Document:

<PAGE>

                                                                   Exhibit 10.17

                             DEVELOPMENT AGREEMENT

                                    between

                            LUCENT TECHNOLOGIES INC.

                                      and

                           MPHASE TECHNOLOGIES, INC.

                       Effective as of September 15, 2003

                 Relating to Broadcast Television Switch (BTS)

<PAGE>

                              DEVELOPMENT AGREEMENT

                               TABLE OF CONTENTS

ARTICLE 1- DEVELOPMENT PROJECT

1.01     Scope of Development Project
1.02     Cost of Development Project

ARTICLE II- INTELLECTUAL PROPERTY

2.01     Existing Intellectual Property
2.02     Rights in Developed Information
2.03     Rights in Inventions
2.04     Patent Licenses
2.05     Licenses to Technology
2.06     No Other Licenses

ARTICLE III - TERM AND TERMINATION

3.01     Termination
3.02     Survival

ARTICLE IV- PROTECTION OF INFORMATION

4.01     Lucent and Company Confidential Information
4.02     Joint Information
4.03     Exceptions to Confidentiality
4.04     Export Control

ARTICLE V - MISCELLANEOUS PROVISIONS

5.01     Compliance with Rules and Regulations and Indemnification
5.02     Agreement Prevails
5.03     Accuracy
5.04     Nothing Construed
5.05     Disclaimer
5.06     Addresses
5.07     Integration
5.08     Nonassignability
5.09     Choice of Law
5.10     Agreement Confidentiality
5.11     Dispute Resolution
5.12     Relationship Between Parties

<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

5.13     Force Majeure
5.14     Headings
5.15     Waiver
5.16     Severability
5.17     Execution In Counterparts
5.18     Payments and Taxes

APPENDIX A - DEFINITION
APPENDIX B - STATEMENT OF WORK

                                       2
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

                             DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT ("Agreement"), effective as of September 15, 2003
("Effective Date"), is made by and between Lucent Technologies Inc., a Delaware
corporation, with offices located at 600 Mountain Avenue, Murray Hill, New
Jersey 07974-0636 ("Lucent") and mPhase Technologies Inc., a New Jersey
corporation, with offices located at 587 Connecticut Avenue, Norwalk, CT 06854
("Company"). Lucent and Company are sometimes referred to herein individually as
a "Party" and collectively as the "Parties". The Parties agree as follows:

                                    ARTICLE I
                               DEVELOPMENT PROJECT

1.01 S cope of Development Project

Lucent shall, during the Development Period, use reasonable efforts to perform
the Development Project described in the Statement of Work in Appendix B
pursuant to the schedule contained therein, and to provide the Deliverables to
Company. The Deliverables may include Technical Information, Hardware and/or
Software. Representatives for Lucent and Company shall meet as needed, either in
person or by telephone, to evaluate and discuss the progress of the Development
Project. The parties may, from time to time, agree upon additional statements
of work that will likewise be appended to and become a part of this Agreement.

1.02 Cost of Development Project

The cost of the Development Project to be paid by Company to Lucent (and terms
of payment, which differ from Lucent's standard terms in a manner that is
intentionally favorable to the Company) are set forth in Appendix B.

                                   ARTICLE II
                              INTELLECTUAL PROPERTY

2.01 Existing Intellectual Property

         Except as provided in Sections 2.04 and 2.05 below, all right, title
and interest in and to inventions, patents, works of authorship, trade secrets,
know-how or any other intellectual property existing prior to the Effective Date
of this Agreement shall remain vested in the Party which owns it immediately
prior to the Effective Date,

------------------
Any term in capital letters which is defined in Appendix A - Definitions shall
have the meaning specified therein.

                                       3
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

2.02 Rights in Developed Information

         (a) Except as specifically provided otherwise in this Agreement, all
information created by employees, contractors, consultants or agents of either
Party during the Development Period and as a direct result of work performed
under this Agreement, which information is necessary to enable Company to make
or have made Licensed Products, whether the information is created solely by
employees, contractors, consultants or agents of one Party or jointly by a
contribution from employees, contractors, consultants or agents of both parties,
shall be termed "Developed Information". Notwithstanding the preceding sentence,
Developed Information shall not include (a) the portion of Lucent Information
that is defined in Section 2.01 above or (b) any part of any Deliverable that is
a general purpose element having one or more uses that are independent of use in
connection with a Licensed Product; Lucent shall retain all right, title and
interest in and to both of the items (a) and (b), subject to the license set
forth in Section 2.05.

         (b) Developed Information, including source code, design schematics and
associated engineering documentation shall be owned by Company, subject,
however, to retention by Lucent of a non-exclusive, royalty-free, world wide,
perpetual license to Lucent or its Subsidiaries to use the Developed Information
(a) for its own internal business purposes, and/or (b) in connection with
products, systems or services other than (i) providing digital television over
DSL transmission facilities, and (ii) providing a low bit rate encoder
substantially as described in Appendix B, section entitled "Low Bit Rate
Encoder".

         (c) Nothing contained in this Agreement shall preclude either party
from including Developed Information in a patent application for a sole
invention as described in Section 2.03(a) or for a joint invention as described
in Section 2.03(b).

2.03 Rights in Inventions

(a) Sole Inventions

         (i) All right, title and interest in and to inventions created solely
by a Party during the Development Period and arising out of the Development
Project, which inventions are not made jointly with employees, contractors,
consultants or agents of the other Party, shall remain vested in the Party which
created it.

         (ii) Either Party may file patent applications for its sole inventions,
but neither Party shall be required to file such patent applications, secure any
patent or maintain any patent.

                                       4
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

(b) Joint Inventions

         (i) For purposes of this Agreement, a Joint Invention shall mean any
invention made by one or more of Lucent's employees, contractors, consultants or
agents working on the Development Project jointly with one or more of Company's
employees, contractors, consultants or agents, which Joint Invention is first
conceived or first actually reduced to practice during the Development Project.

         (ii) The following provisions shall apply only with respect to any
Joint Invention:

         (A)      Lucent shall have the first right to file a patent
                  application in the United States on such Joint Invention and
                  it shall notify Company whether it elects to file such
                  application either before or at the time the development
                  project is complete.

         (B)      Company shall have the right to file a patent application in
                  the United States on such Joint Invention in any case in which
                  Lucent does not elect to file pursuant to Section 2.05(ii)(A)
                  hereof.

         (C)      The Party that elects to file a patent application on such
                  Joint Invention in the United States shall have the first
                  right of election to file a corresponding patent application
                  in each foreign country or, where applicable, community of
                  countries. Such Party shall notify the other Party of those
                  foreign countries, if any, in which it elects to file such
                  patent applications. The other Party shall have the right to
                  file patent applications on such Joint Inventions in all other
                  foreign countries.

