Document:

Agreement dated May 25, 2006, by and among the Registrant and the shareholders
      of Equitalk.co.uk Limited.

    
      	
               

              
              

            
	
              Exhibit
                10.73

            
	
              DATED
                25 May 2006

            
	
               

              THE
                SHAREHOLDERS OF EQUITALK.CO.UK LIMITED

               

               

              and

               

               

              XFONE,
                INC.

               

            
	
              AGREEMENT

               

               

              relating
                to

              the
                sale and purchase of 

               

              EQUITALK.CO.UK
                LIMITED

            
	 

    

    

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    INDEX
      

    

      
        	
                1 INTERPRETATION

              
	
                ‎2 AGREEMENT
                  FOR SALE

              
	
                ‎3 PURCHASE
                  CONSIDERATION

              
	
                ‎4 CONDITIONS

              
	
                ‎5 CONDUCT
                  OF BUSINESS PENDING COMPLETION

              
	
                ‎6 ASSISTANCE
                  PENDING COMPLETION

              
	
                ‎7 COMPLETION

              
	
                ‎8 COMPLETION
                  ACCOUNTS

              
	
                ‎9 WARRANTIES
                  BY THE VENDOR[S]

              
	
                ‎10 LIMITATIONS
                  OF LIABILITY

              
	
                ‎11 PENSIONS

              
	
                ‎12 NAME

              
	
                ‎   
                   FUTURE
                  ACTIVITIES

              
	
                ‎13 ASSIGNMENT

              
	
                ‎14 SUCCESSORS
                  AND ASSIGNS

              
	
                ‎15 FURTHER
                  ASSURANCE

              
	
                ‎16 TIME
                  OF THE ESSENCE

              
	
                ‎17 CONFIDENTIALITY

              
	
                ‎18 ANNOUNCEMENTS

              
	
                ‎19 COSTS

              
	
                ‎20 TAX

              
	
                ‎21 AMENDMENTS

              
	
                ‎22 ENTIRE
                  AGREEMENT

              
	
                ‎23 SURVIVAL
                  OF OBLIGATIONS

              
	
                ‎24 RIGHTS
                  OF THIRD PARTIES

              
	
                ‎25 NOTICES

              
	
                ‎26 COUNTERPARTS

              
	
                ‎27 GOVERNING
                  LAW

              
	
                ‎28 JURISDICTION

              
	
                SCHEDULE
                  1 The Vendors

              
	
                ‎SCHEDULE 2

              
	
                    Part
                  1 - The Company

              
	
                    Part
                  2 - The Subsidiaries

              
	
                ‎SCHEDULE 3
                  - The Intellectual Property

              
	
                    Part
                  1

              
	
                    Part
                  2

              
	
                ‎SCHEDULE 4

              
	
                    Part
                  1 - The Pension Scheme[s]

              
	
                SCHEDULE
                  5 - The Properties

              
	
                    Part
                  1 - Freehold Properties

              
	
                    Part
                  2 - Leasehold Properties

              
	
                    Part
                  3 - Properties Subject to Leases and
                  Licences

              
	
                ‎SCHEDULE 6
                  - Completion Documents

              
	
                SCHEDULE
                  7.
                  -
                  The Warranties

              
	
                SCHEDULE
                  8 - Warranty Limitations

              
	
                ‎SCHEDULE 9
                  - Positive Undertakings

              
	
                ‎SCHEDULE 10
                  - Negative Undertakings

              
	
                ‎SCHEDULE 11
                  - Basis for preparation of the Completion Accounts

              
	
                CHEDULE
                  12 - TAX DEED

              
	
                SCHEDULE
                  13 - Warranty Limitations

              
	
                SCHEDULE 14
                  - Power of Attorney

              
	
                SCHEDULE 15
                  - Purchaser
                  Warranties

              
	
                SCHEDULE 16
                  - Irrevocable Proxy

              
	
                SCHEDULE 17
                  - Limitation on Purchaser
                  Warranties

              

      

    

    
Agreed
      Form Documents

    

    Service
      Agreements with John Burton and James
      Ruane

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    THIS
      AGREEMENT is
      made
      on 25 May 2006

     

    BETWEEN:

     

    
      	
              (1)

            	
              THOSE
                PERSONS whose
                names are set out in Schedule 1 which expression shall include the
                legal
                personal representatives of any such persons (collectively the
                “Vendors”
                and individually a “Vendor”);
                and

            

    

     

    
      	
              (2)

            	
              XFONE,
                INC.
                a
                company incorporated under the laws of the State of Nevada, USA (the
                "Purchaser"
                or “Xfone”)

            

    

     

    RECITALS:

     

    
      	
              (A)

            	
              The
                Company (as defined below) is a private company limited by shares
                incorporated in England and Wales, further information about which
                is
                contained in Part 1 of ‎Schedule 2.

            

    

     

    
      	
              (B)

            	
              The
                Vendors are the beneficial owners of or are otherwise able to procure
                the
                sale and transfer, free from Encumbrances (as defined below), of
                the
                Shares (as defined below).

            

    

     

    
      	
              (C)

            	
              The
                Vendors have agreed to sell and the Purchaser has agreed to purchase
                all
                of their issued shares in the capital of the Company subject to and
                on the
                following terms and conditions.

            

    

     

    
      	
              (D)

            	
              Pursuant
                to Article 14 (as defined below), the Vendors can procure the sale
                to the
                Purchaser of the remaining shares in the share capital of the
                Company.

            

    

     

    IT
      IS AGREED as
      follows:

     

    
      	
              1

            	
              INTERPRETATION

            

    

     

    
      	
              1.1

            	
              Definitions

            

    

     

    In
      this
      Agreement unless the context otherwise requires:

     

    “Abbreviated
      Accounts”

     

    means
      the
      balance sheet of the Company made up as at the Balance Sheet Date and the profit
      and loss account of the Company for the period ended on the Balance Sheet Date
      prepared in accordance with s247B Companies Act 1985, and the notes, reports,
      statements and other documents which are annexed to the accounts of the Company
      concerned, a copy of which has been initialled by or on behalf of the parties
      for the purpose of identification;

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    “Agreement”

     

    means
      this agreement and all schedules and recitals in and appendices to this
      agreement;

     

    "AMEX"

     

    means
      the
      American Stock Exchange;

     

    "Article
      14"

     

    means
      Article 14 of the Articles of Association of the Company;

     

    “Auditors”

     

    means
      Hazlewoods LLP;

     

    “Balance
      Sheet Date”

     

    means
      31
      March 2005;

     

    “Business”

     

    means
      the
      telecommunications reseller business of the Company;

     

    “CAA”

     

    means
      the
      Capital Allowances Act 2001;

     

    “Company”

     

    means
      Equitalk.co.uk Limited, incorporated in England and Wales with registered number
      03894765;

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    “Completion”

     

    means
      completion of the sale and purchase of the Shares as contemplated in clause
      ‎7
      of this
      Agreement;

     

    “Completion
      Accounts”

     

    has
      the
      meaning given to it in clause ‎8.1.1(b);

     

    “Completion
      Date”

     

    means
      the
      date on which Completion takes place;

     

    “Completion
      Net Asset Value”

     

    has
      the
      meaning given to it in clause ‎8.1.9;

     

    “Conditions”

     

    means
      the
      conditions precedent set out in clause ‎4;

     

    “Confidential
      Information”

     

    means
      all
      information or data of the Company in relation to the Business (in whatever
      medium stored) which is of a confidential nature including but without
      limitation, all business, financial, commercial, technical, operational,
      organisational, legal, management and marketing information, data, know how
      and
      trade secrets of the Company;

     

    “Consideration
      Shares”

     

    means
      the
      number of Purchaser Common Stock which
      are
      to be issued and allotted to the Vendors by the Purchaser pursuant to the
      provisions of Clause 3 having
      an
      agreed market value of US $1,100,000 determined using the weighted average
      price
      as reported on the website of the American Stock Exchange of the Purchaser
      Common Stock for the ten (10) trading days preceding the trading day immediately
      prior to the Completion Date (which weighted average price shall in no event
      be
      less than $2.50 per share or greater than $3.50 per share);

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    “Consideration
      Warrants”

     

    means
      the
      number of Purchaser Stock Warrants which
      are
      to be issued to the Vendors by the Purchaser pursuant to the provisions of
      Clause 3 having
      an
      agreed value of $550,000 with the value calculated as at Completion Date
      assuming 90% volatility of the underlying Purchaser Common Stock pursuant to
      the
      Black Scholes option - pricing model. 

     

    “Disclosure
      Letter“

     

    means
      the
      letter of even date from the Vendors to the Purchaser disclosing:

     

    
      	 	
              (a)

            	
              information
                constituting exceptions to the Warranties;
                and

            

    

     

    
      	 	
              (b)

            	
              particulars
                of other matters referred to in this
                Agreement;

            

    

     

    "Dragged
      Along Shares"

     

    Means
      the
      shares in the share capital of the Company which are the subject of Clause
      4.1.2;

     

    “Effective
      Time”

     

    means
      the
      time of Completion;

     

    “Encumbrance”

     

    includes
      any interest of any person including, without prejudice to the generality of
      the
      foregoing, any fixed security, debenture, mortgage, charge, assignation, pledge,
      deposit by way of security, bill of sale, lease, hire-purchase, credit-sale
      and
      other agreements for payment on deferred terms, right to acquire, option, lien
      or right of pre-emption, security interest, title retention or other right
      of
      retention or any other security agreement or arrangement
      whatsoever;

     

    “Event”

     

    includes
      any act, omission, event or transaction and, without limitation, the receipt
      or
      accrual of any income profits or gains, the declaration making or payment of
      any
      distribution, the ownership of any asset membership of or ceasing to be a member
      of any group or partnership or any other association, death, any residence
      or
      change in the residence of any person for Tax purposes, the expiry of any period
      of time and Completion;

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    “Intellectual
      Property”

     

    means
      all
      inventions (whether patentable or not), patents, utility models, designs (both
      registered and unregistered and including rights in semiconductor topographies),
      copyright, database rights, trade and service marks (both registered and
      unregistered) together with all applications for, rights to the grant of and
      extensions of the same, and all other intellectual and industrial property
      including but not limited to all similar or analogous rights throughout the
      world, in each case for the full term of the relevant right;

     

    “Intellectual
      Property Rights”

     

    means
      all
      Intellectual Property that is owned by the Company and used or proposed to
      be
      used by the Company in its businesses and including without limitation that
      listed in Part 1 of ‎Schedule 3;

     

    “Key
      Employees “

     

    means
      John Burton and James
      Ruane.

     

    “Licensed
      Rights”

     

    means
      the
      Intellectual Property that is licensed to the Company.

     

    “Management
      Accounts”

     

    means
      the
      unaudited management accounts of the Company for the period from the Balance
      Sheet Date to the Management Accounts Date;

     

    “Management
      Accounts Date”

     

    means
      31
      March 2006;

     

    “Net
      Asset Value Statement”

     

    has
      the
      meaning given it in clause ‎8.1.1(b)

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    "Purchaser
      Common Stock" 

     

    means
      restricted shares of the common stock of Purchaser.

     

    "Purchaser
      Stock Warrants" 

     

    means
      warrants convertible on a one to one basis into Purchaser Common Stock with
      a
      term of five (5) years, a strike price that is 10% above the closing price
      of
      the Purchaser Common Stock on the Completion Date with the Purchaser Common
      Stock into which the warrant is convertible is restricted stock.

     

    “Properties”

     

    means
      the
      serviced offices occupied by the Company at The Innovation Centre, Heyford
      Park;

     

    “Purchaser’s
      Accountants”

     

    means
      H.
      H.
      Burke & Company Limited
      of
      Britannia House 958 High Road London N12 9RY,
      United Kingdom;

     

    “Purchaser’s
      Group”

     

    means
      the
      Purchaser, any holding company of the Purchaser and/or any subsidiary of the
      Purchaser or of any holding company of the Purchaser;

     

    “Purchaser’s
      Solicitors”

     

    means
      Preiskel & Co LLP of 8-10 New Fetter Lane, London, EC4A 1RS.

     

    “SDLT”

     

    means
      Stamp Duty Land Tax introduced under the Finance Act 2003;

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    “SEC”

     

    means
      the
      U.S. Securities and Exchange Commission.

     

    “Service
      Agreements”

     

    means
      the
      service agreements to be entered into upon Completion between the Purchaser
      and/or Swiftnet and each of John Burton and James Ruane in the agreed
      form;

     

    “Shares”

     

    means
      (a)
      collectively in relation to the Vendors, all the shares in the Company held
      by
      the Vendors to be sold under this Agreement; and (b) separately in relation
      to a
      Vendor, the shares in the Company held by that Vendor as specified in Schedule
      1
      and includes any rights of the holder attaching to, or accruing in relation
      to,
      those shares as at the date of this Agreement and the Completion
      Date;

     

    "Swiftnet"

     

    means
      Swiftnet Limited (registered No. 02469394)
      whose
      registered office is at Britannia House 960 High Road London N12 9RY, United
      Kingdom (a
      subsidiary of the Purchaser)

     

    “Tax”

     

    means
      any
      form of taxation, duty, impost, levy, tariff of any nature whatsoever whether
      of
      the United Kingdom, the United States or elsewhere whether or not any such
      taxation, duty, impost, levy or tariff arises in respect of actual deemed gross
      or net income profits, gains, value, receipt, payment, distribution, sale,
      purchase, disposal, use occupation, franchise, value added property or right
      and
      includes, without limitation, any withholding amount subject to PAYE or other
      amount of or in respect of any of the foregoing payable by virtue of any Tax
      Statute and any penalty, charge, surcharge, fine or interest payable in
      connection with any such taxation, duty, impost, levy or tariff;

     

    “TCGA”

     

    means
      the
      Taxation of Chargeable Gains Act 1992;

     

    “Taxes
      Act”

     

    means
      the
      Income and Corporation Taxes Act 1988;

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    “Tax
      Authority”

     

    means
      the
      HMRC and any other governmental, state, federal, principal, local government
      or
      municipal body or official whether of the United Kingdom, the United States
      or
      elsewhere in the world competent to impose, administer or collect
      Tax;

     

    “Tax
      Deed”

     

    means
      the
      deed in the form set out in ‎Schedule 12;

     

    “Tax
      Statute”

     

    means
      any
      primary or secondary statute instrument, enactment, order, law, by-law, act,
      rule or regulation making any provision for or in relation to Tax including,
      for
      the avoidance of doubt any European Union directive or regulation;

     

    “Tax
      Warranties”

     

    means
      those Warranties set out in paragraph 10 of Schedule 7;

     

    “TMA”

     

    means
      the
      Taxes Management Act 1970;

     

    “VATA”

     

    means
      the
      Value Added Taxes Act 1994;

     

    “VAT
      Regulations”

     

    means
      the
      Value Added Tax Regulations 1995 (SI 1995/2518);

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    “Vendor‘s
      Solicitors”

     

    means
      Gordons Partnership LLP of 22 Great James Street, London WC1N 3ES, United
      Kingdom;
      

     

    “Warranties”

     

    means
      the
      warranties set out in Clause 9 and Schedule 7;

     

    “Warrantors”

     

    means
      John Burton and James
      Ruane; and

     

    “Working
      Capital Deficit” 

     

    means
      the
      total liabilities of the Company less current assets.

     

    
      	
              1.2

            	
              Interpretation
                and Construction

            

    

     

    1.2.1. In
      this
      Agreement, unless otherwise specified or the context otherwise
      requires:-

     

    (a) words
      importing the singular only shall include the plural and vice
      versa;

     

    (b) words
      importing the whole shall be treated as including a reference to any part
      thereof; 

     

    (c) words
      importing any gender shall include all other genders;

     

    (d) reference
      to a Schedule, Appendix, Recital, Clause or Paragraph is to the relevant
      schedule, appendix, recital, clause or paragraph of this Agreement;

     

    (e) reference
      to this Agreement or to any other document is a reference to this Agreement
      or
      to that other document as modified, amended, varied, supplemented, assigned,
      novated or replaced from time to time;

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    (f) reference
      to any provision of law is a reference to that provision as modified or
      re-enacted from time to time except to the extent that any modification or
      re-enactment takes effect after the date of execution of this Agreement and
      has
      the effect of increasing or extending any obligation or liability or otherwise
      adversely affects the rights of any party to this Agreement ;

     

    (g) reference
      to any statutory provision is a reference to any subordinate legislation made
      under that provision from time to time;

     

    (h) reference
      to any legal term for any action, remedy, method of judicial proceeding, legal
      document, legal status, court, official or any legal concept, state of affairs
      or thing shall in respect of any jurisdiction other than England be deemed
      to
      include that which most approximates in that jurisdiction to the English legal
      term.

     

    1.2.2. Headings
      used in this Agreement shall not affect its construction or
      interpretation.

     

    1.2.3. Obligations
      and liabilities assumed by more than one person in this Agreement as a single
      party or otherwise are assumed jointly and severally unless otherwise
      specified.

     

    1.3. Other
      references

     

    In
      this
      Agreement a reference to:-

     

    1.3.1. “in
      writing” or “written” includes faxes and any non-transitory form of visible
      reproduction or words but excludes electronic mail and text messaging via mobile
      phone;

     

    1.3.2. a
      document being “in the agreed form” means that it shall be in the form agreed by
      the Vendor‘s Solicitors and the Purchaser’s Solicitors and signed or initialled
      by or on behalf of the Vendor and the Purchaser for identification prior to
      the
      Purchaser’s execution of this Agreement;

     

    1.3.3. a
      “person” includes any individual, firm, company, corporation, body corporate,
      government, state or agency of state, trust or foundation, or any association,
      partnership or unincorporated body of two or more of the foregoing (whether
      or
      not having separate legal personality and wherever incorporated or
      established);

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    1.3.4. a
      “business day” means any day which is not a Saturday, a Sunday or a public
      holiday in England or the United States;

     

    1.3.5. a
      “subsidiary” means a subsidiary as defined in section 736 and 736A of the
      Companies Act 1985; 

     

    1.3.6. a
      “subsidiary undertaking“ means a subsidiary undertaking as defined in section
      258 of the Companies Act 1985; 

     

    1.3.7. a
      “holding company “ means a holding company as defined in section 736 and 736A of
      the Companies Act 1985; and

     

    1.3.8. any
      reference to a person being an “associate” of another shall be interpreted in
      accordance with section 435 of the Insolvency Act 1986, and a person shall
      be
      regarded as being “connected” or “associated” with any person which is an
      associate of his and with any company of which any director is an associate
      of
      his.

     

    
      	
              2.

            	
              AGREEMENT
                FOR
                SALE

            

    

     

    2.1. Sale
      and Purchase

     

    Subject
      to the terms and conditions of this Agreement, the Vendors shall sell, with
      full
      title guarantee, and the Purchaser shall purchase, as at the Effective Time,
      the
      Shares.

     

    2.2. Waiver
      of rights

     

    The
      Vendors hereby waive or agree to procure the waiver of any pre-emption rights
      which may exist in relation to the Shares pursuant to the articles of
      association of the Company or otherwise.

     

    2.3. Simultaneous
      acquisition

     

    On
      Completion the Purchaser shall not be obliged to complete the purchase of the
      Shares unless the purchase of all the Shares is completed simultaneously but
      completion of the purchase of some of the Shares shall not affect the rights
      of
      the Purchaser with respect to the others.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    2.4. Covenants
      for title

     

    Upon
      Completion the Vendors shall be deemed to have given to the Purchaser the same
      covenants in relation to the sale of the Shares as are implied by Part 1 of
      the
      Law of Property
      (Miscellaneous Provisions) Act 1994 (the “Act”) where a disposition is expressed
      to be made with full title guarantee except that s6(2) of the Act shall be
      excluded and s3(1) of the Act shall apply as if the words “other than” to the
      end of the sub-section were deleted therefrom.

     

    
      	
              3.

            	
              PURCHASE
                CONSIDERATION

            

    

     

    3.1. Consideration

     

    The
      consideration for the sale by the Vendors of the Shares shall be the issue
      to
      the Vendors of the Consideration Shares and Consideration Warrants.

     

    
      	
              3.2.

            	
              The
                Vendors hereby undertake to the Purchaser that, without the prior
                written
                consent of the Purchaser, they shall not sell, transfer or otherwise
                dispose of any of the Consideration Shares issued and allotted to
                them
                under this Agreement (or any interest in such shares) prior to the
                first
                anniversary of Completion.

            

    

     

    
      	
              3.3.

            	
              The
                Purchaser’s obligations in relation to the Consideration Shares
                and Consideration Warrants shall be satisfied by the issue of the
                Consideration Shares and Consideration Warrants set out in Clause
                3.1
                above to the Vendors in the numbers listed in Schedule
                1.

            

    

     

    
      	
              3.4.

            	
              The
                Consideration Shares and Consideration Warrants are subject to the
                provisions set out in Schedule 13.

            

    

     

    Piggyback
      Registration Rights

     

    
      	
              3.5.

            	
              The
                Purchaser covenants and agrees as
                follows:

            

    

     

    3.5.1. For
      purposes of this Clause 3.5:

     

    The
      term
“Act”
means
      the Securities Act of 1933 of the United States of America, as
      amended;

     

    The
      term
“Vendor”
means
      any person owning or having the right to acquire Registerable Securities
      pursuant to this Agreement or any assignee thereof;

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    The
      terms
“register,”
      “registered,”
      and “registration”
      refer to
      a registration effected by preparing and filing a registration statement or
      similar document in compliance with the Act, and the declaration or ordering
      of
      effectiveness of such registration statement or document;

     

    The
      term
“Registerable
      Securities”
means
      the
      Purchaser Common Stock underlying the
      Consideration Warrants; 

     

    3.5.2. On
      the
      first occasion, after the expiry of one year from the date of issuance of the
      Consideration Warrants, that the Purchaser proposes to register any of its
      shares of common stock under the Act in connection with the public offering
      of
      such securities, the Purchaser shall, at such time, promptly (and in any event
      not less than 30 days before such registration will become effective) give
      each
      Vendor a written one-off notice of such intended registration, such written
      notice to be deemed effective if sent by fax or email to the Vendor’s Solicitors
      requesting them to notify all of the Vendors, and shall be deemed served the
      first business day after the date of the email or fax.

     

    3.5.3. Upon
      the
      written request of any Vendor at any time within 10 days of the service
      of such notice, the Purchaser shall, at its own expense, use ommercially
      reasonable efforts to cause to be registered under the Act all of the
      Registerable Securities that any Vendor has requested to be
      registered.

     

    
      	
              4.

            	
              CONDITIONS

            

    

     

    4.1. Conditions
      Precedent

     

    Completion
      is in all respects conditional upon:

     

    4.1.1. Purchaser's
      shareholders approving the transaction contemplated by this Agreement, if such
      approval is required by AMEX.

     

    4.1.2. AMEX
      approving the issuance and listing of the Consideration Shares and the Purchaser
      Common Stock underlying the Consideration Warrants;

     

    4.1.3. The
      Vendors having exercised their rights under Article 14 to require all those
      persons owning shares in the share capital of the Company to sell those shares
      to the Purchaser on the terms of this Agreement. 

     

    Satisfaction
      of Conditions

     

    Each
      party hereby undertakes to the others that he will use all reasonable endeavours
      to procure that the Conditions set out in clauses 4. 1.1 to 4.1.3 are fulfilled
      on or prior to 60 days from the date of this Agreement (the “Long Stop Date”)
      and will promptly notify such fulfilment to the others in writing of the
      fulfilment of such Condition. 

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
      the above, in the event that AMEX requires that the Purchaser's shareholders
      approve the transaction contemplated by this Agreement, the Long Stop Date
      shall
      be on or prior to 120 days from the date of this Agreement.

     

    4.2. Waiver
      of conditions precedent

     

    The
      Purchaser reserves the right to waive the Condition in clauses 4.1.3 provided
      that no such waiver shall be permitted if the failure to satisfy such condition
      would constitute a breach of applicable law.

     

    4.3. Notification
      of anticipated failure

     

    Each
      party shall notify the others immediately in writing on becoming aware of any
      matter which may give rise to a condition which they are obliged to satisfy
      not
      being fulfilled.

     

    4.4. Failure
      to satisfy or waive conditions

     

    If
      any of
      the Conditions has not been fulfilled or waived by the Long Stop Date (or such
      later date as may be agreed in writing by the parties) then, without prejudice
      to the accrued rights of the parties arising in respect of the any provisions
      of
      this Agreement, and except for the provisions of clauses ‎17
      (Confidentiality), ‎18
      (Announcements), ‎19
      (Costs),
‎27
      (Governing Law) and ‎28
      (Jurisdiction), this Agreement shall cease to have effect.

     

    
      	
              5.

            	
              CONDUCT
                OF BUSINESS PENDING
                COMPLETION

            

    

     

    5.1. Ordinary
      and usual course

     

    The
      Warrantors undertake to the Purchaser that during the period from the date
      of
      execution of this Agreement until Completion the business of the Company shall
      be carried on in the ordinary and normal course and with a view to long term
      profit and so as to maintain the same as a going concern.

     

    5.2. Specific
      pre-Completion restrictions

     

    Without
      prejudice to the generality of clause ‎5.1
      each of
      the Warrantors undertakes to the Purchaser that during the period between the
      date of execution of this Agreement and Completion shall:

     

    5.2.1. comply
      with the undertakings set out in ‎Schedule 9;
      and

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    5.2.2. procure
      that the Company complies with the undertakings set out in ‎Schedule 10.

     

    
      	
              6.

            	
              ASSISTANCE
                PENDING
                COMPLETION

            

    

     

    Pending
      Completion, the Warrantors shall procure:

     

    
      	
              6.1.

            	
              that
                the Purchaser and any persons authorised by it shall, upon reasonable
                notice, be allowed full access to the Property, books and records
                of the
                Company and the Vendors; and

            

    

     

    
      	
              6.2.

            	
              the
                supply of any information reasonably required by the Purchaser relating
                to
                the Company or the Vendors.

            

    

     

    
      	
              7.

            	
              COMPLETION

            

    

     

    7.1. Date
      and place

     

    Completion
      shall take place at the offices of the Purchaser’s Solicitors on the first
      Monday following the satisfaction of Clauses 4.1.1 (if applicable) and 4.1.2
      and
      subject to Clause 4.2, Clause 4.1.3, save that if the Monday is a UK or a US
      public holiday, then on the next working day, or such later date as the parties
      may agree in writing.

     

    7.2. Warrantors'
      obligations

     

    At
      Completion the Warrantors shall:

     

    
      	 	
              7.2.1.

            	
              deliver,
                give or make available to the Purchaser the documents listed in
                ‎Schedule 6
                (Completion Documents); 

            

    

     

    7.2.2. procure
      that board meetings of the Company are held at which it shall be resolved
      that:

     

    (a) each
      of
      the transfers in respect of the Shares be approved for registration and that,
      subject only to the transfers being duly stamped, the Purchaser shall be
      registered as the holder of the Shares concerned in the Company’s register of
      members and that share certificates in respect thereof be executed by the
      Company and delivered to the Purchaser;

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    (b) the
      resignations of James Ruane, David Abel Smith and Michael Cronk as directors
      and
      James Gordon as secretary of the Company be tabled and approved;

     

    (c) Guy
      Nissenson and Abraham Keinan shall be appointed directors of the
      Company;

     

    (d) Brad
      Marcus be appointed as the secretary of the Company;

     

    (e) deliver
      bank mandate forms replacing all existing authorities relating to bank accounts
      and appointing such persons as the Purchaser may nominate to
      operate;

     

    (f) the
      registered offices of the Company be changed to Britannia
      House 960 High Road London N12 9RY, United Kingdom;

     

    (g) the
      Service Agreements be approved;

     

    
      	 	
              7.2.3.

            	
              repay
                to the Company all moneys owing as at Completion by the Vendors to
                the
                Company whether or not such sums are due for
                repayment;

            

    

     

    
      	 	
              7.2.4.

            	
              procure
                the discharge of all guarantees and like obligations given by the
                Company
                in respect of the obligations of any other person, other than the
                fixed
                and floating charges in favour of Barclays Bank
                plc;

            

    

     

    7.2.5. execute
      the Tax Deed. 

     

    7.3. Purchaser’s
      obligations

     

    At
      Completion the Purchaser shall, subject to compliance by the Vendors with the
      obligations set out in clause ‎7.2:

     

    
      	 	
              7.3.1.

            	
              allot
                and issue to the Vendors the number of Consideration Shares and
                Consideration Warrants set out opposite their names in Schedule 1
                and
                deliver definitive certificates in respect of such securities to
                the
                Vendors' Solicitors (who are authorised to receive the same) and
                their
                receipt shall be sufficient discharge to the
                Purchaser.

            

    

     

    7.3.2. execute
      the Tax Deed.

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    7.4. Sale
      of all Shares

     

    The
      Purchaser shall not be obliged to complete the purchase of any of the Shares
      unless the purchase of all the Shares is completed in accordance with this
      Agreement and the Purchaser is reasonably satisfied that (i) it will acquire
      title to the Dragged Along Shares so that the Purchaser acquires the issued
      and
      to be issued share capital of the Company and (ii) (based upon the information
      supplied by the Warrantors in accordance with paragraph 5 of Schedule 9) the
      Working Capital Deficit will not be greater than the figure specified in Clause
      8.2.1.

     

    7.5. Failure
      to comply

     

    
      	 	
              7.5.1.

            	
              If
                in any respect the obligations of either party set out in this clause
                ‎7
                are not complied with on the date specified in clause ‎7.1,
                the party not in default shall not be obliged to complete this Agreement
                and may (without prejudice to its rights under this Agreement):
                

            

    

     

    (a) defer
      Completion to a date not more than forty eight (48) days after that
      date;

     

    (b) proceed
      to Completion as far as practicable (but not including completion of some only
      of the Shares); or

     

    (c) waive
      all
      or any of the requirements set out in clause ‎7.2
      (if any
      of the Vendors is the defaulting party) or ‎7.3
      (if the
      Purchaser is the defaulting party) at its discretion by means of a notice to
      that effect in writing served on the other.

