Document:

Exhibit 10.30

THE WARRANTS  REPRESENTED BY THIS  CERTIFICATE AND THE SECURITIES  ISSUABLE UPON
EXERCISE  THEREOF HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED  (THE  "ACT"),  AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE  REGISTRATION  STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF  SECURITIES),  OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY,  STATING  THAT  AN  EXEMPTION  FROM  REGISTRATION  UNDER  SUCH  ACT  IS
AVAILABLE.

                            EXERCISABLE ON OR BEFORE
                     5:00 P.M., NEW YORK TIME, APRIL 7, 2005

125,000 Warrants

                                     WARRANT

         This Warrant  certifies that JAMES  NICHOLSON,  4 Patrick Natale Court,
Stony Point,  New York,  10980,  or his  registered  assigns,  is the registered
holder of Warrants to purchase,  at any time from June 2, 2002,  until 5:00 P.M.
New York City  time on April 7,  2005  ("Expiration  Date"),  up to  one-hundred
twenty-five   thousand   (125,000)  shares  (the  "Shares")  of  fully-paid  and
non-assessable  common stock,  no par value per share (the "Common  Stock"),  of
Frontline  Communications  Corp., a Delaware corporation (the "Company") subject
to the terms and  conditions  set forth  herein.  This  Warrant  and any Warrant
resulting  from a  transfer  or  subdivision  of this  Warrant  shall  sometimes
hereinafter be referred to as a "Warrant" or, collectively, as the "Warrants".

              I. Exercise of Warrants.  Each Warrant is  exercisable to purchase
one share of Common Stock at a purchase price of $.08 per Share,  subject to the
adjustment  provisions  below,  payable  in cash or by check to the order of the
Company,  or any  combination of cash or check.  Upon surrender of this Warrant,

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along with a) the duly executed "Form of Election to Purchase" annexed hereto as
exhibit "A"; b) the duly executed  "Investment  Representation  Letter"  annexed
hereto as exhibit  "B";  and c) payment of the  Purchase  Price (as  hereinafter
defined) for the Shares purchased, at the Company's principal offices (presently
located at One Blue Hill Plaza,  P.O. Box 1548, Pearl River, New York 10965) the
registered  holder of a Warrant  ("Holder"  or  "Holders")  shall be entitled to
receive a certificate or certificates for the shares so purchased.  The purchase
rights  represented by this Warrant are  exercisable at the option of the Holder
hereof, in whole only (but not as to fractional shares of the Common Stock).

         2. Issuance of  Certificates.  Upon the exercise of the  Warrants,  the
issuance of  certificates  for the Shares  shall be made  forthwith  (and in any
event within five (5) business  days  thereafter)  without  charge to the Holder
thereof including,  without limitation,  any tax which may be payable in respect
of the issuance thereof,  and such certificates shall (subject to the provisions
of  Article  3 hereof)  be  issued  in the name of,  or in such  names as may be
directed by, the Holder thereof;  provided,  however, that the Company shall not
be  required  to pay any tax which may be payable  in  respect  of any  transfer
involved in the issuance and delivery of any such  certificates  in a name other
than  that of the  Holder  and the  Company  shall not be  required  to issue or
deliver such certificates  unless or until the person or persons  requesting the
issuance  thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

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         The certificates representing the Shares shall be executed on behalf of
the Company by the manual or facsimile  signature of those officers  required to
sign such certificates under applicable law.

         This Warrant  and,  upon  exercise of the  Warrants,  the  certificates
representing  the  Shares  shall  bear a  legend  substantially  similar  to the
following:

         "The  securities   represented  by  this   certificate  have  not  been
         registered  under the Securities Act of 1933, as amended  ("Act"),  and
         may  not be  offered  or  sold  except  (i)  pursuant  to an  effective
         registration  statement  under the Act, (ii) to the extent  applicable,
         pursuant to Rule 144 under the Act (or any similar  rule under such Act
         relating to the disposition of securities),  or (iii) upon the delivery
         by the  holder to the  Company of an  opinion  of  counsel,  reasonably
         satisfactory  to counsel to the issuer,  stating that an exemption from
         registration under such Act is available."

         3. Restriction on Transfer of Warrants.  The Holder of this Warrant, by
its acceptance thereof, covenants and agrees that the Warrants and the shares of
Common Stock  issuable  upon  exercise of the Warrants are being  acquired as an
investment and not with a view to the distribution thereof.

         4. Price.

              4.1.  Initial and Adjusted  Purchase Price.  The initial  purchase
price of each Warrant shall be $.08 per Share. The adjusted purchase price shall
be the price which shall  result from time to time from any and all  adjustments
of the initial  purchase  price in accordance  with the  provisions of Article 5
hereof.

         4.2.  Purchase Price.  The term "Purchase  Price" herein shall mean the
initial  purchase  price or the  adjusted  purchase  price,  depending  upon the
context.

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         5. Adjustments of Purchase Price and Number of Shares.

              5.1. Dividends and Distributions. In case the Company shall at any
time pay a  dividend  in shares  of Common  Stock,  then upon such  dividend  or
distribution, the Purchase Price in effect immediately prior to such event shall
be reduced to a price determined by dividing an amount equal to the total number
of shares of Common  Stock  outstanding  immediately  prior to such  dividend or
distribution  multiplied by the Purchase  Price in effect  immediately  prior to
such  dividend or  distribution  by the total  number of shares of Common  Stock
outstanding immediately after such issuance or sale.

              5.2. Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding  shares of Common Stock,  the Purchase
Price shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.

              5.3.  Adjustment in Number of Shares.  Upon each adjustment of the
Purchase  Price  pursuant  to the  provisions  of this  Article 5, the number of
Shares  issuable  upon the  exercise  of each  Warrant  shall be adjusted to the
nearest full Share by multiplying a number equal to the Purchase Price in effect
immediately  prior to such  adjustment  by the  number of Shares  issuable  upon
exercise of the Warrants  immediately  prior to such adjustment and dividing the
product so obtained by the adjusted Purchase Price.