         (D)      The expenses for preparing, filing and prosecuting each
                  application, and for issue of the respective patents, shall be
                  borne by the Party which prepares and files the application,
                  except that expenses associated with official patent office
                  fees, taxes, annuities and translation costs, if applicable,
                  shall be equally divided between Lucent and Company, and paid
                  as specified in Section 2.03(b)(ii)(E). The other Party shall
                  have the right to review and comment on each such application
                  prior to its filing, and shall furnish the filing Party with
                  all documents, information, or other assistance that may be
                  necessary for the preparation, filing and prosecution of each
                  such application.

         (E)      In the case of an application for patent that is filed in a
                  country that requires the translation of the application or
                  payment of taxes, maintenance fees or annuities on a pending
                  application or on an issued patent, the Party that files the
                  application shall pay such taxes, maintenance fees or
                  annuities on the pending application or the issued patent and
                  shall invoice the other Party for one-half (1/2) of all such
                  expenses, which shall be payable by the other Party within
                  thirty (30) days of the invoice.

                                       5
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

         (F)      In the event that a Party does not wish to pay its share of
                  expenses associated with a patent application or an issued
                  patent in any country as specified in Section 2.03(b)(ii)(D),
                  such Party shall notify the other Party in writing of its
                  refusal to share in such expenses, and shall assign all its
                  right, title and interest in such patent application or issued
                  patent in such country to the other Party, subject to existing
                  licenses and rights granted by such Party to third parties.
                  Concurrent with the execution by such Party of all necessary
                  documents associated with such an assignment, the other Party
                  shall grant to the Party and its Subsidiaries personal,
                  non-transferable, nonexclusive, royalty-free, licenses (with
                  no sublicensing rights) under such patent application or
                  issued patent to make, have made, use, lease, sell, offer for
                  sale and import. Such nonexclusive licenses shall be for any
                  and all products and services of the kinds furnished or used
                  in the operation of the Party's and its Subsidiaries'
                  businesses.

         (G)      Subject to the provisions of Section 2.03(b)(ii)(F), the
                  Parties shall each have an equal title interest in each
                  application and patent for such Joint Inventions, with Company
                  holding an undivided one-half (1/2) interest and Lucent
                  holding an undivided one-half (1/2) interest.

         (H)      Subject to the provisions of Section 2.03(b)(ii)(F), each
                  Party shall have the right to grant nonexclusive licenses
                  under applications and patents covering such Joint Inventions,
                  and each Party hereby consents to the granting of such
                  licenses by the other Party. Each Party shall have the right
                  to retain all royalties that it receives for granting
                  licenses, without accounting therefor to the other Party.

2.04 Patent Licenses

         (a) Upon payment of the applicable fees as set forth in Appendix B and
subject to the provisions of this Agreement, Lucent hereby grants to Company a
personal, non-transferable and non-exclusive license under Lucent Patents to use
the Deliverables solely for Company's development of the Broadcast Television
Switch. Licensee understands and agrees that IF any patent licenses are
necessary for purposes other than development, including but not limited to the
manufacture of Licensed Products by Company and/or Contract Manufacturers in the
factories of Company and/or Contract Manufacturers, or for the sale of Licensed
Products by Company, such licenses will be governed by a separate patent license
agreement between the Parties, such agreement to contain reasonable and
non-discriminatory terms and conditions, including license fees not to exceed
five (5%) percent of the Fair Market Value of the Licensed Products.

                                       6
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

         (b) Licenses granted herein to Company are not to be construed either
(i) as consent by Lucent to any act which may be performed by Company, except to
the extent impacted by a patent licensed herein to Company, or (ii) to include
licenses to contributory infringe or induce infringement under U.S. law or a
foreign equivalent thereof.

         (c) Company hereby grants to Lucent a personal, non-transferable and
non-exclusive license under patents owned by Company by virtue of Section
2.03(a) solely to perform the Development Project and to furnish Deliverables
pursuant to this Agreement.

2.05 Licenses to Technology

         (a) Upon payment of the applicable fees as set forth in Appendix B and
subject to the provisions of this Agreement, Lucent hereby grants to Company a
personal nontransferable (except as permitted in Section 5.08) and nonexclusive,
worldwide rights to use and/or copy (a) Lucent Information and (b) any part of
any Deliverable that is a general purpose element having one or more uses that
are independent of use in connection with a Licensed Product (i) for the purpose
of conducting the Development Project, (ii) for the manufacture of Licensed
Products by Company and/or Contract Manufacturers in the factories of Company
and/or Contract Manufacturers, and (iii) for the sale of Licensed Products by
Company.

         (b) Subject to the provisions of this Agreement, Company hereby grants
to Lucent a non-exclusive, personal, royalty-free and non-transferable license
under any and all intellectual property rights owned by Company which are
necessary for performing the Development Project or furnishing Deliverables
pursuant to this Agreement.

2.08 No Other Licenses

         (a) No right is granted herein to either Party to use any
identification (such as, but not limited to, trade names, trademarks, service
marks or symbols, and abbreviations, contractions or simulations thereof) owned
by or used to identify the other Party or any of its Subsidiaries or any of its
or their products, services or organizations, and that, with respect to the
subject matter of this Agreement, each Party agrees it will not without the
express written permission of the other Party (i) use any such identification in
advertising, publicity, packaging, labeling or in any other manner to identify
itself or any of its products, services or organizations; or (ii) represent
directly or indirectly that any product, service or organization of the
receiving Party is a product, service or organization of the other Party or any
of its Subsidiaries, or that any product or service of such Party is made in
accordance with or utilizes any information of the other Party or any of its
Subsidiaries.

                                       7
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

         (b) Except as expressly set forth herein, no other right or license is
either granted or implied by either party to the other with respect to any
technical or business information, or with respect to rights in any patents,
trademarks, copyrights, trade secrets, mask work protection rights, and other
intellectual property. Company further understands and agrees that no rights or
licenses under any third party information, software or intellectual property is
being furnished or granted by Lucent hereunder and it shall be Company's sole
responsibility to procure any such rights or licenses (even if such a right or
license is necessary to exercise the rights expressly granted herein).

                                   ARTICLE III
                              TERM AND TERMINATION

3.01 Termination

(a) If a Party fails to fulfill one or more of its material obligations or fails
to perform or observe any material term or condition under this Agreement, the
other Party may, upon its election and in addition to any other remedies that it
may have, at any time terminate this Agreement by not less than thirty (30) days
written notice to the Party specifying any such breach, subject to 3.02 below
unless within the period of such notice, or such longer period as the Parties
may agree, all breaches specified therein shall have been remedied.

(b) Either Party may terminate this Agreement for convenience upon thirty (30)
days written notice to the other Party, subject to 3.02 below. Within such
thirty-day period, the Parties shall meet and agree on a commercially reasonable
wind up of the Development Project, including but not limited to delivery of
completed (or partial) deliverables, and payment to Lucent for non-refundable
costs and expenses incurred.