     

    
      	 	
              7.5.2.

            	
              If,
                and only if, the party not in default shall have deferred Completion
                in
                accordance with clause ‎7.5.1(a)
                for a period of at least twenty one (21) days and the party in default
                is
                still unable to comply with the obligations in this clause ‎7
                and ‎Schedule 6
                by
                such date then the party not in default may rescind this
                Agreement.

            

    

     

    7.6. Continuing
      obligations

     

    The
      Warranties and all other provisions of this Agreement in so far as the same
      shall not have been performed at Completion shall not be extinguished or
      affected by Completion, or by any other event or matter whatsoever, except
      by a
      specific and duly authorised written waiver or release by the
      Purchaser.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    
      	
              8.

            	
              COMPLETION
                ACCOUNTS

            

    

     

    8.1. Preparation
      of Completion Accounts

     

    8.1.1. The
      Purchaser shall procure that:-

     

    (a) as
      soon
      as practicable following Completion (and, in any event, within ten (10) business
      days after Completion), a balance sheet for the Company as at the last day
      of
      the month before the month in which the Completion Date falls and a profit
      and
      loss account for the Company in respect of the period from the day immediately
      following the Balance Sheet Date to the Completion Date inclusive shall be
      prepared in accordance with the principles set out in paragraphs 1 to 5 of
      ‎Schedule 11;
      

     

    (b) the
      Auditors will, as part of their work on the audit for the period to 31 March
      2006 be instructed to review such balance sheet and profit and loss account
      (together the “Completion Accounts”) and to issue a written statement of the net
      asset value of the Company as at the Completion Date as derived from the balance
      sheet (the “Net Asset Value Statement”); and 

     

    (c) as
      soon
      as practicable after the final form of the Net Asset Value Statement is issued
      by the Auditors, it shall be delivered to the Vendors and the
      Purchaser.

     

    8.1.2. Unless
      within twenty (20) business days after receipt by the Purchaser of the Net
      Asset
      Value Statement pursuant to clause ‎8.1.1
      the
      Purchaser notifies the Warrantors in writing of any disagreement or difference
      of opinion relating to the Completion Accounts and/or the Net Asset Value
      Statement, the parties shall be deemed to have accepted that the Completion
      Accounts and the Net Asset Value Statement are correct.

     

    8.1.3. If
      within
      the period of twenty (20) business days referred to in clause ‎8.1.2
      the
      Purchaser notifies the Vendors of any disagreement or difference of opinion
      relating to the Completion Accounts and/or the Net Asset Value Statement, the
      Warrantors and the Purchaser shall respectively use reasonable endeavours to
      resolve such disagreement or difference of opinion within twenty (20) business
      days after such notification. 

     

    8.1.4. If
      the
      Warrantors and the Purchaser are unable to reach agreement within twenty (20)
      business days after such notification, the matter in dispute shall be referred
      to the decision of an independent chartered accountant (the “Independent
      Accountant”) agreed between the parties or in the absence of such agreement
      appointed at the instance of either of them by the President for the time being
      of the Institute of Chartered Accountants in England and Wales.

     

    8.1.5. The
      Independent Accountant shall act as expert and not as an
      arbitrator.

     

    8.1.6. The
      Independent Accountant shall furnish the parties with a written reasoned
      decision within twenty (20) business days. The decision of the Independent
      Accountant shall be final and binding on the Vendors and the
      Purchaser.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    8.1.7. The
      costs
      of the Independent Accountant shall be borne equally between the Vendors and
      the
      Purchaser (or as the Independent Accountant shall determine). 

     

    8.1.8. The
      Warrantors shall procure that the Auditors shall give the Purchaser and the
      Purchaser’s Accountants unrestricted access to all their working papers (with
      the right to take copies) during their review of the Completion Accounts and
      the
      Net Asset Value Statement at every location at which work on them is done and
      the Vendors agree that the Purchaser and the Purchaser’s Accountants shall be at
      liberty to disclose to each other any information and copies of any documents
      which they receive by virtue of this clause.

     

    8.1.9. The
      net
      asset value of the Company as at the Completion Date (“Completion Net Asset
      Value”) shall be:-

     

    (a) the
      net
      asset value of the Company as at the Completion Date as stated in the Net Asset
      Value Statement; or

     

    (b) if
      the
      Purchaser notifies the Warrantors in accordance with clause ‎8.1.3
      of any
      disagreement or difference of opinion relating to the Completion Accounts and/or
      the Net Asset Value Statement and such disagreement or difference of opinion
      is
      resolved in accordance with clause ‎8.1.3,
      the net
      asset value of the Company as at the Completion Date as stated in the Net Asset
      Value Statement adjusted to take account of any such disagreement or difference
      of opinion, as resolved; or

     

    (c) if
      any
      matter is referred to the Independent Accountant in accordance with clause
      ‎8.1.4,
      the net
      asset value of the Company as at the Completion Date as stated in the Net Asset
      Value Statement adjusted to take account of any disagreement or difference
      of
      opinion (to the extent any such disagreement or difference of opinion is
      resolved in accordance with clause ‎8.1.3)
      and
      further adjusted to take account of any matter decided upon by the Independent
      Accountant.

     

    8.2. Adjustment
      of Consideration

     

    8.2.1. if
      the
      Completion Net Asset Value shows a Working Capital Deficit of greater than
      £114,647.83 Consideration Warrants and Consideration Shares granted to the
      Vendors to the extent of the excess above such figure shall forthwith be
      rendered null and void and the Vendors agree to sign any documentation that
      may
      be required to cancel such Consideration Warrants and Consideration Shares
      in
      such proportions as the Vendors shall agree between them or, failing agreement,
      pro rata to their shareholdings in the Company.

     

    
      	
              9.

            	
              WARRANTIES
                BY THE WARRANTORS
                & THE PURCHASER

            

    

     

    9.1. Accuracy
      of warranties

     

    Each
      of
      the Warrantors severally warrants to the Purchaser that, save as fairly
      disclosed in the Disclosure Letter, the Warranties are true and accurate in
      all
      material respects.

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    9.2. Updating
      to Completion

     

    Each
      of
      the Warrantors further warrants and represents to the Purchaser
      that:

     

    9.2.1. subject
      to clause ‎9.1,
      the
      Warranties will be true and accurate in all respects and not misleading in
      any
      respect at Completion as if they had been given again at Completion;
      and

     

    9.2.2. if
      after
      the signing of this Agreement and before Completion any event shall occur or
      matter shall arise of which any of the Warrantors becomes aware and which
      results or may result in any of the Warranties being unfulfilled, untrue,
      misleading or incorrect in any respect at Completion the Warrantors shall
      immediately notify the Purchaser in writing fully thereof prior to Completion
      and shall make any investigation concerning the event or matter which the
      Purchaser may require.

     

    9.3. Purchaser’s
      remedies

     

    The
      rights and remedies of the Purchaser in respect of any breach of the Warranties
      shall not be affected by:

     

    9.3.1. completion
      of the purchase of the Shares; 

     

    9.3.2. the
      Purchaser failing to exercise or delaying the exercise of any of its rights
      or
      remedies.

     

    9.4. Knowledge
      of the Warrantors

     

    Where
      any
      Warranty refers to the knowledge, information or belief of the Warrantors,
      they
      undertake that they have made full enquiry into the subject matter of the
      Warranty.

     

    9.5. Information
      supplied to the Warrantors

     

    9.5.1. No
      information supplied by or on behalf of any employee, agent or adviser of the
      Company to the Warrantors in connection with the Warranties or the preparation
      of the Disclosure Letter shall constitute a warranty or representation as to
      the
      accuracy of such information.

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    9.5.2. Each
      of
      the Warrantors hereby undertakes to the Purchaser to waive any claim which
      he
      may have against any employee, agent or adviser of the Company in respect of
      any
      information referred to in clause ‎9.5.1.

     

    9.6. Reliance

     

    The
      Purchaser has entered into this Agreement exclusively in reliance of the
      Warranties.

     

    9.7. Payments
      under Warranties to be deemed reduction of consideration

     

    Any
      amount payable under this Agreement for breach of the Warranties shall be deemed
      to be a reduction in the consideration payable for the Shares.

     

    9.8. Right
      of Termination

     

    If
      prior
      to Completion:

     

    9.8.1. it
      shall
      be found that any of the Warranties have not been carried out or complied with
      to the Purchaser’s reasonable satisfaction or are otherwise untrue or misleading
      the Purchaser shall be entitled (in addition to and without prejudice to all
      other rights or remedies available to it and its successors in title including
      the right to claim damages) by notice in writing to Vendors to terminate this
      Agreement but failure to exercise this right shall not constitute a waiver
      of
      any other rights of the Purchaser or its successors in title arising out of
      any
      breach of Warranty; or 

     

    9.8.2. any
      event
      shall occur (other than an event constituting or giving rise to a breach of
      any
      of the Warranties) which affects or is likely to affect adversely to a material
      degree the financial position or business prospects of the Company not being
      an
      event affecting or likely to affect generally all companies carrying
on
      similar businesses in the United Kingdom, the Purchaser shall be entitled by
      notice in writing to the Vendors to terminate this Agreement; but the occurrence
      of such an event shall not give rise to any right to damages or
      compensation.

     

    
      	
              10.

            	
              LIMITATIONS
                OF
                LIABILITY

            

    

     

    10.1. Limitation
      of Warrantors' liability

     

    The
      provisions of Schedule 8 shall operate to limit the liability of the Warrantors
      under the Warranties save those Warranties set out in paragraph 1 of Schedule
      7.
      The provisions of Schedule 17 shall operate to limit the liability of the
      Purchaser under the Purchaser's Warranties.

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

    10.2. No
      limitation in case of fraud etc

     

    The
      provisions of Clause 10.1 shall not operate to limit the liability of the
      Warrantors or Purchaser (as applicable) where the liability arises as a result
      of fraud on the part of any of the Warrantor of Purchaser (as applicable),
      the
      Company or any of the officers or employees of the Company, or any agents or
      representatives of the Company or where a matter has been deliberately concealed
      or withheld by any of the Warrantors or Purchaser (as applicable) or the Company
      or any of the officers or employees of the company or any of the agents or
      representatives of the Company.

     

    
      	
              11.

            	
              PENSIONS

            

    

     

    The
      provisions of Part 2 of ‎Schedule 4
      confirm
      that there are no pension schemes that relate to the Company or any of its
      officers or employees other than the payment to each of the Key Employees of
      £4,500 per annum (which arrangement will terminate upon entry of the Service
      Agreements).

     

    
      	
              12.

            	
              NAME

            

    

     

    12.1. Prohibition
      on use of name

     

    Each
      of
      the Vendors undertakes that it shall not, and shall procure that no company
      in
      which he, she or it holds over 10% of the shares shall:

     

    12.1.1. contain
      in their name or trade under a name including the words “Equitalk“
or
      any
      word or words which when read together imply that any such company or business
      is or may be connected in any way with the Company;

     

    12.1.2. in
      any
      way hold themselves out as being in any way connected with the Company (other
      than the Key Employees); or

     

    12.1.3. apply
      for
      registration of any trade mark or domain name that includes the words Equitalk
      or any word or words which when read together imply that any such company or
      business is or may be connected in any way with the Company or any word or
      words
      used in any trade mark or domain name owned or used by the Company or any member
      of the group.

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    FUTURE
      ACTIVITIES

     

    12.2. Restrictions
      on Warrantors 

     

    For
      the
      purpose of assuring to the Purchaser the full benefit of the goodwill and
      connections of the Company each of the Warrantors agrees with the Purchaser
      that
      he will not:

     

    12.2.1. at
      any
      time following Completion disclose to any person or use for any purpose, and
      shall use all reasonable endeavours to prevent the publication or disclosure
      of,
      any Confidential Information except:

     

    (a) where
      the
      Confidential Information concerned enters the public domain otherwise than
      as a
      result of a breach by the Warrantors of their obligations under this clause
      ‎12.2.1.;
      or

     

    (b) if
      and to
      the extent that use or disclosure is made:

     

    
      	 	
              12.2.1.b.1.

            	
              in
                compliance with any requirement of law or regulation or pursuant
                to the
                order of a court of competent jurisdiction;
                or

            

    

     

    
      	 	
              12.2.1.b.2.

            	
              in
                response to a requirement of the regulations of a recognised stock
                exchange or any other applicable regulatory
                authority;

            

    

     

    12.2.2. for
      a
      period of 12 months following Completion either on his own account or through
      any other person, so as to compete with the Business, directly or indirectly
      solicit, interfere with, or endeavour to entice away from the Purchaser any
      person who is immediately prior to Completion or has, during the two years
      preceding Completion, been a customer of the Company;

     

    12.2.3. for
      a
      period of 12 months following Completion either on his own account or through
      any other person, directly or indirectly solicit, interfere with, or endeavour
      to entice away from the Purchaser any person who is immediately prior to
      Completion or has, during the two years preceding Completion, been an employee
      of the Company.

     

    12.3. Severability

     

    Each
      of
      the Warrantors agrees that they consider that the restrictions contained in
      this
      clause are no greater than is reasonable and necessary for the protection of
      the
      interests of the Purchaser but if any such restriction shall be held to be
      void
      but would be valid if deleted in part or reduced in application, such
      restriction shall apply with such deletion or modification as may be necessary
      to make it valid and enforceable.

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    12.4. Purchaser
      Warranties

     

    The
      Purchaser warrants to the Warrantors that the Purchaser Warranties are true
      and
      accurate in all material respects.

     

    
      	
              13.

            	
              ASSIGNMENT

            

    

     

    No
      party
      shall without the prior written consent of the other parties assign, transfer
      or
      otherwise delegate (in whole or in part) the benefit of or the rights or the
      obligations under this Agreement.

     

    
      	
              14.

            	
              SUCCESSORS
                AND
                ASSIGNS

            

    

     

    This
      Agreement shall be binding on and enure for the benefit of the successors and
      permitted assigns of the parties.

     

    15. FURTHER
      ASSURANCE 

     

    The
      Vendors shall take all necessary steps and co-operate fully with the Purchaser
      (at the Purchaser's expense) to ensure that it obtains the full benefit of
      this
      Agreement and shall execute such documents and take such other steps (or procure
      other necessary parties to take such steps) as are necessary or appropriate
      for
      vesting in the Purchaser all its rights and interests in the Shares and the
      full
      benefit of this Agreement and in such regard, agree to execute the Power of
      Attorney set out in Schedule 14.

     

    
      	
              16.

            	
              TIME
                OF THE
                ESSENCE

            

    

     

    Time
      shall be of the essence in this Agreement.

     

    
      	
              17.

            	
              CONFIDENTIALITY 

            

    

     

    17.1. Prohibition
      on disclosure

     

    Each
      of
      the parties hereby undertakes with the others, that it shall preserve the
      confidentiality of, and not directly or indirectly use, otherwise than for
      the
      purposes of this Agreement, or disclose, details of the provisions or subject
      matter of this Agreement or any information obtained by such party about the
      other parties as a result of negotiating, entering into or performing its
      obligations under this Agreement except:

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    17.1.1. in
      the
      circumstances set out in clause ‎17.2
      below;
      or

     

    17.1.2. with
      the
      prior written consent of the party to whose affairs such confidential
      information relates. 

     

    17.2. Permitted
      disclosures

     

    The
      circumstances referred to in clause ‎17.1.1
      above
      are:

     

    17.2.1. where
      the
      confidential information enters the public domain otherwise than as a result
      of
      a breach by any of the parties of its obligations in this clause ‎17;
      

     

    17.2.2. if
      and to
      the extent that disclosure is made:

     

    (a) in
      compliance with any requirement of law or regulation or pursuant to the order
      of
      a court of competent jurisdiction; or

     

    (b) in
      response to a requirement of the rules and/or regulations of the SEC, AMEX
      or
      any other recognised stock exchange or applicable regulatory authority or
      regulatory or governmental or fiscal body (including any self-regulatory
      organisation);

     

    (c) required
      by contractual obligations existing at the date hereof;

     

    (d) required
      to vest the full benefit of this Agreement and any document to be executed
      pursuant to this Agreement in either party;

     

    (e) disclosed
      only to the professional advisers, auditors, insurers or bankers of each party
      under suitable conditions of confidentiality; or

     

    (f) the
      information was lawfully in that party’s possession prior to its disclosure to
      such party by the other party;

     

    provided
      that any such information used or disclosable pursuant to this clause
‎17.2.2
      (save
      for clauses 17.2.2 (a) and 17.2.2 (b)) shall, so far as reasonably practicable,
      be used or disclosed only after consultation with the non-disclosing parties.
      

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    17.3. No
      time limit

     

    The
      restrictions contained in this clause 17 shall continue to apply after
      Completion without limit of time.

     

    
      	
              18.

            	
              ANNOUNCEMENTS

            

    

     

    18.1. Prohibition
      on announcements

     

    Subject
      to clause ‎18.2,
      and
      whether or not any restriction contained in clause ‎17
      applies,
      no announcement or disclosure concerning the matters provided for in this
      Agreement shall be made or issued by or on behalf of the Vendors without the
      prior written approval of the Purchaser.

     

    18.2. Exceptions

     

    The
      provisions of clause ‎18.1
      shall
      not apply to any matters required to be made:

     

    18.2.1. in
      compliance with any requirement of law or regulation or pursuant to the order
      of
      a court of competent jurisdiction; or

     

    18.2.2. in
      response to a requirement of the regulations of a recognised stock exchange
      or
      other applicable regulatory authority or regulatory or governmental or fiscal
      body (including any self-regulatory organisation).

     

    18.3. No
      time limit

     

    The
      restriction contained in this clause 18 shall continue to apply after Completion
      without limit of time.

     

    
      	
              19.

            	
              COSTS

            

    

     

    All
      expenses incurred by or on behalf of the parties, including all fees of
      professional advisers employed by either of the parties in connection with
      the
      negotiation, preparation and execution of this Agreement shall be borne solely
      by the party which incurred them.

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

    
      	
              20.

            	
              TAX

            

    

     

    20.1. Stamp
      duty

     

    The
      Purchaser will be responsible for the payment of all stamp duty in respect
      of
      this Agreement and the carrying into effect of this Agreement. 

     

    
      	
              21.

            	
              AMENDMENTS

            

    

     

    21.1. Amendments

     

    No
      amendment or variation of this Agreement or any of the documents referred to
      in
      it shall be effective unless it is in writing and signed by or on behalf of
      each
      of the parties. References in this Agreement to documents “in the agreed form”
shall, where appropriate, be construed as references to such documents as so
      amended.

     

    21.2. Waivers
      and remedies

     

    21.2.1. The
      rights of each party under this Agreement:-

     

    
      	 	
              (a)

            	
              are
                in addition to and not exclusive of rights or remedies under any
                applicable law; and

            

    

     

    
      	 	
              (b)

            	
              may
                be waived only in writing and
                specifically.

            

    

     

    21.2.2. Delay
      in
      exercising or non-exercise of any right or remedy under this Agreement is not
      a
      waiver of that right or remedy.

     

    21.2.3. Partial
      exercise of any right or remedy under this Agreement shall not preclude any
      further or other exercise of that right or remedy or any other right or remedy
      under this Agreement.

     

    21.2.4. Waiver
      of
      a breach shall not operate as a waiver of any subsequent breach.

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

    
      	
              22.

            	
              ENTIRE
                AGREEMENT

            

    

     

    22.1. Entire
      agreement

     

    This
      Agreement (together with the documents referred to herein):

     

    22.1.1. shall
      constitute the entire agreement between the parties with respect to the subject
      matter of this Agreement; and

     

    22.1.2. supersedes
      and extinguishes any prior drafts, agreements and undertakings between the
      parties relating to such subject matter.

     

    22.2. Fraud

     

    This
      clause shall not exclude any liability which any party would otherwise have
      to
      the other or any right which either of them may have to rescind this Agreement
      in respect of any statements made fraudulently by the other prior to the
      execution of this Agreement or any rights which either of them may have in
      respect of fraudulent concealment by the other.

     

    
      	
              23.

            	
              SURVIVAL
                OF
                OBLIGATIONS

            

    

     

    Notwithstanding
      Completion each and every right and obligation of the Purchaser and the Vendors
      under this Agreement shall, except in so far as fully performed at Completion,
      continue in full force and effect.

     

    
      	
              24.

            	
              RIGHTS
                OF THIRD
PARTIES

            

    

     

    24.1. No
      third party rights

     

    A
      person
      who is not a party to this Agreement has no rights under the Contracts (Rights
      of Third Parties) Act 1999 to enforce, or to enjoy the benefit of, any term
      of
      this Agreement.

     

    
      	
              25.

            	
              NOTICES

            

    

     

    25.1. Writing

     

    All
      notices between the parties with respect to this Agreement shall be in writing
      and signed by the party giving it.

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

    25.2. Service

     

    Any
      notice referred in clause ‎25.1,
      shall
      be served by delivering it:

     

    25.2.1. by
      hand;

     

    25.2.2. by
      sending it by first-class pre-paid post, recorded delivery, registered delivery
      or air mail; or

     

    25.2.3. by
      fax,

     

    to
      the
      address of the addressee set out below, or to such other address as the
      addressee may from time to time have notified for the purpose of this
      clause.

     

    25.3. Deemed
      delivery

     

    A
      notice
      shall take effect from the time received or, if earlier, the time of deemed
      receipt in accordance with this clause, unless a later time is specified in
      it.
      Notices shall be deemed to have been received:

     

    25.3.1. if
      delivered by hand, on the day of delivery;

     

    25.3.2. if
      sent
      by first-class pre-paid post, recorded or registered delivery two (2) business
      days after posting exclusive of the day of posting;

     

    25.3.3. if
      delivered by air mail, five (5) business days after posting exclusive of the
      day
      of posting;

     

    25.3.4. if
      sent
      by fax, at the time of transmission unless received after normal office hours
      in
      the place of receipt in which case it shall be deemed to have been received
      on
      the next business day in the place of receipt.

     

    25.4. Proof
      of service

     

    In
      proving service:

     

    25.4.1. of
      delivery by hand, it shall be necessary only to produce a receipt for the
      communication signed by or on behalf of the addressee;

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

    25.4.2. by
      post,
      it shall be necessary only to prove that the communication was contained in
      an
      envelope which was duly addressed and posted in accordance with this clause;
      and

     

    25.4.3. by
      fax,
      it shall be necessary only to produce the sender’s transmission slip bearing the
      addressee’s fax number showing the fax received by the addressee.

     

    25.5. Addresses
      for notices

     

    The
      addresses and fax numbers of the parties for the purposes of this clause
      are:

     

    The
      Vendors

     

    Address:
      c/o the Vendors’ Solicitors

     

    For
      the
      attention of: James Gordon

     

    Fax
      Number: 020
      7421
      9422

     

    The
      Purchaser 

     

    Address:
      c/o Swiftnet, Britannia
      House 960 High Road London N12 9RY, United Kingdom

     

    For
      the
      attention of: Abraham Keinan

     

    Fax
      number: -020 8446 7010

     

    With
      a
      copy to the Purchaser's Solicitors

     

    25.6. Electronic
      transmission

     

    25.6.1. Any
      notice given under this Agreement shall not be validly served if only sent
      by
      electronic mail, by text messaging via mobile phone or other electronic means
      other than fax.

     

    25.6.2. The
      Vendors hereby acknowledge their consent to receive from Xfone materials which
      are sent from time to time to shareholders, such as Annual Report and Proxy
      Statement, via electronic mail. The E-mail addresses of the Vendors are set
      out
      in Schedule 1. 

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

     

    
      	
              26.

            	
              COUNTERPARTS

            

    

     

    26.1. Execution
      in counterparts

     

    This
      Agreement may be signed in any number of counterparts and by the parties on
      separate counterparts, but shall not be effective until each party has signed
      at
      least one counterpart.

     

    26.2. One
      Agreement

     

    Each
      counterpart shall constitute an original of this Agreement but all counterparts
      shall together constitute one and the same agreement.

     

    
      	
              27.

            	
              GOVERNING
                LAW

            

    

     

    This
      Agreement shall be governed by and construed in accordance with the laws of
      England, without regard to conflicts of laws.

     

    
      	
              28.

            	
              JURISDICTION

            

    

     

    In
      relation to any legal action or proceedings arising out of or in connection
      with
      this Agreement, each of the parties irrevocably submits to the exclusive
      jurisdiction of the English courts and the parties agree to only serve
      proceedings in the High Courts of Justice, Strand, London and waives any
      objection to proceedings in such courts on the grounds of venue or on the
      grounds that proceedings have been brought in an inappropriate
      forum.

     

    IN
      WITNESS whereof
      this Agreement has been duly entered into as a deed on the date first above
      written

     

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

    SCHEDULE 1

     

    THE
      VENDORS

     

    

     

    
      	
              Equitalk
                Shareholders (Feb 06)

            	 	 	 	 	 
	 	 	 	 	 	 	 
	
              Name

            	
              Address

            	
              Number
                of Equitalk Shares

            	
              Value
                of Xfone Shares

            	
              Value
                of Xfone Warrants

            	
              Total

            	
              %

            
	
              Abel-Smith,
                David

            	
              Quenington
                Old Rectory, Church Road, Quenington, Glos GL7 5BN

            	
              996

            	
              $21,018.30

            	
              $10,509.15

            	
              $31,527.45

            	
              1.91

            
	
              Aird,
                James

            	
              Grange
                Farm, Evenlode, Moreton in Marsh, Glos GL56 ONT

            	
              187

            	
              $3,946.21

            	
              $1,973.10

            	
              $5,919.31

            	
              0.36

            
	
              Aird,
                Lady M

            	
              Grange
                Farm, Evenlode, Moreton in Marsh, Glos GL56 ONT

            	
              312

            	
              $6,584.05

            	
              $3,292.02

            	
              $9,876.07

            	
              0.60

            
	
              Aird,
                Rebecca

            	
              Grange
                Farm, Evenlode, Moreton in Marsh, Glos GL56 ONT

            	
              125

            	
              $2,637.84

            	
              $1,318.92

            	
              $3,956.76

            	
              0.24

            
	
              Aird,
                Sir John

            	
              Grange
                Farm, Evenlode, Moreton in Marsh, Glos GL56 ONT

            	
              2,075

            	
              $43,788.13

            	
              $21,894.06

            	
              $65,682.19

            	
              3.98

            
	
              Barrett,
                Norma

            	
              3
                Aylesbury Road, Cuddlington, Bucks HP18 OBD

            	
              621

            	
              $13,104.78

            	
              $6,552.39

            	
              $19,657.18

            	
              1.19

            
	
              Bell
                Group Pension Scheme

            	
              3
                B
                Rowlands Hill, Wimborne, Dorset BH21 1Al

            	
              1,087

            	
              $22,938.65

            	
              $11,469.32

            	
              $34,407.97

            	
              2.09

            
	
              Burton,
                Jennifer Susan

            	
              14
                Distons Lane, Chipping Norton, Oxon OX7 5NY

            	
              621

            	
              $13,104.78

            	
              $6,552.39

            	
              $19,657.18

            	
              1.19

            
	
              Burton,
                John Mark

            	
              14
                Distons Lane, Chipping Norton, Oxon OX7 5NY

            	
              4,105

            	
              $86,626.64

            	
              $43,313.32

            	
              $129,939.95

            	
              7.88

            
	
              Cantay
                Investments Limited

            	
              Cantay
                House, Park End Place, Oxford OX1 1JE

            	
              498

            	
              $10,509.15

            	
              $5,254.58

            	
              $15,763.73

            	
              0.96

            
	
              Cary,
                John Lucius Arthur

            	
              c/o
                Seed Capital, Magdalen Centre, Oxford Science Park, Oxon OX4
                4GA

            	
              2

            	
              $42.21

            	
              $21.10

            	
              $63.31

            	
              0.00

            
	
              Cronk,
                Angela

            	
              11
                Ashley Gardens, Ambrosden Avenue, London SW1P 1QD

            	
              1,039

            	
              $21,925.72

            	
              $10,962.86

            	
              $32,888.58

            	
              1.99

            
	
              Cronk,
                JJT

            	
              Nutfield
                House, 66 Dry Hill, Park Road, Tonbridge, Kent TN10 3BX

            	
              325

            	
              $6,858.38

            	
              $3,429.19

            	
              $10,287.57

            	
              0.62

            
	
              Cronk,
                Michael AJ

            	
              11
                Ashley Gardens, Ambrosden Avenue, London SW1P 1QD

            	
              3,601

            	
              $75,990.87

            	
              $37,995.43

            	
              $113,986.30

            	
              6.91

            
	
              Dennis,
                Arthur Jeremy Dyke

            	
              Donnington
                Manor, Moreton in Marsh Glos 56 OY3

            	
              375

            	
              $7,913.52

            	
              $3,956.76

            	
              $11,870.28

            	
              0.72

            
	
              Dennis,
                Henry Dyke

            	
              Donnington
                Manor, Moreton in Marsh Glos 56 OY3

            	
              375

            	
              $7,913.52

            	
              $3,956.76

            	
              $11,870.28

            	
              0.72

            
	
              Fast
                Guides Limited

            	
              PO
                Box 25, 30 Crodaun, Celbridge, Co Kildare, Eire

            	
              1,423

            	
              $30,029.16

            	
              $15,014.58

            	
              $45,043.74

            	
              2.73

            
	
              Gill,
                Carol

            	
              42
                Bushwood Road, Kew, Surrey TW9 3BQ

            	
              62

            	
              $1,308.37

            	
              $654.18

            	
              $1,962.55

            	
              0.12

            
	
