DATED                                                   9th March 2000



                                SERVICE AGREEMENT
                                   relating to


                         EUROTELECOM COMMUNICATIONS INC
                          [DIRECTOR SERVICE AGREEMENT]











EUROTELECOM COMMUNICATIONS INC                                            (1)

PHILIP SHAUN DERRY                                                        (2)


<PAGE>

DATE

9th March           2000

         PARTIES

(1)      EuroTelecom Communications Inc whose principal office is at F4
         Mexborough Business Centre, College Road, Mexborough, South Yorkshire
         S64 9JP ("the Company")

(2)      Philip Shaun Derry of Littlewood, Selby Road, Camblesforth, Selby,
         North Yorkshire YO8 8HX ("the Executive")

         INTERPRETATION

(1)      In this Agreement, unless the context otherwise requires, the following
         expressions have the meanings set out below:

         Admission                  admission of the ordinary shares of 5p each
                                    in the capital of the Company to the
                                    Alternative Investment Market ("AIM") first
                                    becoming effective as laid down by paragraph
                                    16.6 of the AIM Rules of the London Stock
                                    Exchange;

         the Appointment            the employment of the Executive pursuant to
                                    this Agreement;

         the Board                  the board of directors of the Company for
                                    the time being (including any committee of
                                    the Board);

         the Commencement Date      Admission or such other date on which
                                    Admission takes place being no later than 30
                                    April 2000;

         Confidential Information   all information which may be imparted in
                                    confidence or be of a confidential nature
                                    relating to the business or prospective
                                    business, current or projected plans or
                                    internal affairs of the Company or any Group
                                    Company and, in particular, but not limited
                                    to all Know-how, Marketing Information,
                                    trade secrets, unpublished information
                                    relating to the Company's or any Group
                                    Company's intellectual property and any
                                    other commercial, financial or technical
                                    information relating to the business or
                                    prospective business of the Company or any
                                    Group Company or to any customer or
                                    potential customer or supplier or potential
                                    supplier, licensee, officer or employee of
                                    the Company or any Group Company or to any
                                    member or person interested in the share
                                    capital of the Company or any Group Company;

         Documents                  documents, disks, memory, notebooks, tapes
                                    or any other medium, whether or not
                                    eye-readable, on which information (whether
                                    confidential or otherwise) may from time to
                                    time be referred to, written or recorded;

         the ERA                    the Employment Rights Act 1996;

         Group                      all companies being any of a subsidiary or
                                    subsidiary undertaking of the Company or a
                                    holding company or parent undertaking of the
                                    Company or a subsidiary or subsidiary
                                    undertaking of any such holding company or
                                    parent undertaking;


<PAGE>

         Group Company              any company within the Group and references
                                    to the "Group Companies" shall be construed
                                    accordingly;

         Key Employee               any employee who is or was (in the Period)
                                    employed to the knowledge of the Executive:-

                                    (a) at management grade; or

                                    (b) in a senior capacity; or

                                    (c) in a capacity in which he has access to
                                        or obtained Confidential Information;

         Know-how                   information (including without limitation
                                    that comprised in formulae, specifications,
                                    designs, drawings, component lists,
                                    databases, software (or pre-cursor
                                    documents), databases, manuals, instructions
                                    and catalogues) held in whatever form
                                    relating to the creation, production or
                                    supply of any products or services by the
                                    Company or any Group Company, or by or to
                                    any of the suppliers, customers, partners or
                                    joint venturers of such company;

         Marketing Information      information relating to the current or
                                    prospective marketing or sales of any
                                    products or services of the Company or any
                                    Group Company, including lists of customers'
                                    and suppliers' names, addresses and
                                    contacts, sales targets and statistics,
                                    market share and pricing statistics,
                                    marketing surveys, research and reports and
                                    advertising and promotional material;

         Period                     the period of 12 months immediately
                                    preceding the Termination Date;

         Permitted Interest         an interest in any class of shares or other
                                    securities of any company which are traded
                                    on a recognised investment exchange which
                                    amount to not more than 3% of such class of
                                    issued shares or securities or an interest
                                    in such traded shares or securities as
                                    notified to and permitted by the Board (not
                                    a committee) and an interest in any units of
                                    any authorised unit trust;

         Remuneration Committee     a committee of the Board which determines
                                    the annual salary, any bonuses and other
                                    remuneration payable to the Executive and
                                    other members of the Board and of which a
                                    majority consists of non-executive
                                    directors; and

         Termination Date           the date of termination or expiration of the
                                    Appointment.

(2)      The expressions "subsidiary" and "holding company" have the meanings
         given to them by Sections 736 and 736A of the Companies Act 1985; the
         expressions "parent undertaking" and "subsidiary undertaking" have the
         meanings given to them by Sections 258, 259 and 260 of the Companies
         Act 1985; and the expression "financial year" has the meaning given by
         Section 223 of the Companies Act 1985.