3.02 Survival

The rights and obligations of Lucent and Company in Sections 2.01 through 2.06,
4.01, 4.02, 4.03, 4.04, 5.09, 5.10 and 5.11), shall survive and continue after
any such termination of this Agreement.

                                       8
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

                                   ARTICLE IV
                            PROTECTION OF INFORMATION

4.07 Lucent and Company Confidential Information

(a) Company and Lucent agree that:

         (i)      Company will not use any of Lucent Information, and that
                  Lucent will not use any of Company Information except as
                  authorized herein;

         (ii)     Company shall hold all of Lucent Information and Lucent shall
                  hold all of Company Information in confidence, and neither
                  Party shall make any disclosure of any or all of such other
                  Party's information to anyone, except to its employees,
                  contractors, consultants and agents who have a need to know,
                  and to any others to whom such disclosure may be expressly
                  authorized hereunder and is necessary to implement the use
                  authorized hereunder, and that each Party shall appropriately
                  notify each person to whom any such disclosure is made that
                  such disclosure is made in confidence and shall be kept in
                  confidence by such person, and each Party shall keep a list
                  of each person to who any such disclosure is made;

         (iii)    the receiving Party will not, without the disclosing Party's
                  express written permission, reverse engineer any of the
                  furnished Lucent Information or Company Information;

         (iv)     the receiving Party will not, without the disclosing Party's
                  express written permission, make or have made, or permit to be
                  made, more copies of any of the furnished Lucent Information
                  or Company Information than are necessary for its use
                  hereunder, and that each such copy shall contain the same
                  proprietary notices or legends that appear on the furnished
                  Lucent Information or Company Information being copied;

         (v)      all of Lucent Information shall remain the property of Lucent,
                  and upon termination of this Agreement, Company shall, at
                  Lucent's written request, immediately cease all use of Lucent
                  Information and shall, as directed by Lucent, promptly destroy
                  or deliver to Lucent each and every part specified by Lucent
                  of Lucent Information then under Company or its Subsidiaries'
                  control;

         (vi)     all of Company Information shall remain the property of
                  Company, and upon termination of this Agreement, Lucent
                  shall, at Company written request, immediately cease all use
                  of Company information and shall, as directed by Company,
                  promptly destroy or deliver to Company each and every part
                  specified by Company of Company Information then under
                  Lucent's or its Subsidiaries' control; and

                                       9
<PAGE>

      MPhase, Inc. DEVELOPMENT AGREEMENT

         (vii)    if this Agreement is terminated by a Party for breach prior to
                  completion of the Development Project, then: (i) the
                  terminating Party may retain and use, in accordance with the
                  terms and conditions of this Agreement, Company Information or
                  Lucent Information, as appropriate, for a period of six (6)
                  months from the date of termination, and (ii) the breaching
                  Party shall, at the terminating Party's written request,
                  immediately cease all use Company Information or Lucent
                  Information, as appropriate, and shall, as directed by the
                  terminating Party, promptly destroy or deliver to the
                  terminating Party each and every part specified by the
                  terminating Party of Company Information or Lucent
                  Information, as appropriate, then under the breaching Party's
                  or its Subsidiaries' control.

4.02 Joint Information

(a) Lucent will provide to Company a list of jointly developed Intellectual
Properties utilized in the jointly developed product when product development
design and testing is complete.

(b) All Joint Information, except publicly known information, shall, if in
written or other tangible form, be marked "PROPRIETARY LUCENT-mPHASE" and shall
be maintained confidential by both Parties.

(c) Any Joint Information, except publicly known information, if in intangible
form shall be reduced to a written or other tangible form within thirty (30)
days and marked accordingly.

(d) Subject to a Party's preexisting rights in any solely owned information
contained in the Joint Information, the Parties shall own the Joint Information
jointly.

(e) Each Party may use the Joint Information, royalty-free, for any purpose
subject to any provisions in this Agreement. A Party may disclose or license the
Joint Information, or any portion thereof, to a third party without the
permission of and without accounting to, the other party provided that such
third party agrees to confidentiality provisions for the Joint Information which
are not less restrictive than the provisions herein. Joint Information may be
disclosed for purposes of obtaining patent protection pursuant to the provisions
of Section 2,04(b).

                                       10
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

4.03 Exceptions to Confidentiality

Notwithstanding the provisions of Sections 4.01 or 4.02, neither Party shall be
required to restrict use and/or disclosure with respect to portions of Lucent
Information, Company Information or the Joint Information, if any:

         (i)      that are independently developed by the receiving Party,
                  solely by personnel with no access to such portions furnished
                  under this Agreement to the receiving Party;

         (ii)     that are lawfully received from another source having the
                  right to so furnish such portions without breach of this
                  Agreement;

         (iii)    that have become generally known to the public, provided that
                  such public knowledge was not the result of any breach of this
                  Agreement attributable to the receiving Party;

         (iv)     that at the time of furnishing to the receiving Party was
                  known to the receiving Party as evidenced by documentation or
                  other evidence available to the receiving Party;

         (v)      that the disclosing Party otherwise explicitly agrees in
                  writing need not be kept confidential; or

         (vi)     that is disclosed pursuant to governmental or judicial order
                  or request provided that the Party receiving such request or
                  order shall, whenever practicable, promptly notify the other
                  Party and shall reasonably cooperate with the other Party in
                  contesting such disclosure or in obtaining confidential
                  treatment of any disclosed information (at the other Party's
                  sole cost and expense).

4.04 Export Control

Each Party hereby assures the other that it will not without a license or
license exception authorized by the Bureau of Export Administration of the U.S.
Department of Commerce, Washington, D.C. 20230, United States of America, if
required;

         (i)      export or release any Deliverables (Technical Information or
                  Software, including source code) obtained pursuant to this
                  Agreement to a national of Country Groups D:1 or E:2 (15
                  C.F.R. Part 740, Supp. 1), Iran, Iraq, Serbia, Sudan, or
                  Syria; or

                                       11
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

         (ii)     export to Country Groups D:1 or E;2, or to Iran, Iraq, Serbia,
                  Sudan, or Syria, the direct product (including processes and
                  services) of the Technical Information or Software; or

         (iii)    if the direct product of the Technical Information is a
                  complete plant or any major component of a plant, export to
                  Country Groups D:1 or E:2, or to Iran, Iraq, Serbia, Sudan, or
                  Syria, the direct product of the plant or major component.

This assurance will be honored even after the expiration or termination of this
Agreement.