              Guerin,
                Charles & Jennifer

            	
              50
                Farmers Way, Seer Green, Beaconsfield, Bucks HP9

            	
              27

            	
              $569.77

            	
              $284.89

            	
              $854.66

            	
              0.05

            
	
              Hillyard,
                Pamela

            	
              3
                B
                Rowlands Hill, Wimborne, Dorset BH21 1Al

            	
              26

            	
              $548.67

            	
              $274.34

            	
              $823.01

            	
              0.05

            
	
              Jackson,
                John BH

            	
              c/o
                Mischcon de Reya, 21 Southampton Row, London WC1B 5HS

            	
              364

            	
              $7,681.39

            	
              $3,840.69

            	
              $11,522.08

            	
              0.70

            
	
              Larpent
                Newton Holdings Ltd

            	
              Steane
                Grounds Farm, Steane, Brackley, Northants NN13 5NP

            	
              414

            	
              $8,736.52

            	
              $4,368.26

            	
              $13,104.78

            	
              0.79

            
	
              Meiklejohn,
                Simon Donald

            	
              60
                Beresford St., Bayswater, Auckland, New Zealand

            	
              1,130

            	
              $23,846.07

            	
              $11,923.03

            	
              $35,769.10

            	
              2.17

            
	
              Mint
                House Nominees Limited

            	
              Mansion
                Court, 25 Watling St., London EC4M 9BR

            	
              686

            	
              $14,476.46

            	
              $7,238.23

            	
              $21,714.69

            	
              1.32

            
	
              Nowshadi,
                Farshid & Maria

            	
              45
                Montrose Avenue, Luton, Beds LU3 1HP

            	
              6

            	
              $126.62

            	
              $63.31

            	
              $189.92

            	
              0.01

            
	
              Omnicom

            	
              Abacus
                Billing House, 2 Alexandra Rd, Reading, Berks. RG1 5PE

            	
              435

            	
              $9,179.68

            	
              $4,589.84

            	
              $13,769.52

            	
              0.83

            
	
              Oxford
                Technology 2 VCT plc

            	
              c/o
                Seed Capital, Magdalen Centre, Oxford Science Park, Oxon OX4
                4GA

            	
              10,461

            	
              $220,755.48

            	
              $110,377.74

            	
              $331,133.22

            	
              20.07

            
	
              Oxford
                Technology 3 VCT plc

            	
              c/o
                Seed Capital, Magdalen Centre, Oxford Science Park, Oxon OX4
                4GA

            	
              6,995

            	
              $147,613.48

            	
              $73,806.74

            	
              $221,420.21

            	
              13.42

            
	
              Oxford
                Technology VCT plc

            	
              c/o
                Seed Capital, Magdalen Centre, Oxford Science Park, Oxon OX4
                4GA

            	
              2,731

            	
              $57,631.51

            	
              $28,815.75

            	
              $86,447.26

            	
              5.24

            
	
              Phelps,
                Roland

            	
              41
                Frithwood Avenue, Northwood, Middlesex, HA6 3LY.

            	
              200

            	
              $4,220.54

            	
              $2,110.27

            	
              $6,330.81

            	
              0.38

            
	
              Price,
                John Duncan

            	
              12
                Georgian Way, Harrow, Middlesex, HA1 3LF

            	
              544

            	
              $11,479.88

            	
              $5,739.94

            	
              $17,219.81

            	
              1.04

            
	
              Price,
                Jonathan

            	
              12
                Georgian Way, Harrow, Middlesex, HA1 3LF

            	
              885

            	
              $18,675.90

            	
              $9,337.95

            	
              $28,013.85

            	
              1.70

            
	
              Price,
                Rachel

            	
              12
                Georgian Way, Harrow, Middlesex, HA1 3LF

            	
              885

            	
              $18,675.90

            	
              $9,337.95

            	
              $28,013.85

            	
              1.70

            
	
              QTP
                (General Partner) Limited

            	
              St
                John's Innovation Centre, Cowley Rd, Cambridge CB4 0WS

            	
              517

            	
              $10,910.10

            	
              $5,455.05

            	
              $16,365.15

            	
              0.99

            
	
              Ruane,
                James Joseph

            	
              3
                Aylesbury Road, Cuddlington, Bucks HP18 OBD

            	
              4,076

            	
              $86,014.66

            	
              $43,007.33

            	
              $129,021.99

            	
              7.82

            
	
              Vessey,
                Richard

            	
              3
                B
                Rowlands Hill, Wimborne, Dorset BH21 1Al

            	
              3,915

            	
              $82,617.12

            	
              $41,308.56

            	
              $123,925.68

            	
              7.51

            
	 	 	 	 	 	 	 
	
              Total

            	 	
              52,126

            	
              $1,100,000

            	
              $550,000

            	
              $1,650,000

            	
              100

            

    

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE 2

     

    PART
      1

     

    THE
      COMPANY

     

    
      	
              (i) Directors:

            	
              The
                Key Employees, David Abel Smith, Michael Cronk

               

            
	
              (ii) Secretary:

               

            	
              James
                Gordon

               

            
	
              (iii) Registered
                Office:

               

            	
              22
                Great James Street, London WC1N 3ES

               

            
	
              (iv) Date
                of Incorporation:

               

            	
              15
                December 1999

               

            
	
              (v) Country
                of Incorporation:

               

            	
              England
                & Wales

               

            
	
              (vi) Registered
                Number:

               

            	
              389
                4765

               

            
	
              (vii) Auditors:

               

            	
              Hazlewoods

               

            
	
              (viii) Accounting
                Reference Date:

               

            	
              31
                March

               

            
	
              (ix) Charges:

               

            	
              In
                favour of Barclays Bank plc dated 10 April 2003 and 2 June
                2003

               

            
	
              (x) Authorised
                Share Capital:

               

            	
              1,000,000

               

            
	
              (xi) Issued
                Share Capital:

               

            	
              52,126
                shares of 10 pence

               

            	 
	
            	
            	 
	 	 	 

    

    

     

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

    Part
      2

     

    The
      Warrantors warrant that the Company has no subsidiaries

     

    

     

    
      
        
        

      

      
        -36-

        
          

        

      

      
        
        

      

    

    SCHEDULE 3

     

    THE
      INTELLECTUAL PROPERTY

     

     

    Part
      1

     

    [NOTE:
      THIS SHOULD LIST ALL KEY INTELLECTUAL PROPERTY OWNED BY THE
      COMPANY]"
      INTELLECTUAL
      PROPERTY OWNED
      BY
      THE COMPANY

     

    Registered
      Trade Mark 224 5490 for "Equitalk" in classes 38 and 41

     

    The
      rights to the www.equitalk.co.uk
      domain
      name registration.

     

    Part
      2

     

    ALL
      KEY INTELLECTUAL PROPERTY WHICH IS LICENSED
      TO
      THE COMPANY 

     

    MS
      Word

    
      
        
        

      

      
        -37-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE 4

     

    THE
      PENSION SCHEMES

    

     

    The
      Warrantors represent that there are no occupational pension schemes nor personal
      pension plans in operation that relate to the Company’s officers or employees
      other than an annual contribution of £4,500 contributed to personal pensions of
      James Ruane and John Burton, such contributions to terminate with immediate
      effect at Completion.

     

    
      
        
        

      

      
        -38-

        
          

        

      

      
        
        

      

    

    SCHEDULE 5

     

    THE
      PROPERTIES

     

    Part
      1

     

    Freehold
      Properties and Leasehold Properties

     

    There
      are
      no freehold properties nor leasehold properties.

     

    Part
      2

     

    Properties
      Subject to Leases and Licences

     

    The
      Warrantors warrant that the Company only has one licence in relation to a
      property and that licence is to use serviced offices, subject to termination
      on
      one month’s notice.

     

    
      
        
        

      

      
        -39-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE 6

     

     

    COMPLETION
      DOCUMENTS

     

    
      	
              1

            	
              Duly
                executed transfers of the Shares in favour of the Purchaser together
                with
                the relative share certificates. 

            

    

     

    
      	
              2

            	
              Such
                waivers or consents as the Purchaser may require to enable the Purchaser
                to be registered as holder of the
                Shares.

            

    

     

    
      	
              3.

            	
              Power
                of attorney in the agreed form and the Tax Deed duly executed by
                the
                Warrantors.

            

    

     

    
      	
              4.

            	
              The
                resignations as deeds of each of (a) the Warrantors and Jennifer
                Burton as
                employees and (b) James Ruane, Michael Cronk,and David Abel Smith
                as
                directors of the Company in which each of them shall acknowledge
                in the
                agreed terms set out in Schedule 18 that he or she has no claims
                against
                the Company for compensation for loss of employment or office or
                otherwise.

            

    

     

    
      	
              5.

            	
              The
                resignation as a deed of James Gordon set out in Schedule 18 as the
                secretary of the Company in which he shall acknowledge in the agreed
                terms
                that he has no claims against the Company for compensation for loss
                of
                office or otherwise.

            

    

     

    
      	
              6.

            	
              All
                the statutory and other books of the Company (which shall be written
                up to
                date) together with its certificate of incorporation (and any certificate
                of incorporation on change of name) and common
                seals.

            

    

     

    
      	
              7.

            	
              The
                licence of serviced office space at The Innovation Centre,77 Heyford
                Park,
                Upper Heyford OX25 5HD

            

    

     

    8.  The
      Service Agreements duly executed by John Burton (in the case of the Service
      Agreement in which he is named as a party) and by James Ruane (in the case
      of
      the Service Agreement in which he is named as a party).

     

    
      	
              9.

            	
              A
                copy of a new bank mandate of the Company drafted in accordance with
                Clause 7.2.2(g) revoking previous mandates and copies of statements
                of
                each bank account of the Company made up to a date not earlier than
                two
                business days before Completion.

            

    

     

    
      	
              10.

            	
              Certified
                copies of the board minutes of the Company in respect of the board
                meetings held pursuant to clause ‎7.2.2.

            

    

     

    
      	
              11.

            	
              Evidence
                of the due fulfilment of the conditions specified at clause ‎4.1.

            

    

     

     

    
      
        
        

      

      
        -40-

        
          

        

      

      
        
        

      

    

    SCHEDULE 7

     

    THE
      WARRANTIES

     

    
      	
              1

            	
              AUTHORITY,
                CAPACITY AND TITLE

            

    

     

    1.1. Authority
      and Capacity of the Warrantors

     

    1.1.1. Each
      of
      the Warrantors has full power and authority to enter into and perform this
      Agreement and the Tax Deed and this Agreement and the Tax Deed when executed
      will constitute valid and binding obligations on each Warrantor, in accordance
      with their respective terms.

     

    1.2. Ownership
      of the Shares

     

    1.2.1. The
      Warrantors are entitled to negotiate and sell and transfer to the Purchaser
      the
      full legal and beneficial ownership of their Shares without the further consent
      of any third party.

     

    1.2.2. No
      person
      has the right (whether exercisable now or in the future and whether contingent
      or not) to call for the allotment, issue, sale or transfer of any share or
      loan
      capital of the Company under any option or other agreement (including conversion
      rights and rights of pre-emption) and there are no claims, charges, liens,
      equities or encumbrances on the shares of the Company.

     

    
      	
              2.

            	
              SUPPLY
                OF INFORMATION

            

    

     

    2.1. Accuracy
      and adequacy of information disclosed to the Purchaser

     

    All
      information contained in this Agreement and the Disclosure Letter was when
      given
      true, complete and accurate in all material respects and none of the Warrantors
      is aware of any fact or matter or circumstances not disclosed in writing to
      the
      Purchaser which renders any such information materially untrue, inaccurate
      or
      misleading.

     

    
      
        
        

      

      
        -41-

        
          

        

      

      
        
        

      

    

    
      	
              2.2.

            	
              Copies
                of Abbreviated Accounts, the Management Accounts and Memorandum and
                Articles of Association

            

    

     

    The
      copies of the Abbreviated Accounts, the Management Accounts and the memorandum
      and articles of association of the Company delivered to the Purchaser are
      complete and accurate copies of the originals thereof and, in the case of the
      memorandum and articles of association, contain full details of the rights
      and
      restrictions attaching to the share capital of the Company and have attached
      to
      them copies of all such resolutions and agreements as are required by law to
      be
      delivered to the Registrar of Companies for registration and all other
      resolutions passed by the Company or any class of members, other than
      resolutions relating to ordinary business at any annual general meeting of
      the
      Company.

     

    
      	
              3.

            	
              ACCOUNTS
                AND RECORDS

            

    

     

    3.1. Latest
      Accounts

     

    The
      Abbreviated Accounts have been prepared in accordance with the law and on a
      basis consistent with that adopted in preparing the Abbreviated Accounts for
      the
      previous two financial periods and in accordance with accounting principles,
      standards and practices generally accepted at the date of this Agreement in
      the
      United Kingdom so as to give a true and fair view of the state of affairs of
      the
      Company at the Balance Sheet Date and of the profits or losses for the period
      concerned and as at that date make:

     

    3.1.1. appropriate
      provision for all actual liabilities;

     

    3.1.2. proper
      provision (or note in accordance with good accountancy practice) for all
      contingent liabilities; and

     

    3.1.3. provision
      reasonably regarded as adequate for all bad and doubtful debts.

     

    3.2. Extraordinary
      Items

     

    The
      profits of the Company for the two years ended on the Balance Sheet Date as
      shown by the Abbreviated Accounts and the trend of profits thereby shown have
      not (except as disclosed in such accounts) been affected by inconsistencies
      in
      accounting practices, by the inclusion of non-recurring items of income or
      expenditure, by transactions entered into otherwise than on normal commercial
      terms or by any other factors or extraordinary items rendering such profits
      for
      all or any of such periods exceptionally high or low.

     

    
      
        
        

      

      
        -42-

        
          

        

      

      
        
        

      

    

    3.3. Book
      Debts

     

    None
      of
      the book debts which were included in the Abbreviated Accounts or which have
      subsequently arisen have been outstanding for more than three months from their
      due dates for payment or have been released on terms that the debtor has paid
      less than the full value of his debt and all such debts have realised or will
      realise in the normal course of collection their full value as indicated in
      the
      Abbreviated Accounts or in the books of the Company after taking into account
      the provision for bad and doubtful debts made in the Abbreviated Accounts.
      For
      the avoidance of doubt, a debt shall not be regarded as realising its full
      value
      to the extent that it is paid, received or otherwise recovered in circumstances
      in which such payment, receipt or recovery is or may be void, voidable or
      otherwise liable to be reclaimed or set aside.

     

    3.4. Accounting
      and Other Records

     

    The
      statutory books, books of account and other records of whatsoever kind of the
      Company are up-to-date and maintained in accordance with all applicable legal
      requirements on a proper and consistent basis and contain adequate records
      of
      all matters required to be dealt with in such books and all such books and
      records. All accounts, documents and returns required by law to be delivered
      or
      made to the Registrar of Companies have been delivered or made.

     

    3.5. The
      Management Accounts

     

    The
      Management Accounts:

     

    3.5.1. have
      been
      prepared in good faith with reasonable skill and care and on bases and
      principles which are consistent with those used in the preparation of the
      unaudited management accounts of the Company for the financial year ended on
      the
      Balance Sheet Date;

     

    3.6. Changes
      since the Balance Sheet Date

     

    Since
      the
      Balance Sheet Date:

     

    3.6.1. the
      Company’s business has been carried on in the ordinary course, without any
      interruption or alteration in its nature, scope or manner, and so as to maintain
      the same as a going concern;

     

    3.6.2. the
      Company has not entered into any transaction or assumed or incurred any
      liabilities (including contingent liabilities) or made any payment not provided
      for in the Abbreviated Accounts otherwise than in the ordinary course of
      carrying on its business;

     

    
      
        
        

      

      
        -43-

        
          

        

      

      
        
        

      

    

    3.6.3. the
      Company’s profits have not been affected by inconsistencies in accounting
      practices, by the inclusion of non-recurring items of income or expenditure,
      by
      transactions entered into otherwise than on normal commercial terms or by any
      other factors;

     

    3.6.4. the
      Company has not entered into any unusual, long term or onerous commitments
      or
      contracts;

     

    3.6.5. the
      Company’s business has not been materially and adversely affected by
      fluctuations in monthly sales figures in excess of £10,000 per month and the
      Warrantors have not received any notice of any facts which are likely to give
      rise to any such effects;

     

    3.6.6. no
      dividend or other distribution has been declared, made or paid to the Company’s
      members;

     

    3.6.7. the
      Company has not allotted or issued or agreed to issue any share or loan
      capital;

     

    3.6.8. the
      Company has not made or received any surrender relating to group relief or
      the
      benefit of advance corporation tax; and

     

    3.6.9. there
      has
      been no unusual increase or decrease in the level of the Company’s
      stock.

     

    FINANCE
      

     

    3.7. Borrowings

     

    3.7.1. The
      amounts borrowed by the Company (as determined in accordance with the provisions
      of the relevant instrument) do not exceed any limitation on its borrowing
      contained in its Articles of Association or in any debenture or other deed
      or
      document binding upon it.

     

    3.7.2. The
      Company has no outstanding loan capital, nor has it factored any of its debts,
      or engaged in financing of a type which would not require to be shown or
      reflected in the Abbreviated Accounts or borrowed any money which it has not
      repaid, save for borrowings disclosed in the Disclosure Letter.

     

    3.7.3. Full
      particulars of all bank accounts of the Company are contained in the Disclosure
      Letter including the credit or debit balances (reconciled to show all
      unpresented cheques) as of a date not more than two days prior to the date
      of
      this Agreement since which no payment has been made or instructed to be made
      out
      of, or cheques drawn on, such accounts. 

     

    
      
        
        

      

      
        -44-

        
          

        

      

      
        
        

      

    

    3.7.4. Full
      particulars of all debentures, acceptance credits, overdraft, loans or other
      financial facilities outstanding or available to the Company are contained
      in
      the Disclosure Letter and there are attached to it accurate copies of all
      documents relating to such facilities and neither the Vendors nor the Company
      has done anything whereby the continuance of any such facilities in full force
      and effect might be affected or prejudiced.

     

    3.8. Liabilities

     

    There
      are
      no liabilities (including contingent liabilities) which are outstanding on
      the
      part of the Company, other than those liabilities disclosed in the Abbreviated
      Accounts or which have arisen in the ordinary course of business since the
      date
      to which such accounts were prepared.

     

    
      	
              4.

            	
              BANK
                ACCOUNTS

            

    

     

    Full
      written details of all bank accounts of the Company are contained in the
      Disclosure Letter, including copy statements of each account being not more
      than
      two days old, to Completion and together with details of all current outgoing
      standing orders, direct debits or similar instructions.

     

    
      	
              5.

            	
              INSURANCE

            

    

     

    Full
      particulars of the insurances of the Company are contained in the Disclosure
      Letter and in respect of all such insurances:

     

    5.1. all
      premiums have been duly paid to date;

     

    5.2. full
      details of all claims outstanding or expected have been disclosed to the
      Purchaser.

     

    
      	
              6.

            	
              CONTRACTS

            

    

     

    Full
      written details of all material current contracts of the Company (that is ones
      representing £10,000 per annum) and the standard terms and conditions for
      customers have been supplied to the Purchaser. All such contracts are on arms
      length terms and in the ordinary course of business and do not contain any
      change of control or similar provisions.

     

    
      	
              7.

            	
              CUSTOMERS

            

    

     

    The
      entry
      into this Agreement will not result in the loss by the Company of any customer
      or supplier representing 5% or more of such company’s sales or
      purchases.

     

    
      
        
        

      

      
        -45-

        
          

        

      

      
        
        

      

    

    
      	
              8.

            	
              LEGAL
                MATTERS

            

    

     

    8.1. Litigation

     

    Full
      details of all current claims made by or against the Company have been fully
      disclosed to the Purchaser. There are no circumstances likely to lead to any
      such claim which have not been disclosed to the Purchaser in
      writing.

     

    8.2. Avoidable
      Transactions

     

    The
      Company has not been party to any transactions which in the event of the
      insolvency of the Company could lead to such transaction being voidable or
      otherwise set aside.

     

    8.3. Warranties
      and Indemnities

     

    Full
      details of the Company’s terms and conditions of sale or warranty have been
      supplied to the Purchaser and no product has been supplied or sold or service
      provided on any other terms.

     

    8.4. Directors
      and Officers

     

    Details
      of the Company’s directors and other officers appear in Schedule 2 and none of
      such persons has at any time been bankrupt in any jurisdiction or subject to
      a
      disqualification order.

     

    
      	
              9.

            	
              EMPLOYEES,
                ETC

            

    

     

    9.1. Full
      Particulars

     

    Particulars
      of the start dates, notice periods, remuneration, benefits and other
      entitlements of all current employment or consultancy arrangements of the
      Company with any person are contained in the Disclosure Letter.

     

    9.2. Pensions

     

    There
      are
      no pension or similar schemes operated or proposed by the Company for any
      current or former employee and details of any sickness, accident, life cover,
      permanent health or other scheme currently available or offered to employees
      have been disclosed in writing to the Purchaser. There are no proposals to
      create any new, or enhance the current, such benefits for employees

     

    
      
        
        

      

      
        -46-

        
          

        

      

      
        
        

      

    

    9.3. Recent
      Terminations

     

    No
      employment or consultancy arrangement of the Company has been terminated or
      become the subject of notice in the last six months.

     

    
      	
              10.

            	
              TAXATION
                MATTERS

            

    

     

    10.1. Tax
      returns and compliance

     

    10.1.1. The
      Company has submitted to all relevant Tax authorities by the requisite dates
      every computation return and all information for the purpose of Tax howsoever
      required and each such computation return and information was and remains true
      complete and accurate and leaves no material matter unresolved regarding the
      Tax
      affairs of the Company.

     

    10.1.2. The
      Company has discharged every liability of or in respect of Tax (“Tax liability”)
      whether or not a primary liability of such company, due from such company
      directly or indirectly in connection with any event (which includes, without
      limitation, any act, omission, transaction or occurrence) occurring on or before
      Completion and the Company has sufficient cash resources to discharge any such
      Tax liability which has not been discharged before Completion and there is
      no
      Tax liability or potential Tax liability in respect of which the date for
      payment has been postponed by agreement with the relevant Tax authority or
      by
      virtue of any right under any Tax statute or the practice of any Tax
      authority.

     

    10.1.3. The
      Company has properly made all deductions withholdings and retentions required
      to
      be made in respect of any actual or deemed payment made or benefit provided
      on
      or before Completion and has accounted for all such deductions withholdings
      and
      retentions to each relevant Tax authority and complied with all its obligations
      under Tax statutes in connection therewith and without prejudice to the
      generality of the foregoing the Company has properly operated PAYE under Part
      II
      of the Income Tax (Earnings & Pensions) Act 2003 or any regulations made
      thereunder.

     

    10.2. General
      provisions for tax

     

    Full
      provision or reserve was made in the Abbreviated Accounts in respect of every
      Tax liability (including without limitation deferred Tax) for which the Company
      at the Balance Sheet Date was or may have been liable or accountable whether
      or
      not such Tax liability was or is a primary liability of such company and whether
      or not such company had has or may have any right of reimbursement against
      any
      other person.

     

    10.3. Value
      Added Tax

     

    10.3.1. The
      Company is registered as a taxable person for the purposes of VAT.

     

    
      
        
        

      

      
        -47-

        
          

        

      

      
        
        

      

    

    10.3.2. The
      Company:

     

    (a) has
      complied in all material respects with all Tax statutes relevant to VAT and
      guidance published by all relevant Tax authorities in any form whatsoever and
      has made and maintained records and other documents appropriate or requisite
      for
      the purposes of such Tax statutes and guidance; and

     

    (b) is
      not in
      arrears with any payment and has not failed to submit any return (fully and
      properly completed) or information required in respect of VAT and is not liable
      to any abnormal or non-routine payment or default surcharge or any forfeiture
      or
      penalty or subject to the operation of any penal provision.

     

    10.4. Tax
      avoidance

     

    The
      Company has never knowingly:

     

    10.4.1. entered
      into, been party to or otherwise been concerned with any event as a result
      of
      which any provision of Part XVII Taxes Act applied applies or may
      apply;

     

    10.4.2. been
      party to or concerned with any scheme or arrangement of which the main purpose
      or one of the main purposes was the avoidance of or a reduction in liability
      to
      Tax.

     

    10.5. Overseas
      dealings

     

    10.5.1. The
      Company has always exclusively been resident in the UK for tax purposes and
      no
      circumstance or arrangement exists which would or may cause such company to
      cease to be resident in the UK for Tax purposes.

     

    10.5.2. The
      Company does not have any subsidiary in the UK and has not at any time had
      any
      branch agency or establishment outside the UK or any interest in any
      non-resident body corporate or entity.

     

    
      	
              11.

            	
              ASSETS

            

    

     

    11.1. Title
      to
      the Assets

     

    All
      of
      the assets of the Company including all debts due to such company which are
      either included in the Abbreviated Accounts or have been acquired or become
      due
      since the Balance Sheet Date are the absolute property of the Company free
      from
      any Encumbrances.

     

    
      
        
        

      

      
        -48-

        
          

        

      

      
        
        

      

    

    11.2. Plant,
      Machinery and Computer Systems

     

    The
      plant
      and machinery used by the Company and the computer systems operated by the
      Company have been regularly and properly maintained and are believed by the
      Warrantors to be adequate for the requirements of its business as presently
      carried on.

     

    11.3. Intellectual
      Property

     

    Details
      of any intellectual property or know-how rights which is owned by the Company
      have been fully disclosed in writing to the Purchaser and all such rights
      (including the rights to any domain names used and any software used in the
      computer systems) are either
      fully owned by the Company or are available for use pursuant to a written
      licence from a third party for an unlimited time without any requirement for
      the
      payment of fees.

     

    
      	
              12.

            	
              FREEHOLD
                AND LEASEHOLD PROPERTY
                The Company does not hold any leasehold property nor freehold property
                and
                the only property related rights and obligations are those set out
                in
                Schedule 5 in relation to a lease for serviced offices that can be
                terminated at no cost to the Company, subject to service of one month’s
                notice.

            

    

     

    
      	
              13.

            	
              Effect
                of Sale of the Shares

            

    

     

    13.1.1. Compliance
      with this Agreement does not and will not conflict with or result in the breach
      of or constitute a default under any agreement or instrument to which the
      Company is now a party or relieve any other party to a contract with the Company
      of its obligations under such contract or entitle such party to terminate such
      contract, whether summarily or by notice.

     

    
      	
              14.

            	
              Dependence
                on Individual Suppliers or
                Customers

            

    

     

    Neither
      more than 10% per cent of the aggregate amount of all the purchases, nor more
      than ten per cent of the aggregate amount of all the sales, of the Company
      are
      obtained or made from or to the same supplier or customer (including any person,
      firm or company in any way connected with such supplier or customer) nor is
      any
      material source of supply to the Company, or any material outlet for the sales
      of the Company, in jeopardy or likely to be in jeopardy.

     

    
      	
              15.

            	
              Commissions
                and Finder’s Fees

            

    

     

    No
      one is
      entitled to receive from the Company any finder’s fee, brokerage or other
      commission in connection with the purchase of shares in the
      Company.

     

    
      
        
        

      

      
        -49-

        
          

        

      

      
        
        

      

    

    
      	
              16.

            	
              Joint
                Venture, Partnerships etc

            

    

     

    The
      Company is not, and has not agreed to become, a member of any joint venture,
      consortium, partnership or other unincorporated association and the Company
      is
      not and has not agreed to become a party to any agreement or arrangement for
      participating with others in any business sharing commissions or other
      income.

     

    
      	
              17.

            	
              Agency
                Agreements and Agreements Restricting
                Business

            

    

     

    The
      Company is not a party to any agency, distributorship, marketing, purchasing,
      manufacturing or licensing agreement or arrangement or any agreement or
      arrangement which restricts its freedom to carry on its business in any part
      of
      the world in such manner as it thinks fit.

    
      
        
        

      

      
        -50-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE 8

     

    WARRANTY
      LIMITATIONS

     

    
      	
              1

            	
              LIMIT
                ON INDIVIDUAL RELEVANT CLAIMS

            

    

     

    The
      Warrantors shall have no liability whatsoever in respect of any individual
      claim
      arising under the Warranties (a “Relevant Claim”) unless:

     

    
      	
              1.1.

            	
              the
                amount that would otherwise be recoverable from the Warrantors in
                respect
                of that Relevant Claim (the “Claim Amount”) exceeds £10,000 in which case
                the Warrantors shall be liable for the whole of the Claim Amount
                and not
                just the excess

            

    

     

    
      	
              1.2.

            	
              notice
                of the Relevant Claim (stating in reasonable detail, so far as known
                to
                the Purchaser, the nature of the Relevant Claim and, so far as
                practicable, the Claim Amount) has been given to the
                Warrantors:

            

    

     

    1.2.1. on
      or
      before the first anniversary of Completion in the case of a Relevant Claim
      under
      the Warranties (other than the Tax Warranties);or

     

    1.2.2. on
      or
      before the seventh anniversary of Completion in respect of any Relevant Claim
      under the Tax Deed or the Tax Warranties.

     

    
      	
              2.

            	
              MAXIMUM
                LIMIT FOR ALL RELEVANT CLAIMS

            

    

     

    The
      aggregate liability each Warrantor in respect of all Relevant Claims shall
      not
      exceed the value of the Consideration Shares and Consideration Warrants received
      by him, such value to be measured at the date that a claim is admitted by the
      Warrantors or determined by a court.

     

    To
      the
      extent that a Relevant Claim is validly made, the Warrantors may satisfy the
      obligation to pay the Purchaser by (i) forfeiting Consideration Warrants to
      the
      value of the claim (calculated on the Black Scholes method on the date a
      Relevant Claim is agreed or determined) and/or (ii) forfeiting the Consideration
      Shares or transferring the same to the Purchaser or as it may direct for no
      consideration.

