectus if (x) such untrue statement or omission is corrected in an amendment or supplement to such prospectus, and (y) having previously been furnished by or on behalf of the Company with copies of such prospectus as so amended or supplemented, Sellers thereafter fails to deliver such prospectus as so amended or supplemented prior to or concurrently with the sale of a Registrable Security to the Person asserting the claim from which such Damages arise. SECTION 4.2 Indemnification by Sellers. Sellers shall, to the full extent permitted by law, indemnify and hold harmless the Company, its officers, directors, employees and agents and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, together with the partners, officers, directors, employees and agents of such controlling Person, to the same extent as the foregoing indemnity from the Company to Sellers, but only with reference to information related to Sellers, or its plan of distribution, furnished in writing by Sellers expressly for use in any Registration Statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any preliminary prospectus and the aggregate amount which may be recovered from Sellers pursuant to the indemnification provided for in this Section 4.2 in connection with any registration and sale of Registrable Securities shall be limited to the total proceeds received by Sellers from the sale of such Registrable Securities. In case any action or proceeding shall be brought against the Company or its officers, directors, employees or agents or any such controlling Person or its officers, directors, employees or agents, in respect of which indemnity may be sought against Sellers, Sellers shall have the rights and duties given to the Company, and the Company or its officers, directors, employees or agents, or such controlling Person, or its officers, directors, employees or agents, shall have the rights and duties given to Sellers, by the preceding paragraph. SECTION 4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any person in respect of which indemnity may be sought pursuant to Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the commencement of any action, the Indemnified Party shall, if a claim in respect thereof is to be made against the Person against whom such indemnity may be sought (an "Indemnifying Party"), notify the Indemnifying Party in writing of the claim or the commencement of such action; provided that the failure to notify the Indemnifying Party shall not relieve it from any liability which it may have to an Indemnified Party except to the extent of any actual prejudice resulting therefrom. If any such claim or action shall be brought against an Indemnified Party, and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled to participate therein, and, to the extent that it wishes, 12

jointly with any other similarly notified Indemnifying Party, to assume the defense thereof with counsel reasonably satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified Party of its election to assume the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided that the Indemnified Party shall have the right to employ separate counsel to represent the Indemnified Party and its controlling Persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, but the fees and expenses of such counsel shall be for the account of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) in the reasonable judgment of the Company and such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interest between them, it being understood, however, that the Indemnifying Party shall not, in connection with any one such claim or action or separate but substantially similar or related claims or actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all Indemnified Parties, or for fees and expenses that are not reasonable. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding. Whether or not the defense of any claim or action is assumed by the Indemnifying Party, such Indemnifying Party will not be subject to any liability for any settlement made without its consent, which consent will not be unreasonably withheld. SECTION 4.4 Contribution. If the indemnification provided for in this Article 4 is unavailable to the Indemnified Parties in respect of any Damages referred to herein, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Damages as between the Company on the one hand and Sellers on the other, in such proportion as is appropriate to reflect the relative fault of the Company and Sellers in connection with such statements or omissions, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and Sellers on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. 13

SECTION 4.5 The Company and Sellers agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the Damages referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4.4, Sellers shall not be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities of Sellers were offered to the public (less underwriting discounts and commissions) exceeds the amount of any damages which Sellers has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. ARTICLE V. INFORMATION AND OTHER OBLIGATIONS OF SELLERS SECTION 5.1 Provision of Information. As a condition to exercising the registration rights provided for herein, Sellers shall furnish to the Company such information regarding Sellers and the distribution proposed by Sellers as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification, or compliance referred to in this Agreement. SECTION 5.2 Underwriters. Sellers, with respect to any Registrable Securities included in any registration, shall cooperate in good faith with the Company and the underwriters, if any, in connection with such registration. SECTION 5.3 Stop Orders. Sellers, with respect to any Registrable Securities included in any registration, shall make no further sales or other dispositions, or offers therefor, of such shares under such Registration Statement if, during the effectiveness of such Registration Statement, an intervening event should occur which, in the opinion of counsel to the Company, makes the prospectus included in such Registration Statement no longer comply with the Securities Act until such time as Sellers has received from the Company copies of a new, amended or supplemented prospectus complying with the Securities Act. 14

ARTICLE VI. MISCELLANEOUS SECTION 6.1 Participation in Underwritten Registrations. Sellers shall not be required to make any representations or warranties to or agreements with the Company or the Underwriters other than representations, warranties or agreements regarding Sellers and its ownership of the securities being registered on their behalf and Sellers' intended method of distribution and any other representation required by law. SECTION 6.2 Rule 144 and 144A. The Company covenants that it will file any reports required to be filed by it under the Securities Act and the Securities Exchange Act of 1934, as amended and that it will take such further action as Sellers may reasonably request, all to the extent required from time to time to enable Sellers to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 or Rule 144A under the Securities Act, as such Rules may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the Commission. Upon the request of Sellers, the Company will deliver to Sellers a written statement as to whether it has complied with such requirements. SECTION 6.3 Suspension of Obligation to File. Notwithstanding the provisions of Section 3.1(a), the Company's obligations to file a Registration Statement, or cause such Registration Statement to become and remain effective, shall be suspended for a period not to exceed 90 days if there exists at the time material non-public information relating to the Company that, in the reasonable opinion of the Company, should not be disclosed. SECTION 6.4 Amendment and Modification. This Agreement may be amended, modified and supplemented, and any of the provisions contained herein may be waived, only by a written instrument signed by the Company and Sellers. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. SECTION 6.5 Binding Effect; Entire Agreement. This Agreement (including the exhibits, schedules and appendices attached hereto), including the documents referred to herein, embodies the entire agreement and understanding of the Parties hereto and supersedes all prior agreements and understandings of the Parties hereto relating to the subject matter herein contained. SECTION 6.6 Severability. Any holding that a provision of this Agreement is unenforceable, in whole or in part, will not affect the validity of the other provisions of this Agreement. 15

SECTION 6.7 Notices. All notices under this Agreement, including reports, shall be in writing in the English language addressed to the appropriate Party at the address set forth by its name on this Agreement, and shall be deemed given when received by the recipient and shall be delivered directly by hand to authorized personnel or by registered mail, return receipt requested, telex authenticated facsimile message or electronic mail, confirmed by registered mail. All notices shall be addressed: If to Sellers: Arrangoiz and Requejo. Quintana Roo No. 28 Col. Roma Sur 06760 Mexico, D.F. Fax. (525) 264-6442 If to the Company: Frontline Communications Corp. One Blue Hill Plaza 7th Floor Pearl River, New York 10965 Fax: (845) 623-8669 Attn: Stephen J. Cole-Hatchard SECTION 6.8 GOVERNING LAW. This Agreement shall be construed, interpreted, governed, and enforced by and under the laws of the State of New York, without giving effect to the conflicts of law principles thereof. SECTION 6.9 Headings. The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement, nor shall they affect their meaning, construction or effect. SECTION 6.10 Counterparts. This Agreement may be executed in any number of counterparts and by the different Parties hereto on separate counterparts, each of which, when executed and delivered, shall be effective for purposes of binding the Parties hereto, but all of which shall together constitute one and the same instrument. Any signature page delivered by a fax machine or telecopy machine shall be binding to the same extent as an original signature page. Any Party who delivers such a signature page agrees to later deliver an original counterpart to any Party which requests it. SECTION 6.11 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties named in this Agreement and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of each of the other parties, except that 16

each of Sellers shall be entitled to assign or transfer their rights hereunder to their respective beneficiaries or as part as an estate planning trust or mechanism, by giving prior written notice to the Company. SECTION 6.12 Remedies. In the event of a breach or a threatened breach by any Party to this Agreement of its obligations under this Agreement, any Party injured or to be injured by such breach will be entitled to specific performance of its rights under this Agreement or to injunctive relief, in addition to being entitled to exercise all rights provided in this Agreement and granted by law. The Parties agree that the provisions of this Agreement shall be specifically enforceable, it being agreed by the Parties that the remedy at law, inducing monetary damages, for breach of any such provision will be inadequate compensation for any loss and that any defense or objection in any action for specific performance or injunctive relief that a remedy at law would be adequate is waived. SECTION 6.13 Interpretation. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. [SIGNATURE PAGE FOLLOWS] 17

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. /s/ Ventura Martinez del Rio Arrangoiz /s/ Ventura Martinez del Rio Requejo - -------------------------------------- ------------------------------------ Ventura Martinez del Rio Arrangoiz Ventura Martinez del Rio Requejo /s/ Stephen J. Cole-Hatchard - ------------------------------------- Frontline Communications Corp. Name: ____________________________ Title: ___________________________

Exhibit 10.12 SECURITY AGREEMENT THIS SECURITY AGREEMENT (this "Agreement") is made as of April 3, 2003, by and among FRONTLINE COMMUNICATIONS CORP., a Delaware corporation ("Frontline"); PROYECCIONES Y VENTAS ORGANIZADAS, S.A. DE C.V. ("Provo" and together with Frontline, individually a "Grantor" and collectively, the "Grantors"); VENTURA MARTINEZ DEL RIO ARRANGOIZ ("Arrangoiz") and VENTURA MARTINEZ DEL RIO REQUEJO ("Requejo", and together with Arrangoiz, collectively, the "Secured Parties"). RECITALS WHEREAS, concurrently herewith Frontline, Provo, Requejo and Arrangoiz are entering into a certain Stock Purchase Agreement (the "Stock Purchase Agreement"), whereby Frontline is acquiring from the Secured Parties all of the issued and outstanding capital stock of Provo in consideration of certain shares Series C Preferred Stock of Frontline. Capitalized terms used herein and not defined are used with the meanings ascribed thereto in the Stock Purchase Agreement and Certificate of Designation of Series C Convertible Preferred Stock (the "Certificate of Designation"). WHEREAS, subject to the terms of the Stock Purchase Agreement and the Secured Note of even date herewith (the "Note"), the Company's obligations under the Note may arise on the Conversion Date (as defined in the Stock Purchase Agreement). Each of the Grantors has agreed to enter into this Security Agreement in order to induce the Secured Parties to enter into the Stock Purchase Agreement and the Note. WHEREAS, each of the Grantors is the owner of the type and number of issued and outstanding shares of capital stock and other equity interests (the "Equity Interests") set forth opposite the name of such Grantor in Part A of Schedule I hereto and issued by the Persons named therein (the "Initial Pledged Interests"). WHEREAS, it is a condition precedent to the entering into the Stock Purchase Agreement, that each of the Grantors shall have granted the assignment and security interest and made the pledge and assignment contemplated by this Agreement. Each of the Grantors will derive substantial direct and indirect benefit from the transactions contemplated by the Transaction Documents. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: Section 1. The Security Interests. (a) In order to secure the performance of each of the Grantors' obligations under the Stock Purchase Agreement and the Note issued thereunder (collectively the "Obligations"), each of the Grantors hereby assigns and pledges to the Secured Parties, and hereby grants to the Secured Parties, a

lien on and security interest in the property and assets set forth on Exhibit A hereto, in each case, as to each type of property and assets described therein, whether now owned or hereafter acquired by such Grantor, wherever located, and whether now or hereafter existing or arising (collectively, the "Collateral"). (b) The security interest granted pursuant to this Section 1 (the "Security Interest") is granted as security only and shall not subject the Secured Parties to, or transfer to the Secured Parties, or in any way affect or modify, any obligation or liability of each of the Grantors under any of the Collateral or any transaction which gave rise thereto. Section 2. Filing; Further Assurances. (a) Each of the Grantors will, at its expense, execute, deliver, file and record (in such manner and form as the Secured Parties may require), or permit the Secured Parties to file and record, any financing statements, or this Security Agreement (which the parties hereto agree shall be sufficient as a financing statement hereunder), any specific assignments or other paper that may be necessary or desirable, or that the Secured Parties may reasonably request, in order to create, perfect or validate the Security Interest or to enable the Secured Parties to exercise and enforce its rights and remedies hereunder or under applicable law with respect to any of the Collateral. (b) The Secured Parties may at any time and from time to time, without the any of the Grantors' further signature or authorization file financing statements, continuation statements and amendments thereto that describe the Collateral as specified herein and that contain any other information required by Article 9 of the Uniform Commercial Code, in effect from time to time, (the "UCC") for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including whether any of the Grantors is an organization, the type of organization and any organization identification number issued to the Grantors. Each of the Grantors agrees to furnish any such information to the Secured Parties promptly upon request. (c) Each of the Grantors shall at any time and from time to time take such steps as the Secured Parties may reasonably request for the Secured Parties (i) to obtain an acknowledgement, in form and substance satisfactory to the Secured Parties, of any bailee having possession of any of the Collateral that the bailee holds such Collateral for the Secured Parties and (ii) otherwise to insure the continued perfection and priority of the Secured Parties' Security Interest and of the preservation of the Secured Parties' rights therein, including, without limitation, taking such steps as reasonably requested by Secured Parties to preserve the Secured Parties' perfected Security Interests in any portion of the Collateral located in Mexico or otherwise outside of any jurisdiction where the financing statements on record prior to any such re-location are insufficient to preserve the Secured Parties' perfected Security Interest in such portion of the Collateral. Section 3. Grantors' Representations and Warranties. Each of the Grantors hereby represents and warrants to the Secured Parties as follows: -2-

(a) It is duly incorporated and in good standing under the laws of its respective jurisdiction of incorporation (to the extent that the concept of good standing is provided for in the laws of its jurisdiction of incorporation), and has power to enter into and perform this Agreement and has taken all necessary corporate action to authorise the execution, delivery and performance of this Agreement; and (b) the execution, delivery and performance of this Agreement will not (i) contravene any law or regulation to which each of the Grantors is subject or any provision of its charter documents, or (ii) cause any of the Grantors to be in breach of or default under any agreement binding on it or any of its assets; or (iii) except as provided in the Stock Purchase Agreement, no material litigation or administrative proceedings before, by or of any court or governmental authority is pending or threatened against it or any of its assets. (b) Each of the Grantors is, or, to the extent any Collateral is acquired by any of the Grantors after the date hereof will be, the legal and beneficial owner of the Collateral pledged by the Grantors, free and clear of any lien, security interest, option, or other charge or encumbrance except for the security interest created by this Agreement. (c) No financing statement covering the Collateral is on file in any public office, other than the financing statements filed pursuant to this Security Agreement. (d) The pledge of the Collateral pursuant to this Agreement creates a valid and perfected first priority lien on and security interest in the Collateral, enforceable against all third parties. (e) No portion of the Collateral is, or during the term of this Agreement will be, subject to any right of first refusal or similar restriction, other than statutory or legal restrictions under Applicable Law, which could affect the ability of any purchaser from the Secured Parties to sell the same. The term "Applicable Law" shall mean with respect to any Person, all applicable laws, statutes, treaties, rules, codes, ordinances, regulations, certificates, orders, interpretations, licenses and permits of any applicable governmental authority, and all applicable judgments, decrees, injunctions, writs, orders, determinations, awards or other similar actions of any applicable court, arbitrator or other administrative, judicial or quasi-judicial tribunal or agency of competent jurisdiction (including those pertaining to health, safety or the environment), binding upon or applicable to such Person or any of its Subsidiaries or to any of their property, assets or businesses. (f) That portion of the Collateral comprised of Equity Interests are fully paid, validly issued and non assessable. (g) No consent or approval of any governmental body or regulatory authority is or will be necessary to the validity of the rights created hereunder, other than those that have been previously obtained. Section 4. Grantors' Covenants. Each of the Grantors hereby covenants and agrees with the Secured Parties that such Grantors will, from the date hereof: -3-

(a) Defend the Collateral against all claims and demands of all persons at any time claiming any interest therein. (b) Provide the Secured Parties, at least 10 business days prior to occurrence, with written notice of (i) any change in any of the Grantors' chief executive office, (ii) a change of the jurisdiction in which the Grantors is incorporated and (iii) the movement or relocation of all or any portion of the Collateral to a new location within the United States. (c) Provide the Secured Parties, at least 30 business days' prior to the occurrence thereof, with written notice of the movement or relocation of all or any portion of the Collateral to a location outside of the United States. (d) Keep the Collateral free from any adverse security interest and in good order and repair, reasonable wear and tear excepted, and not waste or destroy the Collateral or any part thereof and make the Collateral available for inspection by the Secured Parties at all reasonable times. (d) Not use the Collateral in violation of applicable law or of any policy of insurance applicable thereto. (e) Promptly pay any and all taxes, assessments and governmental charges upon the Collateral prior to the date penalties are attached thereto, except to the extent that such taxes, assessments and charges shall be contested in good faith by such Grantors, adequate reserves have been set aside therefor, and payment of such contested taxes made prior to the institution of any enforcement proceeding which could adversely affect the Security Interests or the Collateral. (f) Cause Provo and its Subsidiaries not to issue any stock or other securities in addition to or in substitution for the Equity Interests issued by Provo and its Subsidiaries, except to the Grantors. In addition, each of the Grantors agrees that it will pledge to the Secured Parties, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities of Provo and/or any of its Subsidiaries. Section 5. Records Relating to Collateral. Frontline will keep its records concerning the Collateral at its principal office located at One Blue Hill Plaza, 7th Floor, Pearl River, New York 10965. Provo will keep its records concerning the Collateral at its principal office located at Manzanillo 130, Colonia Roma Sur, Mexico City, 06760 Mexico. Each of the Grantors will hold and preserve such records and will permit the Secured Parties' representatives at any time during normal business hours to examine and inspect the Collateral and to make abstracts from such records, and will furnish to the Secured Parties such information and reports regarding the Collateral as the Secured Parties may from time to time reasonably request. -4-

Section 6. Events of Default. The Secured Parties shall be entitled to exercise any or all of their remedies under this Agreement only in the event of default. An "Event of Default" will be deemed to have occurred under this Agreement upon the occurrence of any one or more of the following: (a) Frontline shall fail to make any monetary payment under the Note to the Secured Parties when due and payable. Section 7. Certain Remedies. (a) The Secured Parties may exercise in respect of the Collateral, in addition to the other rights and remedies provided for herein, in the Transaction Documents or in any other instrument or agreement securing, evidencing or otherwise relating the Obligations of each of the Grantors or otherwise available to it, all the rights and remedies of a secured party upon default under the UCC and also may: (i) require any of the Grantors to, and each of the Grantors hereby agrees that it will, at its sole expense and upon request of the Secured Parties forthwith, assemble all or part of its Collateral capable of being assembled as directed by the Secured Parties and make it available to the Secured Parties at a place to be designated by the Secured Parties that is reasonably convenient to both parties; (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Secured Parties' offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Secured Parties may deem commercially reasonable; (iii) occupy any premises owned or leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period of time in order to effectuate the rights and remedies afforded to the Secured Parties under this Agreement and the other Transaction Documents or under any Applicable Law, without obligation to such Grantor in respect of such occupation; (iv) transfer all or any part of the Collateral into the Secured Parties' name or the name of one or more of its nominees; and (v) notify the Grantors that all of its rights to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise with respect to the Equity Interests comprising part of the Collateral pursuant to Section 15 shall cease and, upon such notice, all such rights shall become vested -5-

in the Secured Parties, who shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights. (b) Each of the Grantors hereby agrees that, to the extent notice of sale shall be required by Applicable Law, at least ten days' prior notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Secured Parties shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Secured Parties may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Any of the Collateral may be sold, leased or otherwise disposed of in the condition in which the same existed when taken by the Secured Parties or after any overhaul or repair which the Secured Parties shall determine to be commercially reasonable. (c) If the Secured Parties shall determine to exercise their right to sell any or all of the Collateral pursuant to this Section 7, each of the Grantors shall, upon the written request of the Secured Parties therefor, furnish to the Secured Parties all such information as the Secured Parties may reasonably request in order to determine the number of shares and other instruments included in such Collateral that may be sold by the Secured Parties in transactions exempt under the Securities Act or any similar Applicable Law in effect from time to time in any relevant jurisdiction. (d) Each of the Grantors agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make the sale or sales of all or any portion of the Security Collateral pursuant to this Section 7 valid and binding and in compliance with any and all Applicable Law. Each of the Grantors further agrees that a breach of any of the covenants contained in subsection (a) of this Section 7 will cause irreparable injury to the Secured Parties, that the Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in subsection (a) of this Section 7 shall be specifically enforceable against such Grantor by the Secured Parties, and each of the Grantors hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants, except for a defense that no Event of Default has occurred and is continuing. (e) Each purchaser of all or any part of the Collateral at any such sale that has been made in accordance with all Applicable Law shall hold the property sold absolutely free from any claim, encumbrance or other right on the part of any of the Grantors, and each of the Grantors hereby waives, to the fullest extent permitted by Applicable Law, all rights of redemption, stay and/or appraisal that it now has or may at any time in the future have under any Applicable Law now existing or hereafter enacted with respect to any such sale. (f) All proofs of claim, rights of action and rights to assert claims under this Agreement or any of the other Transaction Documents may be enforced by the Secured Parties without the possession of the Note (or any document or instrument substituting the Note) at any proceeding instituted by the Secured Parties. (g) All cash held by or on behalf of the Secured Parties as Collateral and all cash proceeds received by or on behalf of the Secured Parties in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Secured Parties, be held -6-

by the Secured Parties as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Secured Parties pursuant to Section 8) in whole or in part by the Secured Parties, against all or any part of the Obligations in the order of priority set forth in Section 8 or, to the extent not expressly provided therein, in such order as the Secured Parties shall elect. (h) The Secured Parties may exercise any and all rights and remedies of any of the Grantors under or in connection with the Assigned Agreements (as defined below) and the Receivables (as defined below) or otherwise in respect of the Collateral (including, without limitation, any and all rights of any such Grantors to demand or otherwise require payment of any amount under, or performance of any provision of, any of the Assigned Agreements, the Receivables or the Related Contracts or any other Collateral). (i) In the event of any sale, assignment or other disposition of any of the Intellectual Property Collateral, the goodwill of the business connected with and symbolized by any of the Trademarks subject to such disposition will be included, and each of the Grantors will supply the Secured Parties or its designee with such Grantor's know-how and expertise, and with documents and things embodying the same, subject to such sale, assignment or other disposition, and such Grantor's customer lists and other records and documents relating to such Intellectual Property Collateral. (j) Upon the occurrence and continuance of an Event of Default, all payments received by any of the Grantors under, in connection with, or in respect of, any of the Collateral shall be received and held by such Grantor in trust for the benefit of the Secured Parties, shall be segregated from the other property and funds of such Grantor and shall be delivered forthwith to the Secured Parties in the same form as so received (with any necessary endorsement or assignment). (k) The Secured Parties may, at any time or from time to time, charge, set off and otherwise apply all or any part of the Obligations against any funds of any of the Grantors held by them. Each of the Secured Parties hereby agrees promptly to notify the applicable Grantor after any such charge, set-off or other application is made by the Secured Parties; provided, however, that the failure to give such notice shall not affect the validity of such charge, set-off or other application. Section 8. Application of Collateral and Proceeds. The proceeds of any sale of, or other realization upon, all or any part of the Collateral shall be applied in the following order of priorities: (a) first, to pay the expenses of such sale or other realization, including reasonable commission to the Secured Parties' third party selling agent, and all reasonable expenses, liabilities and advances incurred or made by the Secured Parties in connection therewith, and any other unreimbursed expenses for which the Secured Parties is to be reimbursed pursuant to Section 14 hereof, including, without limitation, reasonable attorney's fees and expenses; (b) second, to the payment of amounts due under the Note and any fees or expenses incurred in connection therewith in such order and manner as the Secured Parties, in their sole discretion, shall determine; and -7-

(c) finally, unless Applicable Law otherwise provides, to pay to the Grantors, or its successors or assigns, or as a court of competent jurisdiction may direct, any surplus then remaining from such proceeds. Each of the Grantors shall remain liable for any deficiency resulting from a sale of the Collateral and shall pay such deficiency forthwith upon demand. Section 9. Acknowledgement Relating to certain Collateral. Each of the Grantors recognizes and hereby acknowledges that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws (or other similar Applicable Law of other relevant jurisdictions), the Secured Parties may be compelled with respect to any sale of all or any part of the Collateral comprised of Equity Interests that are not registered under the Securities Act to limit the purchasers thereof to those Persons who will agree, among other things, to acquire the Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Each of the Grantors hereby further acknowledges that any such private sale may be at a price and on terms less favorable to the Secured Parties than those obtainable through a public sale without such restrictions (including, without limitation, a public offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances, each of the Grantors hereby agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Secured Parties shall have no obligation to engage in public sales and no obligation to delay the sale of any Collateral for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or any applicable state securities laws (or other similar Applicable Law of other relevant jurisdictions), even if any of the Grantors would agree to do so. Each of the Grantors hereby waives any claims against the Secured Parties arising by reason of the fact that the price at which any Collateral, may have been sold at such a private sale was less than the price that might have been obtained at a public sale, even if the Secured Parties accepts the first offer received and does not offer such Collateral to more than one offeree. Section 10. Secured Parties Appointed Attorney-in-Fact. Each of the Grantors hereby irrevocably appoints each of the Secured Parties Agent as each of the Grantors' attorney-in-fact, with full authority in the place and stead of each of the Grantors and in the name of each of the Grantors or otherwise, from time to time in the Secured Parties' discretion, to take any action and to execute any instrument that the Secured Parties may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to receive, indorse, and collect all instruments made payable to each of the Grantors representing any dividend or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same. Section 11. The Secured Parties May Perform. If any the Grantors fails to perform any agreement contained herein, each of the Secured Parties may itself perform, or cause performance of, such agreement, and the expenses of the Secured Parties incurred in connection therewith shall be payable by such Grantors. Section 12. The Secured Parties' Duties. The powers conferred on each of the Secured Parties hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon -8-

such Secured Party to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for monies and for other properties actually received by it hereunder, each of the Secured Parties shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders, or other matters relative to any Collateral, whether or not such Secured Party has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. Each of the Secured Parties shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral in its possession if it takes such action for that purpose as the Grantors may request in writing, but failure of the Secured Parties to comply with any such request shall not itself be deemed a failure to exercise reasonable care. The Secured Parties shall also be deemed to have exercised reasonable care in the custody and preservation of any Collateral in their possession if such Collateral is accorded treatment substantially equal to that which each of the Secured Parties accords its own property of like kind. Section 13. Security Interest Absolute. (a) The obligations of each of the Grantors under this Agreement are independent of the Obligations, and a separate action or actions may be brought and prosecuted against such Grantors to enforce this Agreement, irrespective of whether any action is brought against it under any of the other Transaction Documents. All rights of the Secured Parties and security interests hereunder, and all obligations of each of the Grantors hereunder, shall be absolute and unconditional irrespective of (but not limited to) the occurrence of any of the following: (i) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Transaction Documents; (ii) any taking, exchange, release, or non-perfection of any other Collateral, or any taking, release, or amendment or waiver of or consent or departure from any guaranty, for all or any of the Obligations; (iii) any manner of application of Collateral, or proceeds thereof, to all or any of the Obligations, or any manner of sale or other disposition of any collateral for all or any part of the Obligations, or any other assets of Grantors; (iv) any change, restructuring, or termination of the corporate structure or existence of any of the Grantors or any of its direct or indirectly held Subsidiaries, or (v) the existence of any defense in respect of the Obligations. (b) This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the Secured Parties or by any other person upon the insolvency, bankruptcy or reorganization of any of the Grantors or otherwise, all as though such payment had not been made, and each of the Grantors hereby unconditionally and irrevocably agrees that it will indemnify the Secured Parties, upon demand, for all -9-

of the costs and expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by the Secured Parties in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, a fraudulent transfer or a similar payment under any bankruptcy, insolvency or similar Applicable Law. Section 14. Expenses; the Secured Parties' Lien. Each of the Grantors will forthwith upon demand pay to the Secured Parties the amount of any and all reasonable out-of-pocket expenses, including reasonable attorneys' fees and the reasonable fees and disbursements of any agents not regularly in its employ, which the Secured Parties may incur in connection with the collection, sale or other disposition of any of the Collateral or any default on any of the Grantors' part hereunder. Section 15. Voting Rights; Dividends; Etc (a) Subject to paragraph (c) of this Section 15, Frontline and/or Provo shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Equity Interests conforming the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement; provided, however, that Frontline or Provo shall not exercise or refrain from exercising any such right if such action constitutes, could result or could reasonably be expected to result in, a material adverse effect on the value of the Collateral or any material part thereof. (b) The Secured Parties shall execute and deliver (or cause to be executed and delivered) to the applicable Grantor all such revocable proxies and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and other rights that it is entitled to exercise pursuant to paragraph (a) of this Section 15. (c) Upon the occurrence and during the continuance of any Event of Default, the Secured Parties shall have the right, upon prior written notice to the Grantors: (i) to terminate all rights of the Grantors to exercise or refrain from exercising the voting and other consensual rights that they would otherwise be entitled to exercise pursuant to paragraph (a) of this Section 15, and all such rights shall thereupon become vested in the Secured Parties, which shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights; (ii) to revoke any proxies and other instruments delivered to the Grantors pursuant to paragraph (b) of this Section 15; and -10-

(iii) to cause any or all of the Collateral comprised of Equity Interests, to be transferred of record into the name of the Secured Parties or their nominee. Section 16. Termination of Security Interests; Release of Collateral. Upon the repayment and performance in full of the Obligations, the Security Interests shall terminate and all rights to the Collateral shall revert to the Grantors. Upon any such termination of the Security Interests or release of Collateral, the Secured Parties will, at the Grantors' expense to the extent permitted by law, execute and deliver to the Grantors such documents as the Grantors shall reasonably request to evidence the termination of the Security Interests or the release of such Collateral, as the case may be. Section 17. Waivers; Non-Exclusive Remedies. (a) Except as otherwise specifically provided herein, each of the Grantors hereby waives demand, notice, protest, notice of acceptance of this Security Agreement, notice of loans made, credit extended, collateral received or delivered or other action taken in reliance hereon (and all other demands and notice of any description). With respect to both the Obligations and the Collateral, each of the Grantors hereby assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of Collateral, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as the Secured Parties may deem advisable. (b) Except as otherwise provided by Applicable Law, the Secured Parties shall not have any duty as to the collection or protection of the Collateral or any income thereon, nor as to the preservation of rights against prior parties, nor as to the preservation of any rights pertaining thereto beyond the safe custody of any Collateral in its possession. Except as otherwise provided by Applicable Law, each of the Secured Parties may exercise its rights with respect to the Collateral without resort or regard to other collateral or sources of reimbursement for liability. Except as otherwise provided by Applicable Law, the Secured Parties shall not be required to marshal any present or future security for (including, but not limited to, this Security Agreement and the Collateral subject to the Security Interests created hereby) the Obligations or any portion thereof, or to resort to such security in any particular order; and all of its rights hereunder and in respect of such security and guarantees shall be cumulative and in addition to all other rights, however existing or arising. To the extent that it lawfully may do so, each of the Grantors hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Secured Parties' rights under this Agreement or under any other instrument evidencing all or any portion of the Obligations or under which all or any portion of the Obligations are outstanding or by which all or any portion of the Obligations is secured, and, to the extent that it lawfully may do so, the Grantors hereby irrevocably waives the benefits of all such laws. (c) No failure on the part of the Secured Parties to exercise, and no delay in exercising, and no course of dealing with respect to, any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise by the Secured Parties of any right, power or -11-

remedy under this Agreement preclude any other right, power or remedy that they may have hereunder or at law or equity. The remedies in this Agreement are cumulative and are not exclusive of any other remedies provided by law or equity, including any rights of setoff in favor of the Secured Parties. (d) Each of the Grantors, hereby consents to the non-exclusive jurisdiction of the courts of the State of New York sitting in New York County and the United States District Court for the Southern District of New York for the purpose of any suit or proceeding brought in connection with or with respect to this Agreement. SECTION 18. WAIVER OF JURY TRIAL. EACH OF THE DEBTORS AND EACH OF THE LENDERS HEREBY EXPRESSLY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT. Section 19. Changes in Writing. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Section 20. Governing Law; Meaning of Terms. This Agreement shall be construed in accordance with and governed by the laws of the State of New York applicable to contracts made and performed therein without giving effect to the conflicts or choice of law provisions thereof that would give rise to the application of the domestic substantive law of any other jurisdiction; except in any event to the extent that remedies provided by the laws of any jurisdiction other than the State of New York are governed by the laws of such jurisdiction. Unless otherwise defined herein, or unless the context otherwise requires, all terms used herein which are defined in the UCC as in effect in the State of New York have the meanings stated therein. Section 21. Severability. If any provision hereof is invalid or unenforceable in any jurisdiction, the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of the Secured Parties. Section 22. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. -12-

Section 23. Headings. The headings in this Agreement are for the purposes of reference only and shall not limit or otherwise affect the meaning hereof. Section 24. Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same agreement. -13-

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto under seal all as of the day and year first above written. THE GRANTORS: FRONTLINE COMMUNICATIONS CORP. By: /s/ ----------------------------------- Stephen Cole-Hatchard Chief Executive Officer PROYECCIONES Y VENTAS ORGANIZADAS, S.A. DE C.V. By: /s/ ----------------------------------- Ventura Martinez del Rio Requejo Chief Executive Officer THE SECURED PARTIES: /s/ -------------------------------------- VENTURA MARTINEZ DEL RIO ARRANGOIZ /s/ ----------------------------------- VENTURA MARTINEZ DEL RIO REQUEJO

