Document:

EXHIBIT 4.2

                          FIBERNET TELECOM GROUP, INC.

                           INVESTOR'S RIGHTS AGREEMENT

                                October 30, 2002

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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

1.    Definitions............................................................1

2.    Registration Rights....................................................4
      2.1   Shelf Registration...............................................4
      2.2   Company Registration.............................................5
      2.3   Obligations of the Company.......................................6
      2.4   Furnish Information..............................................7
      2.5   Expenses of Registration.........................................8
      2.6   Delay of Registration............................................8
      2.7   Indemnification..................................................8
      2.8   Reports Under Securities Exchange Act of 1934...................10
      2.9   Assignment of Registration Rights...............................11
      2.10  Limitations on Subsequent Registration Rights...................11
      2.11  Market-Standoff Agreement.......................................11
      2.12  Termination of Registration Rights..............................12

3.    Transfer Restrictions.................................................12
      3.1   Restrictions on Transfer........................................12
      3.2   Right of First Offer............................................12

4.    Miscellaneous.........................................................13
      4.1   Legends.........................................................13
      4.2   Entire Agreement................................................14
      4.3   Recapitalizations, Etc..........................................14
      4.4   Successors and Assigns..........................................14
      4.5   Amendments and Waivers..........................................14
      4.6   Notices.........................................................15
      4.7   Severability....................................................15
      4.8   Delays or Omissions; Remedies Cumulative........................15
      4.9   Attorney's Fees.................................................15
      4.10  Governing Law...................................................15
      4.11  Counterparts....................................................16
      4.12  Interpretation..................................................16

                                       -i-

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                          FIBERNET TELECOM GROUP, INC.

                           INVESTOR'S RIGHTS AGREEMENT
                           ---------------------------

     This Investor's Rights Agreement (this "Agreement") is made as of October
30, 2002, between FiberNet Telecom Group, Inc., a Delaware corporation (the
"Company") and the investors listed on Exhibit A hereto, each of which is herein
referred to as an "Investor".

                                    RECITALS
                                    --------

     The Company and the Investors have entered into a Common Stock and Warrant
Purchase Agreement (the "Purchase Agreement") of even date herewith pursuant to
which the Company desires to sell to the Investors, and the Investors desire to
purchase from the Company, shares of the Company's Common Stock and warrants to
purchase an additional amount of such shares (the "Warrant"). A condition to the
Investors' obligations under the Purchase Agreement is that the Company and the
Investors enter into this Agreement in order to provide the Investors with
certain rights to register shares of the Company's Common Stock. The Company
desires to induce the Investors to purchase shares of Common Stock pursuant to
the Purchase Agreement by agreeing to the terms and conditions set forth herein.

                                    AGREEMENT
                                    ---------

     The parties agree as follows:

     1. Definitions.
        -----------

     For purposes of this Agreement:

     (a) "Business Day" means a day other than a Saturday or Sunday or any
federal holiday.

     (b) "Common Stock" means the common stock, par value $0.001, of the
Company.

     (c) "Credit Agreement" means the Company's Amended and Restated Credit
Agreement dated as of February 9, 2001 (as amended, supplemented, amended and
restated or otherwise modified from time to time prior to the date hereof) among
FiberNet Operations, Inc., Devnet, L.L.C., the financial institutions from time
to time parties thereto as lenders, Deutsche Bank AG New York Branch, as
administrative agent, Toronto Dominion (USA) Securities Inc., as syndication
agent, and Wachovia Investors, Inc., as documentation agent.

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

     (e) "Exempt Registration" means (i) a registration statement relating to
the sale of securities by the Company pursuant to a stock option, stock purchase
or similar

<PAGE>

benefit plan or an SEC Rule 145 transaction or (ii) a registration statement
filed by the Company pursuant to the terms of the New Equity Registration Rights
Agreement.

     (f) "Form S-3" means such form under the Securities Act as in effect on the
date hereof or any successor form under the Securities Act that is intended to
be used as a short form for the registration of distributions of secondary
shares.

     (g) "New Equity Registration Rights Agreement" means the Registration
Rights Agreement dated as of October 30, 2002, by and among the Company and the
purchasers listed on Schedule I thereto as in effect on the date hereof.

     (h) "Nortel Note Exchange Agreement" means the Note Exchange Agreement,
dated as of October 30, 2002, by and between the Company and SDS Merchant Fund,
L.P. as in effect on the date hereof, pursuant to which the promissory note
issued by the Company to Nortel Networks Inc. on December 7, 2001, will be
surrendered to the Company in exchange for shares of Common Stock.

     (i) "Permitted Sale" means either (1) a transfer of Common Stock or
Warrants to any Permitted Transferee, or (2) a transfer of Common Stock and
Warrants in connection with a disposition of all of the equity interests of the
Company and all of the Company's obligations under the Credit Agreement held by
the transferor.

     (j) "Permitted Transferee" means (i) in the case of an Investor who is an
individual, such person's ancestors, descendants or spouse, or any custodian or
trustee for the account of such person (or for the account of such person's
ancestors, descendants or spouse), (ii) in the case of an Investor which is a
partnership or limited liability company, any constituent partner or member of
such entity, (iii) in the case of an Investor which is a corporation, any parent
corporation or wholly-owned subsidiary corporation or any officer, director or
10% stockholder of such corporation, and (iv) any other Investor.

     (k) "person" means any individual, corporation, partnership, limited
liability company, trust, business, association or governmental or political
subdivision thereof, governmental agency or other entity.

     (l) "Purchase Price" means an amount per share equal to $0.15 (subject to
adjustment for stock splits, stock dividends, stock recombinations and similar
transactions).

     (m) "Qualified Public Offering" shall mean any firm commitment underwritten
public offering by the Company of its Common Stock yielding gross proceeds to
the Company of at least $50.0 million at a per share price to the public of at
least $10 (subject to adjustment for stock splits, stock dividends, stock
recombinations and similar transactions).

     (n) "register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement or document.

                                      -2-
<PAGE>

     (o) The term "Registrable Securities" means the shares of Common Stock
issuable or issued to the Investors (i) pursuant to the Purchase Agreement, (ii)
in connection with the exercise of the warrants issued or issuable pursuant to
the Purchase Agreement, (iii) as Liquidated Damages pursuant to Section 2.1(b)
hereof, and (iv) as (or issuable upon the conversion, exercise or exchange of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
shares listed in clauses (i), (ii), (iii) and this clause (iv). Notwithstanding
the foregoing, securities shall only be treated as Registrable Securities if and
so long as they have not been (A) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or (B)
sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect thereto, if any, are
removed upon the consummation of such sale.

     (p) The number of shares of "Registrable Securities then outstanding" shall
equal the number of shares of Common Stock outstanding which are, and the number
of shares of Common Stock issuable pursuant to then exercisable or convertible
securities which are, Registrable Securities.

     (q) "SEC" means the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.

     (r) "Securities Act" means the Securities Act of 1933, as amended.

     (s) "Series H Share Exchange Agreement" means the Share Exchange Agreement,
dated as of October 30, 2002, by and among the Company and each of the
purchasers whose names appear on the signature pages thereto, pursuant to which
the Company will issue Common Stock in exchange for all of its issued and
outstanding shares of Series H Preferred Stock.