(3)      The provisions of Sections 324 and 328 of the Companies Act 1985 apply
         in determining for the purpose of Clauses 8 and 9 whether the Executive
         has an interest in any shares or other securities.

(4)      References to Clauses, Parties, and the Schedules are respectively to
         Clauses of and the Parties and the Schedules to this Agreement.

                                      -3-
<PAGE>

(5)      References to any enactment are to be construed as referring also to
         any enactment or re-enactment thereof (whether before or after the date
         hereof), and to any previous enactment which such enactment has
         replaced (with or without amendment provided that the amendment does
         not change the law as at the date hereof) and to any regulation or
         order made thereunder.

(6)      The clause headings are for ease of reference only and shall not affect
         the interpretation of this Agreement.

         OPERATIVE PROVISIONS

1        JOB TITLE

         The Company shall employ the Executive and the Executive shall serve
         the Company as President and Chief Executive Officer or in such other
         capacity as the Board may reasonably require.

2        PERIOD OF EMPLOYMENT

2.1      The Appointment shall be deemed to have commenced on the Commencement
         Date and, unless terminated earlier under Clause 12, will continue
         until terminated by either party giving to the other not less than 12
         months' notice in writing to expire at any time.

2.2      The Company (and any relevant Group Company) shall not be obliged to
         provide work to the Executive at any time after notice of termination
         of the Appointment shall have been given by either party under any of
         the provisions of this Agreement and the Company may, in its
         discretion, take any one or more of the following steps in respect of
         all or part of an unexpired period of notice:

         (a)      require the Executive to comply with such conditions as it may
                  specify in relation to attending at, or remaining away from,
                  the place(s) of business of the Company and the Group
                  Companies; and / or

         (b)      pay the Executive his fixed salary entitlement in lieu of all
                  or any part of the unexpired period of notice (subject to
                  deduction at source of income tax and applicable national
                  insurance contributions).

2.3      If the Executive fails to make himself available to work during any
         period of notice of termination of the Appointment other than at the
         request or with the permission of the Board, the Company reserves the
         right to deduct one day's salary for each day of absence during such
         notice period.

2.4      Subject to clause 2.5, if during the Appointment the Executive shall be
         removed from his office as a director of the Company pursuant to any
         power in that behalf given to the Board or to the members of the
         Company by law or by the Articles of Association of the Company, or if
         he shall retire from his office as a director of the Company by
         rotation and shall not be re-elected, such event will not be deemed to
         be a breach of this Agreement, and the job title of the Executive shall
         be altered appropriately.

2.5      If the Executive shall cease by reason of his own act or default to be
         a director of the Company he shall be deemed to be in breach of this
         Agreement.

3        DUTIES

3.1      During the term of the Appointment, the Executive shall have (in
         addition to his implied duty of fidelity and his duties as a director
         at law) the following duties and obligations:

         (a)      at all times to use all reasonable endeavours to promote the
                  interests and welfare and maintain the goodwill of the Company
                  and any other Group Company and not to do and to exercise all
                  reasonable endeavours to prevent there being done anything
                  which may be prejudicial or detrimental to the Company or any
                  Group Company;

         (b)      faithfully and diligently to perform his duties and to
                  exercise and carry out such powers and functions as may from
                  time to time be vested in him by or under the authority of the
                  Board;

                                      -4-
<PAGE>

         (c)      to devote the whole of his time and attention, with the
                  ability to organise his own affairs having regard to the
                  interests of the Company or any other Group Company, and
                  devote the full benefit of his knowledge, expertise and skills
                  in the proper performance of his duties (unless on holiday as
                  permitted by this Agreement or prevented by ill-health or
                  accident);

         (d)      to give (in writing if so requested) to the Board, or to such
                  person(s) as it may direct, such information and explanations
                  regarding the affairs of the Company or any other Group
                  Company or matters relating to the Appointment as the Board
                  may require; and

         (e)      to comply with any applicable code relating to dealings in
                  securities of the Company including, without limitation, the
                  "Model Code" as set out in the Rules of the London Stock
                  Exchange and the City Code on Takeover and Mergers, all lawful
                  directions from time to time given to him by or under the
                  authority of the Board and, save as inconsistent with the
                  express terms of this Agreement, all applicable rules and
                  regulations from time to time laid down by the Company
                  concerning its employees;

         (f)      comply with the provisions of Chapter 16 of the Rules of the
                  London Stock Exchange relating to a Company listed on the
                  Alternative Investment Market;

         (g)      to comply with the provisions of Schedule 1 (Copyright and
                  Inventions); and

         (h)      to comply with US securities laws, federal laws and the laws
                  of the state of Delaware.

3.2      The Executive shall attend and work at any of the places of business of
         the Company and/or the Group as determined from time to time by the
         Board and shall travel to and work at such places (whether within or
         outside the United Kingdom) in the manner and on the occasions required
         from time to time by the Board.