                                    ARTICLE V
                            MISCELLANEOUS PROVISIONS

5.01 Compliance with Rules and Regulations and Indemnification

(a) Company personnel shall, while on any location of Lucent in connection with
the Development Project, comply with Lucent's rules and regulations with regard
to safety and security. Lucent shall inform such personnel of such rules and
regulations. Company shall have full control over such personnel and shall be
entirely responsible for their complying with Lucent's rules and regulations.
Company agrees to indemnify and save Lucent harmless from any claims or demands,
including the costs, expenses and reasonable attorneys' fees incurred on account
thereof, that may be made by (i) anyone for injuries to persons or damage to
property to the extent they arise in connection with this Agreement and result
from the willful misconduct or negligence of Company personnel; or (ii) Company
personnel under Worker's Compensation or similar laws. Company agrees to defend
Lucent, at Lucent's request, against any such claim or demand.

(b) Lucent's personnel shall, while on any location of Company, in connection
with the Development Project, comply with Company rules and regulations with
regard to safety and security. Company shall inform such personnel of such rules
and regulations. Lucent shall have full control over such personnel and shall
be entirely responsible for their complying with Company rules and regulations.
Lucent agrees to indemnify and save Company harmless from any claims or demands,
including the costs, expenses and reasonable attorneys' fees incurred on account
thereof, that may be made by (i) anyone for injuries to persons or damage to
property to the extent they arise in connection with this Agreement and result
from the willful misconduct or negligence of Lucent's personnel; or (ii)
Lucent's personnel under Worker's Compensation or similar laws. Lucent agrees to
defend Company, at Company request, against any such claim or demand.

(c) Each Party shall be solely responsible for (i) its personnel's remuneration,
travel, living and other local expenses, and (ii) payment of all federal, state,
social security and other payroll taxes in respect of its personnel, including
contributions from them when required by the law of the country or any political
subdivisions thereof in which such personnel is employed by such Party.

                                       12
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

(d) Lucent and Company shall, at all times, each retain the administrative
supervision of their respective personnel.

(e) Lucent and Company contemplate the provision of a mutually agreed upon
reasonable amount of technical assistance or training services, some of which
may be provided in countries outside of the United States. Company shall pay all
travel and living expenses incurred by Lucent personnel in connection with such
technical assistance or training services.

5.02 Agreement Prevails

This Agreement shall prevail in the event of any conflicting terms or legends
that may appear on Lucent Information or Company Information or Joint
Information.

5.03 Accuracy

Lucent believes that Lucent Information is true and accurate, and Company
believes that Company Information is true and accurate, but neither Lucent nor
Company nor their respective Subsidiaries shall be held to any liability for
errors or omissions therein.

5.04 Nothing Construed

Neither the execution of this Agreement nor anything in it or in Lucent
Information or in Company Information shall be construed as,

         (i)      an obligation upon either Party or their Subsidiaries to
                  furnish, except as expressly provided in this Agreement, any
                  assistance of any kind whatsoever, or any products or
                  information other than Company or Lucent Information or to
                  revise, supplement or elaborate upon such information; or

         (ii)     providing or implying any arrangement or understanding, except
                  to the extent set forth in this Agreement, that either Party
                  or its Subsidiaries will make any purchase or lease from, or
                  enter into any contract or other business arrangement with,
                  the other Party or its Subsidiaries.

                                       13
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

5.05 Disclaimer

         (a)      All Deliverables, Lucent Information and other information
                  furnished by Lucent under this Agreement is furnished "AS IS"
                  with all faults, latent and patent, and without any warranty
                  of any type. Notwithstanding the foregoing, mPhase and Lucent
                  shall test the Deliverables in order to determine that the
                  Deliverables are in substantial compliance with the Statement
                  of Work set forth in Appendix B.

         (b)      Lucent and its Subsidiaries make no representations or
                  warranties, express or implied. By way of example but not of
                  limitation, Lucent and its Subsidiaries make no
                  representations or warranties of merchantability or fitness
                  for a particular purpose, or that the use of Deliverables,
                  Lucent Information or other information will not infringe any
                  patent or other intellectual property right. Lucent and its
                  Subsidiaries shall not be held to any liability with respect
                  to any claim by Company or any third party on account of, or
                  arising from, the use of Deliverables, Lucent Information or
                  other information furnished hereunder.

(b) Neither Party or its Subsidiaries will under any circumstance, whether as a
result of breach of contract, breach of warranty, delay, negligence, tort or
otherwise, be liable to the other Party or to any third party for any
consequential, incidental, special, punitive or exemplary damages and/or loss of
profits or revenues of the other Party or any third party arising out of this
Agreement, whether or not the applicable Party has been advised of the
possibility of such damages.

5.06 Addresses

         (a) Any notice or other communication hereunder shall be sufficiently
given to mPhase when sent by certified mail addressed to mPhase Technologies
Inc., 587 Connecticut Avenue, Norwalk, CT 06854, or to LUCENT when sent by
certified mail addressed to Lucent Technologies, Inc. Attention: Contract
Administrator Intellectual Property Business 2400 SW 145th Avenue, Monarch Lakes
Office Park, Miramar, FL 33027. Changes in such addresses may be specified by
written notice.

         (b) Payments by the LICENSEE shall be made to LUCENT at Lucent
Technologies, Inc., Account No.375 121 0670, Bank of America, P.O. Box 281547,
Atlanta, Georgia 30384-1547 USA. Alternatively, payments to LUCENT may be made
by bank wire transfers to LUCENT's account at Lucent Technologies Licensing,
Account No.375 121 0670, Bank of America, 1401 Elm Street, Dallas, TX 75202 USA,
ABA Code: 111000012, SWIFT CODE:

                                       14
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

NABKUS4A. Changes in such address or account may be specified by written notice.

5.07 Integration

This Agreement sets forth the entire Agreement and understanding between the
Parties as to the subject matter hereof and merges all prior discussions and
agreements between them. Neither of the Parties shall be bound by any
warranties, understandings, modifications or representations with respect to the
subject matter hereof other than as expressly provided herein or in a writing
signed with or subsequent to the execution hereof by an authorized
representative of the Party to be bound thereby.

5.08 Nonassignability

a) The Parties hereto have entered into this Agreement in contemplation of
personal performance, each by the other, and intend that the licenses and rights
granted hereunder to a Party not be extended to entities other than such Party's
Subsidiaries without the other Party's express written consent.

b) Notwithstanding Section 5.08(a), Lucent's rights, licenses, obligations,
title, and interest in this Agreement may be assigned, in whole or in part, to
(i) any Subsidiary of Lucent; or (ii) any direct or indirect successor to all or
any portion of the business of Lucent or its Subsidiaries, which successor shall
thereafter be deemed substituted for Lucent as the Party hereto, effective upon
such assignment.

c) Notwithstanding Section 5.08(x), Company's rights, licenses, obligations,
title and interest in this Agreement may be assigned, in whole or in part, to
(i) any Subsidiary of Company; or (ii) any direct or indirect successor to all
or any portion of the business of Company or its Subsidiaries, which successor
shall thereafter be deemed substituted for Company as the Party hereto,
effective upon such assignment.