              5.4. Reclassification,  Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than

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a change in par value to no par value,  or from no par value to par value, or as
a result of a subdivision or combination),  or in the case of any  consolidation
of the Company with, or merger of the Company into,  another  corporation (other
than a consolidation or merger in which the Company is the surviving corporation
and which does not result in any  reclassification  or change of the outstanding
shares  of  Common  Stock,  except a  change  as a result  of a  subdivision  or
combination of such shares or a change in par value,  as  aforesaid),  or in the
case of a sale or  conveyance  to another  corporation  of the  property  of the
Company as an entirety,  the Holder shall  thereafter have the right to purchase
the kind and  number  of  shares of stock  and  other  securities  and  property
receivable upon such reclassification,  change,  consolidation,  merger, sale or
conveyance  as if the  Holder  were the  owner of the  shares  of  Common  Stock
underlying the Warrants immediately prior to any such events at a price equal to
the product of (x) the number of shares  issuable  upon exercise of the Warrants
and (y) the Purchase  Price in effect  immediately  prior to the record date for
such reclassification,  change, consolidation,  merger, sale or conveyance as if
such Holder had exercised the Warrants.

              6.  Exchange  and   Replacement  of  Warrants.   Each  Warrant  is
exchangeable without expense, upon the surrender hereof by the registered Holder
at the  principal  executive  office of the  Company,  for a new Warrant of like
tenor and date  representing  in the  aggregate  the right to purchase  the same
number of Shares in such  denominations  as shall be  designated  by the  Holder
thereof at the time of such surrender.

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         Upon receipt by the Company of evidence  reasonably  satisfactory to it
of the loss,  theft,  destruction or mutilation of any Warrant,  and, in case of
loss, theft or destruction,  of indemnity or security reasonably satisfactory to
it, and  reimbursement  to the  Company of all  reasonable  expenses  incidental
thereto, and upon surrender and cancellation of the Warrants, if mutilated,  the
Company will make and deliver a new Warrant of like tenor, in lieu thereof.

         7.  Elimination  of  Fractional  Interests.  The  Company  shall not be
required to issue certificates  representing fractions of shares of Common Stock
and  shall  not be  required  to issue  scrip or pay cash in lieu of  fractional
interests,  it being the intent of the  parties  that all  fractional  interests
shall be  eliminated  by rounding any fraction up to the nearest whole number of
shares of Common Stock.

         8. Reservation of Shares.  The Company has reserved a sufficient number
of shares of Common  Stock for  issuance  upon  exercise  of the  Warrants.  The
Company  covenants and agrees that, upon exercise of the Warrants and payment of
the  Purchase  Price  therefor,  all shares of Common Stock  issuable  upon such
exercise shall be duly and validly  issued,  fully paid,  nonassessable  and not
subject to the preemptive rights of any shareholder.

         9. Notices to Warrant  Holders.  Nothing  contained  in this  Agreement
shall be construed as conferring upon the Holder or Holders the right to vote or
to consent or to receive  notice as a shareholder  in respect of any meetings of
shareholders for the election of directors or any other matter, or as having any
rights  whatsoever as a shareholder  of the Company.  If,  however,  at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:

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                                     (a) the Company  shall take a record of the
                  holders  of its  shares of Common  Stock  for the  purpose  of
                  entitling them to receive a dividend or  distribution  payable
                  otherwise  than in cash,  or a cash  dividend or  distribution
                  payable otherwise than out of current or retained earnings, as
                  indicated  by the  accounting  treatment  of such  dividend or
                  distribution on the books of the Company; or

                                     (b)  the  Company  shall  offer  to all the
                  holders of its Common Stock any  additional  shares of capital
                  stock  of  the  Company  or  securities  convertible  into  or
                  exchangeable  for shares of capital  stock of the Company,  or
                  any option, right or warrant to subscribe therefor; or

                                     (c) a  dissolution,  liquidation or winding
                  up  of  the  Company   (other  than  in   connection   with  a
                  consolidation or merger) or a sale of all or substantially all
                  of its property,  assets and business as an entirety  shall be
                  proposed;

then, in any one or more of said events,  the Company shall give written  notice
of such  event at least  fifteen  (15) days  prior to the date fixed as a record
date or the date of closing  the  transfer  books for the  determination  of the
shareholders   entitled  to  such   dividend,   distribution,   convertible   or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such  proposed  dissolution,  liquidation,  winding up or sale.  Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be.  Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection  with the  declaration  or
payment of any such dividend or distribution, or the issuance of any convertible
or exchangeable  securities or subscription rights,  options or warrants, or any
proposed dissolution, liquidation, winding up or sale.

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<PAGE>

         10. Notices. All notices,  requests,  consents and other communications
hereunder  shall be in  writing  and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:

                                     (a)  If  to  a  registered  Holder  of  the
                  Warrants,  to the address of such Holder as shown on the books
                  of the Company; or

                                     (b) If to the  Company,  to the address set
                  forth in Section 1 of this  Agreement or to such other address
                  as the Company may designate by notice to the Holders.

         11.  Successors.  All the covenants and provisions of this Agreement by
or for the benefit of the Company and the Holders  inure to the benefit of their
respective successors and assigns hereunder.

         IN WITNESS  WHEREOF,  the Company  has caused  this  Warrant to be duly
executed, as of the day and year first above written.

[SEAL]                          Frontline Communications Corporation

                                By: /s/
                                    ---------------------------------------
                                    Name: Stephen J. Cole-Hatchard
                                    Title: CEO

Attest:

-------------------------

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                                    EXHIBIT A

To:    Frontline Communications Corp.
       One Blue Hill Plaza
       POB 1548
       Pearl River, New York 10965

ELECTION TO EXERCISE

       The  undersigned   hereby   exercises  his  or  its  rights  to  purchase
________________  Shares  covered  by the within  Warrant  and  tenders  payment
herewith in the amount of $_______________ in accordance with the terms thereof,
certifies that he owns this Warrant free and clear of any and all claims,  liens
and/or encumbrances and requests that certificates for such securities be issued
in the name of, and delivered to:

                           ------------------------------------------

                           ------------------------------------------

                           ------------------------------------------
                           Print  Name,  Address,  and  Social  Security  or Tax
                           Identification Number of Person Receiving Shares

Dated:_________________, 200__

Your Name: _____________________________
                  (Print)

Address:     ______________________________

Signature:  ______________________________

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                                    EXHIBIT B

                        Investment Representation Letter

                                                         ________________, 200__

Frontline Communications Corp.
One Blue Hill Plaza
POB 1548
Pearl River, New York 10965

Gentlemen:

                  In  connection   with  the  issuance  to  the  undersigned  of
____________  shares (the  "Shares")  of common  stock (the  "Common  Stock") of
Frontline  Communications  Corp.  (the  "Company") upon exercise of that certain
warrant  issued by the  Company  in favor of the  undersigned,  the  undersigned
hereby represents, warrants to, and covenants with the Company as follows:

                  The undersigned  understands that (A) the Shares have not been
registered  under the  Securities  Act of 1933,  as amended (the "Act"),  or the
securities  laws of any  state,  based  upon  applicable  exemptions  from  such
registration  requirements;  (B) the Shares are "restricted securities," as said
term is defined in Rule 144 of the Rules and Regulations  promulgated  under the
Act;  (C) the Shares may not be sold or otherwise  transferred  unless they have
been first registered under the Act and all applicable state securities laws, or
unless exemptions from such  registration  provisions are available with respect
to said resale or transfer;  (D) a legend to the foregoing effect will be placed
on the  certificate  or  certificates  representing  the  Shares;  and (E)  stop
transfer  instructions  with  respect to the  foregoing  will be placed with the
transfer agent for the Common Stock with respect to the Shares;

         The  undersigned  is acquiring the Shares solely for the account of the
undersigned  for  investment  purposes only, and not with a current view towards
the distribution thereof;

                  (iii) The  undersigned  agrees that the  undersigned  will not
sell,  transfer,  hypothecate  or  otherwise  dispose of the  Shares  other than
pursuant  to an  effective  registration  statement  under the Act unless  prior
thereto the Company receives either an opinion, in form and substance reasonably
acceptable  to  the  Company,  of the  Company's  counsel  or  counsel  for  the
undersigned  reasonably acceptable to the Company, that the proposed transaction
may be effected without compliance with the registration provisions of the Act;

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<PAGE>

                  (iv) The undersigned (or the representative of the undersigned
if the  undersigned  is an  entity)  has  had a  reasonable  opportunity  to ask
questions of and receive answers from the Company, or a person or persons acting
on behalf of the Company,  concerning  the Company and its financial  condition,
and all such questions,  if any, have been answered to the full  satisfaction of
the undersigned (or such representative);

                  (v) The undersigned (or the  representative of the undersigned
if the  undersigned  is an entity) has the financial and business  expertise and
experience  required to make an informed investment decision with respect to the
Company and the Shares;

                  (vi) The  undersigned  hereby  agrees to indemnify the Company
and hold it harmless from and against any and all losses, damages,  liabilities,
costs and expenses  which it may sustain or incur in connection  with the breach
by the  undersigned  of any  representation,  warranty or  covenant  made by the
undersigned herein; and

                  (vii) In rendering  any opinion to the transfer  agent for the
Common Stock with respect to the issuance of the Shares, counsel for the Company
may rely on the  representations of the undersigned  contained herein as if they
were made directly to them.

                                     ----------------------------------
                                     Name of Investor [please print]

                                     ----------------------------------
                                     Signature of Investor

                                     ----------------------------------
                                     Title(if signed on behalf of an entity)

                                     ----------------------------------
                                     Address of Investor

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                                    EXHIBIT C

                               FORM OF ASSIGNMENT

(To be executed by the registered  holder if such holder desires to transfer the
attached Warrant.)

         FOR VALUE RECEIVED,  ___________________________ hereby sells, assigns,
and  transfers   unto   _____________________________   a  Warrant  to  purchase
_____________  shares of Common  Stock,  $.01 par value per share,  of Frontline
Communications  Corp.  (the  "Company"),  together  with all right,  title,  and
interest   therein,   and  does  hereby   irrevocably   constitute  and  appoint
______________________  attorney  to transfer  such  Warrant on the books of the
Company, with full power of substitution.

Dated: ________________, 200__

Signature _________________________________

Signature Guaranteed:

NOTICE

         The signature on the foregoing  Assignment  must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.

                                       12<PAGE>

EXHIBIT 10.31

                      FRONTLINE COMMUNICATIONS CORPORATION

                  SUBSCRIPTION AGREEMENT made as of this 25th day of November,
2003 between Frontline Communications Corporation, a corporation organized under
the laws of the State of Delaware with offices at One Blue Hill Plaza, P.O. Box
1548, Pearl River, New York 10965 (the "COMPANY"), and Scarborough Ltd. (the
"SUBSCRIBER").

                  WHEREAS, the Company desires to issue in a private placement
(the "PLACEMENT"): (i) 1,666,666 shares of the Company's common stock, $.01 par
value ("COMMON STOCK"), (ii) one (1) three-year warrant (the "A WARRANT") to
purchase 750,000 shares of the Company's Common Stock at an exercise price equal
to $.01 per share, and (iii) one (1) fo31rty-five (45) day warrant (subject to
extension as provided therein) (the "B WARRANT") to purchase 1,666,666 shares of
the Company's Common Stock at an exercise price equal to $.30 per share plus,
upon exercise of the B Warrant, one (1) three-year warrant (the "B2 WARRANT") to
purchase 1,250,000 shares of the Company's Common Stock at an exercise price
equal to $.01 per share, in the form attached as EXHIBIT A (collectively, the A,
B and B2 Warrants, the "WARRANTS");

                  WHEREAS, Beaufort International Associates Limited (the
"PLACEMENT AGENT") is acting as placement agent in connection with the
Placement;

                  NOW, THEREFORE, for and in consideration of the promises and
the mutual covenants hereinafter set forth, the parties hereto do hereby agree
as follows:

                  I. SUBSCRIPTION FOR COMMON AND WARRANTS AND REPRESENTATIONS BY
AND COVENANTS OF SUBSCRIBER

                  1.1 Subject to the terms and conditions hereinafter set forth,
the Subscriber hereby subscribes for and agrees to purchase from the Company
1,666,666 shares of Common Stock, one (1) A Warrant and one (1) B Warrant, at a
price equal to $500,000, and the Company agrees to sell such Common Stock, A
Warrant and B Warrant to the Subscriber for said purchase price. The purchase
price is payable by certified or bank check made payable to "Loeb & Loeb, LLP,
as Escrow Agent" or by wire transfer of funds, contemporaneously with the
execution and delivery of this Subscription Agreement. The Placement shall be
consummated after the release of all funds and securities due hereunder held in
escrow by Loeb & Loeb, LLP, as escrow agent (the "ESCROW AGENT") pursuant to the
terms of paragraph 3.2 herein.

