Document:

Exhibit 10.1

 

GT SOLAR INTERNATIONAL, INC.

 

MANAGEMENT INCENTIVE PROGRAM

 

FY 2010

 

1

 

GT SOLAR INTERNATIONAL, INC.

 

MANAGEMENT INCENTIVE PROGRAM

 

FY 2010

 

1.     FISCAL
YEAR 2010

 

The FY 2010 Management Incentive Program (the “Program”)
of GT Solar International, Inc. (the “Company”) shall commence on March 29,
2009 and continue through and including April 3, 2010 (“FY 2010”).

 

2.     ADMINISTRATION

 

The Program shall be administered by the Exeuctive
Management (“Management”). Subject to the provisions of the Program, Management
may establish from time to time such regulations, provisions, procedures and
conditions of the Program which, in its opinion, may be advisable in the
administration of the Program.  No member
of the Management Team, or Board of Directors, shall be liable for any action
or determination made in good faith with respect to the administration of the
Program, eligibility under the Program or the bonuses awarded under the
Program.

 

3.     ELIGIBILITY

 

Management shall determine,
in its sole discretion, any and all Participants of the Company that will be
eligible to participate in the Program (each, a “Participant”;
collectively, the “Participants”). 
Participants will be eligible to participate in the Program only upon
execution of a participant agreement with the Company as set forth in Exhibit A
hereto (a “Participant Agreement”). 
Each Participant Agreement shall be subject to the terms and conditions
of the Program and may contain additional terms and conditions (which may vary
from Participant to Participant).  Unless
otherwise specified in such Participant Agreement, the date on which
Participant is deemed to be a participant in the Program (the “Participation
Date”) shall be the date on which the individual started employment with
the Company during FY 2010.

 

As soon as practicable after the Participation Date
and from time to time thereafter, the Participant, in
accordance with their manager and with Section 5(B)(iii) below,
shall adopt in writing certain goals and objectives (“MBO Goals”) to be
achieved by Participant over the course of FY 2010.  Such goals and objectives may vary among
Participants.

 

4.     Plan
Performance Components

 

A.                                    Incentive
Operating Income

 

“Incentive Operating Income” for FY 2010 means, on a
consolidated basis, income (loss) from operations for such period as reported
in the company’s Form 10-K, adjusted to 

 

2

 

exclude the effect of (a) stock compensation
expense, (b) any costs of persons other than the company, its officers and
directors, which the Company has incurred under the GT Solar Holdings LLC
Limited Liability Company agreement and (c) any
extraordinary income (e.g., proceeds from any legal action) or expenses in the
reasonable determination of the compensation committee.

 

Incentive Operating Income for FY 2010 shall be
derived from the audited consolidated financial statements of the Company and
its subsidiaries covering such period, and shall be subject to the review and
approval of the Committee, whose determination of such Incentive Operating
Income calculation shall be final and binding.

 

For FY 2010, the Company’s
target Incentive Operating Income shall be set forth in each Participant’s
Participant Agreement (the “Target Incentive Operating Income”).  Please note this figure is Company Confidential and
not to be disclosed externally.

 

B.                                    Incentive
Ending Cash Balance

 

“Incentive Ending Cash Balance” for the incentive plan year
means “cash and cash equivalents” as reported in the Company’s Form 10-K, (a) reduced
by any portion of accounts payable or accrued expenses attributable to the
negotiation of any revised terms with suppliers 
resulting in additional operating charges. (i.e. If normal payment terms
are 45 days and actual AP is at 90 days, a reduction of half of the AP balance
from the Ending Cash Balance shall apply); (b) increased by the amount of any costs paid by the Company
during fiscal 2010 on behalf of persons other than the Company, its officers
and directors under the GT Solar Holdings LLC Limited Liability Company
agreement and (c) any extraordinary cash flows in the reasonable
determination of the compensation committee.

 

For FY 2010, the Company’s
target Incentive Ending Cash Balance shall be set forth in each Participant’s
Participant Agreement (the “Target Incentive Ending Cash Balance”).  Please note this figure is Company
Confidential and not to be disclosed externally.

 

C.                                    MBO Goals

 

“MBO Goals” for FY 2010
refers to the goals for each Participant in their respective job function.

 

5.     BONUS
PAYMENTS

 

A.                                    Determination
Date

 

The amount, if any, to be paid to each Participant
under the Program (the “Bonus Payment”) shall be determined by Management
 after the conclusion of FY 2010
following the audit of the Company’s financial statements by its independent
accountants (the “Determination Date”). 
Bonus Payments shall be disbursed following conclusion of the FY 2010
plan year as soon as administratively practicable after the Determination
Date.  All amounts earned under the
Program reflect gross dollar amounts and are, therefore, subject to applicable
withholding and taxation.