3.3      The Board may require the Executive to perform services for any Group
         Company wherever situated and without further fees or remuneration and
         to enter into any separate agreement(s) with such Group Company for
         such purpose and any duties that he may have under this Agreement will
         be deemed to extend to such Group Company, provided that this does not
         interfere with the proper performance of the Executive's duties as
         President and Chief Executive Officer of the Company.

3.4      The hours of work of the Executive are not fixed but are the usual
         working hours of the Company and such additional hours as may be
         necessary to enable him properly to discharge his duties. The Executive
         acknowledges that he may be required to work more than forty eight
         hours in a week.

3.5      The Company may at any time appoint another person or persons to act
         jointly with the Executive in discharging his duties.

3.6      The Executive shall:

         (a)      at the request and expense of the Company, submit annually to
                  a medical examination by a medical practitioner nominated by
                  the Company as part of a health screening programme and for
                  insurance purposes; and

         (b)      authorise such medical practitioner to disclose to or discuss
                  with the Company's medical adviser any matters arising from
                  such examination; and the Company's medical adviser may notify
                  the other directors of the Company of any serious matter if,
                  in his opinion, it might materially and adversely affect the
                  health of the Executive or the proper discharge of his duties.

4        PAY AND EXPENSES

4.1      The Company shall pay to the Executive for the proper performance of
         his duties under this Agreement a fixed salary at the rate of
         (pound)150,000 per annum (or such higher rate as the Company may from
         time to time notify in writing to the Executive).

                                      -5-
<PAGE>

4.2      The Company intends to operate a discretionary bonus scheme which is to
         be approved by the Remuneration Committee. The Executive shall be
         entitled to participate in such scheme.

4.3      The fixed salary of the Executive will:

         (a)      accrue from day to day and be payable by equal quarterly
                  instalments in arrears by not later than the last working day
                  of the month at the end of such quarter;

         (b)      notwithstanding anything to the contrary contained in the
                  Articles of Association of the Company or of any other Group
                  Company, be inclusive of any other fees or remuneration of any
                  description which the Executive might be entitled to receive
                  from the Company or any Group Company or any other company or
                  association in which he holds office as a nominee or
                  representative of the Company or any Group Company (and the
                  Executive shall, at the discretion of the Board, either waive
                  his right to any such remuneration or account to the Company
                  for the same forthwith upon receipt);

         (c)      be paid by credit transfer to the account nominated by the
                  Executive from time to time; and

         (d)      be capable of set off by the Company from time to time against
                  any liability of the Executive to the Company.

4.4      Subject to clause 4.5, the fixed salary shall be reviewed by the
         Remuneration Committee in the month of July each year. Increases are
         not automatic but will be based on individual merit and performance.

4.5      The Executive hereby authorises the Company to deduct from any
         remuneration accrued and due to him under the terms of this Agreement
         (whether or not actually paid during the Appointment) or from any pay
         in lieu of notice:

         (a)      any overpayment of salary or expenses or payment made to the
                  Executive by mistake or through any misrepresentation;

         (b)      any debt owed by the Executive to the Company or any Group
                  Company;

         (c)      any other sum or sums which may be required to be authorised
                  pursuant to Section 13 of the ERA; and

         (d)      any tax or Social Security contributions due in respect of
                  remuneration or any other monies received or receivable by the
                  Executive from the Company.

4.6      The Company shall repay to the Executive all reasonable travelling,
         hotel and other expenses properly incurred by him in or about the
         performance of his duties, subject to the Executive having delivered to
         the Company such form(s) and vouchers or other evidence of actual
         payment of such expenses as the Company may from time to time require.
         The decision of the Board as to what constitutes reasonable expenses
         shall be conclusive.

5        OTHER BENEFITS

5.1      If the Company adopts a Company car policy, then until notice of
         termination of the Appointment is given under Clauses 2 or 12 and
         subject to the Executive holding and continuing to hold a full driving
         licence, the Remuneration Committee may decide to provide the
         Executive:-

         (a)      a motor car of a type to be agreed between the Executive and
                  the Remuneration Committee for use by him in accordance with
                  the Company's car policy in force from time to time; or

         (b)      with a contract hire allowance for a suitable motor car at a
                  rate to be set by the Remuneration Committee and this
                  allowance will include maintenance, repairs, motor tax and
                  insurance but may exclude business mileage.

5.2      The Executive shall be entitled to participate, at the Company's
         expense, in any permanent health insurance scheme as the Remuneration
         Committee may decide to set up and provide from time to time subject to
         the Company's right to terminate or substitute other schemes for such
         schemes and subject to clause 12.1(a).

                                      -6-
<PAGE>

5.3      The Executive shall be entitled to participate, at the Company's
         expense in such medical insurance and life insurance scheme as the
         Remuneration Committee may decide to set up and provide from time to
         time subject to the rules of such scheme.

5.4      The Executive shall be entitled to become a member of the Company
         Pension Scheme which the Remuneration Committee may decide to set up.