                  1.2 The Subscriber recognizes that the purchase of Common
Stock, Warrants, the shares of common stock issuable upon the exercise of the A
and B Warrants (the "WARRANT SHARES"), and the shares of common stock issuable
upon the exercise of the B2 Warrants (the "B2 WARRANT SHARES") (collectively,
the "SECURITIES") involves a high degree of risk in that (i) an investment in
the Company is highly speculative and only investors who can afford the loss of
their entire investment should consider investing in the Company and the
Securities; (ii) an investment in the Securities is illiquid; and (iii)
transferability of the securities comprising the Securities is extremely

<PAGE>

limited, as well as other risk factors as more fully set forth in the in the
Company's filings with the United States Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934 (the "EXCHANGE ACT") or the
Securities Act of 1933, as amended (the "SECURITIES ACT").

                  1.3 The Subscriber represents and warrants that it is an
"accredited investor" as such term in defined in Rule 501 of Regulation D
promulgated under the Securities Act, and that he is able to bear the economic
risk of an investment in the Securities.

                  1.4 The Subscriber acknowledges that it has prior investment
experience, including investment in non-registered securities with a limited
trading market and that he recognizes the highly speculative nature of this
investment.

                  1.5 The Subscriber hereby represents that it has been
furnished by the Company during the course of this transaction with all
information regarding the Company that he has requested or desires to know and
that he has been afforded the opportunity to ask questions of and receive
answers from duly authorized officers or other representatives of the Company
concerning the terms and conditions of the Placement. The Subscriber represents
that he was not induced to invest by any form of general solicitation or general
advertising including, but not limited to, the following: (i) any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over the news or radio; and (ii) any seminar or
meeting whose attendees were invited by any general solicitation or advertising.

                  1.6 The Subscriber acknowledges that this offering of
Securities may involve tax consequences and that neither the Company nor the
Placement Agent has provided it with tax advice or information. The Subscriber
acknowledges that it must retain its own professional advisors to evaluate the
tax and other consequences of an investment in Securities.

                  1.7 The Subscriber acknowledges that the Placement has not
been reviewed by the SEC because of the Company's representations that this is
intended to be a nonpublic offering pursuant to Sections 4(2) or 3(b) of the
Securities Act. The Subscriber represents that the Securities are being
purchased for its own account, for investment and not for distribution or resale
to others. The Subscriber agrees that it will not sell or otherwise transfer
such Securities unless they are registered under the Securities Act or unless an
exemption from such registration is available.

                  1.8 The Subscriber consents to the placement of a legend on
any certificate or other document evidencing the Securities stating that they
have not been registered under the Securities Act and setting forth or referring
to the restrictions on transferability and sale thereof, and to the issuance of
stop transfer instructions with respect thereto.

                  1.9 The undersigned Subscriber further represents and warrants
that: (i) it is authorized and otherwise duly qualified to purchase and hold the
Securities; and (ii) that this Subscription Agreement has been duly and validly
authorized, executed and delivered constitutes the legal, binding and
enforceable obligation of the undersigned.

                  1.10 The Subscriber hereby represents that the address of
Subscriber furnished by it at the end of this Subscription Agreement is the
undersigned's principal business address.

                                       2
<PAGE>

                  1.11 The Subscriber hereby represents that no representations
or warranties have been made to the Subscriber by the Company or any agent,
employee or affiliate of the Company, including the Placement Agent, and in
entering into this transaction, the Subscriber is not relying on any
information, other than the results of independent investigation by the
Subscriber.

                  1.12 The Subscriber acknowledges that at such time, if ever,
as the Securities, are registered, sales of such securities will be subject to
state securities laws, including those of states which may require any
securities sold therein to be sold through a registered broker-dealer or in
reliance upon an exemption from registration.

                  1.13 The Subscriber acknowledges that the Company will cause
$125,000 out of the proceeds of the Placement to be used for principal, interest
and other fee payments due under the Term Loan and Security Agreement dated
April 3, 2003 among the Company, Proyecciones Y Ventas Organizadas, S.A. de
C.V., and IIG Equity Opportunities Fund Ltd. (the "LOAN AGREEMENT").

                  II. REPRESENTATIONS BY THE COMPANY

                  2.1 The Company represents and warrants to the Subscriber that
at the date hereof and at the Closing (as hereinafter defined):

                  (a) The Company is a corporation duly organized, existing and
in good standing under the laws of the State of Delaware and has the corporate
power to conduct the business which it conducts and proposes to conduct.

                  (b) The execution, delivery and performance of this
Subscription Agreement by the Company will have been duly approved by the board
of directors of the Company and all other actions required to authorize and
effect the offer and sale of the Securities will have been duly taken and
approved.

                  (c) The Securities have been duly and validly authorized and
when issued and paid for in accordance with the terms hereof, will be the
binding obligations of the Company.

                  (d) The Company will at all times have authorized and reserved
a sufficient number of Warrant Shares and B2 Warrant Shares to provide for
exercise of the Warrants.

                  (e) The issuance of the Warrant Shares and B2 Warrant Shares
upon the exercise of the A, B and B2 Warrants in accordance with the terms of
the Warrant Agreement shall be, against payment therefor (if any), validly
issued, fully paid and nonassessable.

                  (f) The Company has obtained, or is in the process of
obtaining, all licenses, permits and other governmental authorizations necessary
to the conduct of its business, except where the failure to obtain any of the
same would not be reasonably likely to have a material adverse effect on the
Company; such licenses, permits and other governmental authorizations obtained
are in full force and effect; and the Company is in all material respects
complying therewith.

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<PAGE>

                  (g) The Company knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which would be
reasonably likely to materially adversely affect the business, property,
financial condition or operations of the Company.

                  (h) The Company is not in violation of or default under, nor
will the execution and delivery of this Subscription Agreement, the issuance of
the Securities, and the incurrence of the obligations herein and therein set
forth and the consummation of the transactions herein or therein contemplated,
result in a violation of, or constitute a default under, the Company's articles
of incorporation or by-laws, any material obligations, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any material contract, indenture, mortgage, loan agreement,
lease, joint venture or other agreement or instrument to which the Company is a
party or by which it or any of its properties may be bound or any material
order, rule, regulation, writ, injunction, or decree of any government,
governmental instrumentality or court, domestic or foreign.

