Document:

Exhibit 10.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPERIOR
ESSEX INC.

LONG-TERM
INCENTIVE PLAN

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE 1  ESTABLISHMENT OF PLAN

  	
  1

  
	
  1.1

  	
  Background

  	
  1

  
	
  1.2

  	
  Purpose

  	
  1

  
	
  1.3

  	
  Effective Date

  	
  1

  
	
  ARTICLE 2  DEFINITIONS 

  	
  1

  
	
  2.1

  	
  Definitions

  	
  1

  
	
  ARTICLE 3  ADMINISTRATION 

  	
  4

  
	
  3.1

  	
  Committee

  	
  4

  
	
  3.2

  	
  Authority of Committee

  	
  4

  
	
  3.3

  	
  Decisions Binding

  	
  4

  
	
  ARTICLE 4  ELIGIBILITY 

  	
  4

  
	
  4.1

  	
  Eligibility

  	
  4

  
	
  ARTICLE 5  OPERATION OF THE PLAN 

  	
  5

  
	
  5.1

  	
  Plan Structure

  	
  5

  
	
  5.2

  	
  Designation of Participants

  	
  5

  
	
  5.3

  	
  Establishment of Target Awards

  	
  5

  
	
  5.4

  	
  Performance Objectives

  	
  5

  
	
  5.5

  	
  Crediting, Vesting and Settlement of
  Performance Shares

  	
  5

  
	
  5.6

  	
  Determination of Performance

  	
  6

  
	
  5.7

  	
  No Dividend Equivalents

  	
  6

  
	
  5.8

  	
  Terminations of Employment

  	
  6

  
	
  5.9

  	
  Recoupment Policy

  	
  6

  
	
  5.10

  	
  Effect of Acquisition or Disposition

  	
  6

  
	
  5.11

  	
  Vesting of Performance Shares

  	
  7

  
	
  ARTICLE 6  AMENDMENT, MODIFICATION AND TERMINATION 

  	
  7

  
	
  6.1

  	
  Amendment, Modification and Termination

  	
  7

  
	
  6.2

  	
  Termination After or During Performance
  Period

  	
  7

  
	
  ARTICLE 7  GENERAL PROVISIONS 

  	
  8

  
	
  7.1

  	
  Limitation of Rights

  	
  8

  
	
  7.2

  	
  Payment of Taxes

  	
  8

  
	
  7.3

  	
  Notices

  	
  8

  
	
  7.4

  	
  Omnibus Plan Controls

  	
  8

  

 

i

 

SUPERIOR
ESSEX INC.

LONG-TERM
INCENTIVE PLAN

 

ARTICLE 1

ESTABLISHMENT
OF PLAN

 

1.1           BACKGROUND.  This Long-Term Incentive Plan (the “Long-Term
Incentive Plan” or the “Plan”) is a subplan of the Superior Essex Inc. Amended
and Restated 2005 Incentive Plan (“Omnibus Plan”), consisting of a program for
the grant of Performance Awards under Article 9 of the Omnibus Plan.  This Plan has been established and approved,
and will be administered by, the Committee pursuant to the terms of the Omnibus
Plan, including without limitation, Article 14 thereof.  It is intended that the Performance Awards
earned under this Plan shall be Qualified Performance-Based Awards with respect
to Participants who are Covered Employees, with the intent that the Performance
Awards to Covered Employees will be fully deductible by the Company without
regard to the limitations of Code Section 162(m).  The applicable Award limits of Section 5.4
of the Omnibus Plan shall apply with respect to this Plan.  As of the Effective Date, Section 5.4 of
the Omnibus Plan provides that the maximum aggregate number of Shares
underlying Awards of Restricted Stock, Restricted Stock Units, Deferred Stock
Units, Performance Shares or other Stock-Based Awards (other than Options or
SARs) granted in any one calendar year to any one Participant shall be 300,000.

 

1.2.          PURPOSE.  The purpose of this Plan is to set forth the
terms for the periodic grant to eligible executives of the Company of
Performance Shares representing the right to receive Shares of the Company’s
common stock at the end of designated performance periods, based on the
achievement of Performance Objectives over such periods.  Performance Objectives are designed to focus
on overall corporate financial results that drive shareholder value.

 

1.3.          EFFECTIVE DATE.  This Plan was
adopted by the Committee on March19, 2008 to be effective as of January 1,
2008.

 

ARTICLE 2

DEFINITIONS

 

2.1.          DEFINITIONS.  Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Omnibus
Plan.  In addition, the following terms
shall have the following meanings for purposes of this Plan, unless the context
in which they are used clearly indicates that some other meaning is intended or
unless a Schedule approved for any Performance Shares assigns a different
meaning to such term.  Other defined
terms that relate to Performance Shares granted with respect to a specific
Performance Period may be set out on the applicable Schedule for that
Performance Period.

 

Acquisition.  An acquisition (or combination of
acquisitions) of a business, including a line of products.

 

1

 

Adjusted EBITDA.  A non-GAAP financial measure for the Company
for a given year, as reflected in the Company’s year-end earnings release, or
if Adjusted EBITDA is no longer reported, EBITDA.  Adjusted EBITDA is generally operating
income, increased by other income (exclusive of interest income) and reduced by
other expense and further adjusted as follows, without duplication and only to
the extent such item is included as a component of operating income:

 

(1)                                  increased
by depreciation and amortization,

(2)                                  increased
or reduced to eliminate the effects of extraordinary items, within the meaning
of GAAP,

(3)                                  increased
or reduced to eliminate the effects of accounting changes implemented during
the Plan Year,

(4)                                  increased
or reduced to eliminate the impact of discontinued operations,

(5)                                  increased
or reduced by other charges or credits that are considered to be non-recurring
or special items, and

(6)                                  increased
or reduced by non-cash gains, losses, income or expenses, such as non-cash
compensation expense.

 

Adjusted
EBITDA Margin. 
With respect to any Performance Period, the quotient obtained by
dividing (i) the quotient of Adjusted EBITDA for a Plan Year divided by
Core Business Revenues for such Plan Year, by (ii) the number of years in
the Performance Period.

 

Adjusted
Operating Income. 
Consolidated Company operating income, a GAAP financial measure for a
given period, as reflected in the applicable Company earnings release, adjusted
without duplication by charges that are considered to be non-recurring or
special items.

 

Average Annual RONA.  With respect to any Performance Period, the
quotient obtained by dividing (i) the sum of RONA for each Plan Year, by (ii) the
number of years in the Performance Period.

 

Average Net Assets.  The average of total assets of the Company
(on a consolidated basis) during a Plan Year, less: (i) cash, (ii) current
liabilities other than debt, and (iii) intangible assets, as reflected on
the Company’s balance sheet on December 31 immediately prior to such Plan
Year and on the last day of each fiscal quarter in such Plan Year.

 

Core Business
Revenues. 
Revenues of the Company’s businesses during a Plan Year, other than the
copper rod segment, as reflected in the applicable earnings release, with the
copper component of revenues adjusted to $3.00 per pound COMEX value or
equivalent values used by the Company for Europe and China.

 

Disposition.  The disposition of businesses, product lines
or interests.

 

GAAP.  Generally accepted accounting principles for
U.S. companies.

 

Grantee
Agreement.  Any Employment Agreement or Change in
Control Agreement between a Participant and the Company as may be in effect on
the Grant Date of Performance

 

2

 

Shares hereunder.

 

Key Performance Objectives.  With respect to any
Performance Shares and the related Performance Period, the Performance
Objectives specified by the Committee which shall be used to trigger
adjustments to the Performance Objectives in the event of Acquisitions as
provided in Section 5.10 hereof.

 

Pay-Out Date.  With respect to any Performance Period, the
earlier of the Scheduled Pay-Out Date or the date of the occurrence of a Change
in Control.