     (t) "Series J Share Exchange Agreement" means the Series J-1 Share Exchange
Agreement, dated as of October 30, 2002, by and among the Company and each of
the purchasers whose names appear on the signature pages thereto, pursuant to
which the Company will issue Common Stock in exchange for all of its issued and
outstanding shares of Series J-1 Preferred Stock.

     (u) "Trading Day" means, with respect to any security, any day on which the
principal market (including any formal or informal over the counter market) in
which such security is then traded or on which a quoted price therefor may be
ascertained is open for business.

     (v) "Transfer Restriction Period" means, (i) with respect to each Investor
other than Nortel Networks Inc., the period of time commencing on the date of
this Agreement and ending upon the first anniversary of the date of this
Agreement, and (ii) with respect to Nortel Networks Inc., the period of time
commencing on the date of this Agreement and ending on February 28, 2003.

                                      -3-
<PAGE>

     2. Registration Rights
        -------------------

     2.1 Shelf Registration.
         ------------------

     (a) Filing. The Company shall (i) prepare and file with the SEC a shelf
registration statement on Form S-3 (the "Shelf Registration Statement") pursuant
to Rule 415 under the Securities Act relating to all of the Registrable
Securities within 60 days of the date hereof (the "Filing Deadline") and (ii)
use its best efforts to cause the Shelf Registration Statement to be declared
effective under the Securities Act within 180 days of the date hereof (the
"Effectiveness Deadline"). The Shelf Registration Statement may also include all
of the "Registrable Securities" as defined in the New Equity Registration Rights
Agreement.

     The Company shall use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended to the
extent necessary to ensure that it is available for resale of Registrable
Securities by the holders thereof entitled to the benefits of this Section
2.1(a) and to ensure that it conforms with the requirements of this Agreement,
the Securities Act and the policies, rules and regulations of the SEC as
announced from time to time, until all Registrable Securities covered by such
Shelf Registration Statement have been sold pursuant thereto.

     (b) Liquidated Damages.
         ------------------

     If (i) the Shelf Registration Statement is not filed with the SEC on or
prior to the Filing Deadline, (ii) the Shelf Registration Statement has not been
declared effective by the SEC on or prior to the Effectiveness Deadline, or
(iii) prior to the sale of all Registrable Securities covered by such Shelf
Registration Statement, the Shelf Registration Statement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded within two Business Days by a
post-effective amendment to the Shelf Registration Statement that cures such
failure and that is itself declared effective within five Business Days of
filing such post-effective amendment to such Registration Statement (each such
event referred to in clauses (i) through (iii), a "Registration Default"), then
the Company hereby agrees to pay to each record holder of Registrable Securities
liquidated damages ("Liquidated Damages") for the period during which such
Registration Default continues at a per annum rate of 6% (or, for any period of
time during which such Registration Default continues after June 30, 2004, 8%)
of the Purchase Price of such Registrable Securities. Liquidated Damages shall
be paid in shares of Common Stock at a per share rate equal to the Purchase
Price. Notwithstanding anything to the contrary set forth herein, (1) upon
filing of the Shelf Registration Statement, (2) upon the effectiveness of the
Shelf Registration Statement, or (3) upon the filing of a post-effective
amendment to the Shelf Registration Statement that causes the Shelf Registration
Statement to again be declared effective or made usable, the Liquidated Damages
payable with respect to the Registrable Securities as a result of such clause
(i), (ii), or (iii), as applicable, shall cease to accrue. Notwithstanding
anything to the contrary in this Section 2.1(b), if a Registration Default shall
have occurred in connection with the Company's exercise of its rights under
Section 2.1(c) hereof, such Registration Default shall not be deemed to occur
until one Business Day following the termination of the postponement or
suspension permitted pursuant to such Section 2.1(c).

                                      -4-
<PAGE>

     All accrued Liquidated Damages shall be paid to the holders of Registrable
Securities entitled thereto on the last Business Day of each month in which such
Liquidated Damages accrued. Notwithstanding the fact that any securities for
which Liquidated Damages are due cease to be Registrable Securities, all
obligations of the Company to pay Liquidated Damages with respect to securities
shall survive until such time as such obligations with respect to such
securities shall have been satisfied in full.

     (c) Postponing Or Suspending Filing Or Effectiveness Of A Registration
         ------------------------------------------------------------------
Statement.
---------

     If (i) there is material non-public information regarding the Company which
the Company's Board of Directors reasonably determines not to be in the
Company's best interest to disclose and which the Company is not otherwise
required to disclose, or (ii) there is a significant business opportunity
(including the acquisition or disposition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer or other similar
transaction) available to the Company which such Board of Directors reasonably
determines not to be in the Company's best interest to disclose, then the
Company may postpone or suspend filing or effectiveness of a registration
statement for a period not to exceed 20 consecutive days, provided that the
Company may not postpone or suspend its obligation under this Section 2.1(c) for
more than 45 days in the aggregate during any 12 month period; provided,
however, that no such postponement or suspension shall be permitted for
consecutive 20 day periods, arising out of the same set of facts, circumstances
or transactions.

     2.2 Company Registration.
         --------------------

     (a) Initiation. If the Company proposes to register (including for this
purpose a registration effected by the Company for stockholders other than the
Investors) any of its stock in connection with a public offering of such
securities for cash (other than an Exempt Registration), the Company shall, at
such time, promptly give each Investor notice of such registration. Upon the
written request of each Investor given within 20 days after receipt by such
Investor of the Company's notice, the Company shall, subject to the provisions
of Section 2.2(b), cause to be registered all of the Registrable Securities that
each such Investor has requested to be registered.

     (b) Underwritten Offering. In connection with any offering involving an
underwriting of shares of the Company's capital stock, the Company shall not be
required under Section 2.2(a) to include an Investor's securities in such
underwriting unless such Investor accepts the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity as
the underwriters advise the Company in writing will not adversely affect the
marketing of the Company's capital stock. If the total amount of securities,
including Registrable Securities, requested by stockholders to be included in
such offering exceeds the maximum amount of securities sold other than by the
Company that the underwriters determine would not adversely affect the marketing
of the offering, then the Company shall be required to include in the offering
only that number of such securities, including Registrable Securities,

                                      -5-
<PAGE>

which the underwriters determine would not adversely affect the marketing of the
offering (the securities so included to be apportioned pro rata (to the nearest
100 shares) among the selling stockholders according to the total amount of
securities entitled to be included therein owned by each selling stockholder or
in such other proportions as shall mutually be agreed to by such selling
stockholders). For purposes of the preceding apportionment, for any
participating Investor that is a partnership, limited liability company or
corporation, the partners, retired partners, members, retired members and
stockholders of such Investor, or the estates and family members of any such
partners, members, retired partners or members and any trusts for the benefit of
any of the foregoing persons shall be deemed to be a single "selling
stockholder," and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all persons included in such "selling stockholder,"
as defined in this sentence.

     2.3 Obligations of the Company. Whenever required under this Section 2 to
effect the registration of any Registrable Securities, in addition to any other
obligations of the Company under this Agreement, the Company shall, as
expeditiously as reasonably possible:

     (a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its reasonable best efforts to cause such
registration statement to become effective.

     (b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act.

     (c) Furnish to the Investors such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of such Registrable Securities.

     (d) Use its reasonable best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Investors,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.

     (e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement with the managing
underwriter of such offering in usual and customary form and consistent with the
other provisions of this Agreement. Each Investor participating in such
underwriting shall also enter into and perform its obligations under such an
agreement.