 

3

 

B.                                    Bonus Calculation

 

Each Participant’s Bonus
Payment, if any, shall be determined in the following manner:

 

(i)            Target Bonus

 

The Participant Agreement for
each Participant will specify such Participant’s “Target Bonus” (which will be
based upon a percentage of Participant’s base salary).  Adjustments to base salary during the course
of FY 2010, or partial year participation due to a start date during the plan
year, shall result in a corresponding adjustment to target bonus eligibility on
a pro-rated basis.

 

(ii)           Calculation of Bonus Payment

 

Each Participant’s Bonus
Payment shall equal the sum of the (i) financial performance component
based on Incentive  Operating Income
(weighted 50%), (ii)  financial performance component based on Incentive
Ending Cash Balance (weighted 25%), and (iii) an MBO component (weighted 25%).  Each of these calculations will be
independent of the other; provided that no bonus will be paid if the company
achieves Incentive Operating Income or Incentive  Ending Cash Balance
that is less than 50% of Target Incentive Operating Income or Target Incentive
Ending Cash Balance.

 

The portion of the bonus that
is based on achievement of Incentive Operating Income and Incentive Ending Cash
Balance will be calculated as follows: the applicable payment increases
linearly so that the participant will receive a 0% payment if we achieved 75%
or less of target; a 100% payment if we achieve 100% of target and a 200%
payment if we achieve 120% or more of target. 
Management reserves the right to adjust the formula for unplanned, board
or executive team, approved events.  The
portion of the bonus that is based on the achievement of individual MBOs will
be determined based on the assessment of each participant’s performance as
compared to their MBOs.  In no event
shall a participant’s bonus payment exceed two times such participant’s target
bonus opportunity.

 

(iii)         MBO
Process

 

In order to ensure close alignment with the earned MBO
bonus and each participant’s goal attainment, Management, in consultation with
the CEO, shall retain discretionary authority to determine the MBO bonus based
upon an evaluation of each participant’s performance and contribution during
the plan year.

 

Management shall determine the MBO Goals applicable to
each Participant as follows: Such Participant shall submit to their direct
manager an initial proposal for such Participant’s MBO Goals for FY 2010.  Management shall review such proposal, and at
Management’s sole discretion, shall discuss such proposal with such Participant
and/or modify such proposal.  Although the goal
setting process 

 

4

 

and actual MBO goals may vary
from one participant to the next, the following is intended to provide general
guidance regarding the competencies that may be considered in determining a
Participant’s MBO Goals:

 

1.                                       Achieving corporate,
functional, departmental goals and objectives specified for FY 2010.

 

2.                                       Delivering highly effective management of
operations through leadership of teams, timely communication and the deployment
of business processes and systems that anticipate and prepare the organization
for growth.

 

3.                                       Contributing to an organizational culture where people
can grow and contribute.  Actively
supporting a culture that values safety, operational excellence, initiative,
innovation, teamwork and quality in everything we do.

 

4.                                       Working as a productive and vital member
of the management team.  Building
productive collaborative relationships with peers to meet organizational
challenges together as a team.  Being
responsive to the needs of other team members and cultivating a service
mentality internally within the line of authority.

 

Management shall evaluate
the level of achievement against such Participant’s MBO goals at its sole
discretion and using such criteria as it deems reasonable for each Participant.

 

C.                                    Pro-rata Bonus Payments

 

In the event that the Participation Date of a
Participant occurs after the commencement of FY 2010, such Participant shall be
eligible for a pro-rated Bonus Payment calculated based on the number of days
such Participant was employed by the Company during FY 2010.  Unless otherwise provided in a written
agreement between the Company and Participant, no Participant shall be entitled
to receive a Bonus Payment if, prior to March 31, 2010, such Participant’s
employment with the Company is terminated for any reason.

 

6.     AUTHORITY

 

The Committee shall have final authority to make all
determinations specified in or permitted or deemed necessary under the Program.

 

7.                                      MISCELLANEOUS

 

A.    Assignment
and Transfer

 

No Bonus Payment or any rights or interests therein
shall be assignable or transferable by a Participant.