5.5      Any benefits which may from time to time be provided by the Company or
         any other Group Company to the Executive or his family which are not
         expressly referred to in this Agreement shall be provided at the entire
         discretion of the Company and, unless so agreed in writing, shall not
         form part of the Executive's terms and conditions of employment.

5.6      Should the Executive's employment be terminated for whatever reason the
         Company reserves the right:

         (a)      to make a cash allowance in lieu of the benefits to which the
                  Executive is entitled for any period of notice; or

         (b)      to make provision for the continuation of such benefits for
                  that period;

         or partly the one and partly the other. The provision of benefits
         pursuant to paragraph (b) above will cease immediately should the
         Executive commence new employment at any time prior to the expiry of
         the notice period.

6        HOLIDAY

6.1      In addition to the usual public and bank holidays, the Executive shall
         be entitled to 25 days' paid holiday in each complete holiday year
         worked (and pro rata for part of each holiday year worked) to be taken
         at such time or times as shall be agreed by the Board.

6.2      The holiday year runs from 1 January each year to the following 31
         December. No holiday entitlement may be carried forward from one
         holiday year to the next and no money will be paid in lieu of any such
         untaken holiday entitlement.

6.3      Upon termination of the Appointment, other than pursuant to Clause
         12.1, the Executive's entitlement to holiday will be calculated on the
         basis of 2.1 working days for each calendar month of service completed
         during the holiday year in which termination occurs and payment in lieu
         of untaken holiday entitlement may be made at the discretion of the
         Board.

7        CONFIDENTIALITY

7.1      Neither during the continuance of the Appointment, other than in the
         proper course of his duties and for the benefit of the Company, nor
         after the Termination Date for any reason whatsoever, shall the
         Executive:

         (a)      use, disclose or communicate to any person any Confidential
                  Information which he shall have come to know or have received
                  or obtained at any time (before or after the date of this
                  Agreement) by reason of or in connection with his service with
                  the Company; or

         (b)      copy or reproduce in any form or by or on any media or device
                  or allow others access to or to copy or reproduce Documents
                  containing or referring to Confidential Information.

7.2      The Executive acknowledges that all Documents containing or referring
         to Confidential Information at any time in his control or possession
         are and shall at all times remain the absolute property of the Company
         and the Executive undertakes, both during the Appointment and after the
         Termination Date:

         (a)      to exercise due care and diligence to avoid any unauthorised
                  publication, disclosure or use of Confidential Information and
                  any Documents containing or referring to it;

         (b)      at the direction of the Board, to deliver up any Confidential
                  Information (including all copies of all Documents whether or
                  not lawfully made or obtained) or to delete Confidential
                  Information from any re-usable medium; and

                                      -7-
<PAGE>

         (c)      to do such things and sign such documents at the expense of
                  the Company as shall be reasonably necessary to give effect to
                  this Clause and/or to provide evidence that it has been
                  complied with.

7.3      The restrictions in Clause 7.1:

         (a)      will not restrict the Executive from disclosing (but only to
                  the proper recipient) any Confidential Information which the
                  Executive is required to disclose by law or any order of the
                  court or any relevant regulatory body, provided that the
                  Executive shall, unless obliged by law, have given prior
                  written notice to the Company of the requirement and of the
                  information to be disclosed and allowed the Company an
                  opportunity to comment on the requirement before making the
                  disclosure; and

         (b)      will not apply to Confidential Information which is or which
                  comes into the public domain otherwise than as a result of an
                  unauthorised disclosure by the Executive or any other person
                  who owes the Company an obligation of confidentiality in
                  relation to the information disclosed.

7.4      Nothing in this Agreement shall restrict the rights of the Executive to
         make a Protected Disclosure under the ERA. If the Executive has a
         particular grievance, concern, disclosure or information of a
         particularly sensitive nature or has reasonable grounds to believe that
         the Company has committed a crime, a breach of its legal obligations, a
         miscarriage of justice or a breach of health and safety or
         environmental legislation, the Executive should raise this in the first
         instance with a non-executive director of the Executive's choice.

7.5      The Executive agrees that the restrictions set out in this Clause 7 are
         without prejudice to any other duties of confidentiality owed to the
         Company whether express or implied and are to survive the termination
         of the Appointment.

8        RESTRICTIONS DURING EMPLOYMENT

8.1      Save as permitted under Clause 8.2, the Executive shall not during the
         Appointment carry on or be concerned, engaged or interested directly or
         indirectly (whether as principal, shareholder, partner, employee,
         officer, agent or otherwise) in any trade or business other than that
         of the Company and shall not engage in any other activity which the
         Company reasonably considers may impair his ability to perform his
         duties under this Agreement.