 

Performance Period.  A period of two or more fiscal years of the
Company over which the performance shall be determined for purposes of a given
Performance Share Award.  Unless
otherwise specified by the Committee, Performance Periods under the Plan shall
consist of three consecutive Plan Years.

 

Performance Objective.  With respect to any Performance Shares, any
performance objective for a given Performance Period as designated by the
Committee and set forth in a Schedule. 
Performance Objectives shall be based on one or more Qualified Business
Criteria as set out in the Omnibus Plan.

 

Plan Year.  Individually, a fiscal year of the Company
ended December 31, and collectively, all such fiscal years within a given
Performance Period.

 

Pro Forma
Revenues.  Core
Business Revenues for a specified Plan Year, increased to reflect historic pro
forma annual revenues of any Acquisition that occurs during such Plan Year to
the extent not otherwise reflected in Core Business Revenues.

 

Return on Net
Assets (RONA). 
Adjusted Operating Income for the applicable Plan Year, divided by
Average Net Assets for such Plan Year.

 

Schedule.  With respect to any Performance Shares, a
written document approved by the Committee which sets forth the Performance
Period, the Performance Objectives, the Key Performance Objectives and any
other matters required under Section 5.4 hereof or deemed to be
appropriate by the Committee.

 

Scheduled Pay-Out Date.  With respect to any Performance Period, March 15
of the year following the last Plan Year in the Performance Period.

 

Target Award.  Has the meaning described in Section 5.1.

 

3

 

ARTICLE 3

ADMINISTRATION

 

3.1.          COMMITTEE.  This Plan shall be administered by the
Committee.

 

3.2.          AUTHORITY OF
COMMITTEE.  Without limiting its
authority under Article 4 of the Omnibus Plan, the Committee has the
exclusive power, authority and discretion to:

 

(a)           Designate Participants
for each Performance Period;

 

(b)           Establish and review
Performance Objectives and weightings for different Performance Objectives for
each Performance Period;

 

(c)           Establish Target Awards
for Participants for each Performance Period;

 

(d)           Determine whether and
to what extent Performance Objectives were achieved for each Performance
Period;

 

(e)           Increase the
Performance Objectives or decrease the number of Shares otherwise payable to
any Participant resulting from the achievement of financial Performance
Objectives in any Performance Period, if the Committee determines that the
Performance Objectives would result in payouts that would be disproportionate
to the Company’s performance or other extraordinary circumstances merit a
reduction in the amounts earned;

 

(f)            Establish, adopt or
revise any rules and regulations as it may deem necessary or advisable to
administer this Plan;

 

(g)           Make all other
decisions and determinations that may be required under this Plan or as the
Committee deems necessary or advisable to administer this Plan; and

 

(h)           Amend this Plan as
provided herein.

 

3.3.          DECISIONS BINDING.  The Committee’s interpretation of this Plan
and all decisions and determinations by the Committee with respect to this Plan
are final, binding, and conclusive on all parties.

 

ARTICLE 4

ELIGIBILITY

 

4.1.          ELIGIBILITY.  Participants must be employees of the
Company.  Until the Committee determines
otherwise, it is anticipated that participation will be limited to officers of
the Company or its Affiliates.

 

4

 

ARTICLE 5

OPERATION
OF THE PLAN

 

5.1.          PLAN STRUCTURE.  The Plan provides the underlying terms for
Performance Shares granted to executive officers of the Company or other
eligible participants under the Omnibus Plan. 
Performance Shares are performance-based restricted stock units that
represent the right to receive Shares of the Company’s Stock at the end of a
designated Performance Period, based on the degree to which designated
Performance Objectives are achieved. 
Performance Objectives for each Performance Period will be set forth in
a Schedule approved by the Committee.

 

5.2.          DESIGNATION OF PARTICIPANTS.  Within the first 90 days of any Performance
Period, the Committee shall approve the names of Covered Employees for that
Performance Period.  The Committee may
delegate to the Chief Executive Officer the ability to designate Participants
who are not Covered Employees.  The
Committee will notify or cause Participants to be notified of their eligibility
to participate, and the terms thereof, in writing.

 

5.3.          ESTABLISHMENT OF
TARGET AWARDS.  Awards under the Plan
are expressed as a target number of Performance Shares, which represents the
number of Shares that will be earned at the end of the Performance Period if
all of the Performance Objectives are earned at the “target” level of
achievement (“Target Award”).  The actual
number of Shares that may be earned can vary from 0% to 200% of the Target
Award, depending on the level of achievement of Performance Objectives and
depending on whether the Committee exercises its discretion to reduce a
resulting pay-out as provided herein or in a relevant Schedule.  Within the first 90 days of any Performance
Period, the Committee shall approve the Target Award for each Participant who
is a Covered Employee.  Each Participant’s
Target Award will be communicated in writing to the Participant.

 

5.4.          PERFORMANCE OBJECTIVES.  Within the first 90 days of any Performance
Period, the Committee shall approve the Performance Objectives for the
Performance Period and set forth such Performance Objectives in a Schedule.  The Schedule shall provide a description of
the Performance Objectives and their respective weightings, if applicable, and
any other information that is relevant to the formula the Committee will use to
determine the number of Shares to be granted at the end of the Performance
Period, based on the level of achievement of Performance Objectives.

 

5.5.          CREDITING, VESTING AND SETTLEMENT OF
PERFORMANCE SHARES.  The maximum
number of Performance Shares that a Participant may earn shall be credited at
the time of grant to a bookkeeping account on behalf of the Participant.  The Performance Shares will vest and will be
converted to actual Shares of Stock (one Share per vested Performance Share) on
the dates and to the extent set forth in the applicable Schedule.  Vested Performance Shares will be registered
on the books of the Company in the Participant’s name on the earlier of the
Scheduled Pay-Out Date or the date of the occurrence of a Change in Control
(whichever is applicable, the “Pay-Out Date”), and will be delivered to the
Participant as soon as practical thereafter, in certificated or uncertificated
form, as the Participant shall direct.

 

5

 

5.6.          DETERMINATION OF
PERFORMANCE. The Committee shall, as soon as practicable after the end of a
Performance Period certify the Company’s performance against the Performance
Objectives, but not later than March 15 of the year following the last
Plan Year in the Performance Period.

 

5.7.          NO DIVIDEND
EQUIVALENTS.  Prior to the Pay-Out
Date, the Participant shall have no rights to cash dividends or other cash
distributions paid with respect to Performance Shares.

 

5.8.          TERMINATION OF
EMPLOYMENT.  If the Participant’s
employment terminates prior to the end of a Performance Period for any reason
other than as set forth in the applicable Schedule or in Section 5.11, the
Participant shall forfeit all right, title and interest in and to the
Performance Shares as of the date of such termination.  In addition, the Participant shall have no
rights to any Performance Shares that fail to vest in accordance with the terms
of the Plan.

 

5.9.          RECOUPMENT POLICY.  Shares earned hereunder with respect to
Performance Shares awarded in 2008 or later to Covered Employees are subject to
recoupment pursuant to the terms of that certain Incentive Compensation
Recoupment Policy adopted by the Committee on March 6, 2008, or any
replacement policy or policies adopted by the Board or the Committee setting forth
standards for seeking the return (recoupment) from executive officers of
incentive payments if such payments were inflated due to financial results that
are later restated; provided that any such replacement policy that would have a
material adverse affect on a Participant shall only be effective prospectively.

 

5.10         EFFECT OF ACQUISITION
OR DISPOSITION.  If prior to the end
of a Performance Period, the Company engages in a Disposition or Acquisition,
the following shall occur (the “Automatic Adjustments”):

 

(a)           In the case of a
Disposition, each Performance Objective shall be adjusted, effective as of the
date of the Disposition, by eliminating from the original Performance
Objectives the plan business results and net assets relating to the disposed
business or assets for the remainder of the Performance Period.