     (f) Promptly notify each Investor of Registrable Securities covered by the
registration statement at any time when the Company becomes aware of the
happening of any event as a result of which the registration statement or the
prospectus included in such registration statement or any supplement to the
prospectus (as then in effect) contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements

                                      -6-
<PAGE>

therein (in the case of the prospectus, in light of the circumstances under
which they were made) not misleading or, if for any other reason it shall be
necessary during such time period to amend or supplement the registration
statement or the prospectus in order to comply with the Securities Act,
whereupon, in either case, each Investor shall immediately cease to use such
registration statement or prospectus for any purpose and, as promptly as
reasonably practicable thereafter, the Company shall prepare and file with the
SEC, and furnish without charge to the appropriate Investors and managing
underwriters, if any, a supplement or amendment to such registration statement
or prospectus which will correct such statement or omission or effect such
compliance and such copies thereof as the Investors and any underwriters may
reasonably request.

     (g) Cause all such Registrable Securities registered pursuant hereunder to
be listed on each securities exchange or over-the-counter market on which
similar securities issued by the Company are then listed, if applicable.

     (h) Provide a transfer agent and registrar for such Registrable Securities
and a CUSIP number for all such Registrable Securities, in each case not later
than the effective date of such registration.

     (i) Use its reasonable best efforts, after the effectiveness of a
registration statement under the Securities Act qualifying a public offering of
Registrable Securities held by an Investor, to issue and deliver, upon delivery
of a certificate representing shares of Registrable Securities held by such
Investor, that number of Registrable Securities represented by such certificate
to the Depository Trust Company ("DTC") account on the Investor's behalf via the
Deposit Withdrawal Agent Commission System ("DWAC").

     (j) Use its reasonable best efforts to furnish, at the request of any
Investor requesting registration of Registrable Securities pursuant to Section
2.2, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to Section 2.2,
if such securities are being sold through underwriters, or, if such securities
are not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, (i) an opinion,
dated such date, of the counsel representing the Company for the purposes of
such registration, in form and substance as is customarily given to underwriters
in an underwritten public offering, addressed to the underwriters, if any, and
to the Investors requesting registration of Registrable Securities and (ii) a
letter dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Investors requesting registration of
Registrable Securities (to the extent the then applicable standards of
professional conduct permit said letter to be addressed to the Investors).

     2.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 2 with
respect to the Registrable Securities of any selling Investor that such Investor
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Investor's Registrable
Securities.

                                      -7-
<PAGE>

     2.5 Expenses of Registration. All expenses other than underwriting
discounts and commissions incurred in connection with registrations initiated
pursuant to this Section 2, including all registration, filing and qualification
fees, printers' and accounting fees, fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements of one special counsel for
the selling Investors selected by Investors selling a majority of the subject
Registrable Securities with the approval of the Company, which approval shall
not be unreasonably withheld, shall be borne by the Company.

     2.6 Delay of Registration. No Investor 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.

     2.7 Indemnification. In the event any Registrable Securities are included
in a registration statement under this Section 2:

     (a) Indemnification by the Company. The Company will indemnify and hold
harmless each Investor, any underwriter (as defined in the Securities Act) for
such Investor, and each person, if any, who controls such Investor or
underwriter within the meaning of the Securities Act or the Exchange Act, and
their respective officers, directors, partners, members, brokers, investment
advisors, employees, legal counsel, accountants, and agents (collectively, the
"Indemnified Parties"), against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the 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 (iii) 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; and the Company will pay to each
such Indemnified Person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 2.7(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable to any
Indemnified Person for any such loss, claim, damage, liability, or action to the
extent that it arises solely out of or is based solely upon a Violation which
occurs in reasonable reliance upon and in conformity with written information
furnished expressly for use in connection with such registration, by such
Indemnified Person.

     (b) Indemnification by the Investors. To the extent permitted by law, each
selling Investor will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter, any other Investor

                                      -8-
<PAGE>

selling securities in such registration statement and any controlling person of
any such underwriter or other Investor, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing persons may become
subject, under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs solely in
reliance upon and in conformity with written information furnished by such
Investor expressly for use in connection with such registration; and each such
Investor will pay, as incurred, any legal or other expenses reasonably incurred
by any person intended to be indemnified pursuant to this Section 2.7(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 2.7(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Investor, which consent shall not be unreasonably withheld;
provided, that in no event shall any indemnity under this Section 2.7(b) exceed
the net proceeds from the offering received by such Investor.

     (c) Procedures. Promptly after receipt by an indemnified party under this
Section 2.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.7, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.7. 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. The indemnity agreements contained in this Section
2.7 shall not apply to amounts paid in settlement of any loss, claim, damage,
liability or action if such settlement is effected without the consent of the
indemnifying party.

     (d) Contribution. If the indemnification provided for in this Section 2.7
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim,

                                      -9-
<PAGE>

damage, or expense in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the indemnified party on
the other in connection with the statements or omissions that resulted in such
loss, liability, claim, damage or expense as well as any other relevant
equitable considerations; provided, that in no event shall any contribution by
an Investor under this Section 2.7(d) exceed the net proceeds from the offering
received by such Investor. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.

     (e) Underwriting Agreement. Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.

     (f) Survival. The obligations of the Company and Investors under this
Section 2.7 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 2, and otherwise.

     2.8 Reports Under Securities Exchange Act of 1934. With a view to making
available to the Investors the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit an Investor to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:

     (a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times for so long as the Company
remains subject to the periodic reporting requirements under Sections 13 or
15(d) of the Exchange Act;

     (b) take such action, including the voluntary registration of its Common
Stock under Section 12 of the Exchange Act, as is necessary to enable the
Investors to use Form S-3 for the sale of their Registrable Securities;

     (c) file with the SEC in a timely manner all reports and other documents as
may be required of the Company under the Securities Act and the Exchange Act;
and

     (d) furnish to any Investor, so long as the Investor owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company
whether it has complied with the reporting requirements of SEC Rule 144, the
Securities Act and the Exchange Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Investor
of any rule or regulation of the SEC which permits the selling of any such
securities without registration or pursuant to such form.

                                      -10-
<PAGE>

     2.9 Assignment of Registration Rights. The rights to cause the Company to
register securities granted Investors under Section 2 may be assigned to any
Permitted Transferee or any transferee or assignee in connection with the
transfer or assignment of all or any portion of such Investor's Registrable
Securities; provided, that (a) such transfer may otherwise be effected in
accordance with applicable securities laws and other restrictions on transfer
applicable to such shares, (b) notice of such assignment is given to the Company
and (c) such transferee or assignee agrees to be bound by all provisions of this
Agreement.

     2.10 Limitations on Subsequent Registration Rights. From and after the date
of this Agreement, the Company shall not, without the prior written consent of
Investors holding at least a majority of the then outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section 2
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 the
Registrable Securities of the Investors which is included or (b) except pursuant
to the New Equity Registration Rights Agreement, to make a demand registration
which could result in such registration statement being declared effective
within 120 days after the effective date of any registration effected pursuant
to Section 2.