 

5

 

B.    No
Guarantee of Employment / No Equity Rights

 

Nothing contained in the
Program shall be construed to create or imply a guarantee of employment for any
period of time.  Unless otherwise
provided in a written agreement between Participant and the Company, employment
with the Company is considered to be at-will and may be terminated at any time
by Participant or the Company.

 

C.    Withholding

 

The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy any federal, state, local and foreign taxes of any kind
(including, but not limited to, the Participant’s FICA and SDI obligations)
which the Committee, in its sole discretion, deems necessary to be withheld or
remitted to comply with the Internal Revenue Code of 1986, as amended, and/or
any other applicable law, rule or regulation with respect to any Bonus
Payment. Subject to applicable law, each Participant agrees that the Company
may satisfy withholding obligations from any source of funds available to the
Company and otherwise payable to Participant, including salary payments.

 

D.    Governing Law

 

All questions pertaining to the validity, construction
and administration of the
Program and any Participant’s Participant Agreement shall be determined in
accordance with the laws of the State of New Hampshire.

 

E.     Amendment
and Termination of Program

 

The Committee shall have the right in its sole
discretion to amend the Program at any time and from time to time; provided
that no such amendment shall materially and adversely affect the rights of any
Participant without the consent of such Participant.

 

F.     Severability

 

The invalidity or unenforceability of any provisions
of the Program in any jurisdiction shall not affect the validity, legality or
enforceability of the remainder of the Program in such jurisdiction or the
validity, legality or enforceability of any provision of the Program in any
other jurisdiction, it being intended that all rights and obligations of the
parties hereunder shall be enforceable to the fullest extent permitted by law.

 

*   *  
*   *   *

 

6

 

EXHIBIT
A

 

PARTICIPANT
AGREEMENT

 

GT SOLAR INTERNATIONAL,
INC.

 

PARTICIPANT AGREEMENT TO
THE

MANAGEMENT INCENTIVE PROGRAM

 

Participant
Agreement made as of [DATED] (this “Agreement”) between GT Solar
International, Inc., a Delaware corporation (the “Company”), and [                        ]
(“Participant”). 
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the FY 2010 Management Incentive Program (the “Program”).

 

1.             Right to Participate.  The
Company hereby grants to Participant the right to participate in the Program
pursuant to the terms and conditions thereto.

 

2.             Participant Acknowledgment. 
Attached hereto as Exhibit A is a copy of the Program.  Participant hereby acknowledges receipt of a copy
of the Program and agrees to be bound by all terms and provisions thereof.

 

3.             Participation
Date.  Participant’s Participation
Date shall be March 30, 2009.

 

4.             Incentive
Operating Income.  For FY 2010, the
Incentive Operating Income for purposes of determining Participant’s Bonus
Payment, if any, is $[ ].  Please note
this figure is Company Confidential and not to be disclosed externally.

 

5.             Incentive
Ending Cash Balance.  For FY 2010,
the Incentive Ending Cash Balance for purposes of determining Participant’s
Bonus Payment, if any, is $[  ].  Please
note this figure is Company Confidential and not to be disclosed externally.

 

6.             Target
Bonus.  For purposes of the Program,
Participant’s Target Bonus shall equal $[                        ]
 (representing [      ]%)
of Participant’s base salary during FY 2010. 
Adjustments to base salary during the course of FY 2010, or partial year
participation due to a start date during the plan year, shall result in a
corresponding adjustment to target bonus eligibility on a pro-rated basis.

 

7.             Individual
Goal Achievement.  Participant
acknowledges and agrees that the Bonus Payment, if any, will be subject to
Participant achieving certain goals.  The
criteria used in assessing individual performance, the weight to be assigned
such criteria and such Participant’s Performance Achievement Percentage shall
be determined by the Committee in its sole discretion.  The Bonus Payment, if any, will be calculated
in accordance with the Program

 

8.             Binding Effect. 
This Agreement shall be binding upon and inure to the benefit of any
successors to the Company and all persons lawfully claiming under Participant.

 

7

 

9.             Complete
Agreement.  This Agreement, those
documents expressly referred to herein and other documents of even date
herewith embody the complete agreement and understanding among the parties and
supersede and preempt any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject
matter hereof in any way.

 

10.           Future
Incentive Bonus Plans.  The Company
may in the future adopt one or more incentive plans or programs, with regard to
which the Committee shall retain the exclusive right in its sole discretion to
determine the applicable terms and to identify the persons eligible to
participate.  Nothing in this Agreement
shall be understood to grant or guarantee Participant a right to participate in
any such plan or program.

 

*   *   *  
*   *

 

IN WITNESS WHEREOF, the
Company and Participant have executed this Agreement as of the date first above
written.