 

(b)           In the case of an
Acquisition that would result in a reduction in the Company’s performance under
a Key Performance Objective for the remainder of the Performance Period, the
Performance Objectives shall be reduced, effective as of the date of the
Acquisition, for the effect of such Acquisition for the remainder of the
Performance Period.

 

Notwithstanding the Automatic Adjustments, if an Acquisition or
Disposition occurs, the Committee may, in its sole discretion, increase the
applicable Performance Objectives, so that as adjusted, the difficulty in
attaining such Performance Objectives is increased, or reduce the percentage
pay-out, as a result of such Acquisition or Disposition.

 

6

 

5.11         VESTING OF PERFORMANCE
SHARES.  Except as may be provided in
a Schedule with respect to a Performance Award, Performance Shares will vest
and will be converted to actual Shares of Stock (one Share per vested
Performance Share) on the dates and to the extent set forth below:

 

(a)           On the Scheduled
Pay-Out Date, as to the number of Shares earned based on the achievement of
Performance Objectives as provided on the applicable Schedule for the
Performance Award.

 

(b)           On the date of a Change
in Control, if any, that occurs on or prior to the Scheduled Pay-Out Date, as to
the number of Shares determined by the Committee between the Target Award and
the maximum award, subject to the provisions of the Grantee Agreement.

 

(c)           On the Scheduled
Pay-Out Date, if the Participant’s employment is terminated due to death,
Disability, Retirement, the Participant’s resignation for “Good Reason” (as
defined in the Grantee Agreement) or termination by the Company without “Cause”
(as defined in the Grantee Agreement) prior to the end of the Performance
Period, as to the number of Shares that would have been earned if the
Participant had remained employed through the end of the Performance Period,
multiplied by a fraction, the numerator of which is the number of days lapsed
since the beginning of the Performance Period and the date of such event, and
the denominator of which is the number of days in the Performance Period.

 

If a Participant’s employment is terminated for any reason between the
end of the Performance Period and the Scheduled Pay-Out Date, the Performance
Shares shall be converted to actual Shares of Stock on the Scheduled Pay-Out
Date and be transferred to the Participant as if the Participant remained
employed on the Scheduled Pay-Out Date.

 

ARTICLE 6

AMENDMENT,
MODIFICATION AND TERMINATION

 

6.1.          AMENDMENT,
MODIFICATION AND TERMINATION.  The
Committee may, at any time and from time to time, amend, modify or terminate
this Plan.  The Committee may condition
any amendment or modification on the approval of shareholders of the Company if
such approval is necessary or deemed advisable with respect to tax, securities
or other applicable laws, policies or regulations, including without limitation
Code Section 162(m).

 

6.2.          TERMINATION AFTER OR
DURING PERFORMANCE PERIOD. 
Termination of this Plan after the end of a Performance Period but
before the Scheduled Pay-Out Date will not reduce Participants’ rights to
receive and vested Shares for the Performance Period.  Termination or amendment of this Plan during
a Performance Period shall not affect outstanding Performance Awards except as
permitted under the terms of the Omnibus Plan.

 

7

 

ARTICLE 7

GENERAL
PROVISIONS

 

7.1.          LIMITATION OF RIGHTS.  The Plan does not confer to the Participant
or the Participant’s Beneficiary, executors or administrators any rights of a
stockholder of the Company unless and until Shares of Stock are in fact
registered in such person’s name on the Pay-Out Date.  Prior to the Pay-Out Date, no right or
interest of the Participant in Performance Shares may be pledged, encumbered,
or hypothecated or be made subject to any lien, obligation, or liability of the
Participant to any other party other than the Company or an Affiliate.  Prior to the Pay-Out Date, Performance Shares
may not be sold, assigned, transferred or otherwise disposed of by the
Participant other than by will or the laws of descent and distribution.

 

7.2.          PAYMENT OF TAXES.  The Company or any Affiliate shall have the
authority and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy federal, state, and local
taxes (including the Participant’s FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of this
Plan.  A Participant shall, no later than
the date as of which any amount related to his or her Performance Shares first
becomes includable in the Participant’s gross income for federal income tax
purposes, pay to the Company, or make other arrangements satisfactory to the
Company regarding payment of, any federal, state and local taxes of any kind
required by law to be withheld with respect to such amount.  By adopting this Plan, the Committee hereby
approves the Participant’s surrender to the Company of a number of Shares
earned under a Performance Share award (or the withholding of such Shares) as
necessary to pay the minimum applicable withholding tax obligation, and by
accepting an award of Performance Shares hereunder, the Participant consents to
such method of tax withholding if requested by the Company.  The obligations of the Company under the Plan
will be conditional on such payment or arrangements, and the Company, and,
where applicable, its Affiliates will, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
the Participant.

 

7.3.          NOTICES.  Notices and communications under the Plan must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid. Notices to the Company must be addressed to Superior Essex Inc., 150 Interstate North Parkway, Atlanta, Georgia 30339; Attention: Corporate Secretary, or any other address designated by the Company with notice to the Participant.  Notices to a Participant will be directed to the address of the Participant then currently on file with the Company, or at any other address given by the Participant in a written notice to the Company.
 

7.4           OMNIBUS PLAN
CONTROLS.  This Plan is adopted
pursuant to and shall be governed by and construed in accordance with the
Omnibus Plan.  Performance Shares granted
hereunder shall be subject to all the
terms, conditions and provisions of the Omnibus Plan and to such rules,
regulations and interpretations relating to the Omnibus Plan as may be adopted
by the Committee and as may be in effect from time to time.  The Omnibus Plan and applicable provisions of
any Grantee Agreement are
incorporated herein by reference.  If and
to the extent that the provisions of this Plan conflict or are inconsistent
with the terms, conditions and provisions of the Omnibus Plan or such Grantee
Agreement, if any, the Omnibus Plan and such Grantee Agreement shall control,
provided that to the extent the Omnibus Plan provides the 

 

8

 

Committee with discretion to
determine the terms of Performance Shares, the exercise of such discretion
shall not be considered to be inconsistent with the terms of the Plan.

 

The foregoing
is hereby acknowledged as being the Superior Essex Inc. 2008 Long-Term
Incentive Plan as adopted by the Committee on March19, 2008, to be effective as
of January 1, 2008.

 

	
   

  	
  SUPERIOR ESSEX INC.

  
	
   

  	
   

  
	
   

  	
  /s/ Barbara L. Blackford

  
	
   

  	
  Barbara L. Blackford

  
	
   

  	
  Executive Vice President,

  
	
   

  	
  General Counsel and Corporate Secretary

  

 

9ex10123.htm

    EXHIBIT
10.123

    

    

    COMPROMISE
AGREEMENT

    WITHOUT
PREJUDICE AND SUBJECT TO CONTRACT

    

     

    THIS AGREEMENT is made on 25 March
2008

     

    BETWEEN:-

     

    
      	
              (1)

            	
              Story Telecom, Inc., a
      corporation registered in the State of Nevada, United States of America
      with corporation no: C4689-2004 and whose registered office is at 3155
      East Patrick Lane, Las Vegas, 89120-3481, USA (the “Company”);

            

    

     

    
      	
              (2)

            	
              Story Telecom Limited, a
      company registered in England and Wales with company no: 4551415 and whose
      registered office is at Britannia House, 960 High Road, London N12 9RY, UK
      (“Story”);

            

    

     

    
      	
              (3)

            	
              Xfone, Inc., a
      corporation registered in the State of Nevada, United States of America
      with corporation no: C23688-2000 and whose registered office is at 2506
      Lakeland Drive, Suite 100, Flowood, MS 39232 USA (“Xfone”)

            

    

     

    
      	
              (4)

            	
              Trecastle Holdings Limited, a corporation
      registered in the British Virgin Islands with company no: 305501 and whose
      registered office is at 3152, Road Town, Tortola BV1 (“Trecastle”)
      and

            

    

     

    
      	
              (5)

            	
              Nir Davison of Garden
      Flat, 24 Upper Park Road, London NW3 2UT (“Employee”)

            

    

     

    WHEREAS:-

     

    
      	
              (A)  

            	
              The
      Employee is a legal and registered owner of stock in the Company (the
      “Employee Stock
      Holding”).