EXHIBIT A Collateral (a) All of such Grantor's right, title and interest in and to all equipment in all of its forms (including, but not limited to, (i) all furniture, furnishings, trade fixtures, machinery and appliances and (ii) all production, manufacturing, distribution, selling, data processing, computer and office equipment (including, without limitation, notebooks, drawings, diagrams, plans, manuals, computer peripherals, hardware, firmware, software, data storage tapes, disks, diskettes and other computerized information)), all fixtures and all parts thereof and all accessions and additions thereto, parts and appurtenances thereof, substitutions therefor and replacements thereof (any and all such equipment, fixtures, accessions, additions, parts, appurtenances, substitutions and replacements being the "Equipment"); with the exception of Frontline's leased equipment and Frontline's equipment subject to pre-existing security interests. (b) All of such Grantor's right, title and interest in and to all inventory in all of its forms (including, but not limited to, (i) all raw materials and works in process therefor, finished goods thereof and materials used or consumed in the manufacture or production thereof, (ii) all goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including, without limitation, goods in which such Grantor has an interest or right as consignee) and (iii) all goods that are returned to or repossessed or stopped in transit by such Grantor), and all accessions thereto and products thereof and documents therefor (any and all such inventory, accessions, products and documents being the "Inventory"). (c) All of such Grantor's right, title and interest in and to the following (collectively, the "Security Collateral"): (i) the Initial Pledged Interests, whether or not evidenced by certificates, and all of the certificates, if any, representing such Initial Pledged Interests, all security therefor and all dividends, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Initial Pledged Interests; (ii) all of the additional Equity Interests in any Person from time to time acquired by such Grantor in any manner and all other all investment property (together with the Initial Pledged Interests, the "Pledged Interests"), whether or not evidenced by certificates, and all of the certificates, if any, representing such additional Equity Interests, all security therefor, and all dividends, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such additional Equity Interests and other investment property; (iii) all of the additional Indebtedness from time to time owed to such Grantor by any Person (other than trade and other accounts receivable owed to such Grantor in the ordinary course of its business, which are otherwise covered by Section (e)) (the "Pledged Debt"), whether or not evidenced by instruments, and all of the instruments, if any, evidencing such additional Indebtedness, all security therefor and all interest, cash,

instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such additional Indebtedness; and (v) all of the additional investment property (including, without limitation, all securities (whether certificated or uncertificated), security entitlements, security accounts, commodity contracts and commodity accounts, whether or not evidenced by certificates or instruments, and all of the certificates and instruments, if any, representing or evidencing such additional investment property, all security therefor and all dividends, interest, distributions, value, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such additional investment property; (d) All of such Grantor's right, title and interest in, to and under each of the agreements listed on Schedule II hereto to which such Grantor is now or may hereafter become a party, in each case as such agreement may be amended, supplemented or otherwise modified from time to time (collectively, the "Assigned Agreements"), including, without limitation, (A) all rights of such Grantor to receive moneys due and to become due under or pursuant to the Assigned Agreements, (B) all rights of such Grantor to receive proceeds of any insurance, indemnity, warranty or guarantee with respect to the Assigned Agreements or any other instrument, agreement or document delivered pursuant thereto, (C) all claims of such Grantor for damages arising out of or for breach of or default under the Assigned Agreements and (D) all rights of such Grantor to terminate the Assigned Agreements, to perform thereunder and to compel performance and otherwise to exercise all remedies thereunder (any and all such agreements, rights and claims being the "Agreement Collateral"); (e) All of such Grantor's right, title and interest in and to all accounts, contract rights, chattel paper, instruments, deposit accounts, payment intangibles and general intangibles, and all other rights and obligations of any kind, whether or not arising out of or in connection with the sale or lease of goods or the rendering of services, and whether or not earned by performance (including, without limitation, any right with respect to workers' compensation or other deposits made by such Grantor and any right to receive tax refunds or other refunds, reimbursements or payments from any governmental authority), and all rights in and to all security agreements, leases and other contracts securing or otherwise relating to any such accounts, contract rights, chattel paper, instruments, deposit accounts, general intangibles or other rights or obligations (any and all such accounts, contract rights, chattel paper, instruments, deposit accounts, general intangibles and other rights and obligations, to the extent not referred to in subsection (c), (d), (e), (g), (h), (i), or (j) hereof, being the "Receivables". (g) All of such Grantor's right, title and interest in and to all general intangibles (other than general intangibles for money due or to become due, which are covered by subsection (e), and other than any of the Intellectual Property Collateral (as hereinafter defined), which is covered by subsections (h), (i), and (j) of this Exhibit A), including, but not limited to, (i) all Equity Interests in and to any Person, (ii) all Governmental Authorizations, (iii) all certificates, records, circulation lists, subscriber lists, advertiser lists, supplier lists, customer lists, customer and supplier contracts, sales orders, purchasing records and other rights, privileges and goodwill obtained or used in connection with the Collateral, (iv) all processes, practices, techniques, procedures, trade secrets, know-how and other information and data (including, without limitation, all designs, drawings, compilations of data,

specifications and assembly procedures) and (v) the right to sue or otherwise recover for any and all past, present and future infringements, misappropriations and other violations thereof (any and all such general intangibles being the "Propriety Works"). (h) all of such Grantor's right, title and interest in and to (i) all copyrights (including, without limitation, all sales literature, promotional literature, software, mask works, databases and firmware), whether statutory or common law, and whether or not the underlying works of authorship have been published, (ii) all copyright registrations and copyright applications (including, without limitation, each of the copyright registrations and copyright applications set forth opposite the name of such Grantor in Part A of Schedule III hereto) and all works of authorship and other intellectual property rights therein, (iii) all copyrights of works based on, incorporated in, derived from or relating to works covered by such copyrights, (iv) all rights to make and exploit all derivative works based on or adopted from works covered by such copyrights, and (v) any extensions or renewals thereof, including, but not limited to, (A) the right to print, publish and distribute any of the foregoing, (B) all commercial tort claims and the right to sue or otherwise recover for any and all other past, present and future infringements, misappropriations and other violations thereof, (C) all income, royalties, damages, settlements and other payments now and hereafter due and/or payable with respect thereto (including, without limitation, payments under all licenses entered into in connection therewith, and damages, settlements and payments for past or future infringements thereof) and (D) all rights corresponding thereto throughout the world and all other rights of such Grantor of any kind whatsoever accruing thereunder or pertaining thereto (any and all such copyrights, works of authorship, copyrights of works, rights to make or exploit, copyright registrations, copyright applications, extensions and renewals being the "Copyrights"); (i) all of such Grantor's right, title and interest in and to (i) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious names, trade dress, service marks, trade styles, logos and other designs or sources of business identifiers or other indicia of trade origin, (ii) all trademark and service mark registrations and applications for trademark or service mark registrations (including, without limitation, each registration and application set forth opposite the name of such Grantor in Part B of Schedule III hereto) and (iii) any and all extensions and renewals of or with respect to any of the foregoing, including, but not limited to, (A) all commercial tort claims and the right to sue or otherwise recover for any and all other past, present and future infringements, misappropriations and other violations thereof, (B) all income, royalties, damages, settlements and other payments now and hereafter due and/or payable with respect thereto (including, without limitation, payments under all licenses entered into in connection therewith, and damages, settlements and payments for past or future infringements thereof) and (C) all rights of such Grantor corresponding thereto throughout the world and all other rights of such Grantor of any kind whatsoever accruing thereunder or pertaining thereto, together in each case with the goodwill of the business connected with the use of, and symbolized by, any or all of the foregoing throughout the world, but excluding any United States intent-to-use trademark application prior to the filing of a Statement of Use or an amendment to allege use in connection therewith to the extent that a valid lien and security interest may not be taken in such an intent-to-use application under applicable law (any and all such trademarks, service marks, trade names, corporate names, company names, business names, fictitious names, trade dress, service marks, trade styles, logos, designs, sources of business identifiers, indicia of trade origin, registrations, applications, extensions and renewals being the "Trademarks");

(j) all of such Grantor's right, title and interest in and to all patents, patent applications and patentable inventions (including, without limitation, each patent and patent application set forth opposite the name of such Grantor in Part C of Schedule III hereto), including, but not limited to, (i) all inventions and improvements described and claimed therein, (ii) all commercial tort claims and the right to sue or otherwise recover for any other infringements and other violations thereof, (iii) all income, royalties, damages, settlements and other payments now and hereafter due and/or payable with respect thereto (including, without limitation, payments under all licenses entered into in connection therewith, and damages, settlements and payments for past and future infringements thereof) and (iv) all rights corresponding thereto throughout the world and all reissues, divisions, continuations, continuations-in-part, provisional applications, substitutes, renewals and extensions thereof, all improvements thereon and all other rights of such Grantor of any kind whatsoever accruing thereunder or pertaining thereto (any and all such patents, patent applications, patentable inventions, reissues, divisions, continuations, continuations-in-part, provisional applications, substitutes, renewals, extensions, improvements and other rights being the "Patents"); and (k) all proceeds and supporting obligations of any and all of the foregoing Collateral (including, without limitation, proceeds that constitute property and assets of the types described in subsections (a) through (j) of this Exhibit A) and, to the extent not otherwise included, (i) all payments under insurance (whether or not the Administrative Agent is the loss payee thereof), or any indemnity, warranty or guarantee, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral and (ii) all cash. The Copyrights, Trademarks, Patents and Licenses are hereinafter collectively referred to as the "Intellectual Property Collateral"; provided, however, that notwithstanding anything herein to the contrary, the Collateral shall not include (i) any Contract, license or other agreement to the extent, but only to the extent, that the grant of a security interest therein would constitute a violation of a valid and enforceable restriction in favor of a third party, or would give any third party thereto a valid and enforceable right to terminate its obligations thereunder (in each case, after giving effect to Section 9-408 of the N.Y. Uniform Commercial Code and similar provisions of Applicable Law).

Schedule I Initial Pledged Interests 192,000 common shares, par value of $50.00 Mexican Peso each, of Provo stock. It is expressly agreed that the Frontline common stock, preferred stock and other equity instruments do not constitute Initial Pledged Interests and are not subject to this Agreement.

Schedule II Assigned Agreements

Schedule III Intellectual Property

Exhibit 10.13 The obligations under this Secured Promissory Note shall arise on the Conversion Date (as defined in the Amended and Restated Stock Purchase Agreement dated April 3, 2003 between the Corporation and Proyecciones y Ventas Organizadas, S.S. de C.V., Ventura Martinez del Rio Requejo and Ventura Martinez del Rio Arrangoiz (the "Agreement") and only if the Series C Preferred Stock (as defined in the Certificate of Designation of Series C convertible preferred stock of the Company (the "Designation")) is not converted into Common Stock of the Company in accordance with the Designation. SECURED PROMISSORY NOTE $20,000,000 New York, NY April 3, 2003 FOR VALUE RECEIVED, Frontline Communications, Corp., a Delaware corporation (the "Borrower") promises to pay to Ventura Martinez del Rio Arrangoiz ("Arrangoiz" or the "Lender"), as agent for the Sellers under that certain Amended and Restated Stock Purchase Agreement, dated as of April 3, 2003 (the "Stock Purchase Agreement"), among Borrower, Proyecciones y Ventas Organizadas, S.A. de C.V. ("Provo"), Arrangoiz and Ventura Martinez del Rio Requejo ("Requejo" and together with Arrangoiz, the "Sellers"), or ORDER, the principal sum of Twenty Million and 00/100 Dollars ($20,000,000), in lawful money of the United States of America, with interest thereon, to be computed on each advance from the date of its disbursement, at the rate of 8% per annum. IT IS HEREBY EXPRESSLY AGREED that the entire principal sum from time to time outstanding hereunder and all accrued and unpaid interest thereon shall become due and payable, within fifteen (15) days of the Conversion Date and only if the Series C Preferred Stock is not converted into Common Stock of the Company in accordance with the Designation. (the "Due Date"). If any amount payable by the Borrower hereunder is not paid on the date when due (whether at maturity, by acceleration or otherwise) interest shall accrue on such amount ("Late Payment"), to the extent permitted by applicable law, during the period from and including the Due Date thereof to but excluding the date such amount is paid at the rate of 12% per annum. Interest accruing on Late Payments shall be payable from time to time on demand by the holder of this Note. Principal and interest shall be payable at the office of Arrangoiz in Mexico City, Mexico, or at such other place as the holder may from time to time designate in writing. This Note is being issued pursuant to the Stock Purchase Agreement and the Certificate of Designation and is secured by the Security Agreement referred to therein.

This Note may be prepaid at any time, and from time to time, in whole or in part, without any premium or penalty therefor; provided, however, that all such prepayments shall be applied first toward interest accrued on this Note and then toward the outstanding principal balance. The Borrower (i) waives diligence, demand, presentment, protest and notice of any kind, (ii) agrees that it will not be necessary for the holder to first institute suit in order to enforce payment of this Note (iii) consents to any one or more extensions or postponements of time of payment, forbearance, forgiveness or other indulgence, without notice or consent and (iv) consents that the Lender may release or surrender, exchange or substitute any collateral security now held or which may hereafter be held as security for the payment of this Note. The pleading of any statute of limitations as a defense to any demand against the undersigned is expressly hereby waived by the undersigned. The holder shall have the right, but not the obligation, to set off against this Note any and all amounts owing at any time by the undersigned to the holder. The holder shall not be required to resort to any means of collection for payment of any amounts evidenced by this Note, but may proceed directly against the Borrower in such manner as the holder may choose. None of the rights of the holder shall be waived or diminished by any failure or delay in the exercise thereof. This Note shall have the effect of an instrument executed under seal and shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the choice or conflict of laws provisions thereof that would give rise to the application of the domestic substantive law of any other jurisdiction. The Borrower irrevocably consents and submits to the non-exclusive jurisdiction of the courts of the State of New York, and waives any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Note or in any way connected with or related or incidental to the dealings of the Borrower, Provo and Sellers in respect of this Note or the transactions related hereto, in each case whether now existing or hereafter arising, and whether in contract, tort, equity or otherwise, and agrees that any dispute arising out of the relationship among the Borrower, Provo and Sellers or the conduct of such persons in connection with this Note shall be heard only in the courts described above (except that the holder shall have the right to bring any action or proceeding against the Borrower or its property in the courts of any jurisdiction which the holder deems necessary to appropriate in order to enforce its rights against the Borrower or its property). The Borrower hereby waives personal service of any and all process on it and consents that all such service of process may be made by registered or certified mail (return receipt requested and postage prepaid) directed to it, and service so made shall be deemed to be completed five (5) calendar days after the same shall have been deposited in the U.S. mails, or, at the holder's option, by service upon the undersigned in any other manner provided under applicable law. - 2 -

All notices, request, demands and other communications that are required or may be given hereunder (collectively, "Notices") shall be in writing and shall be sent by registered or certified mail (return receipt requested and postage prepaid) to the Borrower and Arrangoiz at the following respective addresses or at such other address as shall be specified by like Notice: (i) if to the Borrower, to Frontline Communications Corp., One Blue Hill Plaza, 7th Floor, Pearl River, New York 10965, Attention: Stephen Cole-Hatchard; and (ii) if to the Lender, to Quintana Roo No. 28, Col. Roma Sur, 06760 Mexico, D.F., Mexico, Attention: Ventura Martinez del Rio Arrangoiz. Notices shall be deemed given on the third business day following the day sent, whether or not such Notice was actually received on such day. All agreements between the Borrower and the Lender are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness or otherwise, shall the amount paid or agreed to be paid for the use or forbearance of the indebtedness evidenced hereby exceed the maximum amount which is permitted to receive under applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or of the Stock Purchase Agreement, at the time performance of such provision shall be due, shall involve exceeding such amount, then the obligation to be fulfilled shall automatically be reduced to the limit of such validity and if, from any circumstances the Lender should ever receive as interest an amount which would exceed such maximum amount, such amount which is excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest. As used herein, the term "applicable law" shall mean the law which results in a higher permissible rate of interest, then this Note shall be governed by such new law as of its effective date. This provision shall control every other provision of all agreements between the Borrower and the Lender. If this Note shall not be paid when due and shall be placed by the holder hereof in the hands of an attorney for collection, through legal proceedings or otherwise, the Borrower will pay reasonable attorneys' fees to the holder hereof; together with reasonable costs and expenses of collection, including, without limitation, any such attorneys' fees, costs and expenses relating to any proceedings with respect to the bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation of the Borrower or any party to any instrument or agreement securing this Note, all is provided in the Stock Purchase Agreement. THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED ON THIS NOTE OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PERSON. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE LENDER TO ACCEPT THIS NOTE AND TO MAKE LOANS AS CONTEMPLATED HEREBY. - 3 -

This Note shall be binding on the successors and assigns of the Borrower and inure to the benefit of the Lender and any other holder of this Note. Whenever used herein, the term the Borrower shall be deemed to include its successors and assigns and the term "Arrangoiz" shall be deemed to include the Sellers and their respective successors and assigns. If any term or provision of this Note shall be held invalid, illegal or unenforceable, the validity of all other terms and provisions hereof shall be in no way affected thereby. Frontline Communications Corp. By: /s/ Stephen J. Cole-Hatchard --------------------------- Stephen J. Cole-Hatchard Chief Executive Officer - 4 -

Exhibit 10.14 TERM LOAN AND SECURITY AGREEMENT AMONG FRONTLINE COMMUNICATIONS CORPORATION, PROYECCIONES Y VENTAS ORGANIZADAS, S.A. DE C.V. AND IIG EQUITY OPPORTUNITIES FUND LTD. April 3, 2003

TERM LOAN AND SECURITY AGREEMENT This Term Loan and Security Agreement dated as of April 3, 2003 among FRONTLINE COMMUNICATIONS CORPORATION, a Delaware corporation ("Frontline"), PROYECCIONES Y VENTAS ORGANIZADAS, S.A. DE C.V., a Mexico corporation ("Provo") (Frontline and Provo each a "Borrower" and collectively, the "Borrowers"), and IIG EQUITY OPPORTUNITIES FUND LTD., a Bermuda company (the "Lender"). The Borrowers have requested that the Lender make a Term Loan (as defined herein) to the Borrowers, the proceeds of which shall be used by the Borrowers (a) to pay in full any and all amounts owing to Delanet, Inc., (b) to pay certain fees and expenses in connection with the Provo Acquisition (as defined below) and (c) for the Borrowers' general working capital purposes. The parties wish to provide for the terms and conditions upon which the Term Loan shall be made. In consideration of the mutual covenants and undertakings and the terms and conditions set forth in this Agreement, the parties hereto agree as follows: ARTICLE I Definitions Section 1.1. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; and (c) all references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. "Accounts" means all accounts as such term is defined in the UCC, including, without limitation, the aggregate unpaid obligations of customers and other account debtors arising out of the sale or lease of goods or rendition of services on an open account or deferred payment basis. "Affiliate" or "Affiliates" means (a) any Person controlled by, controlling or under common control with any Borrower, including, without limitation, any Subsidiary of any Borrower and (b) any Person who is a director, member, partner, officer or manager of any Borrower, of a Subsidiary of any Borrower or of any Person described in clause (a) above. For purposes of this definition, "control," when used with respect to any specified Person, means the power to direct the management and policies of such 2

Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. "Agreement" means this Term Loan and Security Agreement, as amended, modified, supplemented or restated from time to time. "Business Day" means a day on which the Lender is open for business that is not a Saturday, Sunday or other day on which banks are required or permitted to be closed in New York, New York. "Change of Control" means, with respect to any Person on or after the Closing Date, any change in the composition of shareholders as of the Closing Date shall occur which would result in any Person or group acquiring fifty percent (50%) or more of any class of stock of such Person or that any Person (or group of Persons acting in concert) shall otherwise acquire, directly or indirectly (including through Affiliates), the power to elect a majority of the board of directors of such Person or otherwise direct the management or affairs of such Person. "Chattel Paper" means all chattel paper as such term is defined in the UCC, now owned or hereafter acquired, including, without limitation, electronic chattel paper, as such term is defined in the UCC. "Closing Date" means April ___, 2003. "Collateral" means and includes all now and hereafter acquired assets of Frontline including, without limitation: (A) all Inventory; (B) all Equipment; (C) all General Intangibles; (D) all Receivables; (E) all Chattel Paper; (F) all Letter-of-Credit Rights; (G) all Instruments; (H) the commercial tort claims set forth on Exhibit C; (I) all books, records, ledgercards, files, correspondence, computer programs, tapes, disks and related data processing software (owned by Frontline or in which it has an interest) which at any time evidence or contain information relating to any or all of (A), (B), (C), (D), (E), (F), (G) and (H) above or are otherwise necessary or helpful in the collection thereof or realization thereupon; 3

(J) documents of title, policies and certificates of insurance, securities, Chattel Paper, other documents or instruments evidencing or pertaining to any or all of (A), (B), (C), (D) (E), (F), (G), (H) and (I) above; (K) all Supporting Obligations and guaranties, including letters of credit and guarantees issued in support of Receivables, Chattel Paper, General Intangibles and Investment Property, Liens on real or personal property, leases, and other agreements and property which in any way secure or relate to any or all of (A), (B), (C), (D), (E), (F), (G), (H), (I) and (J) above, or are acquired for the purpose of securing and enforcing any item thereof; (L) (i) all cash held as cash collateral to the extent not otherwise constituting Collateral, all other cash or property at any time on deposit with or held by the Lender for the account of Frontline (whether for safekeeping, custody, pledge, transmission or otherwise), (ii) all present or future deposit accounts (whether time or demand or interest or non-interest bearing) of Frontline with the Lender or any other Person including those to which any such cash may at any time and from time to time be credited, (iii) all Payment Intangibles, (iv) all letter of credit obligations, (v) all investments and reinvestments (however evidenced) of amounts from time to time credited to such accounts, (iv) all interest, dividends, distributions and other proceeds payable on or with respect to (x) such investments and reinvestments and (y) such accounts, and (v) all Investment Property; and (M) all products and proceeds of (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K) and (L) above (including, but not limited to, all claims to items referred to in (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K) and (L) above) and all claims of Frontline against third parties (x) for (i) loss of, damage to, or destruction of, and (ii) payments due or to become due under leases, rentals and hires of any or all of (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K) and (L) above and (y) proceeds payable under, or unearned premiums with respect to policies of insurance in whatever form. Notwithstanding the foregoing, the Collateral shall not include any shares of capital stock of Provo or Provo's Affiliates owned by Frontline. Solely for clarification purposes, the Lender confirms that the Collateral does not include any assets of Provo or any of its Affiliates, including without limitation, any of the Accounts of Provo or its Affiliates. "Common Stock" means the common stock, $.01 par value per share, of Frontline. "Debt" of any Person means all items of indebtedness or liability which in accordance with GAAP would be included in determining total liabilities as shown on the liabilities side of a balance sheet of that Person as at the date as of which Debt is to be determined. For purposes of determining a Person's aggregate Debt at any time, "Debt" shall also include the aggregate payments required to be made by such Person at any time under any lease that is considered a capitalized lease under GAAP. 4

"Default" means an event that, with giving of notice or passage of time or both, would constitute an Event of Default. "Default Period" means any period of time beginning on the first day of any month during which a Default or Event of Default has occurred and ending on the date the Lender notifies Frontline in writing that such Default or Event of Default has been cured or waived. "Default Rate" means an annual rate equal to three percent (3%) over the Interest Rate. "Environmental Law" means any federal, state, local or other governmental statute, regulation, law or ordinance dealing with the protection of human health and the environment. "Equipment" means all equipment as such term is defined in the UCC, now owned or hereafter acquired, including, without limitation, equipment, machinery and goods (excluding Inventory), whether or not constituting fixtures, including, without limitation: plant and office equipment, tools, dies, parts, data processing equipment, computer equipment with embedded software and peripheral equipment, furniture and trade fixtures, trucks, trailers, loaders and other vehicles and all replacements and substitutions therefore and all accessions thereto. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Event of Default" has the meaning specified in Section 9.1. "GAAP" means generally accepted accounting principles in effect from time to time in the United States of America, applied on a basis consistent with the accounting practices applied in the financial statements described in Section 7.5, except for any change in accounting practices to the extent that, due to a promulgation of the Financial Accounting Standards Board changing or implementing any new accounting standard, Frontline either (i) is required to implement such change, or (ii) for future periods will be required to and for the current period may in accordance with generally accepted accounting principles implement such change, for its financial statements to be in conformity with generally accepted accounting principles (any such change is hereinafter referred to as a "Required GAAP Change"), provided that Frontline shall fully disclose in such financial statements any such Required GAAP Change and the effects of the Required GAAP Change on Frontline's income, retained earnings or other accounts, as applicable. "General Intangibles" means all general intangibles as such term is defined in the UCC, now owned or hereafter acquired, including, without limitation, Payment Intangibles, trademarks, tradenames, tradestyles, trade secrets, equipment formulation, manufacturing procedures, quality control procedures, product specifications, patents, patent applications, copyrights, registrations, software, contract rights, choses in action, causes of action, corporate or other business records, inventions, designs, goodwill, 5

claims under guarantees, licenses, franchises, tax refunds, tax refund claims, computer programs, computer data bases, computer program flow diagrams, source codes, object codes and all other intangible property of every kind and nature. "Hazardous Substances" means pollutants, contaminants, hazardous substances, hazardous wastes, petroleum and fractions thereof, and all other chemicals, wastes, substances and materials listed in, regulated by or identified in any Environmental Law. "Health-Care-Insurance Receivables" means all health-care-insurance receivables as such term is defined in the UCC, now owned or hereafter acquired, including, without limitation, an interest in or claim under a policy of insurance which is a right to payment of a monetary obligation for health-care goods or services provided. "Indemnified Liabilities" has the meaning given to such term in Section 11.8. "Indemnitees" has the meaning given to such term in Section 11.8. "Instruments" means all instruments as such term is defined in the UCC, now owned or hereafter acquired, including, without limitation, a negotiable instrument or a certificated security or any other writing which evidences a right to the payment of money. "Interest Rate" means an annual rate equal to fourteen percent (14.00%). "Inventory" means all inventory as such term is defined in the UCC, now owned or hereafter acquired, including, without limitation, goods, merchandise and other personal property, wherever located, to be furnished under any contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them. "Investment Property" means all investment property as such term is defined in the UCC. "Letter-of-Credit Rights" means all letter-of-credit rights as such term is defined in the UCC, now owned or hereafter acquired, including, without limitation, rights to payment or performance under a letter of credit, whether or not the beneficiary has demanded or is entitled to demand payment or performance. "Lien" means any mortgage, security deed, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including, without limitation, any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the UCC or comparable law of any jurisdiction. 6

"Limited Guaranty" means, collectively, (i) the Limited Guaranty dated as of the date hereof made by Stephen J. Cole-Hatchard in favor of Lender and (ii) the Limited Guaranty dated as of the date hereof made by Ann M. Cole-Hatchard in favor of Lender. "Loan Documents" means this Agreement, the Term Note, the Limited Guaranty, the Mortgages, the Pledge Agreement, the Registration Rights Agreement, the Escrow Agreement and all other documents, instruments, agreements and certificates at any time delivered by any Person executed in connection herewith or therewith. "Material Adverse Effect" means a material adverse effect on (i) the condition, operations, assets, business or prospects of Frontline or the Borrowers, taken as a whole, (ii) the Borrowers' ability to pay or perform the Obligations in accordance with the terms hereof or any Loan Document, (iii) the value of the Collateral, the Liens on the Collateral or the priority of any such Lien or (iv) the practical realization of the benefits of the Lender's rights and remedies under this Agreement or any of the other Loan Documents. "Maximum Legal Rate" has the meaning given to such term in Section 2.2(c). "Mortgages" means collectively, each mortgage granted by Stephen J. Cole-Hatchard and/or Ann Cole-Hatchard to Lender on the Real Estate securing the Obligations. "Obligations" means and includes the Term Loan and all Debts, liabilities, obligations, covenants and duties owing by each Borrower to the Lender (or any Person that directly or indirectly controls or is controlled by or is under common control with the Lender) of every kind and description (whether or not evidenced by any note or other instrument and whether or not for the payment of money or the performance or non-performance of any act), direct or indirect, absolute or contingent, due or to become due, contractual or tortious, liquidated or unliquidated, whether existing by operation of law or otherwise now existing or hereafter arising including, without limitation, any Debt, liability or obligation owing from any Borrower to others which the Lender may have obtained by assignment or otherwise and further including, without limitation, all interest, charges or any other payments each Borrower is required to make by law or otherwise arising under or as a result of this Agreement and the other Loan Documents, together with all reasonable expenses and reasonable attorneys' fees chargeable to such Borrower's account or incurred by the Lender in connection with such Borrower's account whether provided for herein or in any other Loan Document. "Payment Intangibles" means all payment intangibles as such term is defined in the UCC, now owned or hereafter acquired, including, without limitation, a General Intangible under which the account debtor's principle obligation is a monetary obligation. "Permitted Liens" means (a) Liens of carriers, warehousemen, artisans, bailees, mechanics and materialmen incurred in the ordinary course of business securing sums not overdue; (b) Liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance or other forms of governmental insurance or benefits, relating to employees, securing sums (i) not overdue or (ii) being 7

diligently contested in good faith provided that adequate reserves with respect thereto are maintained on the books of Frontline in conformity with GAAP, (c) Liens in favor of the Lender, (d) Liens for taxes (i) not yet due or (ii) being diligently contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of Frontline in conformity with GAAP provided, that, the Lien shall have no effect on the priority of Liens in favor of the Lender or the value of the assets in which the Lender has a Lien, (e) zoning restrictions, easements, licenses, or other restrictions on the use of real property or other minor irregularities in title thereto, so long as the same do not materially impair the use, value or marketability of such real estate, (f) Liens upon fixed assets which secures the payment of the purchase price thereof but only if such Lien shall at all times be confined solely to the asset the purchase price of which was financed and only if such Lien secures only such purchase money indebtedness and (g) Liens specified on Schedule 8.1 hereto. "Person" means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Plan" means an employee benefit plan or other plan maintained for any Borrower's employees and covered by Title IV of ERISA. "Pledge Agreement" means the Pledge Agreement dated as of the date hereof made by Stephen J. Cole-Hatchard and Nicko Feinberg in favor of Lender pursuant to which all of the shares of Common Stock owned by Stephen J. Cole-Hatchard and Nicko Feinberg shall be pledged to the Lender as collateral security for the Obligations. "Premises" means all premises where any Borrower conducts its business and has any rights of possession, including, without limitation, the premises described in Exhibit B attached hereto. "Provo Acquisition" means the acquisition by Frontline of all of the capital stock of Provo pursuant to the terms and conditions of the Stock Purchase Agreement. "Real Estate" means the real property and the improvements thereon located at (i) 56 Beach Road, Stony Point, New York 10980 and (ii) 1008 Adams Drive, Key Largo, Florida 33037. "Receivables" means all Accounts now owned or hereafter acquired, including, without limitation, each and every right to the payment of money, whether such right to payment now exists or hereafter arises, whether such right to payment arises out of a sale, lease or other disposition of goods or other property, out of a rendering of services, out of a loan, out of the overpayment of taxes or other liabilities, or otherwise arises under any contract or agreement, whether such right to payment is created, generated or earned by Frontline or by some other Person who subsequently transfers such Person's interest to Frontline, whether such right to payment is or is not already earned by performance, and howsoever such right to payment may be evidenced, together with all other rights and interests (including all Liens) which Frontline may at any time have by law or agreement 8

against any account debtor or other obligor obligated to make any such payment or against any property of such account debtor or other obligor; all including but not limited to all present and future accounts, contract rights, loans and obligations receivable, Health Care Insurance Receivables, Chattel Paper, bonds, notes and other debt instruments, tax refunds and rights to payment in the nature of General Intangibles. "Receivables Financing Event" means the date upon which Provo enters into a Receivables Financing Facility. "Receivables Financing Facility" means any receivables financing facility entered into by Provo following the Closing Date pursuant to which Provo agrees to finance any or all of its Accounts; provided, however, the financial arrangement between the government of Mexico or other Mexican banking institutions and Provo in connection with the Accounts of Walmart Stores, Inc. and any of its Affiliates located in Mexico shall not be deemed a Receivables Financing Facility. "Registration Rights Agreement" means the Registration Rights Agreement dated as of the date hereof among Frontline and the purchasers named therein. "Reportable Event" shall have the meaning assigned to that term in Title IV of ERISA. "Restricted Securities" means the Shares and any shares of Common Stock received in respect thereof, in each case which have not then been sold to the public pursuant to (a) registration under the 1933 Act or (b) Rule 144 (or similar or successor rule) promulgated under the 1933 Act. "SEC" means the United States Securities and Exchange Commission (or a successor thereto). "SEC Documents" has the meaning given to such term in Section 5.16. "Shares" means the 500,000 shares of Common Stock to be issued to Lender pursuant to Section 3.1. "Stock Purchase Agreement" means that certain Amended and Restated Stock Purchase Agreement dated as of April ___, 2003 by and among Frontline, Provo and certain shareholders of Provo. "Subordinated Lenders" means collectively, Ann M. Sulla, Ronald Signore, Anthony Rudel, Stefano A. Masi, Irrevocable Trust of Bernice J. Monroe, Nicko Feinberg, Gary Koval and James Nicholson. "Subordination Agreement" means the Subordination and Intercreditor Agreement dated as of the date hereof delivered and executed by each Subordinated Lender in favor of Lender and acknowledged by Borrower. 9

"Subsidiary" means (i) any corporation of which more than fifty percent (50%) of the outstanding shares of capital stock having general voting power under ordinary circumstances to elect a majority of the board of directors of such corporation, irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency, is at the time directly or indirectly owned by any Borrower, by any Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries, (ii) any partnership, limited liability company, entity or joint venture of which more than fifty percent (50%) of the outstanding equity interests is at the time, directly or indirectly, owned by any Borrower or (iii) any partnership of which any Borrower is a general partner. "Supporting Obligations" means all supporting obligations as such term is defined in the UCC. "Term Note" means the promissory note in the aggregate original principal amount of Five Hundred Fifty Thousand Dollars ($550,000.00) executed by the Borrowers to the order of the Lender and dated as of the Closing Date, together with all replacements and substitutions thereof. "Term Loan" has the meaning given to such term in Section 2.1. "Transfer" means any sale, transfer, assignment, or other disposition of any interest in, with or without consideration, any security, including any disposition of any security or of any interest therein which would constitute a sale thereof within the meaning of the 1933 Act. "UCC" means the Uniform Commercial Code as in effect from time to time in the state designated in Section 11.15 as the state whose laws shall govern this Agreement, or in any other state whose laws are held to govern this Agreement or any portion hereof. "United States Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy", as amended, and any successor statute. "1933 Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. "1934 Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. Section 1.2. Cross References. All references in this Agreement to Articles, Sections, subsections, Exhibits and Schedules, shall be to Articles, Sections, subsections, Exhibits and Schedules of this Agreement unless otherwise explicitly specified. ARTICLE II Amount and Terms of the Term Loan 10

Section 2.1. Term Loan. On the Closing Date, the Lender shall make a term loan ("Term Loan") to the Borrowers in the amount of Five Hundred and Fifty Thousand Dollars ($550,000.00). Except as otherwise provided in the immediately following sentence, the entire unpaid principal balance of the Term Loan, and any accrued and unpaid interest thereon, shall be payable by the Borrowers to the Lender ninety (90) days following the Closing Date. Notwithstanding anything hereinabove to the contrary, the entire unpaid principal balance of the Term Loan, and any accrued and unpaid interest thereon, shall be immediately due and payable upon the earlier to occur of (i) the Receivables Financing Event or (ii) the acceleration of the Obligations pursuant to Section 9.2. The Term Loan shall be evidenced by the Term Note in substantially the form attached hereto as Exhibit A. Section 2.2. Interest; Default Interest; Participations; Usury. Interest accruing on the Term Loan shall be due and payable in arrears on the last day of each month. (a) Interest Rate. Except as set forth in Sections 2.2(b) and 2.2(c), the outstanding principal balance of the Term Loan shall bear interest at the Interest Rate. (b) Default Interest Rate. At any time during any Default Period, in the Lender's sole discretion and without waiving any of its other rights and remedies, the principal of the Term Loan outstanding from time to time shall bear interest at the Default Rate, effective for any periods designated by the Lender from time to time during that Default Period. (c) Usury. In no event shall the aggregate interest payable exceed the maximum rate permitted under any applicable law or regulation, as in effect from time to time (the "Maximum Legal Rate") and if any provision of this Agreement or any other Loan Document is in contravention of any such law or regulation, interest payable under this Agreement and each other Loan Document shall be computed on the basis of the Maximum Legal Rate (so that such interest will not exceed the Maximum Legal Rate) and once the amount of interest payable hereunder or under the other Loan Documents is less than the Maximum Legal Rate, the Lender shall not reduce interest payable hereunder or under any other Loan Document below the amount computed based upon the Maximum Legal Rate until the aggregate amount of interest paid equals the amount of interest which would have been payable if the Maximum Legal Rate had not been imposed. Section 2.3. Computation of Interest. Interest accruing on the outstanding principal balance of the Term Loan shall be computed on the basis of actual number of days elapsed in a year of 360 days. Section 2.4. Origination Fee. The Borrowers hereby agree to pay the Lender an origination fee in the amount of $38,500 on the Closing Date. The origination fee shall be deemed earned as of the Closing Date and shall not be subject to rebate or proration for any reason. Section 2.5. Prepayment. 11