     

    
      	
              3.

            	
              OTHER
                LIMITATIONS ON RELEVANT CLAIMS

            

    

     

    The
      Purchaser shall not be entitled to make any Relevant Claim:

    

    
      	 	
              (a)

            	
              to
                the extent that provision or allowance for the matter or liability
                which
                would otherwise give rise to the claim in question has been taken
                into
                account in the Abbreviated Accounts and/or the Management Accounts;
                or

            

    

    

    
      
        
        

      

      
        -51-

        
          

        

      

      
        
        

      

    

    
      	 	
              (b)

            	
              in
                respect of any matter fairly disclosed in any document specifically
                referenced in the Disclosure Letter;
                or

            

    

    

    
      	 	
              (c)

            	
              to
                the extent that the claim arises as a result of any changes made
                after
                Completion in the accounting policies or practices upon which the
                Company
                values its assets; or

            

    

    

    
      	 	
              (d)

            	
              to
                the extent that the claim arises directly or indirectly as a result
                of any
                voluntary act or omission by the Purchaser or any member of the
                Purchaser's Group; or

            

    

    

    
      	 	
              (e)

            	
              in
                respect of anything arising from any matter or thing of which any
                member
                of the Purchaser has received written notification that it could
                lead to a
                claim being made at the date of this Agreement; or
                

            

    

    

    
      	 	
              (f)

            	
              to
                the extent that any loss or liability is caused or increased by a
                failure
                to mitigate any loss suffered by it;
                or

            

    

    

    
      	 	
              (g)

            	
              it
                arises directly or indirectly as a result
                of:

            

    

    

    
      	 	
              (i)

            	
              the
                payment after the Completion Date of any unusual or abnormal dividend
                by
                the Company;

            

    

    

    
      	 	
              (ii)

            	
              the
                change after the Completion Date of the date to which Company makes
                up its
                accounts; or 

            

    

     

    

    
      	 	
              (iii)

            	
              the
                cessation of any business carried on by the Company;
                or

            

    

    

    
      	 	
              (h)

            	
              it
                would not have arisen but for a change in legislation made after
                the date
                of this Agreement (whether relating to taxation, rates of taxation
                or
                otherwise) or any amendment to or the
                withdrawal of any practice previously published by the HM Revenue
&
                Customs or other taxation authority,
                in either case occurring after Completion,
                whether or not that change, amendment or
                withdrawal purports
                to be effective retrospectively in whole or in part;
                or

            

    

    

    
      	 	
              (j)

            	
              to
                the extent that the claim would have been recoverable under a policy
                of
                insurance had the Purchaser or the Company maintained in force insurance
                cover similar to that current for the business at the Completion
                Date;
                or

            

    

    

    
      	 	
              (k)

            	
              to
                the extent that the claim arises from the Purchaser's failure to
                perform
                its obligations under this
                Agreement,

            

    

    

    and
      to
      the extent that any claim is increased as a result of any of the matters set
      out
      in this sub-clause, the Warrantors shall not be liable in respect of the amount
      by which any claim is so increased.

    

    
      
        
        

      

      
        -52-

        
          

        

      

      
        
        

      

    

    SCHEDULE 9

     

    POSITIVE
      UNDERTAKINGS

     

    The
      Warrantors shall:-

     

    
      	
              1

            	
              Maintenance
                of trade:
                use all reasonable endeavours to maintain the trade and trade connections
                of the Company;

            

    

     

    
      	
              2.

            	
              Notice
                to Purchaser:
                promptly give to the Purchaser full details of any material changes
                in the
                Business, financial position and/or assets of the Company or event,
                matter, thing or circumstances which may or does result in any breach
                of
                any of the provisions of clause ‎5
                (Conduct of business pending
                Completion);

            

    

     

    
      	
              3.

            	
              Insurances:
                maintain in force policies of insurance with limits of indemnity
                at least
                equal to, and otherwise on terms no less favourable than, those policies
                of insurance currently maintained by the Company, full details of
                which
                are attached to the Disclosure
                Letter;

            

    

     

    
      	
              4.

            	
              Intellectual
                Property Rights:
                maintain all Intellectual Property Rights including by the payment
                of all
                renewal, application and registration fees and diligently prosecute
                all
                applications comprised in the Intellectual Property Rights and take
                all
                necessary steps and action to defend the Intellectual Property Rights
                and
                the interests of the Company therein and provide details thereof
                to the
                Purchaser and notify the Purchaser of any third party claim of which
                the
                Company becomes aware in relation to the Intellectual Property
                Rights;

            

    

     

    
      	
              5.

            	
              Estimated
                Working Capital Deficit as at the date of this
                Agreement:
                provide the Purchaser with the Warrantors' reasonable estimate of
                the
                Working Capital Deficit as at the date of this Agreement and sufficient
                information on a weekly basis so that the Purchaser may form a reasonable
                view as to the likely change in the Working Capital Deficit between
                the
                date of this Agreement and the Completion
                Date.

            

    

     

    

     

    
      
        
        

      

      
        -53-

        
          

        

      

      
        
        

      

    

    SCHEDULE 10

     

    NEGATIVE
      UNDERTAKINGS

     

    The
      Company shall not:

     

    
      	
              1

            	
              Capital
                expenditure:
                incur any expenditure exceeding £5,000 in aggregate on capital account or
                enter into any commitments so to
                do;

            

    

     

    
      	
              2.

            	
              Borrowings:
                take or agree to take any loans, borrowings or other form of funding
                or
                financial facility or assistance, or enter into or agree to enter
                into any
                foreign exchange contracts, interest rate swaps, collars, guarantees
                or
                agreements or other interest rate
                instruments;

            

    

     

    
      	
              3.

            	
              Grant
                of loans:
                grant or agree to grant any loans or other financial facilities or
                assistance to or any guarantees or indemnities for the benefit of
                any
                person;

            

    

     

    
      	
              4.

            	
              Repayment
                of facilities:
                prematurely repay or prepay any loans, borrowings or other financial
                facilities or assistance made available to
                it;

            

    

     

    
      	
              5.

            	
              Banking
                transactions:
                make any payments out of or drawings on its bank account(s) other
                than
                routine payments made in the ordinary and usual course of
                business;

            

    

     

    
      	
              6.

            	
              Negative
                pledge:
                create or allow to subsist any Encumbrance other than in favour of
                Barclays Bank plc over any of its assets or its undertaking (otherwise
                than in the ordinary and usual course of its business) or grant or
                issue
                or agree to grant or issue any mortgages, charges, debentures or
                other
                securities for money or redeem or agree to redeem any such securities
                or
                give or agree to give any guarantees or
                indemnities;

            

    

     

    
      	
              7.

            	
              Contracts:
                make or agree to any amendment, variation, deletion, addition, renewal
                or
                extension to or of, or terminate or give any notice or intimation
                of
                termination of, or breach or fail to comply with the material terms
                of any
                contract or arrangement having a value of greater than £5,000 enter into
                any unusual or abnormal contract or commitment or enter into any
                contract
                other than on arms length terms and for full and proper
                consideration;

            

    

     

    
      	
              8.

            	
              Leasing
                and hire purchase:
                enter into any leasing, hire purchase or other agreement or arrangement
                for payment on deferred terms;

            

    

     

    
      	
              9.

            	
              Joint
                ventures and partnerships:
                enter into or agree to enter into any joint venture, partnership
                or
                agreement or arrangement for the sharing of profits or
                assets;

            

    

     

    
      	
              10.

            	
              Property:
                grant or agree to grant any lease or third party right, or vary the
                same,
                in respect of the Property or dispose of or agree to dispose of the
                same;

            

    

     

    
      	
              11.

            	
              Acquisitions:
                acquire or enter into any agreement to acquire (whether by one transaction
                or by a series of transactions) the whole or a substantial or material
                part of the business, undertaking or assets of any other person or
                enter
                into any agreement or arrangement or permit any action whereby another
                company becomes its subsidiary or subsidiary
                undertaking;

            

    

     

    
      
        
        

      

      
        -54-

        
          

        

      

      
        
        

      

    

    
      	
              12.

            	
              Disposal
                of assets:
                dispose of or agree to dispose of or grant any option in respect
                of or
                remove from the Property any of its assets, business or undertaking
                other
                than stock in the ordinary course of normal day to day
                trading;

            

    

     

    
      	
              13.

            	
              Insurances:
                permit any of its insurances to lapse or do any thing which would
                make any
                policy of insurance void or
                voidable;

            

    

     

    
      	
              14.

            	
              Litigation
                and Arbitration:
                institute, compromise, discontinue settle or agree to settle any
                legal or
                arbitration proceedings relating to the Business, save for debt collection
                in the ordinary course of business;

            

    

     

    
      	
              15.

            	
              Intellectual
                Property Rights:
                grant or modify or agree to terminate any rights or enter into any
                agreement relating to the Intellectual Property Rights or otherwise
                permit
                any of its rights relating to the Intellectual Property Rights to
                lapse;

            

    

     

    
      	
              16.

            	
              Liabilities
                to/from Company:
                incur any liabilities other than trading liabilities incurred in
                the
                ordinary course of business;

            

    

     

    
      	
              17.

            	
              Payments
                to Directors and Associates:
                save in respect of payment of a sum in aggregate of no more than
£10,000
                (exclusive of VAT) that does not cause the Company to exceed the
                Working
                Capital Deficit limit specified at Clause 8.2.1, pay or agree to
                pay any
                remuneration, management charge, fee or other sum to any Key Employee
                or
                any other person (other than remuneration properly accrued due or
                reimbursement of business expenses properly incurred, in each case
                as
                disclosed in the Disclosure Letter);
                or

            

    

     

    
      	
              18.

            	
              Policies
                and practices:
                manage its business otherwise than in accordance with its business
                and
                trading policies and practice to date as disclosed to the Purchaser
                in the
                Disclosure Letter, except as may be necessary to comply with any
                legislative changes or in any other way, depart from the ordinary
                and
                normal course of its day to day business either as regards the nature
                or
                scope or the manner of conducting the
                same.

            

    

     

    

     

    
      
        
        

      

      
        -55-

        
          

        

      

      
        
        

      

    

    SCHEDULE 11

     

    BASIS
      FOR
      PREPARATION OF THE COMPLETION ACCOUNTS

     

    

     

    The
      Abbreviated Accounts shall be prepared in accordance with UK General Accepted
      Accounting Practices (GAAP) standards.

     

    
      
        
        

      

      
        -56-

        
          

        

      

      
        
        

      

    

    SCHEDULE 12

     

    TAX
      DEED

     

    
      	
              1.

            	
              DEFINITIONS
                AND INTERPRETATION

            

    

     

    
      	 	
              1.1

            	
              In
                this Schedule 12 the following words and expressions have the following
                meanings:-

            

    

     

    
      	
              “Accounting
                Period”

               

            	
              has
                the meaning ascribed to it in section 12 of ICTA;

               

            
	
              “Accounting
                Standards”

               

            	
              SSAPs,
                FRSs, UITF Abstracts, SORPs and all other generally accepted accounting
                principles applicable to a United Kingdom company;

               

            
	
              “Actual
                Taxation Liability”

               

            	
              in
                relation to any person, a liability of that person to make a payment
                of or
                of an amount in respect of, Taxation, whether or not such Taxation
                is also
                or alternatively chargeable against or attributable to any other
                person
                and whether or not such Taxation has been discharged on or before
                Completion; 

               

            
	
              “Claim”

               

            	
              any
                assessment, notice, demand or other document issued or action taken
                by, or
                on behalf of, any Taxation Authority, or any self-assessment return,
                from
                which it appears that the Company is subject to, is sought to be
                made
                subject to, or might become subject to, any Taxation Liability;
                

               

            
	
              “Customs”

               

            	
              H
                M
                Revenue & Customs;

               

            
	
              “Default
                Rate”

               

            	
              4%
                above the base rate of HSBC Bank plc from time to time;

               

            
	
              “Event”

               

            	
              any
                event, occurrence, transaction, act or omission (or any event, occurrence,
                transaction, act or omission which is deemed to take place for the
                purposes of any Taxation) including the sale and purchase of the
                Shares
                pursuant to this Agreement; 

               

            
	
              “Relief”

               

            	
              any
                loss, allowance, exemption, set-off, deduction, credit or other relief
                relating to any Taxation or to the computation of income, profits
                or
                chargeable gains for the purposes of any Taxation which has been
                or is
                (with the consent of the Warrantors) taken into account in the production
                of the Abbreviated Accounts, the Management Accounts and/or the Completion
                Accounts; 

               

            

    

     

    
      
        
        

      

      
        -57-

        
          

        

      

      
        
        

      

    

    
      	
              “Tax”
                and “Taxation” 

               

            	
              (a)
                 all
                forms of tax, levy, duty, charge, impost, withholding or other amount
                whenever created or imposed and whether of the United Kingdom or
                elsewhere, payable to or imposed by any Taxation Authority; and
                

               

              (b)
                 all
                charges, interest, penalties and fines incidental or relating to
                any
                Taxation falling within (a) above or to any failure to submit, or
                timely
                to submit, or to fail fully or accurately to complete any return,
                form,
                account or computation required by any Taxation Authority; 

               

            
	
              “Taxation
                Authority”

               

            	
              the
                Inland Revenue, Customs, the Inland Revenue National Insurance
                Contributions Office or any other revenue, customs, fiscal, governmental,
                statutory, state, provincial, local governmental or municipal authority,
                body or person, whether of the United Kingdom or elsewhere competent
                to
                impose, assess or collect any Taxation; 

               

            
	
              “Taxation
                Liability”

               

            	
              in
                relation to any person, any Actual Taxation Liability or Deemed Taxation
                Liability of that person or any other liability of, or amount incurred
                by,
                or charged against, that person, in each case falling within any
                of
                paragraphs ‎2.1.1
                to
                ‎2.1.6;
                and

               

            
	
              “unavailability”

               

            	
              in
                relation to a Relief, the reduction, modification, claw- back,
                counteraction, disallowance or cancellation of, or failure to obtain,
                that
                Relief, and “unavailable” shall be construed accordingly. 

               

            

    

    
      	 	
              1.2

            	
              In
                determining for the purposes of this part 1 of this Schedule 12 whether
                a
                charge on, or power to sell, mortgage or charge, any share or asset
                exists
                at any time, the fact that any Taxation has not become payable or
                may be
                paid by instalments shall be disregarded, and such Taxation shall
                be
                treated as becoming due, and the charge on, or power to sell, mortgage
                or
                charge as arising, on the date of the transfer of value or other
                Event as
                a result of, in respect of, or by reference to, which it becomes
                payable
                or arises.

            

    

     

    
      	 	
              1.3

            	
              For
                the purposes of paragraphs ‎1.5.2
                and ‎3.1.4
                the following Taxation Liabilities of any person shall be treated
                as
                arising otherwise than, or as a result of an act, omission or transaction
                otherwise than, in the ordinary course of trading of that person:-
                

            

    

     

    
      	
              1.3.1

            	
              any
                Taxation Liability of that person which is payable by or otherwise
                recoverable from that person by reason of the failure by any other
                person
                to pay or otherwise discharge any liability to Taxation;
                

            

    

     

    
      	
              1.3.2

            	
              any
                Taxation Liability of that person either arising under Part XVII
                of ICTA
                or arising in respect of any transaction or arrangement which includes
                any
                step having no commercial or business purpose apart from the reduction,
                avoidance or deferral of a liability to Taxation;
                

            

    

     

    
      
        
        

      

      
        -58-

        
          

        

      

      
        
        

      

    

    
      	
              1.3.3

            	
              any
                Taxation Liability of that person arising in respect of any distribution
                (as defined in Part VI of ICTA) or deemed distribution made by that
                person, the creation, cancellation or re-organisation of any share
                or loan
                capital by that person, the making of any loan or advance by that
                person,
                the creation, cancellation, satisfaction, waiver or repayment of
                any
                intra-group indebtedness by that person or, in the case of a company,
                that
                company being, becoming or ceasing to be, or being treated as ceasing
                to
                be, related to any other person for the purposes of any Taxation;
                

            

    

     

    
      	
              1.3.4

            	
              any
                Taxation Liability of that person arising as a result of the application
                of any of the provisions of Schedule 28AA to ICTA;
                

            

    

     

    
      	
              1.3.5

            	
              any
                Taxation Liability of that person which arises by reason of, or is
                attributable to, the failure by that person to deduct or withhold
                any
                Taxation from any payment or, if due, to account to any Taxation
                Authority
                for any such Taxation; 

            

    

     

    
      	
              1.3.6

            	
              any
                Taxation Liability of that person arising from any cessation, closure,
                rationalisation or reorganisation of any material part of any trade
                or
                business carried on by that person;

            

    

     

    
      	
              1.3.7

            	
              any
                Taxation Liability of that person which arises by reason of, or is
                attributable to, the disposal by that person of any asset in circumstances
                where the amount of the gain by reference to which that person is
                subject
                to Taxation exceeds the actual consideration received by that person
                for
                that disposal less the value attributed to that asset in the Accounts,
                in
                which case, the amount of that excess shall be treated as arising
                otherwise than, or as a result of an act, omission or transaction
                otherwise than, in the ordinary course of trading of that person;
                and

            

    

     

    
      	
              1.3.8

            	
              any
                Taxation Liability of that person arising by reason of any change
                in the
                date to which that person makes up its accounts.
                

            

    

     

    
      	 	
              1.4

            	
              Each
                of the following shall be treated, for the purposes of this part
                1 of this
                Schedule 12, as arising as a result of an Event occurring on Completion
                otherwise than in the ordinary course of
                trading:-

            

    

     

    
      	
              1.4.1

            	
              any
                liability of the Company to income tax and/or national insurance
                contributions under the PAYE system either as a result of the disposal
                (or
                any thing leading to the disposal) of the Shares or the exercise
                of any
                options which are exercisable on or before Completion or become
                exercisable as a result of, or by reason of, the sale of the
                Company.

            

    

     

    
      	 	
              1.5

            	
              References
                in this part 1 of this Schedule 12 to any Event shall include any
                combination of two or more Events, and references to any Event occurring
                or being deemed for the purposes of any Taxation to occur on or before
                Completion shall include any combination of two or more Events, provided
                that, in that case, one or more of those Events shall occur or be
                so
                deemed to occur on or before Completion and those Events which shall
                occur
                after Completion shall have occurred:-

            

    

     

    
      	
              1.5.1

            	
              pursuant
                to a legally binding commitment entered into by, or on behalf of,
                the
                Company on or before Completion;
                and

            

    

     

    
      	
              1.5.2

            	
              otherwise
                than in the ordinary course of trading of the Company as carried
                on
                immediately before Completion. 

            

    

     

    
      
        
        

      

      
        -59-

        
          

        

      

      
        
        

      

    

    
      	 	
              1.6

            	
              References
                in this part 1 of this Schedule 12 to any person being related to
                any
                other person for the purposes of any Taxation shall include:-
                

            

    

     

    
      	
              1.6.1

            	
              that
                person having control (within the meaning of any of sections 416
                (or any
                one or more subsections of that section), 767B(4) and 840 of ICTA)
                of that
                other person; 

            

    

     

    
      	
              1.6.2

            	
              that
                person being connected (within the meaning of section 839 of ICTA)
                with
                that other person; 

            

    

     

    
      	
              1.6.3

            	
              any
                other person having control (as defined in paragraph ‎1.6.1)
                of, or being connected (as defined in paragraph ‎1.6.2)
                with, that person and that other person;

            

    

     

    
      	
              1.6.4

            	
              that
                person being the holding company of that other person or being a
                subsidiary of either that other person or any other person of which
                that
                other person is also a subsidiary;

            

    

     

    
      	
              1.6.5

            	
              that
                person being a direct or indirect participant in the management,
                control
                or capital of that other person (for the purposes of schedule 28AA
                to
                ICTA), and so that where one person is related to another person
                each
                shall be regarded as being related to the other.
                

            

    

     

    
      	
              2.

            	
              Covenant
                

            

    

     

    
      	 	
              2.1

            	
              Subject
                to the limitations in Schedule 8, the Warrantors covenant with the
                Purchaser to forfeit Consideration Warrants and/or Consideration
                Shares to
                the Purchaser to a value equal to each of the following:- 

            

    

     

    
      	
              2.1.1

            	
              any
                Actual Taxation Liability (not being inheritance tax nor any charges,
                interest, penalties and fines incidental or relating to inheritance
                tax)
                of the Company arising as a result of, in respect of, or by reference
                to:- 

            

    

     

    
      	 	
              (a)

            	
              any
                Event occurring, or deemed for the purposes of any Taxation to occur,
                on
                or before Completion; or 

            

    

     

    
      	 	
              (b)

            	
              any
                income, profits or chargeable gains (not falling within paragraph
                2.1.1(a)) earned, accrued or received, or deemed for the purposes
                of any
                Taxation to be earned, accrued or received, on or before, or in respect
                of
                any period ending on or before, Completion (excluding any latent
                gain
                based on a re-valuation of the Company's goodwill);
                

            

    

     

    
      	
              2.1.2

            	
              any
                liability of the Company to pay or repay any other person (other
                than any
                Taxation Authority any amount under any agreement or other arrangement
                entered
                into on or before Completion relating to
                corporation tax and/or value added
                tax;

            

    

     

    
      	
              2.1.3

            	
              any
                Actual Taxation Liability of the Company (not otherwise falling within
                paragraph ‎2.1.1)
                which is the liability to Taxation of any other person and for which
                the
                Company is liable by reason of having been, at any time on or before
                Completion, related to:- 

            

    

     

    
      
        
        

      

      
        -60-

        
          

        

      

      
        
        

      

    

    
      	 	
              (a)

            	
              that
                other person for the purposes of any Taxation; 

            

    

     

    
      	 	
              (b)

            	
              any
                person which is or has been at any time related to that other person
                for
                the purposes of any Taxation;;
                

            

    

     

    
      	
              2.1.4

            	
              any
                Taxation Liability of the Company in respect of PAYE and NICs in
                respect
                of the period prior to Completion. 

            

    

     

    
      	
              2.1.5

            	
              all
                charges, interest, penalties and fines (not otherwise falling within
                paragraphs ‎2.1.1
                to
                2.1.5) incurred by or charged against the Company (whether in respect
                of
                periods before or after Completion) in respect of:- 

            

    

     

    
      	 	
              (a)

            	
              any
                Taxation Liability (whether or not such Taxation Liability has been
                paid
                or otherwise extinguished) either arising on or before Completion
                or
                arising after Completion in the circumstances falling within paragraph
                ‎2.1.3;
                and

            

    

     

    
      	 	
              (b)

            	
              any
                default in relation to Taxation incurred or committed on or before
                Completion;

            

    

     

    
      	
              2.1.6

            	
              any
                reasonable costs and expenses incurred by the Purchaser or the Company
                (or
                any of them) (other than costs of any employee or officer of the
                Purchaser
                and/or the Company spending time on such matters) in connection with
                any
                such liability or amount as is referred to in any of paragraphs
                ‎2.1.1
                to
                2.1.6, or with any claim in respect thereof. 

            

    

     

    
      	 	
              2.2

            	
              Any
                payments made pursuant to the Tax Covenant shall, so far as possible,
                be
                treated, as an adjustment to the consideration paid or payable for
                the
                Shares. 

            

    

     

    
      	
              3.

            	
              Limitations

            

    

     

    
      	 	
              3.1

            	
              The
                Warrantors shall not be liable under the Tax Covenant in respect
                of any
                Taxation Liability of any person to the extent that:-
                

            

    

     

    
      	
              3.1.1

            	
              provision
                (not being a provision for deferred taxation) has been made for such
                Taxation Liability in the Abbreviated Accounts (including the notes
                to
                such Accounts) or in the Management Accounts or in the Completion
                Accounts; or 

            

    

     

    
      	
              3.1.2

            	
              such
                Taxation Liability was paid or is shown in the Management Accounts
                as
                having been discharged or accrued; or 

            

    

     

    
      	
              3.1.3

            	
              such
                Taxation Liability arises or is increased as a result of:-

            

    

     

    
      
        
        

      

      
        -61-

        
          

        

      

      
        
        

      

    

    
      	 	
              (a)

            	
              the
                coming into force after Completion of, or any introduction or change
                after
                Completion in, any law, rule, regulation or published practice of
                any
                Taxation Authority of general application; or

            

    

     

    
      	 	
              (b)

            	
              any
                change after Completion in the rates of Taxation; or
                

            

    

     

    
      	
              3.1.4

            	
              such
                Taxation Liability would not have arisen but for any act, omission
                or
                transaction done, made or carried out by the Purchaser and the Company
                (or
                any of them) or any of their respective directors, employees or
                agents:- 

            

    

     

    
      	 	
              (a)

            	
              on
                or before Completion, at the written request of the Purchaser; or
                

            

    

     

    
      	 	
              (b)

            	
              after
                Completion, where such act, omission or transaction was done, made
                or
                carried out:-

            

    

     

    
      	 	
              (i)

            	
              otherwise
                than as required by law or pursuant to a legally binding commitment
                of
                that person created on or before Completion; or

            

    

     

    
      	 	
              (ii)

            	
              otherwise
                than in the ordinary course of trading of that person as carried
                on
                immediately before Completion; or 

            

    

     

    
      	
              3.1.5

            	
              the
                Purchaser or that person has received from any other person (other
                than
                the Company) a payment in respect of such Taxation Liability;
                or 

            

    

     

    
      	
              3.1.6

            	
              such
                Taxation Liability would not have arisen but for a change in the
                accounting reference date or a change in the accounting policies
                or
                practices applying to, or in any way affecting, that person, introduced
                or
                having effect after Completion, other than a change which is required
                in
                order to comply with the Accounting Standards
                applying to that person;

            

    

     

    
      	 	
              3.2

            	
              The
                provisions of Schedule 8 shall apply to the Tax
                Covenant.

            

    

     

    
      	
              4.

            	
              Withholdings
                and Gross-Up

            

    

     

    
      	 	
              4.1

            	
              If,
                at any time, any applicable law, regulation or regulatory requirement
                requires the Vendors to make any deduction or withholding from any
                sums
                payable to the Purchaser under the Tax Covenant, the amount so due
                (and
                therefore the number of Consideration Warrants and/or Consideration
                Shares
                to be forfeited) shall be increased to the extent necessary to ensure
                that, after the making of such deduction or withholding, the Purchaser
                receives, on the due date for such payment, a net sum equal to the
                sum
                which it would have received had no such deduction or withholding
                been
                required to be made. 

            

    

     

    
      
        
        

      

      
        -62-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      13

     

    TERMS
      AND
      CONDITIONS RELATING TO THE CONSIDERATION SHARES AND CONSIDERATION
      WARRANTS

     

    1.01 Investment
      Representation

     

    
      	 	
              (a)

            	
              The
                Vendors understand that the Consideration Shares and the Consideration
                Warrants to be issued pursuant to the terms of this Agreement have
                not
                been registered under the Securities Act of 1933 as amended (the
                "Securities Act") and the Purchaser Common Stock and Purchaser Stock
                Warrants are "restricted securities" as the term is defined in Rule
                144
                promulgated by the SEC under the Securities Act ("Rule 144") and
                the
                Vendors cannot resale any of the Consideration Shares and the Purchaser
                Common Stock underlying the Consideration Warrants before the first
                anniversary of the Completion Date, unless such shares are being
                registered under the Securities Act. In the absence of such registration,
                as of the first anniversary of the Completion Date and until the
                second
                anniversary of the Completion Date, the resale by the Vendors of
                the
                Consideration Shares and the Purchaser Common Stock underlying the
                Consideration Warrants will be permitted pursuant and subject to
                the
                conditions of Rule 144. 

            

    

     

    
      	 	
              (b)

            	
              Each
                Vendor has been advised that the Consideration Shares and the
                Consideration Warrants (including the underlying Purchaser Common
                Stock)
                issued hereunder have not been and are not being registered under
                the
                Securities Act or under the Blue Sky laws of any jurisdiction, and
                that
                Purchaser in issuing such shares is relying upon, among other things,
                the
                representations and warranties of the Vendors contained in this Agreement
                including that such issuance is a "private offering" and does not
                require
                compliance with the registration provisions of the Securities
                Act.

            

    

     

    
      	 	
              (c)

            	
              The
                Purchaser undertakes to comply with its periodic reporting requirements
                under the Securities Exchange Act of
                1934.

            

    

    

    
      	 	
              (d)

            	
              If
                after the first anniversary of the issuance of the Consideration
                Shares
                and the Consideration Warrants, the consent of the Purchaser is required
                to remove the legend referred to in 1.02 of this Schedule in accordance
                with Rule 144, the Purchaser hereby agrees that in such circumstances
                consistent with the application of Rule 144, it shall not unreasonably
                withhold its consent.

            

    

     

    1.02 Restrictions
      on Transfer 

     

    The
      Consideration Shares and the Consideration Warrants to be issued as
      consideration shall be characterized as "restricted securities" for purposes
      of
      Rule 144, and each certificate representing any of such securities shall bear
      a
      legend identical or similar in effect to the following legend (together with
      any
      other legend or legends required by applicable state securities laws or
      otherwise):

     

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS,
      AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
      HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT AND SUCH LAWS OR IN
      COMPLIANCE WITH AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

    
      
        
        

      

      
        -63-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.03

            	
              Without
                prejudice to the conditions of Rule 144, save for transactions pursuant
                to
                paragraph 1.05 below, each Vendor agrees that the total number of
                Purchaser Common Stock sold by him/her in any one month period shall
                not
                exceed 2.5% of the average monthly trading volume of the Purchaser
                Common
                Stock for the month prior to the date in which sale takes place.
                Each
                Vendor agrees that this resale restriction shall apply to any Purchaser
                Common Stock owned by him or her, whether owned as part of the
                Consideration Shares or thereafter acquired for as long as either
                owns any
                Consideration Shares.