5.09 Choice of Law

The Parties agree that the law of the State of New York, exclusive of its
conflict of laws provisions, shall apply in any dispute or controversy arising
with respect to this Agreement.

                                       15
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

5.10 Agreement Confidentiality

The terms, but not the existence, of this Agreement shall be treated as
confidential information by the Parties, and no Party shall disclose such terms
to any third party without the prior written consent of the other Party;
provided however, that each Party may (i) represent to third parties that such
Party is licensed as provided by this Agreement; (ii) disclose this Agreement
and its terms to potential acquirers of, investors in or lenders to such Party
(including any representatives of the parties in such transaction), or
disclosures reasonably necessary in connection with the divestiture of all or
any portion of a Party's respective businesses, provided such disclosure is made
pursuant to a written confidentiality agreement binding upon such potential
acquirer, investor or tender which contains confidentiality obligations which
are no less protective than at least the same degree of care the disclosing
Party normally exercises to protect its own proprietary information of a similar
nature; (iii) disclose this Agreement and its terms in any arbitration,
mediation or other official dispute resolution procedure pursuant to a written
confidentiality agreement binding upon the parties which contains
confidentiality obligations which are no less protective than at least the same
degree of care the disclosing Party normally exercises to protect its own
proprietary of a similar nature; and (iv) disclose this Agreement and its terms
which is requested pursuant to a judicial or governmental request, requirement
or order under law, provided that such Party provides the other Party with
sufficient prior notice in order to contest such request, requirement or order
or seek protective measures. In addition, this Section shall not prevent a Party
from making disclosures reasonably required by law or as required by a stock
exchange.

5.11 Dispute Resolution

(a) If a dispute arises out of or relates to this Agreement, or the breach,
termination or validity thereof, the Parties agree to submit the dispute to a
sole mediator selected by the Parties or, at any time at the option of a Party,
to mediation by the American Arbitration Association ("AAA"). If not thus
resolved, it shall be referred to a sole arbitrator selected by the Parties
within thirty (30) days of the mediation, or in the absence of such selection,
to AAA arbitration before a sole arbitrator which shall be governed by the
United States Arbitration Act.

(b) Any award made (i) shall be a bare award limited to a holding for or against
a Party and affording such remedy as is deemed equitable, just and within the
scope of the agreement; (ii) shall be without findings as to issues (including
but not limited to patent validity and/or infringement) or a statement of the
reasoning on which the award rests; (iii) may in appropriate circumstances
(other than patent disputes) include injunctive relief; (iv) shall be made
within four (4) months of the appointment of the arbitrator; and (v) may be
entered in any court.

(c) The requirement for mediation and arbitration shall not be deemed a waiver
of any right of termination under this Agreement and the arbitrator is not
empowered to act or make any award other than based solely on the rights and
obligations of the Parties prior to any such termination.

                                       16
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

(d) The arbitrator shall be knowledgeable in the legal and technical aspects of
this Agreement and shall determine issues of arbitrability but may not limit,
expand or otherwise modify the terms of this Agreement.

(e) The place of mediation and arbitration shall be New York City.

(f) Each Party shall bear its own expenses but those related to the compensation
and expenses of the mediator and arbitrator shall be borne equally.

(g) A request by a Party to a court for interim measures shall not be deemed a
waiver of the obligation to mediate and arbitrate.

(h) The arbitrator shall have authority to award compensatory damages only. The
arbitrator shall have no authority to award punitive or other damages , and each
Party irrevocably waives any claim thereto.

(i) Except as required by law, the Parties, their representatives, other
participants and the mediator and arbitrator shall hold the existence, content
and result of mediation and arbitration in confidence.

5.12 Relationship Between Parties

Neither Party to this Agreement shall have the power to accept purchase orders
on behalf of the other, bind the other by any guarantee or representation that
it may give, or to incur any debts or liabilities in the name of or on behalf of
the other Party. The Parties acknowledge and agree that nothing contained in
this Agreement shall be deemed or construed to constitute or create between the
Parties hereto a partnership, association, joint venture or other agency.

5.13 Force Majeure

Neither Lucent nor Company shall be liable for any loss, damage, delay or
failure of performance resulting directly or indirectly from any cause which is
beyond its reasonable control, including but not limited to acts of God,
extraordinary traffic conditions, riots, civil disturbances, wars, states of
belligerency or acts of the public enemy, strikes, work stoppages, or the laws,
regulations, acts or failure to act of any governmental authority. In the event
that performance under this Agreement is prevented for a continuous period of
two (2) months or longer by any of the foregoing causes, either Party shall have
the right to terminate this Agreement by giving written notice to the other
Party.

5.14 Headings

Section and subsection headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.

                                       17
<PAGE>

M Phase, Inc. DEVELOPMENT AGREEMENT

5.15 Waiver

Except as specifically provided for herein, the waiver from time to time by a
Party of any of their rights or their failure to exercise any remedy shall not
operate or be construed as a continuing waiver of the same or of any other of
such Party's rights or remedies provided in this Agreement.

5.16 Severability

If any term, covenant or condition of this Agreement or the application thereof
to any Party or circumstances shall, to any extent, be held to be invalid or
unenforceable, then the remainder of this Agreement, or the application of such
term, covenant or condition to parties or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby and
each term, covenant or condition of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.

5.17 Execution in Counterparts

This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original (including facsimile copies), but all of which
together shall constitute one and the same instrument.

5.18 Payments and Taxes

(a) Company shall pay all invoices rendered by Lucent, in U.S. dollars, within
sixty (60) days after receipt thereof, to the address specified in the invoice.

(b) Company shall bear all taxes, duties, levies and similar charges (and any
related interest and penalties), however designated, imposed as a result of the
existence or operation of this Agreement, except (i) any tax imposed upon Lucent
in a jurisdiction other than the United States if such tax is allowable as a
credit against the United States income taxes of Lucent; and (ii) any net income
tax imposed upon Lucent by the United States or any governmental entity within
the United States (the fifty (50) states and the District of Columbia). In order
for the exception contained in (i) to apply, Company must furnish Lucent with
evidence issued by the taxing authority in such jurisdiction that such tax has
been paid. The evidence must be furnished within thirty (30) days of issuance by
the taxing authority and must be sufficient to satisfy United States taxing
authorities that such tax has been paid.

                                       18
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

(c) If Company is required to bear a tax, duty, levy or similar charge pursuant
to (a) above, Company shall pay such tax, duty, levy or similar charge and any
additional amounts as are necessary to ensure that the net amounts received by
Lucent hereunder after all such payments or withholdings equal the amounts to
which Lucent is otherwise entitled under this Agreement as if such tax, duty,
levy or similar charge did not apply.