     2.11 Market-Standoff Agreement.
          -------------------------

     (a) Market-Standoff Period; Agreement. In connection with a Qualified
Public Offering of the Company's equity securities for cash subsequent to the
date herein and upon request of the underwriters managing such offering of the
Company's securities, each Investor hereby agrees not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
securities of the Company (other than any disposed of in the registration and
those acquired by the Investor in the registration or thereafter in open market
transactions) without the prior written consent of such underwriters, for such
period of time (not to exceed (i) 180 days with respect to the next Qualified
Public Offering and (ii) 90 days with respect to each other Qualified Public
Offering, or in each case such shorter period as the Company agrees to with any
other person) from the effective date of such registration as may be requested
by such managing underwriters and to execute an agreement reflecting the
foregoing as may be requested by the underwriters at the time of such Qualified
Public Offering.

     (b) Limitations. The obligations described in Section 2.11(a) shall apply
only if and to the extent that all officers and directors of the Company enter
into similar agreements. If any standoff or lockup restrictions imposed on any
holder of securities of the Company is waived or terminated, then such waiver or
termination shall be granted to all Investors subject to standoff or lockup
restrictions pro rata based on the number of shares of Common Stock beneficially
held by such holder and the Investors. From and after the date of this
Agreement, the Company shall use its reasonable best efforts to ensure that all
holders of capital stock of the Company agree to be bound by terms substantially
similar to those set forth in this Section 2.11.

     (c) Stop-Transfer Instructions. In order to enforce the foregoing
covenants, the Company may impose stop-transfer instructions with respect to the
securities of

                                      -11-
<PAGE>

each Investor (and the securities of every other person subject to the
restrictions in Section 2.11(a)).

     2.12 Termination of Registration Rights. No Investor shall be entitled to
exercise any registration right provided for in this Section 2 after the earlier
of (a) such time as Rule 144 is available for the sale of all of such Investor's
Registrable Securities during a three-month period without registration, without
reference to Rule 144(k) and (b) 2 years after the consummation of the Company's
next Qualified Public Offering.

     3. Transfer Restrictions.
        ---------------------

     3.1 Restrictions on Transfer. Unless waived pursuant to Section 4.5, during
the Transfer Restriction Period, each Investor agrees not to transfer any shares
of Common Stock or Warrants received pursuant to the Purchase Agreement or
received upon any exercise of the Warrants, except pursuant to a Permitted Sale.

     3.2 Right of First Offer.
         --------------------

     (a) General. Each Investor shall have a right of first offer to purchase
its pro rata share of all Equity Securities, as defined below, that the Company
may, from time to time, propose to sell and issue after the date of this
Agreement, other than the Equity Securities excluded by Section 3.2(c) hereof.
Each Investor's pro rata share is equal to the ratio of (a) the number of shares
of the Company's Common Stock (including all shares of Common Stock issued or
issuable upon conversion, exercise or exchange of securities of the Company)
which such Investor holds immediately prior to the issuance of such Equity
Securities to (b) the total number of shares of the Company's outstanding Common
Stock (including all shares of Common Stock issued or issuable upon conversion,
exercise or exchange of securities of the Company) immediately prior to the
issuance of the Equity Securities. The term "Equity Securities" means (i) any
Common Stock, preferred stock or other equity security of the Company, (ii) any
security convertible, with or without consideration, into any common stock,
preferred stock or other equity security of the Company (including any option or
warrant to purchase such a convertible security) and (iii) any security carrying
any warrant or right to subscribe to or purchase any common stock, preferred
stock or other equity security of the Company, and any such warrant or right.

     (b) Exercise of Rights. If the Company proposes to issue any Equity
Securities, it shall give each Investor written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Investor shall have 5
Business Days from the receipt of such notice to agree to purchase its pro rata
share of the Equity Securities for the price and upon the terms and conditions
specified in the notice by giving written notice to the Company and stating
therein the quantity of Equity Securities to be purchased. Notwithstanding the
foregoing, the Company shall not be required to offer or sell such Equity
Securities to any Investor who would cause the Company to be in violation of
applicable federal securities laws by virtue of such offer or sale,

     (c) Excluded Securities. The rights of first offer established by this
Section 3 shall have no application to any of the following Equity Securities:

                                      -12-
<PAGE>

          (i) up to 100,441,177 shares of Common Stock, and/or options, warrants
     or other Common Stock purchase rights and the Common Stock issued pursuant
     to such options, warrants or other rights (as adjusted for any stock
     dividends, combinations, splits, recapitalizations and the like), issued to
     employees, officers, directors or strategic partners of, or consultants,
     advisors, lenders, vendors or lessors to, the Company or any of its
     subsidiaries pursuant to the Company's stock incentive plans or pursuant to
     other similar arrangements that are approved by the Board of Directors
     (including the representatives of the Investors);

          (ii) [Intentionally Omitted];

          (iii) any shares of Common Stock issued in connection with any stock
     split, stock dividend or recapitalization by the Company;

          (iv) any Equity Securities that are issued by the Company to the
     holders of the Company's Common Stock and warrants on a pro rata basis
     pursuant to a registration statement filed under the Securities Act;

          (v) any Equity Securities issued pursuant to any rights or agreements
     outstanding as of the date of this Agreement, or options or warrants
     outstanding as of the date of this Agreement as set forth in the Schedule
     of Exceptions to the Purchase Agreement (including Equity Securities issued
     by the Company pursuant to Nortel Note Exchange Agreement, the Series H
     Share Exchange Agreement, the Series J Share Exchange Agreement) and any
     agreement entered into after the date hereof between SDS Merchant Fund,
     L.P. and the Company providing for the conversion of the entire aggregate
     principal amount, all accrued and unpaid interest thereon and all other
     amounts payable in respect of the promissory note issued by the Company to
     SDS Merchant Fund, L.P. in March, 2002 in an initial principal amount of
     $2,000,000;

          (vi) Common Stock and warrants (and Common Stock issuable upon
     exercise of such warrants) issued by the Company pursuant to the Common
     Stock Purchase Agreement dated as of October 30, 2002, by and between the
     Company and the entities listed on Exhibit A thereto; or

          (vii) any Equity Securities issued pursuant to the transactions
     described in Section 2.5.B(iii)(d) of the Credit Agreement if the proceeds
     from such issuance are used to prepay the Loans (as defined in the Credit
     Agreement) and permanently reduce the Commitments (as defined in the Credit
     Agreement) in accordance with Section 2.5.C. of the Credit Agreement.

     4. Miscellaneous.
        -------------

     4.1 Legends. Each certificate representing shares of Common Stock held by
an Investor or any subsequent holder of such shares shall be stamped or
otherwise imprinted with legends substantially similar to the following (in
addition to any legend required under applicable state securities laws):

                                      -13-
<PAGE>

     "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED
FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAW.

     THE SALE, TRANSFER OR PLEDGE OF THIS CERTIFICATE ARE SUBJECT TO THE TERMS
AND CONDITIONS OF AN AGREEMENT BETWEEN THE COMPANY AND CERTAIN HOLDERS OF ITS
SECURITIES, AS THE SAME MAY BE AMENDED AND IN EFFECT FROM TIME TO TIME. COPIES
OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
COMPANY."

     The Company shall be obligated to reissue promptly unlegended certificates
at the request of any holder of a security legended pursuant to this Section 4
if such holder shall have obtained an opinion of counsel at such holder's
expense (which counsel may be counsel to the Company) reasonably acceptable to
the Company to the effect that the securities proposed to be disposed of may
lawfully be so disposed of without registration, qualification or legend. The
Company shall be obligated to reissue promptly certificates not having the
second paragraph of the legend set forth above at the request of any holder of a
security legended pursuant to this Section 4.1 if such holder is not a party to
this Agreement or a person who is an Investor or transferee of an Investor
hereunder.