            

    

     

    
      	
              (B)  

            	
              Trecastle
      is a legal and registered owner of stock in the Company (the “Trecastle Stock
      Holding”).

            

    

     

    
      	
              (C)  

            	
              Pursuant
      to a Stock Purchase Agreement dated 10 May 2006 (the “2006 SPA”); the
      Employee had been employed to act as the Managing Director of Story until
      his employment was terminated on 12 July 2007 (the “Termination
      Date”).   Prior to the Termination Date the Employee
      had ceased actively to be engaged in the business with effect from 23 April 2007 (the
      “Cessation
      Date”).

            

    

     

    
      	
              (D)  

            	
              The
      Employee contends that his dismissal was unfair and in breach of
      contract.  Neither the Company nor Story accept that the
      dismissal was either unfair or in breach of
  contract.

            

    

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

    
      	
              (E)  

            	
              The
      Employee initiated claims against Story in the Employment Tribunal under
      case number: 33001715/2007 (the “Tribunal
      Claim”).

            

    

     

    
      	
              (F)  

            	
              The
      Employee and Trecastle have alleged that they have claims against Xfone
      and others in relation to the Employee Stock Holding and the Trecastle
      Stock Holding (collectively, the “Stock
      Holding”).

            

    

     

    
      	
              (G)  

            	
              The
      Employee and Trecastle have further alleged that they have other potential
      claims against the Company, Story, Xfone and Swiftnet Limited together
      with their respective Associated Companies and all other companies in
      which Xfone has or will have in the future, directly or
      indirectly,  a shareholding interest (together all of which are
      collectively referred to as the “Xfone
      Group”).

            

    

     

    
      	
              (H)  

            	
              The
      Xfone Group and the Employee wish to settle all claims which the Employee
      has or may have against the Xfone Group and any of their respective
      present or former directors, officers, shareholders, employees or workers
      (excluding the Employee and Trecastle) arising out of the Employee’s
      employment or its termination, the Employee’s status as a director of
      any  company in the Xfone Group, the Employee’s rights as a
      shareholder, stockholder or option holder of any company in the Xfone
      Group, whether arising from the Employee Stock Holding, the 2006 SPA or
      otherwise and any other claims of whatsoever nature, howsoever and
      wherever arising, which he may have, whether or not any such claims exist
      or are known to or contemplated by the parties or are recognised by law at
      the date of this Agreement.

            

    

     

    
      	
              (I)  

            	
              The
      Xfone Group acknowledge that it is not aware that it has any outstanding
      claims against the Employee as at the date of this
    Agreement.

            

    

     

    
      	
              (J)  

            	
              Trecastle
      and the Xfone Group also wish to settle any claims of whatsoever nature
      and wherever arising which Trecastle may have against the Xfone Group and
      any of their respective present or former directors, officers,
      shareholders, employees or workers (excluding the Employee and Trecastle)
      whether arising out of Trecastle’s rights as a stockholder of any company
      in the Xfone Group (arising from the Trecastle Stock Holding, the 2006 SPA
      or otherwise) or arising by reason of the 2006 SPA or otherwise, whether
      or not such claims exist or are known to or contemplated by the parties or
      are recognised by law at the date of this
  Agreement.

            

    

     

    
      	
              (K)  

            	
              In
      addition to entering into this Agreement, the Employee and Trecastle have
      agreed to sell the Stock Holding to Xfone.  This Agreement is
      conditional and shall only become fully effective
  on:

            

    

     

    
      	
              a.  

            	
              the
      Employee and Trecastle entering into an agreement with Xfone to sell the
      entire Stock Holding in accordance with the terms of an agreement in the
      form set out in Schedule 2 to this Agreement (the “2008 SPA”)
      and

            

    

     

    
      	
              b.  

            	
              the
      Employee withdrawing the Tribunal Claim against Story and agrees to its
      dismissal by the Employment
Tribunal.

            

    

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    IT
IS AGREED AS FOLLOWS:

     

    
      	
              1.  

            	
              2008
      SPA

            

    

     

    
      	
              1.1  

            	
              The
      Employee and Trecastle hereby agree to enter into the 2008
      SPA.

            

    

     

    
      	
              1.2  

            	
              This
      Agreement is conditional upon and shall not become effective unless and
      until the Employee and Trecastle enter into the 2008 SPA.  In
      the event that the Employee or Trecastle fail to enter into the 2008 SPA
      by 25 March 2008 the terms of this Agreement shall be null and void and as
      if it had never been entered into.

            

    

     

    
      	
              2.  

            	
              TERMINATION
      PAYMENT

            

    

     

    
      	
              2.1  

            	
              Provided
      that the Employee has complied with the Employee's obligations under this
      Agreement, within 5 working days of receipt by the Company/Company's
      Solicitors of:

            

    

     

    
      	
              2.1.1  

            	
              the
      2008 SPA duly signed by the Employee and duly executed for and on behalf
      of Trecastle;

            

    

     

    
      	
              2.1.2  

            	
              the
      signed Adviser's Certificate;

            

    

     

    
      	
              2.1.3  

            	
              this
      Agreement duly signed by the Employee and duly executed for and on behalf
      of Trecastle;

            

    

     

    
      	
              2.1.4  

            	
              a
      letter to the Employment Tribunal sent in accordance with Clause 5
      withdrawing his claim and consenting to the dismissal of the Tribunal
      Claim; and

            

    

     

    
      	
              2.1.5  

            	
              a
      letter of resignation as a director in the form set out at Schedule 3 to
      this Agreement;

            

    

     

    Story
shall pay to the Employee the sum of £30,000 (the "Termination Payment") as
compensation for loss of employment which is made without admission of
liability.  It is acknowledged by the Employee that save for any
entitlement he may have by reason of the 2008 SPA, that no other payments or
benefits of any kind are due from the Company, Story or any other company of the
Xfone Group except as provided for in this Agreement.

     

    
      	
              2.2  

            	
              Subject
      to Clause 2.1, the Company and Story understand that s401 and s403 Income
      Tax (Earnings and Pensions) Act 2003 apply to payment of the Termination
      Payment, and on this basis no deductions will be made from the Termination
      Payment for tax or employee national insurance contributions except to the
      extent that the Termination Payment exceeds £30,000, where income tax will
      be deducted at basic rate.

            

    

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    
      	
              3.  

            	
              TAX
      INDEMNITY – TERMINATION PAYMENT

            

    

     

    
      	
              3.1  

            	
              The
      Company and Story make no warranty or representation as to whether income
      tax or employee national insurance contributions are lawfully payable in
      relation to the Termination
Payment.

            

    

     

    
      	
              3.2  

            	
              The
      Employee shall be responsible for and shall indemnify the Company and
      Story against, and shall on written demand forthwith pay to the Company or
      Story (or as they may direct), any further income tax or employee national
      insurance contributions and interest, costs, penalties or expenses
      relating to any tax assessment that the Company or Story is required to
      pay or account for in respect of the payments made by the Company or Story
      to the Employee pursuant to this Agreement, subject to the Company or
      Story providing the Employee with copies of any such demand within 7 days
      of the Company or Story receiving such demand, and subject to the Company
      and/or Story providing such assistance as is reasonably required by the
      Employee.    

            

    

     

    
      	
              4.  

            	
              TAX
      INDEMNITY – EMPLOYMENT

            

    

     

    
      	
              4.1  

            	
              Under
      the terms of the 2006 SPA the Employee was entitled to payment of his
      remuneration into such account as he
chose.