            

    

     

    
      	 	
              1.04

            	
              Irrevocable
                Proxy from Vendors.
                Each of the Vendors hereby agree to enter into an Irrevocable Proxy
                in the
                agreed form set out in Schedule 16. 

            

    

     

    
      	 	
              1.05

            	
              Subject
                to clause 3.2 of the Agreement and notwithstanding paragraph 1.03
                above, a
                Vendor shall be entitled to sell its Consideration Shares and/or
                Purchaser
                Common Stock underlying the Consideration Warrants on a matched bargain
                basis outside of AMEX.

            

    

     

    
      
        
        

      

      
        -64-

        
          

        

      

      
        
        

      

    

    Schedule
      14

     

    POWER
      OF
      ATTORNEY

     

    The
      Vendors hereby irrevocably appoint the Purchaser as their attorney to sign,
      execute and deliver on its behalf all deeds and documents and to do all acts
      and
      things necessary to give effect to the terms of this Agreement and for vesting
      in the Purchaser the Shares and the full benefit of the
      Agreement.

     

    Ratification
      of the attorney’s acts

     

    The
      Vendors hereby ratify and confirm and undertake to ratify everything the
      Purchaser shall lawfully do or cause to be done in pursuance of the power of
      attorney granted above.

     

    Executed
      as a Deed by:

     

    

     

    The
      Vendors          }

                                       
      }

     

    In
      the
      presence of }

     

    

     

    DATE: 
      

     

    
      
        
        

      

      
        -65-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      15

     

    PURCHASER
      WARRANTIES TO THE WARRANTORS

     

    1. The
      Purchaser

     

    
      	
              (a)

            	
              The
                Purchaser was incorporated in the state of Nevada on 1 September
                2000 and
                was
                admitted to trading on AMEX on 8 June
                2005.

            

    

     

    
      	
              (b)

            	
              At
                the date of this Agreement, the Purchaser has an authorised share
                capital
                of 25,000,000 shares of common stock, US$ .001 par value of which
                9,195,568 have
                been issued and fully paid.

            

    

    

    2. SEC
      Material

     

    
      	
              (a)

            	
              The
                Annual Report on Form 10-KSB dated 31 March 2006 filed with the SEC
                (the
                "SEC Material") is true and accurate in all material respects and
                not
                misleading in any material respect, and all statements, forecasts,
                estimates so supplied and all expressions of opinion, intention and
                expectation made in the SEC Material have been made on reasonable
                grounds
                after due and careful enquiry and are truly and honestly held and
                fairly
                based. 

            

    

     

    
      	
              (b)

            	
              The
                SEC Material complies with the requirements of, and contains all
                information required by, the SEC, the AMEX or any other regulator
                to which
                the Purchaser is subject (collectively the
                "Regulations").

            

    

     

    3. Litigation

     

    Save
      as
      disclosed in the SEC Material, the Purchaser is not engaged in any pending
      legal
      or arbitration proceedings which are material or which may have or have had
      during the twelve months preceding the date hereof a material effect on the
      financial or trading position of the Purchaser and no such legal or arbitration
      proceedings are threatened against the Purchaser.

     

    4 The
      Consideration
      Shares and the Consideration Warrants

     

    
      	
              (a)

            	
              Subject
                to the approval of AMEX, the Purchaser has power to allot and issue
                the
                Consideration Shares and Consideration Warrants to the Vendors.

            

    

     

    
      	
              (b)

            	
              The
                creation, allotment and issue of the Consideration Shares and
                Consideration Warrants in accordance with this Agreement will comply
                with
                the rules and regulations of the AMEX and all regulations made thereunder
                and all other relevant laws and regulations of the United States
                of
                America and elsewhere and all agreements or arrangements to which
                the
                Purchaser is a party or by which the Purchaser or its property is
                bound.

            

    

     

    
      
        
        

      

      
        -66-

        
          

        

      

      
        
        

      

    

    
      	
              (c)

            	
              The
                creation, allotment and issue of the Consideration Shares and
                Consideration Warrants and the entering into and completion of this
                Agreement will not infringe or exceed any limits, powers or restrictions
                or the terms of any contract, obligation or commitment whatsoever
                of the
                Purchaser and/or its board of
                directors.

            

    

     

    
      	
              (e)

            	
              The
                Consideration Shares and Consideration Warrants will be allotted
                and
                issued free from all Encumbrances and will rank pari passu in all
                respects
                with the existing common stock in the share capital of the
                Purchaser.

            

    

     

    5 Limitation
      on Purchaser Warranties

     

    The
      Purchaser Warranties provided in this Agreement are subject to the limitations
      set out in Schedule 17.

    
      
        
        

      

      
        -67-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
16

    

    IRREVOCABLE
      PROXY

    

    KNOW
      ALL
      PERSONS BY THESE PRESENTS that the undersigned does hereby make, constitute
      and
      appoint Abraham
      Keinan,
      its
      true and lawful attorney, for it and in its name, place and stead, to act as
      its
      proxy in respect of all of the shares of common stock of Xfone, Inc. a Nevada
      based company (hereinafter referred to as the “Company”), which it now or
      hereafter may own or hold, including, without limitation, the right, on its
      behalf, to demand the call by any proper officer of the Company pursuant to
      the
      provisions of its by-laws, articles of association, memorandum of association
      or
      other organizational documents and as permitted by law of a meeting of its
      shareholders and at any meeting of shareholders, annual, general or special,
      to
      vote for the transaction of any and all business that may come before such
      meeting, or at any adjournment thereof, including, without limitation, the
      right
      to vote for the sale of all or any part of the assets of the Company and/or
      the
      liquidation and dissolution of the Company; giving and granting to his said
      attorney full power and authority to do and perform each and every act and
      thing
      whether necessary or desirable to be done in and about the premises, as fully
      as
      it might or could do if personally present with full power of substitution,
      appointment and revocation, hereby ratifying and confirming all that its said
      attorneys shall do or cause to be done by virtue hereof.

    

    This
      Proxy is given to Abraham
      Keinan
      in
      consideration of the performance of the Agreement dated ________, 2006, by
      and
      between the undersigned and the Company, and this Proxy shall not be revocable
      or revoked by the undersigned and shall be binding upon his successors and
      assigns, provided,
      however, that
      this
      Proxy shall be null and void and shall have no force and effect, in respect
      of
      such shares (and no other securities) so sold by the undersigned in
      an
      arm’s length sale (in good faith) of the shares to a third party that is not an
      Affiliate (as defined below) or related party of the Company.

    

    An
      “Affiliate” means (A)
      an
      entity in which the undersigned owns or has the right to own directly or
      indirectly equity and voting share or any other kind of interest or acts as
      an
      officer thereof, or has the right and power to direct the policy and management
      of such company; or (B) a trust or living will or trust in which the undersigned
      is a beneficiary thereof; or (C) the spouse, children, parents, and any other
      family members up to a fourth degree of the undersigned; or (D) any trustee
      of
      the undersigned; or (E) any other person or entity which will be subject to
      the
      undersigned instructions in connection with the ordinary shares so purchased
      by
      such person or entity. 

     

    THE
      UNDERSIGNED SHALL EXECUTE AND DELIVER SUCH ADDITIONAL DOCUMENTS AND INSTRUMENTS
      AS THE COMPANY OR ABRAHAN KEINAN MAY REQUIRE TO CONFIRM THE GRANT HEREBY,
      INCLUDING, WITHOUT LIMITATION, SUCH INSTRUMENTS AS MAY BE NECESSARY OR
      APPROPRIATE UNDER ANY APPLICABLE LAW. 

    

    IN
      WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy this ___
      day of May, 2006. 

    

    Name:
      ______________________

     

     

    By:____________________________

     

    Name:
      

     

    Title:
      

    
      
        
        

      

      
        -68-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      17

     

    LIMITATIONS
      ON PURCHASER WARRANTIES

     

    
      	
              19

            	
              LIMIT
                ON INDIVIDUAL RELEVANT
                CLAIMS

            

    

     

    The
      Purchaser shall have no liability whatsoever in respect of any individual claim
      arising under the Purchaser Warranties (a “Relevant Claim”) unless:

     

    
      	
              19.1.

            	
              the
                amount that would otherwise be recoverable from the Purchaser in
                respect
                of that Relevant Claim (the “Claim Amount”) exceeds £10,000 in which case
                the Purchaser shall be liable for the whole of the Claim Amount and
                not
                just the excess.

            

    

     

    
      	
              19.2.

            	
              notice
                of the Relevant Claim (stating in reasonable detail, so far as known
                to
                the Warrantor, the nature of the Relevant Claim and, so far as
                practicable, the Claim Amount) has been given to the Purchaser on
                or
                before the first anniversary of
                Completion.

            

    

     

    
      	
              20.

            	
              MAXIMUM
                LIMIT FOR ALL RELEVANT
                CLAIMS

            

    

     

    The
      aggregate liability of the Purchaser to a Warrantor in respect of all Relevant
      Claims shall not exceed the value of the Consideration Shares and Consideration
      Warrants received by such Warrantor on Completion, such value to be measured
      at
      the date that a claim is admitted by the Purchaser or determined by a
      court.

     

    To
      the
      extent that a Relevant Claim is validly made, the Purchaser may satisfy the
      obligation to pay the Warrantor by (i) granting further Consideration Warrants
      to the value of the claim (calculated on the Black Scholes option - pricing
      model on the date a Relevant Claim is agreed or determined) and/or (ii) issuing
      Purchaser Common Stock to the Warrantor, as the Purchaser may elect, for no
      consideration.

     

    
      	
              21.

            	
              OTHER
                LIMITATIONS ON RELEVANT
                CLAIMS

            

    

     

    The
      Warrantors shall not be entitled to make any Relevant Claim:

    

    
      	 	
              (c)

            	
              to
                the extent that provision or allowance for the matter or liability
                which
                would otherwise give rise to the claim in question has been filed
                with the
                SEC or AMEX; or

            

    

    

    
      
        
        

      

      
        -69-

        
          

        

      

      
        
        

      

    

    
      	 	
              (d)

            	
              to
                the extent that the claim arises directly or indirectly as a result
                of any
                voluntary act or omission by the Warrantors;
                or

            

    

    

    
      	 	
              (e)

            	
              in
                respect of anything arising from any matter or thing of which any
                Warrantor has received written notification that it could lead to
                a claim
                being made at the date of this Agreement; or

            

    

    

    
      	 	
              (f)

            	
              to
                the extent that any loss or liability is caused or increased by a
                failure
                to mitigate any loss suffered by it;
                or

            

    

     

    
      	 	
              (h)

            	
              it
                would not have arisen but for a change in legislation made after
                the date
                of this Agreement (whether relating to taxation, rates of taxation
                or
                otherwise) or any amendment to or the
                withdrawal of any practice previously published by the HM Revenue
&
                Customs or other taxation authority,
                in either case occurring after Completion,
                whether or not that change, amendment or
                withdrawal purports
                to be effective retrospectively in whole or in part;
                or

            

    

    

    
      	 	
              (j)

            	
              to
                the extent that the claim arises from the Warrantors’ failure to perform
                its obligations under this Agreement, and
                to the extent that any claim is increased as a result of any of the
                matters set out in this sub-clause, the Purchaser shall not be liable
                in
                respect of the amount by which any claim is so increased.
                

              

            

    

    

     

    
      
        
        

      

      
        -70-

        
          

        

      

      
        
        

      

    

    Schedule
18

     

    AGREED
      FORM RESIGNATION LETTERS FOR DIRECTORS OF THE COMPANY 

     

    A.
      JOHN BURTON and Jennifer Burton FORM OF RESIGNATION LETTER

     

    Dear
      Sirs

     

    I,
      John
      Burton:

     

    1. resign
      my
      employment with Equitalk.co.uk Limited with immediate effect;

     

    2. acknowledge
      that:

     

    2.1 I
      have no
      claim whatsoever against Equitalk.co.uk Limited, Xfone, Inc. or Swiftnet Limited
      for breach of contract, compensation for loss of office or employment, loss
      of
      pension rights which I acknowledge shall terminate with immediate effect,
      redundancy, unfair dismissal or retirement or on any other account;
      and

     

    2.2 there
      is
      no agreement or arrangement outstanding under which Equitalk.co.uk has or could
      have an obligation to me whether now or in the future in each case up to and
      including the date of this letter; and

     

    3. waive,
      release and forever discharge Equitalk.co.uk Limited, Xfone,  Inc.
      and
      Swiftnet Limited against all actions, proceedings, claims, demands and costs
      which I may now have or would have had but for the execution of this
      deed.

    

    Signed
      as
      a deed by  )

    John
      Burton   ) ___________________________________

    in
      the
      presence of:  )

     

    ________________________ Signature
      of the Witness

     

    ________________________ Name
      of
      the Witness

     

    ________________________ Address
      of the Witness

     

    ________________________

     

    ________________________

     

    ________________________ Occupation
      of the Witness

    
      
        
        

      

      
        -71-

        
          

        

      

      
        
        

      

    

    Dear
      Sirs

     

    I,
      Jennifer Burton:

     

    1. resign
      my
      employment with Equitalk.co.uk Limited with immediate effect;

     

    2. acknowledge
      that:

     

    2.1 I
      have no
      claim whatsoever against the Equitalk.co.uk Limited, Xfone, Inc. or Swiftnet
      Limited for breach of contract, compensation for loss of office or employment,
      loss of pension rights which I acknowledge shall terminate with immediate
      effect, redundancy, unfair dismissal or retirement or on any other account;
      and

     

    2.2 there
      is
      no agreement or arrangement outstanding under which Equitalk.co.uk has or could
      have an obligation to me whether now or in the future in each case up to and
      including the date of this letter; and

     

    3. waive,
      release and forever discharge Equitalk.co.uk Limited, Xfone, Inc. and Swiftnet
      Limited against all actions, proceedings, claims, demands and costs which I
      may
      now have or would have had but for the execution of this deed.

    

    Signed
      as
      a deed by  )

    Jennifer
      Burton   ) ___________________________________

    in
      the
      presence of:  )

     

    ________________________ Signature
      of the Witness

     

    ________________________ Name
      of
      the Witness

     

    ________________________ Address
      of the Witness

     

    ________________________

     

    ________________________

     

    ________________________ Occupation
      of the Witness

    
 

    
      
        
        

      

      
        -72-

        
          

        

      

      
        
        

      

    

    B.
      AGREED FORM OF RESIGNATION LETTER FOR JAMES RUANE,MICHAEL CRONK, DAVID ABEL
      SMITH AND JAMES GORDON (subject to the latter’s referring to resignation as
      Company secretary) 

     

    Dear
      Sirs

     

    I,
      James
      Ruane:

     

    1. resign
      my
      office as director of Equitalk.co.uk Limited with immediate effect and resign
      my
      employment with Equitalk.co.uk Limited with immediate effect;

     

    2. acknowledge
      that:

     

    2.1 I
      have no
      claim whatsoever against Equitalk.co.uk Limited, Xfone, Inc. or Swiftnet Limited
      for breach of contract, compensation for loss of office or employment, loss
      of
      pension rights which I acknowledge shall terminate with immediate effect,
      redundancy, unfair dismissal or retirement or on any other account;
      and

     

    2.2 there
      is
      no agreement or arrangement outstanding under which Equitalk.co.uk has or could
      have an obligation to me whether now or in the future in each case up to and
      including the date of this letter; and

     

    3. waive,
      release and forever discharge the Equitalk.co.uk Limited, Xfone, Inc. and
      Swiftnet Limited against all actions, proceedings, claims, demands and costs
      which I may now have or would have had but for the execution of this
      deed.

    

    Signed
      as
      a deed by  )

    James
      Ruane   ) ___________________________________

    in
      the
      presence of:  )

     

    ________________________ Signature
      of the Witness

     

    ________________________ Name
      of
      the Witness

     

    ________________________ Address
      of the Witness

     

    ________________________

     

    ________________________

     

    ________________________ Occupation
      of the Witness

    
      
        
        

      

      
        -73-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS
      whereof
      this Agreement has been duly entered into as a Deed on the date first above
      written

     

    
      	
               

              SIGNED
                and delivered on the date hereof as a Deed by Xfone, Inc. acting
                by:

            	
               

               

            	 
	 	 	
               

              By:
                /S/
                Guy Nissenson 

               

              Name:
                Guy Nissenson 

               

              Title:
                President and CEO

            
	 	 	 

    

    

     

    INDIVIDUAL
      VENDORS

     

    (please
      place a tick against your own name if your signature is hard to
      decipher)

     

    
      	
              Signed
                and delivered as a Deed by:

              David
                Abel Smith

              James
                Aird

              Lady
                Aird

              Sir
                John Aird

              Rebecca
                Aird

              Norma
                Barrett

              Jennifer
                Susan Burton

              John
                Mark Burton

              John
                Lucius Arthur Cary

              Angela
                Cronk

              Michael
                Cronk

              JJT
                Cronk

              Arthur
                Dennis

              Henry
                Dyke

              Charles
                & Jennifer Guerin

              Pamela
                Hillyard

              John
                Jackson

              Simon
                Meiklejohn

              Farshid
                & Maria Nowshadi

              Roland
                Phelps

              John
                Price

              Jonathan
                Price

              Rachel
                Price

              James
                Joseph Ruane

              Carol
                Gill

              Richard
                Vessey

               

              In
                the presence of

            	 	 

    

    

    
      
        
        

      

      
        -74-

        
          

        

      

      
        
        

      

    

     

    CORPORATE
      VENDORS

     

    (please
      place a tick against your corporate name)

     

    
      	
              Signed
                and delivered as a Deed by:

              Bell
                Group Pension Scheme

              Cantay
                Investments Limited

              Fast
                Guides Limited

              Larpent
                Newton Holdings Ltd

              Mint
                House Nominees Ltd

              Omnicom
                Limited

              Oxford
                Technology VCT plc

              Oxford
                Technology 2 VCT plc 

              Oxford
                Technology 3 VCT plc

              QTP
                General Partner Limited

               

              Acting
                By

               

              Director

               

              Director/Secretary

            	
               

               

               

               

            	 

    

    

     

    
      
        
        

      

      
        -75-

        
          

        

      

      
        
        

      

    

    ***********************************************************************************

    Agreed
      Form Documents

    

    Service
      Agreements with John Burton and James
      Ruane

    

    ***********************************************************************************

    

     

    

    

    DATED              
      2006

    

    

    

    

    

    

    SWIFTNET
      LIMITED

    

    And

    

    

    XFONE,
      INC.

    

    And 

    

    

    JOHN
      MARK BURTON

     

    

    
      	 	
               

              SERVICE
                AGREEMENT

               

            	 

    

    

    

    Preiskel
&
CO
      LLP.

    8-10
      New
      Fetter Lane

    London
      EC4A 1RS

    Tel:
      +44
      (0) 20 7583 2120

    Fax:
      +44
      (0) 20 7583 2103

    e-mail:
      info@preiskel.com

    Ref:
      RP/AB/20043012

    
      
        
        

      

      
        -76-

        
          

        

      

      
        
        

      

    

    TABLE
      OF
      CONTENTS

    

    
      	  	
              ‎1     
                DEFINITIONS AND INTERPRETATION

            

    

     

    
      	 	
              ‎2     
                TERM OF EMPLOYMENT

            

    

     

    
      	  	
              ‎3     
                DUTIES

            

    

     

    
      	  	
              ‎4     
                HOURS OF WORK

            

    

     

    
      	  	
              ‎5     
                GRATUITIES AND CODES OF CONDUCT

            

    

     

    
      	  	
              ‎6     
                REMUNERATION

            

    

     

    
      	  	
              7     
                PENSIONS

            

    

     

    
      	  	
              ‎8     
                MEDICAL
                INSURANCE4

            

    

     

    
      	  	
              ‎9     
                COMPANY
                CAR/CAR ALLOWANCE

            

    

     

    
      	  	
              ‎10   
                EXPENSES

            

    

     

    
      	  	
              ‎11   
                HOLIDAYS

            

    

     

    
      	  	
              ‎12   
                ILLNESS

            

    

     

    
      	  	
              ‎13   
                RESTRICTIONS DURING EMPLOYMENT

            

    

     

    
      	  	
              ‎14   
                INTELLECTUAL
                PROPERTY

            

    

     

    
      	  	
              ‎15   
                CONFIDENTIALITY

            

    

     

    
      	 	
              ‎16   
                DATA PROTECTION

            

    

     

    
      	  	
              ‎17   
                MONITORING

            

    

     

    
      	  	
              ‎18   
                TERMINATION OF EMPLOYMENT

            

    

     

    
      	 	
              ‎19   
                SUSPENSION AND GARDEN LEAVE

            

    

     

    
      	 	
              ‎20   
                RESIGNATION
                AND RETURN OF COMPANY PROPERTY

            

    

     

    
      	 	
              ‎21   
                RECONSTRUCTION
                OR AMALGAMATION

            

    

     

    
      	  	
              ‎22   
                RESTRICTIONS

            

    

     

    
      	  	
              ‎23   
                SEVERABILITY

            

    

     

    
      	  	
              ‎24   
                THIRD PARTIES

            

    

     

    
      	 	
              ‎25   
                NOTICES

            

    

     

    
      	 	
              ‎26   
                STATUTORY
                INFORMATION

            

    

     

    
      	 	
              ‎27   
                MISCELLANEOUS

            

    

     

    
      	 	
              Schedule
                1 - Statement Of Particulars Pursuant To The Employment Rights Act
                1996

            

    

    
       

      	 	
              Schedule 
                2 - Bonus 

            

    

    
      
        
        

      

      
        -77-

        
          

        

      

      
        
        

      

    

    THIS
      AGREEMENT is
      made
      on 2006

     

    BETWEEN:

     

    
      	
              (1)

            	
              SWIFTNET
                LIMITED (the
                “Company”) whose registered office is at Britannia House 960 High Road
                London N12 9RY, United Kingdom; 

            

    

     

    
      	
              (2)

            	
              XFONE,
                INC.
                of
                2506 Lakeland Drive, Flowood, Mississippi 39232, USA (the "Parent");
                and

            

    

     

    
      	
              (3)

            	
              JOHN
                MARK BURTON of
                14
                Distons Lane,
                Chipping
                Norton,
                Oxon OX7
                5NY, United
                Kingdom (the
                “Executive”).

            

    

     

    RECITAL

     

    The
      Company shall employ the Executive and the Executive shall serve the Company
      as
      Managing Director of the Company on the following terms and subject to the
      following conditions (the “Agreement”):

     

    IT
      IS AGREED AS FOLLOWS:

     

    
      	
              1

            	
              DEFINITIONS
                AND INTERPRETATION

            

    

     

    
      	
              1.1

            	
              In
                this Agreement unless the context otherwise requires the following
                expressions shall have the following
                meanings:

            

    

     

    “Associated
      Company”

     

    
      	 	
              (a)

            	
              a
                company which is not a Subsidiary of the Parent but whose issued
                equity
                share capital (as defined in s744 of the Companies Act 1985) is owned
                as
                to at least twenty per cent (20%) by the Parent or one of its
                Subsidiaries; or

            

    

     

    
      	 	
              (b)

            	
              a
                Subsidiary

            

    

     

    “Board”

     

    the
      board
      of directors for the time being of the Company

    
      
        
        

      

      
        -78-

        
          

        

      

      
        
        

      

    

     

    "Equitalk"
      

     

    Equitalk.co.uk
      Limited, a Subsidiary of the Parent

     

    “Group”

     

    the
      Parent and its Associated
      Companies
      for the
      time being and “Group
      Company”
      means
      any one of them

     

    “Group
      Policy”

     

    such
      reasonable policies and/or procedures of the Parent or Company as may be in
      force from time to time in the future and which do not amount to a material
      change in the Executive's terms of employment, including without limitation
      the
      Parent's Code of Conduct and Ethics, Whistleblower Policy and Insider Trading
      Policy 

     

    “Parent”

     

    Xfone,
      Inc. and any other company which is for the time being the ultimate holding
      company of the Company within the meaning of s736 of the Companies Act
      1985

     

    “Regulations”

     

    the
      Working Time Regulations 1998

     

    “Subsidiary”

     

    a
      Subsidiary within the meaning of s736 of the Companies Act 1985

     

    “Works”

     

    any
      discoveries, designs, inventions, research and development, formulas and
      technology, topography, techniques or improvements in each case provided that
      it
      relates to the business of the Company and/or any Group Company.

    
      
        
        

      

      
        -79-

        
          

        

      

      
        
        

      

    

     

    
      	
              1.2

            	
              Any
                reference to a statutory provision shall be deemed to include a reference
                to any statutory modification or re-enactment of
                it.

            

    

     

    
      	
              1.3

            	
              Words
                importing the singular only shall include the plural and vice
                versa.

            

    

     

    
      	
              1.4

            	
              The
                headings in this Agreement are for convenience only and shall not
                affect
                its construction or interpretation.

            

    

     

    
      	
              1.5

            	
              References
                in this Agreement to a person include a body corporate and an incorporated
                association of persons and references to a company include any body
                corporate.

            

    

     

    
      	
              1.6

            	
              Where
                appropriate, references to the Executive include his personal
                representatives.

            

    

     

    
      	
              2

            	
              TERM
                OF EMPLOYMENT

            

    

     

    The
      employment of the Executive shall be deemed to have commenced on ______ 2006,
      but the Executive's employment with Equitalk shall count towards his continuous
      employment and (subject to termination as provided below) shall be for an
      indefinite period terminable by either party giving to the other three (3)
      months notice in writing
      if
      served during the first six (6) months since the date of this Agreement and
      thereafter the Company shall provide the Executive with no less than six (6)
      months notice and the Executive shall provide the Company with no less than
      three (3) months written notice.

     

    
      	
              3

            	
              DUTIES

            

    

     

    
      	
              3.1

            	
              The
                Executive shall during his employment under this
                Agreement:

            

    

     

    
      	 	
              3.1.1

            	
              perform
                the duties and exercise the powers which the Board may from time
                to time
                properly assign to him consistent with the Executive being Managing
                Director in connection with the conduct and management of the business
                of
                the Company or the business of any Group Company (including serving
                on the
                board of such Group Company or on any other executive body or any
                committee of such a company); and

            

    

     

    
      	 	
              3.1.2

            	
              promote,
                develop and protect the business of the Company and
                any Group Company
                and at all times and in all respects conform to and comply with the
                proper
                and reasonable directions and regulations of the Board
                and/or the Parent.

            

    

     

    
      	
              3.2

            	
              The
                Executive shall give to the Board
                such information regarding the affairs of the Company as it shall
                require,
                and in any event, report regularly and keep the Board
                informed.

            

    

     

    
      
        
        

      

      
        -80-

        
          

        

      

      
        
        

      

    

    
      	
              3.3

            	
              The
                Executive shall carry out his duties in accordance with Group Policy
                and
                exercise his powers jointly with any other executives appointed by
                the
                Board
                and/or the Parent
                to
                act jointly with him and the Board
                and/or the Parent
                may at any time require the Executive to cease performing or exercising
                the said or any duties or powers.

            

    

     

    
      	
              3.4

            	
              Without
                prejudice to clause 3.3, the Executive shall sign up to all Group
                Policies
                that other directors or officers of the Group have agreed to sign
                up to or
                where this is a requirement of the rules, regulations or recommended
                good
                practice of the SEC, the American Stock Exchange, or any other recognised
                stock exchange. 

            

    

     

    
      	
              3.5

            	
              The
                Executive shall be based at the Company's office at the address shown
                above or in any place at which the Company maintains an office within
                a
                similar distance of his home which the Board may require. The Executive
                may be required to travel on business trips abroad when required
                by the
                Company for the proper performance of his duties.
                

            

    

     

    
      	
              4

            	
              HOURS
                OF WORK

            

    

     

    
      	
              4.1

            	
              The
                Executive shall have no normal hours of work and is required to devote
                such reasonable amount of time to his work as is reasonably necessary
                for
                the proper performance of his duties.

            

    

     

    Without
      prejudice to the above, it's hereby noted that Company's standard office hours
      are 09:00 to 18:00 Monday to Friday with an hour's break for lunch each day.
      

     

    
      	
              4.2

            	
              In
                addition to time in which the Executive is working at the Company’s
                disposal and carrying out his activities or duties the following
                will be
                included as working time:

            

    

     

    
      	 	
              4.2.1

            	
              travelling
                time whilst in work e.g. to visit the Parent, clients and suppliers
                or to
                attend meetings. For the avoidance of doubt this does not include
                travel
                to and from work; and

            

    

     

    
      	 	
              4.2.2

            	
              entertaining
                of clients and suppliers after office hours provided it has been
                authorised by a member of the Board other than the
                Executive.

            

    

     

    
      	
              5

            	
              GRATUITIES
                AND CODES OF CONDUCT

            

    

     

    
      	
              5.1

            	
              The
                Executive shall not directly or indirectly accept any commission,
                rebate,
                discount or gratuity in cash or in kind from any person who has or
                is
                having a business relationship with the Company or any Group
                Company.

            

    

     

    
      	
              5.2

            	
              The
                Executive shall comply (and procure that his spouse and minor children
                shall comply) with all applicable rules and regulations of the American
                Stock Exchange, the US Securities and Exchange Commission (“SEC”) and the
                rules and regulations of any other relevant stock exchange and any
                other
                relevant regulatory authority.

            

    

     

    
      
        
        

      

      
        -81-

        
          

        

      

      
        
        

      

    

    
      	
              6

            	
              REMUNERATION

            

    

     

    
      	
              6.1

            	
              The
                Company shall pay to the Executive a salary at the rate of seventy
                thousand pounds (£70,000) per year inclusive of any directors’ fees
                payable to him. 

            

    

     

    
      	
              6.2

            	
              The
                Executive’s salary shall accrue from day to day and be payable by equal
                monthly instalments in arrears on the last day of each
                month.