(a) Voluntary Prepayment. The Borrowers may prepay the Term Loan in whole at any time or from time to time in part. All such prepayments shall be applied against the principal installments of the Term Loan in the inverse order of the maturities thereof. (b) Mandatory Prepayment. Upon the receipt of any proceeds received by a Borrower under a Receivables Financing Facility, the Borrowers shall make a prepayment of the Term Loan in an amount equal to fifty percent (50%) of such proceeds. All such prepayments shall be applied against the principal installments of the Term Loan in the inverse order of the maturities thereof. (c) Prepayment Fee. The Borrowers shall pay to the Lender a prepayment fee in the amount of (a) $7,000 if (i) a prepayment is made by the Borrowers to the Lender during the period commencing with the Closing Date and ending on the date that is thirty (30) days after the Closing Date and (ii) the aggregate amount of prepayments made by the Borrowers after the Closing Date exceeds $275,000 and (b) $3,500 if (i) a prepayment is made by the Borrowers to the Lender during the period commencing with the date that is thirty-one (31) days after the Closing Date and ending on the date that is sixty (60) days after the Closing Date and (ii) the aggregate amount of prepayments made by the Borrowers after the Closing Date exceeds $275,000. Borrowers shall not be required to pay a prepayment fee if the Borrowers make prepayments following the date that is sixty (60) days after the Closing Date. ARTICLE III Issuance of the Shares On the Closing Date, as partial consideration for the Term Loan, Frontline shall issue, sell and deliver to the Lender, and the Lender shall purchase from Frontline, the Shares. ARTICLE IV Lien; Occupancy; Setoff Section 4.1. Grant of Lien. Frontline hereby pledges, assigns and grants to the Lender a security interest in and a Lien upon all of the Collateral, as security for the payment and performance of the Obligations. Frontline acknowledges and agrees that the defined term Collateral covers all assets of Frontline except as otherwise provided in the definition of "Collateral". Frontline hereby authorizes the Lender at any time and from time to time to file financing and continuation statements and amendments thereto reflecting the same. Section 4.2. Notification of Account Debtors and Other Obligors. During a Default Period, the Lender may at any time notify any account debtor or other Person obligated to pay the amount due that such right to payment has been assigned or transferred to the Lender for security and shall be paid directly to the Lender. Frontline will join in giving such notice if the Lender so requests. At any time after Frontline or the Lender gives such notice to an account debtor or other obligor, the Lender may, but need not, in the Lender's name or in Frontline's 12

name, (a) demand, sue for, collect or receive any money or property at any time payable or receivable on account of, or securing, any such right to payment, or grant any extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend or change the obligations (including collateral obligations) of any such account debtor or other obligor; and (b) upon the occurrence and during the continuance of an Event of Default, as Frontline's agent and attorney-in-fact, notify the United States Postal Service to change the address for delivery of Frontline's mail to any address designated by the Lender, otherwise intercept Frontline's mail, and receive, open and dispose of Frontline's mail, applying all Collateral as permitted under this Agreement and holding all other mail for Frontline's account or forwarding such mail to Frontline's last known address. Section 4.3. Assignment of Insurance. As additional security for the payment and performance of the Obligations, Frontline hereby assigns to the Lender any and all monies (including, without limitation, proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other rights of Frontline with respect to, any and all policies of insurance now or at any time hereafter covering the Collateral or any evidence thereof or any business records or valuable papers pertaining thereto, and Frontline hereby directs the issuer of any such policy to pay all such monies directly to the Lender. During a Default Period, the Lender may (but need not), in the Lender's name or in Frontline's name, execute and deliver proof of claim, receive all such monies, endorse checks and other instruments representing payment of such monies, and adjust, litigate, compromise or release any claim against the issuer of any such policy. Section 4.4. Occupancy. (a) Frontline hereby irrevocably grants to the Lender the right to take possession of the Premises at any time during a Default Period. (b) The Lender may use the Premises only to hold, process, manufacture, sell, use, store, liquidate, realize upon or otherwise dispose of goods that are Collateral and for other purposes that the Lender may in good faith deem to be related or incidental purposes. (c) The Lender's right to hold the Premises shall cease and terminate upon the earlier of (i) payment in full and discharge of all Obligations, and (ii) final sale or disposition of all goods constituting Collateral and delivery of all such goods to purchasers. (d) The Lender shall not be obligated to pay or account for any rent or other compensation for the possession, occupancy or use of any of the Premises; provided, however, that if the Lender does pay or account for any rent or other compensation for the possession, occupancy or use of any of the Premises, Frontline shall reimburse the Lender promptly for the full amount thereof. In addition, Frontline will pay, or reimburse the Lender for, all taxes, fees, duties, imposts, charges and expenses at any time incurred by or imposed upon the Lender by reason of the execution, delivery, existence, recordation, performance or enforcement of this Agreement or the provisions of this Section 4.4. 13

Section 4.5. License. Without limiting the generality of any security agreement granting the Lender a Lien in any or all of the intellectual property owned by Frontline, Frontline hereby grants to the Lender a non-exclusive, worldwide and royalty-free license to use or otherwise exploit all trademarks, franchises, trade names, copyrights and patents of Frontline for the purpose of selling, leasing or otherwise disposing of any or all Collateral during any Default Period. Solely for clarification purposes, the Lender confirms that it does not have a Lien or license in any intellectual property owned by Provo or any of its Affiliates. Section 4.6. Financing Statement. A carbon, photographic or other reproduction of this Agreement or of any financing statements signed by Frontline is sufficient as a financing statement and may be filed as a financing statement in any state to perfect the security interests and Liens granted hereby. For this purpose, the following information is set forth: Name and address of Frontline: Frontline Communications Corporation One Blue Hill Plaza Pearl River, New York 10965 Organizational Identification Number: 2718950 Name and address of the Lender: IIG Equity Opportunities Fund Ltd. c/o IIG Capital LLC 1500 Broadway, 17th Floor New York, New York 10036 Section 4.7. Setoff. Frontline agrees that the Lender may at any time or from time to time, at its sole discretion and without demand and without notice to anyone, setoff any liability owed to Frontline by the Lender, whether or not due, against any Obligation, whether or not due. In addition, each other Person holding a participating interest in any Obligations shall have the right to appropriate or setoff any deposit or other liability then owed by such Person to Frontline, whether or not due, and apply the same to the payment of said participating interest, as fully as if such Person had lent directly to Frontline the amount of such participating interest. Section 4.8. Power of Attorney. Frontline hereby appoints the Lender or any other Person whom the Lender may designate as Frontline's attorney, with power, during a Default Period, to: (i) endorse Frontline's name on any checks, notes, acceptances, money orders, drafts or other forms of payment or security that may come into Lender's possession; (ii) sign Frontline's name on any invoice or bill of lading relating to any Receivables of Frontline, drafts against customers, schedules and assignments of Receivables of Frontline, notices of assignment, financing statements and other public records, verifications or account and notices to or from customers; (iii) verify the validity, amount or any other matter relating to any Receivable of Frontline by mail, telephone, telegraph or otherwise with account debtors; (iv) execute customs declarations and such other documents as may be required to clear Inventory of Frontline through customs; and (v) do all things necessary to carry out this Agreement, any other Loan Documents and all related documents. Frontline hereby ratifies and approves all acts of the attorney. Neither the Lender nor the attorney will be liable for any acts or omissions or for any error of judgment or mistake of fact or law. This power, being coupled with an interest, is 14

irrevocable so long as any Receivable of Frontline which is assigned to the Lender or in which the Lender has a security interest remains unpaid and until any Obligations have been fully satisfied. Section 4.9. Termination of Lien. The Liens and rights granted to the Lender hereunder and any other Loan Documents and the financing statements filed in connection herewith or therewith shall continue in full force and effect, notwithstanding the termination of this Agreement until (a) all of the Obligations of the Borrowers have been paid or performed in full after the termination of this Agreement or the Borrowers have furnished the Lender with an indemnification satisfactory to the Lender with respect thereto and (b) Frontline has an executed release of any and all claims which the Borrowers may have or thereafter have under this Agreement or any other Loan Documents. Accordingly, Frontline waives any rights which it may have under the UCC to demand the filing of termination statements with respect to the Collateral, and the Lender shall not be required to send such termination statements to Frontline, or to file them with any filing office, unless and until all Loan Documents shall have been terminated in accordance with its terms and all Obligations paid in full in immediately available funds. ARTICLE V Representations and Warranties of the Borrowers Each Borrower represents and warrants to the Lender as follows: Section 5.1. Organization and Power; Name; Chief Executive Office; Inventory and Equipment Locations; Organizational Identification Number. Frontline is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and Provo is a corporation duly organized and existing under the laws of the United Mexican States. Each Borrower is duly licensed or qualified to transact business in all jurisdictions where the character of the property owned or leased or the nature of the business transacted by it makes such licensing or qualification necessary. Each Borrower has all requisite power and authority, corporate or otherwise, to conduct its business, to own its properties and to execute and deliver, and to perform all of its obligations under, the Loan Documents. Each Borrower's chief executive office and principal place of business is located at the address set forth in Schedule 5.1, and all of such Borrower's records relating to its business or the Collateral are kept at that location. All Inventory and Equipment of Frontline is located at its chief executive office or at one of the other locations set forth in Schedule 5.1. Frontline's organizational identification number is correctly set forth in Section 4.6 hereto. Section 5.2. Authorization of Borrowing; No Conflict as to Law or Agreements. The execution, delivery and performance by each Borrower of the Loan Documents have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of any Borrower's shareholders; (ii) require any authorization, consent or approval by, or registration, declaration or filing with, or notice to, any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or any third party, except such authorization, consent, approval, registration, declaration, filing or notice as has been obtained, accomplished or given prior to the date hereof; (iii) violate any provision of any 15

law, rule or regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System) or of any order, writ, injunction or decree presently in effect having applicability to any Borrower or of any Borrower's certificate of incorporation, bylaws or other organizational document; (iv) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which any Borrower is a party or by which it or its properties may be bound or affected; (v) contravene any provision of any Borrower's certificate of incorporation, bylaws or other organizational document or (vi) result in, or require, the creation or imposition of any Lien upon or with respect to any of the properties now owned or hereafter acquired by any Borrower. Section 5.3. Capitalization. As of the date hereof, the authorized capital stock of Frontline, after giving effect to the issuance of the Shares, is as set forth on Schedule 5.3 hereto. All of such outstanding shares of capital stock have been, or upon issuance (including the Shares) will be, validly authorized and issued, fully paid and non-assessable, and issued in accordance with the registration provisions of the 1933 Act, or pursuant to valid exemptions therefrom. Except as disclosed in Schedule 5.3 hereto: (a) no shares of Frontline's capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by Frontline, nor is any Person entitled to preemptive or similar rights arising out of any agreement or understanding with Frontline by virtue of any of the Loan Documents; (b) there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of capital stock of Frontline, or contracts, commitments, understandings or arrangements by which Frontline is or may become bound to issue additional shares of capital stock of Frontline or options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of Frontline; (c) there are no outstanding debt securities of Frontline; (d) there are no agreements or arrangements under which Frontline is obligated to register the sale of any of their securities under the 1933 Act; (e) there are no outstanding equity securities of Frontline which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which Frontline is or may become bound to redeem an equity security of Frontline; (f) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Shares; (g) Frontline does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement; and (h) except as specifically disclosed in its filings made with the SEC, no Person or group of related Persons, to Frontline's knowledge, beneficially owns (as determined pursuant to Rule 13d-3 promulgated under the 1934 Act) or has the right to acquire by agreement with or by obligation binding upon Frontline beneficial ownership of in excess of 5% of the Common Stock. Schedule 5.3 contains a true and complete table setting the pro forma capitalization of Frontline on a fully diluted basis giving effect to: (a) the issuance of the Shares; (b) any adjustments in other securities resulting from such issuance; and (c) the exercise or conversion of all outstanding securities. Section 5.4. Legal Agreements. This Agreement constitutes and, upon due execution by each Borrower, the other Loan Documents will constitute, the legal, valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their 16

respective terms, except insofar as the enforceability thereof may be limited (a) by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (b) by general principles of equity and public policy (regardless of whether considered at law or in equity). Section 5.5. Litigation. Except as otherwise disclosed in Schedule 5.5. there are no actions, suits or proceedings pending or, to each Borrower's knowledge, threatened against or affecting such Borrower or the properties of such Borrower before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which, if determined adversely to such Borrower could have a Material Adverse Effect. Section 5.6. Regulation U. No Borrower is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. Section 5.7. Taxes. Each Borrower and its Affiliates have paid or caused to be paid to the proper authorities when due all federal, state and local taxes required to be withheld by each of them. Each Borrower and its Affiliates have filed all federal, state and local tax returns that are required to be filed, and each Borrower and its Affiliates have paid or caused to be paid to the respective taxing authorities all taxes as shown on said returns or on any assessment received by any of them to the extent such taxes have become due. Section 5.8. Titles and Liens. Frontline has good and absolute title to all Collateral, free and clear of all Liens, except for Permitted Liens. No financing statement naming Frontline as debtor is on file in any office except to perfect Permitted Liens. Section 5.9. Plans. Except as disclosed to the Lender in writing prior to the date hereof, no Borrower or any of its Affiliates maintains or has maintained any Plan. No Borrower or any of its Affiliates has received any notice or has any knowledge to the effect that it is not in full compliance with any of the requirements of ERISA. No Reportable Event or other fact or circumstance which may have an adverse effect on the Plan's tax qualified status exists in connection with any Plan. Section 5.10. Default. Each Borrower is in compliance with all provisions of all agreements, instruments, decrees and orders to which it is a party or by which it or its property is bound or affected, the breach or default of which could have a Material Adverse Effect. Section 5.11. Environmental Matters. Except as otherwise disclosed in the SEC Documents and to the best knowledge of each Borrower: (a) There are not present in, on or under the Premises any Hazardous Substances in such form or quantity as to create any liability or obligation for either any Borrower or the Lender under common law of any jurisdiction or under any Environmental Law, and no Hazardous Substances have ever been stored, buried, spilled, leaked, discharged, emitted or released in, on or under the Premises in such a way as to create any such liability. 17

(b) No Borrower has disposed of Hazardous Substances in such a manner as to create any liability under any Environmental Law. (c) There are not and there never have been any requests, claims, notices, investigations, demands, administrative proceedings, hearings or litigation, relating in any way to the Premises or any Borrower, alleging liability under, violation of, or noncompliance with any Environmental Law or any license, permit or other authorization issued pursuant thereto. To each Borrower's best knowledge, no such matter is threatened or impending. (d) Each Borrower's businesses are and have in the past always been conducted in accordance with all Environmental Laws and all licenses, permits and other authorizations required pursuant to any Environmental Law and necessary for the lawful and efficient operation of such businesses are in such Borrower's possession and are in full force and effect. No material permit required under any Environmental Law is scheduled to expire within 12 months and there is no threat that any such permit will be withdrawn, terminated, limited or materially changed. (e) To each Borrower's best knowledge, the Premises are not and never have been listed on the National Priorities List, the Comprehensive Environmental Response, Compensation and Liability Information System or any similar federal, state or local list, schedule, log, inventory or database. (f) Each Borrower has delivered to the Lender all environmental assessments, audits, reports, permits, licenses and other documents describing or relating in any way to the Premises or such Borrower's businesses. Section 5.12. Submissions to the Lender. All financial and other information provided to the Lender by or on behalf of each Borrower in connection with such Borrower's request for the credit facility contemplated hereby is true and correct in all material respects and, as to projections, valuations or pro forma financial statements, present a good faith opinion as to such projections, valuations and pro forma condition and results. Section 5.13. Financing Statements. Frontline has authorized the Lender to file financing statements sufficient when filed to perfect the Liens created by the Loan Documents. When such financing statements are filed in the offices noted therein, the Lender will have a valid and perfected Lien in all Collateral and all other collateral described in the Loan Documents which is capable of being perfected by filing financing statements. None of the Collateral or other collateral covered by the Loan Documents is or will become a fixture on real estate, unless a sufficient fixture filing is in effect with respect thereto. Section 5.14. Rights to Payment. Each right to payment and each instrument, document, Chattel Paper and other agreement constituting or evidencing Collateral or other collateral covered by the other Loan Documents is (or, in the case of all future Collateral or such other collateral, will be when arising or issued) the valid, genuine and legally enforceable obligation, subject to no defense, setoff or counterclaim, of the account debtor or other obligor named therein or in Frontline's records pertaining thereto as being obligated to pay such obligation. 18

Section 5.15. Intellectual Property. Frontline possesses all of the licenses, patents, copyrights, trademarks and tradenames necessary to conduct its business. There has been no assertion or claim of violation or infringement with respect thereof and all such licenses, patents, copyrights, trademarks and tradenames are listed on Schedule 5.15. Section 5.16. SEC Documents and Financial Statements. Since January 1, 2001, Frontline has timely filed with the SEC all forms, reports, schedules, statements and other documents required to be filed by it under the 1934 Act or the 1933 Act (such documents, as supplemented and amended since the time of filing, collectively, the "SEC Documents"). The SEC Documents, including, without limitation, any financial statements or schedules included or incorporated by reference therein, at the time filed (and, in the case of registration statements, on the dates of effectiveness) (a) as of its filing did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (b) complied in all material respects with the applicable requirements of the 1934 Act and the 1933 Act, as the case may be and the rules and regulations thereunder. The financial statements of Frontline together with any related schedules and notes included in the SEC Documents at the time filed (and, in the case of registration statements, on the dates of effectiveness) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto), and fairly present (subject in the case of unaudited statements to normal, recurring audit adjustments) the combined financial position of Frontline and its Subsidiaries, as of the dates thereof and the combined results of operations, statements of stockholder equity, and cash flows for the periods then ended. Section 5.17. No Public Offer. Assuming the accuracy of the representations and warranties of the Lender contained in Article VI of this Agreement, the sale and issuance of the Shares will be exempt from the registration requirements of Section 5 of the 1933 Act, and the Shares will have been registered or qualified (or be exempt from registration or qualification) under applicable state securities laws. Neither Frontline nor anyone acting on its behalf has offered to any Person securities of Frontline, nor any part thereof, nor any instruments convertible, exercisable, or exchangeable into such securities, or has solicited from any Person any offer to acquire the same, in a manner so as to make the transactions contemplated by this Agreement not exempt from the registration requirements of Section 5 of the 1933 Act or any state securities laws. Section 5.18. No Material Misstatements or Omissions. Neither this Agreement nor any of the Loan Documents contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein not misleading. There is no fact or information relating to the business, prospects, condition (financial or otherwise), affairs, operations, or assets of Frontline or its Subsidiaries that has not been disclosed to the Lender in writing by Frontline that could result in a Material Adverse Effect, including, without limitation, through disclosure in the SEC Documents. The financial statements and other related financial data furnished to the Lender by or at the direction of Frontline in connection with the negotiation of this Agreement do not contain any material misstatement of fact and, when considered with all other written statements furnished to the Lender in that connection, such financial statements, 19

related financial data and reserve reports do not omit to state a material fact or any fact necessary to make the statements contained therein not misleading. The circumstances and events that are not required to be identified on the Schedules hereto by reason of the materiality qualifications contained in the representations and warranties in this Article V, or which are otherwise within such qualifications, in the aggregate do not have, and could not reasonably be expected to have, a Material Adverse Effect on Frontline when taken in the context of all of the assets, obligations and operations of Frontline. Section 5.19. Fees and Commissions. No Borrower has retained, nor are any fees due from any Borrower to, any intermediary retained by such party, any finder, broker, agent, financial advisor, or other intermediary, in connection with the transactions contemplated by this Agreement and the other Loan Documents. ARTICLE VI Representations and Warranties of the Lender The Lender represents and warrants to Frontline as follows: Section 6.1. Purchase for its Own Account. The Lender is purchasing the Shares, without a view to the distribution thereof in violation of the 1933 Act, all without prejudice, however, to the right of the Lender at any time, in accordance with this Agreement or the Loan Documents, lawfully to sell or otherwise to dispose of all or any part of the Shares held by it. Section 6.2. Accredited Purchaser. The Lender is an "accredited investor" within the meaning of Regulation D promulgated under the 1933 Act. Section 6.3. Authority, Etc. The Lender has the power and authority to enter into and perform this Agreement and the other Loan Documents and the execution and performance hereof have been duly authorized by all proper and necessary action; this Agreement and the other Loan Documents constitute the valid and legally binding obligation of the Lender, enforceable against it in accordance with its terms, except insofar as the enforceability thereof may be limited (a) by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (b) by general principles of equity and public policy (regardless of whether considered at law or in equity). Section 6.4. 1933 Act Compliance. The Lender understands that Frontline has not registered the Shares under the 1933 Act, and the Lender agrees that the Shares may not be sold or transferred or offered for sale or transfer by it without registration under the 1933 Act or the availability of an exemption therefrom. Section 6.5. Access to Information; Knowledge and Experience. The Lender (a) has been furnished with or has had access to the information the Lender has requested from Frontline, (b) has had an opportunity to discuss with management of Frontline the intended business and financial affairs of Frontline and (C) has such knowledge and experience in business and financial matters and with respect to investments in securities similar to the Shares that it is capable of evaluating the risks and merits of this investment. The Lender's 20

representations in this subsection shall in no way limit the enforceability of any representation made by Frontline in any of the Loan Documents. Section 6.6. Liquidity. The Lender has no need for liquidity in its investment in the Shares and is able to bear the economic risk of its investment in the Shares and the complete loss of all of such investments. Section 6.7. Risks. The Lender recognizes that an investment in Frontline involves certain risks, and has taken full cognizance of, and understands all of, the risk factors related to the purchase of the Shares. ARTICLE VII Affirmative Covenants of the Borrowers So long as the Obligations shall remain unpaid, or the Term Loan shall remain outstanding, each Borrower will comply with the following requirements, unless the Lender shall otherwise consent in writing: Section 7.1. Reporting Requirements. Each Borrower will deliver, or cause to be delivered, to the Lender each of the following, which shall be in form and substance acceptable to the Lender: (a) immediately after the commencement thereof, notice in writing of all litigation and of all proceedings before any governmental or regulatory agency affecting any Borrower of the type described in Section 5.11 or which seek a monetary recovery against any Borrower in excess of One Hundred Thousand Dollars ($100,000); (b) as promptly as practicable (but in any event not later than five (5) Business Days) after an officer of any Borrower obtains knowledge of the occurrence of any breach, default or event of default under any Loan Document or any event which constitutes a Default or Event of Default, notice of such occurrence, together with a detailed statement by a responsible officer of such Borrower of the steps being taken by such Borrower to cure the effect of such breach, default or event; (c) as soon as possible and in any event within thirty (30) days after any Borrower knows that any Reportable Event with respect to any Plan has occurred, the statement of such Borrower's chief financial officer setting forth details as to such Reportable Event and the action which such Borrower proposes to take with respect thereto, together with a copy of the notice of such Reportable Event to the Pension Benefit Guaranty Corporation; (d) as soon as possible, and in any event within ten (10) days after any Borrower fails to make any quarterly contribution required with respect to any Plan under Section 412(m) of the Internal Revenue Code of 1986, as amended, the statement of such Borrower's chief financial officer setting forth details as to such failure and the action which such Borrower proposes to take with respect thereto, together with a copy of any 21

notice of such failure required to be provided to the Pension Benefit Guaranty Corporation; (e) promptly upon knowledge thereof, notice of any Borrower's violation of any law, rule or regulation, the non-compliance with which could have a Material Adverse Effect; and (f) Frontline will immediately notify the Lender if at any time it holds or acquires any commercial tort claim (as defined in the UCC) and Frontline will enter into a supplement to this Agreement granting to Lender a Lien in such commercial tort claim and in all proceeds thereof, with such agreement to be in form and substance satisfactory to the Lender. Section 7.2. Books and Records; Inspection and Examination. Frontline will keep accurate books of record and account for itself pertaining to the Collateral and each Borrower will keep accurate books of records and account for itself pertaining to such Borrower's business and financial condition and such other matters as the Lender may from time to time request in which true and complete entries will be made in accordance with GAAP and, during a Default Period, upon the Lender's request, will permit any officer, employee, attorney or accountant for the Lender to audit, review, make extracts from or copy any and all corporate and financial books and records of such Borrower at all times during ordinary business hours, to send and discuss with account debtors and other obligors requests for verification of amounts owed to each Borrower, and to discuss each Borrower's affairs with any of its directors, officers, employees or agents. During a Default Period, Frontline will permit the Lender, or its employees, accountants, attorneys or agents, to examine and inspect any Collateral, other collateral covered by the Loan Documents or any other property of Frontline at any time during ordinary business hours. Section 7.3. Compliance with Laws. (a) Each Borrower will (i) comply with the requirements of applicable laws and regulations, the non-compliance with which could reasonably be expected to have a Material Adverse Effect and (ii) use and keep the Collateral, and require that others use and keep the Collateral, only for lawful purposes, without violation of any federal, state or local law, statute or ordinance. (b) Without limiting the foregoing undertakings, each Borrower specifically agrees that it will comply with all applicable Environmental Laws and obtain and comply with all permits, licenses and similar approvals required by any Environmental Laws, and will not generate, use, transport, treat, store or dispose of any Hazardous Substances in such a manner as to create any liability or obligation under the common law of any jurisdiction or any Environmental Law. Section 7.4. Payment of Taxes and Other Claims. Each Borrower will pay or discharge, when due, (a) all taxes, assessments and governmental charges levied or imposed upon it or upon its income or profits, upon any properties belonging to it (including, without limitation, the Collateral) or upon or against the creation, perfection or continuance of the Lien, 22

prior to the date on which penalties attach thereto, (b) all federal, state and local taxes required to be withheld by it, and (c) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a Lien upon any properties of Frontline; provided, that no Borrower shall be required to pay any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which proper reserves have been made. Section 7.5. Maintenance of Properties. (a) Frontline will keep and maintain the Collateral, the other collateral covered by the other Loan Documents and all of its other properties necessary or useful in its business in good condition, repair and working order (normal wear and tear excepted) and will from time to time replace or repair any worn, defective or broken parts; provided, however, that nothing in this Section 7.5 shall prevent Frontline from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the Lender's judgment, desirable in the conduct of Frontline's business and not disadvantageous in any material respect to the Lender. (b) Frontline will defend the Collateral against all claims or demands of all Persons (other than the Lender) claiming the Collateral or any interest therein. (c) Frontline will keep all Collateral and other collateral covered by the Loan Documents free and clear of all Liens, except Permitted Liens. Section 7.6. Insurance. Frontline will bear the full risk of loss from any loss of any nature whatsoever with respect to the Collateral. At Frontline's own cost and expense in amounts and with carriers reasonably acceptable to the Lender, Frontline shall (a) keep all its insurable properties and properties in which it has an interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to Frontline's including, without limitation, business interruption insurance; (b) at Lender's request, maintain a bond in such amounts as is customary in the case of companies engaged in businesses similar to the Frontline's insuring against larceny, embezzlement or other criminal misappropriation of insured's officers and employees who may either singly or jointly with others at any time have access to the assets or funds of Frontline either directly or through authority to draw upon such funds or to direct generally the disposition of such assets; (c) maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (d) maintain all such worker's compensation or similar insurance as may be required under the laws of any state or jurisdiction in which Frontline is engaged in business; and (e) at Lender's request, furnish the Lender with (i) copies of all policies and evidence of the maintenance of such policies at least thirty (30) days before any expiration date, (ii) endorsements to such policies naming the Lender as "co-insured" or "additional insured" and appropriate loss payable endorsements in form and substance satisfactory to the Lender, naming the Lender as loss payee, and (iii) evidence that as to the Lender the insurance coverage shall not be impaired or invalidated by any act or neglect of Frontline and the insurer will provide the Lender with at least thirty (30) days notice prior to cancellation. At Lender's request, Frontline shall instruct the insurance carriers that in the event of any loss thereunder, the 23

carriers shall make payment for such loss to the Lender and not to Frontline and the Lender jointly. If any insurance losses are paid by check, draft or other instrument payable to Frontline and the Lender jointly, the Lender may endorse Frontline's name thereon and do such other things as the Lender may deem advisable to reduce the same to cash. The Lender is hereby authorized to adjust and compromise claims. All loss recoveries received by the Lender upon any such insurance may be applied to the Obligations, in such order as the Lender in its sole discretion shall determine. Any surplus shall be paid by the Lender to Frontline or applied as may be otherwise required by law. Any deficiency thereon shall be paid by Frontline to the Lender, on demand. Section 7.7. Preservation of Existence. Each Borrower will preserve and maintain its existence and all of its rights, privileges and franchises necessary or reasonably desirable in the normal conduct of its business and shall conduct its business in an orderly, efficient and regular manner. Section 7.8. Delivery of Instruments, etc. During a Default Period, upon request by the Lender, Frontline will promptly deliver to the Lender in pledge all instruments, documents and Chattel Paper constituting Collateral, duly endorsed or assigned by Frontline or accompanied by stock powers, allonges or other instruments of transfer (executed in blank). Section 7.9. Performance by the Lender. If any Borrower at any time fails to perform or observe any of the foregoing covenants contained in this Article VII or elsewhere herein, the Lender may, but need not, perform or observe such covenant on behalf and in the name, place and stead of such Borrower (or, at the Lender's option, in the Lender's name) and may, but need not, take any and all other actions which the Lender may reasonably deem necessary to cure or correct such failure (including, without limitation, the payment of taxes, the satisfaction of Liens, the performance of obligations owed to account debtors or other obligors, the procurement and maintenance of insurance, the execution of assignments, security agreements and financing statements, and the endorsement of instruments); and the Borrowers shall thereupon pay to the Lender on demand the amount of all monies expended and all costs and expenses (including reasonable attorneys' fees and legal expenses) incurred by the Lender in connection with or as a result of the performance or observance of such agreements or the taking of such action by the Lender, together with interest thereon from the date expended or incurred at the Interest Rate. To facilitate the Lender's performance or observance of such covenants of each Borrower, each Borrower hereby irrevocably appoints the Lender, or the Lender's delegate, acting alone, as such Borrower's attorney in fact (which appointment is coupled with an interest) with the right (but not the duty) from time to time to create, prepare, complete, execute, deliver, endorse or file in the name and on behalf of such Borrower any and all instruments, documents, assignments, security agreements, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by such Borrower under this Section 7.9. Section 7.10. Securities Laws. Frontline will comply with all applicable federal and state securities laws, rules, regulations and orders in connection with the issuance of the Shares. Frontline will continue to take all action necessary to continue the listing or trading of the Common Stock on the American Stock Exchange or any relevant market or system, if applicable, and will comply with Frontline's reporting, filing, listing and other requirements thereunder 24

including, without limitation, the listing of the Shares issuable hereunder or other obligations under the rules of the American Stock Exchange or any relevant market or system. Section 7.11. SEC Reporting. Frontline shall remain current in its SEC reporting obligations. Section 7.12. Use of Proceeds. The proceeds of the Term Loan shall only be used by the Borrowers to (a) pay in full any and all amounts owing to Delanet, Inc., (b) pay any and all fees and expenses in connection with the Provo Acquisition and (c) for the Borrowers' general working capital purposes. ARTICLE VIII Negative Covenants of the Borrowers So long as the Obligations shall remain unpaid, or the Term Loan shall remain outstanding, each Borrower agrees that, without the Lender's prior written consent: Section 8.1. Liens. No Borrower will create, incur or suffer to exist any Lien, assignment or transfer upon or of any of its assets, now owned or hereafter acquired, to secure any indebtedness; excluding Permitted Liens. Section 8.2. Sale or Transfer of Assets; Suspension of Business Operations. No Borrower will sell, lease, assign, transfer or otherwise dispose of (i) all or a substantial part of its assets, or (ii) any Collateral or any interest therein (whether in one transaction or in a series of transactions) to any other Person other than the sale of its Inventory in the ordinary course of business and will not liquidate, dissolve or suspend business operations. No Borrower will in any manner transfer any property without prior or present receipt of full and adequate consideration. Section 8.3. Consolidation and Merger; Asset Acquisitions; Reorganization. No Borrower will consolidate with or merge into any Person, or permit any other Person to merge into it, or acquire (in a transaction analogous in purpose or effect to a consolidation or merger) all or substantially all the assets of any other Person except for the Provo Acquisition. No Borrower will reincorporate or reorganize itself under the laws of any jurisdiction other than the jurisdiction in which it is incorporated or organized as of the date of this Agreement. Section 8.4. Sale and Leaseback. No Borrower will enter into any arrangement, directly or indirectly, with any other Person whereby such Borrower shall sell or transfer any real or personal property, whether now owned or hereafter acquired, and then or thereafter rent or lease as lessee such property or any part thereof or any other property which such Borrower intends to use for substantially the same purpose or purposes as the property being sold or transferred other than such an arrangement entered into by Provo in connection with its owned motor vehicles. Section 8.5. Restrictions on Nature of Business. No Borrower will engage in any line of business materially different from that presently engaged in by such Borrower and will not purchase, lease or otherwise acquire assets not related to its business. 25