 

 

	
   

  	
  GT
  SOLAR INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Brian P. Logue

  
	
   

  	
   

  	
  Vice President Human
  Resources

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  <<First Name>> <<Last Name>>

  

 

8ex10134.htm

    LOAN
AGREEMENT

    

    LOAN
AGREEMENT, dated as of December 10, 2009, between Swiftnet Limited (company
number 02469394) whose registered office is at Britannia House 960 High Road,
London N12 9RY (the "Borrower"), Xfone, Inc. whose
principal executive offices are at 5307 W Loop 289, Lubbock, TX 79414 US (the
“Guarantor”) and certain
subsidiaries of either the Borrower or the Guarantor each of which is registered
in England & Wales being Auracall Limited (company number 04308459, “Auracall”), Equitalk.co.uk
Limited (company number 03894765, “Equitalk”) and Story Telecom
Limited (company number 04551415) (the “UK Subsidiaries” and “UK Subsidiary” means any of
them as may be appropriate), and Iddo Keinan whose address is at Flat 2, 62
Fitzjohns avenue, Hampstead, London NW3 5LT, UK  (the "Lender").

    

    RECITALS

    

    WHEREAS,
the Lender is willing to extend to the Borrower a loan in an amount of
£860,044.58 (Eight Hundred and Sixty Thousand and Forty Four Pounds Sterling and
Fifty Eight Pence Only) on the terms and conditions set forth in this Loan
Agreement (“this Agreement”); and

     

    WHEREAS,
for the purpose of performance of his undertakings under this Agreement, the
Lender has obtained the funds for the Loan (as that term is defined below) in
the sum of £1,252,500 (the “Lender’s Loan”) from the Lender’s bank
and has and/or shall bear certain costs and expenses as specified in the
schedule of expenses attached to this Agreement as “Schedule A” (the “Lender’s Expenses”) in
connection with the Loan.

     

    NOW,
THEREFORE, the parties hereto agree as follows:

     

    
      	
              1.  

            	
              THE
      LOAN

            

    

     

    
      	
              (a)  

            	
              Subject
      to the terms and conditions set forth below, the Lender shall lend to the
      Borrower an amount of £860,044.58 (Eight Hundred and Sixty Thousand and
      Forty Four Pounds Sterling and Fifty Eight Pence) (the "Loan"), no later than
      December 10, 2009 (the "Drawdown Date"). The
      Loan shall be advanced by the Borrower to the Guarantor for the bridge
      funding of the payment of amounts due from the Guarantor under its Series
      A Bonds.

            

    

     

    
      	
              (b)  

            	
              Provided
      no event of default occurs as specified in Clause (k), the Loan shall be
      repaid to the Lender in full no later than May 30,
  2010.

            

    

     

    
      	
              (c)  

            	
              The
      Borrower shall pay to the Lender the following
  amounts:

            

    

     

    
      	
              (i)  

            	
              interest
      at an interest rate of 1.3% (One Point Three Per Cent) per month charged
      on the total amount of the Lender’s Loan, to be paid by the Borrower by
      way of standing order, less a monthly amount of £1,000 (One Thousand
      Pounds Sterling); and

            

    

     

    
      	
              (ii)  

            	
              the
      Lender’s Expenses; and

            

    

     

    
      	
              (iii)  

            	
              any
      costs that may arise in respect of the Loan either as a result of putting
      the Loan in place, during its tenor or in order to obtain repayment of the
      Loan.

            

    

     

    
      	
              (d)  

            	
              All
      payments are to be made by the Borrower without set off or counterclaim
      and free and clear of any and all deductions, including (without
      limitation) withholding taxes except to the extent required by
      law.  If the Borrower is compelled by law or regulations to
      deduct any such amount the amount payable will be automatically increased
      so that the net amount after allowing for such deduction would be equal to
      the amount which would have been payable if no such deduction had
      arisen.

            

    

     

    
      	
              (e)  

            	
              All
      payments are to be made by the Borrower to the Lender in Pounds Sterling
      for value on their due date.  If any payment is made by the
      Borrower to the Lender in any currency other than Pounds Sterling then the
      Borrower will indemnify the Lender for any shortfall that may occur as a
      result of the Lender having to convert such payment to Pounds
      Sterling.