            

    

     

    
      	
              6.3

            	
              The
                Executive shall be entitled to receive a bonus whilst employed by
                the
                Company as indicated in Schedule 2.

            

    

     

    
      	
              7

            	
              PENSIONS
                

            

    

     

    The
      Company shall pay a further sum equal to 7.5% of the Executive’s salary by way
      of a contribution to his personal pension scheme as notified to the Company
      in
      writing. For the avoidance of doubt, such payment shall be additional to the
      Executive's salary

     

    
      	
              8

            	
              MEDICAL
                INSURANCE

            

    

     

    The
      Company shall pay for medical insurance to cover the Executive and his immediate
      family and the Company shall take out life insurance of up to four (4) times
      his
      basic salary.

     

    The
      Company shall ensure that the Executive is covered by travel insurance on terms
      reasonably acceptable to the Executive, and by the Parent's directors &
officers' insurance.

     

    
      	
              9

            	
              COMPANY
                CAR/CAR
                ALLOWANCE

            

    

     

    9.1 The
      Company shall provide the Executive with a leased car of his choice to a value
      of £600 plus VAT per month. The Executive may add to this value, through salary
      sacrifice if he so wishes.

     

    9.2 In
      addition, the Company will pay for insurance for the car for the Executive
      and
      which will include his wife as a named driver. The Company will pay for personal
      and business fuel for travel within the UK (which will be charged to the
      Executive's Company credit card as per Clause 10.2). 

     

    9.3 The
      Company will provide a free car parking space at the Company's offices or shall
      pay for parking if no space is available.

     

    
      
        
        

      

      
        -82-

        
          

        

      

      
        
        

      

    

    
      	
              10

            	
              EXPENSES

            

    

     

    10.1 The
      Company shall reimburse or procure that the Executive is reimbursed all
      reasonable travelling, hotel and other expenses wholly and necessarily incurred
      by him in the performance of his duties under this Agreement.

     

    10.2 The
      Company will provide the Executive with a company credit card and the Executive
      shall only use such credit card for the types of expense indicated above and
      in
      accordance with any Group Policies in place from time to time.

     

    
      	
              11

            	
              HOLIDAYS

            

    

     

    
      	
              11.1

            	
              The
                Executive is entitled to twenty five (25) days’ holiday with pay every
                calendar year in addition to bank and other public holidays. The
                Company’s
                holiday year runs from 1st
                January to 31st
                December. The Executive shall be entitled to carry forward not more
                than
                five (5) days holiday each year without needing to seek the permission
                of
                the Board.

            

    

     

    
      	
              11.2

            	
              The
                Executive’s holiday entitlement is inclusive of his statutory entitlement
                which is twenty (20) days per annum. When calculating the Executive’s
                statutory entitlement bank and public holidays are taken into account.
                The
                statutory entitlement cannot be carried over from one holiday year
                to the
                next and no pay in lieu can be made to the
                Executive.

            

    

     

    
      	
              11.3

            	
              During
                the first year of the Executive’s employment, the Executive may use six
                (6) days of accrued but unused holiday earned whilst working with
                Equitalk. The Executive’s statutory holiday entitlement will accrue pro
                rata monthly in advance. Where this calculation results in fractions
                of
                days the amount of leave which can be taken is rounded up to the
                next half
                day. Any rounded up element is deducted from the leave
                remaining.

            

    

     

    
      	
              11.4

            	
              Save
                as provided for in clause 11.3 above, the Executive’s entitlement to
                holiday accrues pro rata throughout each holiday year (disregarding
                fractions of days). The Executive will be deemed to have taken statutory
                holiday first.

            

    

     

    
      	
              11.5

            	
              Any
                entitlement to holiday over and above any statutory entitlement remaining
                at the end of any holiday year shall lapse and no payment in lieu
                will be
                made for accrued untaken holiday.

            

    

     

    
      	
              11.6

            	 

    

    
      	 	
              11.6.1

            	
              If
                the Executive has taken holiday in excess of his entitlement on
                termination of employment he will be required to give account for
                it and
                the Company will make a deduction from his final salary payment
                accordingly. If the Executive has accrued holiday owing to him, the
                Company may at its discretion, require him to take the outstanding
                holiday
                during any notice period or make a payment in lieu of
                it.

            

    

     

    
      
        
        

      

      
        -83-

        
          

        

      

      
        
        

      

    

    
      	 	
              11.6.2

            	
              For
                the purposes of clause 11.6.1
                above, a day’s pay will be calculated on the following basis: 1/260 of the
                Executive’s annual salary.

            

    

     

    
      	
              11.7

            	
              If
                the Executive’s employment is lawfully terminated without notice, he will
                not be entitled to holiday pay for holiday which would have accrued
                during
                the notice period, had he continued to be employed throughout that
                time.

            

    

     

    
      	
              11.8

            	
              There
                are no formal notice requirements for taking holiday but the Executive
                is
                expected to take his holiday at a time or times convenient to the
                Company.

            

    

     

    
      	
              12

            	
              ILLNESS

            

    

     

    
      	
              12.1

            	
              The
                Executive shall continue to be paid during sickness absence (such
                payment
                to be inclusive of any statutory sick pay or social security benefits
                to
                which he may be entitled) for a total of up to twelve (12) weeks
                in any
                twelve (12) consecutive calendar
                months.

            

    

     

    
      	
              12.2

            	
              Thereafter
                the Executive shall continue to be paid salary at the discretion
                of the
                Company provided that if such absence shall aggregate twenty six
                (26)
                weeks in any twelve (12) consecutive calendar months the Company
                may
                terminate the employment of the Executive with immediate effect at
                any
                time and in that event the Company shall pay to the Executive a sum
                equal
                to one (1) month salary in full and final settlement of all and any
                claims
                the Executive may have against the Company arising from the termination
                of
                this Agreement.

            

    

     

    
      	
              12.3

            	
              The
                Executive will cease to accrue holiday, subject to any entitlement
                under
                the Working Time Regulations if he has been absent due to sickness,
                for
                five (5) consecutive weeks or more.

            

    

     

    
      	
              12.4

            	
              If
                the Executive is incapable of performing his duties by reason of
                injury
                sustained wholly or partly as a result of negligence, nuisance or
                breach
                of any statutory duty on the part of a third party and the Executive
                recovers an amount by way of compensation for loss of earnings from
                that
                third party, he shall immediately pay that amount to the
                Company.

            

    

     

    
      	
              12.5

            	
              The
                Company shall be entitled to require the Executive to undergo examinations
                by a medical adviser appointed or approved by the Company and the
                Executive authorises the medical adviser and/or will provide such
                consents
                as are necessary to disclose to the Company and the Parent the results
                of
                such examinations.

            

    

     

    
      	
              13

            	
              RESTRICTIONS
                DURING EMPLOYMENT

            

    

     

    
      	
              13.1

            	
              During
                the continuance of his employment under this Agreement the Executive
                shall
                unless prevented by incapacity devote the whole of his working time
                to the
                business of the Company and shall not without the prior written consent
                of
                the Board:

            

    

     

    
      
        
        

      

      
        -84-

        
          

        

      

      
        
        

      

    

    
      	 	
              13.1.1

            	
              engage
                in any other business; or

            

    

     

    
      	 	
              13.1.2

            	
              be
                concerned or interested in any other business which is or shall be
                of a
                similar nature to or competitive with that carried on by the Company
                or
                any Group Company or which is a supplier or customer of the Company
                or
                Group Company in relation to their goods or services;
                or

            

    

     

    
      	 	
              13.1.3

            	
              solicit
                the custom of, canvass, approach or deal with, in competition with
                the
                Company or any Group Company, any person (including any company,
                firm,
                organisation or other entity) to whom the Company or any Group Company
                supplies services or goods or with whom the Company or any Group
                Company
                is in negotiations or discussions regarding the possible supply of
                services or goods; or

            

    

     

    
      	 	
              13.1.4

            	
              discourage
                any such person referred to in clause 13.1.3
                above from conducting or continuing to conduct business with the
                Company
                or any Group Company on the best terms available to the Company or
                any
                Group Company; or

            

    

     

    
      	 	
              13.1.5

            	
              induce
                or attempt to induce any director or senior employee of the Company
                or any
                Group Company and with whom the Executive has material dealings in
                the
                course of his employment, to leave the employment of the Company
                or any
                Group Company; or

            

    

     

    
      	 	
              13.1.6

            	
              take
                any steps which impair or might reasonably be thought by the Company,
                to
                impair the Executive’s ability to act at all times in the best interests
                of the Company. 

            

    

     

    
      	
              13.2

            	
              If
                the Executive does, with the Board’s written consent, carry out other
                work, he must notify the Board and the Parent of the number of additional
                hours he is working. 

            

    

     

    
      	
              14

            	
              INTELLECTUAL
                PROPERTY

            

    

     

    
      	
              14.1

            	
              The
                Executive acknowledges and agrees that all Works created by the Executive
                during the course of his employment are, and shall remain, the exclusive
                property of the Company and/or any Group Company.  The Executive
                specifically acknowledges and agrees that he has no interest whatsoever
                in
                such Works, including without limitation any interest in know-how,
                copyrights, patents, trade marks, topographies or trade names,
                notwithstanding the fact that the Executive may have created or
                contributed to the creation of
                same.

            

    

     

    
      	
              14.2

            	
              The
                Executive hereby wholly, unequivocally, and irrevocably assigns to
                the
                Company and/or any Group Company any and all rights, title, and interest
                which the Executive has in and to any Works made, created, or improved
                during the course of employment of the Executive by the Company and/or
                any
                Group Company or using the equipment or other resources of the Company
                and/or any Group Company (collectively referred to in this clause
                14 as
                “Intellectual Property”). 

            

    

     

    
      
        
        

      

      
        -85-

        
          

        

      

      
        
        

      

    

    
      	
              14.3

            	
              The
                Executive will, if so requested by the Company (and at the Company’s
                expense), execute all such documents as may be necessary to confirm
                the
                title of the Company to any rights, interests or other property which
                belong to the Company by virtue of this clause
                14.

            

    

     

    
      	
              14.4

            	
              The
                Executive hereby waives any moral rights which the Executive may
                have in
                any Intellectual Property in the
                Works.

            

    

     

    
      	
              14.5

            	
              The
                Executive further agrees to disclose to the Company, and preserve
                as
                strictly confidential, full particulars of any Intellectual Property,
                and
                undertakes and agrees to maintain at all times written records pertaining
                thereto, which records shall be, and shall remain, the sole and exclusive
                property of the Company.

            

    

     

    
      	
              14.6

            	
              All
                notes, data, tapes, reference items, sketches, drawings, memoranda,
                records, diskettes and other materials in any way relating to any
                of the
                Confidential Information, Intellectual Property, or to the Company’s
                and/or any Group Company’s business produced by the Executive or coming
                into the Executive’s possession by or through the Executive’s employment,
                shall belong exclusively to the Company and/or any Group Company
                and the
                Executive agrees to turn over to the Company and/or any Group Company
                all
                copies of any such materials in the Executive’s possession or under the
                Executive’s control, forthwith, at the request of the Company and/or any
                Group Company or, in the absence of a request, on the termination
                of the
                Executive’s employment with the
                Company.

            

    

     

    
      	
              14.7

            	
              The
                Executive further understands that the provisions of this clause
                14 and
                the Executive’s agreement to same, are of the essence of this Agreement
                and constitute a material inducement to the Company to enter into
                this
                Agreement and that the Company would not have employed the Executive
                without such inducement. 

            

    

     

    
      	
              14.8

            	
              The
                Executive agrees that the provisions of this clause 14 shall be construed
                independently of any other provision of this Agreement, and the existence
                of any claim or cause of action the Executive may have against the
                Company
                and/or any Group Company, whether predicated on this Agreement or
                otherwise, shall not constitute a defence to the enforcement by the
                Company and/or any Group Company of the provisions of this clause
                14.

            

    

     

    
      	
              14.9

            	
              The
                Executive acknowledges and agrees that, in the event of his violation
                of
                any of the provisions this clause 14, the Company and/or any Group
                Company
                shall be entitled to obtain, from an authority of competent jurisdiction,
                interim and permanent injunctive relief and an account of all profits
                and
                benefits that arise out of such violation, which rights and remedies
                shall
                be cumulative in addition to any other rights or remedies to which
                the
                Company and/or any Group Company may be entitled in law.
                

            

    

     

    
      	
              14.10

            	
              Notwithstanding
                any other provision of this Agreement this clause 14 shall survive
                the
                termination of this Agreement, howsoever
                caused.

            

    

     

    
      	
              15

            	
              CONFIDENTIALITY

            

    

     

    
      	
              15.1

            	
              During
                the course of the Executive’s employment with the Company the Executive
                has access to information, documentation and associated material
                which is
                confidential to the Company and/or any Group Company and customers
                of the
                Company and/or Group Company including, but not limited to information
                which is provided to the Executive in confidence by the Company and/or
                Group Company including any information relating to the internal
                affairs
                of the Company and/or any Group Company. In particular, such information
                includes, but is not limited to, the
                following:

            

    

     

    
      
        
        

      

      
        -86-

        
          

        

      

      
        
        

      

    

    15.1.1 
      trade
      secrets;

     

    15.1.2 
      existing
      and target customer lists and buying habits;

     

    15.1.3 
      purchase
      requirements;

     

    15.1.4 
      pricing
      and sales information, policies and concepts;

     

    15.1.5 
      financial
      information;

     

    15.1.6 
      business
      plans, forecasts and market strategies; and 

     

    15.1.7 
      inventions
      and intellectual property.

     

    Such
      information is referred to as “Confidential Information”.

     

    
      	
              15.2

            	
              The
                Executive agrees that he will not (except in the proper course of
                his
                duties or where otherwise authorised by the Company in writing) either
                during or at any time after the termination of his employment reveal
                or
                disclose to any person any Confidential
                Information.

            

    

     

    
      	
              15.3

            	
              The
                Executive agrees that he shall use all reasonable endeavours to prevent
                the unauthorised publication or disclosure of any Confidential
                Information.

            

    

     

    
      	
              15.4

            	
              The
                Executive agrees that he shall not use for his own purposes or for
                any
                purposes other than those of the Company and its Associated Companies,
                any
                Confidential Information. 

            

    

     

    
      	
              15.5

            	
              The
                restrictions contained in this clause 15 shall not apply to any
                Confidential Information which is available to the public generally
                (other
                than through a prior disclosure which was itself unauthorised) or
                to any
                disclosure required by law to be made, or to any “qualifying disclosure”
                within the meaning of the Public Interest Disclosure Act 1998.
                

            

    

     

    
      	
              15.6

            	
              The
                Executive further understands that the provisions of this clause
                15 and
                the Executive’s agreement to same, are of the essence of this Agreement
                and constitute a material inducement to the Company to enter into
                this
                Agreement and that the Company would not have employed the Executive
                without such inducement. 

            

    

     

    
      
        
        

      

      
        -87-

        
          

        

      

      
        
        

      

    

    
      	
              15.7

            	
              The
                Executive agrees that the provisions of this clause 15 shall be construed
                independently of any other provision of this Agreement, and the existence
                of any claim or cause of action the Executive may have against the
                Company
                and/or any Group Company, whether predicated on this Agreement or
                otherwise, shall not constitute a defence to the enforcement by the
                Company and/or any Group Company of the provisions of this clause
                15.

            

    

     

    
      	
              15.8

            	
              The
                Executive acknowledges and agrees that, in the event of his violation
                of
                any of the provisions this clause 15, the Company and/or any Group
                Company
                shall be entitled to obtain, from an authority of competent jurisdiction,
                interim and permanent injunctive relief and an account of all profits
                and
                benefits that arise out of such violation, which rights and remedies
                shall
                be cumulative in addition to any other rights or remedies to which the
                Company and/or any Group Company may be entitled in law.
                

            

    

     

    
      	
              15.9

            	
              Notwithstanding
                any other provision of this Agreement this clause 15 shall survive
                the
                termination of this Agreement, howsoever
                caused.

            

    

     

    
      	
              16

            	
              DATA
                PROTECTION 

            

    

     

    
      	
              16.1

            	
              The
                Executive acknowledges that the Company will hold personal data relating
                to the Executive such data will include the Executive’s employment
                application, address, references, bank details, performance appraisals,
                work, holiday and sickness records, next of kin, salary reviews,
                remuneration details and other records (which may, where necessary,
                include sensitive personal data relating to the Executive’s health, and
                data held for equal opportunities purposes). The Company will hold
                such
                personal data for personnel administration and management purposes
                and to
                comply with the obligations regarding the retention of Executive/worker
                records. The Executive’s right of access to such data is as prescribed by
                law.

            

    

     

    
      	
              16.2

            	
              The
                Executive hereby undertakes and agrees that the Company may process
                personal data relating to personnel administration and management
                purposes, and may, when necessary for those purposes, make such data
                available to its advisers, to third parties providing products and/or
                services to the Company, (such as IT systems suppliers, pensions,
                benefits
                and payroll administrators) and as required by law. Further, the
                Executive
                hereby agrees that the Company may transfer such data to and from
                any
                Group Company and may be required to disclose such data by the SEC
                or the
                American Stock Exchange. By signing this Agreement, the Executive
                expressly consents to the collection, transfer and use of such data
                in
                accordance with this Clause 16.

            

    

     

    
      	
              17

            	
              MONITORING 

            

    

     

    
      	
              17.1

            	
              The
                Executive acknowledges that the Company may monitor messages sent
                and
                received via email, the Internet and voicemail systems to ensure
                that the
                Executive is complying with the Company’s policy for use by its employees
                of these systems.

            

    

     

    
      	
              18

            	
              TERMINATION
                OF EMPLOYMENT

            

    

     

    
      	
              18.1

            	
              The
                Company may at any time and in its absolute discretion (whether or
                not any
                notice of termination has been given by the Company or the Executive
                under
                clause 2
                above) terminate the Agreement with immediate effect and make a payment
                in
                lieu of notice. This payment shall comprise the Executive’s basic salary
                (at the rate payable when this option is exercised) and any bonus,
                pension
                contributions or any other benefits and shall be subject to deductions
                for
                income tax and national insurance contributions as appropriate (the
                “Payment
                in Lieu”).
                The Executive will not, under any circumstances, have any right to
                payment
                in lieu unless the Company has exercised its option to pay in lieu
                of
                notice.

            

    

     

    
      
        
        

      

      
        -88-

        
          

        

      

      
        
        

      

    

    
      	
              18.2

            	
              The
                Payment in Lieu may, at the Company’s sole discretion, be made at the date
                that the termination of the Executive's employment is effected by
                the
                Company. During any such period the Executive is required to keep
                the
                Company informed on a monthly basis as to his earnings and the Executive
                agrees that the Company may deduct any monies he earns as a consultant
                or
                employee during that period from the Payment in
                Lieu.

            

    

     

    
      	
              18.3

            	
              The
                employment of the Executive may be terminated by the Company without
                notice or payment in lieu of notice if the
                Executive:

            

    

     

    
      	 	
              18.3.1

            	
              is
                guilty of any serious misconduct or any other conduct which gives
                the
                Company the right to dismiss the Executive summarily;
                or

            

    

     

    
      	 	
              18.3.2

            	
              commits
                any serious or repeated breach or non-observance of any of the provisions
                contained in this Agreement; or

            

    

     

    
      	 	
              18.3.3

            	
              has
                an interim receiving order made against him, becomes bankrupt or
                makes any
                composition or enters into any deed of arrangement with his creditors;
                or

            

    

     

    
      	 	
              18.3.4

            	
              is
                charged
                with
                any arrestable criminal offence (other than an offence under road
                traffic
                legislation in the United Kingdom or elsewhere for which a fine or
                non-custodial penalty is imposed);
                or

            

    

     

    
      	 	
              18.3.5

            	
              is
                disqualified from holding office in another company by reason of
                an order
                of a court of competent
                jurisdiction

            

    

     

    
      	 	
              18.3.6

            	
              is
                suspended or disqualified from driving for a period of over a month;
                or

            

    

     

    
      	 	
              18.3.7

            	
              shall
                become of unsound mind or become a patient under the Mental Health
                Act
                1983; or

            

    

     

    
      	 	
              18.3.8

            	
              is
                convicted of an offence under the Criminal Justice Act 1993 in relation
                to
                insider dealings or under any other present or future statutory enactment
                or regulations relating to insider dealings;
                or

            

    

     

    
      	 	
              18.3.9

            	
              is
                in breach of the Model Code on directors’ dealings in listed securities,
                including securities dealt on the OFEX trading facility and securities
                dealt on the Alternative Investment Market published by the London
                Stock
                Exchange Limited or in breach of the rules or regulations of the
                SEC, the
                American Stock Exchange or any other relevant stock
                exchange.

            

    

     

    
      	 	
              18.3.10

            	
              is
                in breach or violation of the Parent's Code of Conduct and Ethics,
                Whistleblower Policy or Insider Trading Policy.

            

    

     

    
      	
              18.4

            	
              Any
                delay by the Company in exercising the right to terminate without
                notice
                is not a waiver thereof.

            

    

     

    
      
        
        

      

      
        -89-

        
          

        

      

      
        
        

      

    

    
      	
              19

            	
              SUSPENSION
                AND GARDEN LEAVE

            

    

     

    
      	
              19.1

            	
              The
                Company may suspend the Executive for up to ninety (90) days on full
                pay
                to allow the Company to investigate any complaint made against the
                Executive in relation to his employment with the
                Company.

            

    

     

    
      	
              19.2

            	
              Provided
                the Executive continues to enjoy his full contractual benefits and
                receive
                his pay in accordance with this Agreement, the Company may in its
                absolute
                discretion do all or any of the following during the notice period
                or any
                part of the notice period, after the Executive or the Company has
                given
                notice of termination to the other, without breaching this Agreement
                or
                incurring any liability or giving rise to any claim against
                it:

            

    

     

    
      	 	
              19.2.1

            	
              exclude
                the Executive from the premises of the Company and/or the
                Group;

            

    

     

    
      	 	
              19.2.2

            	
              require
                the Executive to carry out only specified duties (consistent with
                his
                status, role and experience) or to carry out no
                duties;

            

    

     

    
      	 	
              19.2.3

            	
              announce
                to any or all of its employees, suppliers, customers and business
                partners
                that the Executive has been given notice of termination or has resigned
                (as the case may be);

            

    

     

    
      	 	
              19.2.4

            	
              prohibit
                the Executive from communicating in any way with any or all of the
                suppliers, customers, business partners, employees, agents or
                representatives of the Company or the Group until his employment
                has
                terminated except to the extent he is authorised to do so by the
                Board in
                writing;

            

    

     

    
      	 	
              19.2.5

            	
              require
                the Executive to resign his directorship of any Group
                Company;

            

    

     

    
      	 	
              19.2.6

            	
              require
                the Executive to comply with any other reasonable conditions imposed
                by
                the Company.

            

    

     

    The
      Executive will continue to be bound by all obligations (whether express or
      implied) owed to the Company under the terms of the Agreement or as an employee
      of the Company.

     

    
      	
              20

            	
              RESIGNATION
                AND RETURN OF COMPANY
                PROPERTY

            

    

     

    
      	
              20.1

            	
              Upon
                the termination by whatever means of this Agreement the Executive
                shall:

            

    

     

    
      	 	
              20.1.1

            	
              promptly
                resign from his office as a director of the Company and from such
                offices
                held by him in any Group Company without claim for compensation;
                and 

            

    

     

    
      	 	
              20.1.2

            	
              promptly
                deliver to the Company all credit cards, motor-cars, keys, computer
                media
                and other property, in whatever form, of or relating to the business
                of
                the Company or of any Group Company which may be in his possession
                or
                under his power or control.

            

    

     

    
      
        
        

      

      
        -90-

        
          

        

      

      
        
        

      

    

    
      	
              20.2

            	
              If
                the Executive fails to comply with clause 19.2.5
                and 20.1.1
                the Company is hereby irrevocably authorised to appoint some person
                in his
                name and on his behalf to sign and complete any documents or do any
                thing
                necessary to give effect to this
                clause.

            

    

     

    
      	
              20.3

            	
              The
                Executive shall not without the consent of the Company at any time
                after
                the termination of this Agreement represent himself still to be connected
                with the Company or any Group Company (save, if applicable, as shareholder
                in the Parent).

            

    

     

    
      	
              21

            	
              RECONSTRUCTION
                OR AMALGAMATION

            

    

     

    If
      the
      employment of the Executive under this Agreement is terminated by reason of
      the
      liquidation of the Company for the purpose of reconstruction or amalgamation
      and
      the Executive is offered employment with any concern or undertaking resulting
      from the reconstruction or amalgamation on terms and conditions not less
      favourable than the terms of this Agreement then the Executive shall have no
      claim against the Company or any Group Company in respect of the termination
      of
      his employment under this Agreement.

     

    
      	
              22

            	
              RESTRICTIONS

            

    

     

    
      	 	
              22.1.1

            	
              The
                Executive shall not;

            

    

     

    
      	 	
              22.1.2

            	
              for
                a period of six (6) months following termination either on his own
                account
                or through any other person, so as to compete with the business of
                the
                Company or any Group Company, directly or indirectly solicit, interfere
                with, or endeavour to entice away from the Company or any Group Company,
                any person who is immediately prior to Completion or has, during
                the two
                (2) years preceding termination, been a customer of the Company or
                any
                Group Company;

            

    

     

    
      	 	
              22.1.3

            	
              for
                a period of twelve (12) months following termination, either on his
                own
                account or through any other person, directly or indirectly solicit,
                interfere with, or endeavour to entice away from the Company or any
                Group
                Company, any person who is immediately prior to termination or has,
                during
                the two (2) years preceding termination, been an employee of the
                Company
                or any Group Company.

            

    

     

    
      	 	
              22.1.4

            	
              The
                restrictions in this clause are considered by the parties to be reasonable
                and the validity of each sub-clause shall not be affected if any
                of the
                others is found by a court of competent jurisdiction to be invalid.
                If any
                of the restrictions is void but would be valid if some part of the
                restriction were deleted, the restriction in question shall apply
                with
                such modification as may be necessary to make it
                valid.

            

    

     

    
      	
              22.2

            	
              The
                Executive acknowledges that the provisions of this clause are no
                more
                extensive than is reasonable to protect the Company or the
                Group.

            

    

     

    
      
        
        

      

      
        -91-

        
          

        

      

      
        
        

      

    

    
      	
              22.3

            	
              If
                the Executive is suspended from work under the provisions of
                clause 19.2,
                the Company may, at its sole discretion, agree that the period of
                time
                during which the non-competition restriction contained in clause 22
                is enforceable, starts to run from the date of the suspension and
                not from
                the Termination Date.

            

    

     

    
      	
              22.4

            	
              The
                restrictions contained in Clauses 22. 1.1. and 22.2.2 shall not apply
                to
                the Executive where the Termination Date is before 1st
                January 2008. 

            

    

     

    
      	
              23

            	
              SEVERABILITY

            

    

     

    If
      any of
      the provisions of this Agreement become invalid or unenforceable for any reason
      by virtue of applicable law the remaining provisions shall continue in full
      force and effect and the Company and the Executive hereby undertake to use
      all
      reasonable endeavours to replace any legally invalid or unenforceable provision
      with a provision which will promise to the parties (as far as practicable)
      the
      same commercial results as were intended or contemplated by the original
      provision.

     

    
      	
              24

            	
              THIRD
                PARTIES

            

    

     

    Unless
      the right of enforcement is expressly granted, it is not intended that a third
      party other than a Group Company should have the right to enforce the provisions
      of this Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999.
      

     

    
      	
              25

            	
              NOTICES

            

    

     

    
      	
              25.1

            	
              Any
                notice required or permitted to be given under this Agreement shall
                be
                given in writing delivered personally or sent by first class post
                pre-paid
                recorded delivery (air mail if overseas) or by facsimile to the party
                due
                to receive such notice at, in the case of the Company, its registered
                office from time to time and, in the case of the Executive, his address
                as
                set out in this Agreement (or such address as he may have notified
                to the
                Company in accordance with this
                clause).

            

    

     

    
      	
              25.2

            	
              Any
                notice delivered personally shall be deemed to be received when delivered
                to the address provided in this Agreement and any notice sent by
                pre-paid
                recorded delivery post shall be deemed (in the absence of evidence
                of
                earlier receipt) to be received three (3) days after posting and
                in
                proving the time of despatch it shall be sufficient to show that
                the
                envelope containing such notice was properly addressed, stamped and
                posted. A notice sent by facsimile shall be deemed to have been received
                on receipt by the sender of confirmation in the transmission report
                that
                the facsimile had been sent. 

            

    

     

    
      	
              26

            	
              STATUTORY
                INFORMATION

            

    

     

    The
      Schedule 1 to this Agreement sets out information required to be given to the
      Executive by the Employment Rights Act 1996.

     

    
      
        
        

      

      
        -92-

        
          

        

      

      
        
        

      

    

    
      	
              27

            	
              MISCELLANEOUS

            

    

     

    
      	
              27.1

            	
              This
                Agreement is governed by and shall be construed in accordance with
                the
                laws of England, without regard to conflicts of
                law.

            

    

     

    
      	
              27.2

            	
              The
                parties to this Agreement submit to the exclusive jurisdiction of
                the
                English courts and agree to only serve proceedings in the High Courts
                of
                Justice, Strand London.

            

    

     

    
      	
              27.3

            	
              This
                Agreement contains the entire understanding between the parties and
                supersedes all previous agreements and arrangements (if any) relating
                to
                the employment of the Executive by the Company (which shall be deemed
                to
                have been terminated by mutual
                consent).

            

    

     

    
      	
              27.4

            	
              Nothing
                in this Agreement shall require the Executive to be or remain a director
                of the Company or any Associated Company and the Company shall not
                be
                entitled to terminate the employment of the Executive on the grounds
                that
                he has resigned as a director of any such
                company.