Section 8.6. Defined Benefit Pension Plans. No Borrower will adopt, create, assume or become a party to any defined benefit pension plan, unless disclosed to the Lender pursuant to Section 5.9. Section 8.7. Other Defaults. No Borrower will permit any breach, default or event of default to occur under any note, loan agreement, indenture, lease, mortgage, contract for deed, security agreement or other contractual obligation binding upon such Borrower. Section 8.8. Place of Business; Name. No Borrower will transfer its chief executive office or principal place of business, or move, relocate, close or sell any business location, provided, that any Borrower may change such locations or open a new location provided, that such Borrower provides the Lender with thirty (30) days prior written notice of such changes or new location and (ii) in the case of Frontline, prior to such change or opening of a new location Frontline executes and delivers to the Lender such financing statements and other agreements as the Lender may request, including, without limitation, landlord agreements, mortgagee agreements and warehouse agreements, each in form and substance satisfactory to the Lender. No Borrower will change its name. Section 8.9. Organizational Documents. No Borrower will amend its certificate of incorporation, bylaws or other organizational document or change its corporate structure. Section 8.10. Change in Ownership and Management. Except as contemplated under the Stock Purchase Agreement, no Borrower will issue or sell any equity so as to change the percentage of voting and non-voting equity owned by such Borrower's shareholders on the Closing Date, and no Borrower will permit or suffer to occur the sale, transfer, assignment, pledge or other disposition of any or all of the issued and outstanding equity interest of such Borrower. ARTICLE IX Events of Default, Rights and Remedies Section 9.1. Events of Default. This Agreement sets forth a non-exclusive list of certain critical events after the occurrence of which the Lender expects that it would demand immediate payment of the Obligations and exercise its remedies. "Event of Default", wherever used herein, means any one of the following events: (a) Default in the payment of the Obligations on demand or on any portion of the Obligations that otherwise becomes due and payable; or (b) Default in the performance, or breach, of any covenant or agreement of any Borrower contained in this Agreement; or (c) Any Borrower shall be or become insolvent, or admit in writing its or his inability to pay its or his debts as they mature, or make an assignment for the benefit of creditors; or any Borrower shall apply for or consent to the appointment of any receiver, trustee, or similar officer for it or him or for all or any substantial part of its or his property; or such receiver, trustee or similar officer shall be appointed without the 26

application or consent of such Borrower, as the case may be; or any Borrower shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it or him under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against any Borrower; writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of any Borrower and such proceeding is not dismissed or stayed within thirty (30) days; or (d) A petition shall be filed by or against any Borrower under the United States Bankruptcy Code naming such Borrower as debtor and such petition is not dismissed or stayed within thirty (30) days; or (e) Any representation or warranty made by any Borrower in this Agreement, or by any Borrower (or any of its officers) in any agreement, certificate, instrument or financial statement or other statement contemplated by or made or delivered pursuant to or in connection with this Agreement shall prove to have been incorrect in any material respect when deemed to be effective; or (f) The rendering against any Borrower of a final judgment, decree or order for the payment of money in excess of Fifty Thousand Dollars ($50,000) and the continuance of such judgment, decree or order unsatisfied and in effect for any period of thirty (30) consecutive days without a stay of execution; or (g) Any Reportable Event, which the Lender determines in good faith might constitute grounds for the termination of any Plan or for the appointment by the appropriate United States District Court of a trustee to administer any Plan, shall have occurred and be continuing thirty (30) days after written notice to such effect shall have been given to any Borrower by the Lender; or a trustee shall have been appointed by an appropriate United States District Court to administer any Plan; or the Pension Benefit Guaranty Corporation shall have instituted proceedings to terminate any Plan or to appoint a trustee to administer any Plan; or any Borrower shall have filed for a distress termination of any Plan under Title IV of ERISA; or any Borrower shall have failed to make any quarterly contribution required with respect to any Plan under Section 412(m) of the Internal Revenue Code of 1986, as amended, which the Lender determines in good faith may by itself, or in combination with any such failures that the Lender may determine are likely to occur in the future, result in the imposition of a lien on any Borrower's assets in favor of the Plan; or (h) An event of default shall occur under any Loan Document or under any other security agreement, mortgage, deed of trust, assignment or other instrument or agreement securing any Obligations; or (i) Any Borrower shall liquidate, dissolve, terminate or suspend its business operations or otherwise fail to operate its business in the ordinary course, or sell all or substantially all of its assets, without the Lender's prior written consent; or 27

(j) Any Borrower shall fail to pay, withhold, collect or remit any tax or tax deficiency when assessed or due (other than any tax deficiency which is being contested in good faith and by proper proceedings and for which it shall have set aside on its books adequate reserves therefor) or notice of any state or federal tax liens shall be filed or issued; or (k) Any Lien created under any Loan Document for any reason ceases to be or is not a valid and perfected Lien having a first priority or a lesser priority to the extent permitted in the Loan Documents; or (l) The Real Property subject to each Mortgage is not free, clear and discharged of any and all Liens other than the mortgage granted in favor of the Lender and those matters expressly permitted under such Mortgage; or (m) Default in the payment of any amount owed by any Borrower to the Lender other than any indebtedness arising hereunder; or (n) Any event or circumstance with respect to any Borrower shall occur such that the Lender shall believe in good faith that the prospect of payment of all or any part of the Obligations or the performance by such Borrower under the Loan Documents is impaired or that shall have a Material Adverse Effect; or (o) if SCH or ACH attempt to terminate, challenge the validity of, or its liability under the Limited Guaranty or the Mortgage; (p) if SCH or ACH default in its obligations under the Limited Guaranty or the Mortgage or if any proceeding shall be brought to challenge the validity, binding effect of the Limited Guaranty or the Mortgage, or should SCH or ACH breach any representation, warranty or covenant contained in the Limited Guaranty or the Mortgage or should the Limited Guaranty or the Mortgage cease to be a valid, binding and enforceable obligation; (q) any Borrower shall take or participate in any action which would be prohibited under the provisions of the Subordination Agreement or make any payment on the Debt subordinated to the Lender that any Person was not entitled to receive under the provisions of the Subordination Agreement; (r) Any Change of Control shall occur with respect to any Borrower other than a Change of Control that occurs as a result of the transactions contemplated under the Stock Purchase Agreement; or (s) Lender shall in good faith deem itself insecure or unsafe or shall fear diminution in value, removal or waste of the Collateral; or (t) The indictment or threatened indictment of any Borrower, any officer of any Borrower under any criminal statute, or commencement or threatened commencement of criminal or civil proceeding against any Borrower or any officer of 28

any Borrower pursuant to which statute or proceeding penalties or remedies sought or available include forfeiture of any of the property of any Borrower. Section 9.2. Rights and Remedies. During any Default Period, the Lender may exercise any or all of the following rights and remedies: (a) The Lender may, by notice to the Borrowers, declare the Obligations to be forthwith due and payable, whereupon all Obligations shall become and be forthwith due and payable, without presentment, notice of dishonor, protest or further notice of any kind, all of which each Borrower hereby expressly waives; (b) The Lender may, without notice to any Borrower and without further action, apply any and all money owing by the Lender to any Borrower to the payment of the Obligations; (c) The Lender may exercise and enforce any and all rights and remedies available upon default to a secured party under the UCC, including, without limitation, the right to take possession of Collateral, or any evidence thereof, proceeding without judicial process or by judicial process (without a prior hearing or notice thereof, which each Borrower hereby expressly waives) and the right to sell, lease or otherwise dispose of any or all of the Collateral, and, in connection therewith, Frontline will on demand assemble the Collateral and make it available to the Lender at a place to be designated by the Lender which is reasonably convenient to both parties; (d) The Lender may exercise and enforce its rights and remedies under the Loan Documents; and (e) The Lender may exercise any other rights and remedies available to it by law or agreement. Notwithstanding the foregoing, upon the occurrence of an Event of Default described in subsections (c) or (d) of Section 9.1, the Obligations shall be immediately due and payable automatically without presentment, demand, protest or notice of any kind. In addition to all other sums due to the Lender, the Borrowers shall pay the Lender, for reasonable costs and expenses incurred by the Lender for internal collection efforts to obtain or enforce payment of the Receivables of Frontline, an amount equal to fifteen percent (15%) of the net face amount of any such Receivables collected. Section 9.3. Certain Notices. If notice to any Borrower of any intended disposition of Collateral or any other intended action is required by law in a particular instance, such notice shall be deemed commercially reasonable if given (in the manner specified in Section 11.4) at least ten (10) calendar days before the date of intended disposition or other action. 29

ARTICLE X Transfer of Securities Section 10.1. Restriction on Transfer. The Restricted Securities shall not be transferable except a holder of Restricted Securities may transfer such Restricted Securities (i) to any Affiliate of such holder or (ii) upon the conditions specified in this Article X, which conditions are intended to insure compliance with the provisions of the 1933 Act in respect of the transfer thereof. Section 10.2. Restrictive Legends. Each certificate for the Restricted Securities and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions of Section 10.3 hereof) be stamped or otherwise imprinted with a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR APPLICABLE STATE BLUE SKY LAWS. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE TERM LOAN AND SECURITY AGREEMENT, DATED AS OF APRIL ___, 2003, AMONG THE ISSUER HEREOF AND CERTAIN OTHER SIGNATORIES THERETO, AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. UPON THE FULFILLMENT OF CERTAIN OF SUCH CONDITIONS, THE ISSUER HEREOF HAS AGREED TO DELIVER TO THE HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING THIS LEGEND, FOR THE SECURITIES REPRESENTED HEREBY REGISTERED IN THE NAME OF THE HOLDER HEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE ISSUER HEREOF." Section 10.3. Notice of Transfer. (a) Each holder shall, prior to any Transfer of any Restricted Securities (other than a Transfer referenced in clause (i) of Section 10.1 above), give written notice to Frontline of such holder's intention to effect such Transfer and to comply in all other respects with the provisions of this Section 10.3 in making such proposed Transfer. Each such notice shall describe the manner and circumstances of the proposed Transfer. Upon request by Frontline, the holder delivering such notice shall deliver a written opinion, addressed to Frontline, of counsel for such holder (which may be one of its internal counsels), stating that in the opinion of such counsel (which opinion shall be reasonably 30

satisfactory to Frontline) such proposed Transfer does not involve a transaction requiring registration of such Restricted Securities under the 1933 Act. Such holder shall thereupon be entitled to Transfer the Restricted Securities in accordance with the terms of the notice delivered to Frontline, if Frontline does not reasonably object to such Transfer and request such opinion, within five days after delivery of such notice or, if Frontline does request such opinion, upon its receipt thereof. Each certificate or other instrument evidencing the securities issued upon the Transfer of any Restricted Securities (and each certificate or other instrument evidencing any untransferred balance of such Restricted Securities) shall bear the legend set forth in Section 10.2 above unless (i) such opinion of counsel is to the effect that registration of any future Transfer is not required by the applicable provisions of the 1933 Act or (ii) Frontline shall have waived the requirement of such legend. (b) Notwithstanding the foregoing provisions of this Section 10.3, the restrictions imposed by this Section 10.3 upon the transferability of any Restricted Securities shall cease and terminate when (i) any such Restricted Securities are sold or otherwise disposed of pursuant to an effective registration statement under the 1933 Act or as otherwise contemplated by paragraph (a) above in a manner that does not require that the Restricted Securities so transferred continue to bear the legend set forth in Section 10.2 above or (ii) the holder of such Restricted Securities has met the requirements for Transfer of such Restricted Securities under Rule 144(k). Whenever the restrictions imposed by this Section shall terminate, upon the written request of the holder of any Restricted Securities as to which such restrictions have terminated, as promptly as practicable but in any event within ten (10) Business Days of receipt of such request, Frontline shall, without charge, issue, register and deliver a new instrument not bearing the restrictive legend set forth in Section 10.2 above and not containing any other reference to the restrictions imposed by this Section. ARTICLE XI Miscellaneous Section 11.1. No Waiver; Cumulative Remedies. No failure or delay by the Lender in exercising any right, power or remedy under the Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law. Section 11.2. Waivers. Each Borrower waives presentment and protest of any instrument and notice thereof, notice of default and all other notices to which such Borrower might otherwise be entitled. Section 11.3. Amendments, Etc. No amendment, modification, termination or waiver of any provision of any Loan Document or consent to any departure by any Borrower therefrom or any release of a Lien shall be effective unless the same shall be in writing and signed by the Lender, and then such waiver or consent shall be effective only in the specific instance and for 31

the specific purpose for which given. No notice to or demand on any Borrower in any case shall entitle such Borrower to any other or further notice or demand in similar or other circumstances. Section 11.4. Addresses for Notices, Etc. Except as otherwise expressly provided herein, all notices, requests, demands and other communications provided for under the Loan Documents shall be in writing and shall be (a) personally delivered, (b) sent by first class United States mail, (c) sent by overnight courier of national reputation, or (d) transmitted by telecopy, in each case addressed or telecopied to the party to whom notice is being given at its address or telecopier number as set forth below: If to the Borrowers: Frontline Communication Corporation One Blue Hill Plaza Pearl River, New York 10965 Attention: Stephen J. Cole-Hatchard, CEO Telephone: (845) 623-8553 Telecopier: (845) 623-8669 and: Provo, S.A. de C.V. Quintana Roo No. 28 Col. Roma Sur 06760 Mexico, D.F. Attention: Ventura Martinez del Rio Arrangoiz Telephone: 011 (52.55) 5264-6442 Telecopier: 011 (52.55) 5264-6442, ext. 182 If to the Lender: IIG Equity Opportunities Fund Ltd. c/o IIG Capital LLC 1500 Broadway, 17th Floor New York, New York 10036 Attention: George Sandhu Telephone: (212) 806-5100 Telecopier: (212) 806-5199 or, as to each party, at such other address or telecopier number as may hereafter be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section. All such notices, requests, demands and other communications shall be deemed to have been given on (a) the date received if personally delivered, (b) when deposited in the mail if delivered by mail, (c) the date sent if sent by overnight courier, or (d) the date of transmission if delivered by telecopy, except that notices or requests to the Lender pursuant to any of the provisions of Article II shall not be effective until received by the Lender. 32

Section 11.5. Further Documents. Each Borrower will from time to time execute and deliver or endorse any and all instruments, documents, conveyances, assignments, security agreements, financing statements and other agreements and writings that the Lender may reasonably request in order to secure, protect, perfect or enforce the Lien or the Lender's rights under the Loan Documents (but any failure to request or assure that a Borrower executes, delivers or endorses any such item shall not affect or impair the validity, sufficiency or enforceability of the Loan Documents and the Lien of the Lender, regardless of whether any such item was or was not executed, delivered or endorsed in a similar context or on a prior occasion). Section 11.6. Collateral. This Agreement does not contemplate a sale of accounts, contract rights or Chattel Paper, and, as provided by law, the Borrowers are entitled to any surplus and shall remain liable for any deficiency. The Lender's duty of care with respect to Collateral in its possession (as imposed by law) shall be deemed fulfilled if it exercises reasonable care in physically keeping such Collateral, or in the case of Collateral in the custody or possession of a bailee or other third Person, exercises reasonable care in the selection of the bailee or other third Person, and the Lender need not otherwise preserve, protect, insure or care for any Collateral. The Lender shall not be obligated to preserve any rights the Borrowers may have against prior parties, to realize on the Collateral at all or in any particular manner or order or to apply any cash proceeds of the Collateral in any particular order of application. Section 11.7. Costs and Expenses. The Borrowers shall pay all of the Lender's out-of-pocket costs and expenses, including, without limitation, reasonable fees and disbursements of counsel and appraisers, in connection with the preparation, execution and delivery of this Agreement and the other Loan Documents; provided, however, the legal fees of counsel prior to and including the Closing Date shall not exceed $24,000 excluding disbursements and third party expenses. The Borrowers shall also pay all of the Lender's fees, charges, out-of-pocket costs and expenses, including without limitation reasonable fees and disbursements of counsel and appraisers, in connection with (a) the prosecution or defense of any action, contest, dispute, suit or proceeding concerning any matter in any way arising out of, related to or connected with this Agreement or any other Loan Document, (b) the preparation, execution and delivery of any waiver, any amendment thereto or consent proposed or executed in connection with the transactions contemplated by this Agreement or the other Loan Documents, (c) the Lender's obtaining performance of the Obligations under this Agreement and any other Loan Documents, including, but not limited to, the enforcement or defense of the Lender's Liens, assignments of rights and Liens hereunder as valid perfected Liens, (d) any attempt to inspect, verify, protect, collect, sell, liquidate or otherwise dispose of any Collateral, (e) any appraisals or re-appraisals of any property (real or personal) pledged to the Lender by Frontline as Collateral for, or any other Person as security for, the Obligations hereunder and (f) any consultations in connection with any of the foregoing. All such costs and expenses together with all filing, recording and search fees, taxes and interest payable by any Borrower to the Lender shall be payable on demand and shall be secured by the Collateral. Section 11.8. Indemnity. In addition to the payment of expenses pursuant to Section 11.7, each Borrower agrees to indemnify, defend and hold harmless the Lender, and any of its participants, parent corporations, subsidiary corporations, affiliated corporations, successor corporations, and all present and future officers, directors, employees, attorneys and agents of the 33

foregoing (the "Indemnitees") from and against any of the following (collectively, "Indemnified Liabilities"): (a) any and all transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution and delivery of the Loan Documents or the making of the Term Loan; (b) any claims, loss or damage to which any Indemnitee may be subjected if any representation or warranty contained in Section 5.11 proves to be incorrect in any respect or as a result of any violation of the covenant contained in Section 7.3(b); and (c) any and all other liabilities, losses, damages, penalties, judgments, suits, claims, costs and expenses of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel and other costs of investigation or defense, including, without limitation, those incurred on appeal) in connection with the foregoing as the result of credit having been extended, suspended or terminated under the Loan Documents with respect to the execution, delivery, enforcement, performance and administration of or any other way related to any Loan Document or any transactions referred to or contemplated herein or therein or contemplated by and any other investigative, administrative or judicial proceedings, whether or not such Indemnitee shall be designated a party thereto, which may be imposed on, incurred by or asserted against any such Indemnitee, in any manner related to or arising out of or in connection with the making of the Term Loan and the Loan Documents or the use and intended use of the proceeds of the Term Loan. If any investigative, judicial or administrative proceeding arising from any of the foregoing is brought against any Indemnitee, upon such Indemnitee's request, each Borrower, or counsel designated by such Borrower and satisfactory to the Indemnitee, will resist and defend such action, suit or proceeding to the extent and in the manner directed by the Indemnitee, at Borrowers' sole costs and expense. Each Indemnitee will use its best efforts to cooperate in the defense of any such action, suit or proceeding. If the foregoing undertaking to indemnify, defend and hold harmless may be held to be unenforceable because it violates any law or public policy, the Borrowers shall nevertheless make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The Borrowers obligation under this Section 11.8 shall survive the termination of this Agreement and the discharge of the Borrowers' other obligations hereunder. NO INDEMNITEE SHALL BE RESPONSIBLE OR LIABLE TO THE BORROWERS OR TO ANY OTHER PARTY TO ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY LOAN DOCUMENTS OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER. Section 11.9. Revival. Each Borrower further agrees that to the extent such Borrower makes a payment or payments to the Lender, which payment or payments or any part thereof are 34

subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, or receiver or any other party under any bankruptcy act, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, the obligation or part thereof intended to be satisfied shall be revived and continued in full force and effect as if said payment had not been made. Section 11.10. Participants. The Lender and its participants, if any, are not partners or joint venturers, and the Lender shall not have any liability or responsibility for any obligation, act or omission of any of its participants. All rights and powers specifically conferred upon the Lender may be transferred or delegated to any of the Lender's participants, successors or assigns. Section 11.11. Execution in Counterparts. This Agreement and other Loan Documents may be executed in any number of counterparts, telecopied signatures, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. Any signature delivered by a party via telecopier transmission shall be deemed an original signature hereto. Section 11.12. Binding Effect; Assignment; Complete Agreement; Exchanging Information. The Loan Documents shall be binding upon and inure to the benefit of each Borrower and the Lender and their respective successors and assigns, except that no Borrower shall have the right to assign its rights thereunder or any interest therein without the Lender's prior written consent. This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof. Without limiting the Lender's right to share information regarding each Borrower and its Affiliates with the Lender's participants, accountants, lawyers and other advisors, the Lender and all direct and indirect subsidiaries of the Lender, may exchange any and all information they may have in their possession regarding each Borrower and its Affiliates, and each Borrower waives any right of confidentiality it may have with respect to such exchange of such information. Section 11.13. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Section 11.14. Headings. Article and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. Section 11.15. Governing Law; Jurisdiction, Venue; Waiver of Jury Trial. This Agreement and the other Loan Documents shall be governed by and construed in accordance with the substantive laws (other than conflict laws) of the State of New York. The parties hereto hereby (i) consent to the personal jurisdiction of the state and federal courts located in the County of New York, State of New York in connection with any controversy related to this Agreement; (ii) waive any argument that venue in any such forum is not convenient, (iii) agree that any litigation initiated by the Lender or any Borrower in connection with this Agreement or the other Loan Documents shall be venued in the United States District Court of the Southern District of New York; and (iv) agree that a final judgment in any such suit, action or proceeding 35

shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. EACH BORROWER WAIVES PERSONAL SERVICE OR PROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON SUCH BORROWER MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO SUCH BORROWER AT SUCH BORROWER'S ADDRESS APPEARING ON THE LENDER'S RECORDS, AND SERVICE SO MADE SHALL BE DEEMED COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED. THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OF THE OBLIGATIONS. Section 11.16. Construction. The parties acknowledge that each party and its counsel have reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto. [Signature Page to Follow] 36

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written. FRONTLINE COMMUNICATIONS CORPORATION, as a Borrower By: /s/ Stephen J. Cole-Hatchard -------------------------------------- Name: Title: C.E.O. PROYECCIONES Y VENTAS ORGANIZADAS, S.A. DE C.V., as a Borrower By: /s/ Ventura Martinez Del Rio Arrangoiz -------------------------------------- Name: Title: Chairman IIG EQUITY OPPORTUNITIES FUND LTD., as the Lender By: /s/ George Sandhu -------------------------------------- Name: George Sandhu Title: Investment Manager 37

TABLE OF EXHIBITS AND SCHEDULES Exhibit A Form of Term Note Exhibit B Premises Exhibit C Commercial Tort Claims Schedule 5.1 Organization and Power; Name; Chief Executive Office; Inventory and Equipment Locations; Organizational Identification Number Schedule 5.3 Capitalization Schedule 5.5 Litigation Schedule 5.14 Intellectual Property Schedule 8.1 Permitted Liens 38

Exhibit A to Term Loan and Security Agreement Term Note $550,000.00 New York, New York April __, 2003 For value received, the undersigned, FRONTLINE COMMUNICATIONS CORPORATION, a Delaware corporation, and PROYECCIONES Y VENTAS ORGANIZADAS, S.A. DE C.V., a Mexico corporation (each a "Borrower" and collectively, the "Borrowers"), hereby, jointly and severally, promise to pay to the order of IIG EQUITY OPPORTUNITIES FUND LTD., a Bermuda company (the "Lender"), at its offices located at 1500 Broadway, 17th Floor, New York, New York 10036, or at any other place designated at any time by the holder hereof, in lawful money of the United States of America and in immediately available funds, the principal sum of Five Hundred Fifty Thousand and 00/100 Dollars ($550,000.00) together with interest on the principal amount hereunder remaining unpaid from time to time, computed on the basis of the actual number of days elapsed and a 360-day year, from the date hereof until this Note is fully paid at the rate from time to time in effect under the Term Loan and Security Agreement of even date herewith (as amended, modified, supplemented and restated from time to time, the "Loan Agreement") among the Lender and the Borrowers. The principal hereof and interest accruing thereon shall be due and payable as provided in the Loan Agreement. This Note may be prepaid only in accordance with the Loan Agreement. This Note is issued pursuant, and is subject, to the Loan Agreement, which provides, among other things, for acceleration hereof. This Note is the Term Note referred to in the Loan Agreement. This Note is secured, among other things, pursuant to the Loan Agreement and the other Loan Documents as therein defined, and may now or hereafter be secured by one or more other security agreements, mortgages, deeds of trust, assignments or other instruments or agreements. Each Borrower hereby agrees to pay all costs of collection, including attorneys' fees and legal expenses in the event this Note is not paid when due, whether or not legal proceedings are commenced. 39

Presentment or other demand for payment, notice of dishonor and protest are expressly waived. FRONTLINE COMMUNICATIONS CORPORATION By: /s/ Stephen J. Cole-Hatchard -------------------------------------- Name: Title: Chief Executive Officer PROYECCIONES Y VENTAS ORGANIZADAS, S.A. DE C.V. By: /s/ Ventura Martinez Del Rio Arrangoiz -------------------------------------- Name: Title: Chairman 40

THE FOLLOWING EXHIBITS HAVE BEEN INTENTIONALLY OMITTED EXHIBIT B EXHIBIT C SCHEDULE 5.1 SCHEDULE 5.3 SCHEDULE 5.5 SCHEDULE 5.14 SCHEDULE 8.1 THE COMPANY WILL PROVIDE COPIES TO THE SEC UPON REQUEST. 41

Exhibit 10.15 PLEDGE AGREEMENT This Pledge Agreement (this "Agreement") is dated as of April 3, 2003, by and among Stephen J. Cole-Hatchard, an individual with a mailing address of 315 Route 210, Stony Point, New York 10980 ("SCH"), Nicko Feinberg, an individual with a mailing address of 149B Kings Highway, Orangeburg, New York 10962 ("NF"), Elizabeth M. Mayer-Feinberg, with a mailing address of 149B Kings Highway, Orangeburg, New York 10962 ("EMF") (SCH, NF and EMF, each a "Pledgor" and collectively, "Pledgors") and IIG Equity Opportunities Fund Ltd.("Lender"). BACKGROUND Frontline Communications Corporation ("Frontline"), Proyecciones y Ventas Organizadas, S.A. de C.V. ("Provo" together with Frontline, each a "Borrower" and collectively, "Borrowers") and Lender are parties to a Term Loan and Security Agreement dated as of the date hereof (as amended, modified, restated or supplemented from time to time, the "Loan Agreement") pursuant to which Lender has agreed, subject to the terms and conditions contained therein, to provide certain financial accommodations to Borrowers. SCH has executed and delivered to Lender a Limited Guaranty dated as of the date hereof (as amended, modified, restated and supplemented from time to time, the "Guaranty") pursuant to which SCH guaranteed Lender the payment and performance of all of the obligations and indebtedness of Borrowers to Lender under the Loan Agreement. In order to induce Lender to provide the financial accommodations described in the Loan Agreement, each Pledgor has jointly and severally agreed to pledge and grant to Lender a security interest in the Pledged Collateral (as hereinafter defined) on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and undertakings and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. Defined Terms. Capitalized terms not defined herein shall have the meanings given to them in the Loan Agreement. Section 2. Pledge. Each Pledgor hereby pledges, assigns, hypothecates, transfers and grants a security interest to Lender, in all of the following (the "Pledged Collateral"): (a) the shares of stock of such Pledgor set forth on Schedule A annexed hereto and expressly made a part hereof (the "Pledged Stock"), the certificates representing the Pledged Stock and all dividends, cash, instruments and other property or proceeds from time to time

received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Stock; (b) all additional shares of stock of any issuer of the Pledged Stock (each an "Issuer") from time to time acquired by each Pledgor in any manner, including, without limitation, in connection with a stock dividend or a distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares, stock split, spin-off or split-off (which shares shall be deemed to be part of the Pledged Collateral) with respect to the Pledged Stock, and the certificates representing such additional shares, and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; (c) all shares issued pursuant to all options and rights, whether as an addition to, in substitution of or in exchange for any shares of the Pledged Stock and all dividends, cash and instruments; and (d) all securities accounts holding Pledged Stock and/or any security entitlements with respect to the Pledged Stock (the "Securities Accounts"), including, without limitation, the accounts maintained at Morgan Stanley DW Inc. ("Morgan Stanley") and more specifically described on Schedule A annexed hereto and expressly made a part hereof, and all interest, dividends, options, warrants, increases, profits and income received therefrom, all investment property in connection therewith, all substitutions therefor and all proceeds thereof in any form. Section 3. Indebtedness Secured. This pledge is made to secure and the Pledged Collateral is security for the payment of (a) all the Obligations, (b) any and all indebtedness, obligations and liabilities of SCH under the Guaranty and (c) any and all other indebtedness, obligations and liabilities of any Pledgor to Lender whether now existing or hereafter arising, direct or indirect, liquidated or unliquidated, absolute or contingent, due or not due and whether under, pursuant to or evidenced by a note, agreement, guaranty, other instrument or otherwise ((a), (b) and (c), collectively, the "Indebtedness"). Section 4. Delivery of Pledged Collateral. All certificates representing or evidencing the Pledged Stock not held in the Securities Account at Morgan Stanley shall be delivered to and held by or on behalf of Lender pursuant hereto and shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Lender. Each Pledgor hereby authorizes any Issuer upon demand by Lender to deliver any certificates, instruments or other distributions issued in connection with the Pledged Collateral directly to Lender, in each case to be held by Lender, subject to the terms hereof. Lender shall have the right, at any time in its discretion and without notice to any Pledgor, to transfer to or to register in the name of Lender or any of its nominees any or all of the Pledged Stock. In addition, Lender shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Stock for certificates or instruments of smaller or larger denominations. Section 5. Representations and Warranties. Each Pledgor represents and warrants to Lender that: 2

(a) Such Pledgor has the individual capacity to enter into this Agreement, to pledge the Pledged Collateral for the purposes described herein and to carry out the transactions contemplated by this Agreement. (b) The execution, delivery and performance by such Pledgor of this Agreement does not and will not result in any violation of any agreement, indenture or other instrument, license, judgment, decree, order, law, statute, ordinance or other governmental rule or regulation applicable to such Pledgor. (c) This Agreement constitutes a legal, valid and binding obligation of such Pledgor enforceable in accordance with its terms. (d) Such Pledgor is the direct and beneficial owner of each share of the Pledged Stock it purports to own. (e) All of the shares of the Pledged Stock have been duly authorized, validly issued and are fully paid and nonassessable. (f) Upon delivery of the Pledged Stock to Lender or an agent for Lender and the execution of a control agreement by each Pledgor and Morgan Stanley granting Lender exclusive control over any Securities Account maintained at Morgan Stanley, this Agreement creates and grants a valid first lien on and perfected security interest in the Pledged Collateral and the proceeds thereof, subject to no prior Lien, or to any agreement purporting to grant to any third party a Lien upon the property or assets of Pledgors which would include the Pledged Collateral. (g) There are no restrictions on transfer of the Pledged Stock contained in the certificate of incorporation or by-laws of any Issuer or otherwise which have not otherwise been enforceably and legally waived by the necessary parties. (h) None of the Pledged Stock has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject. (i) No consent, approval, authorization or other order of any Person and no consent, authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required by the Pledgors either (i) for the pledge of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement or (ii) for the exercise by the Lender of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement, except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally. (j) No notification of the pledge evidenced hereby to any Person is required. The representations and warranties set forth in this Section 5 shall survive the execution and delivery of this Agreement. 3

Section 6. Covenants. Each Pledgor covenants that, until the Indebtedness shall be satisfied in full in cash and the Loan Agreement and Guaranty are irrevocably terminated: (a) Such Pledgor will not sell, assign, transfer, convey, or otherwise dispose of its rights in or to the Pledged Collateral or any interest therein; nor will such Pledgor create, incur or permit to exist any Lien whatsoever with respect to any of the Pledged Collateral or the proceeds thereof other than that created hereby. (b) Such Pledgor will, at its expense, defend Lender's right, title and security interest in and to the Pledged Collateral against the claims of any Person. (c) Such Pledgor shall at any time, and from time to time, upon the written request of Lender, execute and deliver such further documents and do such further acts and things as Lender may reasonably request in order to effect the purposes of this Agreement including, but without limitation, delivering to Lender upon the occurrence of an Event of Default irrevocable proxies in respect of the Pledged Collateral in form satisfactory to Lender. Until receipt thereof, this Agreement shall constitute such Pledgor's proxy to Lender or its nominee to vote all shares of Pledged Collateral then registered in such Pledgor's name. Section 7. Voting Rights and Dividends. In addition to Lender's rights and remedies set forth in Section 9 hereof, in case an Event of Default (as defined in Section 8 hereof) shall have occurred and be continuing, Lender shall be entitled to (i) vote the Pledged Collateral; provided, however, in the case of a shareholder vote contemplated under the terms of the Stock Purchase Agreement, Lender shall vote as directed by each Pledgor, (ii) give consents, waivers and ratifications in respect of the Pledged Collateral (each Pledgor hereby irrevocably constituting and appointing Lender, with full power of substitution, the proxy and attorney-in-fact of such Pledgor for such purposes) and (iii) collect and receive for its own use cash dividends paid on the Pledged Collateral. No Pledgor shall be permitted to exercise or refrain from exercising any voting rights or other powers if, in the reasonable judgment of Lender, such action would have a material adverse effect on the value of the Pledged Collateral or any part thereof; and, provided, further, that each Pledgor shall give at least five (5) days' written notice of the manner in which such Pledgor intends to exercise, or the reasons for refraining from exercising, any voting rights or other powers other than with respect to any election of directors and voting with respect to any incidental matters. All dividends and all other distributions in respect of any of the Pledged Collateral, whenever paid or made, shall be delivered to Lender to hold as Pledged Collateral and shall, if received by any Pledgor, be received in trust for the benefit of Lender, be segregated from the other property or funds of such Pledgor, and be forthwith delivered to Lender as Pledged Collateral in the same form as so received (with any necessary indorsement). Section 8. Event of Default The occurrence of any one or more of the following events shall constitute an "Event of Default": (a) the occurrence of a Default or an Event of Default under the Loan Agreement; 4