8.2      The Executive may:

         (a)      hold a Permitted Interest; and/or

         (b)      carry on or be concerned, engaged or interested in any other
                  trade or business if he shall have:

                  (i)      provided, on the basis of the utmost good faith, full
                           particulars of its nature and of the likely demands
                           it will make on his time and abilities;

                  (ii)     obtained the prior written consent of the Board,
                           which consent may be given subject to such terms or
                           conditions as it may decide (each of which shall be
                           considered to be a term of this Agreement) and the
                           Company shall have the right to reconsider the
                           consent or the terms if it reasonably considers that
                           it is in the interests of the Company to do so; and

                  (iii)    if required by the Company at any time, provide full
                           details of such hours as he may spend on its business
                           to enable the Company to comply with the requirements
                           of the Working Time Regulations 1998.

8.3      The Executive shall not during the Appointment (save in a purely social
         capacity or with the prior written consent of the Board) make any
         contact, whether formal or informal, written or oral, with any of the
         Company's past, current or prospective suppliers, customers or clients
         with whom the Executive has had business dealings (directly or
         indirectly) for any purpose (including but not limited to an intention
         to set up a competing business or to seek employment) other than for
         the legitimate business interests of the Company.

                                      -8-
<PAGE>

8.4      The Executive shall not during the Appointment either on his own behalf
         or on behalf of any person, firm or company:

         (a)      solicit or endeavour to entice away from the Company an actual
                  employee, or discourage from being employed by the Company any
                  person who, to the knowledge of the Executive, is an employee
                  or a prospective employee of the Company; or

         (b)      employ or procure another person to employ any such person.

8.5      The restrictions set out in this Clause 8 are without prejudice to any
         other fiduciary duties owed to the Company whether express or implied.

9        RESTRICTIONS AFTER EMPLOYMENT

9.1      The Executive shall not, save in respect of a Permitted Interest or
         with the prior written consent of the Board (which shall not be
         unreasonably withheld), for a period of 6 months from the Termination
         Date carry on or be concerned or engaged or interested directly or
         indirectly (whether as principal, shareholder, partner, employee,
         officer, agent or otherwise) in any trade or business which competes
         with any trade or business carried on by the Company in which the
         Executive shall have been actively engaged or involved at any time
         during the Period.

9.2      The Executive shall not for a period of 6 months from the Termination
         Date either on his own behalf or on behalf of any person, firm or
         company in relation to the business activities of the Company in which
         the Executive has been engaged or involved, directly or indirectly:

         (a)      solicit, approach or offer goods or services to or entice away
                  from the Company any person, firm or company who was a client
                  or customer of the Company during the Period with whom the
                  Executive has been actively engaged or involved by virtue of
                  his duties hereunder during the Period; or

         (b)      deal with or accept custom from any person, firm or company
                  who was a client or customer of the Company during the Period
                  with whom the Executive has been actively engaged or involved
                  by virtue of his duties hereunder during the Period; or

         (c)      solicit or approach or offer goods or services to or entice
                  away from the Company any person, firm or company who was a
                  supplier, agent or distributor of the Company during the
                  Period with whom the Executive has been actively engaged or
                  involved by virtue of his duties hereunder during the Period;
                  or

         (d)      deal with or interfere with any person, firm or company who
                  was a supplier, agent or distributor of the Company during the
                  Period and in each case with whom the Executive has been
                  actively engaged or involved by virtue of his duties hereunder
                  during the Period;

         PROVIDED THAT nothing contained in these paragraphs (a) to (d) shall
         prohibit the Executive from carrying out any activities which are not
         in competition with any part of the business of the Company with which
         the Executive was involved in the Period.

9.3      The Executive shall not for a period of 6 months from the Termination
         Date either on his own behalf or on behalf of any person, firm or
         company in relation to the business activities of the Company in which
         the Executive has been engaged or involved, directly or indirectly,
         approach, solicit, endeavour to entice away, employ, offer employment
         to or procure the employment of any person who is or was a Key Employee
         with whom the Executive has had dealings during the Period whether or
         not such person would commit any breach of his contract of employment
         by reason of so leaving the service of the Company or otherwise.

9.4      The Executive shall not, at any time after the Termination Date, either
         on his own behalf or on behalf of any other person, firm or company
         directly or indirectly:

         (a)      interfere or seek to interfere with the continuance, or any of
                  the terms, of the supply of goods or services to the Company;
                  or

                                      -9-
<PAGE>

         (b)      represent himself as being in any way connected with or
                  interested in the business of the Company (other than as a
                  consultant or a member if such be the case) [or use any name
                  which is identical or similar to or likely to be confused with
                  the name of the Company or any product or service produced or
                  provided by the Company or which might suggest a connection
                  with the Company.

9.5      For the avoidance of doubt the period of the restrictions in these
         Clauses 9.1, 9.2(a), 9.2(b), 9.2(c), 9.2(d), 9.3 and 9.4 shall be
         reduced by the period, if any, spent by the Executive during which the
         Executive is precluded from attending at the Company's premises, from
         contacting clients, customers, suppliers or agents of the Company and
         is not in receipt of Confidential Information in accordance with Clause
         2.2(a).