            

    

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    
      	
              (f)  

            	
              The
      Loan will not be made available by the Lender to the Borrower until the
      following conditions are satisfied:

            

    

     

    
      	
              (i)  

            	
              the
      Borrower confirms that the existing debentures granted by the Borrower
      and  Equitalk.co.uk Limited in favour of Barclays Bank PLC have
      been released;

            

    

     

    
      	
              (ii)  

            	
              a
      legal opinion from a lawyer in the same jurisdiction as the jurisdiction
      of incorporation of the Guarantor or any other party providing security in
      favour of the Lender but not incorporated in England & Wales
      confirming their good standing and power and authority to enter into this
      Agreement and any other documents specified
  herein;

            

    

    
       

      
        	
                (iii)  

              	
                      
                  this
      Agreement and the security documents specified at Clause (h) duly
      executed;

                

              

      

       

    

    
      	
              (iv)  

            	
              certified
      copies of board resolutions of the Borrower, the Guarantor and any
      security provider under this Agreement together with shareholder
      resolutions of the Borrower and the UK Subsidiaries in relation to the
      entering into of this Agreement and any other documents specified
      herein;

            

    

     

    
      	
              (g)  

            	
              Borrower
      shall have the right upon two (2) Business Days' prior written notice to
      Lender, to make a voluntary prepayment of the Loan, in whole or in part.
      If the Borrower elects to prepay the Loan, in whole or in part, pursuant
      to this Clause, no prepayment fees shall apply. Provided that, should the
      Borrower choose to prepay the Loan at any time within the first month
      following the Drawdown Date then an early repayment charge equal to the
      balance of the first month’s interest shall
  apply.

            

    

     

    
      	
              (h)  

            	
               For
      good consideration and
      as an inducement for the Lender, on the Drawdown Date and so long as
      Borrower’s obligations and undertaking under this Agreement are
      outstanding, the following shall be granted as security in favour of the
      Lender for the Borrower’s obligations under this Agreement (the “Security
      Documents”):

            

    

     

    
      	
              (a)  

            	
              A
      charge over 51% (Fifty One Per Cent) of the issued Class A shares of the
      Borrower and a charge over 51% (Fifty One Per Cent) of the issued Class B
      shares of the Borrower, a charge over 51% (Fifty One Per Cent) of the
      issued share capital of Equitalk and a charge over the entire issued share
      capital of the UK Subsidiaries (except Equitalk) together with (1) undated
      stock transfer forms in respect of the Borrower and each UK Subsidiary
      executed by the relevant shareholder with the identity of the Lender as
      the transferee (the “Stock Transfer Forms”);
      and (2) the original share certificates representing each shareholder’s
      holding in the Borrower and the relevant UK Subsidiary (the “Certificates”).

            

    

     

    Borrower
and Guarantor shall deliver to the person identified by both the Lender and
Guarantor as an agreed escrow agent for the Lender, Borrower and Guarantor (the
“Escrow Agent”) the
Stock Transfer Forms and the Certificates to be held by the Escrow
Agent until the earlier of (1) the Borrower has repaid the Loan in full, in
which case the Escrow Agent shall deliver the Stock Transfer Forms and the
Certificates to
Guarantor; or (2) the Lender exercises its rights pursuant to Clause (k) in
respect of the Borrower and the UK Subsidiaries in which case the Escrow Agent
shall deliver the Stock Transfer Forms and the Certificates to the
Lender.

     

    Should
the Loan not be repaid in full then the other security granted in favour of the
Lender pursuant to this Clause (h) shall continue in full force and effect until
all amounts due under this Agreement are repaid in full.

     

    In order
to grant and perfect the Lender’s security in respect of the shares in the
Borrower and the UK Subsidiaries the Borrower shall or shall procure that
appropriate UCC-1 Forms, together with any supporting documentation as may be
necessary, are filed with the Nevada Secretary of State.

     

    
      	
              (b)  

            	
              An
      intercompany guarantee between the Borrower, the Guarantor, the UK
      Subsidiaries and NTS Communications, Inc. (“NTS”), a company
      incorporated in Texas, US whose principal executive offices are at 5307 W
      Loop 289, Lubbock, TX 79414 US;

            

    

     

    
      	
              (c)  

            	
              Debentures
      over the entire assets of each of the Borrower and each UK
      Subsidiary.