(b) any Pledgor shall default in the performance of any of its obligations under any agreement between such Pledgor and Lender, including, without limitation, this Agreement and such default shall continue unremedied for a period of ten (10) days from the earlier of (i) the date such Pledgor has knowledge of such default and (ii) the date Lender sends written notice of such default to such Pledgor; (c) any representation, warranty, statement or covenant made or furnished to Lender by or on behalf of any Pledgor proves to have been false in any material respect when made or furnished or is breached, violated or not complied with; or (d) any Pledgor shall (i) apply for, consent to, or suffer to exist the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or other fiduciary of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of effecting any of the foregoing. Section 9. Remedies. In case an Event of Default shall have occurred and be declared by Lender, Lender may: (a) Transfer any or all of the Pledged Collateral into its name, or into the name of its nominee or nominees; (b) Exercise all corporate rights with respect to the Pledged Collateral including, without limitation, all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any shares of the Pledged Collateral as if it were the absolute owner thereof, including, but without limitation, the right to exchange, at its discretion, any or all of the Pledged Collateral upon the merger, consolidation, reorganization, recapitalization or other readjustment of any Issuer thereof, or upon the exercise by any Issuer of any right, privilege or option pertaining to any of the Pledged Collateral, and, in connection therewith, to deposit and deliver any and all of the Pledged Collateral with any committee, depository, transfer agent, registrar or other designated agent upon such terms and conditions as it may determine, all without liability except to account for property actually received by it; and (c) Subject to any requirement of applicable law, sell, assign and deliver the whole or, from time to time, any part of the Pledged Collateral at the time held by Lender, at any private sale or at public auction, with or without demand, advertisement or notice of the time or place of sale or adjournment thereof or otherwise (all of which are hereby waived, except such notice as is required by applicable law and cannot be waived), for cash or credit or for other property for immediate or future delivery, and for such price or prices and on such terms as Lender in its sole discretion may determine, or as may be required by applicable law. Each Pledgor hereby waives and releases any and all right or equity of redemption, whether before or after sale hereunder. At any such sale, unless prohibited by 5

applicable law, Lender may bid for and purchase the whole or any part of the Pledged Collateral so sold free from any such right or equity of redemption. All moneys received by Lender hereunder whether upon sale of the Pledged Collateral or any part thereof or otherwise shall be held by Lender and applied by it as provided in Section 12 hereof. No failure or delay on the part of Lender in exercising any rights hereunder shall operate as a waiver of any such rights nor shall any single or partial exercise of any such rights preclude any other or future exercise thereof or the exercise of any other rights hereunder. Lender shall have no duty as to the collection or protection of the Pledged Collateral or any income thereon nor any duty as to preservation of any rights pertaining thereto, except to apply the funds in accordance with the requirements of Section 12 hereof. Lender may exercise its rights with respect to property held hereunder without resort to other security for or sources of reimbursement for the Indebtedness. In addition to the foregoing, Lender shall have all of the rights, remedies and privileges of a secured party under the UCC regardless of the jurisdiction in which enforcement hereof is sought. Section 10. Registration. If Lender shall exercise its right to sell all or any part of the Pledged Collateral, and if, in the opinion of counsel for Lender, it is necessary to have the Pledged Collateral being sold registered under the provisions of the 1933 Act, each Pledgor will use its best efforts to cause each Issuer to execute and deliver, and to cause the directors and officers of such Issuer to execute and deliver, all at Pledgors' expense, all such instruments and documents and to do or cause to be done all such other acts and things as may be necessary to register the Pledged Collateral being sold under the provisions of the 1933 Act. Each Pledgor shall cause any such registration statement to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Collateral being sold and to make all amendments thereto and to related documents which, in the opinion of Lender or its counsel, are necessary or advisable, all in conformity with the requirements of the 1933 Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. Each Pledgor shall also cause each Issuer to comply with the provisions of the "Blue Sky" law of any jurisdiction which Lender shall designate in connection with any sale hereunder; and to cause each Issuer to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) covering a period of at least twelve months but not more than eighteen months, beginning with the first month after the effective date of any such registration statement, which earnings statement will satisfy the provisions of Section 11(a) of the 1933 Act. Each Pledgor acknowledges that a breach of any of the covenants contained in this Section may cause irreparable injury to Lender, that Lender will have no adequate remedy at law with respect to such breach and, as a consequence, such covenants of such Pledgor shall be specifically enforceable against such Pledgor. Section 11. Private Sale. Notwithstanding anything contained in Section 10, each Pledgor recognizes that Lender may be unable to effect (or to do so only after delay which would adversely affect the value that might be realized from the Pledged Collateral) a public sale of all or part of the Pledged Collateral by reason of certain prohibitions contained in the 1933 Act and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor agrees that any such private sale may be at prices and on terms less favorable to the seller than if sold at public sales and that such private sales shall be deemed to have been made in a commercially 6

reasonable manner. Each Pledgor agrees that Lender has no obligation to delay sale of any Pledged Collateral for the period of time necessary to permit any Issuer to register the Pledged Collateral for public sale under the 1933 Act. Section 12. Proceeds of Sale. The proceeds of any collection, recovery, receipt, appropriation, realization or sale of the Pledged Collateral shall be applied by Lender as follows: (a) First, to the payment of all costs, expenses and charges of Lender, as such, or the reimbursement of Lender for the prior payment of such costs, expenses and charges incurred in connection with the care and safekeeping of any of the Pledged Collateral (including, without limitation, the expenses of any sale or other proceeding, the expenses of any taking, reasonable attorneys' fees and expenses, court costs, any other expenses incurred or expenditures or advances made by Lender in the protection, enforcement or exercise of its rights, powers or remedies hereunder) with interest on any such reimbursement at the Default Rate from the date of payment. (b) Second, to the payment of the Indebtedness, in whole or in part, in such order as Lender may elect. (c) Third, to such Persons as required by applicable law including, without limitation, Section 9-615 of the UCC. (d) Fourth, to the extent of any surplus thereafter remaining, to Pledgors or as a court of competent jurisdiction may direct. In the event that the proceeds of any collection, recovery, receipt, appropriation, realization or sale are insufficient to satisfy the Indebtedness, each Pledgor shall be liable for the deficiency together with interest thereon at the Default Rate plus the reasonable fees of any attorneys employed by Lender to collect such deficiency. Lender, in its sole and absolute discretion, with or without notice to Pledgors, may deposit any proceeds of any collection, recovery, receipt, appropriation or sale of the Pledged Collateral in a non-interest bearing cash collateral deposit account to be maintained as security for the Indebtedness. Section 13. Information. Each Pledgor will promptly give or cause to be given written notice to Lender of any notices or other documents received by it with respect to Pledged Collateral registered in the name of such Pledgor. Section 14. Termination. This Agreement shall terminate and Pledgors shall be entitled to the return, at Pledgors' expense, of such of the Pledged Collateral as has not theretofore been sold or otherwise applied pursuant to this Agreement, together with any moneys at any time held by Lender, upon payment of the Indebtedness in full in cash and irrevocable termination of the Loan Agreement and the Guaranty. Section 15. Concerning Lender. The recitals of fact herein shall be taken as statements of Pledgors for which Lender assumes no responsibility. Lender makes no representation to anyone as to the value of the Pledged Collateral or any part thereof or as to the 7

validity or adequacy of the security afforded or intended to be afforded thereby or as to the validity of this Agreement. Lender shall be protected in relying upon any notice, consent, request or other paper or document believed by it to be genuine and correct and to have been signed by a proper person. The permissive rights of Lender hereunder shall not be construed as duties of Lender. Lender shall be under no obligation to take any action toward the enforcement of this Agreement or rights or remedies in respect of any of the Pledged Collateral. Lender shall not be personally liable for any action taken or omitted by it in good faith and reasonably believed by it to be within the power or discretion conferred upon it by this Agreement. Section 16. Notices. Except as otherwise expressly provided herein, all notices, requests, demands and other communications provided for under this Agreement shall be in writing and shall be (a) personally delivered, (b) sent by first class United States mail, (c) sent by overnight courier of national reputation, or (d) transmitted by telecopy, in each case addressed or telecopied to the party to whom notice is being given at its address or telecopier number as set forth below: If to Lender: IIG Equity Opportunities Fund Ltd. c/o IIG Capital LLC 1500 Broadway, 17th Floor New York, New York 10036 Attention: George Sandhu Telephone: (212) 806-5100 Telecopier: (212) 806-5199 If to Pledgors: Stephen J. Cole-Hatchard 315 Route 210 Stony Point, New York 10980 Telephone: (845) 786-3753 Telecopier: (845) 786-5874 and: Nicko Feinberg c/o Frontline Communications Corporation One Blue Hill Plaza Pearl River, New York 10965 Telephone: (845) 623-8553 Telecopier: (845) 623-8669 or, as to each party, at such other address or telecopier number as may hereafter be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section 16. All such notices, requests, demands and other communications shall be deemed to have been given on (a) the date received if personally delivered, (b) when deposited in the mail if delivered by mail, (c) the date sent if sent by overnight courier, or (d) the date of transmission if delivered by telecopy. 8

Section 17. Governing Law. This Agreement and all rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York. Section 18. Recapture. Anything in this Agreement to the contrary notwithstanding, if Lender receives any payment or payments on account of the Indebtedness, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver, or any other party under the United States Bankruptcy Code, as amended, or any other federal or state bankruptcy, reorganization, moratorium or insolvency law relating to or affecting the enforcement of creditors' rights generally, common law or equitable doctrine, then to the extent of any sum not finally retained by Lender, Pledgors' obligations to Lender shall be reinstated and this Agreement shall remain in full force and effect (or be reinstated) until payment shall have been made to Lender, which payment shall be due on demand. Section 19. Waivers. (a) THE PARTIES HERETO EACH HEREBY EXPRESSLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OTHER AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE; AND THE PARTIES HERETO EACH HEREBY AGREE AND CONSENT THAT ANY SUCH ACTIONS OR PROCEEDINGS SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT EITHER PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. (b) Lender may at any time and from time to time, either before or after the maturity thereof, without notice to or further consent of any Pledgor, extend the time of payment of, exchange or surrender any collateral for, renew or extend any of the Indebtedness or increase or decrease the interest rate thereon, and may also make any agreement with any Borrower or with any other party to or person liable on any of the Indebtedness, or interested therein, for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between Lender and any Borrower or any such other party or person, or make any election of rights Lender may deem desirable under the United States Bankruptcy Code, as amended, or any other federal or state bankruptcy, reorganization, moratorium or insolvency law relating to or affecting the enforcement of creditors' rights generally without in any way impairing or affecting this Agreement. (c) Each Pledgor waives any rights to interpose any defense, counterclaim or offset of any nature and description which it may have or which may exist between and among Lender, any Borrower and/or such Pledgor with respect to such Pledgor's obligations under this Agreement, or which any Borrower may assert on the underlying debt, including but not limited 9

to failure of consideration, breach of warranty, fraud, payment (other than cash payment in full of the Indebtedness), statute of frauds, bankruptcy, infancy, statute of limitations, accord and satisfaction, and usury. (d) Each Pledgor further waives (i) notice of the making of any loans or extensions of credit by Lender to any Borrower, and of all notices and demands of any kind to which such Pledgor may be entitled, including, without limitation, notice of adverse change in any Borrower's financial condition or of any other fact which might materially increase the risk of such Pledgor; and (ii) presentment to or demand of payment from anyone whomsoever liable upon any of the Indebtedness, protest, notices of presentment, non-payment or protest and notice of any sale of collateral security or any default of any sort. (e) Each Pledgor expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution or any other claim which such Pledgor may now or hereafter have against any Borrower or any other person directly or contingently liable for the Indebtedness, or against or with respect to any Borrower's property (including, without limitation, property collateralizing such Pledgor's obligations to Lender), arising from the existence or performance of this Agreement. In furtherance, and not in limitation, of the preceding waiver, each Pledgor agrees that any payment to Lender by such Pledgor pursuant to this Agreement shall be deemed a contribution to the capital of Borrowers or other obligated party and any such payment shall not constitute such Pledgor a creditor of any such party. Section 20. Litigation. THE PARTIES HERETO EXPRESSLY CONSENT TO THE JURISDICTION AND VENUE OF THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR ALL PURPOSES IN CONNECTION WITH THIS AGREEMENT. ANY JUDICIAL PROCEEDING BY THE PARTIES HERETO INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. EACH PLEDGOR FURTHER CONSENTS THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF THE STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. EACH PLEDGOR WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS. Section 21. No Waiver; Cumulative Remedies. No failure on the part of Lender to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a 10

waiver thereof nor shall any single or partial exercise of any such right, power or remedy by Lender preclude any other or further exercise thereof or the exercise of any right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law. Section 22. Costs and Expenses; Indemnification. (a) Pledgors shall pay all of Lender's out-of-pocket costs and expenses, including without limitation reasonable fees and disbursements of counsel, in connection with the preparation, execution and delivery of this Agreement and in connection with the prosecution or defense of any action, contest, dispute, suit or proceeding concerning any matter in any way arising out of, related to or connected with this Agreement. Pledgors shall also pay all of the Lender's out-of-pocket costs and expenses, including, without limitation, reasonable fees and disbursements of counsel, in connection with (a) the preparation, execution and delivery of any waiver, any amendment thereto or consent proposed or executed in connection with the transactions contemplated by this Agreement, (b) Lender's obtaining performance of Pledgors' obligations under this Agreement, including, but not limited to, the enforcement or defense of the Liens granted hereunder in the Pledged Collateral, assignments of rights and Liens hereunder as valid perfected security interests, (c) any attempt to inspect, verify, protect, collect, sell, liquidate or otherwise dispose of any Pledged Collateral, and (d) any consultations in connection with any of the foregoing. (b) Any such amounts payable as provided hereunder shall be additional Indebtedness secured hereby. The provisions of this Section 22 shall remain operative and in full force and effect regardless of the termination of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Indebtedness, the invalidity or unenforceability of any term or provision of this Agreement, or any investigation made by or on behalf of the Lender. All amounts due under this Section 22 shall be payable on written demand therefor. Section 23. Severability. In case any security interest or other right of Lender shall be held to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other security interest or other right, privilege or power granted under this Agreement. Section 24. Miscellaneous. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing, signed by Lender and each Pledgor. The provisions of this Agreement shall be binding upon the successors and assigns of each Pledgor. The term "Lender", as used herein, shall include any successor or assign of Lender at the time entitled to the pledged interest in the Pledged Collateral. The headings in this Agreement are for purposes of reference only and shall not limit or define the meaning hereof. Section 25. Captions. The captions at various places in this Agreement are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement. Section 26. Counterparts; Facsimile. This Agreement may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which 11

when taken together shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto. [Signature Page to Follow] 12

IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly executed as of the 3 day of April, 2003. /s/ ---------------------------------- Stephen J. Cole-Hatchard /s/ ---------------------------------- Nicko Feinberg /s/ ---------------------------------- Elizabeth M. Mayer-Feinberg IIG EQUITY OPPORTUNITIES FUND LTD. By: /s/ George Sandmu ------------------------------ Name: George Sandmu Title: Investment Manager 13

STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On the ___ day of April, 2003, before me personally came Stephen J. Cole-Hatchard, to me known and known by me to be the individual described in and who executed the foregoing instrument, and that he duly acknowledged that he executed the same. -------------------------------- Notary Public STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this ___ day of April, 2003, before me personally came Nicko Feinberg, to me known by me to be the individual described in and who executed the foregoing instrument; and that he duly acknowledged that he executed the same. -------------------------------- Notary Public STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this ___ day of April, 2003, before me personally came Elizabeth M. Mayer-Feinberg, to me known by me to be the individual described in and who executed the foregoing instrument; and that she duly acknowledged that she executed the same. -------------------------------- Notary Public STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this ___ day of April, 2003, before me personally came ___________ to me known, who, being by me duly sworn did depose and say that s/he is the _____________ of IIG Equity Opportunities Fund Ltd., the company described in and which executed this agreement; and that s/he signed her/his name thereto. -------------------------------- Notary Public 14

SCHEDULE A Pledged Stock A. Stephen J. Cole-Hatchard: All shares of Frontline Communications Corporation common stock and Series D Convertible Preferred Stock directly and beneficially owned by Stephen Cole-Hatchard (collectively, the "SCH Shares") including, without limitation, the SCH Shares held in the securities account numbered ______________ maintained at Morgan Stanley DW Inc. B. Nicko Feinberg: All shares of Frontline Communications Corporation common stock and Series D Convertible Preferred Stock directly and beneficially owned by Stephen Cole-Hatchard (collectively, the "NF Shares") including, without limitation, the NF Shares held in the securities account numbered ______________ maintained at Morgan Stanley DW Inc. C. Elizabeth M. Mayer-Feinberg: All shares of Frontline Communications Corporation common stock and Series D Convertible Preferred Stock directly and beneficially owned by Elizabeth M. Mayer-Feinberg (collectively, the "EMF Shares") including, without limitation, the EMF Shares held in the securities account numbered ______________ maintained at Morgan Stanley DW Inc.

Exhibit 10.16 REGISTRATION RIGHTS AGREEMENT between FRONTLINE COMMUNICATIONS CORPORATION and IIG EQUITY OPPORTUNITIES FUND LTD. April 3, 2003

TABLE OF CONTENTS

Page Section 1. Certain Definitions.............................................1 Section 2. Registration Rights.............................................2 2.1 Demand Registration.............................................2 2.2 Form S-3 Registration...........................................4 2.3 Piggyback Registration..........................................4 2.4 Limitations on Subsequent Registration Rights...................5 2.5 Designation of Underwriter......................................5 2.6 Expenses of Registration........................................5 2.7 Registration Procedures.........................................6 2.8 Indemnification.................................................8 2.9 Underwriting Agreement.........................................11 2.10 Information by Holder..........................................11 2.11 Transfer of Registration Rights................................11 2.12 Termination of Registration Rights.............................12 2.13 Delay of Registration; Furnishing of Information...............12 2.14 Amendment of Registrable Rights................................12 2.15 Limitation on Subsequent Registration Rights...................12 2.16 Liquidated Damages.............................................12 Section 3. Miscellaneous..................................................13 3.1 GOVERNING LAW..................................................13 3.2 Successor and Assigns..........................................14 3.3 Effectiveness..................................................14 3.4 Adjustments for Stock Splits, Etc..............................14 3.5 Remedies.......................................................14 3.6 Entire Agreement; Amendment....................................14 3.7 Notices, Etc...................................................15 3.8 Delays or Omissions............................................16 3.9 Severability...................................................16 3.10 Titles and Subtitles...........................................16 3.11 Gender.........................................................16 3.12 Counterparts...................................................16
i

Exhibit 10.16 THIS REGISTRATION RIGHTS AGREEMENT dated as of April 3, 2003, between FRONTLINE COMMUNICATIONS CORPORATION, a Delaware corporation (the "Company"), and IIG EQUITY OPPORTUNITIES FUND LTD., a Bermuda company (the "Lender"). Recitals The Company is entering into a Term Loan and Security Agreement (the "Loan Agreement") dated as of the date hereof, with the Lender and Proyecciones Y Ventas Organizadas, S.A. De C.V., a Mexico corporation, pursuant to which, among other things, the Company is issuing to the Lender 500,000 shares of Common Stock (the "Shares"). In order to induce the Lender to enter into the Loan Agreement, the Company wishes to grant registration rights to the Lender as more fully set forth herein. NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, the parties hereby agree as follows: Section 1. Certain Definitions. Capitalized terms used in this Agreement and not defined herein shall have the meanings ascribed to them in the Loan Agreement. As used in this Agreement, the following terms shall have the following respective meanings: "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Common Stock" shall mean the common stock of the Company, par value $.01 per share, and any other securities issued in respect of Common Stock upon any stock split, stock dividend, recapitalization, merger, consolidation, share exchange or similar event. "Effectiveness Date" means the ninetieth (90th) day following the filing of a registration statement pursuant to this Agreement. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any successor federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Holder" shall mean the Lender and any Person holding Registrable Securities to whom the rights under this Agreement have been transferred in accordance with Section 2.11 hereof. "Initiating Holders" shall mean any Holder(s) who in the aggregate are Holders of not less than 30% of the Registrable Securities then outstanding. "NASD" means the National Association of Securities Dealers, Inc.

"NASDAQ" means the automated quotation system of the NASD. "Term Note" has the meaning given to such term in the Loan Agreement. "Person" means any individual, any foreign or domestic corporation, general partnership, limited partnership, limited liability company, firm, joint venture, association, individual retirement account, joint stock company, trust, estate, unincorporated organization, governmental or regulatory body or other entity. "Registrable Securities" shall mean (a) the Shares, and (b) any shares of Common Stock of the Company issued as (or issuable upon conversion or exercise of any warrant, right or other security which is as issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such above-described securities, provided, however, that securities shall be treated as Registrable Securities only if and only for so long as they are held by a Holder or a permitted transferee pursuant to the terms hereof, and (i) they have not been disposed of pursuant to a registration statement declared effective by the Commission, (ii) they have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act, so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale, or (iii) the registration rights as to the Holder of such Registrable Securities have not expired pursuant to Section 2.12. The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Securities" means "securities" as defined in Section 2(1) of the Securities Act and includes capital stock or other equity interests or any options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, capital stock or other equity interests. "Securities Act" shall mean the Securities Act of 1933, as amended, or any successor federal statute and the rules and regulations of the Commission thereunder, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Shares" shall mean the 500,000 shares of Common Stock issued to the Lender pursuant to the Loan Agreement. Section 2. Registration Rights. 2.1 Demand Registration. (a) Request for Registration. In case the Company shall receive from the Initiating Holders, on or after August 1, 2003, a written request that the Company effect any registration under the Securities Act of Registrable Securities then outstanding in accordance with this Section 2.1, the Company will: (i) promptly, and in no event more than five (5) days after receipt of such written request, give written notice of the proposed registration to all other Holders 2

and file a registration statement to effect such registration within thirty (30) days of receipt of such written request of the Initiating Holders; and (ii) as soon as practicable, use its best efforts to effect such registration (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holders joining in such request each as are specified in a written request (which request shall specify the number of Registrable Securities proposed to be included in such registration) received by the Company within 10 days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 2.1 after the Company has effected one such registration which may be effected at the option of the Holders pursuant to this Section 2.1(a) and such registration has been declared or ordered effective. (b) With respect to any registration pursuant to this Section 2.1, if the managing underwriter advises the Company in writing that the inclusion of all Registrable Securities proposed to be included in such registration would interfere with the successful marketing of such Securities, then there shall be excluded from such registration and underwriting, to the extent necessary to satisfy such limitation, first the Securities held by stockholders of the Company other than the Holders, then Securities which the Company may wish to register for its own account, and thereafter, to the extent necessary, Registrable Securities held by the Holders (pro rata to the respective number of Registrable Securities requested by the Holders to be included in the registration); provided, however, that in any event, all Registrable Securities must be included in such registration prior to any other Securities. (c) The Company shall be entitled to register Securities for sale for its own account in any registration requested pursuant to this Section 2.1 as permitted to do so by the underwriters and Section 2.1(b). (d) A requested registration under this Section may be rescinded by written notice to the Company by the Holders holding a majority of the Registrable Securities to be included in such registration under the following circumstances: (i) If such registration statement is rescinded prior to the filing date, such rescinded registration shall not count as a registration statement initiated pursuant to this Section 2.1 for purposes of Section 2.1(a); (ii) If such registration statement is rescinded after the filing date but prior to its effective date, such rescinded registration shall not count as a registration statement initiated pursuant to this Section 2.1 for purposes of Section 2.1(a) if the participating Holders reasonably believed that the registration statement contained an untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein not misleading, (1) notified the 3

Company of such fact and requested that the Company correct such alleged misstatement or omission and (2) the Company refused to correct such alleged misstatement or omission; and (iii) A registration shall not count as a registration statement initiated pursuant to this Section 2.1 for purposes of Section 2.1(a) above unless it becomes effective and the participating Holders are able to sell all of the Registrable Securities sought to be included in such registration statement. (e) The Company may not cause any other registration of Securities for sale for its own account (other than a registration effected solely to implement an employee benefit plan or stock option plan or a transaction contemplated by Rule 145 of the Commission) to be initiated after a registration requested pursuant to Section 2.1 and to become effective less than 90 days after the effective date of any registration requested pursuant to Section 2.1. 2.2 Form S-3 Registration. (a) In case the Company shall receive from any Holder or Holders, on or after August 1, 2003, a written request or requests that the Company effect a registration, the Company shall use its best efforts to effect such registration on Form S-3, or any successor Commission short-form registration statement with respect to Registrable Securities, if Form S-3 is available for such offering by the Holders under applicable federal securities laws. The Company will, within five (5) days after receipt of any such request, give written notice of the proposed registration to all other Holders, and include in such registration all Registrable Securities held by all such Holders who wish to participate in such registration and provide the Company with written requests for inclusion therein within ten (10) days after the receipt of the Company's notice. The Company shall file a registration statement to effect such registration within thirty (30) days of receipt of such initial written request of Holder or Holders and, as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as provided herein. (b) There is no limitation on the number of registrations pursuant to this Section 2.2 that the Company is obligated to effect. (c) Registrations effected pursuant to this Section 2.2 shall not be counted as demands for registration or registrations pursuant to Section 2.1. 2.3 Piggyback Registration. If the Company, at any time, proposes to register any of its Securities under the Securities Act, other than pursuant to Section 2.1 or Section 2.2, it shall promptly, and in no event less than fifteen (15) days prior to the filing of a registration statement with respect to a registration under this Section 2.3, give written notice to each Holder of such intention. Upon the written request of any Holder given within ten (10) days after receipt of any such notice, the Company shall include in such registration all of the Registrable Securities indicated in such 4

request, so as to permit the disposition of the Registrable Securities on the same terms and conditions as the Securities of the Company otherwise being sold in such registration. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statement as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein. Notwithstanding any other provision of this Section 2.3, if the managing underwriter advises the Company in writing that the inclusion of all Registrable Securities proposed to be included in such registration would interfere with the successful marketing of such Securities of the Company, then there shall be excluded from such registration and underwriting, to the extent necessary to satisfy such limitation, first Securities of the Company held by stockholders of the Company other than the Holders and then, to the extent necessary, Registrable Securities held by the Holders (pro rata to the respective number of Registrable Securities requested by the Holders to be included in such registration); provided, however, that in any event, all Registrable Securities must be included in such registration prior to any other Securities. 2.4 Limitations on Subsequent Registration Rights. The Company represents and warrants to the Lender that the registration rights granted hereby do not conflict with any other registration rights granted by the Company. The Company shall not, after the date hereof, grant any registration rights which conflict with or impair, or have any priority over, the registration rights granted hereby. 2.5 Designation of Underwriter. (a) In the case of any registration effected pursuant to Sections 2.1 or 2.2, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by a majority in interest of the Initiating Holders (which underwrite or underwriters shall be reasonably acceptable to the Company). (b) In the case of any registration initiated by the Company, the Company shall have the right to designate the managing underwriter in any underwritten offering. 2.6 Expenses of Registration. The Company shall bear the expense of any registrations effected pursuant to Sections 2.1, 2.2 and 2.3 including, without limitation, all registration and filing fees (including all expenses incident to filing with the NASD), fees and expenses of complying with securities and blue sky laws, printing expenses, and fees and expenses of the Company's counsel and accountants; provided, however, that each Holder participating in such registration shall pay its pro rata portion (on the basis of the number of shares so registered) of discounts or commissions payable to any underwriter. 5

2.7 Registration Procedures. If and whenever the Company is under an obligation pursuant to the provisions of this Agreement to use its best efforts to effect the registration of any Registrable Securities, the Company shall, as expeditiously as practicable: (a) with respect to a registration under Sections 2.l, 2.2 and 2.3, use its best efforts to cause a registration statement that registers such Registrable Securities to become and remain effective for a period of 120 days or until all of such Registrable Securities have been disposed of (if earlier) (the "Effectiveness Period"); (b) furnish, at least five business days before filing a registration statement that registers such Registrable Securities, a prospectus relating thereto or any amendments or supplements relating to such a registration statement or prospectus, to each Holder, to any counsel to any Holder selling Registrable Securities (the "Selling Holder") and to one counsel selected by the holders of a majority of such Registrable Securities (the "Selling Holders' Counsel"), copies of all such documents proposed to be filed, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by such Holders (it being understood that such five-business-day period need not apply to successive drafts of the same document proposed to be filed so long as such successive drafts are supplied to such counsel in advance of the proposed filing by a period of time that is customary and reasonable under the circumstances); (c) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for at least the periods set forth in Section 2.7(a) or until all of such Registrable Securities have been disposed of (if earlier) and to comply with the provisions of the Securities Act with respect to the sale or other disposition of such Registrable Securities; (d) notify in writing any counsel to any Selling Holder and the Selling Holders' Counsel promptly (i) of the receipt by the Company of any notification with respect to any comments by the Commission with respect to such registration statement or prospectus or any amendment or supplement thereto or any request by the Commission for the amending or supplementing thereof or for additional information with respect thereto, (ii) of the receipt by the Company of any notification with respect to the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or prospectus or any amendment or supplement thereto or the initiation or threatening of any proceeding for that purpose and (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification of such Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes; (e) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller of Registrable Securities reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller of Registrable Securities to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller; provided, however, that the 6

Company will not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required so to do but for this paragraph (e); (f) furnish to each seller of such Registrable Securities such number of copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such Holder may reasonably request in order to facilitate the public sale or other disposition of such Registrable Securities; (g) use its best efforts to cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities; (h) notify on a timely basis each seller of such Registrable Securities at any time when a prospectus relating to such Registrable Securities is required to be delivered under the Securities Act within the appropriate period mentioned in paragraph (a) of this Section, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of such seller, prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the offerees of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (i) make available for inspection by any counsel to any Selling Holder and the Selling Holders' Counsel or any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such underwriter (collectively, the "Inspectors"), all pertinent financial and other records, pertinent corporate documents and properties of the Company (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information (together with the Records, the "Information") reasonably requested by any such Inspector in connection with such registration statement. Any of the Information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, shall not be disclosed by the Inspectors unless (i) the disclosure of such Information is necessary to avoid or correct a misstatement or omission in the registration statement, (ii) the release of such Information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or (iii) such Information has been made generally available to the public. The seller of Registrable Securities agrees that it will, upon learning that disclosure of such Information is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of the Information deemed confidential; 7

(j) use its best efforts to obtain from its independent certified public accountants "comfort" letters in customary form and at customary times and covering matters of the type customarily covered by comfort letters; (k) use its best efforts to obtain from its counsel an opinion or opinions in customary form; (l) provide a transfer agent and registrar (which may be the same entity and which may not be the Company) for such Registrable Securities; (m) issue to any underwriter to which any seller of Registrable Securities may sell shares in such offering certificates evidencing such Registrable Securities; (n) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Subject to the provisions of this agreement, each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement; (o) list such Registrable Securities on any national securities exchange on which any shares of the Common Stock are listed or on NASDAQ if then included, or if the Common Stock is not listed on NASDAQ or any other United States national securities exchange, use its best efforts to qualify such Registrable Securities for inclusion on such national securities exchange or NASDAQ as the holders of a majority of such Registrable Securities shall request; (p) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission; and (q) use its best efforts to take all other steps necessary to effect the registration of such Registrable Securities contemplated hereby. 2.8 Indemnification. (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, each of its officers and directors, members, partners and legal counsel and each Person controlling such Holder within the meaning of Rule 12b-2 of the General Rules and Regulations under the Exchange Act, with respect to which registration, qualification or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each Person who controls any underwriter within the meaning of Rule 12b-2 of the General Rules and Regulations under the Exchange Act, against all expenses, claims, losses, damages or liabilities (joint or several) (or actions or proceedings in respect thereof, including but not limited to any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus (including any preliminary prospectus or final prospectus), offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements 8

therein, not misleading, or any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse each such Holder, each of its officers and directors, members, partners and legal counsel and each Person controlling such Holder, each such underwriter and each Person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating, preparing, settling or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by such Holder, controlling Person or underwriter and stated to be specifically for use therein. Notwithstanding the foregoing, insofar as the foregoing indemnity relates to any such untrue statement (or alleged untrue statement) or omission (or alleged omission) made in the preliminary prospectus but eliminated or remedied in the amended prospectus on file with the Commission at the time the registration statement becomes effective or in the final prospectus filed with the Commission pursuant to Rule 424(b) of the Commission, the indemnity agreement herein shall not inure to the benefit of any underwriter if a copy of the final prospectus filed pursuant to Rule 424(b) was not furnished to the Person or entity asserting the loss, liability, claim or damage at or prior to the time such furnishing is required by the Securities Act. (b) To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify and hold harmless the Company, each of its directors, officers and legal counsel, each underwriter, if any, of the Company's securities covered by such a registration statement, each Person who controls the Company or such underwriter within the meaning of Rule 12b-2 of the General Rules and Regulations under the Exchange Act, and each other such Holder, each of its officers, partners, members, directors and legal counsel and each Person controlling Holder within the meaning of Rule 12b-2 of the General Rules and Regulations under the Exchange Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading and will reimburse the Company, such Holders, such directors, officers, legal counsel, Persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein. Notwithstanding the foregoing, the liability of each Holder under this subsection (b) shall be limited in an amount equal to the net proceeds from the sale of the Registrable Securities sold by such Holder. In addition, insofar as the foregoing indemnity relates to any such untrue statement (or alleged untrue statement) or omission (or alleged omission) made in the preliminary prospectus but eliminated or remedied in the amended prospectus on file with the Commission at 9

the time the registration statement becomes effective or in the final prospectus filed pursuant to Rule 424(b) of the Commission, the indemnity agreement herein shall not inure to the benefit of the Company, any underwriter or (if there is no underwriter) any Holder if a copy of the final prospectus filed pursuant to Rule 424(b) was not furnished to the Person or entity asserting the loss, liability, claim or damage at or prior to the time such furnishing is required by the Securities Act. (c) Each party entitled to indemnification under this Section 2.8 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action, and provided, further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. No Indemnified Party shall consent to entry of any judgment or enter into any settlement without the consent of each Indemnifying Party (which consent shall not be unreasonably withheld). Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom. (d) If the indemnification provided for in this Section 2.8 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any losses, claims, damages, expenses or liabilities referred to therein, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, expenses or liabilities in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and all stockholders offering securities in the offering (the "Selling Shareholders") on the other in connection with the statements or omissions which resulted in such losses, claims, damages, expenses or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and the Selling Shareholders on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Selling Shareholders and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Selling Shareholders agree that it would not be just and equitable if contribution pursuant to this Section 2.8(d) were based solely upon the number of entities from whom contribution was requested or by any other method of allocation which does not take account of the equitable 10

considerations referred to above in this Section 2.8(d). The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages, expenses and liabilities referred to above in this Section 2.8 (d) shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim, subject to the provisions of Section 2.8(c) hereof. Notwithstanding the provisions of this Section 2.8(d), no Selling Shareholder shall be required to contribute any amount or make any other payments under this Agreement which in the aggregate exceed the proceeds received by such Selling Shareholder. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. (f) The obligations of the Company and Holders under this Section 2.8 shall survive completion of any offering of Registrable Securities in a registration statement and the termination of this agreement. 2.9 Underwriting Agreement. Notwithstanding the provisions of Sections 2.7 and 2.8, to the extent that the Company and the Holders selling Registrable Securities in a proposed registration shall enter into an underwriting or similar agreement, which agreement contains provisions covering one or more issues addressed in such Sections, the provisions contained in such Sections addressing such issue or issues shall be superseded with respect to such registration by such other agreement. 2.10 Information by Holder. Each Holder selling Registrable Securities in a proposed registration shall furnish to the Company such written information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Agreement. 2.11 Transfer of Registration Rights. The rights granted to a Holder under this Section 2 may be assigned to a transferee or assignee in connection with any transfer or assignment of Registrable Securities by a Holder provided that (i) either (x) such transferee or assignee is a subsidiary, parent, general partner, limited partner, retired partner, member of retired member of the Holder, or (y) such transfer may otherwise be effected in accordance with applicable securities laws; and (ii) the Holder notifies the Company in writing of the transfer or assignment, stating the name and the address of the transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned and the assignee or transferee agrees in writing to be bound by the provisions of this Agreement. 11