                  (i) The Company will cause $125,000 out of the proceeds of the
Placement to be used for principal, interest and other fee payments due under
the Loan Agreement.

                  (j) There are no obligations of the Company to officers,
directors, stockholders or employees of the Company other than (a) for payment
of salary for services rendered, (b) reimbursement for reasonable expenses
incurred on behalf of the Company, (c) for other standard employee benefits made
generally available to all employees (including stock option agreements
outstanding under any stock option plan approved by the Board of Directors of
the Company) and (d) obligations listed in the Company's financial statements or
disclosed in any of its Exchange Act Filings. None of the officers, directors
or, to the best of the Company's knowledge, key employees or stockholders of the
Company or any members of their immediate families, are indebted to the Company,
individually or in the aggregate, in excess of $50,000 or have any direct or
indirect ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation which competes with the Company, other than passive investments in
publicly traded companies (representing less than 1% of such company) which may
compete with the Company. No officer, director or stockholder, or any member of
their immediate families, is, directly or indirectly, interested in any material
contract with the Company and no agreements, understandings or proposed
transactions are contemplated between the Company and any such person. The
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.

                  (k) Except as set forth in Schedule 2.1(k), since December 31,
2002, there has not been:

                           (i) Any change in the assets, liabilities, financial
                  condition, prospects or operations of the Company, other than
                  changes in the ordinary course of business, none of which
                  individually or in the aggregate has had or is reasonably
                  expected to have a material adverse effect on such assets,
                  liabilities, financial condition, prospects or operations of
                  the Company;

                           (ii) Any resignation or termination of any officer,
                  key employee or group of employees of the Company;

                                       4
<PAGE>

                           (iii) Any material change, except in the ordinary
                  course of business, in the contingent obligations of the
                  Company by way of guaranty, endorsement, indemnity, warranty
                  or otherwise;

                           (iv) Any damage, destruction or loss, whether or not
                  covered by insurance, materially and adversely affecting the
                  properties, business or prospects or financial condition of
                  the Company;

                           (v) Any waiver by the Company of a valuable right or
                  of a material debt owed to it;

                           (vi) Any direct or indirect material loans made by
                  the Company to any stockholder, employee, officer or director
                  of the Company, other than advances made in the ordinary
                  course of business;

                           (vii) Any material change in any compensation
                  arrangement or agreement with any employee, officer, director
                  or stockholder;

                           (viii) Any declaration or payment of any dividend or
                  other distribution of the assets of the Company;

                           (ix) Any labor organization activity related to the
                  Company;

                           (x) Any debt, obligation or liability incurred,
                  assumed or guaranteed by the Company, except those for
                  immaterial amounts and for current liabilities incurred in the
                  ordinary course of business;

                           (xi) Any sale, assignment or transfer of any patents,
                  trademarks, copyrights, trade secrets or other intangible
                  assets;

                           (xii) Any change in any material agreement to which
                  the Company is a party or by which it is bound which may
                  materially and adversely affect the business, assets,
                  liabilities, financial condition, operations or prospects of
                  the Company;

                           (xiii) Any other event or condition of any character
                  that, either individually or cumulatively, has or may
                  materially and adversely affect the business, assets,
                  liabilities, financial condition, prospects or operations of
                  the Company; or

                           (xiv) Any arrangement or commitment by the Company to
                  do any of the acts described in subsection (i) through (xiii)
                  above.

                  (l) Assuming the accuracy of the representations and
warranties of the Subscriber contained in this Subscription Agreement, the
offer, sale and issuance of the Securities will be exempt from the registration
requirements of the 1933 Act, and will have been registered or qualified (or are
exempt from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws. Neither the
Company nor any of its affiliates, nor any person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with the offer or sale of the
Securities.

                                       5
<PAGE>

                  (m) The Common Stock of the Company is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act and the Company has timely filed all
proxy statements, reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act. The Company has furnished the
Subscriber with copies of (i) its Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2002, (ii) its Quarterly Reports on Form 10-QSB for the
fiscal quarter ended March 31, 2003, June 30, 2003, and September 30, 2003 and
(iii) its Proxy Statement filed with the SEC on November 13, 2003 (collectively,
the "SEC REPORTS"). The Company is eligible to file a registration statement on
Form S-3 with the SEC. Each SEC Report was, at the time of its filing, in
substantial compliance with the requirements of its respective form and none of
the SEC Reports, nor the financial statements (and the notes thereto) included
in the SEC Reports, as of their respective filing dates, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed) and fairly present in all material respects the financial position of
the Company and its subsidiaries as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

                  (n) The Company's Common Stock is listed for trading on the
American Stock Exchange and satisfies all requirements for the continuation of
such listing. The Company has not received any notice that its Common Stock will
be delisted from the American Stock Exchange or that the Common Stock and the
Company do not meet all requirements for the continuation of such listing.

                  (o) In the event that shareholder approval is required to
consummate the transaction contemplated by this Agreement under the rules of the
American Stock Exchange, Nasdaq Stock Market or other applicable exchange, due
to issuance of 20% or more of its outstanding common stock, the Company shall
use its best efforts to obtain shareholder approval of such transaction on or
before January 20, 2004 (the "APPROVAL"). The Company shall have received
proxies from each of the executive officers and directors of the Company
agreeing to vote in favor of the Approval.

                  (p) Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has directly or indirectly made any offers
or sales of any security or solicited any offers to buy any security under
circumstances that would cause the offering of the Securities pursuant to this
Agreement to be integrated with prior offerings by the Company for purposes of
the 1933 Act which would prevent the Company from selling the Securities
pursuant to Rule 506 under the 1933 Act, or any applicable exchange-related
stockholder approval provisions, nor will the Company or any of its affiliates

                                       6
<PAGE>

or subsidiaries take any action or steps that would cause the offering of the
Securities to be integrated with other offerings.

                  III. TERMS OF SUBSCRIPTION

                  3.1 As compensation for the Placement Agent's services in
connection with the Placement, the Company shall (A) pay to the Placement Agent
a placement fee equal to 7% of $500,000, the purchase price of the Common Stock
and Warrants sold in the Placement (of which $25,000 shall be paid upon the
purchase of the Common Stock and Warrants and balance to be paid upon exercise
of any portion of the B Warrants), plus the exercise price paid on the B
Warrants to be paid in full on such exercise, (B) reimburse the accountable
expenses of the Placement Agent, and (C) reimburse the Subscriber for its legal
fees in an amount not to exceed $15,000. The Company shall also pay all expenses
in connection with the qualification of the Securities under the securities or
blue sky laws of the states which the Placement Agent shall designate, including
legal fees and filing fees.