                                       19
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
in duplicate originals by their duly authorized representatives on the
respective dates entered below.

LUCENT TECHNOLOGIES INC,                          mPhase Technologies, Inc.

By:  /s/ Bernard Zucker
    ------------------------------
                                                  By: /s/ Ronald A. Durando
          BERNARD ZUCKER                              --------------------------
     MANAGING CORPORATE COUNSEL
      INTELLECTUAL PROPERTY                       Name:  Ronald A. Durando
                                                      --------------------------

Date:      10/20/2003                             Title:     President
      ------------------------                          ------------------------

                                                  Date:      10/02/2003
                                                        ------------------------

          THIS AGREEMENT DOES NOT BIND OR OBLIGATE EITHER PARTY IN ANY
    MANNER UNLESS DULY EXECUTED BY AUTHORIZED REPRESENTATIVES OF BOTH PARTIES

                                       20
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

                                   APPENDIX A
                                  DEFINITIONS

BTS means informative material, software, technical information or other
information and Deliverables defined in Appendix B.

Code means Object Code and Source Code, collectively.

Company Information means informative material, software, technical information
or other information, owned by Company or any of its Subsidiaries, disclosed
hereunder by Company that is marked as "confidential" or "proprietary" at the
time of disclosure to Lucent or, if disclosed orally, is identified at the time
of disclosure as "confidential" or "proprietary" and followed by a summary in
writing provided by Company to Lucent within sixty (60) days of the original
disclosure.

Contract Manufacturer means a third party engaged by Company to manufacture
Licensed Products intended for sale by Company to distributors and/or end users.

Deliverables means the Deliverables identified in Appendix B.

Derivative Work shall mean (i) any work of authorship that is based, in whole or
in part, upon one or more pre-existing works (e.g., the Lucent Information or
the Deliverables), such as a revision, modification, translation, abridgment,
condensation, expansion or any other form in which such pre-existing works may
be recast, transformed or adopted and (ii) which, if prepared without
authorization of the owner of the copyright in such pre-existing work, would
constitute a copyright infringement.

Developed Information has the meaning set forth in Section 2.02.

Development Period means, unless otherwise mutually agreed in writing, the
period commencing on the Effective Date of this Agreement and extending until
completion of the last milestone of the Development Project unless terminated
according to the provisions of Article III.

Development Project means performance of the work set forth in the Statement of
Work in Appendix B, and the provision to Company of the Deliverables identified
in Appendix B.

Documentation means all information, whether in human and/or machine-readable
form, relating to Code, including but not limited to user manuals and materials
useful for design (for example, logic manuals, flow charts, and principles of
operation).

                                       21
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

Fair Market Value means, with respect to any Licensed Product sold, leased or
put into use, the greater of (i) the selling price which a seller would realize
from an unaffiliated buyer in an arm's length sale of an identical product in
the same quantity and at the same time and place as such sale, lease or putting
into use; or (ii) the selling price actually obtained for such Licensed Product
in the form in which it is sold, whether or not assembled (and without excluding
therefrom any components or subassemblies thereof which are included in such
selling price).

Joint Information means any newly developed manufacturing process information,
product, service, software, technical information or other information that is
developed while doing work specific to the Development Project by a contribution
of one or more of one Party's employees, agents or consultants jointly with one
or more of the other Party's employees, agents or consultants during the
Development Period. The term does not mean and does not include any existing
intellectual property, product or underlying information of a Party developed
prior to the Effective Date of this Agreement or during the term of this
Agreement solely by or on behalf of Lucent or Company.

Joint Invention shall have the meaning assigned in Section 2.04(b)(i) hereto.

Licensed Product means a Broadcast Television Switch (BTS).

Lucent Information means informative material, Software, Technical Information
or other information, owned by Lucent or any of its Subsidiaries, disclosed
hereunder by Lucent that is marked as "confidential" or "proprietary" at the
time of disclosure to Company or, if disclosed orally, is identified at the time
of disclosure as "confidential" or "proprietary" and followed by a summary in
writing provided by Lucent to Company within sixty (60) days of the original
disclosure.

Lucent Intellectual Property shall mean, collectively, any copyright or trade
secret (but not Lucent Patents) in which Lucent, as of the Effective Date, owns
and has the right to grant any licenses of the type herein granted by Lucent,
but only to the extent of such right, and (I) which is specific to the
Deliverables as furnished hereunder and (ii) but for the licenses granted herein
is unavoidably and necessarily infringed by Customer's implementation and use of
the Deliverables.

Lucent Patent means any patent every patent (including utility models but
excluding design patents and design registrations) issued as of the Effective
Date in any country of the world, and any patent which issues from an
application which claims priority from such issued patent, which Lucent or one
of its wholly-owned Subsidiaries, as of the Effective Date, has the right to
grant any licenses of the type herein granted by Lucent, but only to the extent
of such right, and (i) which claims an invention disclosed in the Deliverables
as furnished hereunder; and (ii) but for the licenses granted herein is
unavoidably and necessarily infringed by Company's use of the Deliverables in
the form furnished hereunder.

                                       22
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

Object Code means code in machine-readable form generated by compilation,
assembly or other translation of Source Code and contained in a medium which
permits it to be loaded into and operated on by a processor.

Software means Code and associated Documentation that is identified in Appendix
B and intended by the Parties to be included in the Deliverables.

Source Code means code in any programming language contained in any format,
including human and machine-readable formats, such code including all comments
and procedural code plus all related development documents such as, but not
limited to, flow charts, schematics, statements of principles of operations or
any other specifications.

Subsidiary of a company means a corporation or other legal entity (i) the
majority of whose shares or other securities entitled to vote for election of
directors (or other managing authority) is now or hereafter controlled by such
company either directly or indirectly; or (ii) that does not have outstanding
shares or securities but the majority of whose ownership interest representing
the right to manage such corporation or other legal entity is now or hereafter
owned and controlled by such company either directly or indirectly; but any such
corporation or other legal entity shall be deemed to be a Subsidiary of such
company only as long as such control or ownership and control exists.

Technical Information means all documented informative material (excluding
patents and patent applications and excluding Code), including without
limitation, Documentation, technical memoranda, technical reports, data and
drawings of whatever kind in whatever tangible medium, specifications, tangible
know-how, processes, manuals, instructions, directories, schematics, sketches,
photographs, graphs, dies, molds, tools, tooling, samples, price lists, part
lists and descriptions, and any and all notes, analysis, compilations, studies,
summaries, and other material containing or based, in whole or in part, on any
information included in the foregoing, that is identified in Appendix B and
intended by the Parties to be included in the Deliverables.