9.6      The Executive (who acknowledges that, in the course of the Appointment,
         he is likely to have dealings with the clients, customers, suppliers
         and other contacts of the Company) agrees that each of the restrictions
         in Clauses 9.1, 9.2(a), 9.2(b), 9.2(c), 9.2(d), 9.3 and 9.4 is separate
         and distinct, is to be construed separately from the other
         restrictions, and is reasonable as regards its duration, extent and
         application for the protection of the legitimate business interests of
         the Company. However, in the event that any such restriction shall be
         found to be void or unenforceable but would be valid or enforceable if
         some part or parts of it were deleted, the Executive agrees that such
         restriction shall apply with such deletions as may be necessary to make
         it valid and effective.

10       RELEVANT DEFINITIONS

         For the purposes of the restrictions set out in Clauses 7, 8 and 9:

         (a)      the expression "Company" shall include any former owner or
                  transferor of a business acquired by the Company by which the
                  Executive shall have been employed under a contract of
                  employment in respect of which his service is included for the
                  purposes of calculating continuous employment with the
                  Company;

         (b)      any reference to the Company and to the Company's trade or
                  business shall be deemed to include any Group Company and its
                  trade or business and/or to apply to them as if the words were
                  repeated by reference to such company insofar as the Executive
                  shall have been performing services for a period of not less
                  than three months for such Group Company at any time during
                  the Period and the Executive hereby undertakes to execute any
                  further documents which the Company may require to confirm
                  this; and

         (c)      where references to the Company and Company's trade or
                  business are deemed to include and/or apply to a Group Company
                  and to a Group Company's business pursuant to paragraph (b) of
                  this Clause 10, the Executive covenants with the Company for
                  itself and in the same terms in relation to each such Group
                  Company and each Group Company's business as he does with the
                  Company and in respect of the Company's business.

11       ABSENCE, ILLNESS AND INCAPACITY

11.1     If at any time the Executive is prevented by reason of ill-health,
         accident or other incapacity from properly performing his duties he
         shall promptly furnish to the Company, if required, evidence of such
         incapacity in a form satisfactory to the Board.

11.2     The Company shall pay the Executive his fixed salary (less an amount
         equal to his statutory sick pay) for the first 180 days in aggregate in
         any calendar year of absence due to illness or other incapacity, but
         shall not be required to pay the Executive any salary or other
         remuneration for any further periods of such absence in any calendar
         year, although it may at its discretion do so.

12       TERMINATION

12.1     The Company may at any time terminate the Appointment with immediate
         effect (or by such longer period of notice as the Company shall see
         fit) by giving the Executive written notice in any of the following
         events:

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<PAGE>

         (a)      if the Executive at the time the notice is given is prevented
                  by reason of ill-health or accident or other incapacity from
                  properly performing his duties and has been so prevented
                  (whether by the same or another reason) for at least a
                  continuous period of 180 days or for an aggregate period of at
                  least 180 days (whether or not, in either case, working days)
                  in the preceding 12 months;

         (b)      if the Executive shall have:

                  (i)      neglected or failed or refused to carry out any of
                           his duties hereunder or otherwise as an Executive of
                           the Company or any Group Company;

                  (ii)     committed any material breach or non-observance or,
                           after having been given warning in writing, any
                           repeated or continued breach or non-observance of any
                           of his duties or any of his express or implied
                           obligations arising from the Appointment or otherwise
                           as a director of the Company or Group Company
                           including refusing to comply with any reasonable
                           instructions given to him by the Board;

                  (iii)    been guilty of conduct or permitted or suffered
                           events tending in the reasonable opinion of the Board
                           to bring himself, the Company or any Group Company
                           into disrepute;

                  (iv)     become prevented by an applicable law or regulation
                           from continuing as a director of the Company or
                           performing any of his duties;

                  (v)      committed any act of fraud or dishonesty (whether or
                           not connected with the Appointment) or committed any
                           act which, in the reasonable opinion of the Board,
                           adversely affects his ability properly to carry out
                           his duties;

                  (vi)     become unable to pay his debts for the purposes of
                           Section 268 of the Insolvency Act 1986, claimed the
                           benefit of any Act for the time being in force for
                           the relief of insolvent debtors or proposed or made
                           any arrangement or composition with his creditors;

                  (vii)    been convicted of a criminal offence (excluding an
                           offence under road traffic legislation in respect of
                           which he is not sentenced to a term of imprisonment,
                           whether immediate or suspended); or

                  (viii)   become of unsound mind or a patient as defined in
                           either Section 112 or Section 145 of the Mental
                           Health Act 1983 or been admitted to a hospital in
                           pursuance of an application made under Part 11 of
                           that Act.