            

    

     

    
      	
              4.2  

            	
              The
      Employee hereby warrants that for the period up to the Termination Date
      that the tax payable by him and by Trecastle arising from any remuneration
      or other monies received from any company in the Xfone Group by him or by
      Trecastle has been duly accounted for to the appropriate tax authorities
      and that all tax due and payable has been duly paid to the proper tax
      authorities entitled to raise a demand on either the Employee or Trecastle
      in respect of such remuneration.

            

    

     

    
      	
              4.3  

            	
              In
      this clause 4 the following terms shall have the following
      meanings:

            

    

     

    
      	
              4.3.1  

            	
              Xfone Tax Payment shall
      mean any payment made by any company in the Xfone Group which has already
      been paid to the proper tax authorities in respect of either the Employee
      or Trecastle or in respect of which the Employee has been notified in
      writing by any such companies that tax has been deducted from payments
      otherwise due to him;

            

    

     

    
      	
              4.3.2  

            	
              Xfone Tax Payer shall
      mean the company or companies in the Xfone Group which receive a demand
      from any tax authority in the world, whether HM Revenue and Customs or any
      other tax authority in respect of tax that is claimed to be payable
      by  or in respect of the Employee or Trecastle in excess of the
      Xfone Tax Payment;

            

    

     

    
      	
              4.4  

            	
              Subject
      to the Company and/or Story providing such assistance as is reasonably
      required by the Employee in respect of any demand, the Employee
      shall,  indemnify the Xfone Tax Payer(s) and the Xfone Group
      against, and shall on written demand forthwith pay to the Xfone Tax
      Payer(s) any further income or other tax or employee national insurance
      contributions (or any equivalent or other taxes leviable in any
      jurisdiction in the world arising from monies received by either the
      Employee or Trecastle from any company in the Xfone Group, whether as an
      employee or share or stockholder of any stock in any company in the Xfone
      Group) together with any interest, costs, penalties or expenses relating
      to any such tax assessment that the Xfone Tax Payer is required to pay or
      account for in respect of any such payments and which is not an Xfone Tax
      Payment.

            

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    
      	
              5.  

            	
              DISMISSAL
      OF TRIBUNAL CLAIM

            

    

     

    
      	
              5.1  

            	
              By
      no later than 26 March 2008 (subject to signature of this Agreement by all
      the parties), the Employee shall cause the Qualified Lawyer to write to
      the Employment Tribunal in the form of a letter set out at Schedule 4 to
      this Agreement in relation to the Tribunal Claim and notify the Employment
      Tribunal that the dispute in relation to the Tribunal Claim has been
      settled by way of a compromise agreement and that proceedings should be
      treated as withdrawn by the Employee, the trial date for the Tribunal
      Claim shall be vacated and all the Claimant’s claims set out in the
      Tribunal Claim, shall be dismissed by the Employment Tribunal with
      immediate effect.

            

    

     

    
      	
              5.2  

            	
              The
      Employee shall instruct the Qualified Lawyer to send a true copy of the
      letter sent to the Employment Tribunal in accordance with clause 5.1
      above, to the Company’s solicitor on the same date it is sent to the
      Employment Tribunal.

            

    

     

    
      	
              6.  

            	
              COVENANTS
      AND WARRANTY

            

    

     

    
      	
              6.1  

            	
              The
      Employee hereby covenants for the benefit of the Xfone Group that he shall
      not for any purpose and in connection with any business use the name
      “Story Telecom”, “Story Telecom. Inc.”, “Story Telecom Limited”, “Xfone”,
      “Swiftnet”, “Auracall” nor use the title “Managing Director or “Chief
      Executive [Officer] of Story Telecom Limited” or any other name which is
      similar to these names or which would otherwise suggest that he had a
      continuing relationship with any company in the Xfone
    Group.

            

    

     

    
      	
              6.2  

            	
              The
      Employee understands that the Xfone Group has agreed to enter into this
      agreement on the basis of the warranties set out in this
      Agreement.  The Employee hereby warrants that he has at all
      times acted properly and in accordance with the 2006 SPA, any implied
      terms arising by reason of the Employee’s employment or any duties or
      obligations on him as a director of any company in the Xfone Group and any
      applicable laws to which he or any such relevant company may have been
      subject.

            

    

     

    
      	
              7.  

            	
              RESTRICTIONS

            

    

     

    
      	
              7.1  

            	
              The
      Employee agrees and confirms that he
has:

            

    

     

    
      	
              7.1.1  

            	
              not
      and shall not directly or indirectly disclose to any third party (other
      than the Employee’s professional advisers and/or immediate family) the
      terms of and the circumstances surrounding the conclusion of either this
      Agreement or the 2008 SPA, save where such disclosure is required by any
      competent authority or to comply with any statutory requirement or is
      otherwise required for the purpose of enforcing any of the provisions of
      this Agreement; and

            

    

     

    
      	
              7.1.2  

            	
              has
      not and shall not directly or indirectly make, publish or otherwise
      communicate any disparaging or derogatory statements, whether in writing
      or otherwise, which are intended to or which might be expected to damage
      or lower the business or professional reputation or financial standing of
      any company in the Xfone Group or any of their respective present or
      former directors, officers, shareholders, agents, workers or employees
      (other than the Employee).

            

    

     

    
      	
              7.2  

            	
              On
      behalf of the Xfone Group it is hereby
agreed:

            

    

     

    
      	
              7.2.1  

            	
              That
      the Xfone Group will make all reasonable endeavours to ensure that none of
      its directors, officers, employees and/or agents, whether directly or
      indirectly, shall disclose the terms of this Agreement except as may be
      required by law or a regulatory
body.

            

    

     

    
      	
              7.2.2  

            	
              That,
      subject to any legal or regulatory obligations to which the Xfone Group is
      subject (which will override this clause), it shall not directly or
      indirectly make, publish or otherwise communicate any disparaging or
      derogatory statements, whether in writing or otherwise, which are intended
      to or which might be expected to damage or lower the reputation of the
      Employee.

            

    

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    
      	
              8.  

            	
              AGREEMENT

            

    

     

    
      	
              8.1  

            	
              Following
      careful consideration of the facts and circumstances relating to the
      Employee’s employment by Story in relation to his services as Managing
      Director of Story and its termination and having regard to the sale by him
      and Trecastle in accordance with the 2008 SPA of the Stock Holding, the
      Employee agrees to settle and not to institute or continue any of the
      following specific claims or proceedings against the Company, or any
      company in the Xfone Group or any of its or their respective present or
      former directors, officers, shareholders, employees or workers before an
      employment tribunal, court or other judicial forum arising out of or
      connected with the Employee's employment with Story and/or its
      termination:-

            

    

     

    
      	
              8.1.1  

            	
              any
      claim arising out of a contravention or alleged contravention of
      Part X of the Employment Rights Act 1996 (unfair
      dismissal);

            

    

     

    
      	
              8.1.2  

            	
              any
      claim arising out of a contravention or alleged contravention of
      section 135 of the Employment Rights Act 1996 (the right to a
      statutory redundancy payment);

            

    

     

    
      	
              8.1.3  

            	
              any
      claim arising out of a contravention or an alleged contravention of a
      provision contained in Part II of the Employment Rights Act 1996
      (protection of wages);

            

    

     

    
      	
              8.1.4  

            	
              any
      claim arising out of a contravention or alleged contravention of
      Part V (protection from suffering detriment in employment), of the
      Employment Rights Act 1996.  For the avoidance of doubt the
      reference to Part V of the Employment Rights Act 1996 includes
      any claim under sections 10 to 13 of the Employment Relations
      Act 1999 (the right to be accompanied at disciplinary or grievance
      hearings and related rights);

            

    

     

    
      	