                                       23
<PAGE>

MPhase, Inc. DEVELOPMENT AGREEMENT

                                   APPENDIX B
                        Broadcast Television Switch (BTS)

                                STATEMENT OF WORK

This Statement of Work will be governed by and construed in accordance with the
terms of the Agreement, but to the extent there is any inconsistency between the
terms of this Statement of Work and those of the Agreement, the terms of the
Statement of Work shall take precedence and control the work tasks identified
herein.
================================================================================

General Description of the Development Project

This Development Project relates to provision of hardware and software
engineering in connection with the design, development and building of a
Broadcast Television Switch (BTS).

Attached are the statements of work, initial milestones and deliverables for
each of the contracted areas.

               [THE REMAINING PORTION OF EXHIBIT HAS BEEN OMITTED
        PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED]

                                       24EXHIBIT 10.1
------------

                             NET FORCE SYSTEMS INC.
                             ----------------------
                       Suite #10 - Epicurean, Woods Centre
                                 P.O. Box W-645
                               St. John's, Antigua
                                   West Indies
                               Tel: (268) 562-3452

October 20, 2003

To:
THE BOARD OF DIRECTORS OF
-------------------------
TANGSHAN YIAN BIOLOGICAL ENGINEERING CO. LTD.
---------------------------------------------
120 Huoju Rd.
High Tech. Developing Zone Tangshan
Hbei Provence
063000 P.R. China

Dear Sirs\Mesdames:

Re:  OFFER TO PURCHASE ALL OF THE OUTSTANDING PAID UP CAPITAL OF TANGSHAN YIAN
     BIOLOGICAL ENGINEERING CO. LTD. ("TANGSHAN") FROM THE SOLE OWNER OF THE
     OUTSTANDING PAID UP CAPITAL OF TANGSHAN BY NET FORCE SYSTEMS INC. ("NET
     FORCE")
     -------------------------------------------------------------------------

Subject to and in accordance  with the terms and  conditions  contained  herein,
this   binding   letter  of  intent   (the  "LOI")  will  set  forth  the  basic
understanding,  terms and conditions relating to the proposed acquisition of all
of the outstanding  paid up capital of Tangshan,  a company  organized under the
laws of the People's  Republic of China ("PRC"),  (the "Tangshan  Capital") from
the sole owner of the Tangshan  Capital by Net Force, a company  organized under
the laws of the Country of Antigua, (the "Transaction"). It is intended that the
purchase of the Tangshan Capital will qualify under the applicable tax laws as a
tax deferred  share for share  exchange.  The parties agree that all  reasonable
commercial  efforts will be made to facilitate the Transaction  qualifying under
the  appropriate  subsection of the applicable tax laws and such intention shall
be reflected in a formal purchase agreement.

By  execution  of this  LOI,  the  parties  agree  to enter  into a more  formal
purchaser   agreement  by  way  of  a  share  exchange  agreement  (the  "Formal
Agreement")  and other  documents  that more fully  delineate  and formalize the
terms outlined in this LOI, as follows:

1.   Form of  Transaction.  Tangshan,  Mr. He Ping  Wang,  the sole owner of the
     ---------------------
Tangshan Capital,  and Net Force shall enter into a share exchange agreement (or
other appropriate documentation)  contemplating that, subject to the approval of
shareholders,  if required, and other conditions hereinafter set forth, Tangshan
and Net Force will exchange all of the Tangshan  Capital for 3,500,000 shares of
common stock of Net Force plus US$2,200,000 in cash which will be payable by Net
Force to Tangshan  within 12 months  from the date of  entering  into the Formal
Agreement.

2.   Formal  Agreement.  The terms,  conditions  and  provisions  governing  the
     ------------------
proposed  Transaction  will be  contained in a Formal  Agreement,  which will be
prepared and  executed in form and  substance  satisfactory  to Tangshan and Net
Force and their respective legal counsel.

3.   Due Diligence.  The LOI shall be subject to the following conditions:
     --------------

     (a)  Net Force shall complete due diligence to its satisfaction and that of
its counsel,  as to corporate status,  compliance with applicable laws,  assets,
liabilities,  contracts and financial condition and prospects of Tangshan within
30 days of entering into this LOI.

                                        5
<PAGE>

     (b)  Tangshan  will provide Net Force and its  respective  representatives,
agents  and  advisers  with  reasonable  access  to,  and  copies of, all books,
records,  files and  documents in  Tangshan's  possession  as may be  reasonably
requested  by Net Force in order  that Net Force  may  satisfy  itself as to all
matters relating to the business,  ownership, assets, operations and liabilities
of Tangshan.

4.   Representations  and Warranties.  The Formal  Agreement shall contain usual
     --------------------------------
and customary  representations  and warranties by each of Tangshan and Net Force
about each such corporation, including but not limited to:

               (i)    due incorporation and good standing;
               (ii)   due  authorization  of  the  transactions  and  agreements
                      relating thereto;
               (iii)  title of each such corporation to its assets;
               (iv)   correctness of financial statements;
               (v)    condition of  properties,  equipment  and  other  material
                      assets;
               (vi)   absence of undisclosed or contingent liabilities;
               (vii)  absence of any  material adverse  change since the date of
                      its most  recent  financial  statements in  the  financial
                      condition, results or prospects of such corporation;
               (viii) absence of tax liabilities other than on a current basis;
               (ix)   absence of any threatened or pending litigation;
               (x)    continuing validity of contracts, licenses and permits;
               (xi)   that a finder's fee of  350,000  shares of Net Force is to
                      be  paid  to  Mr.   Steven  Tang upon  completion  of  the
                      Transaction; and

               (xii)  other than the finder's fee of 350,000 shares of Net Force
                      to be paid to Mr. Steven Tang, there are no other finder's
                      fees or commissions payable  upon  the  completion  of the
                      Transaction.

5.   Indemnification.   Each of Tangshan  and Net Force shall agree to indemnify
     ----------------
the other  against any loss,  damage,  expense,  judgment or payment  (including
expenses of investigation,  attorney's fees and litigation  expenses)  resulting
from the inaccuracy of any  representation  or warranty made by such corporation
in the Formal  Agreement and such  indemnity may be  accompanied by an escrow of
not  more  than  ten  percent  of the  shares  of  common  stock  of  Net  Force
contemplated herein to be issued.

6.   Consents.  Each of Tangshan and Net Force will  cooperate  with one another
     ---------
and  proceed,  as promptly as is  reasonably  practicable  to seek to obtain all
necessary consents and approvals, and to endeavor to comply with all other legal
or  contractual   requirements   for  or  preconditions  to  the  execution  and
consummation of the Formal Agreement.