                  3.2 Upon the signing of this Agreement by the Subscriber, all
funds due hereunder shall be deposited in escrow with the Escrow Agent until
such time as the Escrow Agent receives instructions to release such funds in
accordance with the terms of the escrow agreement between the Company and the
Escrow Agent (the "ESCROW AGREEMENT"). Upon the acceptance of this Agreement by
the Company, all Common Stock and Warrants due hereunder shall be deposited in
escrow with the Escrow Agent until such time as the Escrow Agent receives
instructions to release such Common Stock and Warrants in accordance with the
Escrow Agreement (the "CLOSING"). If the Company does not accept the
subscription within seven (7) days, then this subscription shall be void and all
funds paid hereunder by the Subscriber, without interest, shall be promptly
returned to the Subscriber, subject to paragraph 3.5 hereof, and all such Common
Stock and Warrants deposited hereunder by the Company shall be promptly returned
to the Company.

                  3.3 The Subscriber hereby authorizes and directs the Escrow
Agent to deliver certificates representing the Common Stock and Warrants to be
issued to such Subscriber pursuant to this Subscription Agreement to the
business address furnished by it at the end of this Subscription Agreement.

                  3.4 The Subscriber hereby authorizes and directs the Escrow
Agent to return any funds for unaccepted subscriptions to the same account from
which the funds were drawn.

                  3.5 If the Subscriber is not a United States person, such
Subscriber hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Common Stock and Warrants or any use of this Subscription
Agreement, including (i) the legal requirements within its jurisdiction for the
purchase of the Common Stock and Warrants, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any governmental or other
consents that may need to be obtained, and (iv) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale or transfer of the securities comprising the Common Stock and Warrants.
Such Subscriber's subscription and payment for, and his or her continued
beneficial ownership of the Common Stock and Warrants, will not violate any
applicable securities or other laws of the Subscriber's jurisdiction.

                                       7
<PAGE>

                  IV. REGISTRATION RIGHTS

                  4.1 AUTOMATIC REGISTRATION . The Company hereby agrees with
the holders of the Common Stock and Warrants or their transferees (collectively,
the "SECURITIES HOLDERS") that no later than ten (10) calendar days following
the date of the Closing, the Company shall prepare and file a registration
statement under the Securities Act with the SEC covering the Common Stock and
Warrant Shares (the "REGISTRABLE SECURITIES"), and the Company will use its best
efforts to cause such registration to become effective as promptly as
practicable and within ninety (90) days thereafter. If (i) a registration
statement covering applicable Registrable Securities is not filed on or before
ten (10) calendar days following the date of the Closing, or (ii) a registration
statement covering applicable Registrable Securities is not declared effective
by the SEC on or before the date ninety (90) days thereafter (any such failure
or breach being referred to as an "EVENT," and the date on which such Event
occurs being referred to as an "EVENT DATE"), then, in any such case, as partial
relief for the damages suffered therefrom by the Securities Holders (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall, on the Event Date and on the first day of each month
following the Event Date until the triggering Event is cured, pay to each
Securities Holder an aggregate amount, in cash, as liquidated damages and not as
a penalty, equal to an amount equal to two percent (2%) (the "APPLICABLE
PERCENTAGE") of $1,959,999, which is the aggregate fair market value of the
Registrable Securities on the date hereof (the "SHARE MARKET VALUE") (calculated
as $39,200) (the "LIQUIDATED DAMAGES"). The Liquidated Damages shall be payable
for each month, or prorated for each portion thereof, that an Event has occurred
and is continuing. In addition, for each month, or portion thereof, after the
first month that Liquidated Damages are required to be paid hereunder, the
Applicable Percentage shall be increased by one percentage point (for example,
Liquidated Damages shall equal 2% of the Share Market Value for the first month
following an Event Date, 3% of the Share Market Value for the next month, and so
on until the Event has been cured). The payments to which a Securities Holder
shall be entitled pursuant to this Section are referred to herein as
"REGISTRATION DELAY PAYMENTS." Registration Delay Payments shall be calculated
on a cumulative basis. If the Company fails to make Registration Delay Payments
in a timely manner, such Registration Delay Payments shall bear interest at the
rate of 2.0% per month (or the maximum rate permitted by law), pro-rated for
partial months, until paid in full.

                  The obligation of the Company under this Section 4.1 shall be
limited to one registration statement and shall not apply to any Registrable
Securities that at such time are eligible for immediate resale pursuant to Rule
144(k) under the Securities Act.

                  4.2 AUTOMATIC B2 REGISTRATION . The Company hereby agrees with
the holders of the B2 Warrants or their transferees (collectively, the "B2
SECURITIES HOLDERS") that no later than thirty (30) calendar days following the
issuance of the B Warrants, the Company shall prepare and file a registration
statement under the Securities Act with the SEC covering the B2 Warrant Shares
(the "B2 REGISTRABLE SECURITIES"), and the Company will use its best efforts to
cause such registration to become effective as promptly as practicable and
within ninety (90) days thereafter. If (i) a registration statement covering
applicable B2 Registrable Securities is not filed on or before thirty (30)
calendar days following the issuance of the B Warrants, or (ii) a registration
statement covering applicable B2 Registrable Securities is not declared
effective by the SEC on or before the date ninety (90) days thereafter (any such
failure or breach being referred to as a "B2 EVENT," and the date on which such
B2 Event occurs being referred to as a "B2 EVENT Date"), then, in any such case,
as partial relief for the damages suffered therefrom by the B2 Securities
Holders (which remedy shall not be exclusive of any other remedies available at