              8.1.5  

            	
              any
      claim arising out of a contravention or alleged contravention of
      section 92 (right to written statement of reasons for dismissal)
      or  section 8 (right to itemised pay statement) of the
      Employment Rights Act 1996;

            

    

     

    
      	
              8.1.6  

            	
              any
      claim under Regulation 30 of the Working Time Regulations 1998
      (for breach of the Working Time Regulations including, without limitation,
      paid annual leave and payment in lieu of untaken leave on termination, the
      entitlement to daily and weekly rest, rest breaks and compensatory
      rest);

            

    

     

    
      	
              8.1.7  

            	
              any
      complaint under section 63 of the Sex Discrimination Act 1975
      (discrimination on grounds of sex marital or civil partner status, gender
      reassignment, discrimination by way of victimisation and
      harassment);

            

    

     

    
      	
              8.1.8  

            	
              any
      complaint under section 2 of the Equal Pay Act 1970 (equal
      pay);

            

    

     

    
      	
              8.1.9  

            	
              any
      complaint under section 54 of the Race Relations Act 1976
      (racial discrimination, harassment and discrimination by way of
      victimisation);

            

    

     

    
      	
              8.1.10  

            	
              any
      complaint under section 17A (discrimination or harassment on grounds
      of disability), for victimisation under section 55 or any complaint under
      section 25(8) (disability discrimination in the provision of employment
      services such as vocational guidance or training) of the Disability
      Discrimination Act 1995;

            

    

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    
      	
              8.1.11  

            	
              any
      claim arising out of a contravention or alleged contravention of
      Regulation 3 (less favourable treatment of fixed-term employees) or
      Regulation 6(2) (right not to be subjected to detriment) of the Fixed-term
      Employees (Prevention of Less Favourable Treatment) Regulations
      2002;

            

    

     

    
      	
              8.1.12  

            	
              any
      application under Regulation 9 (declaration as to status as permanent
      employee) of the Fixed-term Employees (Prevention of Less Favourable
      Treatment) Regulations 2002;

            

    

     

    
      	
              8.1.13  

            	
              any
      claim under or arising out of a contravention or alleged contravention of
      section 80(1) (parental leave) or sections 80G(1) or 80H(1)(b)
      (flexible working) of the Employment Rights Act
  1996;

            

    

     

    
      	
              8.1.14  

            	
              any
      claim arising out of a contravention or alleged contravention of
      Regulation 5 (1) (less favourable treatment of part-time worker) or
      Regulation 7(2) (right not to be subjected to detriment) of the
      Part-time Workers (Prevention of Less Favourable Treatment)
      Regulations 2000;

            

    

     

    
      	
              8.1.15  

            	
              any
      claim under Regulation 28 of the Employment Equality (Sexual Orientation)
      Regulations 2003 (discrimination or harassment on grounds of sexual
      orientation and discrimination by way of
  victimisation);

            

    

     

    
      	
              8.1.16  

            	
              any
      claim under Regulation 28 of the Employment Equality (Religion or Belief)
      Regulations 2003 (discrimination or harassment on grounds of religion or
      belief and discrimination by way of
  victimisation);

            

    

     

    
      	
              8.1.17  

            	
              any
      claim for direct or indirect discrimination, harassment or victimisation
      on the grounds of age pursuant to the Employment Equality (Age)
      Regulations 2006;

            

    

     

    
      	
              8.1.18  

            	
              any
      claim under or by virtue of sections 11 (failure to allow access to
      records), section 18, section 20(1)(a) (complaint following non-compliance
      with enforcement notice) or section 24 (right not to be subjected to a
      detriment) of the National Minimum Wage
  Act 1998;

            

    

     

    
      	
              8.1.19  

            	
              any
      claim arising out of a contravention or alleged contravention of
      paragraph 156 of Schedule A1 of the Trade Union and Labour
      Relations (Consolidation) Act 1992 (right not to be subjected to
      detriment on grounds connected with union recognition and collective
      bargaining);

            

    

     

    
      	
              8.1.20  

            	
              any
      claim arising out of a contravention or alleged contravention of
      section 190 of the Trade Union and Labour Relations (Consolidation)
      Act 1992 (individual claim for payment following a protective award);
      and

            

    

     

    
      	
              8.1.21  

            	
              in
      relation to protected disclosures, under the Employment Rights Act 1996
      and the Public Interest Disclosure Act
1998;

            

    

     

    
      	
              8.1.22  

            	
              for
      breach of obligations under the Protection of Harassment Act
      1997;

            

    

     

    
      	
              8.1.23  

            	
              for
      a failure to comply with obligations under the Occupational and Personal
      Pension Schemes (Consultation by Employers and Miscellaneous Amendment)
      Regulations 2006;

            

    

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    
      	
              8.1.24  

            	
              in
      relation to the obligations to elect appropriate representatives or inform
      and consult under the Trade Union and Labour Relations (Consolidation) Act
      1992;

            

    

     

    
      	
              8.1.25  

            	
              in
      relation to the obligations to elect appropriate representatives or inform
      and consult or any entitlement to compensation, under the Transfer of
      Undertakings (Protection of Employment) Regulations 2006;
    and

            

    

     

    
      	
              8.1.26  

            	
              any
      claim under any provision of directly applicable European
    law;

            

    

     

    
      	
              8.2  

            	
              The
      Employee agrees that the terms of this Agreement are in full and final
      settlement of:-

            

    

     

    
      	
              8.2.1  

            	
              the
      claims set out in Clause 8.1;

            

    

     

    
      	
              8.2.2  

            	
              the
      following additional claims (whether in the Employee’s capacity as an
      employee, stock or shareholder, as an officer or in any other capacity)
      against the Xfone Group or any their respective present or former
      directors, officers, shareholders, employees or
  workers;

            

    

     

    
      	
              (a)  

            	
              wrongful
      dismissal;

            

    

     

    
      	
              (b)  

            	
              breach
      of contract;

            

    

     

    
      	
              (c)  

            	
              breach
      of the 2006 SPA;

            

    

     

    
      	
              (d)  

            	
              any
      claims as a shareholder of the Company or of any other company of the
      Xfone Group (save for any claim that the Employee may have in the future
      against Xfone as the registered or beneficial owner of its shares of
      common stock which are acquired by the Employee following the date of this
      Agreement).

            

    

     

    
      	
              (e)  

            	
              any
      claims as a director or an officer of the Company, Story or of any other
      company of the Xfone Group;

            

    

     

    
      	
              (f)  

            	
              any
      claims to dividends whether from the Company or any other company of the
      Xfone Group (save for any claim that the Employee may have in the future
      against Xfone as the registered or beneficial owner of its shares of
      common stock which are acquired by the Employee following the date of this
      Agreement and which give rise to a right to dividends to its registered or
      beneficial owners in the event that Xfone decides, in its sole discretion,
      to make a distribution of dividends to its
  shareholders).

            

    

     

    
      	
              (g)  

            	
              pension
      claims;

            

    

     

    
      	
              (h)  

            	
              personal
      injury;

            

    

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    
      	
              (i)  

            	
              a
      claim for a bonus;  or

            

    

     

    
      	
              (j)  

            	
              a
      claim for compensation under section 13 of the Data Protection Act 1998;
      and

            

    

     

    
      	
              8.2.3  

            	
              any
      other claims of whatsoever nature and howsoever arising, and whether in
      the past or in the future in any jurisdiction including, for the avoidance
      of doubt, within the United Kingdom, Northern Ireland, Ireland, the United
      States of America, the British Virgin Islands, Israel and any other
      jurisdiction in the world which the Employee may otherwise have had
      against the Company or any of the other companies of the Xfone Group or
      any of their respective present or former directors, officers,
      shareholders, employees or workers arising out of or connected with the
      Employee's employment by Story (or, where appropriate, by the Company)
      and/or its termination and any other claims whether as director, or
      option, stock or shareholder of any company  of the Xfone Group,
      and whether such claims arise at common law, under statute, European law,
      the laws of the USA or otherwise and whether or not any such claims exist
      or are known to or contemplated by the parties or are recognised by law at
      the date of this Agreement.