     4.2 Entire Agreement. This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof, and any and all
other written or oral agreements relating to the subject matter hereof existing
among any of the parties hereto are expressly canceled.

     4.3 Recapitalizations, Etc. The provisions of this Agreement (including any
calculation of share ownership) shall apply, to the full extent set forth herein
with respect to the Registrable Securities, to any and all shares of capital
stock of the Company or any capital stock, partnership or member units or any
other security evidencing ownership interests in any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) that may
be issued in respect of, in exchange for, or in substitution of the Registrable
Securities by reason of any stock dividend, split, combination,
recapitalization, liquidation, reclassification, merger, consolidation or
otherwise.

     4.4 Successors and Assigns. Except as otherwise provided in this Agreement,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties
(including transferees of any Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

     4.5 Amendments and Waivers. Any term of Section 2 of this Agreement may be
amended or waived only with the written consent of the Company and the holders
of at

                                      -14-
<PAGE>

least 75% of the Registrable Securities then outstanding. Any other term of this
Agreement may be amended or waived only with the written consent of the
Investors holding at least 75% of the Common Stock (on a fully-diluted basis)
issued pursuant to the Purchase Agreement and then held by all Investors. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each Investor. Notwithstanding the foregoing, if in any particular instance
a party's obligations or rights under this Agreement are adversely affected
thereby in a disproportionately adverse manner from that in which other parties
are affected by application of this Section, the consent of such party shall
also be required in such instance.

     4.6 Notices. Unless otherwise provided, any notice required or permitted by
this Agreement shall be in writing and shall be deemed sufficient upon delivery,
when delivered personally or by overnight courier or sent by telegram or
confirmed fax, or if mailed to a domestic address, 48 hours after being
deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party's address or
fax number as set forth below or on Exhibit A hereto or as subsequently modified
by written notice.

     4.7 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.

     4.8 Delays or Omissions; Remedies Cumulative. No delay or omission to
exercise any right, power or remedy accruing to any party under this Agreement,
upon any breach or default of any other party under this Agreement, shall impair
any such right, power or remedy of such non-breaching or non-defaulting party
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.

     4.9 Attorney's Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
disbursements in addition to any other relief to which such party may be
entitled.

     4.10 Governing Law. This Agreement and all acts and transactions pursuant
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of New York, without giving effect to principles of conflicts of
laws.

                                      -15-
<PAGE>

     4.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     4.12 Interpretation. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. When used in this Agreement, the terms "include,"
"including," "includes" and other derivations of such word shall be deemed to be
followed by the phrase "without limitation."

                            [Signature Page Follows]

                                      -16-
<PAGE>

     The parties have executed this Investor's Rights Agreement as of the date
first above written.

COMPANY:
--------

FIBERNET TELECOM GROUP, INC.

By: /s/ Michael S. Liss
    ------------------------------
Name:   Michael S. Liss
Title:  President and Chief Executive
        Officer

INVESTORS:
----------

DEUTSCHE BANK AG NEW YORK BRANCH

By: /s/ David J. Bell
    ------------------------------
Name:   David J. Bell
Title:  Director

By: /s/ Alexander Richarz
    ------------------------------
Name:   Alexander Richarz
Title:  Vice President

WACHOVIA INVESTORS, INC.

By: /s/ Matthew Berk
    ------------------------------
Name:   Matthew Berk
Title:  Authorized Officer

BANK ONE, N.A.

By: /s/ Michele L. Quentin
    ------------------------------
Name:   Michele L. Quentin
Title:  Assistant Vice President

<PAGE>

IBM CREDIT CORPORATION

By: /s/ Luc Grenon
    ------------------------------
Name:   Luc Grenon
Title:  Director, Credit Operations

NORTEL NETWORKS INC.

By: /s/ Elias Makris
    ------------------------------
Name:   Elias Makris
Title:  Director, Customer Finance

TORONTO DOMINION (TEXAS), INC.

By: /s/ Jane Nixon
    ----------------------------
Name:   Jane Nixon
Title:  Vice PresidentEXHIBIT 4.3

                          REGISTRATION RIGHTS AGREEMENT
                          -----------------------------

     This Registration Rights Agreement (this "Agreement") is made and entered
into as of October 30, 2002, by and among FiberNet Telecom Group, Inc., a
Delaware corporation (the "Company"), and the purchasers listed on Schedule I
hereto (the "Purchasers").

     This Agreement is being entered into pursuant to the Common Stock Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers (the
"Purchase Agreement").

     The Company and the Purchasers hereby agree as follows:

     1. Definitions.
        -----------

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

     "Advice" shall have meaning set forth in Section 3(m).

     "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.

     "Board" shall have meaning set forth in Section 3(n).

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

     "Closing Date" means the date of the closing of the purchase and sale of
the Shares pursuant to the Purchase Agreement.

     "Commission" means the Securities and Exchange Commission.
      ----------

     "Common Stock" means the Company's Common Stock, par value $0.001 per
share.

     "Effectiveness Date" means with respect to the Registration Statement the
earlier of the 90th day following the Closing Date or the date which is within
five (5) Business Days of the date on which the Commission informs the Company
that the Commission (i) will not review

<PAGE>

the Registration Statement or (ii) that the Company may request the acceleration
of the effectiveness of the Registration Statement and the Company makes such
request.

     "Effectiveness Period" shall have the meaning set forth in Section 2.
      --------------------

     "Event" shall have the meaning set forth in Section 7(e).
      -----

     "Event Date" shall have the meaning set forth in Section 7(e).
      ----------

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

     "Filing Date" means the 30th day following the Closing Date.
      -----------

     "Holder" or "Holders" means the holder or holders, as the case may be, from
time to time of Registrable Securities.

     "Indemnified Party" shall have the meaning set forth in Section 5(c).
      -----------------

     "Indemnifying Party" shall have the meaning set forth in Section 5(c).
      ------------------

     "Investor Rights Agreement" means that certain investors' rights agreement
dated as of even date herewith, by and among the Company and the lenders under
its senior credit facility.

     "Losses" shall have the meaning set forth in Section 5(a).
      ------

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

     "Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

     "Prospectus" means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.

     "Registrable Securities" means (i) the shares of Common Stock issued to the
Purchasers pursuant to the Purchase Agreement; (ii) the shares of Common Stock
issuable upon exercise of the Warrants; (iii) the shares of Common Stock
issuable pursuant to the Series J-1 Share Exchange Agreement dated as of October
30, 2002 by and among the Company and each

                                      -2-
<PAGE>

of the holders of the Company's Series J-1 preferred stock; (iv) the shares of
Common Stock issuable upon the exercise of the Series A and Series B warrants
issued to the holders of the Company's Series J-1 preferred stock; (v) the
shares of Common Stock issuable to SDS Merchant Fund, L.P. ("SDS") pursuant to
the Note Exchange Agreement dated as of October 30, 2002 by and among the
Company and SDS (in connection with the surrender by SDS of the promissory note
issued December 7, 2001 by the Company to Nortel Networks, Inc.); (vi) the
shares of Common Stock issued pursuant to the Share Exchange Agreement dated as
of October 30, 2002 by and among the Company and each of the purchasers therein
named (which agreement provides for the issuance of Common Stock upon surrender
of shares of the Company's Series H preferred stock); and (vii) all shares of
Common Stock issuable to SDS pursuant to any agreement entered into after the
date hereof between SDS and the Company providing for the surrender by SDS to
the Company of that certain promissory note issued by the Company to SDS in
March, 2002 in an initial principal amount of $2,000,000.

