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Amendment to a previously filed 10KSB

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


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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



 





I
tem 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