            

    

     

    
      	
              8.3  

            	
              Trecastle
      agrees that the terms of this Agreement are in full and final settlement
      of all and any claims which Trecastle might otherwise have had against any
      company in the Xfone Group (or any of their respective present or former
      directors, officers, shareholders, employees or workers) to the same
      extent (save where inapplicable) as any claims the Employee may have had
      against the Xfone Group, and that Clauses 8.1 and 8.2 are repeated here
      mutatis mutandis save that any reference to the Employee, shall be
      substituted by reference to Trecastle and Trecastle shall be treated as
      settling all and any claims it might otherwise have
  had.

            

    

     

    
      	
              8.4  

            	
              Provided
      there has been no breach of the warranties given in Clause 10below, the
      Company and Story each acknowledge that on the basis of the facts and
      circumstances of which each is aware immediately prior to entering into
      this Agreement, none of the Company, Story or any other member of the
      Xfone Group is intending to commence proceedings against the Employee and
      in respect of such acts of the Employee of which either the Company or
      Story is aware they each waive any right they respectively had to initiate
      claims against the Employee in respect of such
  acts.

            

    

     

    
      	
              9.  

            	
              INDEPENDENT
      LEGAL ADVICE

            

    

     

    
      	
              9.1  

            	
              The
      Employee warrants that, in accordance with the legislation governing
      compromise agreements:

            

    

     

    
      	
              9.1.1  

            	
              the
      Employee has taken independent legal advice from the Qualified Lawyer as
      to the terms and effect of this Agreement and in particular its effect on
      the Employee's ability to pursue the Employee's rights before an
      employment tribunal; and

            

    

     

    
      	
              9.1.2  

            	
              the
      Qualified Lawyer has advised the Employee that she is a Solicitor holding,
      both at the date of this Agreement and at the date the said advice was
      given, a current practising certificate and that there is currently in
      force and was at the time the said advice was given a contract of
      insurance covering the risk of a claim by the Employee in respect of loss
      arising in consequence of the said
advice.

            

    

     

    
      	
              9.2  

            	
              The
      Employee shall procure that the Qualified Lawyer delivers the Adviser's
      Certificate to the Company's
Solicitors.

            

    

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    
      	
              10.  

            	
              WARRANTIES

            

    

     

    
      	
              10.1  

            	
              The
      Employee further warrants that:

            

    

     

    
      	
              10.1.1  

            	
              before
      receiving the advice referred to in Clause 9.1.1,
      the Employee disclosed to the Qualified Lawyer all facts or circumstances
      relating to the Employee's employment by Story (and/or, where appropriate,
      by the Company) and its termination that may give rise to a claim against
      the Company, Story, any other company of the Xfone Group or any of its or
      their respective present or former directors, officers, shareholders,
      employees or workers;

            

    

     

    
      	
              10.1.2  

            	
              the
      Employee is not aware of any claims or circumstances which give rise to or
      might give rise to any claims including any claim for personal injury
      and/or industrial disease against the Company, Story, any other company of
      the Xfone Group or any of its or their respective present or former
      directors, officers, shareholders, employees or workers, other than those
      specified in this Agreement which are the only claims the Employee may
      otherwise have had;

            

    

     

    
      	
              10.1.3  

            	
              the
      Employee has not commenced any proceedings in any court, tribunal or
      otherwise in any jurisdiction against any of the Xfone Group or any of
      their respective present or former directors, officers, shareholder,
      employees or workers in respect of any claim whatsoever (other than the
      Tribunal Claim, which is hereby settled and to be withdrawn in accordance
      with this Agreement) and undertakes not to commence any such proceedings;
      and

            

    

     

    
      	
              10.1.4  

            	
              the
      Employee is not in breach of any duty the Employee may owe to any company
      in the Xfone Group nor has the Employee acted in breach of and there are
      no matters of which the Employee is aware relating to any acts or
      omissions by the Employee or any third party which, if disclosed to any
      company in the Xfone Group might affect its decision to enter into either
      this Agreement or the 2008 SPA.

            

    

     

    
      	
              10.2  

            	
              The
      Employee acknowledges that the Company, Story and Xfone have entered into
      this Agreement in specific reliance on the warranties in this
      Agreement.  Accordingly the Employee agrees that should the
      Employee breach any of those warranties and without prejudice to any other
      remedy any company of the Xfone Group might
  have:

            

    

     

    
      	
              10.2.1  

            	
              the
      Employee will repay to Story the Termination Payment immediately on
      written demand;

            

    

     

    
      	
              10.2.2  

            	
              the
      Company, Story, Xfone and the other companies of the Xfone Group shall
      immediately be released from any continuing obligations under this
      Agreement; and

            

    

     

    
      	
              10.2.3  

            	
              Xfone
      shall, at its option and under its sole discretion be entitled to rescind
      the 2008 SPA and to seek repayment of all sums paid to the Employee and to
      Trecastle under the 2008 SPA and the parties will be returned to the
      position they would have been in had they not entered into the 2008
      SPA.

            

    

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    
      	
              11.  

            	
              COMPLIANCE
      WITH LEGISLATION

            

    

     

    The
conditions regulating compromise agreements under the Employment Rights
Act 1996, the Working Time Regulations 1998, the Sex Discrimination
Act 1975, the Race Relations Act 1976, Schedule 3A of the Disability
Discrimination Act 1995, Schedule 4 of the Employment Equality (Sexual
Orientation) Regulations 2003, Schedule 4 of the Employment Equality (Religion
or Belief) Regulations 2003, the National Minimum Wage Act 1998, the Trade
Union and Labour Relations (Consolidation) Act 1992, the Transnational
Information and Consultation of Employees Regulations 1999 and the
Information and Consultation of Employees Regulations 2004 and Paragraph 13 of
the Schedule to the Occupational and Personal Pension Schemes (Consultation by
Employers and Miscellaneous Amendment) Regulations 2006 and the
Employment  Equality (Age) Regulations are satisfied.

     

    
      	
              12.  

            	
              THIRD
      PARTY RIGHTS

            

    

     

    
      	
              12.1  

            	
              Section 1
      of the Contracts (Rights of Third Parties) Act 1999 ("CRiTPA") shall apply to
      this Agreement but only to the extent that any Associated Company and/or
      any present or former officers, shareholders, workers or employees of the
      Company or any Associated Company (together the "Third Parties") shall be
      entitled to enforce in their own right the terms relevant to them under
      this Agreement.

            

    

     

    
      	
              12.2  

            	
              In
      accordance with section 2(3)(a) of CRiTPA, the whole or any part of
      this Agreement may be rescinded or varied by agreement between the
      Employee, Trecastle, Xfone, the Company and Story without the consent of
      any of the Third Parties or of any other person who is not named as a
      party to this Agreement.

            

    

     

    
      	
              13.  

            	
              COUNTERPARTS

            

    

     

    This
Agreement may be executed in any number of counterparts, each of which, when
executed and delivered, shall be an original, and all counterparts together
shall constitute one and the same instrument.  Such counterparts may
be delivered by facsimile transmission or other electronic
transmission.

     

    
      	
              14.  

            	
              LAW
      AND JURISDICTION

            

    

     

    
      	
              14.1  

            	
              This
      Agreement shall be governed by and construed in accordance with English
      Law.

            

    

     

    
      	
              14.2  

            	
              The
      parties submit to the exclusive jurisdiction of the English Courts and
      tribunals with regard to any dispute or claim arising under this
      Agreement.

            

    

     

    
      	
              15.  