2.12 Termination of Registration Rights. The registration rights granted pursuant to this Agreement shall terminate as to any Holder at such time as such Holder may sell under Rule 144(k) all Registrable Securities then held by such Holder. 2.13 Delay of Registration; Furnishing of Information. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2. 2.14 Amendment of Registrable Rights. Any provision of this Section 2 may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders of at least sixty-six and two-thirds percent (66-2/3%) of the Registrable Securities then outstanding. Any amendment or waiver effected in accordance with this Section 2.11 shall be binding upon each Holder and the Company. By acceptance of any benefits under this Section 2, Holders of Registrable Securities hereby agree to be bound by the provisions hereunder. 2.15 Limitation on Subsequent Registration Rights. After the date of this Agreement, the Company shall not, without the prior written consent of the Holders of sixty-six and two-thirds percent (66-2/3%) of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights senior to those granted to the Holders hereunder. 2.16 Liquidated Damages. If (i) a registration statement covering applicable Registrable Securities is not filed on or before the applicable dates set forth in this Agreement (if the Company files such registration statement without affording the Holders the opportunity to review and comment on the same as required by Section 2.7(b) hereof, the Company shall not be deemed to have satisfied this clause (i)), or (ii) a registration statement covering applicable Registrable Securities is not declared effective by the Commission on or before the applicable Effectiveness Date (any such failure or breach being referred to as an "Event," and the date on which such Event occurs being referred to as an "Event Date"), then, in any such case, as partial relief for the damages suffered therefrom by the Holders (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall, on the Event Date and on the first day of each month following the Event Date until the triggering Event is cured, pay to each Holder an aggregate amount, in cash, as liquidated damages and not as a penalty, equal to an amount equal to two percent (2%) (the "Applicable Percentage") of $2,200.00, which is the aggregate fair market value of the Shares on the date hereof (calculated as 500,000 Shares times the closing price per share of Company Common Stock on the American Stock Exchange on the last trading date immediately preceding the date hereof ("Share Market Value")) (the "Liquidated Damages"). 12

The Liquidated Damages shall be payable for each month, or prorated for each portion thereof, that an Event has occurred and is continuing. In addition, for each month, or portion thereof, after the first month that Liquidated Damages are required to be paid hereunder, the Applicable Percentage shall be increased by one percentage point (for example, Liquidated Damages shall equal 2% of the Share Market Value for the first month following an Event Date, 3% of the Share Market Value for the next month, and so on until the Event has been cured). Notwithstanding the foregoing, aggregate Liquidated Damages shall not exceed $100,000. The payments to which a Holder shall be entitled pursuant to this Section are referred to herein as "Registration Delay Payments." Registration Delay Payments shall be calculated on a cumulative basis. If the Company fails to make Registration Delay Payments in a timely manner, such Registration Delay Payments shall bear interest at the rate of 2.0% per month (or the maximum rate permitted by law), pro-rated for partial months, until paid in full. Section 3. Miscellaneous. 3.1 GOVERNING LAW. (a) ALL QUESTIONS CONCERNING THE CONSTRUCTION, INTERPRETATION AND VALIDITY OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER IN THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. (b) THE PARTIES TO THIS AGREEMENT AGREE THAT JURISDICTION AND VENUE IN ANY ACTION BROUGHT BY ANY PARTY HERETO PURSUANT TO THIS AGREEMENT MAY BE BROUGHT IN ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF NEW YORK. BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE JURISDICTION OF SUCH COURTS FOR THEMSELVES AND IN RESPECT OF THEIR PROPERTY WITH RESPECT TO SUCH ACTION. THE PARTIES HERETO IRREVOCABLY AGREE THAT VENUE WOULD BE PROPER IN SUCH COURT, AND HEREBY WAIVE ANY OBJECTION THAT SUCH COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH ACTION. (c) THE COMPANY HEREBY AGREES THAT SERVICE UPON THEM BY REGISTERED OR CERTIFIED MAIL (RETURN RECEIPT REQUESTED) SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE LENDERS TO BRING PROCEEDINGS AGAINST THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION. (d) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN 13

ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT, THE NOTE DOCUMENTS OR ANY DOCUMENTS RELATED THERETO. 3.2 Successor and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto, except that the Company shall not assign its rights or obligations hereunder without the consent of the Holders of a majority in interest of the aggregate of the then outstanding Registrable Securities, except in the event of a merger or a sale of all or substantially all of the Company's assts. 3.3 Effectiveness. This Agreement shall be effective upon the date first set forth above. 3.4 Adjustments for Stock Splits, Etc. Wherever in this Agreement there is a reference to a specific number of Shares or Registrable Securities of the Company of any class or series, then, upon the occurrence of any subdivision, combination or stock dividend of such class or series of stock, the specific number of shares so referenced in this Agreement shall automatically be proportionally adjusted to reflect the effect on the outstanding shares of such class or series of stock by such subdivision, combination or stock dividend. 3.5 Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, the Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and the Holder agree that monetary damages, including the Liquidated Damages provided in Section 2.16 herein, would not provide adequate and full compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. 3.6 Entire Agreement; Amendment. (a) This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject hereof. 14

(b) Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought; provided, however, subject to Sections 2.14 and 2.15 that any provisions hereof may be amended, waived, discharged or terminated upon the written consent of the Company and the Holders of a majority in interest of the aggregate of the then outstanding Registrable Securities; and provided, further, notwithstanding anything to the contrary in this Agreement that any such amendment, waiver, discharge or termination that would adversely affect the material rights hereunder of any Holder, in its capacity as such, without similarly affecting the rights hereunder of all of the Holders may not be made without the prior written consent of such adversely affected Holder. 3.7 Notices, Etc. All notices, demands and requests of any kind to be delivered to any party hereto in connection with this Agreement shall be (a) delivered personally, (b) sent by nationally-recognized overnight courier, (c) sent by first class, registered or certified mail, return receipt requested or (d) sent by facsimile, in each case to such party at its address as follows: (i) if to the Company, to: Frontline Communications Corporation One Blue Hill Plaza P.O. Box 1548 Pearl River, New York 10965 Attention: Stephen Cole-Hatchard Telephone No.: 845-623-8553 Telecopier No.: 845-623-8669 if to the Lender, to: IIG Equity Opportunities Fund Ltd. 1500 Broadway, 17th Floor New York, New York 10036 Attention: George Sandhu Telephone: 212-806-5100 Telecopier: 212-806-5199 Any notice, demand or request so delivered shall constitute valid notice under this Agreement and shall be deemed to have been received (A) on the day of actual delivery in the case of personal delivery, (B) on the next Business Day after the date when sent in the case of delivery by nationally-recognized overnight courier, (C) on the fifth Business Day after the date of deposit in the U.S. mail in the case of mailing or (D) upon receipt in the case of a facsimile transmission. Any party hereto may from time to time by notice in writing served upon the other as aforesaid designate a different mailing address or a different person to which all such notices, demands or requests thereafter are to be addressed. 15

3.8 Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party upon any breach or default of another party under this Agreement shall impair any such right, power or remedy of such party that is not in breach or default nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative. 3.9 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 no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party. 3.10 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not considered in construing or interpreting this Agreement. 3.11 Gender. As used herein, masculine pronouns shall include the feminine and neuter, and neuter pronouns shall include the masculine and the feminine. 3.12 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. IN WITNESS WHEREOF, the undersigned or each of their respective duly authorized officers or representatives have executed this agreement effective upon the date first set forth above. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 16

IN WITNESS WHEREOF, the undersigned or each of their respective duly authorized officers or representatives have executed this agreement effective upon the date first set forth above. FRONTLINE COMMUNICATIONS CORPORATION By: /s/ ------------------------------------ Stephen J. Cole-Hatchard Chief Executive Officer IIG EQUITY OPPORTUNITIES FUND LTD. By: /s/ George Sandmu ------------------------------------ Name: George Sandmu Title: 17

Exhibit 10.17 LIMITED GUARANTY (Individual) April 3, 2003 FOR VALUE RECEIVED, and in consideration of a loan in the amount of $550,000 made by IIG Equity Opportunities Fund Ltd. ("Lender") to or for the account of Frontline Communications Corporation and Proyecciones y Ventas Organizadas S.A. de C.V. (collectively, "Borrowers") and for other good and valuable consideration, and to induce Lender to make such loan and to make or grant such renewals, extensions, releases of collateral or relinquishments of legal rights as Lender may deem advisable, the undersigned (hereinafter referred to as "Guarantor" or "the undersigned") unconditionally guaranties to Lender, its successors, endorsees and assigns, the prompt payment when due (whether by acceleration or otherwise) of all obligations and liabilities of any and all kinds of Borrowers to Lender and of all instruments of any nature evidencing or relating to any such obligations and liabilities upon which Borrowers or one or more parties and Borrowers are liable to Lender, whether incurred by Borrowers as maker, endorser, drawer, acceptor, guarantor, accommodation party or otherwise, and whether due or to become due, secured or unsecured, absolute or contingent, joint or several, and whether arising under, out of, or in connection with that certain Term Loan and Security Agreement dated as of the date hereof among Lender and Borrowers (as amended, modified, restated or supplemented from time to time, the "Loan Agreement") or any documents, instruments or agreements relating to or executed in connection with the Loan Agreement or any documents, instruments or agreements referred to therein (together with the Loan Agreement, as each may be amended, modified, restated or supplemented from time to time, the "Loan Documents"), or otherwise (all of which are herein collectively referred to as the "Obligations"), and irrespective of the genuineness, validity, regularity or enforceability of such Obligations, or of any instrument evidencing any of the Obligations or of any collateral therefor or of the existence or extent of such collateral, and irrespective of the allowability, allowance or disallowance of any or all of the Obligations in any case commenced by or against Borrowers under Title 11, United States Code, including, without limitation, obligations or indebtedness of Borrowers for post-petition interest, fees, costs and charges that would have accrued or been added to the Obligations but for the commencement of such case. In furtherance of the foregoing, the undersigned hereby agrees as follows: 1. No Impairment. Lender may at any time and from time to time, either before or after the maturity thereof, without notice to or further consent of the undersigned, extend the time of payment of, exchange or surrender any collateral for, renew or extend any of the Obligations or increase or decrease the interest rate thereon, and may also make any agreement with Borrowers or with any other party to or person liable on any of the Obligations, or interested therein, for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between Lender and Borrowers or any such other party or person, or make any election of rights Lender may deem desirable under the United States Bankruptcy Code, as amended, or any other federal or state bankruptcy, reorganization, moratorium or insolvency law relating to or affecting the

enforcement of creditors' rights generally (any of the foregoing, an "Insolvency Law") without in any way impairing or affecting this Guaranty. This instrument shall be effective regardless of the subsequent incorporation, merger or consolidation of Borrowers, or any change in the composition, nature, personnel or location of Borrowers and shall extend to any successor entity to Borrowers, including a debtor in possession or the like under any Insolvency Law. 2. Guaranty Absolute. The undersigned guarantees that the Obligations will be paid strictly in accordance with the terms of the Loan Agreement and/or any other document, instrument or agreement creating or evidencing the Obligations, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of Borrowers with respect thereto. Guarantor hereby knowingly accepts the full range of risk encompassed within a contract of "continuing guaranty" which risk includes the possibility that Borrowers will contract additional indebtedness for which Guarantor may be liable hereunder after Borrowers' financial condition or ability to pay its lawful debts when they fall due has deteriorated, whether or not Borrowers has properly authorized incurring such additional indebtedness. The undersigned acknowledges that (i) no oral representations, including any representations to extend credit or provide other financial accommodations to Borrowers, have been made by Lender to induce the undersigned to enter into this Limited Guaranty and (ii) any extension of credit to the Borrowers shall be governed solely by the provisions of the Loan Agreement. The liability of the undersigned under this Limited Guaranty shall be absolute and unconditional, in accordance with its terms, and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever, including, without limitation: (a) any waiver, indulgence, renewal, extension, amendment or modification of or addition, consent or supplement to or deletion from or any other action or inaction under or in respect of the Loan Documents or any other instruments or agreements relating to the Obligations or any assignment or transfer of any thereof, (b) any lack of validity or enforceability of any Loan Document or other documents, instruments or agreements relating to the Obligations or any assignment or transfer of any thereof, (c) any furnishing of any additional security to Lender or its assignees or any acceptance thereof or any release of any security by Lender or its assignees, (d) any limitation on any party's liability or obligation under the Loan Documents or any other documents, instruments or agreements relating to the Obligations or any assignment or transfer of any thereof or any invalidity or unenforceability, in whole or in part, of any such document, instrument or agreement or any term thereof, (e) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Borrowers, or any action taken with respect to this Limited Guaranty by any trustee or receiver, or by any court, in any such proceeding, whether or not the undersigned shall have notice or knowledge of any of the foregoing, (f) any exchange, release or nonperfection of any collateral, or any release, or amendment or waiver of or consent to departure from any guaranty or security, for all or any of the Obligations, or (g) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the undersigned. Any amounts due from the undersigned to Lender shall bear interest until such amounts are paid in full at the highest rate then applicable to the Obligations. Obligations include post-petition interest whether or not allowed or allowable. 3. Waivers. (a)This Limited Guaranty is a guaranty of payment and not of collection. Lender shall be under no obligation to institute suit, exercise rights or remedies or take any other action against Borrowers or any other person liable with respect to any of the 2

Obligations or resort to any collateral security held by it to secure any of the Obligations as a condition precedent to the undersigned being obligated to perform as agreed herein and Guarantor hereby waives any and all rights which it may have by statute or otherwise which would require Lender to do any of the foregoing. Guarantor further consents and agrees that Lender shall be under no obligation to marshal any assets in favor of Guarantor, or against or in payment of any or all of the Obligations. The undersigned hereby waives all suretyship defenses and any rights to interpose any defense, counterclaim or offset of any nature and description which the undersigned may have or which may exist between and among Lender, Borrowers and/or the undersigned with respect to the undersigned's obligations under this Limited Guaranty, or which Borrowers may assert on the underlying debt, including but not limited to failure of consideration, breach of warranty, fraud, payment (other than cash payment in full of the Obligations), statute of frauds, bankruptcy, infancy, statute of limitations, accord and satisfaction, and usury. b. The undersigned further waives (i) notice of the acceptance of this Limited Guaranty, of the making of any such loans or extensions of credit, and of all notices and demands of any kind to which the undersigned may be entitled, including, without limitation, notice of adverse change in Borrowers' financial condition or of any other fact which might materially increase the risk of the undersigned and (ii) presentment to or demand of payment from anyone whomsoever liable upon any of the Obligations, protest, notices of presentment, non-payment or protest and notice of any sale of collateral security or any default of any sort. c. Notwithstanding any payment or payments made by the undersigned hereunder, or any setoff or application of funds of the undersigned by Lender, the undersigned shall not be entitled to be subrogated to any of the rights of Lender against Borrowers or against any collateral or guarantee or right of offset held by Lender for the payment of the Obligations, nor shall the undersigned seek or be entitled to seek any contribution or reimbursement from Borrowers in respect of payments made by the undersigned hereunder, until all amounts owing to Lender by Borrowers on account of the Obligations are paid in full and the Loan Agreement has been terminated. If, notwithstanding the foregoing, any amount shall be paid to the undersigned on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full and the Loan Agreement shall not have been terminated, such amount shall be held by the undersigned in trust for Lender, segregated from other funds of the undersigned, and shall forthwith upon, and in any event within two (2) business days of, receipt by the undersigned, be turned over to Lender in the exact form received by the undersigned (duly endorsed by the undersigned to Lender, if required), to be applied against the Obligations, whether matured or unmatured, in such order as Lender may determine, subject to the provisions of the Loan Agreement. Any and all present and future debts and obligations of Borrowers to any of the undersigned are hereby subordinated to the full payment and performance of, all present and future debts and obligations of Borrowers to Lender. d. The undersigned further waives the right to renounce any disposition or transfer of assets whether created under a will, trust agreement or intestacy statute, with respect to any devise, bequest, distributive share, trust account, life insurance or annuity contract, employee benefit plan (including, without limitation, any pension, retirement, death benefit, stock bonus or profit sharing plan, system or trust), or any other disposition or transfer created by 3

any testamentary or nontestamentary instrument or by operation of law, and any of the foregoing created or increased by reason of a renunciation made by another person. 4. Representations and Warranties. The undersigned hereby represents and warrants (all of which representations and warranties shall survive until all Obligations are indefeasibly satisfied in full and the Loan Agreement has been irrevocably terminated), that: a. Legal Capacity. The undersigned has full legal capacity to execute and deliver this Limited Guaranty and to perform the obligations of the undersigned under this Limited Guaranty. b. Legal, Valid and Binding Character. This Limited Guaranty constitutes the legal, valid and binding obligation of the undersigned enforceable in accordance with its terms, except as enforceability may be limited by applicable Insolvency Law. c. Violations. The execution, delivery and performance of this Limited Guaranty will not violate any requirement of law applicable to the undersigned or any material contract, agreement or instrument to which the undersigned is a party or by which the undersigned or any property of the undersigned is bound or result in the creation or imposition of any mortgage, lien or other encumbrance other than to Lender on any of the property or assets of the undersigned pursuant to the provisions of any of the foregoing. d. Consents or Approvals. No consent of any other person or entity (including, without limitation, any creditor of the undersigned) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required in connection with the execution, delivery, performance, validity or enforceability of this Limited Guaranty. e. Litigation. No litigation, arbitration, investigation or administrative proceeding of or before any court, arbitrator or governmental authority, bureau or agency is currently pending or, to the best knowledge of the undersigned, threatened (i) with respect to this Limited Guaranty or any of the transactions contemplated by this Limited Guaranty or (ii) against or affecting the undersigned, or any property or assets of the undersigned, which, if adversely determined, would have a material adverse effect on the business, operations, assets or condition, financial or otherwise, of the undersigned. f. Financial Benefit. The undersigned has derived or expects to derive a financial or other advantage from each and every loan, advance or extension of credit made under the Loan Agreement or other Obligation incurred by Borrowers to Lender. 5. Acceleration. a. If any breach of any covenant or condition or other event of default shall occur and be continuing under any agreement made by Borrowers or the undersigned to Lender, or either Borrowers or the undersigned should at any time become insolvent, or make a general assignment, or if a proceeding in or under any Insolvency Law shall be filed or commenced by, or in respect of, the undersigned, or if a notice of any lien, levy, or assessment is filed of record with respect to any assets of the undersigned by the United States of America or any department, 4

agency, or instrumentality thereof, or if any taxes or debts owing at any time or times hereafter to any one of them becomes a lien or encumbrance upon any assets of the undersigned in Lender's possession, or otherwise, any and all Obligations shall for purposes hereof, at Lender's option, be deemed due and payable without notice notwithstanding that any such Obligation is not then due and payable by Borrowers. b. The undersigned will promptly notify Lender of any default by the undersigned in the performance or observance of any term or condition of any agreement to which the undersigned is a party if the effect of such default is to cause, or permit the holder of any obligation under such agreement to cause, such obligation to become due prior to its stated maturity and, if such an event occurs, Lender shall have the right to accelerate the undersigned's obligations hereunder. 6. Payments from Guarantor. Lender, in its sole and absolute discretion, with or without notice to the undersigned, may apply on account of the Obligations any payment from the undersigned or any other guarantor, or amounts realized from any security for the Obligations, or may deposit any and all such amounts realized in a non-interest bearing cash collateral deposit account to be maintained as security for the Obligations. 7. Costs. Subject to Section 19 hereof, the undersigned shall pay on demand, all costs, fees and expenses (including expenses for legal services of every kind) relating or incidental to the enforcement or protection of the rights of Lender hereunder or under any of the Obligations. 8. No Termination. This is a continuing irrevocable guaranty and shall remain in full force and effect and be binding upon the undersigned, and the undersigned's heirs, administrators, executors, successors and assigns, until all of the Obligations have been paid in full and the Loan Agreement has been irrevocably terminated. If any of the present or future Obligations are guarantied by persons, partnerships or corporations in addition to the undersigned, the death, release or discharge in whole or in part or the bankruptcy, merger, consolidation, incorporation, liquidation or dissolution of one or more of them shall not discharge or affect the liabilities of the undersigned under this Limited Guaranty. The death of the undersigned shall not effect a termination of this Limited Guaranty and loans and advances made by Lender and any indebtedness incurred by Borrowers from Lender subsequent to such death shall continue to constitute Obligations guaranteed hereunder. 9. Recapture. Anything in this Limited Guaranty to the contrary notwithstanding, if Lender receives any payment or payments on account of the liabilities guaranteed hereby, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver, or any other party under any Insolvency Law, common law or equitable doctrine, then to the extent of any sum not finally retained by Lender, the undersigned's obligations to Lender shall be reinstated and this Limited Guaranty shall remain in full force and effect (or be reinstated) until payment shall have been made to Lender, which payment shall be due on demand. 10. Books and Records. The books and records of Lender showing the account between Lender and Borrowers shall be admissible in evidence in any action or proceeding, shall 5

be binding upon the undersigned for the purpose of establishing the items therein set forth and shall constitute prima facie proof thereof. 11. No Waiver. No failure on the part of Lender to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Lender of any right, remedy or power hereunder preclude any other or future exercise of any other legal right, remedy or power. Each and every right, remedy and power hereby granted to Lender or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by Lender at any time and from time to time. 12. Waiver of Jury Trial. THE UNDERSIGNED DOES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON OR WITH RESPECT TO THIS LIMITED GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR RELATING OR INCIDENTAL HERETO. THE UNDERSIGNED DOES HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. 13. Governing Law; Jurisdiction; Amendments. THIS INSTRUMENT CANNOT BE CHANGED OR TERMINATED ORALLY, AND SHALL BE GOVERNED, CONSTRUED AND INTERPRETED AS TO VALIDITY, ENFORCEMENT AND IN ALL OTHER RESPECTS IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE UNDERSIGNED EXPRESSLY CONSENTS TO THE JURISDICTION AND VENUE OF THE FEDERAL AND STATE COURTS LOCATED IN THE STATE OF NEW YORK FOR ALL PURPOSES IN CONNECTION HEREWITH. ANY JUDICIAL PROCEEDING BY THE UNDERSIGNED AGAINST LENDER INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED HEREWITH SHALL BE BROUGHT ONLY IN THE FEDERAL AND STATE COURTS LOCATED IN THE STATE OF NEW YORK. THE UNDERSIGNED FURTHER CONSENTS THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF THE STATE OF NEW YORK BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. THE UNDERSIGNED WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS. 14. Severability. To the extent permitted by applicable law, any provision of this Limited Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without 6

invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 15. Amendments, Waivers. No amendment or waiver of any provision of this Limited Guaranty nor consent to any departure by the undersigned therefrom shall in any event be effective unless the same shall be in writing executed by the undersigned and Lender. 16. Notice. All notices, requests and demands to or upon the undersigned, shall be in writing and shall be deemed to have been duly given or made (a) when delivered, if by hand, (b) three (3) days after being sent, postage prepaid, if by registered or certified mail, (c) when confirmed electronically, if by facsimile, or (d) when delivered, if by a recognized overnight delivery service in each event, to the numbers and/or address set forth beneath the signature of the undersigned. 17. Successors. Lender may, from time to time, without notice to the undersigned, sell, assign, transfer or otherwise dispose of all or any part of the Obligations and/or rights under this Limited Guaranty. Without limiting the generality of the foregoing, Lender may assign, or grant participations to, one or more banks, financial institutions or other entities all or any part of any of the Obligations. In each such event, Lender, its Affiliates and each and every immediate and successive purchaser, assignee, transferee or holder of all or any part of the Obligations shall have the right to enforce this Limited Guaranty, by legal action or otherwise, for its own benefit as fully as if such purchaser, assignee, transferee or holder were herein by name specifically given such right. 18. Release. Nothing except cash payment in full of the Obligations shall release the undersigned from liability under this Limited Guaranty. 19. Limited Recourse. Notwithstanding anything to the contrary contained in this Limited Guaranty, Lender's recourse under this Limited Guaranty shall be limited to the enforcement of its rights under (a) the Mortgage dated as of the date hereof executed and delivered by the undersigned to Lender covering the real property located at 56 Beach Road, Stony Point, New York 10980, (b) the Mortgage and Security Agreement dated as of the date hereof executed and delivered by the undersigned and Ann M. Cole-Hatchard in favor of Lender covering the real property located at 1008 Adams Drive, Key Largo, Florida 33037 and (c) the Pledge Agreement dated as of the date hereof executed and delivered by the undersigned and Nicko Feinberg in favor of Lender. [Signature Page to Follow] 7

IN WITNESS WHEREOF, this Limited Guaranty has been executed by the undersigned this 3 day of April, 2003. /s/ ----------------------------- Stephen J. Cole-Hatchard Mailing Address: 315 Route 210 Stony Point, New York 10980 Telephone No.: (845) 786-3753 Facsimile No.: (845) 786-5874 8

STATE OF NEW YORK ) ): ss.: COUNTY OF ___________ On the ____ day of April, 2003, before me personally came Stephen J. Cole-Hatchard to me known, who being by me duly sworn, did depose and say that he resides at ___________________, that he has read the foregoing instrument and is fully familiar with the contents thereof; that he signed his name thereto of his own free will and volition. --------------------------- Notary Public 9

Exhibit 10.18 ================================================================================ MORTGAGE By STEPHEN J. COLE-HATCHARD In Favor of IIG EQUITY OPPORTUNITIES FUND LTD. Dated: April 3, 2003 ================================================================================ Record and Return to: Mitchell Nussbaum, Esq. Loeb & Loeb LLP 345 Park Avenue New York, New York 10154

MORTGAGE THIS MORTGAGE ("Mortgage"), made the 3 day of April, 2003 between STEPHEN J. COLE-HATCHARD with a mailing address of 315 Route 210, Stony Point, New York 10980 ("Mortgagor") and IIG EQUITY OPPORTUNITIES FUND LTD., having offices at 1500 Broadway, 17th Floor, New York, New York 10036 ("Mortgagee"), WITNESSETH, that to secure the payment to the extent of Two Hundred and Seventy Five Thousand and 00/100 Dollars ($275,000) lawful money of the United States of America of all sums which may now or hereafter be owing by the Mortgagor to the Mortgagee pursuant to that certain Limited Guaranty dated as of the date hereof made by Mortgagor in favor of Mortgagee (as amended, restated, extended, modified, supplemented and substituted the "Guaranty") pursuant to which Mortgagor has guaranteed to Mortgagee the payment of all of the obligations and the indebtedness evidenced by a certain Term Loan and Security Agreement dated as of the date hereof among Frontline Communications Corporation, Proyecciones y Ventas Organizadas, S.A. de C.V. (collectively, "Borrowers") and Mortgagee (as such may hereafter be amended, restated, extended, modified or substituted for the "Loan Agreement") and which Guaranty is by this reference made a part hereof as said Guaranty may be amended, extended, renewed or substituted for, and any and all sums, amounts and expenses paid hereunder or thereunder by the Mortgagee according to the terms hereof and all other obligations and liabilities of the Mortgagor under this Mortgage and the Guaranty, together with all interest on the said indebtedness, obligations, liabilities, sums, amounts and expenses and any and all other obligations and liabilities now due and owing or which may hereafter be or become due and owing by the Mortgagor to the Mortgagee hereunder or under the Guaranty, provided, however, that the maximum principal sum secured by this Mortgage at execution or which under any contingency may be secured hereby at any time in the future shall not exceed the principal sum stated above and provided, further, that any payments made from time to time in reduction of the principal amount of the Obligations (as such term is defined in the Guaranty) shall be applied first in reduction of that portion of the Obligations in excess of the sum secured hereby, in such order as Mortgagee shall elect, it being the intention of the Mortgagor and the Mortgagee that the payments in reduction of the Obligations shall not reduce the sums secured hereby until such time as (a) the Obligations shall have been reduced to Two Hundred and Seventy Thousand and 00/100 Dollars ($275,000) or less and (b) the Mortgagee shall have no further obligation to make loans to Borrowers under the Loan Agreement, the Mortgagor hereby mortgages to the Mortgagee and grants to the Mortgagee a security interest in: All that certain plot, piece or parcel of land, with the buildings and improvements thereon erected, situate, lying and being at 56 Beach Road in the Town of Stony Point, County of Rockland and State of New York, bounded and described on Exhibit A attached hereto and made a part hereof, together with: All right, title and interest of the Mortgagor in and to the land lying in the streets and road in front of and adjoining said premises; All fixtures, chattels and articles of personal property now or hereafter attached to or used in connection with said premises, including but not limited to furnaces, boiler, oil burners,

radiators and piping, coal stokers, plumbing and bathroom fixtures, refrigeration, air conditioning and sprinkler systems, wash tubs, sinks, gas and electric fixtures, stoves, ranges, awnings, screens, windows shades, elevators, motors, dynamos, refrigerators, kitchen cabinet, incinerators, plants and shrubbery and all other equipment and machinery, appliances, fittings, and fixtures of every kind in or used in the operation of the buildings standing on said premises, together with any and all replacements thereof and additions thereto; and All awards heretofore and hereafter made to the Mortgagor for taking by eminent domain the whole or any part of said premises or any easement therein, including any awards for changes of grade of streets, which said awards are hereby assigned to the Mortgagee, who is hereby authorized to collect and receive the proceeds of such awards and to give proper receipts and acquittances therefor, and to apply the same toward the payment of the mortgage debt, notwithstanding the fact that the amount owing thereon may not then be due and payable; and the said Mortgagor hereby agrees, upon request, to make, execute and deliver any and all assignments and other instruments sufficient for the purpose of assigning said awards to the Mortgagee, free, clear and discharged of any encumbrances of any kind or nature whatsoever. And the Mortgagor covenants with the Mortgagee as follows: 1. That the Mortgagor will pay the indebtedness as hereinbefore provided. 2. That the Mortgagor will keep the buildings on the premises insured against loss by fire for the benefit of the Mortgagee; that he will assign and, upon the request of the Mortgagee, deliver the policies to the Mortgagee; and that he will reimburse the Mortgagee for any premiums paid for insurance made by the Mortgagee on the Mortgagor's default in so insuring the buildings or in so assigning and delivering the policies. 3. That no building on the premises shall be substantially altered, removed or demolished without the consent of the Mortgagee. 4. That the whole of said principal sum and interest shall become due at the option of the Mortgagee upon the occurrence of any of the following events: (a) if Mortgagor shall default in the payment of any amounts payable by Mortgagor under the Guaranty; or (b) if Mortgagor shall default in the performance of any other obligation of Mortgagor hereunder. 5. That the holder of this Mortgage, in any action to foreclose it, shall be entitled to the appointment of a receiver. 6. That the Mortgagor will pay all taxes, assessments, sewer rents or water rates, and in default thereof, the Mortgagee may, but shall not have the obligation to, pay the same at the expense of Mortgagor. 3

7. That the Mortgagor within five (5) days upon request in person or within ten (10) days upon request by mail will furnish a written statement duly acknowledged of the amount due on this Mortgage and whether any offsets or defenses exist against the mortgage debt. 8. That notice and demand or request may be in writing and may be served in person or by certified mail, return receipt requested. 9. That the Mortgagor warrants the title to the premises. 10. That the fire insurance policies required by paragraph No. 2 above shall contain the usual extended coverage endorsement; that in addition thereto the Mortgagor, within thirty days after notice and demand, will keep the premises insured against war risk and any other hazard that may reasonably be required by the Mortgagee. All of the provisions of paragraph No. 2 above relating to fire insurance and the provisions of Section 254 of the Real Property Law construing the same all apply to the additional insurance required by this paragraph. 11. That in case of a foreclosure sale, said premises, or so much thereof as may be affected by this Mortgage, may be sold in one parcel. 12. That if any action or proceeding be commenced (except an action to foreclose this Mortgage or to collect the debt secured thereby), to which action or proceeding the Mortgagee is made a party or in which it becomes necessary to defend or uphold the lien of this Mortgage, all sums paid by the Mortgagee for the expense of any litigation to prosecute or defend the rights and lien created by this Mortgage (including reasonable counsel fees), shall be paid by the Mortgagor, together with interest thereon at the rate of twelve per cent, per annum, and any such sum and the interest thereon shall be a lien on said premises, prior to any right, or title to, interest in or claim upon said premises attaching or accruing subsequent to the lien of this Mortgage, and shall be deemed to be secured by this Mortgage. In any action or proceeding to foreclose this Mortgage, or to recover or collect the debt secured thereby, the provisions of law respecting the recovering of costs, disbursements and allowances shall prevail, unaffected by this covenant. 13. That the Mortgagor hereby assigns to the Mortgagee the rents, issues and profits of the premises, and the Mortgagor grants to the Mortgagee the right to enter upon and take possession of the premises for the purpose of collecting the same and to let the premises or any part thereof, and to apply the rents, issues and profits, after payment of all necessary charges and expenses, on account of said indebtedness. This assignment and grant shall continue in effect until this Mortgage is paid. Until a default by the Mortgagor, the Mortgagee hereby waives the right to enter upon and take possession of said premises for the purpose of collecting said rents, issues and profits, and the Mortgagor shall be entitled to collect and receive said rents, issues and profits until default under any of the covenants, conditions or agreements contained in this Mortgage and agrees to use such rents, issues and profits in payment of principal and interest becoming due on this Mortgage and in payment of taxes, assessments, sewer rents, water rates and carrying charges becoming due against said premises, but such right of the Mortgagor may be revoked by the Mortgagee upon any default. The Mortgagor will not, without the written consent of the Mortgagee, receive or collect rent from any tenant of said premises or any part thereof for a period of more than one month in advance, and in the event of any default under this Mortgage will pay monthly in advance to the Mortgagee, or to any receiver appointed to 4

collect said rents, issues and profits, the fair and reasonable rental value for the use and occupation of said premises or of such part thereof as may be in the possession of the Mortgagor, and upon default in any such payment will vacate and surrender the possession of said premises to the Mortgagee or to such receiver, and in default thereof may be evicted by summary proceedings. 14. That the whole of said principal sum and the interest shall become due at the option of the Mortgagee: (a) after failure to exhibit to the Mortgagee, within thirty days after demand, receipts showing payment of all taxes, water rates, sewer rents and assessments; or (b) after the actual or threatened alteration, demolition or removal of any building on the premises without the written consent of the Mortgagee or if the Mortgagor shall further encumber the premises or any interest therein; or (c) after the assignment of the rents of the premises or any part thereof without the written consent of the Mortgagee; or (d) if the buildings on said premises are not maintained in reasonably good repair; or (e) after failure to comply with any requirement or order or notice of violation of law or ordinance issued by any governmental department claiming jurisdiction over the premises within three months from the issuance thereof; or (f) in the event of the removal, demolition or destruction in whole or in part of any of the fixtures, chattels or articles of personal property covered hereby unless the same are promptly replaced by similar fixtures, chattels and articles or personal property at least equal in quality and condition to those replaced, free from chattel mortgages or other encumbrances thereon and free from any reservation of title thereto; or (g) after thirty days' notice to the Mortgagor, in the event of the passage of any law deducting from the value of land for the purpose of taxation any lien thereon, or changing in any way the taxation of mortgages or debts secured thereby for state or local purposes; or (h) if all or any part of the premises or an interest therein is sold, conveyed or otherwise transferred by Mortgagor without Mortgagee's prior written consent; or (i) if the Mortgagor fails to keep, observe and perform any of the other covenants, conditions or agreements contained in this Mortgage and/or Lease. 15. That the Mortgagor will, in compliance with Section 13 of the Lien Law, receive the advances secured hereby and will hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the cost of the improvement and will apply the same first to the payment of the cost of the improvement before using any part of the total of the same for any other purpose. 16. That the premise herein mortgaged is of a nature so that a security interest can be perfected under the Uniform Commercial Code, as in effect from time to time in the State of New York (the "UCC"), this instrument shall constitute a security agreement and Mortgagor authorizes Mortgagee to file any financing statements and to execute any other instruments that may be required for the perfection or renewal of such security interest under the UCC. A satisfaction of this Mortgage, when recorded, shall constitute a satisfaction of any financing statement filed in connection with this instrument, or renewal thereof. 17. This Mortgage may not be changed or terminated orally. The covenants contained in this Mortgage shall run with the land and bind the Mortgagor, successors and assigns of the Mortgagor and all subsequent owners, encumbrancers, tenants and subtenants of the premises, and shall inure to the benefit of the Mortgagee, the personal representatives, successors and assigns of the Mortgagee and all subsequent holders of this Mortgage. The word 5