            

    

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    
      	
              (i)  

            	
              For
      the duration of the Loan the Guarantor
shall:

            

    

     

    
      	
              (a)  

            	
              Preserve
      Mr. Abraham Keinan’s (“Mr. Keinan”) current
      positions in each of the Borrower and each UK Subsidiary (together the
      “Group”) and grant
      Mr. Keinan a veto right on any resolution in the board of directors of
      each member of the Group; and appoint Mr. Keinan as a signatory of each
      member of the Group, thereby Mr. Keinan’s signature shall be required for
      the undertaking of any payment and/or obligation in any amount. Without
      derogating from the generality of the above, Mr. Keinan shall not abuse
      his rights and/or positions as a director of any member of the Group and
      the Group’s affiliates in a manner that may hinder or prevent the Borrower
      from performing the Borrower’s obligations and undertakings under this
      Agreement; In the event Mr. Keinan abuses his foregoing veto right and/or
      positions as a director of any member of the Group and the Group’s
      affiliates in a manner that may hinder or prevent the Borrower from
      performing the Borrower’s obligations and undertakings under this
      Agreement, Mr. Keinan’s aforementioned veto right shall terminate and
      become void.

            

    

     

    
      	
              (b)  

            	
              Provide
      sufficient funds to Lender on a monthly basis to ensure the timely
      payments of Borrower’s monthly interest payments on the Loan, in
      full.

            

    

     

    
      	
              (j)  

            	
              The
      Guarantor covenants that it will appoint an additional director to its
      Board of Directors no later than January 15 2010 and that such appointee
      shall be acceptable to Mr. Keinan.  Until such time as such an
      individual is appointed or until the Loan is repaid in full, Mr. Keinan
      shall have a veto right on any resolution put forth before the Guarantor’s
      Board of Directors. Mr. Keinan shall recommend an appropriate candidate
      (an “Appropriate Candidate”) for such appointment no later than January 2
      2010.  Without derogating from the generality of the above, Mr.
      Keinan shall not abuse his foregoing veto right and/or position as a
      director of the Guarantor in a manner that may hinder or prevent such an
      appointment. In the event Mr. Keinan fails to recommend an Appropriate
      Candidate until January 2 2010, Mr. Keinan’s aforementioned veto right
      shall terminate and become void on January 2 2010. In the event Mr. Keinan
      abuses his foregoing veto right and/or position as a director of the
      Guarantor in a manner that may hinder or prevent such an appointment, Mr.
      Keinan’s aforementioned veto right shall terminate and become void on
      January 15 2010.

            

    

     

    
      	
              (k)  

            	
              The
      occurrence of any of the following events shall constitute an event of
      default under this Agreement ("Event of
      Default"):

            

    

     

    
      	
              (a)  

            	
              the
      Borrower fails to pay on the due date the principal of the Loan (the
      “Principal”);
      or

            

    

     

    
      	
              (b)  

            	
              the
      Borrower fails to pay on the due date any amount, including interest but
      excluding the Principal, payable under this Agreement or the Security
      Documents, and such failure is not remedied to the reasonable satisfaction
      of the Lender within 5 Business Days;
or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      Group, Guarantor or NTS (together the “Obligors”) fails to
      comply with any provision of this Agreement or the Security Documents and
      where capable of remedy, such failure is not remedied to the reasonable
      satisfaction of the Lender within 10 Business Days of the Lender giving
      written notice to the applicable Obligor requiring such Obligor to remedy
      the same; or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Borrower,
      Auracall, Guarantor or NTS become insolvent;
or

            

    

     

    
      	
               
      

            	 	
              (v)

            	
              an
      administrative or other receiver, administrator, manager or similar
      officer is appointed for the Borrower, Auracall, Guarantor or
      NTS;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              any
      order is made or any effective resolution is passed
  for:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the
      winding up, dissolution or liquidation of the Borrower, Auracall,
      Guarantor or NTS other than for the purpose of a reconstruction or
      amalgamation the terms of which have previously been approved by the
      Lender in writing provided that the Lender’s consent will not be required
      should such a reconstruction or amalgamation be taking place in a
      non-insolvent situation; or

            

    

    
       

      
        	
                 
      

              	
                (b)

              	
                the
      making of an administration order against the Borrower, Auracall,
      Guarantor or NTS; or

              

      

       

    

    
      	
               
      

            	
              (c)

            	
              the
      notice of the appointment of an administrator in respect of the Borrower,
      Auracall, Guarantor or NTS;

            

    

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (vii)

            	
              analogous
      legal or statutory proceedings to those matters specified in Clauses (j)
      (iv) to (vi) (inclusive) under any applicable law in any other
      jurisdiction;

            

    

     

    Then in
any such case and at any time thereafter while such event is continuing the
Lender may by written notice to the Borrower with a copy to the Guarantor
declare the Loan, all interest accrued and all other sums payable by the
Borrower to the Lender under this Agreement to be immediately due and payable
and/or terminate the obligations of the Lender under this
Agreement.