12.2     Upon termination of the Appointment however arising:

         (a)      the Executive shall, without prejudice for any claim he may
                  have arising out of the termination of this employment
                  hereunder, forthwith at the request of the Board and without
                  further claim for compensation resign as a director of the
                  Company and from all offices held by him in any Group Company
                  and from all other appointments or offices which he holds as
                  nominee or representative of the Company or any Group Company
                  and, if he fails so to do, the Company is irrevocably
                  authorised by the Executive to appoint some person in his name
                  and on his behalf to execute such documents and to do such
                  other things as are reasonably necessary to give effect to
                  such resignations; and

                                      -11-
<PAGE>

         (b)      the Executive (or, if he shall be dead, of unsound mind or
                  bankrupt, his personal representatives or such other persons
                  as shall be appointed to administer his estate and affairs)
                  shall deliver up to the Company in accordance with the
                  directions of the Board all keys, security passes, credit
                  cards, Documents and other property (including any motor car
                  provided pursuant to Clause 5.1) belonging to or relating to
                  the businesses or affairs of the Company or any Group Company,
                  including all copies of all Documents containing or referring
                  to Confidential Information which may be in his possession or
                  under his control (or that of his personal representatives or
                  such other persons), and shall not retain copies, extracts or
                  notes of any of the same.

12.4     The Executive shall have no claim against the Company in respect of the
         termination of the Appointment:

         (a)      by reason of the liquidation of the Company for the purpose of
                  amalgamation or reconstruction or as part of any arrangements
                  for the amalgamation or demerger of the undertaking of the
                  Company not involving liquidation provided that the Executive
                  shall have been offered employment with the amalgamated or
                  reconstructed or de-merged company or companies on terms no
                  less favourable to him than under this Agreement; or

         (b)      in relation to any provision in any articles of association,
                  agreement or arrangement which has the effect of requiring the
                  Executive to sell or give up any shares, securities, options
                  or rights at any price or which causes any options or other
                  rights granted to him to become prematurely exercisable or
                  lapse.

12.5     The Board, if it has reason to suspect that any one or more of the
         events set out in Clause 12.1(b) has or may have occurred, may suspend
         the Executive pending the making and completion of such
         investigation(s) as the Board thinks fit. While the suspension
         continues, the Company shall, unless specifically otherwise provided in
         this Agreement, pay to the Executive his fixed salary and provide to
         him the other benefits set out in this Agreement. During the period of
         suspension the Company and relevant Group Companies shall not be
         obliged to provide work to the Executive and may require the Executive
         to comply with such conditions as the Company may specify in relation
         to attending at or remaining away from the places of business of the
         Company and/or the Group Companies. The Company may later terminate the
         Appointment, pursuant to the terms of this Agreement, on the grounds of
         the same or any other event.

13       THE EMPLOYMENT RIGHTS ACT 1996

         This Agreement contains the particulars required to be given under
         Section 1 and 3 of the ERA.

14       RECORD KEEPING

         In order to keep and maintain records relating to the Appointment it
         will be necessary for the Company to record, keep and process personal
         data relating to the Executive. This data may be recorded, kept and
         processed on computer and in hard copy form. To the extent that it is
         reasonably necessary in connection with the Appointment and the
         performance of the Company's responsibilities as an employer, it may be
         necessary for the Company to disclose this data to others, including
         other employees of the Company, Group Companies, the Company's
         professional advisers, the Inland Revenue and other authorities. The
         Executive consents to the recording, processing, use and disclosure by
         the Company of personal data relating to the Executive as set out
         above. This consent cannot be withdrawn by the Executive. This does not
         affect the Executive's rights as a data subject or the Company's
         obligations and responsibilities under the Data Protection Act 1984
         and/or the Data Protection Act 1998. For the purposes of these Acts,
         the Company has nominated the [Company Secretary] as its
         representative.

15       SECURITY

         The Executive consents to the Company checking, recording and reviewing
         telephone calls, computer files, records and e-mails and any other
         compliance, security or risk analysis checks the Company considers
         reasonably necessary.

                                      -12-
<PAGE>

16       NOTICES

         Notices by either party:

         (a)      must be in writing addressed:

                  (i)      to the Company at its registered office for the time
                           being; and

                  (ii)     to the Executive at his place of work or at the
                           address set out in this Agreement or such other
                           address as the Executive may from time to time have
                           notified to the Company for the purpose of this
                           Clause; and

         (b)      will be effectively served:

                  (i)      on the day of receipt, where any hand-delivered
                           letter or a facsimile transmission is received on a
                           business day before or during normal working hours;

                  (ii)     on the following business day, where any
                           hand-delivered letter or facsimile transmission is
                           received either on a business day after normal
                           working hours or on any other day;

                  (iii)    on the second business day following the day of
                           posting from within the United Kingdom of any letter
                           sent by first class prepaid mail; or

                  (iv)     on the fifth business day following the day of
                           posting to an overseas address of any prepaid airmail
                           letter.

17       GENERAL

17.1     This Agreement, which contains all the terms of employment of the
         Executive, is in substitution for all existing contract(s) of
         employment between the Company and any Group Company and the Executive
         (whether written, oral or governed by a course of dealings) which shall
         be deemed to have terminated with effect from the Commencement Date.