     "Registration Statement" means the registration statements and any
additional registration statements contemplated by Section 2, including (in each
case) the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference in such registration
statement.

     "Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

     "Rule 158" means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

     "Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

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

     "Special Counsel" means one special counsel to the Holders, for which the
Holders will be reimbursed by the Company pursuant to Section 4.

     2. Resale Registration.
        --------------------

            On or prior to the Filing Date the Company shall prepare and file
with the Commission a "resale" Registration Statement covering all Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule
415. The Registration Statement shall be on Form S-3 (except if the Company is
not then eligible to register for resale the Registrable Securities on Form S-3,
in which case such registration shall be on another appropriate form in
accordance herewith). The Company shall (i) not permit any securities other than
the Registrable Securities and the securities listed on Schedule II hereto to be
included in the

                                      -3-
<PAGE>

Registration Statement and (ii) use its reasonable best efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, but in any event prior to the
Effectiveness Date, and to keep such Registration Statement continuously
effective under the Securities Act until such date as is the earlier of (x) the
date when all Registrable Securities covered by such Registration Statement have
been sold or (y) the date on which the Registrable Securities may be sold
without any restriction pursuant to Rule 144 as determined by the counsel to the
Company pursuant to a written opinion letter, addressed to the Company's
transfer agent to such effect (the "Effectiveness Period").

     3. Registration Procedures.
        ------------------------

     In connection with the Company's registration obligations hereunder, the
Company shall:

     (a) Prepare and file with the Commission on or prior to the Filing Date, a
Registration Statement on Form S-3 (or if the Company is not then eligible to
register for resale the Registrable Securities on Form S-3 such registration
shall be on another appropriate form in accordance herewith) in accordance with
the method or methods of distribution thereof as specified by the Holders
(except if otherwise directed by the Holders), and use its reasonable best
efforts to cause the Registration Statement to become effective and remain
effective as provided herein; provided, however, that not less than five (5)
Business Days prior to the filing of the Registration Statement or any related
Prospectus (other than documents incorporated by reference therein) or any
amendment or supplement thereto, and not less than one (1) Business Day prior to
the filing of any document that would be incorporated therein by reference, the
Company shall (i) furnish to the Holders and any Special Counsel, copies of all
such documents proposed to be filed, which documents (other than those
incorporated by reference) will be subject to the review of such Holders and
such Special Counsel, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of counsel to such Holders, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities or the Special Counsel shall reasonably object in writing
within three (3) Business Days of their receipt thereof.

     (b) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement as may be necessary to
keep the Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file with
the Commission such additional Registration Statements in order to register for
resale under the Securities Act all of the Registrable Securities; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
(iii) respond as promptly as possible, but in no event later than ten (10)
business days, to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as possible
provide the Holders true and complete copies of all correspondence from and to
the Commission relating to the Registration Statement; and (iv) comply in all
material

                                      -4-
<PAGE>

respects with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.

     (c) Notify the Holders of Registrable Securities to be sold and any Special
Counsel as promptly as possible (and, in the case of (i)(A) below, not less than
five (5) days prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one (1) Business Day following the
day (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is filed; (B) when the Commission
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement and (C) with respect to the 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 the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time any of the representations and warranties of the
Company contained in any agreement contemplated hereby ceases to be true and
correct in all material respects; (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event that makes any statement made
in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

     (d) Use its reasonable best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

     (e) If requested by the Holders of a majority of the Registrable
Securities, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as the
Company reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment.

     (f) Furnish to each Holder and any Special Counsel, without charge, at
least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, and, to the extent
requested by such Person, all documents

                                      -5-
<PAGE>

incorporated or deemed to be incorporated therein by reference, and all exhibits
(including those previously furnished or incorporated by reference) promptly
after the filing of such documents with the Commission.

     (g) Promptly deliver to each Holder and any Special Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.

     (h) Prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with the selling
Holders and any Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.

     (i) Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold pursuant
to a Registration Statement, which certificates shall be free of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any Holder may request at least two (2) Business
Days prior to any sale of Registrable Securities.

     (j) Upon the occurrence of any event contemplated by Section 3(c)(vi), as
promptly as possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain 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,
in the light of the circumstances under which they were made, not misleading.

     (k) Use its reasonable best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on The Nasdaq SmallCap
Market, OTC Bulletin Board or any other securities exchange, quotation system or
market, if any, on which similar securities issued by the Company are then
listed as and when required pursuant to the Purchase Agreement.

                                      -6-
<PAGE>

     (l) Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.

     (m) The Company may require each selling Holder to furnish to the Company
information regarding such Holder and the distribution of such Registrable
Securities as is required by law to be disclosed in the Registration Statement,
and the Company may exclude from such registration the Registrable Securities of
any such Holder who fails to furnish such information within a reasonable time
after receiving such request.

     If the Registration Statement refers to any Holder by name or otherwise as
the holder of any securities of the Company, then such Holder shall have the
right to require (if such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force) the
deletion of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.

     Each Holder covenants and agrees that (i) it will not sell any Registrable
Securities under the Registration Statement until it has received copies of the
Prospectus as then amended or supplemented as contemplated in Section 3(g) and
notice from the Company that such Registration Statement and any post-effective
amendments thereto have become effective as contemplated by Section 3(c) and
(ii) it and its officers, directors or Affiliates, if any, will comply with the
prospectus delivery requirements of the Securities Act as applicable to them in
connection with sales of Registrable Securities pursuant to the Registration
Statement.

     Each Holder agrees by its acquisition of such Registrable Securities that,
upon receipt of a notice from the Company of the occurrence of any event of the
kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi),
such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.

     (n) If (i) there is material non-public information regarding the Company
which the Company's Board of Directors (the "Board") reasonably determines not
to be in the Company's best interest to disclose and which the Company is not
otherwise required to disclose, or (ii) there is a significant business
opportunity (including, but not limited to, the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company which the Board reasonably determines not to be in the Company's best
interest to disclose, then the Company may postpone

                                      -7-
<PAGE>

or suspend filing or effectiveness of a registration statement for a period not
to exceed 30 consecutive days, provided that the Company may not postpone or
suspend its obligation under this Section 3(n) for more than 45 days in the
aggregate during any 12 month period; provided, however, that no such
postponement or suspension shall be permitted for consecutive 30 day periods,
arising out of the same set of facts, circumstances or transactions.

     4. Registration Expenses.
        ---------------------

     All fees and expenses incident to the performance of or compliance with
this Agreement by the Company, except as and to the extent specified in this
Section 4, shall be borne by the Company whether or not the Registration
Statement is filed or becomes effective and whether or not any Registrable
Securities are sold pursuant to the Registration Statement. The fees and
expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with The
Nasdaq SmallCap Market and each other securities exchange or market on which
Registrable Securities are required hereunder to be listed, (B) with respect to
filings required to be made with the National Association of Securities Dealers,
Inc. and the NASD Regulation, Inc. and (C) in compliance with state securities
or Blue Sky laws (including, without limitation, fees and disbursements of
counsel for the Holders in connection with Blue Sky qualifications of the
Registrable Securities and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions as the Holders of
a majority of Registrable Securities may designate)), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is requested by the holders of a majority of the Registrable
Securities included in the Registration Statement), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company
and Special Counsel for the Holders, in the case of the Special Counsel, to a
maximum amount of $5,000, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement, including, without limitation, the Company's
independent public accountants (including the expenses of any comfort letters or
costs associated with the delivery by independent public accountants of a
comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.