     

    Upon the
occurrence of an Event of Default, Lender may exercise his rights under the
Security Documents with respect to any Obligor at the Lender’s sole
discretion.

     

    
      	
              (l)  

            	
              In
      the event Lender becomes a shareholder of the Borrower or any UK
      Subsidiary, (the “Exercised
      Subsidiaries” and “Exercised Subsidiary”
      means any of them as may be appropriate), then for a period of 3 (Three)
      months (the “Buy Back
      Period”), the Guarantor shall have an irrevocable right to purchase
      back the shares of the Exercised Subsidiaries from the Lender at a
      purchase price equal to the aggregate amount of the outstanding principal,
      interest and any other expenses and costs born by Lender in connection
      with the Loan. During the Buy Back Period the Lender shall operate the
      business of the Exercised Subsidiary in such manner as is consistent with
      its current operations and shall not, without the consent of the Borrower,
      take any extraordinary actions which could reasonably be expected to have
      a materially adverse effect on the business or value of the Exercised
      Subsidiaries.

            

    

     

    
      	
              (m)  

            	
              Once
      the Buy Back Period has ended without the Guarantor exercising his right
      to buy back the shares of the Exercised Subsidiaries, (i) the legal and
      beneficial ownership in the shares of the Exercised Subsidiaries shall
      pass to the Lender and such shares/stock shall be transferred to the
      Lender with full title guarantee (and any rights of pre-emption in respect
      of such shares/stock are hereby waived by the Borrower); (ii) the Lender
      shall be entitled to date and otherwise complete the Stock Transfer Forms
      and take any steps necessary to perfect his title to the shares in the
      relevant Exercised Subsidiary; and (iii) the Guarantor and the Lender
      shall appoint an agreed independent appraiser to perform a valuation of
      the Exercised Subsidies (the “Valuation”).  Any
      positive balance between the value of Lender's shares of the Exercised
      Subsidiaries (to be calculated and determined in accordance with the
      Valuation) and amounts unpaid to the Lender under this Agreement, shall,
      if the relevant Exercised Subsidiary is able do so by way of declaration
      of dividend, be paid to the Borrower annually out of the Exercised
      Subsidiary’s net annual profits.  Such annual payments to the
      Borrower shall not exceed 50% of the Exercised Subsidiary’s net profits
      for that applicable year.  The obligation of the Lender to repay
      any such positive balance shall be reflected by an eight year promissory
      note bearing interest at the London Interbank Offer Rate plus 1% (One Per
      Cent) (the “Promissory
      Note”). Such Promissory Note shall be pre-payable out of any sale
      of the Exercised Subsidiaries or in the event that the Exercised
      Subsidiaries sell any equity to an outside party. Upon the execution of
      the Promissory Note, any obligations that the Lender has to the Borrower
      whether under or in connection with, this Agreement, or the Security
      Documents in respect of amounts over and above amounts due to the Lender
      under this Agreement shall no longer apply and instead be replaced by the
      obligations of the Lender to the Borrower as specified in the Promissory
      Note.

            

    

     

    
      	
              (n)  

            	
              In
      consideration of the Lender entering in to this Agreement at the request
      of the Guarantor, and without derogating from the Borrower’s rights under
      the Promissory Note, the Guarantor hereby grants the Lender an option to
      purchase its entire holding of shares or stock in the Exercised
      Subsidiaries on the following terms (“
Option”):

            

    

     

    
      	
              (a)  

            	
              Exercisable
      at any time after the Buy Back Period and for a period of 24 months
      thereafter;

            

    

     

    
      	
              (b)  

            	
              by
      notice in writing , electronic means or fax to the Guarantor with copy to
      Guarantor's General Counsel;

            

    

     

    
      	
              (c)  

            	
              at
      a purchase price to be calculated and determined in accordance with the
      Valuation which shall apply to the Option mutatis
  mutandis;

            

    

     

    
      	
              (d)  

            	
              subject
      to regulatory and legal requirement under the laws of Nevada, the laws of
      England & Wales and any other applicable law (including, if
      applicable, obtaining the approval of the shareholders of the Guarantor,
      which approval the Guarantor shall use its best endeavors to obtain as
      soon as possible following exercise of the
  Option);

            

    

     

    
      	
              (e)  

            	
              may
      be exercised in respect of some or all of the Exercised Subsidiaries, at
      Lender’s sole discretion;

            

    

     

    
      	
              (f)  

            	
              completion
      of any purchase under the Option shall take place within 48 hours of the
      satisfaction of Clause 1(n)(d) above, on which date the Guarantor shall
      deliver to the Lender duly executed stock transfer forms, or their
      equivalent in the relevant jurisdiction, of the shares the subject of the
      Option, in favour of the Lender or as he may direct, together with the
      relevant share certificates; and the Lender shall deliver to the Guarantor
      the full payment in respect of the purchase of the same calculated as
      specified in Clause 1(n)(c) above.