17.2     The waiver, express or implied, by either party of any right under this
         Agreement or any failure to perform or breach by the other shall not
         constitute or be deemed a waiver of any other right under this
         Agreement or of the same right on another occasion.

17.3     No amendment, change or addition to the terms of this Agreement shall
         be effective or binding on either party unless reduced to writing and
         signed by each party adversely affected by such amendment, change or
         addition.

17.4     The Executive represents and warrants that he is not a party to any
         agreement, contract (whether of employment or otherwise) or
         understanding which would in any way restrict or prohibit him from
         undertaking or performing any of the duties of the Appointment in
         accordance with this Agreement.

17.5     The Executive undertakes not to disclose or communicate any terms of
         the Appointment to any other employee of any Group Company or to any
         third party (other than for the purpose of obtaining professional
         advice or in accordance with the law).

17.6     This Agreement is governed by and is to be construed in accordance with
         the laws of England and the Parties hereby submit to the non-exclusive
         jurisdiction of the High Court of Justice of England and Wales.

17.7     Except as otherwise expressly stated herein, nothing in this Agreement
         confers any rights on any other person (other than the parties hereto)
         pursuant to the Contracts (Rights of Third Parties) Act 1999.


                                      -13-
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                                   SCHEDULE 1

                            COPYRIGHT AND INVENTIONS

1        In this Schedule "Intellectual Property" shall mean patents, trade
         marks and service marks, rights in inventions, designs, rights,
         registered designs, trade names and copyrights (whether or not any of
         these is registered and including applications for registration of any
         such thing) and all forms of protection of a similar nature which may
         subsist anywhere in the world.

2        The Executive acknowledges, having regard to the nature of the business
         of the Company and other Group Companies and the nature of the
         Executive's expertise, that:

         (a)      the normal duties of the Executive under the Appointment may
                  include the making of inventions;

         (b)      inventions may reasonably be expected to result from the
                  carrying out by the Executive of such duties; and

         (c)      due to the nature of the Executive's duties and the particular
                  responsibilities arising from the nature of his duties, the
                  Executive has a special obligation to further the interests of
                  the Company's undertaking.

3        The Executive shall disclose to the Company any invention made or
         discovered or produced by the Executive in the course of the
         Appointment (whether or not during office hours or using office
         stationery and equipment) in connection with or in any way affecting or
         relating to or capable of being used or adapted for use in the business
         of the Company or any other Group Company.

4        The Executive shall do all things and execute all documents that may be
         necessary to enable the Company or its nominee to obtain the benefit of
         every invention made by the Executive in the course of his duties and
         to secure patent or other appropriate protection for it.

5        Without prejudice to the provisions of paragraph 2 of this Schedule,
         the Executive shall disclose to the Company full details of any
         Intellectual Property or copyright work made or created by the
         Executive during the continuance of his Appointment (whether or not
         during office hours or using office stationery and equipment) and the
         Executive hereby assigns to the Company, by way of assignment of future
         copyright or other Intellectual Property rights, all rights of
         copyright or other Intellectual Property rights throughout the world in
         that copyright work or Intellectual Property.

6        The Executive shall, before working, assigning or granting rights in
         relation to any invention or copyright work or other Intellectual
         Property rights to which the Company is not entitled under this
         Agreement and/or at law, allow the Company or any Group Company
         nominated by it a reasonable opportunity to evaluate the same and the
         Executive shall not dispose of any rights to any third party unless he
         shall first have given written notice to the Company with full,
         complete and bona fide details of the price and terms offered by the
         third party offering the Company, or any Group Company, an opportunity
         to purchase the rights concerned at the same price and on the same
         terms within 28 days of the date of the notice.



                                      -14-
<PAGE>


                                   SCHEDULE 2

        NOTE OF ADDITIONAL PARTICULARS UNDER SECTIONS 1 AND 3 OF THE ERA

1        For the purposes of the ERA the period of continuous employment of the
         Executive began on the Commencement Date.

2        There are no disciplinary rules applicable to the Executive. Any matter
         of discipline will be considered and determined by the Board, whose
         decision shall be final.

3        If the Executive has any grievance relating to the Appointment, he
         should apply in writing to the Board.

4        A contracting-out certificate under the Pension Schemes Act 1993 is not
         in force in respect of the Appointment.

         The Company shall be at liberty at any time and at its own discretion
         to vary the rules and procedures referred to in this Schedule.







                                      -15-
<PAGE>



           ATTESTATIONS



           EXECUTED as a DEED by                     )
           EuroTelecom Communications Inc            )

                                                     Director

                                                     Secretary









           EXECUTED as a DEED and                    )
           DELIVERED by Philip Shaun Derry           )
           in the presence of:                       )

           Name of witness:

           Address:

           Occupation:







                                      -16-