     5. Indemnification.
        ---------------

     (a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and

                                      -8-
<PAGE>

the officers, directors, agents and employees of each such controlling Person,
to the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
costs of preparation and attorneys' fees) and expenses (collectively, "Losses"),
as incurred, arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading; provided that (i) the foregoing indemnity
shall not apply to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding such Holder
or such other Indemnified Party furnished in writing to the Company by such
Holder expressly for use therein, which information was reasonably relied on by
the Company for use therein or to the extent that such information relates to
such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto, and (ii) the foregoing
indemnity shall not inure to a Holder or to any Person from whom the Person
asserting any Loss purchased Registrable Securities if copies of the Prospectus
were timely delivered to the Holders or their representatives pursuant hereto
and a copy of the Prospectus (as then amended and supplemented if the Company
shall have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Holder or such other Person to the Person
asserting such Loss, if required by law so to have been delivered, at or prior
to the written confirmation of the sale of any Registrable Securities to such
Person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such Loss. The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.

     (b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, the directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to any appeal or review), as incurred, to the extent arising solely out of or
based solely upon any untrue statement of a material fact contained in the
Registration Statement, any Prospectus, or any form of prospectus, or arising
solely out of or based solely upon any omission of a material fact required to
be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder or other Indemnified Party to
the Company specifically for inclusion in the Registration Statement or such
Prospectus and that such information was reasonably relied upon by the Company
for use in the Registration Statement, such Prospectus or such form of
prospectus or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of

                                      -9-
<PAGE>

Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in the Registration Statement, such Prospectus or
such form of Prospectus.

     (c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party) in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.

     An Indemnified Party shall have the right to employ separate counsel in any
such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel (which shall be reasonably acceptable to the
Indemnifying Party) that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, the Indemnifying Party shall be responsible for reasonable fees and
expenses of no more than one counsel for Indemnified Parties. The Indemnifying
Party shall not be liable for any settlement of any such Proceeding effected
without its written consent, which consent shall not be unreasonably withheld or
delayed. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.

     All fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).

     (d) Contribution. If a claim for indemnification under Section 5(a) or 5(b)
is unavailable to an Indemnified Party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with its
terms (by reason of public policy or

                                      -10-
<PAGE>

otherwise), 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, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying, Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

     The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
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.

     The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties

     6. Rule 144.
        --------

     As long as any Holder owns any Shares, the Company covenants to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act and to promptly furnish
the Holders with true and complete copies of all such filings. As long as any
Holder owns any Shares, if the Company is not required to file reports pursuant
to Section 13(a) or 15(d) of the Exchange Act, it will prepare and furnish to
the Holders and make publicly available in accordance with Rule 144(c)
promulgated under the Securities Act annual and quarterly financial statements,
together with a discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act, as
well as any other information required thereby, in the time period that such
filings would have been required to have been made under the Exchange Act. The
Company further covenants that it will take such further action as any Holder
may reasonably request, all to the extent required from time to time to enable
such Person to sell the Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 promulgated under
the Securities Act, including providing any legal opinions relating to such sale
pursuant to Rule 144. Upon the

                                      -11-
<PAGE>

request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.

     7. Miscellaneous.
        -------------

     (a) Remedies. In the event of a breach by the Company or by a Holder, of
any of their obligations under this Agreement, each 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 each
Holder agree that monetary damages would not provide adequate 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.

     (b) No Inconsistent Agreements. Other than the Investor Rights Agreement,
neither the Company nor any of its subsidiaries has, as of the date hereof
entered into and currently in effect, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Except as disclosed in Schedule 2.1(c) of the Purchase Agreement, neither the
Company nor any of its subsidiaries has previously entered into any agreement
currently in effect granting any registration rights with respect to any of its
securities to any Person. Without limiting the generality of the foregoing,
without the written consent of the Holders of a majority of the then outstanding
Registrable Securities, the Company shall not grant to any Person the right to
request the Company to register any securities of the Company (other than in
connection with the Investor Rights Agreement), under the Securities Act unless
the rights so granted are subject in all respects to the prior rights in full of
the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.

     (c) No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto, the
holders of the "Registrable Securities" as defined in the Investor Rights
Agreement, or as disclosed in Schedule 2.1(c) of the Purchase Agreement) may
include securities of the Company in the Registration Statement, and the Company
shall not after the date hereof enter into any agreement providing such right to
any of its securityholders, unless the right so granted is subject in all
respects to the prior rights in full of the Holders set forth herein, and is not
otherwise in conflict with the provisions of this Agreement.

     (d) Intentionally Omitted.
         ---------------------

     (e) Failure to File Registration Statement and Other Events. The Company
and the Purchasers agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Time or if
certain other events occur. The Company and the Holders further agree

                                      -12-
<PAGE>

that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, if (A) the Registration Statement is not filed on or
prior to the Filing Date, or (B) the Registration Statement is not declared
effective by the Commission on or prior to the 120th day after the Closing Date,
or (C) the Company fails to file with the Commission a request for acceleration
in accordance with Rule 461 promulgated under the Securities Act within five (5)
Business Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration Statement will not
be "reviewed," or not subject to further review, or (D) the Registration
Statement is filed with and declared effective by the Commission but thereafter
ceases to be effective as to all Registrable Securities at any time prior to the
expiration of the Effectiveness Period, without being succeeded immediately by a
subsequent Registration Statement filed with and declared effective by the
Commission, or (E) the Company has breached Section 3(n), or (F) trading in the
Common Stock shall be suspended or if the Common Stock is delisted from The
Nasdaq SmallCap Market or the OTC Bulletin Board for any reason for more than
five Business Days in the aggregate (any such failure or breach being referred
to as an "Event," and for purposes of clauses (A) and (B) the date on which such
Event occurs, or for purposes of clause (C) the date on which such five Business
Day period is exceeded, or for purposes of clause (D) after more than fifteen
Business Days, or for purposes of clause (F) the date on which such three
Business Day period is exceeded, being referred to as "Event Date"), the Company
shall pay an amount as liquidated damages to each Holder equal to 0.3284% for
the first calendar month and 0.5365% per calendar month thereafter or portion
thereof of the Holder's initial investment in the Shares (as determined in
accordance with Schedule III attached hereto) from the Event Date (provided
that, with respect to the Event described in clause (B), the "first calendar
month" shall be deemed to commence on the 30th day prior to the applicable Event
Date) until the applicable Event is cured; provided, that, liquidated damages
for the first calendar month upon the occurrence of an Event shall be payable in
cash only, and for each calendar month thereafter shall be payable at the
Company's option in cash or shares of Common Stock. Notwithstanding anything to
the contrary in this paragraph (e), if (i) any of the Events described in
clauses (A), (B) or (C) shall have occurred, (II) on or prior to the applicable
Event Date, the Company shall have exercised its rights under Section 3(n)
hereof and (III) the postponement or suspension permitted pursuant to such
Section 3(n) shall remain effective as of such applicable Event Date, then the
applicable Event Date shall be deemed instead to occur on the second Business
Day following the termination of such postponement or suspension. If the Company
elects to pay in shares of Common Stock, the number of such shares of Common
Stock to be issued to the Holders pursuant to this paragraph (e) shall be based
on the liquidated damage amount divided by the average closing bid price of the
Common Stock for the five trading days prior to such Event Date and shall be
issuable promptly upon receipt by the Company of a written demand from a Holder
made on or after the Event Date.