"Mortgagor" shall be construed as if it read "Mortgagors" and the word "Mortgagee" shall be construed as if it read " Mortgagees" whenever the sense of this Mortgage so requires. 18. The Mortgagor, for himself and his successors and assigns, waives trial by jury and the right thereto in any action or proceeding of any kind arising on, out of, or by reason of, or relating in any way to the Guaranty or this Mortgage. 19. If any default shall occur hereunder or any sums due under the Guaranty not be paid in full when due, then (1) beginning on the date of such default, interest shall continue to be computed and shall be paid by the Mortgagor at the default rate provided by the Guaranty; and (2) if the Mortgagee or its successors or assigns retains attorneys to sue under the Guaranty or to foreclose this Mortgage; or one or more of the foregoing, the Mortgagor shall pay the reasonable fees of Mortgagee's attorneys and all disbursements incurred by them. This Mortgage shall also secure the full payment of any such interest, reasonable attorneys' fees and disbursements which may become payable; and the amount thereof shall be a lien upon the Premises, in the same manner and with the same force as if that interest and those fees and disbursements were part of the original principal sum secured by this Mortgage. Such interest, fees and disbursements shall be payable by Mortgagor in addition to any court costs or allowances to which the Mortgagee or its successors or assigns may be entitled. 20. The failure of the Mortgagee to seek redress for any default under this Mortgage, or to insist upon the strict performance of any covenant or condition of this Mortgage shall not prevent any subsequent act or omission of the Mortgagor which constitutes a default from having all the force and effect of a default. The receipt by the Mortgagee of any payment, with knowledge of the violation or default of any covenant or condition of this Mortgage, shall not be deemed a waiver of such violation or default, nor shall the Mortgagee's acceptance of any payment after the expiration of any grace period relating thereto be deemed to estop the Mortgagee from exercising its rights with respect to any default arising hereafter out of any other late payment. No provision of this Mortgage shall be deemed to have been waived by the Mortgagee unless the waiver is in writing and signed by the Mortgagee. 21. No delay or omission by the Mortgagee in exercising any right, power or remedy accruing under this Mortgage shall be or be deemed to be a waiver of any default, or acquiescence thereto. A waiver of any default in any one or more instances shall not be deemed a waiver, in any manner or to any extent, of any subsequent default. 22. The Mortgagor shall pay any and all mortgage recording taxes in connection with the recording of this Mortgage. 23. The Mortgagor shall do, execute, acknowledge and deliver, at the sole cost and expense of the Mortgagor, all and every such further acts, deeds, conveyances, mortgages, assignments, estoppel certificates, notices of assignment, transfers and assurances as the Mortgagee or its counsel may require from time to time in order to better assure, convey, grant, assign, transfer and confirm unto the Mortgagee, the rights now or hereafter intended to be granted to the Mortgagee under this Mortgage, any other instrument executed in connection with this Mortgage or any other instrument under which the Mortgagor may be or may hereafter 6

become bound to convey, mortgage or assign to the Mortgagee for carrying out the intention of facilitating the performance of the terms of this Mortgage. [THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK.] 7

IN WITNESS WHEREOF, this Mortgage has been duly executed by the Mortgagor. MORTGAGOR: /s/ ------------------------ STEPHEN J. COLE-HATCHARD State of New York ) ) ss.: County of ______ ) On the ___ day of April in the year two thousand and three, before me, the undersigned, personally appeared Stephen J. Cole-Hatchard, personally known to me or proved to me on the basis of satisfactory evidence to the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity and that by his signature on the instrument, the individual or the person upon behalf of which the individual acted executed the instrument. - ----------------------- Notary Public

Exhibit 10.19 This Instrument Prepared By and Return To: Mitchell S. Nussbaum, Esq. Loeb & Loeb LLP 345 Park Avenue New York, New York 10154 FLORIDA DOCUMENTARY STAMP TAXES IN THE AMOUNT OF $962.50 AND FLORIDA INTANGIBLE PERSONAL PROPERTY TAXES IN THE AMOUNT OF $550.00 HAVE BEEN PAID, UPON THE RECORDATION OF THIS INSTRUMENT IN THE PUBLIC RECORDS OF MONROE COUNTY, FLORIDA, ON A TAXABLE BASE OF $275,000.00, WHICH, PURSUANT TO THE TERMS HEREOF, IS THE MAXIMUM PRINCIPAL AMOUNT THAT MAY BE RECOVERED HEREUNDER. MORTGAGE AND SECURITY AGREEMENT THIS MORTGAGE AND SECURITY AGREEMENT ("Mortgage") is made this 3__ day of April, 2003, by and among STEPHEN J. COLE-HATCHARD ("SCH"), ANN M. COLE-HATCHARD ("ACH" together with SCH, each a "Mortgagor" and collectively, "Mortgagors"), each with a mailing address of 315 Route 210, Stony Point, New York, 10980, in favor of IIG EQUITY OPPORTUNITIES FUND LTD. ("Mortgagee"), with a mailing address of 1500 Broadway, 17th Floor, New York, New York 10036. WHEREAS, Frontline Communications Corporation and Proyecciones y Ventas Organizadas, S.A. de C.V. (collectively, "Borrowers") have entered into that certain Term Loan and Security Agreement dated as of the date hereof ("Loan Agreement") with Mortgagee, pursuant to which Borrowers borrowed from Mortgagee and agreed to repay to Mortgagee the principal sum of TWO HUNDRED SEVENTY FIVE THOUSAND AND 00/100 DOLLARS ($275,000.00), together with interest thereon and other costs, expenses and charges as provided therein. WHEREAS, pursuant to (i) that certain Limited Guaranty dated as of the date hereof made by SCH in favor of Mortgagee (the "SCH Guaranty") and (ii) that certain limited Guaranty dated as of the date hereof made by ACH in favor of Mortgagee (the "ACH Guaranty", together with SCH Guaranty, collectively, the "Guaranty"), each Mortgagor agreed to guarantee the repayment of the obligations and indebtedness of Borrowers under the Loan Agreement pursuant to the terms of the Guaranty. WHEREAS, as a condition to Mortgagee's agreement to provide financial accommodations to Borrowers, Mortgagee has requested that each Mortgagor execute and

deliver, and each Mortgagor has agreed to execute and deliver this Mortgage for the benefit of Mortgagee. NOW, THEREFORE, to secure the payment of the indebtedness evidenced by the Guaranty in accordance therewith and the Mortgage in accordance herewith, and the performance and observance by Mortgagors of all other covenants and conditions in the Guaranty and this Mortgage (collectively, the "Indebtedness"), or executed in connection therewith, and in order to charge the properties, interests and rights hereinafter described with such payment, performance and observance, and for and in consideration of the sum of One and No/100 Dollar ($1.00) paid by Mortgagee to Mortgagors this date, and for other valuable consideration, the receipt and sufficiency of which is acknowledged, each Mortgagor does hereby grant, bargain, sell, alienate, remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, deliver, set over, warrant and confirm unto Mortgagee, its successors and assigns forever: THE MORTGAGED PROPERTY (A) THE LAND: All the land located in Monroe County, Florida, described in Exhibit "A" attached hereto and incorporated herein and made a part hereof ("Land"), together with all mineral, oil and gas rights appurtenant to said Land, and all shrubbery, trees and crops now growing or hereafter grown upon said Land. (B) THE IMPROVEMENTS: (i) All the buildings, structures and improvements of every nature whatsoever now or hereafter situated on said Land, and (ii) all fixtures, machinery, appliances, equipment, furniture and personal property of every nature whatsoever now or hereafter owned by Mortgagors and located in or on, or attached to, and used or intended to be used in connection with or with the operation of, said Land, buildings, structures or other improvements, or in connection with any construction being conducted or which may be conducted thereon, and owned by Mortgagors, and all extensions, additions, improvements, betterments, renewals, substitutions and replacements to any of the foregoing, and all of the right, title and interest of each Mortgagor in and to any said personal property or fixtures, which, to the fullest extent permitted by law, shall be conclusively deemed fixtures and a part of the real property encumbered hereby (hereinafter called the "Improvements"). (C) EASEMENTS: All easements, rights-of-way, gores of land, streets, ways, alleys, passages, sewer rights, water courses, water rights and powers, and all appurtenances whatsoever, in any way belonging, relating or appertaining to any of the mortgaged property described in Sections (A) and (B) hereof, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by the Mortgagors. (D) TOGETHER WITH (i) all the estate, right, title and interest of each Mortgagor of, in and to all judgments, insurance proceeds, awards of damages and settlements hereafter made resulting from condemnation proceedings or the taking of the mortgaged property described in Sections (A), (B) and (C) hereof or any part thereof under the power of eminent domain, or for any damage (whether caused by such taking or otherwise) to the mortgaged property described in Sections (A), (B) and (C) hereof or any part thereof, or to any rights appurtenant thereto, and all proceeds of any sales or other dispositions of the mortgaged property 2

described in Sections (A), (B) and (C) hereof or any part thereof; and the Mortgagee is hereby authorized to collect and receive said awards and proceeds and to give proper receipts and acquittances therefor, and (if it so elects) to apply the same toward the payment of the Indebtedness and other sums secured hereby, notwithstanding the fact that the amount owing thereon may not then be due and payable; and (ii) all contract rights (including, without limitation, all rights of Mortgagors in and to any and all contracts relating to management, maintenance and security of and for said Land and the Improvements), general intangibles, actions and rights in action, including, without limitation, all rights to insurance proceeds and unearned premiums arising from or relating to the mortgaged property described in Sections (A), (B) and (C) above; and (iii) all proceeds, products, replacements, additions, substitutions, renewals and accessions of and to the mortgaged property described in Sections (A), (B) and (C). (E) TOGETHER WITH all rents, income, accounts receivable and other benefits to which the Mortgagors may now or hereafter be entitled from the mortgaged property described in Sections (A), (B) and (C) hereof to be applied against the Indebtedness and other sums secured hereby; provided, however, that permission is hereby given to the Mortgagors, so long as no Event of Default has occurred hereunder, to collect and use said rents, income, accounts receivable and other benefits as they become due and payable, but not in advance thereof. Upon the occurrence of any such Event of Default, the permission hereby given to the Mortgagors to collect said rents, income, accounts receivable and other benefits from the mortgaged property described in Sections (A), (B) and (C) hereof shall terminate and such permission shall not be reinstated upon a cure of such Event of Default without the Mortgagee's specific written consent. The foregoing provisions hereof shall constitute an absolute and present assignment of the rents, income, accounts receivable and other benefits from the mortgaged property described in (A), (B) and (C) above, subject, however, to the conditional permission given to the Mortgagor to collect and use such rents, income, accounts receivable and other benefits as hereinabove provided; and the existence or exercise of such right of the Mortgagors shall not operate to subordinate this assignment to any subsequent assignment, in whole or in part, by the Mortgagors, and any such subsequent assignment by the Mortgagors shall be subject to the rights of the Mortgagee hereunder. (F) TOGETHER WITH (i) all right, title and interest of each Mortgagor in and to any and all contracts for sale and purchase of all or any part of the property described in paragraphs (A), (B) and (C) hereof, and any down payments, earnest money deposits or other sums paid or deposited in connection therewith; and (ii) all right, title and interest of each Mortgagor in and to any and all leases now or hereafter on or affecting the mortgaged property described in Sections (A), (B) and (C) hereof, together with all security therefor and all monies payable thereunder, including, without limitation, tenant security deposits, and all books and records which contain information pertaining to payments made under the leases and security therefor, subject, however, to the conditional permission hereinabove given to the Mortgagors to collect the rents, income and other benefits arising under any such lease. The Mortgagee shall have the right, at any time and from time to time, to notify any lessee of the rights of the Mortgagee as provided by this Section. 3

(G) TOGETHER WITH (i) each Mortgagor's rights further to encumber the mortgaged property described in Sections (A), (B) and (C) above for debt and (ii) all of the Mortgagors' rights to enter into any lease or lease agreement. All of the mortgaged property described in Sections (A), (B), (C), (D), (E), (F) and (G) above, and each item of mortgaged property described therein, is herein referred to as "the Property." TO HAVE AND TO HOLD all and singular the said Property hereby conveyed, mortgaged, pledged, assigned or granted by each Mortgagor, or intended so to be, unto the Mortgagee. PROVIDED HOWEVER, that, notwithstanding anything to the contrary herein, the maximum amount that may be recovered by Mortgagee under this Mortgage is the principal sum of $275,000.00, plus interest on the Indebtedness, any disbursements made for the payment of taxes, levies or insurance on the mortgaged Property, and other charges payable hereunder. PROVIDED FURTHER, that the foregoing limitation on recovery shall not in any way limit the right of Mortgagee to enforce the Guaranty or the Loan Agreement or to collect the Indebtedness. And each Mortgagor covenants and warrants to Mortgagee that (i) such Mortgagor has the full power and lawful right to mortgage and convey the Property as aforesaid; (ii) no third party consents are required; (iii) such Mortgagor is the fee owner of the Land and other property located thereon; (iv) the Property is free from all liens and encumbrances except for those matters as set forth in Exhibit B attached hereto and made a part hereof; and (v) such Mortgagor hereby fully warrants and covenants to defend the title to the Property against all claims and demands of all persons whosoever. PROVIDED, ALWAYS, that if Mortgagors shall fully pay unto Mortgagee the Indebtedness, and shall perform, comply with and abide by each and every of the stipulations, agreements, conditions and covenants of said Guaranty and of this Mortgage, then this Mortgage and the estate hereby created shall cease and be null and void, and this Mortgage shall be released. 1. Each Mortgagor hereby warrants, covenants and agrees: a. To pay all and singular the taxes, assessments, levies, liabilities, obligations and encumbrances of every nature, and kind on said described Property each and everyone, when due and payable, according to law, before they became delinquent and before any interest attaches or penalty is incurred, and if the same be not promptly paid, the Mortgagee may at any time pay the same without waiving or affecting the option to foreclose or any other right hereunder; and every payment so made shall be due from the Mortgagors on demand and shall bear interest from the date of payment at the maximum rate of interest allowable by law, and all said costs, charges and expenses so incurred or paid, together with interest, shall be secured by the lien of this Mortgage. 4

Mortgagors shall pay these obligations in accordance with the provisions of this paragraph directly to the person or entity owed payment. Mortgagors shall promptly furnish to Mortgagee all notices of amounts to be paid under this paragraph. If Mortgagors make these payments directly, Mortgagors shall promptly furnish to Mortgagee receipts evidencing the payments. Each Mortgagor agrees to comply with any covenants, declarations, conditions, stipulations, easements, and reservations of record which shall include, but not be limited to, the payment of all taxes, assessments and/or levies, regular or special, and if the same be not promptly paid, the Mortgagee may at any time pay same without waiving or affecting the option to foreclose or any right hereunder pay the same, and every payment so made shall be due from the Mortgagors on demand and shall bear interest from the date of payment at the maximum rate of interest allowable by law and shall be secured by lien of the Mortgage. b. To pay all and singular costs, charges and expenses, including attorneys' and paralegals' fees and abstracting costs, reasonably incurred or paid at any time by the Mortgagee because of the failure on the part of any Mortgagor to perform comply with and abide by each and every of the stipulations, agreements, conditions and covenants of said Guaranty and this Mortgage, or any of them, and to pay such reasonable attorneys' and paralegals' fees, cost and expenses as may be incurred by Mortgagee in connection with any proceeding or proposal for acquisition for public use of all or any part of the Property encumbered by this Mortgage by condemnation or otherwise, and every such payment shall be due from the Mortgagors on demand and shall bear interest from the date of payment at the maximum rate of interest allowable by law, and all said costs, charges and expenses so incurred or paid, together with interest, shall be secured by the lien of this Mortgage. c. Mortgagors shall keep the improvements now existing or hereafter erected on the Property insured against loss by fire, hazards included within the term "extended coverage" and any other hazards for which Mortgagee requires insurance. This insurance shall be maintained in the amounts and for the periods that Mortgagee requires. The insurance carrier providing the insurance shall be chosen by Mortgagors subject to Mortgagee's approval which shall not be reasonably withheld. All insurance policies and renewals shall be acceptable to Mortgagee and shall include a standard mortgage clause and shall provide that they may not be terminated for any reason, including the non-payment of premiums without providing Mortgagee with at least ten (10) days' prior written notice at Mortgagee's address specified herein above. Mortgagee shall have the right to hold the policies and renewals. If Mortgagee requires, Mortgagors shall promptly give to Mortgagee all receipts of paid premiums and renewal notices. In the event of loss, Mortgagors shall give prompt notice to the insurance carrier and Mortgagee. Mortgagee may make proof of loss if not made promptly by Mortgagors. Unless Mortgagee and Mortgagors otherwise agree in writing, insurance proceeds may be applied to restoration or repair of the Property damaged, if the restoration or repair is economically feasible and Mortgagee's security is not lessened. If the restoration or repair is not economically feasible or Mortgagee's security would be lessened, the insurance proceeds shall be applied to the sums secured by this Mortgage, whether or not then due, with 5

any excess paid to Mortgagors. If Mortgagors abandon the Property, or do not answer within 30 days a notice from Mortgagee that the insurance carrier has offered to settle a claim, then Mortgagee may collect the insurance proceeds. Mortgagee may use the proceeds to repair or restore the Property or to pay sums secured by this Mortgage, whether or not then due. The 30-day period will begin when the notice is given. If the Property is acquired by Mortgagee through foreclosure or otherwise, Mortgagors' right to any insurance policies and proceeds resulting from damage to the Property prior to the acquisition shall pass to Mortgagee to the extent of the sums secured by this Mortgage immediately prior to the acquisition. d. To keep the Property at all times in good order and repair, except for normal wear and tear and to permit, commit or suffer no waste, impairment or deterioration of said Property or any part thereof. e. To perform, comply with and abide by all applicable laws, stipulations, agreements, conditions and covenants in the Guaranty and this Mortgage. f. That in order to accelerate the maturity of the Indebtedness because of the failure of the Mortgagors to pay any tax, assessment, liability, obligation or encumbrance upon said Property, as herein provided, it shall not be necessary nor requisite that the Mortgagee shall first pay the same. 2. Any default by any Mortgagor under its Guaranty or any default under the Loan Agreement shall, at the option of Mortgagee or any subsequent holder or holders of the Guaranty or the Loan Agreement, be deemed a default under the Guaranty, and under this Mortgage. Any default by any Mortgagor on any superior or inferior mortgages, liens or encumbrances on the Property shall, at the option of the Mortgagee be deemed a default under the Guaranty, the Loan Agreement and this Mortgage. 3. Each Mortgagor hereby assigns to the Mortgagee the rents, issues and profits of the premises, and each Mortgagor grants to the Mortgagee the right to enter upon and take possession of the mortgaged Property for the purpose of collecting the same and to let the premises or any part thereof, and to apply the rents, issues and profits, after payment of all necessary charges and expenses, on account of said indebtedness. This assignment and grant shall continue in effect until this Mortgage is paid. Until a default by the Mortgagors, the Mortgagee hereby waives the right to enter upon and take possession of the mortgaged Property for the purpose of collecting said rents, issues and profits, and the Mortgagors shall be entitled to collect and receive said rents, issues and profits until default under any of the covenants, conditions or agreements contained in this Mortgage and agrees to use such rents, issues and profits in payment of principal and interest becoming due on this Mortgage and in payment of taxes, assessments, sewer rents, water rates and carrying charges becoming due against said premises, but such right of the Mortgagors may be revoked by the Mortgagee upon any default. The Mortgagors will not, without the written consent of the Mortgagee, receive or collect rent from any tenant of the mortgaged Property or any part thereof for a period of more than one month in advance, and in the event of any default under this Mortgage will pay monthly in advance to the Mortgagee, or to any receiver appointed to collect said rents, issues and profits, 6

the fair and reasonable rental value for the use and occupation of the mortgaged Property or of such part thereof as may be in the possession of the Mortgagors, and upon default in any such payment will vacate and surrender the possession of the mortgaged Property to the Mortgagee or to such receiver, and in default thereof may be evicted by summary proceedings. 4. In the event there shall be filed a complaint to foreclose this Mortgage, or any other suit upon this Mortgage, Mortgagee shall immediately and without notice be entitled to the appointment of a receiver for the Property and the rents, earnings, issues, income and profits thereof, with the usual power of receivers in such cases, and such receiver may be continued in possession of said Property and of said rents, earnings, issues, income and profits of said Property during the pendency of such suit or foreclosure suit, and Mortgagors hereby specifically waive the right to object to such appointments and consents that such appointment shall be made as an admitted equity and as a matter of absolute right to Mortgagee, and without reference to the adequacy or inadequacy of the value of the Property or to the solvency or insolvency of Mortgagors or any other party defendant to such suit and that such rents, earnings, issues, income and profits shall be applied by such receiver according to the lien of the Mortgagee. 5. In the event the ownership of the Property, or any part thereof, becomes vested in a person other than Mortgagors, Mortgagee may without notice to Mortgagors, deal with such successor in interest with reference to this Mortgage and the debt hereby secured, in the same manner as with Mortgagors, without any way vitiating or discharging Mortgagor's liability hereunder or upon the debt hereby secured. No sale or other conveyance of the Property hereby mortgaged and no forbearance on the part of Mortgagee, and no extension of the time for the payment of the debt hereby secured given by Mortgagee shall operate to release, discharge, modify, change or affect the original liability of Mortgagors herein, either in whole or in part, and shall not be a waiver of Mortgagee's right to accelerate the aggregate sum secured by this Mortgage. 6. Notwithstanding the foregoing, each Mortgagor acknowledges that ownership of Property by such Mortgagor is of a material nature to the transaction. Therefore, the undersigned agrees that in the event of any transfer of all or any part of the Property, or any interest therein, or the placing of any additional financing secured by a mortgage, lien or other encumbrance on the Property or any part thereof, without the written consent of Mortgagee shall permit Mortgagee at its option to declare the entire unpaid principal balance under the Guaranty and the Loan Agreement, together with accrued interest immediately due and payable by Mortgagors, and shall constitute a default under this Mortgage. 7. The lien of this Mortgage secures and shall continue to secure payment of the Indebtedness to Mortgagee, however evidenced, whether by the Guaranty or any renewal or extension thereof or substitute thereof, or otherwise, until all such Indebtedness has been fully paid. 8. Mortgagee shall have the right to enforce the lien of this Mortgage against any or all of the Property and to cause any or all of said mortgaged Property to be sold for payment and satisfaction of any decree of foreclosure without any right of Mortgagors or those claiming under Mortgagors to any marshalling of liens, exonerations of security or other similar rights or remedies. 7

9. In the event damages are awarded for the taking of, or injury to, the Property under the power of eminent domain or otherwise, all such damages shall be paid to and received by Mortgagee to be applied as a payment upon such part of the Indebtedness, as Mortgagee may elect, without affecting the amount of or time for payment of, any other installments required hereunder, whether or not such Indebtedness to which such damages may be applied is then due and payable. 10. If any action, or proceeding, shall be commenced by any person other than the holder of this Mortgage (except an action to foreclose this Mortgage, or to collect the debt secured thereby) to which action, or proceeding, the holder of this Mortgage is made a party, or in which it shall become necessary to defend, or uphold the lien of this Mortgage, all sums paid by the holder of this Mortgage for the expense of any litigation to prosecute to defend the rights and liens created by this Mortgage (including reasonable attorney's fees and costs at trial and appellate levels), shall be paid by Mortgagors on demand, together with interest thereon, at the maximum rate of interest allowable by Florida law, and any such sum together with the interest thereon, shall be secured by the lien of this Mortgage. 11. If all or any part of the Property or an interest therein is sold, conveyed or otherwise transferred by Mortgagors without Mortgagee's prior written consent, or further mortgaged or pledged as security for any other loans obtained by Mortgagors, such action shall constitute a default under this Mortgage and, at Mortgagee's option, Mortgagee may declare all the sums secured by this Mortgage to be immediately due and payable. 12. In the event any person, partnership, corporation or other entity owning an interest in the Property is adjudicated as bankrupt, insolvent, or shall make an assignment for the benefit of creditors, or shall take, or receive, the benefit of any act for reorganization, or if a receiver should be appointed for such owner, or in the event a petition is filed against any Mortgagor or the Property and not dismissed within 60 days, Mortgagee may at its option, declare the principal balance of the Guaranty and the Loan Agreement then outstanding to be due and payable by Mortgagors immediately; and upon such declaration, the said principal so declared to be due and payable, together with the interest accrued thereon and together with any other sums secured hereby shall become due and payable immediately, anything in this Mortgage or in said Guaranty and the Loan Agreement to the contrary notwithstanding. In the event a petition under United States Bankruptcy Code ("Code") is filed against any Mortgagor and/or the Property which is not dismissed within sixty (60) days, or in the event any Mortgagor filed a petition under the Code, Mortgagee may, at its option declare the principal balance of the Guaranty and the Loan Agreement then outstanding to be due and payable by Mortgagors immediately and each Mortgagor hereby consents to and shall stipulate to any action by the Mortgagee to obtain a relief from any automatic stay and/or injunction in effect so that Mortgagee can proceed with a foreclosure action in a Florida court with respect to the Property. 13. Time is of the essence in all matters herein. 14. Forbearance in exercising any other right or remedy hereunder, or otherwise afforded by applicable law, at any time, shall not be taken to be a waiver of the terms of the Guaranty, the Loan Agreement or this Mortgage or be a waiver of or preclude the exercise of any 8

such right or remedy, and the acceptance of payment upon said Indebtedness shall not constitute a waiver of the option of Mortgagee to accelerate the Indebtedness as provided for herein. 15. The whole of the principal sum secured hereunder and interest accrued thereon shall become due, at the option of Mortgagee, immediately upon the happening of any one of the following events (each an "Event of Default"): a. After default in the payment of any installment of principal, interest or any other payment required to be made under the Guaranty, the Loan Agreement and this Mortgage beyond applicable grace period; b. After default in any other terms, conditions or covenants of the Guaranty and the Loan Agreement or this Mortgage which default continues for thirty (30) days after written notice thereof, and Mortgagors are not making a good faith effort to cure such default; c. Any filing for record of a notice pursuant to Florida Statutes Section 697.04 limiting the maximum principal amount which may be secured by this Mortgage. 16. Unless paid in accordance with Paragraph 1.a. herein, Mortgagors shall provide Mortgagee with evidence of payment of real estate taxes prior to the time same become delinquent. 17. Upon the request of Mortgagee, Mortgagors shall provide Mortgagee with evidence of payment of insurance premiums as same become due. 18. Should Mortgagors fail to make payment of any taxes, assessments or public charges before they become delinquent, or before any interest or penalty shall attach, or if any insurance premiums or other charges payable by Mortgagors, or should Mortgagors fail to make payment of any principal or interest secured by any mortgagor or lien prior to the lien of this Mortgage before the same become delinquent, then Mortgagee may make payments of the same, and also may redeem said premises from tax sale without any obligation to inquire into the validity of such taxes, assessments and tax sales (the receipts of the proper officers being conclusive evidence of the validity and amount thereof). In case of such payments by Mortgagee, Mortgagors agree to reimburse Mortgagee on demand, and the amounts so paid, with interest thereon at the maximum rate per annum allowable by law shall be added to and become part of the debt secured by these presents without waiver of any right arising from breach of any of the covenants, and for such payments, with interest as aforesaid, the premises hereinbefore described, as well as Mortgagors, shall be bound to the same extent that they are bound for the payment of the Guaranty herein described. 19. Should Mortgagee at any time request in writing that Mortgagors confirm the amount of the Indebtedness for principal and interest secured by this Mortgage and the validity of the lien hereof, Mortgagors covenant and agree to give such written request, or within said period of time to advise Mortgagee in writing of any dispute as to the amount of the Indebtedness or the validity of this Mortgage, or the lien thereof. 20. Without affecting the liability of Mortgagors or any other person (except any person expressly released in writing) for payment of any Indebtedness or for performance of any 9

obligation contained herein, and without affecting the rights of Mortgagee with respect to any security not expressly released in writing, the Mortgagee may, at any time and from time to time, either before or after the maturity of said Guaranty and the Loan Agreement and without notice and consent: a. Release any person liable for payment of all or any part of the Indebtedness or for performance of any obligation. b. Make any agreement extending the time or otherwise altering the terms of payment of all or part of the Indebtedness or modify or waiving any obligation or subordinating, modifying or otherwise dealing with the loan or charge hereof. c. Exercise or refrain from exercise or waive any right which Mortgagee may have. d. Accept additional security of any kind. e. Release or otherwise deal with any property, real or personal, securing the Indebtedness, including all or any part of the property mortgaged hereby. 21. It is agreed that if any of the property herein mortgaged is of a nature so that a security interest can be perfected under the Uniform Commercial Code, as in effect from time to time in the State of Florida (the "UCC"), this instrument shall constitute a security agreement and Mortgagors authorize Mortgagee to file any financing statements and to execute any other instruments that may be required for the perfection or renewal of such security interest under the UCC. A satisfaction of this Mortgage, when recorded, shall constitute a satisfaction of any financing statement filed in connection with this instrument, or renewal thereof. 22. That in the event that the Guaranty or the Loan Agreement, or both, are placed in the hands of an attorney for collection, or in case Mortgagee shall become a party either as plaintiff or as a defendant in any law suit or legal proceeding in relation to the Property described or the lien created herein, or for the recovery or protection of said Indebtedness, Mortgagors will repay on demand all cost and expenses arising therefrom, including reasonable attorney's fees and costs (whether incurred on appeal or in any bankruptcy or administrative proceeding or otherwise), with interest thereon at the maximum rate allowable by Florida law until paid, all of which sums, if unpaid, shall be added to and become a part of the debt secured by these presents. 23. It is further covenanted that Mortgagee may (but shall not be obligated to) advance monies that should have been paid by Mortgagors hereunder in order to protect the lien or security hereof, and Mortgagors agree without demand forthwith to repay such monies, which amount shall bear interest from the date so advanced until paid, at the maximum rate allowed by Florida law, and shall be considered as additional Indebtedness; but no payment by Mortgagee of any such monies shall be deemed a waiver of Mortgagee's right to declare the principal sum due hereunder by reason of the default or violation of Mortgagors in any of its covenants hereunder. 24. If a foreclosure proceeding of any prior or subordinate lien or mortgage should be instituted, the Mortgagee may, at its option immediately or thereafter, declare this Mortgage and 10

the Indebtedness due and payable forthwith and may, at its option, proceed to foreclose this Mortgage. 25. Each Mortgagor represents and warrants that: a. no asbestos, substance containing asbestos, or any other substance deemed hazardous by federal, state or local laws, rules, regulations or orders respecting such materials has been installed or constructed upon or in the improvements comprising a part of the Property, and such Mortgagor has not and will not install or permit to be installed in, on or about the improvements comprising a part of the Property, any such asbestos, substance containing asbestos or other hazardous substance; and b. the Property is free from all hazardous or toxic wastes and underground storage tanks. Each Mortgagor shall comply with all federal, state and local laws, regulations or orders with respect to the discharge and removal of hazardous or toxic wastes and shall keep the Property free from all hazardous or toxic wastes and shall keep the Property free of and from any lien imposed against the Property pursuant to such laws, regulations and orders. No Mortgagor shall knowingly install or knowingly permit to be installed on the Property any underground storage tank or any substance deemed hazardous or toxic waste by federal, state or local laws, regulations, orders and ordinances. Mortgagors hereby agree to indemnify and hold Mortgagee and any wholly owned subsidiary of Mortgagee harmless from any and all loss, liability, damage, cost or expense (including, without limitation, attorneys' and paralegals' fees, including, without limitation, such fees as may be incurred in litigation, mediation, arbitration and bankruptcy and administrative proceedings, and appeals therefrom) incurred by or imposed upon Mortgagee or any such subsidiary at any time or, occasioned by, resulting from or consequent to any such toxic or hazardous wastes, waste products or substances at the Property or releases or discharges thereof from the Property or the manufacturing, maintaining, holding, handling, transporting, spilling, leaking or dumping of toxic or hazardous wastes, waste products or substances on the Property at any time. The aforesaid indemnification and hold harmless agreement shall benefit Mortgagee from the date hereof and shall continue notwithstanding payment, release or discharge of this Mortgage or the indebtedness secured hereby, and, without limiting the generality of the foregoing such obligations shall continue for the benefit of Mortgagee and any wholly owned subsidiary of Mortgagee during and following any possession of the Property thereby or any ownership of the Property thereby, whether arising by foreclosure or deed in lieu of foreclosure or otherwise, such indemnification and hold harmless agreement to continue forever, excepting out from such indemnification any loss, liability, damages, cost or expense arising out of the control of, or acts upon, the Property by Mortgagee subsequent to the date Mortgagee takes title to the Property. 26. Mortgagors hereby acknowledge that consideration has been given and waives any argument that the Mortgage was given without consideration. 11

27. WAIVER OF JURY TRIAL. NEITHER MORTGAGORS NOR MORTGAGEE NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF EITHER SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF THIS MORTGAGE, ANY RELATED AGREEMENT OR INSTRUMENT, ANY OTHER COLLATERAL FOR THE INDEBTEDNESS EVIDENCED HEREBY OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG MORTGAGORS AND MORTGAGEE, OR ANY OF THEM. NEITHER MORTGAGORS NOR MORTGAGEE WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY MORTGAGORS AND MORTGAGEE, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER MORTGAGORS NOR MORTGAGEE HAS IN ANY WAY AGREED WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. 28. This Mortgage shall be construed in accordance with the laws of the State of Florida. The venue of any litigation arising out of this Mortgage, including appellate proceedings, shall lie in Monroe County, Florida. 29. The terms "Mortgagor" and "Mortgagee" whenever used in this instrument shall include the heirs, personal representatives, successors and permitted assigns of the respective parties hereto. Whenever used, the singular number shall include the plural and the singular, and the use of any gender shall include all gender. 30. The unenforceability or invalidity of any provision or provisions of this Mortgage as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other persons or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 31. This Mortgage is given to secure not only existing indebtedness, but also such future advances, whether such advances are obligatory or are to be made at the option of Mortgagee, or otherwise, as are made within twenty years from the date hereof, to the same extent as if such future advances were made on the date of the execution of this Mortgage. The total amount of indebtedness that may be so secured may decrease or increase from time to time, but the total unpaid balance so secured at one time shall not exceed $275,000.00 plus interest on the Indebtedness, and any disbursements made for the payment of taxes, levies or insurance on the mortgaged Property, plus interest thereon. [Remainder of Page Intentionally Left Blank] 12

IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the date first above written. Witnesses: MORTGAGORS: /s/ - ------------------------ ---------------------------------- (Signature) STEPHEN J. COLE-HATCHARD - ------------------------ (Printed Name) - ------------------------ (Signature) - ------------------------ (Printed Name) Witnesses: /s/ - ------------------------ ---------------------------------- (Signature) ANN M. COLE-HATCHARD - ------------------------ (Printed Name) - ------------------------ (Signature) - ------------------------ (Printed Name) 13

STATE OF ____________________ COUNTY OF ___________________ The foregoing instrument was acknowledged before me this _______ day of April, 2003, by STEPHEN J. COLE-HATCHARD and ANN M. COLE-HATCHARD, who are personally known to me or have produced ______________________________ (type of identification) as identification. My Commission Expires: ------------------------- Notary Public (Signature) (AFFIX NOTARY SEAL) ------------------------- (Printed Name) ------------------------- (Title or Rank) ------------------------- (Serial Number, if any) 14

EXHIBIT "A" (the Property) A-1

EXHIBIT "B" (Permitted Encumbrances) B-1

Exhibit 10.20 SUBORDINATION AND INTERCREDITOR AGREEMENT This Subordination and Intercreditor Agreement (this "Agreement") dated as of April 3, 2003 among IIG Equity Opportunities Fund Ltd. ("Senior Lender"), Ann M. Sulla ("AMS"), Ronald Signore ("RS"), Anthony Rudel ("AR"), Stefano A. Masi ("SAM"), Irrevocable Trust of Bernice J. Monroe ("ITBJM"), Nicko Feinberg ("NF"), Gary Koval ("GK"), James Nicholson ("JN" together with AMS, RS, AR, SAM, ITBJM, NF and GK, collectively, "Subordinated Lender") and Frontline Communications Corporation ("Company"). BACKGROUND As an inducement for Senior Lender to provide a secured credit facility in favor of Company and Proyecciones y Ventas Organizadas, S.A. de C.V. (collectively, "Borrowers"), Subordinated Lender has agreed to enter into this Agreement to provide for the subordination of (i) the "Subordinated Indebtedness" to the "Senior Indebtedness" and (ii) the "Liens" in the assets of Company granted to Subordinated Lender to the "Liens" in the assets of Company granted to Senior Lender. AGREEMENTS NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Definitions. (a) General Terms. For purposes of this Agreement, the following terms shall have the following meanings: "Collateral" shall mean all of the property and interests in property, tangible or intangible, real or personal, now owned or hereafter acquired by Company, in or upon which Senior Lender at any time has a Lien, and including, without limitation, all proceeds and products of such property and interests in property. "Company" shall mean Company and its successors and assigns. "Creditor Agreements" shall mean, collectively, the Senior Lending Agreements and the Subordinated Lending Agreements. "Creditors" shall mean, collectively, Senior Lender and Subordinated Lender and their respective heirs, administrators, executors, successors and assigns. "Distribution" shall mean any payment, whether in cash, in kind, securities or any other property, or security for any such Distribution.