            

    

     

    
      	
              27.5

            	
              For
                a period of twelve (12) months from the date of this Agreement, the
                Parent
                undertakes that it will use reasonable endeavours that, save with
                the
                Executive's consent, it will procure that the Company is not insolvent
                (as
                that term is used in s123 Insolvency Act
                1986).

            

    

     

    
      
        
        

      

      
        -93-

        
          

        

      

      
        
        

      

    

    SCHEDULE 1

     

    Statement
      Of Particulars Pursuant To The Employment Rights Act 1996

     

    
      	
              1

            	
              The
                Executive’s period of continuous employment commences on 26 January
                2000.

            

    

     

    
      	
              2

            	
              The
                Company operates disciplinary and grievance procedures in accordance
                with
                the Employment Act 2002.

            

    

     

    
      	
              3

            	
              The
                Company is not a party to any collective agreement which affects
                the
                Executive’s employment.

            

    

     

    

     

    
      
        
        

      

      
        -94-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      2

     

    Bonus
      Arrangements

     

    
      	
              1

            	
              Within
                fourteen (14) days from the date of this Agreement, the Parent will
                grant
                the Executive, under the Parent's 2004 Stock Option Plan, 300,000
                options
                for restricted shares of its common stock, at a strike price of $3.50
                per
                share. Such options shall vest as follows: 75,000 options on the
                first
                anniversary of this agreement and 18,750 each quarter thereafter
                during
                which he is employed by the Company. Such options may be exercised
                at any
                time before the tenth anniversary of the date of this
                Agreement.

            

    

     

    
      	
              2

            	
              On
                or before 31 August 2006, the Executive will be paid a bonus of £4,000 if
                he has produced a business plan that the Board approves for execution
                in
                writing.

            

    

     

    
      	
              3

            	
              On
                or before 31 October 2006, the Executive will be paid a bonus equal
                to
                twelve per cent (12%) of the revenues referable for the month of
                September
                2006 from former customers of Equitalk, which have transferred to
                the
                Company and whose CLIs and other details have been entered into the
                Company’ system and
                set up so as to ensure that their calls are routed by means of the
                Company’s switch by 30 September 2006.
                If
                such former customers have not paid in relation to such revenues
                by 31
                December 2006, then the Executive shall repay to the Company within
                thirty
                (30) days, the portion of the bonus that relates to the non-collected
                revenues.

            

    

     

    
      	
              4

            	
              If
                the share capital of the Company, the Parent or any Associated Company
                of
                either are admitted to a recognised investment exchange in the United
                Kingdom (a "Listing") at any time during the course of the Executive's
                employment, the Executive will be paid a bonus of one point thirty
                three
                per cent (1.33%) of the amount raised on such a Listing. Such bonus
                will
                be subject to any applicable law and appropriate approvals from the
                American Stock Exchange, SEC and/or UK Recognised Stock Exchange
                and shall
                be paid as soon as reasonably practicable following the date of the
                Listing by way of the grant of options or warrants (exercisable at
                any
                time within 5 years of the date of grant subject to any lock-in periods
                agreed as part of the Listing process) exercisable into restricted
                shares
                of common stock of the Parent. Such options or warrants will be priced
                at
                the issue price of the Listing, according to the Black Scholes option
                -
                pricing model, with a volatility of ninety per cent
                (90%).

            

    

     

    
      	
              5

            	
              If
                the Company, the Parent or any Associated Company acquires the shares,
                assets of undertaking of any company or business in the United Kingdom
                (an
                "Acquisition") at any time during the course of the Executive's
                employment, the Executive will be paid a bonus of one point thirty
                three
                per cent (1.33%) of the value of the Acquisition. Such bonus will
                be
                subject to any applicable law and appropriate approvals from the
                American
                Stock Exchange and/or SEC and shall be paid as soon as reasonably
                practicable following the date of the Acquisition and may be satisfied
                by
                the Company by procuring that the Parent allots restricted shares
                of
                common stock to the Executive to the value of such bonus.

            

    

     

    
      	
              6

            	
              On
                or before 31 August 2006, the Executive and the Company will agree
                a bonus
                scheme linked to his individual performance.  An on-target bonus of
                £4,000 per month will be payable for each month, such targets to be
                set so
                as to reward the
                Executive
                for improving the profitability and revenue of the Company, whilst
                giving
                him
                a
                realistic chance of reaching them.  The bonus will be paid monthly in
                arrears and there shall be no entitlement to receive any bonus once
                the
                Executive’s
                employment has terminated. The Executive and the Company will agree
                a
                formula to pay the Executive a reduced bonus if targets are not met
                and an
                increased bonus if targets are
                exceeded.

            

    

     

    
      	
              7

            	
              Piggyback
                Registration Rights

            

    

     

    The
      obligations on Parent in Clause 3.5 and Schedule 13 of the Share Purchase
      Agreement between the parties (entered into on or about the date of this
      Agreement) shall be deemed repeated in this agreement, mutatis mutandis, in
      respect of any securities allotted by the Parent to the Executive under this
      Schedule.

     

    
      
        
        

      

      
        -95-

        
          

        

      

      
        
        

      

    

     

    
      	
               

              Signed
                as a Deed by Swiftnet Limited acting by:

            	 
	
               

              Director

            	 
	
               

              Company
                Secretary

            	 
	
               

               

              Signed
                as a Deed by Xfone, Inc. acting by:

               

            	 
	
              Director

               

            	 
	 	 

    

    

     

    
      	
               

              Signed
                by JOHN MARK BURTON in the presence of:

               

            	 
	
               

              Witness
                signature:

               

            	 
	
               

              Name:

               

            	 
	
               

              Address:

               

            	 
	 	 
	
               

              Occupation:

               

            	 

    

     

    

     

    

    

    
      
        
        

      

      
        -96-

        
          

        

      

      
        
        

      

    

    

    DATED                                           
      2006

    

    

    SWIFTNET
      LIMITED

    

    

    And

    

    

    JAMES
      RUANE

    

     

    

    

    
      	 	
               

              SERVICE
                AGREEMENT

               

            	 

    

    

     

    

    Preiskel
&
CO
      LLP.
8-10
      New
      Fetter Lane

    London
      EC4A 1RS

    Tel:
      +44
      (0) 20 7583 2120

    Fax:
      +44
      (0) 20 7583 2103

    e-mail:
      info@preiskel.com

    Ref:
      RP/AB/20043012

    
      
        
        

      

      
        -97-

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

     

    
      	  	
              ‎1    
                DEFINITIONS
                AND INTERPRETATION

            

    

     

    
      	  	
              ‎2    
                TERM
                OF EMPLOYMENT

            

    

     

    
      	  	
              ‎3    
                DUTIES

            

    

     

    
      	  	
              ‎4    
                HOURS
                OF WORK

            

    

     

    
      	  	
              ‎5    
                GRATUITIES
                AND CODES OF CONDUCT

            

    

     

    
      	 	
              ‎6    
                REMUNERATION

            

    

     

    
      	 	
              7    
                PENSIONS

            

    

     

    
      	  	
              ‎8    
                MEDICAL
                INSURANCE3

            

    

     

    
      	  	
              ‎9    
                COMPANY CAR / CAR ALLOWANCE

            

    

     

    
      	  	
              ‎10    EXPENSES

            

    

     

    
      	  	
              ‎11    HOLIDAYS

            

    

     

    
      	  	
              ‎12    ILLNESS

            

    

     

    
      	  	
              ‎13    RESTRICTIONS
                DURING EMPLOYMENT

            

    

     

    
      	  	
              ‎14    INTELLECTUAL
                PROPERTY

            

    

     

    
      	  	
              ‎15    CONFIDENTIALITY

            

    

     

    
      	  	
              ‎16    DATA
                PROTECTION

            

    

     

    
      	  	
              ‎17    MONITORING

            

    

     

    
      	  	
              ‎18    TERMINATION
                OF EMPLOYMENT 

            

    

     

    
      	  	
              19    SUSPENSION
                AND GARDEN LEAVE

            

    

     

    
      	  	
              ‎20    RESIGNATION
                AND RETURN OF COMPANY PROPERTY

            

    

     

    
      	  	
              ‎21    RECONSTRUCTION
                OR AMALGAMATION

            

    

     

    
      	  	
              ‎22    RESTRICTIONS

            

    

     

    
      	  	
              ‎23    SEVERABILITY

            

    

     

    
      	  	
              ‎24    THIRD
                PARTIES

            

    

     

    
      	  	
              ‎25    NOTICES

            

    

     

    
      	  	
              ‎26    STATUTORY
                INFORMATION

            

    

     

    
      	  	
              ‎27    MISCELLANEOUS

            

    

     

    
      	  	
              Schedule
                1 - Statement Of Particulars Pursuant To The Employment Rights Act
                1996

            

    

    
       

      
        	  	
                Schedule
                  1 - Statement Of Particulars Pursuant To The Employment Rights
                  Act 19962 -
                  Bonus

              

      

       

      
        
          
          

        

        
          -98-

          
            

          

        

        
          
          

        

      

    

    THIS
      AGREEMENT is
      made
      on 2006

     

    BETWEEN:

     

    
      	
              (1)

            	
              SWIFTNET
                LIMITED (the
                “Company”) whose registered office is at Britannia House 960 High Road
                London N12 9RY, United Kingdom; and

            

    

     

    
      	
              (2)

            	
              JAMES
                RUANE
                of 3
                Aylesbury Road, Cuddington, Aylesbury, Bucks HP18 OBD,
                United Kingdom (the
                “Employee”).

            

    

     

    recital

     

    The
      Company shall employ the Employee and the Employee shall serve the Company
      as a
      project manager for the Company on the following terms and subject to the
      following conditions (the “Agreement”):

     

    IT
      IS AGREED AS FOLLOWS:

     

    
      	
              1

            	
              DEFINITIONS
                AND INTERPRETATION

            

    

     

    
      	
              1.1

            	
              In
                this Agreement unless the context otherwise requires the following
                expressions shall have the following
                meanings:

            

    

     

    “Associated
      Company”

     

    
      	 	
              (a)

            	
              a
                company which is not a Subsidiary of the Parent but whose issued
                equity
                share capital (as defined in s744 of the Companies Act 1985) is owned
                as
                to at least twenty per cent (20%) by the Parent or one of its
                Subsidiaries; or

            

    

     

    
      	 	
              (b)

            	
              a
                Subsidiary 

            

    

     

    “Board”

     

    the
      board
      of directors for the time being of the Company

     

    
      
        
        

      

      
        -99-

        
          

        

      

      
        
        

      

    

    "Equitalk"
      

     

    Equitalk.co.uk
      Limited, a Subsidiary

     

    “Group”

     

    the
      Parent and its Associated
      Companies
      for the
      time being and “Group
      Company”
      means
      any one of them

     

    “Group
      Policy”

     

    such
      reasonable policies and/or procedures of the Parent or Company as may be in
      force from time to time in the future and which do not amount to a material
      change in the Employee's terms of employment including without limitation the
      Parent's Code of Conduct and Ethics, Whistleblower Policy and Insider Trading
      Policy

     

    “Parent”

     

    Xfone,
      Inc. of 2506 Lakeland Drive, Flowood, Mississippi 39232, USA and any other
      company which is for the time being the ultimate holding company of the Company
      within the meaning of s736 of the Companies Act 1985

     

    “Regulations”

     

    the
      Working Time Regulations 1998

     

    “Subsidiary”

     

    a
      Subsidiary within the meaning of s736 of the Companies Act 1985

     

    “Works”

     

    any
      discoveries, designs, inventions, research and development, formulas and
      technology, topography, techniques or improvements in each case provided that
      it
      relates to the business of the Company and/or any Group Company.

     

    
      
        
        

      

      
        -100-

        
          

        

      

      
        
        

      

    

    
      	
              1.2

            	
              Any
                reference to a statutory provision shall be deemed to include a reference
                to any statutory modification or re-enactment of
                it.

            

    

     

    
      	
              1.3

            	
              Words
                importing the singular only shall include the plural and vice
                versa.

            

    

     

    
      	
              1.4

            	
              The
                headings in this Agreement are for convenience only and shall not
                affect
                its construction or interpretation.

            

    

     

    
      	
              1.5

            	
              References
                in this Agreement to a person include a body corporate and an incorporated
                association of persons and references to a company include any body
                corporate.

            

    

     

    
      	
              1.6

            	
              Where
                appropriate, references to the Employee include his personal
                representatives.

            

    

     

    
      	
              2

            	
              TERM
                OF EMPLOYMENT

            

    

     

    The
      employment of the Employee shall be deemed to have commenced on [ ]May 2006,
      but
      the Employee's employment with Equitalk shall count towards his continuous
      employment and (subject to termination as provided below) shall be for an
      indefinite period terminable by either party giving to the other three (3)
      months notice in writing if served during the first six (6) months since the
      date of this Agreement and thereafter the Company shall provide the Employee
      with no less than six (6) months notice and the Employee shall provide the
      Company with no less than three (3) months written notice.

     

    
      	
              3

            	
              DUTIES

            

    

     

    
      	
              3.1

            	
              The
                Employee shall during his employment under this
                Agreement:

            

    

     

    
      	 	
              3.1.1

            	
              perform
                the duties and exercise the powers which the Board may from time
                to time
                properly assign to him; and

            

    

     

    
      	 	
              3.1.2

            	
              promote,
                develop and protect the business of the Company and
                any Group Company
                and at all times and in all respects conform to and comply with the
                proper
                and reasonable directions and regulations of the Board
                and/or the Parent.

            

    

     

    
      	
              3.2

            	
              The
                Employee shall give to the Board
                such information regarding the affairs of the Company as it shall
                require,
                and in any event, report regularly and keep the Board
                informed.

            

    

     

    
      	
              3.3

            	
              The
                Employee shall carry out his duties in accordance with any applicable
                Group Policy. 

            

    

     

    
      	
              3.4

            	
              The
                Employee shall be based at the Company's office at the address shown
                above
                or in any place at which the Company maintains an office within a
                similar
                distance of his home which the Board may require. The Employee may
                be
                required to travel on business trips abroad when required by the
                Company
                for the proper performance of his duties.

            

    

     

    
      
        
        

      

      
        -101-

        
          

        

      

      
        
        

      

    

    
      	
              4

            	
              HOURS
                OF WORK

            

    

     

    
      	
              4.1

            	
              The
                Employee is required to be in the Company's office during standard
                office
                hours and outside standard office hours as reasonably required to
                perform
                his duties. The Employee will not qualify for overtime payments.
                Standard
                office hours are 09:00 to 18:00 Monday to Friday with an hour's break
                for
                lunch each day. 

            

    

     

    
      	
              4.2

            	
              In
                addition to time in which the Employee is working at the Company’s
                disposal and carrying out his activities or duties the following
                will be
                included as working time:

            

    

     

    
      	 	
              4.2.1

            	
              travelling
                time whilst in work e.g. to visit the Parent, clients and suppliers
                or to
                attend meetings. For the avoidance of doubt this does not include
                travel
                to and from work; and

            

    

     

    
      	 	
              4.2.2

            	
              entertaining
                of clients and suppliers after office hours provided it has been
                authorised by a member of the Board other than the
                Employee.

            

    

     

    
      	
              4.3

            	
              The
                Employee agrees that, notwithstanding the provisions of Regulation
                4 of
                the Working Time Regulations 1998 relating to maximum weekly working
                time
                of 48 hours, the limit on maximum working time shall not apply to
                the
                Employee's employment. The Employee's agreement set out in this clause
                is
                given for an indefinite period, but shall be terminable on the Employee
                giving six months' prior written notice to the
                Employer.

            

    

     

    
      	
              5

            	
              GRATUITIES
                AND CODES OF CONDUCT

            

    

     

    
      	
              5.1

            	
              The
                Employee shall not directly or indirectly accept any commission,
                rebate,
                discount or gratuity in cash or in kind from any person who has or
                is
                having a business relationship with the Company or any Group
                Company.

            

    

     

    
      	
              5.2

            	
              The
                Employee shall comply (and procure that his spouse and minor children
                shall comply) with all applicable rules and regulations of the American
                Stock Exchange, the US Securities and Exchange Commission (“SEC”) and the
                rules and regulations of any other relevant stock exchange and any
                other
                relevant regulatory authority.

            

    

     

    
      	
              6

            	
              REMUNERATION

            

    

     

    
      	
              6.1

            	
              The
                Company shall pay to the Employee a salary at the rate of fifty five
                thousand pounds (£55,000) per year.

            

    

     

    
      	
              6.2

            	
              The
                Employee’s salary shall accrue from day to day and be payable by equal
                monthly instalments in arrears on the last day of each
                month.

            

    

     

    
      	
              6.3

            	
              The
                Employee shall be entitled to receive a bonus whilst employed by
                the
                Company as indicated in Schedule 2.

            

    

     

    
      
        
        

      

      
        -102-

        
          

        

      

      
        
        

      

    

    
      	
              7

            	
              PENSIONS
                

            

    

     

    The
      Company shall pay a further sum equal to 7.5% of the Employee’s salary by way of
      a contribution to his personal pension scheme as notified to the Company in
      writing. For the avoidance of doubt, such payment shall be additional to the
      Employee's salary

     

    
      	
              8

            	
              MEDICAL
                INSURANCE

            

    

     

    The
      Company shall pay for medical insurance to cover the Employee. The Employee
      may
      elect for a cash alternative of £35 per month.

     

    
      	
              9

            	
              COMPANY
                CAR/CAR ALLOWANCE

            

    

     

    9.1 The
      Company shall provide the Employee with a leased car of his choice to a value
      of
£500 plus VAT per month. The Employee may add to this value, through salary
      sacrifice if he so wishes. The Company will pay for business fuel and personal
      fuel for the trip between the Employee's home and the Company's
      office.

     

    9.2 In
      addition, the Company will pay for insurance for the car for the Employee and
      his wife as a named driver, provided that the addition of his wife costs no
      more
      than £200 + VAT per year.

     

    9.3 The
      Company will provide a free car parking space at the Company's offices or shall
      pay for parking if no space is available.

     

    
      	
              10

            	
              EXPENSES

            

    

     

    10.1 The
      Company shall reimburse or procure that the Employee is reimbursed all
      reasonable travelling, hotel and other expenses wholly and necessarily incurred
      by him in the performance of his duties under this Agreement that have been
      pre-approved by the Board.

     

    
      	
              11

            	
              HOLIDAYS

            

    

     

    
      	
              11.1

            	
              The
                Employee is entitled to twenty five (25) days’ holiday with pay every
                calendar year in addition to bank and other public holidays. The
                Company’s
                holiday year runs from 1st
                January to 31st
                December. The Employee shall be entitled to carry forward not more
                than
                five (5) days holiday each year without needing to seek the permission
                of
                the Board.

            

    

     

    
      	
              11.2

            	
              The
                Employee’s holiday entitlement is inclusive of his statutory entitlement
                which is twenty (20) days per annum. When calculating the Employee’s
                statutory entitlement bank and public holidays are taken into account.
                The
                statutory entitlement cannot be carried over from one holiday year
                to the
                next and no pay in lieu can be made to the
                Employee.

            

    

     

    
      
        
        

      

      
        -103-

        
          

        

      

      
        
        

      

    

    
      	
              11.3

            	
              During
                the first year of the Employee's employment, the Employee may use
                four (4)
                days of accrued but unused holiday earned whilst working with Equitalk.
                The Employee’s statutory holiday entitlement will accrue pro rata monthly
                in advance. Where this calculation results in fractions of days the
                amount
                of leave which can be taken is rounded up to the next half day. Any
                rounded up element is deducted from the leave
                remaining.

            

    

     

    
      	
              11.4

            	
              Save
                as provided for in clause 11.3 above, the Employee’s entitlement to
                holiday accrues pro rata throughout each holiday year (disregarding
                fractions of days). The Employee will be deemed to have taken statutory
                holiday first.

            

    

     

    
      	
              11.5

            	
              Any
                entitlement to holiday over and above any statutory entitlement remaining
                at the end of any holiday year shall lapse and no payment in lieu
                will be
                made for accrued untaken holiday.

            

    

     

    
      	
              11.6

            	 

    

    
      	 	
              11.6.1

            	
              If
                the Employee has taken holiday in excess of his entitlement on termination
                of employment he will be required to give account for it and the
                Company
                will make a deduction from his final salary payment accordingly.
                If the
                Employee has accrued holiday owing to him, the Company may at its
                discretion, require him to take the outstanding holiday during any
                notice
                period or make a payment in lieu of
                it.

            

    

     

    
      	 	
              11.6.2

            	
              For
                the purposes of clause 11.6.1
                above, a day’s pay will be calculated on the following basis: 1/260 of the
                Employee’s annual salary.

            

    

     

    
      	
              11.7

            	
              If
                the Employee’s employment is lawfully terminated without notice, he will
                not be entitled to holiday pay for holiday which would have accrued
                during
                the notice period, had he continued to be employed throughout that
                time.

            

    

     

    
      	
              11.8

            	
              There
                are no formal notice requirements for taking holiday but the Employee
                is
                expected to take his holiday at a time or times convenient to the
                Company.

            

    

     

    
      	
              12

            	
              ILLNESS

            

    

     

    
      	
              12.1

            	
              The
                Employee shall continue to be paid during sickness absence (such
                payment
                to be inclusive of any statutory sick pay or social security benefits
                to
                which he may be entitled) for a total of up to twelve (12) weeks
                in any
                twelve (12) consecutive calendar
                months.

            

    

     

    
      	
              12.2

            	
              Thereafter
                the Employee shall continue to be paid salary at the discretion of
                the
                Company provided that if such absence shall aggregate twenty six
                (26)
                weeks in any twelve (12) consecutive calendar months the Company
                may
                terminate the employment of the Employee with immediate effect at
                any time
                and in that event the Company shall pay to the Employee a sum equal
                to one
                (1) month salary in full and final settlement of all and any claims
                the
                Employee may have against the Company arising from the termination
                of this
                Agreement.

            

    

     

    
      	
              12.3

            	
              The
                Employee will cease to accrue holiday, subject to any entitlement
                under
                the Working Time Regulations if he has been absent due to sickness,
                for
                five (5) consecutive weeks or more.

            

    

     

    
      
        
        

      

      
        -104-

        
          

        

      

      
        
        

      

    

    
      	
              12.4

            	
              If
                the Employee is incapable of performing his duties by reason of injury
                sustained wholly or partly as a result of negligence, nuisance or
                breach
                of any statutory duty on the part of a third party and the Employee
                recovers an amount by way of compensation for loss of earnings from
                that
                third party, he shall immediately pay that amount to the
                Company.

            

    

     

    
      	
              12.5

            	
              The
                Company shall be entitled to require the Employee to undergo examinations
                by a medical adviser appointed or approved by the Company and the
                Employee
                authorises the medical adviser and/or will provide such consents
                as are
                necessary to disclose to the Company and the Parent the results of
                such
                examinations.

            

    

     

    
      	
              13

            	
              RESTRICTIONS
                DURING EMPLOYMENT

            

    

     

    
      	
              13.1

            	
              During
                the continuance of his employment under this Agreement the Employee
                shall
                unless prevented by incapacity devote the whole of his working time
                to the
                business of the Company and shall not without the prior written consent
                of
                the Board:

            

    

     

    
      	 	
              13.1.1

            	
              engage
                in any other business; or

            

    

     

    
      	 	
              13.1.2

            	
              be
                concerned or interested in any other business which is or shall be
                of a
                similar nature to or competitive with that carried on by the Company
                or
                any Group Company or which is a supplier or customer of the Company
                or
                Group Company in relation to their goods or services;
                or

            

    

     

    
      	 	
              13.1.3

            	
              solicit
                the custom of, canvass, approach or deal with, in competition with
                the
                Company or any Group Company, any person (including any company,
                firm,
                organisation or other entity) to whom the Company or any Group Company
                supplies services or goods or with whom the Company or any Group
                Company
                is in negotiations or discussions regarding the possible supply of
                services or goods; or

            

    

     

    
      	 	
              13.1.4

            	
              discourage
                any such person referred to in clause 13.1.3
                above from conducting or continuing to conduct business with the
                Company
                or any Group Company on the best terms available to the Company or
                any
                Group Company; or

            

    

     

    
      	 	
              13.1.5

            	
              induce
                or attempt to induce any director or senior employee of the Company
                or any
                Group Company and with whom the Employee has material dealings in
                the
                course of his employment, to leave the employment of the Company
                or any
                Group Company; or

            

    

     

    
      	 	
              13.1.6

            	
              take
                any steps which impair or might reasonably be thought by the Company,
                to
                impair the Employee’s ability to act at all times in the best interests of
                the Company. 

            

    

     

    
      	
              13.2

            	
              If
                the Employee does, with the Board’s written consent, carry out other work,
                he must notify the Board and the Parent of the number of additional
                hours
                he is working. 

            

    

     

    
      
        
        

      

      
        -105-

        
          

        

      

      
        
        

      

    

    
      	
              14

            	
              INTELLECTUAL
                PROPERTY

            

    

     

    
      	
              14.1

            	
              The
                Employee acknowledges and agrees that all Works created by the Employee
                during the course of his employment are, and shall remain, the exclusive
                property of the Company and/or any Group Company.  The Employee
                specifically acknowledges and agrees that he has no interest whatsoever
                in
                such Works, including without limitation any interest in know-how,
                copyrights, patents, trade marks, topographies or trade names,
                notwithstanding the fact that the Employee may have created or contributed
                to the creation of same.

            

    

     

    
      	
              14.2

            	
              The
                Employee hereby wholly, unequivocally, and irrevocably assigns to
                the
                Company and/or any Group Company any and all rights, title, and interest
                which the Employee has in and to any Works made, created, or improved
                during the course of employment of the Employee by the Company and/or
                any
                Group Company or using the equipment or other resources of the Company
                and/or any Group Company (collectively referred to in this clause
                14 as
                “Intellectual Property”). 

            

    

     

    
      	
              14.3

            	
              The
                Employee will, if so requested by the Company (and at the Company’s
                expense), execute all such documents as may be necessary to confirm
                the
                title of the Company to any rights, interests or other property which
                belong to the Company by virtue of this clause
                14.

            

    

     

    
      	
              14.4

            	
              The
                Employee hereby waives any moral rights which the Employee may have
                in any
                Intellectual Property in the Works.

            

    

     

    
      	
              14.5

            	
              The
                Employee further agrees to disclose to the Company, and preserve
                as
                strictly confidential, full particulars of any Intellectual Property,
                and
                undertakes and agrees to maintain at all times written records pertaining
                thereto, which records shall be, and shall remain, the sole and exclusive
                property of the Company.

            

    

     

    
      	
              14.6

            	
              All
                notes, data, tapes, reference items, sketches, drawings, memoranda,
                records, diskettes and other materials in any way relating to any
                of the
                Confidential Information, Intellectual Property, or to the Company’s
                and/or any Group Company’s business produced by the Employee or coming
                into the Employee’s possession by or through the Employee’s employment,
                shall belong exclusively to the Company and/or any Group Company
                and the
                Employee agrees to turn over to the Company and/or any Group Company
                all
                copies of any such materials in the Employee’s possession or under the
                Employee’s control, forthwith, at the request of the Company and/or any
                Group Company or, in the absence of a request, on the termination
                of the
                Employee’s employment with the
                Company.

            

    

     

    
      	
              14.7

            	
              The
                Employee further understands that the provisions of this clause 14
                and the
                Employee’s agreement to same, are of the essence of this Agreement and
                constitute a material inducement to the Company to enter into this
                Agreement and that the Company would not have employed the Employee
                without such inducement. 

            

    

     

    
      	
              14.8

            	
              The
                Employee agrees that the provisions of this clause 14 shall be construed
                independently of any other provision of this Agreement, and the existence
                of any claim or cause of action the Employee may have against the
                Company
                and/or any Group Company, whether predicated on this Agreement or
                otherwise, shall not constitute a defence to the enforcement by the
                Company and/or any Group Company of the provisions of this clause
                14.

            

    

     

    
      
        
        

      

      
        -106-

        
          

        

      

      
        
        

      

    

    
      	
              14.9

            	
              The
                Employee acknowledges and agrees that, in the event of his violation
                of
                any of the provisions this clause 14, the Company and/or any Group
                Company
                shall be entitled to obtain, from an authority of competent jurisdiction,
                interim and permanent injunctive relief and an account of all profits
                and
                benefits that arise out of such violation, which rights and remedies
                shall
                be cumulative in addition to any other rights or remedies to which
                the
                Company and/or any Group Company may be entitled in law.
                

            

    

     

    
      	
              14.10

            	
              Notwithstanding
                any other provision of this Agreement this clause 14 shall survive
                the
                termination of this Agreement, howsoever
                caused.

            

    

     

    
      	
              15

            	
              CONFIDENTIALITY

            

    

     

    
      	
              15.1

            	
              During
                the course of the Employee’s employment with the Company the Employee has
                access to information, documentation and associated material which
                is
                confidential to the Company and/or any Group Company and customers
                of the
                Company and/or Group Company including, but not limited to information
                which is provided to the Employee in confidence by the Company and/or
                Group Company including any information relating to the internal
                affairs
                of the Company and/or any Group Company. In particular, such information
                includes, but is not limited to, the
                following:

            

    

     

    15.1.1
      trade
      secrets;

     

    15.1.2
      existing
      and target customer lists and buying habits;

     

    15.1.3
      purchase
      requirements;

     

    15.1.4
      pricing
      and sales information, policies and concepts;

     

    15.1.5
      financial
      information;

     

    15.1.6
      business
      plans, forecasts and market strategies; and 

     

    15.1.7
      inventions
      and intellectual property.

     

    Such
      information is referred to as “Confidential Information”.

     

    
      	
              15.2

            	
              The
                Employee agrees that he will not (except in the proper course of
                his
                duties or where otherwise authorised by the Company in writing) either
                during or at any time after the termination of his employment reveal
                or
                disclose to any person any Confidential
                Information.