                                       8
<PAGE>

law or in equity), the Company shall, on the B2 Event Date and on the first day
of each month following the B2 Event Date until the triggering B2 Event is
cured, pay to each B2 Securities Holder an aggregate amount, in cash, as
liquidated damages and not as a penalty, equal to an amount equal to two percent
(2%) (the "B2 APPLICABLE PERCENTAGE") of $600,000, which is the aggregate fair
market value of the B2 Registrable Securities on the date hereof (the "B2 SHARE
MARKET VALUE") (calculated as $12,000) (the "B2 LIQUIDATED DAMAGES"). The B2
Liquidated Damages shall be payable for each month, or prorated for each portion
thereof, that a B2 Event has occurred and is continuing. In addition, for each
month, or portion thereof, after the first month that B2 Liquidated Damages are
required to be paid hereunder, the B2 Applicable Percentage shall be increased
by one percentage point (for example, B2 Liquidated Damages shall equal 2% of
the B2 Share Market Value for the first month following a B2 Event Date, 3% of
the B2 Share Market Value for the next month, and so on until the B2 Event has
been cured). The payments to which a B2 Securities Holder shall be entitled
pursuant to this Section are referred to herein as "B2 REGISTRATION DELAY
PAYMENTS." B2 Registration Delay Payments shall be calculated on a cumulative
basis. If the Company fails to make B2 Registration Delay Payments in a timely
manner, such B2 Registration Delay Payments shall bear interest at the rate of
2.0% per month (or the maximum rate permitted by law), pro-rated for partial
months, until paid in full.

                  The obligation of the Company under this Section 4.2 shall be
limited to one registration statement and shall not apply to any B2 Registrable
Securities that at such time are eligible for immediate resale pursuant to Rule
144(k) under the Securities Act.

                  4.3 "PIGGYBACK" REGISTRATION RIGHTS. At any time commencing
six months after the Closing, if the Company shall determine to proceed with the
actual preparation and filing of a registration statement under the Securities
Act in connection with the proposed offer and sale of any of its securities by
it or any of its security holders (other than a registration statement on Form
S-4, S-8 or other limited purpose form), the Company will give written notice of
its determination to all Securities Holders and B2 Securities Holders of record.
Upon the written request from any such holders (the "REQUESTING HOLDERS"),
within 15 days after receipt of any such notice from the Company, the Company
will, except as herein provided, cause all such Registrable Securities and B2
Registrable Securities to be included in such registration statement, all to the
extent requisite to permit the sale or other disposition by the prospective
seller or sellers of the Registrable Securities and B2 Registrable Securities to
be so registered; provided, further, that nothing herein shall prevent the
Company from, at any time, abandoning or delaying any registration. If any
registration pursuant to this Section 4.3 shall be underwritten in whole or in
part, the Company may require that the Registrable Securities and B2 Registrable
Securities requested for inclusion pursuant to this Section 4.3 be included in
the underwriting on the same terms and conditions as the securities otherwise
being sold through the underwriters. In such event, the Requesting Holders
shall, if requested by the underwriters, execute an underwriting agreement
containing customary representations and warranties by selling stockholders and
a lock-up on shares not being sold. If in the good faith judgment of the
managing underwriter of such public offering the inclusion of all of the
Registrable Securities and B2 Registrable Securities originally covered by a
request for registration (the "REQUESTED STOCK") would reduce the number of
shares to be offered by the Company or interfere with the successful marketing
of the shares of stock or other securities offered by the Company, the number of
shares of Requested Stock otherwise to be included in the underwritten public
offering may be reduced pro rata (by number of shares) among the holders thereof

                                       9
<PAGE>

requesting such registration or excluded in their entirety if so required by the
underwriter. To the extent only a portion of the Requested Stock is included in
the underwritten public offering, those shares of Requested Stock which are thus
excluded from the underwritten public offering shall be withheld from the market
by the holders thereof for a period, not to exceed 90 days, which the managing
underwriter reasonably determines is necessary in order to effect the
underwritten public offering.

                  The obligation of the Company under this Section 4.3 shall not
apply to Registrable Securities and B2 Registrable Securities that at such time
are eligible for immediate resale pursuant to Rule 144(k) under the Securities
Act.

                  4.4 FORM S-3 REGISTRATION. In case the Company shall be
obligated to effect a registration pursuant to the terms hereunder, the Company
shall use its best efforts to effect such registration on Form S-3, or any
successor SEC short-form registration statement with respect to the Registrable
Securities and B2 Registrable Securities, if Form S-3 is available for such
offering by the Securities Holders or B2 Securities Holders under applicable
federal securities laws.

                  4.5 REGISTRATION PROCEDURES. To the extent required by Section
4.1, Section 4.2, Section 4.3, and Section 4.4 the Company will:

                  (a) prepare and file with the SEC a registration statement
with respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective;

                  (b) prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective;

                  (c) furnish to the Securities Holders or B2 Securities Holders
participating in such registration and to the underwriters of the securities
being registered such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as such
underwriters may reasonably request in order to facilitate the public offering
of such securities;

                  (d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as the Securities Holders and B2 Securities Holders
may reasonably request in writing within 20 days following the original filing
of such registration statement, except that the Company shall not for any
purpose be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified;

                  (e) notify the Securities Holders or B2 Securities Holders,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed;

                                       10
<PAGE>

                  (f) notify the Securities Holders or B2 Holders promptly of
any request by the SEC for the amending or supplementing of such registration
statement or prospectus or for additional information;

                  (g) prepare and file with the SEC, promptly upon the request
of any Securities Holders or B2 Securities Holders, any amendments or
supplements to such registration statement or prospectus which, in the opinion
of counsel for such Securities Holders or B2 Securities Holders (and concurred
in by counsel for the Company), is required under the Securities Act or the
rules and regulations thereunder in connection with the distribution of Common
Stock by such Securities Holders or B2 Securities Holders;

                  (h) prepare and promptly file with the SEC and promptly notify
such Securities Holders or B2 Securities Holders of the filing of such amendment
or supplement to such registration statement or prospectus as may be necessary
to correct any statements or omissions if, at the time when a prospectus
relating to such securities is required to be delivered under the Securities
Act, any event shall have occurred as the result of which any such prospectus or
any other prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading; and

                  (i) advise the Securities Holders or B2 Securities Holders,
promptly after it shall receive notice or obtain knowledge thereof, of the
issuance of any stop order by the SEC suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
that purpose and promptly use its best efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be issued.

                  The Securities Holders and B2 Securities Holders shall
cooperate with the Company in providing the information necessary to effect the
registration of their Registrable Shares or B2 Registrable Shares, including
completion of customary questionnaires.

4.6      EXPENSES.

                  (a) With respect to the registration required pursuant to
Sections 4.1, 4.2, and 4.3 hereof, all fees, costs and expenses of and
incidental to such registration, inclusion and public offering (as specified in
paragraph (b) below) in connection therewith shall be borne by the Company.