7.   Confidentiality.  Each of  Tangshan  and Net  Force  agrees  to  treat  all
     ----------------
information  (including  but  not  limited  to  any  information  identified  as
"confidential"  in writing and any such information which by its content or from
the  manner  in  which  it  is  provided  could   reasonably  be  deemed  to  be
confidential)  concerning  the other  furnished,  or to be  furnished,  by or on
behalf  of the  other  in  accordance  with  the  provisions  of this  paragraph
(collectively,  the "Information"),  and to take, or abstain from taking,  other
actions set forth herein. The Information will be used solely for the purpose of
evaluating  the proposed  transactions,  and will be kept  confidential  by each
corporation and its officers, directors, employees, representatives, agents, and
advisors;  provided that (i) any of such  Information may be disclosed by either
corporation to its officers, directors, employees, representatives,  agents, and
advisors who need to know such  information  for the purpose of  evaluating  the
proposed  transactions,  (ii) any disclosure of such  information may be made to
which each  corporation  consents  in  writing,  (iii) such  information  may be
disclosed  if so required  by law and (iv) such  obligation  of  confidentiality
shall expire upon such confidential  information  becoming public by means other
than a breach of this paragraph. If the proposed Transaction is not consummated,
each of Tangshan and Net Force will promptly  return all  documents,  contracts,
records,  or properties to the other.  The  provisions of this  paragraph  shall
survive the termination of this LOI.

                                        6
<PAGE>

8.   Public Disclosure.  Before the closing of the proposed Transaction, neither
     ------------------
Tangshan nor Net Force shall make any public  release of  information  regarding
the matters  contemplated  herein except (i) that press  releases in agreed form
shall be issued by Net Force as promptly as is  practicable  after the execution
of  this  LOI,  (ii)  that  Tangshan  and  Net  Force  may  each  continue  such
communications  with  employees,  customers,  suppliers,  franchisees,  lenders,
lessors, shareholders, and other particular groups as may be legally required or
necessary or  appropriate  and not  inconsistent  with the best interests of the
other party or the prompt consummation of the transactions  contemplated by this
LOI, and (iii) as required by law.

9.   Reasonable  Commercial  Efforts.  Each  of  Tangshan  and  Net  Force  will
     --------------------------------
negotiate in good faith and use its reasonably commercial efforts to arrive at a
mutually  acceptable Formal Agreement for approval,  execution,  and delivery on
the  earliest  reasonably  practicable  date.  Net  Force  will  pursue  its due
diligence  investigation of the business,  financial  condition and prospects of
Tangshan in good faith and with reasonable dispatch. Each party hereto will also
use its reasonably  commercial  efforts (subject to all the terms and conditions
hereof and the Formal Agreement) to effect the closing of the Transaction and to
proceed with the transactions  contemplated in this LOI and the Formal Agreement
as promptly as is reasonably practicable.

10.  Exclusive Dealing. During the pendency of negotiations between Tangshan and
     ------------------
Net Force,  each of Tangshan  and Net Force will not,  directly  or  indirectly,
through any officer,  director,  agent, or otherwise, (i) solicit,  initiate, or
negotiate with,  directly or indirectly,  or encourage  submission of inquiries,
proposals,  or offers from, any third party  relating to the  disposition of the
assets,  business or any  securities  of such  corporation,  or any part thereof
(other than transactions in the ordinary course or transactions  which have been
initiated  by a party  prior to the date  hereof,  which in either case will not
make  inadvisable  or  impracticable  the  consummation  of the  Transaction  or
transactions contemplated herein) or (ii) subject to fiduciary obligations under
applicable law as advised in writing by counsel,  participate in any discussions
or negotiations regarding, or furnish to any person any information with respect
to,  the  disposition  of  the  assets,  business  or  any  securities  of  such
corporation or any part thereof  (except as  contemplated  in clause (i) above),
and  neither   Tangshan  nor  Net  Force  will   unilaterally   terminate  these
negotiations without cause unless,  despite the reasonable commercial efforts of
the parties:  (a) the transactions  contemplated shall not have been approved by
the boards of directors of both Tangshan and Net Force; or (b) a material change
or event  (exclusive of a competing  offer) not heretofore known or disclosed to
both parties  hereto shall have  occurred that would make  proceeding  with such
execution and approval of the Formal Agreement or such closing illegal, invalid,
or contrary to the  fiduciary  duties of the board of  directors of Tangshan and
Net Force. Each of Tangshan and Net Force agrees to immediately  disclose to the
other  the  receipt  of any  offer  of a  third  party  for the  sale  or  other
disposition of such corporation.

11.  Transactions  in the Ordinary  Course.  During the pendency of negotiations
     --------------------------------------
between Tangshan and Net Force,  each of Tangshan and Net Force will not make or
agree to make  any  purchase,  sale or  other  similar  transaction  of  assets,
securities  or otherwise in an amount in any  transaction,  greater than $10,000
without  the  consent of the other  party  hereto,  which  consent  shall not be
unreasonably withheld;  except in any such case, for any such transactions which
are in the ordinary course and scope of the business of such party.

12.  Costs.  Tangshan and Net Force will each be solely responsible for and bear
     ------
all of its own respective expenses,  including, without limitation,  expenses of
legal counsel,  accountants,  financial and other advisors, incurred at any time
in  connection  with  pursuing  or  consummating  the Formal  Agreement  and the
transactions contemplated herein.

13.  Termination  Date.  Except with respect to the  provisions  of paragraph 7,
     ------------------
either party hereto may terminate this LOI and thereafter this LOI shall have no
force and effect and the parties shall have no further obligations hereunder if,
despite the reasonable commercial efforts of the parties, the Transaction or the
transactions  contemplated  herein are not closed by December 31, 2003,  if such
terminating  party is not in breach  of any of the  binding  provisions  hereof,
unless the  deadline  date for the closing of  Transaction  or the  transactions
contemplated  herein are extended as may be mutually agreed to by the parties in
writing for a maximum of 14 days per extension.

14.  Execution  in  Counterparts.  This  LOI  may be  executed  in  original  or
     ----------------------------
counterpart form, delivered by facsimile or otherwise,  and when executed by the
parties as aforesaid, shall be deemed to constitute one agreement and shall take
effect as such.

                                        7
<PAGE>

15.  Governing Law.  The situs of this LOI is Vancouver, British  Columbia,  and
     --------------
for all purposes  this LOI will be governed  exclusively  by and  construed  and
enforced in  accordance  with the laws and Courts  prevailing in the Province of
British Columbia.

          Dated this 30th day of October, 2003

                                            TANGSHAN YIAN BIOLOGICAL
                                            ENGINEERING CO. LTD.
                                            ------------------------

                                            Per:     /s/ Xianping Wang
                                                --------------------------------
                                                     Xianping Wang, director

                                            NET FORCE SYSTEMS INC.
                                            ----------------------

                                            Per:     /s/ Lily Wang
                                                --------------------------------
                                                     Lily Wang, director

                                        8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}]]