     (f) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Holders of
a majority of the Registrable Securities outstanding.

     (g) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and

                                      -13-
<PAGE>

effective on the earlier of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified for notice prior to 5:00 p.m., New York City time, on a Business Day,
(ii) the Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified for notice later than 5:00 p.m., New York City time, on any date and
earlier than 11:59 p.m., New York City time, on such date, (iii) the Business
Day following the date of mailing, if sent by nationally recognized overnight
courier service or (iv) actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be with
respect to each Holder at its address set forth under its name on Schedule I
attached hereto, or with respect to the Company, addressed to:

                        FiberNet Telecom Group, Inc.
                        570 Lexington Avenue
                        New York, New York 10022
                        Attention: President
                        Tel. No.: (212) 405-6200
                        Fax No.:  (212) 421-8860

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice.

     (h) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns and
shall inure to the benefit of each Holder and its successors and assigns. The
Company may not assign this Agreement or any of its rights or obligations
hereunder without the prior written consent of each Holder. Each Purchaser may
assign its rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.

     (i) Assignment of Registration Rights. The rights of each Holder hereunder,
including the right to have the Company register for resale Registrable
Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any Affiliate of such Holder or any
other Holder or Affiliate of any other Holder of all or a portion of the
Registrable Securities if: (i) the Holder agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment the further
disposition of such securities by the transferee or assignees is restricted
under the Securities Act and applicable state securities laws, (iv) at or before
the time the Company receives the written notice contemplated by clause (ii) of
this Section, the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions of this Agreement, (v) such transfer shall
have been made in accordance with the applicable requirements of the Purchase
Agreement, and (vi) at least 1,000,000 shares of Registrable Securities
(appropriately adjusted for any stock dividend, split or combination of the
Common Stock) are being transferred to such transferee or assignee in connection
with such assignment of rights. In addition, each Holder shall have the right to

                                      -14-
<PAGE>

assign its rights hereunder to any other Person with the prior written consent
of the Company, which consent shall not be unreasonably withheld. The rights to
assignment shall apply to the Holders (and to subsequent) successors and
assigns.

     (j) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.

     (k) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law thereof.

     (l) Cumulative Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.

     (m) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, void or unenforceable in any respect,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

     (n) Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

     (o) Shares Held by the Company and its Affiliates. Whenever the consent or
approval of Holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by the Company or its Affiliates
(other than any Holder or transferees or successors or assigns thereof if such
Holder is deemed to be an Affiliate solely by reason of its holdings of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -15-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.

                                    FIBERNET TELECOM GROUP, INC.

                                    By:  /s/ Michael S. Liss
                                         ---------------------------------------
                                         Name:   Michael S. Liss
                                        Title:   President and Chief Executive
                                                 Officer

                                    PURCHASERS:

                                    By: /s/ Judith E. Olinger
                                        ---------------------------------------
                                        Name:   Judith E. Olinger
                                        Title:  Investor

                                    By: /s/ Myles S. Jerdan
                                        ---------------------------------------
                                        Name:   Myles S. Jerdan
                                        Title:  President, Jerden Enterprises

                                    By: /s/ Alan R. Cohen
                                        ---------------------------------------
                                        Name:   Alan R. Cohen
                                        Title:  Investor

                                    By: /s/ Thomas Contino
                                        ---------------------------------------
                                        Name:   Thomas Contino
                                        Title:  Investor

                                    By: /s/ Jerry D'Anduno
                                        ---------------------------------------
                                        Name:   Jerry D'Anduno
                                        Title:  Investor

                                    By: /s/ William R. Denslow, Jr.
                                        ---------------------------------------
                                        Name:   William R. Denslow, Jr.
                                        Title:  Chairman, Penny Lane, Inc.

                                    By: /s/ Robert W. Duggan
                                        ---------------------------------------
                                        Name:   Robert W. Duggan
                                                Duggan & Associates

                                    By: /s/ Jared Bluestein
                                        ---------------------------------------
                                        Name:   Jared Bluestein
                                        Title:  Director, Alexander Enterprise
                                                Holdings Corp.

                                    By: /s/ Jack Gilbert
                                        ---------------------------------------
                                        Name:   Jack Gilbert
                                        Title:  Investor
<PAGE>

                                    By: /s/ Eliot D. Gersten
                                        ---------------------------------------
                                        Name:   Eliot D. Gersten

                                    By: /s/ Robert Spiegel
                                        ---------------------------------------
                                        Name:   Robert Spiegel
                                        Title:  General Partner,
                                                Trautman Wasserman
                                                8701 Opportunities Fund

                                    By: /s/ Santos Petrocelli
                                        ---------------------------------------
                                        Name:   Santos Petrocelli
                                        Title:  President, SMFS, Inc.

                                    By: /s/ Lawrence Polan
                                        ---------------------------------------
                                        Name:   Lawrence Polan
                                        Title:  President, LPS Consultants Inc.

                                    By: /s/ Michael S. Liss
                                        ---------------------------------------
                                        Name:   Michael S. Liss
                                        Title:  Sole Member, MLS Investments LLC

                                    By: /s/ Randall M. Tuggle
                                        ---------------------------------------
                                        Name:   Randall M. Tuggle
                                        Title:  Investor

                                    By: /s/ Stuart Jacobsen
                                        ---------------------------------------
                                        Name:   Stuart Jacobsen
                                        Title:  Investor

                                    By: /s/ Andrew Wilder
                                        ---------------------------------------
                                        Name:   Andrew Wilder
                                        Title:  Chief Financial Officer
                                                DMG Legacy Fund LLC

<PAGE>

                                    By: /s/ Andrew Wilder
                                        ---------------------------------------
                                        Name:   Andrew Wilder
                                        Title:  Chief Financial Officer
                                                DMG Legacy International Ltd.

                                    By: /s/ Andrew Wilder
                                        ---------------------------------------
                                        Name:   Andrew Wilder
                                        Title:  Chief Financial Officer
                                                DMG Legacy Institutional
                                                Fund LLC

                                    By: /s/ Scott E. Derby
                                        ---------------------------------------
                                        Name:   Scott E. Derby
                                        Title:  Principal
                                                Sargon Capital International
                                                Fund Ltd.

                                    By: /s/ Scott E. Derby
                                        ---------------------------------------
                                        Name:   Scott E. Derby
                                        Title:  General Counsel,
                                                SDS Merchant Fund LP

                                    By: /s/ Steven H. Tishman
                                        ---------------------------------------
                                        Name:   Steven H. Tishman
                                        Title:  Investor

                                    By: /s/ Michael P. Rucker
                                        ---------------------------------------
                                        Name:   Michael P. Rucker
                                        Title:  Trustee, Helen Jones
                                                Marital Trust

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