            	
              DEFINITIONS

            

    

     

    "Adviser's Certificate" means a certificate in
the form attached to this Agreement at Schedule 1, signed by the Qualified
Lawyer advising the Employee;

     

    "Agreement" means the agreement
between the parties contained herein;

     

    "Associated Company” means any
undertaking which is a subsidiary, or parent or subsidiary undertaking (as those
expressions are used in Sections 1159 - 1162 of the Companies Act 2006 or, the
equivalent jurisdiction) of any company of the Xfone Group;

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    "Company's Solicitors" means Howard Kennedy of
19 Cavendish Square, London W1A 2AW;

     

    "Qualified Lawyer" means Audrey Onwukwe of
Levenes of Ashley House, 235-239 High Road, Wood Green, London N22
8HF.

     

    
      	
              16.  

            	
              GENERAL

            

    

     

    
      	
              16.1  

            	
              In
      this Agreement:

            

    

     

    
      	
              16.1.1  

            	
              a
      reference to any legislative provision includes any lawful amendment or
      re-enactment of it; and

            

    

     

    
      	
              16.1.2  

            	
              the
      headings are for convenience only and shall not affect its
      interpretation.

            

    

     

    
      	
              16.2  

            	
              The
      Schedules to this Agreement form part of (and are incorporated into) this
      Agreement.

            

    

     

    
      	
              16.3  

            	
              Subject
      to sub-clause 16.4, this Agreement together with the 2008 SPA sets out the
      entire agreement between the parties and supersedes all previous
      discussions, negotiations, agreements and arrangements (if any) whether
      oral or in writing and whether express or implied relating to the
      relationship, in any capacity, between the Employee, Trecastle and any
      company, director, officer and employee in the Xfone Group.  The
      Employee and Trecastle acknowledge that they have no other rights against
      any member of the Xfone Group other than as set out in this Agreement and
      the 2008 SPA.

            

    

     

    
      	
              16.4  

            	
              Any
      section under the 2006 SPA that was not explicitly terminated by Section 5
      of the 2008 SPA shall survive sub-clause 16.3
  above.

            

    

     

    
      	
              16.5  

            	
              In
      the event of any conflict between this agreement and the 2008 SPA, the
      terms of this Agreement shall
prevail.

            

    

     

    
      	
              16.6  

            	
              This
      Agreement, although marked "without prejudice" and "subject to contract"
      will when dated and signed by the parties and accompanied by the Adviser's
      Certificate become an open document evidencing an agreement binding on the
      parties.

            

    

     

    
      	
              16.7  

            	
              Nothing
      in this Agreement shall be taken to prevent the Employee from making a
      protected disclosure as defined by the Public Interest Disclosure Act
      1998.

            

    

     

    
      	
              16.8  

            	
              The
      complete or partial invalidity or unenforceability of any provision of
      this Agreement for any purpose shall in no way
  affect:-

            

    

     

    
      	
              16.8.1  

            	
              the
      validity or enforceability of such provision for any other
      purpose;

            

    

     

    
      	
              16.8.2  

            	
              the
      remainder of such provision; and/or

            

    

     

    
      	
              16.8.3  

            	
              the
      remaining provisions of this
Agreement.

            

    

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

     

    Schedule
1

    [To be
written on the Qualified Lawyer’s letterhead]

    To: Story
and to the other companies of the Xfone Group

    

    Dear
Sirs

    Re: Nir Davison

    

    I refer
to the terms of the Compromise Agreement of today's date between my client Nir
Davison ("my Client") and Story and others (collectively referred to as the
"Xfone Group").   I hereby certify that:

    

    
      	
               
      

            	
              I
      am a Solicitor, holding now and at all relevant times a current practising
      certificate.

            

    

     

    
      	
              1.  

            	
              Before
      the said Compromise Agreement was signed I had advised my Client as to its
      terms and effect and in particular its effect on my Client's ability to
      pursue his rights before an employment
tribunal.

            

    

     

    
      	
              2.  

            	
              At
      the time I gave the advice there was in force a contract of insurance
      covering the risk of a claim by my Client in respect of loss arising in
      consequence of such advice.

            

    

     

    
      	
              3.  

            	
              I
      am a relevant independent adviser within the meaning of the legislation
      governing compromise agreements.  In particular, I am not acting
      for or employed by Story, any associated employer or any person connected
      with Story as those terms are defined by the governing
      legislation.

            

    

     

    Yours
faithfully

     

    

     

    Signed...........................................

     

    Audrey
Onwukwe, Solicitor

     

    Dated...........................................

     

    

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    

    

     

    
      	
               
      

            	
              Schedule
      2

            

    

     

    
      	
               
      

            	
              The
      2008 SPA [to be annexed to this
agreement]

            

    

     

    

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              Schedule
      3

            

    

     

    
      	
               
      

            	
              Resignation
      as a director

            

    

     

    

     

    The
Directors of

    Story
Telecom, Inc.

    Story
Telecom Limited

     [any
other companies of which Nir Davison is a director]

    

    

    [Date]

    

    Dear
Sirs

    Story
Telecom, Inc. and Story Telecom Limited (together the “Story Telecom
Group”)

    I hereby resign from my office as a director of the companies which
comprise the Story Telecom Group with immediate effect and acknowledge and
confirm that I have no claim or right of action of any kind outstanding for
compensation or otherwise against the Story Telecom Group or any of its officers
or employees in respect of the termination of my office.   To the
extent that any such claim exists or may exist, I irrevocably waive such claim
and release each company in the Story Telecom Group and each of its respective
present or former directors, officers and employees from any liability in
respect thereof.

    

    Yours
faithfully

    

    

    Signed
and delivered as a deed by

    NIR
DAVISON [SIGNATURE]

    

    

    in the
presence of [NAME OF WITNESS]

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Schedule
      4

            

    

     

    
      	
               
      

            	
              Withdrawal
      of Claim

            

    

     

    

     

    [On
Levenes letterhead]

    

    Employment
Tribunal (Watford)

    London
North West Region

    

    

    

    Dear Sirs

    

    Mr N Davison v. Story Telecom Limited

    Case
No: 3301715/2007

    

    We write
to notify you that following the Claimant entering into an agreement with the
Respondent, the Claimant now applies to the Employment Tribunal for all the
claims against Story Telecom Limited as set out in Case No: 3301715/2007 (the
“Case”) to be withdrawn for all purposes and for the hearing set to commence on
7 July 2008 be vacated for all purposes.

    

    We
understand that the Respondent will shortly be applying to the tribunal for an
order that the Case to be dismissed for all purposes.   We also
wish to notify you on behalf of the Claimant that the Claimant hereby consents
to the dismissal of the all claims set out in the Case for all
purposes.

    

    We hereby
confirm that we do not seek and shall not in the future seek to make any
application for costs in relation to the Case.

    

    We have
today sent a copy of this letter to the Respondent’s solicitors.

    

    Yours
faithfully

    

    

    Levenes

    Signed
for and on behalf and

    As the
duly authorised representative of

    The
Claimant Nir Davison

     

    Signed by
or on behalf of the parties on the date which first appears in this
Agreement

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    

     

    /s/ John
Burton

     

    Signed by
John Burton

     

    duly
authorised for and on behalf of STORY TELECOM,
INC.

     

    

     

    /s/ John
Burton

     

    Signed by
John Burton

     

    duly
authorised for and on behalf of the STORY TELECOM
LIMITED

     

    

     

    /s/ Guy
Nissenson

     

    Signed by
Guy Nissenson

     

    duly
authorised for and on behalf of the XFONE, INC.

     

    

     

    /s/ Nir
Davison

     

    Signed by
Nir
Davison                                            ]

     

    duly
authorised for and on behalf of TRECASTLE HOLDINGS
LIMITED

     

    

     

    /s/ Nir
Davison

     

    SIGNED by NIR
DAVISON

    
      
         

      

      
        -17-

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