"Documents" shall have the meaning given to the term "Loan Documents" in the Loan Agreement. "Event" shall have the meaning set forth in Section 2(b)(iii) hereof. "Holder of Subordinated Indebtedness" or "Subordinated Lender" shall mean Ann M. Sulla, Ronald Signore, Anthony Rudel, Stefano A. Masi, Irrevocable Trust of Bernice J. Monroe, Nicko Feinberg, Gary Koval, James Nicholson, and any other Person(s) at any time or in any manner acquiring any right or interest in any of the Subordinated Indebtedness, and any heirs, administrators, executors, successors and assigns of such Person(s). "Lien" shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights of way and the like), lien (statutory or other), security agreement or transfer intended as security including, without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing. "Loan Agreement" shall mean that certain Term Loan and Security Agreement dated as of the date hereof among Borrowers and Senior Lender, as the same may be amended, supplemented, modified or restated from time to time. "Person" shall mean an individual, a partnership, a corporation (including a business trust), a joint stock company, a trust, an unincorporated association, a joint venture, a limited liability company, a limited liability partnership or other entity, or a government or any agency, instrumentality or political subdivision thereof. "Secured Lender Remedies" shall mean any action which results in the sale, foreclosure, realization upon, or a liquidation of any of the Collateral including, without limitation, the exercise or any of the rights or remedies of a "secured party" under Article 9 of the UCC, such as, without limitation, the notification of account debtors. "Senior Indebtedness" shall mean all Obligations of any kind owed by Borrowers to Senior Lender from time to time under or pursuant to any of the Senior Lending Agreements including, without limitation, all principal, interest accruing thereon, charges, expenses, fees and other sums (including all interest, charges, expenses, fees and other sums accruing after commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of any Borrower) chargeable to Borrowers by Senior Lender, and reimbursement, indemnity or other obligations due and payable to Senior Lender. Senior Indebtedness shall continue to constitute Senior Indebtedness, notwithstanding the fact that such Senior Indebtedness or any claim for such Senior Indebtedness is subordinated, avoided or disallowed under the federal Bankruptcy Code or other applicable law. Senior Indebtedness shall also include any indebtedness of Borrowers incurred in connection with a refinancing of the Senior Indebtedness under the Senior Lending Agreements if the terms and conditions of the agreements, documents and instruments related to such refinancing, taken as a whole, are not materially more onerous to the Holder of Subordinated Indebtedness than those set forth in the Senior Lending Agreements, as in effect on the date hereof. 2

"Senior Lender" shall have the meaning set forth in the introductory paragraph of this Agreement and shall include its successors and assigns. "Senior Lending Agreements" shall mean collectively the Loan Agreement, the Notes and the other Documents, each as from time to time in effect. "Subordinated Indebtedness" shall mean all principal, interest and other amounts payable or chargeable in connection with the Subordinated Lending Agreements. "Subordinated Lender Collateral" shall mean the assets of Company in which Company granted Subordinated Lender, and Subordinated Lender has, an enforceable and perfected security interest under the Subordinated Lending Agreements. "Subordinated Lending Agreements" shall mean, collectively, the Subordinated Notes and all promissory notes, agreements, documents and instruments now or at any time hereafter executed and/or delivered by Company or any other person to, with or in favor of Subordinated Lender in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. "Subordinated Notes" shall mean collectively, each Senior Secured Promissory Note issued by Company to a Subordinated Lender in the original principal amount of $25,000 dated April 7, 2002 together with any extensions thereof, securities issued in exchange therefor or modifications or amendments thereto or replacements and substitutions therefor. "UCC" means the Uniform Commercial Code of the State of New York as in effect from time to time. (b) Other Terms. Capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement. (c) Certain Matters of Construction. The terms "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. Except as expressly set forth herein, all references to any instruments or agreements, including, without limitation, references to any of the Creditor Agreements shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. 2. Covenants. Company and each Holder of Subordinated Indebtedness hereby covenant that until the Senior Indebtedness shall have been paid in full and satisfied in cash and the Senior Lending Agreements shall have been irrevocably terminated, all in accordance with the terms of the Senior Lending Agreements, each will comply with such of the following provisions as are applicable to it: 3

(a) Transfers. Each Holder of Subordinated Indebtedness covenants that any transferee from it of any Subordinated Indebtedness shall, prior to acquiring such interest, execute and deliver a counterpart of this Agreement to each other party hereto. (b) Subordination Provisions. To induce Senior Lender to enter into the Loan Agreement and to make loans and advances thereunder, notwithstanding any other provision of the Subordinated Indebtedness to the contrary, any Distribution with respect to the Subordinated Indebtedness is and shall be expressly junior and subordinated in right of payment to all amounts due and owing upon all Senior Indebtedness outstanding from time to time. Specifically, but not by way of limitation: (i) Payments. Company shall make no Distribution on the Subordinated Indebtedness until such time as the Senior Indebtedness shall have been paid in full in cash and the Senior Lending Agreements shall have been irrevocably terminated. (ii) Limitation on Acceleration. No Holder of Subordinated Indebtedness shall be entitled to accelerate the maturity of the Subordinated Indebtedness, exercise any remedies or commence any action or proceeding to recover any amounts due or to become due with respect to Subordinated Indebtedness, provided, however, the foregoing limitation on acceleration shall not be applicable following the maturity or acceleration of all Senior Indebtedness. (iii) Prior Payment of Senior Indebtedness in Bankruptcy, etc. In the event of any insolvency or bankruptcy proceedings relative to Company or its property, or any receivership, liquidation, reorganization or other similar proceedings in connection therewith, or, in the event of any proceedings for voluntary liquidation, dissolution or other winding up of Company or distribution or marshalling of its assets or any composition with creditors of Company, whether or not involving insolvency or bankruptcy, or if Company shall cease its operations, call a meeting of its creditors or no longer do business as a going concern (each individually or collectively, an "Event"), then all Senior Indebtedness shall be paid in full and satisfied in cash and the Senior Lending Agreements irrevocably terminated before any Distribution shall be made on account of any Subordinated Indebtedness. Any such Distribution (except equity securities or securities which are subordinated and junior in right of payment to the payment in full in cash of all Senior Indebtedness) which would, but for the provisions hereof, be payable or deliverable in respect of the Subordinated Indebtedness, shall be paid or delivered directly to Senior Lender or its representatives, in the proportions in which they hold the same, until amounts owing upon Senior Indebtedness shall have been paid in full in cash and the Senior Lending Agreements irrevocably terminated. (iv) Power of Attorney. To enable Senior Lender to assert and enforce its rights hereunder in any proceeding referred to in Section 2(b)(iii) or upon the happening of any Event, Senior Lender or any person whom it may designate is hereby irrevocably appointed attorney in fact for Subordinated Lender with full power to act in the place and stead of Subordinated Lender including the right to make, present, file and vote such proofs of claim against Company on account of all or any part of the Subordinated Indebtedness as Senior Lender may deem advisable and to receive and collect any and all dividends or other payments made thereon and to apply the same on account of the Senior Indebtedness. Subordinated 4

Lender will execute and deliver to Senior Lender such instruments as may be required by Senior Lender to enforce any and all Subordinated Indebtedness, to effectuate the aforesaid power of attorney and to effect collection of any and all dividends or other payments which may be made at any time on account thereof, and Subordinated Lender hereby irrevocably appoints Senior Lender as the lawful attorney and agent of Subordinated Lender to execute financing statements on behalf of Subordinated Lender and hereby further authorizes Senior Lender to file such financing statements in any appropriate public office. (v) Payments Held in Trust. Should any Distribution or the proceeds thereof, in respect of the Subordinated Indebtedness, be collected or received by Subordinated Lender or any Affiliate (as such term is defined in Rule 405 of Regulation C adopted by the Securities and Exchange Commission pursuant to the Securities Act of 1933) of Subordinated Lender at a time when Subordinated Lender is not permitted to receive any such Distribution or proceeds thereof including if same is collected or received when there is or would be after giving effect to such payment a Default or an Event of Default under the Loan Agreement, then Subordinated Lender will forthwith deliver, or cause to be delivered, the same to Senior Lender in precisely the form held by Subordinated Lender (except for any necessary endorsement) and until so delivered, the same shall be held in trust by Subordinated Lender, or any such Affiliate, as the property of Senior Lender and shall not be commingled with other property of the Subordinated Lender or any such Affiliate. (vi) Subrogation. Subject to the prior payment in full in cash of the Senior Indebtedness and the irrevocable termination of the Senior Lending Agreements, to the extent that Senior Lender has received any Distribution on the Senior Indebtedness which, but for this Agreement, would have been applied to the Subordinated Indebtedness, Subordinated Lender shall be subrogated to the then or thereafter rights of Senior Lender including, without limitation, the right to receive any Distribution made on the Senior Indebtedness until the principal of, interest on and other charges due under the Subordinated Indebtedness shall be paid in full; and, for the purposes of such subrogation, no Distribution to Senior Lender to which Subordinated Lender would be entitled except for the provisions of this Agreement shall, as between Company, its creditors (other than Senior Lender) and Subordinated Lender, be deemed to be a Distribution by Company to or on account of Senior Indebtedness, it being understood that the provisions hereof are and are intended solely for the purpose of defining the relative rights of Subordinated Lender on the one hand, and Senior Lender on the other hand. (vii) Scope of Subordination. The provisions of this Agreement are solely to define the relative rights of any Holder of Subordinated Indebtedness and Senior Lender. Nothing in this Agreement shall impair, as between Company and Subordinated Lender the unconditional and absolute obligation of Company to punctually pay the principal, interest and any other amounts and obligations owing under the Subordinated Note and Subordinated Lending Agreements in accordance with the terms thereof, subject to the rights of Senior Lender under this Agreement. 3. Security. (a) Acknowledgment of Lien. Subordinated Lender hereby agrees and acknowledges that Senior Lender has been granted a Lien upon the Collateral. Senior Lender 5

hereby agrees and acknowledges that Subordinated Lender has been granted a Lien upon the Subordinated Lender Collateral. (b) Priority. Notwithstanding the order or time of attachment, or the order, time or manner of perfection, or the order or time of filing or recordation of any document or instrument, or other method of perfecting a Lien in favor of each Creditor in any Collateral and notwithstanding any conflicting terms or conditions which may be contained in any of the Creditor Agreements, the Liens upon the Collateral of Senior Lender have and shall have priority over the Liens upon the Collateral of Subordinated Lender and such Liens of Subordinated Lender are and shall be, in all respects, subject and subordinate to the Liens of Senior Lender therein to the full extent of the Senior Indebtedness outstanding from time to time. Subordinated Lender shall not take any action to foreclose or realize upon any of the Collateral until such time as the Senior Indebtedness shall have been paid in full in cash and the Lending Agreements irrevocably terminated. (c) No Alteration of Priority. The Lien priorities provided in Section 3(b) hereof shall not be altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement or refinancing of any Senior Indebtedness or the Subordinated Indebtedness, nor by any action or inaction which either Creditor may take or fail to take in respect of the Collateral. (d) Perfection. Each Creditor shall be solely responsible for perfecting and maintaining the perfection of its Lien in and to each item constituting the Collateral in which such Creditor has been granted a Lien. The foregoing provisions of this Agreement are intended solely to govern the respective lien priorities as between the Creditors and shall not impose on Senior Lender any obligations in respect of the disposition of proceeds of foreclosure on any Collateral which would conflict with prior perfected claims therein in favor of any other Person. Subordinated Lender agrees that it will not contest the validity, perfection, priority or enforceability of the Liens of Senior Lender in the Collateral and that as between Senior Lender and Subordinated Lender, the terms of this Agreement shall govern even if part or all of the Senior Indebtedness or the Liens of Senior Lender securing payment and performance thereof are avoided, disallowed, set aside or otherwise invalidated in any judicial proceeding or otherwise. (e) Management of Collateral. Senior Lender shall have the exclusive right to manage, perform and enforce the terms of the Senior Lending Agreements with respect to the Collateral and to exercise and enforce all privileges and rights thereunder according to its discretion and exercise of its business judgment, including, without limitation, the exclusive right to enforce or settle insurance claims, take or retake control or possession of the Collateral and to hold, prepare for sale, process, sell, lease, dispose of, or liquidate the Collateral. In connection therewith, Subordinated Lender waives any and all rights to affect the method or challenge the appropriateness of any action by Senior Lender. (f) Sale of Collateral. Notwithstanding anything to the contrary contained in any of the Creditor Agreements only Senior Lender shall have the right to restrict or permit, or approve or disapprove, the sale, transfer or other disposition of Collateral. Subordinated Lender will, immediately upon the request of Senior Lender, release or otherwise terminate its Liens 6

upon any Collateral, to the extent such Collateral is sold or otherwise disposed of either by Senior Lender, its agents, or Company with the consent of Senior Lender, and Subordinated Lender will immediately deliver such release documents as Senior Lender may require in connection therewith. (g) Secured Lender Remedies. In no event shall Subordinated Lender exercise any Secured Lender Remedies until such time as the Senior Indebtedness shall have been paid in full in cash and the Senior Lending Agreements irrevocably terminated; nor shall Subordinated Lender join in, solicit any other person to, or act to cause the commencement of, any case involving Company under any state or federal bankruptcy or insolvency laws or seek the appointment of a receiver for the affairs or property of the Company until such time as the Senior Indebtedness shall have been paid in full in cash and the Senior Lending Agreements shall have been irrevocably terminated. In the event Subordinated Lender shall receive any payment or distribution of any kind representing proceeds of any Collateral as to which its Lien in the Collateral is or is required to be subordinated to the Lien of Senior Lender before the Obligations shall have been paid in full in cash and the Senior Lending Agreements irrevocably terminated, such sums shall be held in trust by Subordinated Lender for the benefit and on account of Senior Lender and such amounts shall be paid to Senior Lender for application to the then unpaid Obligations under the Senior Lending Agreements. (h) Section 9-611 Notice and Waiver of Marshaling. Subordinated Lender and Senior Lender acknowledge that this Agreement shall constitute notice of their respective interests in the Collateral as provided by Section 9-611 of the UCC and each hereby waive any right to compel any marshaling of any of the Collateral. 4. Miscellaneous. (a) Provisions of Subordinated Note. From and after the date hereof, Company and Subordinated Lender shall cause each Subordinated Lending Agreement or any other evidence of Subordinated Indebtedness to contain a provision to the following effect: "This Note is subject to the Subordination and Intercreditor Agreement, dated as of April ___, 2003, Frontline Communications Corporation ("Maker"), Ann M. Sulla, Ronald Signore, Anthony Rudel, Stefano A. Masi, Irrevocable Trust of Bernice J. Monroe, Nicko Feinberg, Gary Koval, James Nicholson and IIG Equity Opportunities Fund Ltd., as Senior Lender, under which this Note and the Maker's obligations hereunder are subordinated in the manner set forth therein to the prior payment of certain obligations to the holders of Senior Indebtedness as defined therein." Proof of compliance with the foregoing shall be promptly given to Senior Lender. (b) Additional Agreements. In the event that the Senior Indebtedness is refinanced in full, Subordinated Lender agrees at the request of such refinancing party to enter 7

into a subordination and intercreditor agreement on terms substantially similar to this Agreement. (c) Survival of Rights. The right of Senior Lender to enforce the provisions of this Agreement shall not be prejudiced or impaired by any act or omitted act of Company or Senior Lender including forbearance, waiver, consent, compromise, amendment, extension, renewal, or taking or release of security in respect of any Senior Indebtedness or noncompliance by Company with such provisions, regardless of the actual or imputed knowledge of Senior Lender. (d) Bankruptcy Financing Issues. (i) This Agreement shall continue in full force and effect after the filing of any petition ("Petition") by or against Company under the United States Bankruptcy Code (the "Code") and all converted or succeeding cases in respect thereof. All references herein to Company shall be deemed to apply to Company as debtor-in-possession and to a trustee for Company. If Company shall become subject to a proceeding under the Code, and if Senior Lender shall desire to permit the use of cash collateral or to provide post-Petition financing from Senior Lender to Company under the Code, Subordinated Lender agrees as follows: (1) adequate notice to Subordinated Lender shall be deemed to have been provided for such consent or post-Petition financing if Subordinated Lender receives notice thereof three (3) Business Days (or such shorter notice as is given to Senior Lender) prior to the earlier of (a) any hearing on a request to approve such post-petition financing or (b) the date of entry of an order approving same and (2) no objection will be raised by Subordinated Lender to (a) any such use of cash collateral or such post-Petition financing from Senior Lender and (b) Senior Lender declaring a default and/or exercising any of its rights and remedies under any agreement evidencing such post-Petition financing from Senior Lender. (ii) Subordinated Lender shall not join in, solicit any other person to, or act to cause the commencement of, any case involving Company under any state or federal bankruptcy or insolvency laws or seek the appointment of a receiver for the affairs or property of Company until such time as the Senior Indebtedness shall have been paid in full in cash and the Senior Lending Agreements shall have been irrevocably terminated. (e) Insurance Proceeds. Proceeds of the Collateral include insurance proceeds, and therefore, notwithstanding the terms set forth in the Senior Lending Agreements or Subordinated Lender Agreements, the priorities set forth in Section 3(b) govern the ultimate disposition of casualty insurance proceeds. Senior Lender, as the holder of a senior security interest on the Collateral insured shall have the sole and exclusive right, as against Subordinated Lender, to adjust settlement of insurance claims in the event of any covered loss, theft or destruction of such Collateral. All proceeds of such insurance shall inure to Senior Lender, to the extent Senior Lender's claim, and Subordinated Lender shall cooperate (if necessary) in a reasonable manner in effecting the payment of insurance proceeds to Senior Lender. In the event Senior Lender, in its sole discretion or pursuant to agreement with Company, permits Company to utilize the proceeds of insurance to replace Collateral, the consent of Senior Lender thereto shall be deemed to include the consent of Subordinated Lender. (f) Receipt of Agreements. Subordinated Lender hereby acknowledges that it has delivered to Senior Lender a correct and complete copy of the Subordinated Lending 8

Agreements as in effect on the date hereof. Subordinated Lender, solely for the purposes of this Agreement, hereby acknowledges receipt of a correct and complete copy of each of the Senior Lending Agreements as in effect on the date hereof. (g) No Amendment of Subordinated Lending Agreements. So long as the Loan Agreement remains in effect, neither Company nor any Holder of Subordinated Indebtedness shall enter into any amendment to or modification of any Subordinated Lending Agreements which relates to or affects the principal amount, interest rate, payment terms, or any other material covenant or agreement of Company thereunder or in respect thereof, without the prior written consent of Senior Lender. (h) Amendments to Senior Lending Agreements. Nothing contained in this Agreement, or in any other agreement or instrument binding upon any of the parties hereto, shall in any manner limit or restrict the ability of Senior Lender from increasing or changing the terms of the loans under the Senior Lending Agreements, or to otherwise waive, amend or modify the terms and conditions of the Senior Lending Agreements, in such manner as Senior Lender and Company shall mutually determine. Each Holder of Subordinated Indebtedness hereby consents to any and all such waivers, amendments, modifications and compromises, and any other renewals, extensions, indulgences, releases of collateral or other accommodations granted by Senior Lender to Company from time to time, and agrees that none of such actions shall in any manner affect or impair the subordination established by this Agreement in respect of the Subordinated Indebtedness. (i) Notice of Default and Certain Events. Senior Lender and the Holders of Subordinated Indebtedness shall undertake in good faith to notify the other of the occurrence of any of the following as applicable: (i) the obtaining of actual knowledge of the occurrence of any default under any of the Subordinated Lending Agreements; (ii) the acceleration of any Senior Indebtedness by Senior Lender or of any Subordinated Indebtedness by any Holder of Subordinated Indebtedness; (iii) the granting by Senior Lender of any waiver of any Event of Default under the Loan Agreement or the granting by any Holder of Subordinated Indebtedness of any waiver of any "default" or "event of default" under any of the Subordinated Lending Agreements; (iv) the payment in full by Company (whether as a result of refinancing or otherwise) of all Senior Indebtedness; or (v) the sale or liquidation by Senior Lender of, or realization upon, any of the Subordinated Lender Collateral. The failure of any party to give such notice shall not affect the subordination of the Subordinated Indebtedness or the relative Lien priorities as provided in this Agreement. 9

(j) Notices. Any notice or other communication required or permitted pursuant to this Agreement shall be deemed given (i) when personally delivered to any officer of the party to whom it is addressed, (ii) on the earlier of actual receipt thereof or three (3) days following posting thereof by certified or registered mail, postage prepaid, (iii) upon actual receipt thereof when sent by a recognized overnight delivery service or (iv) upon actual receipt thereof when sent by telecopier to the number set forth below with electronic confirmation of receipt, in each case addressed to each party at its address or telecopier number set forth below or at such other address or telecopier number as has been furnished in writing by a party to the other by like notice:

If to Senior Lender: IIG Capital LLC 1500 Broadway, 17th Floor New York, New York 10036 Attention: George Sandhu Telephone: (212) 806-5100 Facsimile: (212) 806-5199 If to Subordinated Lenders: Frontline Communications Corporation One Blue Hill Plaza Pearl River, New York 10965 Attention: Amy Wagner-Mele, Esq. Telephone: (845) 623-8553 Facsimile: (845) 623-8669 If to Company: Frontline Communications Corporation One Blue Hill Plaza Pearl River, New York 10965 Attention: Steven J. Cole-Hatchard Telephone: (845) 623-8553 Facsimile: (845) 623-8669
(k) Books and Records. Subordinated Lender shall (a) make notations on the books of Subordinated Lender beside all accounts or on other statements evidencing or recording any Subordinated Indebtedness to the effect that such Subordinated Indebtedness is subject to the provisions of this Agreement, (b) furnish Senior Lender, upon request from time to time, a statement of the account between Subordinated Lender and Company and (c) give Senior Lender, upon its request, full and free access to Subordinated Lender's books pertaining only to such accounts with the right to make copies thereof. (l) Binding Effect; Other. This Agreement shall be a continuing agreement, shall be binding upon and shall inure to the benefit of the parties hereto from time to time and their respective successors and assigns, shall be irrevocable and shall remain in full force and effect until the Senior Indebtedness shall have been satisfied or paid in full in cash and the Senior Lending Agreements shall have been irrevocably terminated, but shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any amount paid by or on behalf of Company with regard to the Senior Indebtedness is rescinded or must 10

otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Company, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee, custodian, or similar officer, for Company or any substantial part of its property, or otherwise, all as though such payments had not been made. No action which Senior Lender or Company may take or refrain from taking with respect to the Senior Indebtedness, including any amendments thereto, shall affect the provisions of this Agreement or the obligations of Subordinated Lender hereunder. Any waiver or amendment hereunder must be evidenced by a signed writing of the party to be bound thereby, and shall only be effective in the specific instance. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. The headings in this Agreement are for convenience of reference only, and shall not alter or otherwise affect the meaning hereof. (m) Security. Until the Senior Indebtedness shall have been paid in full in cash and the Senior Lending Agreements shall have been irrevocably terminated, the Subordinated Lender hereby disclaims any and all Liens on any property (personal or real) of the Company other than Subordinated Lender's Lien on the Subordinated Lender Collateral. (n) No Challenge to Validity, Etc. of Liens. Notwithstanding anything to the contrary expressed or implied in this Agreement, each Holder of Subordinated Indebtedness agrees that it will not at any time contest the validity, perfection, priority or enforceability of any security interest or lien granted to Senior Lender by Company securing all or any part of the Obligations, or the Senior Lender's right to foreclosure, realization upon, levy upon, or liquidation of any of the Collateral. 5. Representations and Warranties. (a) Subordinated Lender represents and warrants to Senior Lender that Subordinated Lender is the holder of the Subordinated Indebtedness and Liens which secure or will secure the Subordinated Indebtedness. Subordinated Lender agrees that it shall not assign or transfer any of the Subordinated Indebtedness or Liens without (i) prior notice being given to Senior Lender and (ii) such assignment or transfer being made expressly subject to the terms of this Agreement. Subordinated Lender authorizes Senior Lender to file an amendment to any financing statement or mortgage, trust deed or other encumbrance now on file which covers Collateral to the effect that the same is subject to the terms of this Agreement, and agrees to so mark any extension of such financing statements, or any financing statement or mortgage, trust deed or other encumbrance filed by Subordinated Lender on Collateral in the future. Subordinated Lender further warrants to Senior Lender that it has full right, power and authority to enter into this Agreement and, to the extent Subordinated Lender is an agent or trustee for other parties, that this Agreement shall fully bind all such other parties. (b) Senior Lender represents and warrants to Subordinated Lender that Senior Lender is the holder of the Senior Indebtedness and Liens which secure or will secure the Senior Indebtedness. Senior Lender agrees that it shall not assign or transfer any of the Senior Indebtedness or Liens without (i) prior notice being given to Subordinated Lender and (ii) such assignment or transfer being made expressly subject to the terms and provisions of this Agreement. Senior Lender further warrants to Subordinated Lender that it has full right, power 11

and authority to enter into this Agreement and, to the extent Senior Lender is an agent or trustee for other parties, that this Agreement shall fully bind all such other parties. 6. Proceedings. ANY JUDICIAL PROCEEDING BROUGHT BY OR AGAINST SUBORDINATED LENDER OR COMPANY WITH RESPECT TO THIS AGREEMENT OR ANY RELATED AGREEMENT MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, UNITED STATES OF AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH PARTY THERETO ACCEPTS FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST SUBORDINATED LENDER OR COMPANY IN ANY COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY SUBORDINATED LENDER OR COMPANY AGAINST LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT OR ANY RELATED AGREEMENT, SHALL BE BROUGHT ONLY IN A COURT LOCATED IN THE STATE OF NEW YORK; PROVIDED THAT NOTWITHSTANDING THE FOREGOING, IF IN ANY JUDICIAL PROCEEDING BY OR AGAINST SUBORDINATED LENDER OR COMPANY THAT IS BROUGHT IN ANY OTHER COURT SUCH COURT DETERMINES THAT SENIOR LENDER IS AN INDISPENSABLE PARTY, SUBORDINATED LENDER OR COMPANY SHALL BE ENTITLED TO JOIN OR INCLUDE EACH PARTY HERETO IN SUCH PROCEEDINGS IN SUCH OTHER COURT. SUBORDINATED LENDER AND COMPANY WAIVE ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREUNDER AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS. 7. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY CREDITOR OR COMPANY OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENTS OR AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT JURY, AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR A 12

COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THEIR CONSENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 8. Company Acknowledgement. Company agrees that (a) nothing contained in this Agreement shall be deemed to amend, modify, supercede or otherwise alter the terms of the respective agreements between Company and each Creditor and (b) this Agreement is solely for the benefit of the Creditors and shall not give Company, its successors or assigns or any other person any rights vis-a-vis any Creditor. 9. Counterparts; Facsimile. This Agreement may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto. [Signature Page to Follow] 13

IN WITNESS WHEREOF, the undersigned have entered into this Agreement as of this 3 day of April, 2003. IIG EQUITY OPPORTUNITIES FUND LTD., as Senior Lender By: ---------------------------------------- Name: Title: /s/ ------------------------------------------- Ann M. Sulla, as a Subordinated Lender /s/ ------------------------------------------- Ronald Signore, as a Subordinated Lender ------------------------------------------- Anthony Rudel, as a Subordinated Lender /s/ ------------------------------------------- Stefano A. Masi, as a Subordinated Lender /s/ ------------------------------------------- Nicko Feinberg, as a Subordinated Lender ------------------------------------------- Gary Koval, as a Subordinated Lender /s/ ------------------------------------------- James Nicholson, as a Subordinated Lender [Additional Signature Page to Follow] 14

IRREVOCABLE TRUST OF BERNICE J. MONROE, as a Subordinated Lender By: ----------------------------- Name: Title: Trustee FRONTLINE COMMUNICATIONS CORPORATION, as Company By: ----------------------------- Name: Title: 15

STATE OF NEW YORK ) : ss.: COUNTY OF ____________) On the _______ day of April, 2003, before me personally came __________ to me known, who, being by me duly sworn did depose and say that s/he is the ________________ of IIG Equity Opportunities Fund Ltd., the company described in and which executed the above instrument; and that s/he was authorized to sign her/his name thereto. --------------------------- Notary Public STATE OF _____________) : ss.: COUNTY OF ____________) On the _____ day of April 2003, before me personally came Ann M. Sulla, to me known to be the individual described in and who executed the foregoing instrument, and acknowledged to me that she executed the same. --------------------------- Notary Public STATE OF _____________) : ss.: COUNTY OF ____________) On the _____ day of April 2003, before me personally came Ronald Signore, to me known to be the individual described in and who executed the foregoing instrument, and acknowledged to me that he executed the same. --------------------------- Notary Public 16

STATE OF _____________) : ss.: COUNTY OF ____________) On the _____ day of April 2003, before me personally came Anthony Rudel, to me known to be the individual described in and who executed the foregoing instrument, and acknowledged to me that he executed the same. --------------------------- Notary Public STATE OF _____________) : ss.: COUNTY OF ____________) On the _____ day of April 2003, before me personally came Stefano A. Masi, to me known to be the individual described in and who executed the foregoing instrument, and acknowledged to me that he executed the same. -------------------------- Notary Public STATE OF _____________) : ss.: COUNTY OF ____________) On the _____ day of April 2003, before me personally came Nicko Feinberg, to me known to be the individual described in and who executed the foregoing instrument, and acknowledged to me that he executed the same. --------------------------- Notary Public 17

STATE OF _____________) : ss.: COUNTY OF ____________) On the _____ day of April 2003, before me personally came Gary Koval, to me known to be the individual described in and who executed the foregoing instrument, and acknowledged to me that he executed the same. --------------------------- Notary Public STATE OF _____________) : ss.: COUNTY OF ____________) On the _____ day of April 2003, before me personally came James Nicholson, to me known to be the individual described in and who executed the foregoing instrument, and acknowledged to me that he executed the same. --------------------------- Notary Public STATE OF _____________) : ss.: COUNTY OF ____________) On the _______ day of April, 2003, before me personally came _______________ to me known, who, being by me duly sworn did depose and say that s/he is the trustee of Irrevocable Trust of Bernice J. Monroe, the trust described in and which executed the above instrument; and that s/he signed her/his name thereto. --------------------------- Notary Public 18

STATE OF _____________) : ss.: COUNTY OF ____________) On the _______ day of April, 2003, before me personally came _______________ to me known, who, being by me duly sworn did depose and say that s/he is the ________________ of Frontline Communications Corporation, the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. --------------------------- Notary Public 19

Exhibit 21.1 Subsidiaries of Frontline Communications Corporation Name Jurisdiction ---- ------------ WOW Factor, Inc. New Jersey CLEC Communications Corporation. Delaware FNT Communications Corporation New York Proyecciones y Ventas Organizadas, S.A. de C.V. Mexico

EXHIBIT 23.1 INDEPENDENT AUDITOR'S CONSENT To the Board of Directors Frontline Communications Corporation We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement of Frontline Communications Corporation on Forms S-3 (#333-89811 and 333-35058) and Form S-8 (#333-86792) of our report dated February 20, 2003, on the consolidated financial statements of Frontline Communications Corporation as of December 31, 2002 and for each of the two years in the period then ended appearing in the annual report on Form 10-KSB of Frontline Communications Corporation for the year ended December 31, 2002. We also consent to the reference of our firm under the caption "Experts" contained in such Registration Statement. /s/ Goldstein Golub Kessler LLP - ------------------------------- GOLDSTEIN GOLUB KESSLER LLP New York, New York April 14, 2003

Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U. S. C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Frontline Communications Corporation (the "Company") on Form 10-KSB for the period ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen J. Cole-Hatchard, as Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Stephen J. Cole-Hatchard ---------------------------- Stephen J. Cole-Hatchard Chief Executive Officer and President April 15, 2003

Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U. S. C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Frontline Communications Corporation (the "Company") on Form 10-KSB for the period December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Vasan Thatham, as Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Vasan Thatham ---------------------------- Vasan Thatham Vice President and Chief Financial Officer April 15, 2003