STERN & CO. CONSULTING AGREEMENT

January 09, 2004

__________ xfone, inc. __________. (the "Company")

On behalf of Stern & Co.  ("Stern"),  I look  forward to working  with you as an
outside business consultant.  The purpose of this letter (the "Agreement") is to
set forth the terms and conditions under which Stern agrees to serve the Company
as an outside business consultant.

1.       Services.  Stern shall use its best  efforts to perform  the  following
         services in a timely manner:  (a) become familiar with the business and
         operations of the Company and review and analyze the  Company's  formal
         and informal strategic, marketing, financial and business plans and (b)
         advice the  Company in  strategic  planning  matters  and assist in the
         implementation of short- and long-term  strategic planning  initiatives
         to  enhance  and  accelerate  the  commercialization  of the  Company's
         business objectives.

2.       Term.  This  Agreement  shall be in effect for six (6) months  from the
         date of acceptance by the Company.

3.       Consideration.  For the valuable  advice and services to be provided by
         Stern to the Company  under this  Agreement,  the Company will issue to
         Stern (i) ___ 17,500  _____ shares of the  Company's  common stock (the
         "Shares")  and (ii) 17500  warrants at $3.50 which expire 10 days after
         the  company's  commencement  of trading  on nasadaq  small cap or amex
         (iii) 17,500 warrants at $5.50.  This warrant is a 5 year warrant.  All
         compensation  due to Stern under the terms of this  Agreement  shall be
         deemed earned upon execution  hereof.  The Shares and shares underlying
         the   Warrants   shall  have   anti-dilution   provisions,   piggy-back
         registrations right and cashless exercise rights.

4.       Representations and Warranties.  The Company represents and warrants to
         Stern that the  statements  contained  in  paragraph  4 are correct and
         complete as of the  Effective  Date:  (a) The Company is a  corporation
         duly organized, validly existing and active under the laws of the State
         of New York (b) The Company has full  corporate  power and authority to
         (i)  conduct  its  business  as now  conducted  and as a proposed to be
         conducted and to own, use, license, and lease its assets and properties
         and (ii) enter into this Agreement and to consummate  the  transactions
         contemplated herein.

5.       Expenses.  In addition to the  consideration  set forth in paragraph 3,
         the Company shall reimburse Stern and its affiliates, upon request, for
         all reasonable  out-of-pocket  expenses incurred in connection with the
         performance  by  Stern  of  its   obligations   under  this  Agreement.
         Out-of-pocket  expenses may include necessary out-of-town travel agreed
         to by the Company  (including  meals and lodging),  database  services,
         courier  charges,  and fees and expenses of third parties such as legal
         counsel, etc. The Company shall approve such expenses in advance.

6.       Indemnity.  The Company agrees to indemnify,  defend, and hold harmless
         Stern and its  affiliates,  directors,  officers,  counsel,  employees,
         agents, members, managers,  successors, assigns and controlling persons
         (as defined in the Act) (each, an "Indemnified Party") from and against
         any and all losses, claims damages,  costs,  expenses,  and liabilities
         (including any  investigatory,  legal,  and other expenses  incurred as
         they are incurred by an Indemnified  Party in connection with preparing
         for or  defending  any action,  claim,  or  proceeding,  whether or not
         resulting in any liability)  (collectively,  "Indemnifiable Losses") to
         which any Indemnified Party may become subject or liable relating to or
         a rising out of (a) the Agreement or the services to be performed under
         the  Agreement or any agreement  between the parties to this  Agreement
         (b) any  transactions  referred to in the Agreement or any transactions
         arising out of the transactions  contemplated by the Agreement, (c) any
         inaccuracy in or breach in the  representations  and  warranties of the
         Company contained in this Agreement, and (d) any failure of the Company
         to perform its  obligations  under this  Agreement,  provided  that the
         Company shall not be liable to an Indemnified Party in any such case to
         the  extent  that any  jurisdiction  to have  resulted  as a direct and
         proximate cause from the willful  misconduct or gross  negligence of an
         Indemnified  Party. No Indemnified Party shall be liable,  responsible,
         or accountable in damages and costs and expenses (including  attorneys'
         fees) under this Agreement except fro any liability for losses, claims,
         damages, or liabilities finally judicially  determined to have resulted
         solely and  exclusively  from actions taken or omitted to be taken as a
         direct result of such  Indemnified  Party or insufficient to fully hold
         any Indemnified  Party harmless,  then the Company agrees to contribute
         to the amount paid or payable by such Indemnified  Party as a result of
         such  Indemnifiable  Losses in such  proportion  as is  appropriate  to
         reflect the relative benefits received by and fault of the Company,  on
         the one hand, and the relative benefits received by and fault of Stern,
         on the other hand.

7.       Legal Matters.  This Agreement shall be interpreted  under the governed
         by the laws of the  State of New York.  Any  controversy,  dispute,  or
         claim between the parties  relating to this Agreement shall be resolved
         by binding  arbitration  in accordance  with the rules of this American
         Arbitration Association.

8.       Representation.  The Company acknowledges that it has been given notice
         by Stern that Stern is not a ------------------------------------------
         ------------- licensed securities broker-dealer  and therefore Stern is
         not required under this Agreement or any side -------------------------
         ---------------------------------------------------- agreement, whether
         verbally or in writing, to sell securities on behalf of the Company  or
         any issuer -----------------------------------------------   affiliated
         with the Company.  Moreover,  the Company  acknowledges that Stern does
         not  intend  to  -----------------------------   negotiate  raising  of
         capital transactions, does not intend to directly solicit purchasers of
         the Company's common stock,  will not hold any funds or securities in a
         capital raising  transaction,  and the compensation due to Stern is not
         based on a specified percentage of any actual or proposed funds raised.
         The Company  acknowledges that Stern has informed it that neither Stern
         nor any of its  members  or  employees  provides  any  legal  advice or
         counsel.  The duties of Stern  shall not include  auditing,  valuation,
         accounting,  computer network design or appraisal services, which shall
         be procured by the Company at its own expense.

9.       Independent  Contractor.  Stern is an  independent  contractor  and may
         engage in other  business  activities.  Since  Stern is an  independent
         contractor,   nothing  in  this  Agreement   shall  be  interrupted  to
         constitute that Stern is an agent, employee, or partner of the Company,
         nor shall either party have any authority to bind the other.

10.      Entire  Agreement.  This  Agreement  constitutes  the entire  agreement
         between  the  parties  pertaining  to the  subject  matter  hereof  and
         supersedes  and  cancels  any  prior  communications,  representations,
         understanding,  and agreements between the parties. No modifications of
         or  changes  to this  Agreement  shall  be  binding,  nor can any of is
         provisions be waived, unless agreed to in writing by the parties. There
         are no side  agreements,  whether  verbally or in writing,  between the
         Company and Stern.

11.      Confidentiality.  The  parties  agreed  that the  terms  and all of the
         encompassing  components of this Agreement shall be kept  confidential,
         unless this  information  is required to be  disclosed  pursuant to any
         inquiries by federal,  state,  or local law  enforcement or pursuant to
         paragraph 9.

         If the foregoing is acceptable to you, please execute this Agreement in
the place provided below.


Very Truly Yours,



By:
    -------------------------------------------------
     Shai Z. Stern


ACCEPTED AND AGREED


Company:
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By:
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