                  (b) The fees, costs and expenses of registration to be borne
by the Company as provided in paragraph (a) above shall include, without
limitation, all registration, filing, and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered and qualified. The Company shall be responsible for fees and
disbursements of counsel and accountants for the Securities Holders or B2
Securities Holders and any other expenses incurred by the Securities Holders or
B2 Securities Holders not expressly included above up to $5,000.

                  4.7 INDEMNIFICATION.

                                       11
<PAGE>

                  (a) The Company will indemnify and hold harmless each
Securities Holder of Registrable Securities or B2 Securities Holder of B2
Registrable Shares which are included in a registration statement pursuant to
the provisions of Section 4.1, Section 4.2, or Section 4.3 hereof, its directors
and officers, and any underwriter (as defined in the Securities Act) for such
Securities Holders or B2 Securities Holder and each person, if any, who controls
such Securities Holders or B2 Securities Holder or such underwriter within the
meaning of the Securities Act, from and against, and will reimburse such
Securities Holders or B2 Securities Holder and each such underwriter and
controlling person with respect to, any and all loss, damage, liability, cost
and expense to which such Securities Holders or B2 Securities Holder or any such
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expenses arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by or on behalf of such Securities
Holders or B2 Securities Holder, such underwriter or such controlling person in
writing specifically for use in the preparation thereof.

                  (b) Each Securities Holders of Registrable Securities or B2
Securities Holder of B2 Registrable Securities included in a registration
pursuant to the provisions of Section 4.1, Section 4.2, or Section 4.3 hereof
will indemnify and hold harmless the Company, its directors and officers, any
controlling person and any underwriter from and against, and will reimburse the
Company, its directors and officers, any controlling person and any underwriter
with respect to, any and all loss, damage, liability, cost or expense to which
the Company or any controlling person and/or any underwriter may become subject
under the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was so
made in conformity with written information furnished by or on behalf of such
Securities Holders or B2 Securities Holder specifically for use in the
preparation thereof; provided however, that the total amounts payable in
indemnity by the Securities Holders or B2 Securities Holder under this Section
4.7 shall not exceed the net proceeds received by the Securities Holders or B2
Securities Holder in the registered offering out of which such all loss, damage,
liability, cost and expense arises.

                  (c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) or (b) of this Section 4.7 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), promptly notify the indemnifying party of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve it from

                                       12
<PAGE>

any liability which it may have to any indemnified party hereunder, except to
the extent that the indemnifying party is actually prejudiced thereby. In case
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party, provided, however,
if counsel for the indemnifying party concludes that a single counsel cannot
under applicable legal and ethical considerations, represent both the
indemnifying party and the indemnified party, the indemnified party or parties
have the right to select separate counsel to participate in the defense of such
action on behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of said paragraph (a) or (b) for any legal or
other expense subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the provisions
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the commencement
of the action or (iii) the indemnifying party has, in its sole discretion,
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party.

                  V. MISCELLANEOUS

                  5.1 Any notice or other communication given hereunder shall be
deemed sufficient if in writing and sent by registered or certified mail, return
receipt requested, addressed to the Company, at its registered office, One Blue
Hill Plaza, 7th Floor, P.O. Box 1548, Pearl River, New York 10965, Attention:
Stephen J. Cole-Hatchard, Chief Executive Officer, and to the Subscriber at its
address indicated on the last page of this Subscription Agreement. Notices shall
be deemed to have been given on the date of mailing, except notices of change of
address and notices sent from outside the continental United States, which shall
be deemed to have been given when received.

                  5.2 This Subscription Agreement shall not be changed, modified
or amended except by a writing signed by the parties to be charged, and this
Subscription Agreement may not be discharged except by performance in accordance
with its terms or by a writing signed by the party to be charged.

                  5.3 This Subscription Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter thereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.

                  5.4 Notwithstanding the place where this Subscription
Agreement may be executed by any of the parties hereto, the parties expressly
agree that all the terms and provisions hereof shall be construed in accordance
with and governed by the laws of the State of New York without regard to such
states laws regarding conflicts of laws. The parties hereby agree that any
dispute which may arise between them arising out of or in connection with this
Subscription Agreement shall be adjudicated before a court located in New York
City and they hereby submit to the exclusive jurisdiction of the courts of the
State of New York located in New York, New York and of the federal courts in the
Southern District of New York with respect to any action or legal proceeding
commenced by any party, and irrevocably waive any objection they now or
hereafter may have respecting the venue of any such action or proceeding brought

                                       13
<PAGE>

in such a court or respecting the fact that such court is an inconvenient forum,
relating to or arising out of this Subscription Agreement or any acts or
omissions relating to the sale of the securities hereunder, and consent to the
service of process in any such action or legal proceeding by means of registered
or certified mail, return receipt requested, in care of the address set forth
below or such other address as the undersigned shall furnish in writing to the
other.

                  5.5 This Subscription Agreement may be executed in
counterparts. Upon the execution and delivery of this Subscription Agreement by
the Subscriber, this Subscription Agreement shall become a binding obligation of
the Subscriber with respect to the purchase of Securities as herein provided;
subject, however, to the right hereby reserved to the Company to enter into the
same agreements with other subscribers and to add and/or to delete other persons
as subscribers.

                  5.6 The holding of any provision of this Subscription
Agreement to be invalid or unenforceable by a court of competent jurisdiction
shall not affect any other provision of this Subscription Agreement, which shall
remain in full force and effect.

                  5.7 It is agreed that a waiver by either party of a breach of
any provision of this Subscription Agreement shall not operate, or be construed,
as a waiver of any subsequent breach by that same party.

                  5.8 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Subscription Agreement.

                                       14
<PAGE>

                  IN WITNESS WHEREOF, the parties have executed this
Subscription Agreement as of the day and year first written above.

Scarborough Ltd.

By:
   --------------------------------------------
     Name: Clive Dakin
     Title:

c/o Euroba Management Limited
73 Front Street, 4th Floor
Hamilton HM 12 Bermuda

----------------------------------------------
Taxpayer Identification Number of Subscriber

$500,000
----------------------------------------------
Dollar Amount of Units Subscribed For

Subscription Accepted:

FRONTLINE COMMUNICATIONS CORPORATION

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

                                       15

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