            

    

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    
      	
              (o)  

            	
              Following
      repayment of the liabilities of the Borrower under this Agreement to the
      Lender in full then the Lender shall, at the request and cost of the
      Borrower execute any such documents as may be necessary for the release or
      reassignment as may be appropriate of any security granted in favour of
      the Lender by any Obligor.

            

    

     

    
      	
              (p)  

            	
              The
      Guarantor confirms that it has obtained a credit facility from Bank Leumi
      (UK) Plc of up to £150,000 (One Hundred and Fifty Thousand Pounds
      Sterling), for general working capital purposes (the “Credit
      Facility”).  The Credit Facility is secured by a bank
      guarantee given to Bank Leumi (UK) by FIBI London. The guarantee has been
      issued by FIBI London on the basis of a deposit in an equivalent amount
      lodged by the Lender with FIBI London (“Lender’s
      Deposit”).  The Guarantor covenants with the Lender to
      repay the Credit Facility no later than May 30 2010 so that the Lender’s
      Deposit can be released to the Lender.  A failure to comply with
      this Clause (po) will constitute an event of
  default.

            

    

     

    
      	
              (q)  

            	
              The
      Guarantor hereby grants the Lender a security interest in the proceeds of
      any sale of its working interest in the capital stock of Xfone 018 Ltd
      (“Xfone 018”) in
      an amount at least equal to the Loan. The Guarantor agrees to file a UCC-1
      Form together with any supporting documentation as may be necessary, in
      favour of the Lender to secure such interest. In addition, Guarantor shall
      or shall procure that appropriate UCC-1 Form, together with any supporting
      documentation as may be necessary, covering any such proceeds, will be
      filed with the Nevada Secretary of State within 3 (Three) days of such
      sale.  The Guarantor further agrees to immediately notify the
      Lender in the event of the sale of its interest in Xfone
    018.

            

    

     

    
      	
              2.  

            	
              MISCELLANEOUS

            

    

     

    
      	
              (a)  

            	
              This
      Agreement shall be binding upon and inure to the benefit of the Borrower
      and the Lender and their respective successors and assigns, except that
      neither party may assign any of its rights or obligations hereunder
      without the prior written consent of the other
  party.

            

    

     

    
      	
              (b)  

            	
              Any
      provision of this Agreement may be amended or waived only if such
      amendment or waiver is in writing and is signed by all
      parties.

            

    

     

    
      	
              (c)  

            	
              No
      failure on the part of the Lender to exercise, and no delay in exercising,
      any right will be deemed as a waiver thereof, nor will any single or
      partial exercise by the Lender of any right preclude any other or future
      exercise thereof or the exercise of any other
  right.

            

    

     

    
      	
              (d)  

            	
              In
      case any of the provisions contained in  this Agreement shall be
      found to be invalid, illegal or unenforceable in any respect under any
      applicable law, the validity, legality and enforceability of the remaining
      provisions contained herein shall not in any way be affected or impaired
      thereby.

            

    

     

    
      	
              (e)  

            	
              This
      Agreement is governed by the laws of the England & Wales and the
      parties submit to the exclusive jurisdiction of the High Court of England
      & Wales.

            

    

     

    

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly
executed as of the date first above written.

    

    

    Xfone,
Inc.

    

    By: /s/ Itzhak Almog,
Director

    

    

    Swiftnet
Limited

    

    By: /s/ John Burton,
Director

    

    

    Auracall
Limited.

    

    By: /s/ John Burton,
Director

    

    

    Equitalk.co.uk
Limited.

    

    By: /s/ John Burton,
Director

    

    

    Story
Telecom Limited.

    

    By: /s/ John Burton,
Director

    

    

    Iddo
Keinan

    

    By: /s/ Iddo
Keinan

    

    I hereby
confirm my obligations pursuant to Clauses (i) and (j) of this
Agreement.

    

    Abraham
Keinan

    

    By: /s/ Abraham
Keinan

    

    
      
         

      

      
        -6-

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