            

    

     

    
      
        
        

      

      
        -107-

        
          

        

      

      
        
        

      

    

    
      	
              15.3

            	
              The
                Employee agrees that he shall use all reasonable endeavours to prevent
                the
                unauthorised publication or disclosure of any Confidential
                Information.

            

    

     

    
      	
              15.4

            	
              The
                Employee agrees that he shall not use for his own purposes or for
                any
                purposes other than those of the Company and its Associated Companies,
                any
                Confidential Information. 

            

    

     

    
      	
              15.5

            	
              The
                restrictions contained in this clause 16 shall not apply to any
                Confidential Information which is available to the public generally
                (other
                than through a prior disclosure which was itself unauthorised) or
                to any
                disclosure required by law to be made, or to any “qualifying disclosure”
                within the meaning of the Public Interest Disclosure Act 1998.
                

            

    

     

    
      	
              15.6

            	
              The
                Employee further understands that the provisions of this clause 15
                and the
                Employee’s agreement to same, are of the essence of this Agreement and
                constitute a material inducement to the Company to enter into this
                Agreement and that the Company would not have employed the Employee
                without such inducement. 

            

    

     

    
      	
              15.7

            	
              The
                Employee agrees that the provisions of this clause 15 shall be construed
                independently of any other provision of this Agreement, and the existence
                of any claim or cause of action the Employee may have against the
                Company
                and/or any Group Company, whether predicated on this Agreement or
                otherwise, shall not constitute a defence to the enforcement by the
                Company and/or any Group Company of the provisions of this clause
                15.

            

    

     

    
      	
              15.8

            	
              The
                Employee acknowledges and agrees that, in the event of his violation
                of
                any of the provisions this clause 15, the Company and/or any Group
                Company
                shall be entitled to obtain, from an authority of competent jurisdiction,
                interim and permanent injunctive relief and an account of all profits
                and
                benefits that arise out of such violation, which rights and remedies
                shall
                be cumulative in addition to any other rights or remedies to which
                the
                Company and/or any Group Company may be entitled in law.
                

            

    

     

    
      	
              15.9

            	
              Notwithstanding
                any other provision of this Agreement this clause 15 shall survive
                the
                termination of this Agreement, howsoever
                caused.

            

    

     

    
      	
              16

            	
              DATA
                PROTECTION 

            

    

     

    
      	
              16.1

            	
              The
                Employee acknowledges that the Company will hold personal data relating
                to
                the Employee such data will include the Employee’s employment application,
                address, references, bank details, performance appraisals, work,
                holiday
                and sickness records, next of kin, salary reviews, remuneration details
                and other records (which may, where necessary, include sensitive
                personal
                data relating to the Employee’s health, and data held for equal
                opportunities purposes). The Company will hold such personal data
                for
                personnel administration and management purposes and to comply with
                the
                obligations regarding the retention of Employee/worker records. The
                Employee’s right of access to such data is as prescribed by
                law.

            

    

     

    
      
        
        

      

      
        -108-

        
          

        

      

      
        
        

      

    

    
      	
              16.2

            	
              The
                Employee hereby undertakes and agrees that the Company may process
                personal data relating to personnel administration and management
                purposes, and may, when necessary for those purposes, make such data
                available to its advisers, to third parties providing products and/or
                services to the Company, (such as IT systems suppliers, pensions,
                benefits
                and payroll administrators) and as required by law. Further, the
                Employee
                hereby agrees that the Company may transfer such data to and from
                any
                Group Company and may be required to disclose such data by the SEC
                or the
                American Stock Exchange. By signing this Agreement, the Employee
                expressly
                consents to the collection, transfer and use of such data in accordance
                with this Clause 16.

            

    

     

    
      	
              17

            	
              MONITORING
                

            

    

     

    
      	
              17.1

            	
              The
                Employee acknowledges that the Company may monitor messages sent
                and
                received via email, the Internet and voicemail systems to ensure
                that the
                Employee is complying with the Company’s policy for use by its employees
                of these systems.

            

    

     

    
      	
              18

            	
              TERMINATION
                OF EMPLOYMENT

            

    

     

    
      	
              18.1

            	
              The
                Company may at any time and in its absolute discretion (whether or
                not any
                notice of termination has been given by the Company or the Employee
                under
                clause 2
                above) terminate the Agreement with immediate effect and make a payment
                in
                lieu of notice. This payment shall comprise the Employee’s basic salary
                (at the rate payable when this option is exercised) and any bonus,
                pension
                contributions or any other benefits and shall be subject to deductions
                for
                income tax and national insurance contributions as appropriate (the
                “Payment
                in Lieu”).
                The Employee will not, under any circumstances, have any right to
                payment
                in lieu unless the Company has exercised its option to pay in lieu
                of
                notice.

            

    

     

    
      	
              18.2

            	
              The
                Payment in Lieu may, at the Company’s sole discretion, be made at the date
                that the termination of the Employee's employment is effected by
                the
                Company. During any such period the Employee is required to keep
                the
                Company informed on a monthly basis as to his earnings and the Employee
                agrees that the Company may deduct any monies he earns as a consultant
                or
                employee during that period from the Payment in
                Lieu.

            

    

     

    
      	
              18.3

            	
              The
                employment of the Employee may be terminated by the Company without
                notice
                or payment in lieu of notice if the
                Employee:

            

    

     

    
      	 	
              18.3.1

            	
              is
                guilty of any serious misconduct or any other conduct which gives
                the
                Company the right to dismiss the Employee summarily;
                or

            

    

     

    
      	 	
              18.3.2

            	
              commits
                any serious or repeated breach or non-observance of any of the provisions
                contained in this Agreement; or

            

    

     

    
      	 	
              18.3.3

            	
              has
                an interim receiving order made against him, becomes bankrupt or
                makes any
                composition or enters into any deed of arrangement with his creditors;
                or

            

    

     

    
      	 	
              18.3.4

            	
              is
                charged
                with
                any arrestable criminal offence (other than an offence under road
                traffic
                legislation in the United Kingdom or elsewhere for which a fine or
                non-custodial penalty is imposed);
                or

            

    

     

    
      
        
        

      

      
        -109-

        
          

        

      

      
        
        

      

    

    
      	 	
              18.3.5

            	
              is
                disqualified from holding office in another company by reason of
                an order
                of a court of competent jurisdiction;
                or

            

    

     

    
      	 	
              18.3.6

            	
              shall
                become of unsound mind or become a patient under the Mental Health
                Act
                1983; or

            

    

     

    
      	 	
              18.3.7

            	
              is
                convicted of an offence under the Criminal Justice Act 1993 in relation
                to
                insider dealings or under any other present or future statutory enactment
                or regulations relating to insider dealings;
                or

            

    

     

    
      	 	
              18.3.8

            	
              is
                in breach or violation of the Parent's Code of Conduct and Ethics,
                Whistleblower Policy or Insider Trading Policy.

            

    

     

    
      	
              18.4

            	
              Any
                delay by the Company in exercising the right to terminate without
                notice
                is not a waiver thereof.

            

    

     

    
      	
              19

            	
              SUSPENSION
                AND GARDEN LEAVE

            

    

     

    
      	
              19.1

            	
              The
                Company may suspend the Employee for up to ninety (90) days on full
                pay to
                allow the Company to investigate any complaint made against the Employee
                in relation to his employment with the
                Company.

            

    

     

    
      	
              19.2

            	
              Provided
                the Employee continues to enjoy his full contractual benefits and
                receive
                his pay in accordance with this Agreement, the Company may in its
                absolute
                discretion do all or any of the following during the notice period
                or any
                part of the notice period, after the Employee or the Company has
                given
                notice of termination to the other, without breaching this Agreement
                or
                incurring any liability or giving rise to any claim against
                it:

            

    

     

    
      	 	
              19.2.1

            	
              exclude
                the Employee from the premises of the Company and/or the
                Group;

            

    

     

    
      	 	
              19.2.2

            	
              require
                the Employee to carry out only specified duties (consistent with
                his
                status, role and experience) or to carry out no
                duties;

            

    

     

    
      	 	
              19.2.3

            	
              announce
                to any or all of its employees, suppliers, customers and business
                partners
                that the Employee has been given notice of termination or has resigned
                (as
                the case may be);

            

    

     

    
      	 	
              19.2.4

            	
              prohibit
                the Employee from communicating in any way with any or all of the
                suppliers, customers, business partners, employees, agents or
                representatives of the Company or the Group until his employment
                has
                terminated except to the extent he is authorised to do so by the
                Board in
                writing;

            

    

     

    
      	 	
              19.2.5

            	
              require
                the Employee to resign any directorship of any Group Company to which
                he
                may have been appointed by such
                time;

            

    

     

    
      
        
        

      

      
        -110-

        
          

        

      

      
        
        

      

    

    
      	 	
              19.2.6

            	
              require
                the Employee to comply with any other reasonable conditions imposed
                by the
                Company.

            

    

     

    The
      Employee will continue to be bound by all obligations (whether express or
      implied) owed to the Company under the terms of the Agreement or as an employee
      of the Company.

     

    
      	
              20

            	
              RESIGNATION
                AND RETURN OF COMPANY
                PROPERTY

            

    

     

    
      	
              20.1

            	
              Upon
                the termination by whatever means of this Agreement the Employee
                shall:

            

    

     

    
      	 	
              20.1.1

            	
              promptly
                resign from any offices that may be held by him in any Group Company
                without claim for compensation; and

            

    

     

    
      	 	
              20.1.2

            	
              promptly
                deliver to the Company all credit cards, motor-cars, keys, computer
                media
                and other property, in whatever form, of or relating to the business
                of
                the Company or of any Group Company which may be in his possession
                or
                under his power or control.

            

    

     

    
      	
              20.2

            	
              If
                the Employee fails to comply with clause 19.2.5
                and 20.1.1
                the Company is hereby irrevocably authorised to appoint some person
                in his
                name and on his behalf to sign and complete any documents or do any
                thing
                necessary to give effect to this
                clause.

            

    

     

    
      	
              20.3

            	
              The
                Employee shall not without the consent of the Company at any time
                after
                the termination of this Agreement represent himself still to be connected
                with the Company or any Group Company (save, if applicable, as shareholder
                in the Parent).

            

    

     

    
      	
              21

            	
              RECONSTRUCTION
                OR AMALGAMATION

            

    

     

    If
      the
      employment of the Employee under this Agreement is terminated by reason of
      the
      liquidation of the Company for the purpose of reconstruction or amalgamation
      and
      the Employee is offered employment with any concern or undertaking resulting
      from the reconstruction or amalgamation on terms and conditions not less
      favourable than the terms of this Agreement then the Employee shall have no
      claim against the Company or any Group Company in respect of the termination
      of
      his employment under this Agreement.

     

    
      	
              22

            	
              RESTRICTIONS

            

    

     

    
      	 	
              22.1.1

            	
              The
                Employee shall not;

            

    

     

    
      
        
        

      

      
        -111-

        
          

        

      

      
        
        

      

    

    
      	 	
              22.1.2

            	
              for
                a period of six (6) months following termination either on his own
                account
                or through any other person, so as to compete with the business of
                the
                Company or any Group Company, directly or indirectly solicit, interfere
                with, or endeavour to entice away from the Company or any Group Company,
                any person who is immediately prior to Completion or has, during
                the two
                (2) years preceding termination, been a customer of the Company or
                any
                Group Company;

            

    

     

    
      	 	
              22.1.3

            	
              for
                a period of twelve (12) months following termination, either on his
                own
                account or through any other person, directly or indirectly solicit,
                interfere with, or endeavour to entice away from the Company or any
                Group
                Company, any person who is immediately prior to termination or has,
                during
                the two (2) years preceding termination, been an employee of the
                Company
                or any Group Company.

            

    

     

    
      	 	
              22.1.4

            	
              The
                restrictions in this clause are considered by the parties to be reasonable
                and the validity of each sub-clause shall not be affected if any
                of the
                others is found by a court of competent jurisdiction to be invalid.
                If any
                of the restrictions is void but would be valid if some part of the
                restriction were deleted, the restriction in question shall apply
                with
                such modification as may be necessary to make it
                valid.

            

    

     

    
      	
              22.2

            	
              The
                Employee acknowledges that the provisions of this clause are no more
                extensive than is reasonable to protect the Company or the
                Group.

            

    

     

    
      	
              22.3

            	
              If
                the Employee is suspended from work under the provisions of
                clause 19.2,
                the Company may, at its sole discretion, agree that the period of
                time
                during which the non-competition restriction contained in clause 22
                is enforceable, starts to run from the date of the suspension and
                not from
                the Termination Date.

            

    

     

    
      	
              23

            	
              SEVERABILITY

            

    

     

    If
      any of
      the provisions of this Agreement become invalid or unenforceable for any reason
      by virtue of applicable law the remaining provisions shall continue in full
      force and effect and the Company and the Employee hereby undertake to use all
      reasonable endeavours to replace any legally invalid or unenforceable provision
      with a provision which will promise to the parties (as far as practicable)
      the
      same commercial results as were intended or contemplated by the original
      provision.

     

    
      	
              24

            	
              THIRD
                PARTIES

            

    

     

    Unless
      the right of enforcement is expressly granted, it is not intended that a third
      party other than a Group Company should have the right to enforce the provisions
      of this Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999.
      

     

    
      	
              25

            	
              NOTICES

            

    

     

    
      	
              25.1

            	
              Any
                notice required or permitted to be given under this Agreement shall
                be
                given in writing delivered personally or sent by first class post
                pre-paid
                recorded delivery (air mail if overseas) or by facsimile to the party
                due
                to receive such notice at, in the case of the Company, its registered
                office from time to time and, in the case of the Employee, his address
                as
                set out in this Agreement (or such address as he may have notified
                to the
                Company in accordance with this
                clause).

            

    

     

    
      	
              25.2

            	
              Any
                notice delivered personally shall be deemed to be received when delivered
                to the address provided in this Agreement and any notice sent by
                pre-paid
                recorded delivery post shall be deemed (in the absence of evidence
                of
                earlier receipt) to be received three (3) days after posting and
                in
                proving the time of despatch it shall be sufficient to show that
                the
                envelope containing such notice was properly addressed, stamped and
                posted. A notice sent by facsimile shall be deemed to have been received
                on receipt by the sender of confirmation in the transmission report
                that
                the facsimile had been sent. 

            

    

     

    
      
        
        

      

      
        -112-

        
          

        

      

      
        
        

      

    

    
      	
              26

            	
              STATUTORY
                INFORMATION

            

    

     

    The
      Schedule 1 to this Agreement sets out information required to be given to the
      Employee by the Employment Rights Act 1996.

     

    
      	
              27

            	
              MISCELLANEOUS

            

    

     

    
      	
              27.1

            	
              This
                Agreement is governed by and shall be construed in accordance with
                the
                laws of England, without regard to conflicts of
                law.

            

    

     

    
      	
              27.2

            	
              The
                parties to this Agreement submit to the exclusive jurisdiction of
                the
                English courts and agree to only serve proceedings in the High Courts
                of
                Justice, Strand London.

            

    

     

    
      	
              27.3

            	
              This
                Agreement contains the entire understanding between the parties and
                supersedes all previous agreements and arrangements (if any) relating
                to
                the employment of the Employee by the Company (which shall be deemed
                to
                have been terminated by mutual
                consent).

            

    

     

    

    
      
        
        

      

      
        -113-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1

     

    Statement
      Of Particulars Pursuant To The Employment Rights Act 1996

     

    
      	
              1

            	
              The
                Employee’s period of continuous employment commences on 26 January
                2000.

            

    

     

    
      	
              2

            	
              The
                Company operates disciplinary and grievance procedures in accordance
                with
                the Employment Act 2002.

            

    

     

    
      	
              3

            	
              The
                Company is not a party to any collective agreement which affects
                the
                Employee’s employment.

            

    

     

    

     

    
      
        
        

      

      
        -114-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      2

     

    

     

    Bonus
      Arrangement

     

    On
      or
      before 31 July 2006, the Employee and the Company will agree a bonus scheme
      linked to his individual performance that will apply as from 1 August
      2006.  An on-target bonus of £1,500 per month will be payable for each
      month, such targets to be set so as to reward the
      Employee
      for
      improving the profitability and revenue of the Company, whilst giving
him
      a
      realistic chance of reaching them.  Such fixed bonus will be paid monthly
      in arrears and there shall be no entitlement to receive any bonus once
the
      Employee’s
      employment has terminated. The Employee and the Company will agree a formula
      to
      pay the Employee a reduced bonus if targets are not met and an increased bonus
      if targets are exceeded.

     

    
      	
               

              Signed
                as a Deed by Swiftnet Limited acting by:

            	 
	
               

              Director

            	 
	
               

              Company
                Secretary

            	 

    

    

     

    

     

    
      	
               

              Signed
                by JAMES RUANE in the presence of:

               

            	 
	
               

              Witness
                signature:

               

            	 
	
               

              Name:

               

            	 
	
               

              Address:

               

            	 
	 	 
	
               

              Occupation:

               

            	 

    

    

    

     

    
      
        
        

      

      
        -115-Exhibit 4.1 - Warrant

    Exhibit
      4.1

    

    WARRANT

    

    NEITHER
      THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
      HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
      THE
      SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES
      LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
      SUCH
      EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
      

    

    MILLENNIUM
      CELL INC.

    

    WARRANT

    

    Warrant
      No. B-1                                                      Date
      of
      Issuance:  May 30, 2006

    

    Millennium
      Cell Inc., a Delaware corporation (the “Company”),
      hereby certifies that, for value received, The Dow Chemical Company or its
      registered assigns (the “Holder”),
      is
      entitled to purchase from the Company up to a total of 178,571 shares of common
      stock, $0.001 par value per share (the “Common
      Stock”),
      of
      the Company (each such share, a “Warrant
      Share”
and
      all
      such
      shares,
      the “Warrant
      Shares”)
      at an
      exercise price (the
      “Exercise
      Price”)
      per
      Warrant Share equal to
      $2.10,
      at any time and from time to time from and after the six (6) month anniversary
      of the Date of Issuance
      (the
“Target
      Date”)
      and
      through and including the five (5) year anniversary of the Date of Issuance
      (the
“Expiration
      Date”),
      and
      subject to the following terms and conditions: 

     

    1.  Definitions.
      In
      addition to the terms defined elsewhere in this Warrant, capitalized terms
      that
      are not otherwise defined herein shall have the meanings given to such terms
      in
      the Stock Purchase Agreement dated February 27, 2005, between the Company and
      the original Holder, as amended by Amendment No. 1 dated April 25, 2005 and
      Amendment No. 2 dated May 30, 2006 (the “Purchase
      Agreement”).

     

    2.  Registration
      of Warrant.
      The
      Company shall register this Warrant, upon
      records to be maintained by the Company for that purpose (the “Warrant
      Register”),
      in
      the name of the record Holder hereof from time to time. The Company may treat
      the registered Holder as the absolute
      owner hereof for the purpose of any exercise hereof or any
      distribution to
      the
      Holder, and for all other purposes, absent actual notice to the
      contrary.

     

    3.  Registration
      of Transfers.
      The
      Company shall register the transfer of any portion of this Warrant in the
      Warrant Register, upon surrender of this Warrant accompanied by a written
      instrument of transfer duly executed by the Holder or by the duly appointed
      legal representative or attorney thereof, to the Company at its address
      specified herein. Upon any such registration or transfer, a new warrant to
      purchase Common Stock, in substantially the form of this Warrant (any such
      new
      warrant, a “New
      Warrant”),
      evidencing the portion of this Warrant so transferred shall be issued to the
      transferee and a New Warrant evidencing the remaining portion of this Warrant
      not so transferred, if any, shall be issued to the transferring Holder. The
      acceptance of the New Warrant by the transferee thereof shall be deemed the
      acceptance by such transferee of all of the rights and obligations of a holder
      of a Warrant.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.  Exercise
      and Duration.
      Subject
      to the provisions of Section
      6,
      this
Warrant
      shall be exercisable by the registered Holder at any time and from
      time
      to time
      on or after the Target Date to and including the Expiration Date (the
“Exercise
      Period”).
      At
      11:59 p.m., New York City time on the Expiration Date, the portion of this
      Warrant available for exercise and not exercised prior thereto shall be and
      become void without the necessity of any further action by the Company and
      of no
      value.

     

    5.  Required
      Exercise.
      At any
      time during the Exercise Period, as long as the Common Stock is publicly traded
      on a Trading Market the Company may elect, by written notice to Holder, to
      require the Holder to exercise all or any portion of the Warrant, if, for the
      thirty (30)-trading day period immediately preceding the date of such election
      the Common Stock (i) has an average daily trading volume which exceeds the
      product of (x) the average daily trading volume for Common Stock during calendar
      years 2003 and 2004 multiplied by (y) fifteen (15), and (ii) has a VWAP which
      is
      at least four (4) times greater than the Exercise Price; provided,
      however,
      that
      upon such election by the Company, the Holder will have the right to immediately
      sell or otherwise transfer this Warrant to a third party who will then be
      required to exercise this Warrant in accordance with the Company’s election
      under this Section
      5;
      provided
      further,
      however,
      that
      if, within ten (10) Business Days after the Company’s election, (i) the
      Holder has not exercised this Warrant, or (ii) the Holder has not sold or
      otherwise transferred this Warrant to a third party, or if sold or otherwise
      transferred, such third party has not exercised this Warrant, then this Warrant
      shall immediately terminate and be of no force and effect without any action
      on
      the part of the Company, the Holder or such third party.

     

    6.  Delivery
      of Warrant Shares.

     

    (a)  Upon
      delivery of: (i) the Notice of Exercise attached hereto as Exhibit
      A
      to the
      Company at its address for notice
      set forth in Section
      14,
      (ii)
      this Warrant, and (iii) the Exercise Price multiplied
      by the
      number of Warrant Shares that the Holder intends to purchase hereunder (the
      “Aggregate
      Exercise Price”),
      the
      Company shall promptly (but in no event later than ten (10) Business Days
      after
      the Date
      of Exercise (as defined herein)) issue and deliver to the Holder, a certificate
      for the Warrant Shares issuable upon such exercise bearing only the restrictive
      legends required by the Purchase Agreement. The Company
      shall,
      upon
      request of the Holder and subsequent to the date on which a
      registration statement covering the resale of the Warrant Shares has been
declared
      effective by the Securities and Exchange Commission, use its
      reasonable
      commercial efforts to deliver Warrant Shares hereunder electronically through
      the Depository Trust Corporation or another established clearing corporation
      performing
      similar functions, if available, provided, that, the Company may,
      but will
      not
      be required to change its transfer agent if its current transfer
      agent
      cannot
      deliver Warrant Shares electronically through the Depository Trust
      Corporation.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    A
      “Date
      of Exercise”
means
      the date on which the Holder shall have delivered to the Company (i) the Notice
      of Exercise,
      appropriately completed and duly
      signed,
      (ii) this Warrant and (iii) the Aggregate Exercise Price.

     

    (b)  If
      by the
      tenth (10th)
      Business Day after a Date of Exercise the Company fails to deliver the required
      number of Warrant Shares in the manner required pursuant to Section
      6(a),
      then
      the Holder will have the right to rescind such exercise.

     

    (c)  The
      Company's obligations to issue and deliver Warrant Shares in accordance with
      the
      terms hereof are absolute and unconditional, irrespective of any action or
      inaction by the Holder to enforce the same, any waiver or consent with respect
      to any provision hereof, the recovery of any judgment against any Person or
      any
      action to enforce the same, or any setoff, counterclaim, recoupment, limitation
      or termination, or any breach or alleged breach
      by
      the Holder or any other Person of any obligation to the Company or
      any
      violation or alleged violation of law by the Holder or any other
      Person.
      Nothing
      herein shall limit a Holder's right to pursue any other
      remedies
      available to it hereunder, at law or in equity including, without limitation,
      a
      decree of specific performance and/or injunctive relief with respect to the
      Company's failure to timely deliver certificates representing shares
      of
      Common Stock upon exercise of the Warrant as required pursuant to
      the
      terms
      hereof.

     

    7.  Charges,
      Taxes and Expenses.
      Issuance and delivery of certificates for
      shares of Common Stock upon exercise of this Warrant shall be made
      without
      charge
      to the Holder for any issue or transfer tax, withholding tax, transfer
agent
      fee
      or other incidental tax or expense in respect of the issuance of
      such
      certificates, all of which taxes and expenses shall be paid by the
      Company.

     

    8.  Replacement
      of Warrant.
      If this
      Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
      cause to be issued in exchange and substitution for and upon cancellation
      hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
      only
      upon receipt of evidence reasonably satisfactory
      to the Company of such loss, theft or destruction and customary and
      reasonable indemnity, if requested. Applicants for a New Warrant under such
      circumstances shall also comply with such other reasonable regulations and
      procedures and pay such other reasonable third-party costs as the Company may
      prescribe.

     

    9.  Reservation
      of Warrant Shares.
      The
      Company covenants that it will at all
      times
      reserve and keep available out of the aggregate of its authorized
      but
      unissued
      and otherwise unreserved Common Stock, solely for the purpose of enabling it
      to
      issue Warrant Shares upon exercise of this Warrant as herein provided, the
      number of Warrant Shares which are then issuable and deliverable upon
      the
      exercise of this Warrant in its entirety; and
      if at
      any time the number of authorized but unissued shares of Common Stock would
      be
      insufficient to effect the exercise of the entire Warrant, the Company shall
      take such corporate action prior to taking any action that would result in
      any
      such insufficiency as may, in the opinion of its counsel, be necessary to
      increase its authorized but unissued shares of Common Stock to such number
      of
      shares as shall be sufficient for such purpose. 

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    10.  Character
      of Warrant Shares.
      The
      Company covenants that all Warrant
      Shares,
      upon issuance and the payment of the applicable Exercise Price in accordance
      with the terms hereof, shall be duly and validly authorized, issued and fully
      paid and nonassessable.

     

    11.  Certain
      Adjustments.
      The
      Exercise Price and number of Warrant Shares issuable upon exercise of this
      Warrant are subject to adjustment from time to time as set forth in this
Section
      11.

     

    (a)  Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding, either (i) pays a stock
      dividend on its Common Stock or otherwise makes a distribution on any class
      of
      capital stock that is payable in shares of Common Stock or (ii) subdivides
      outstanding shares of Common Stock into a larger number of shares, then in
      each
      such case (A) the Exercise Price shall be proportionately decreased by
      multiplying the Exercise Price in effect immediately before such event by a
      fraction of which the numerator shall be the number of shares of Common Stock
      outstanding immediately before such event and of which the denominator shall
      be
      the number of shares of Common Stock outstanding immediately after such event
      and (B) the number of Warrant Shares issuable upon exercise of this Warrant
      shall be proportionately increased by multiplying the number of Warrant Shares
      issuable upon exercise of this Warrant immediately before such event by a
      fraction of which the numerator shall be the number of shares of Common Stock
      outstanding immediately after such event and of which the denominator shall
      be
      the number of shares of Common Stock outstanding immediately before such event.
      

     

    (b)  Combinations.
      If the
      Company, at any time while this Warrant is outstanding, combines outstanding
      shares of Common Stock into a smaller number of shares, then in such case (A)
      the Exercise Price shall be proportionately increased by multiplying the
      Exercise Price in effect immediately before such event by a fraction of which
      the numerator shall be the number of shares of Common Stock outstanding
      immediately before such event and of which the denominator shall be the number
      of shares of Common Stock outstanding immediately after such event and (B)
      the
      number of Warrant Shares issuable upon exercise of this Warrant shall be
      proportionately decreased by multiplying the number of Warrant Shares issuable
      upon exercise of this Warrant immediately before such event by a fraction of
      which the numerator shall be the number of shares of Common Stock outstanding
      immediately after such event and of which the denominator shall be the number
      of
      shares of Common Stock outstanding immediately before such event. 

     

    (c)  Fundamental
      Transactions.
      If, at
      any time while this Warrant is outstanding: (i) the Company effects any merger
      or consolidation of the Company with or into another Person, (ii) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (iii) any tender offer or exchange offer (whether by
      the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (iv) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (in any such case, a “Fundamental
      Transaction”),
      then
      the Holder shall have the right thereafter to receive, upon exercise of this
      Warrant, the same amount and kind of securities, cash or property as it would
      have been entitled to receive upon the occurrence of such Fundamental
      Transaction if it had been, immediately prior to such 

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    Fundamental
      Transaction, the holder of the number of Warrant Shares then issuable upon
      exercise in full of this Warrant (the “Alternate
      Consideration”).
      For
      purposes of any such exercise, the determination of the Exercise Price shall
      be
      appropriately adjusted to apply to such Alternate Consideration based on the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Exercise Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any exercise of this Warrant following such Fundamental
      Transaction. At the Holder’s option and request, any successor to the Company or
      surviving entity in such Fundamental Transaction shall, either (i) issue to
      the
      Holder a new warrant substantially in the form of this Warrant and consistent
      with the foregoing provisions and evidencing the Holder's right to purchase
      the
      Alternate Consideration for the aggregate Exercise Price upon exercise thereof,
      or (ii) purchase the Warrant from the Holder for a purchase price, payable
      in
      cash within ten (10) trading days after such request (or, if later, on the
      effective date of the Fundamental Transaction), equal to the Black Scholes
      value
      of the remaining unexercised portion of this Warrant on the date of the
      Fundamental Transaction as well as assumptions reasonably mutually acceptable
      to
      the Company and the Holder, provided that for purposes of such calculation,
      the
      market price of the Common Stock shall be the closing bid price of the Common
      Stock on the trading day immediately preceding the public announcement of the
      Fundamental Transaction and the volatility factor shall be determined by
      reference to the 12 month average industry volatility measures. The terms of
      any
      agreement pursuant to which a Fundamental Transaction is effected shall include
      terms requiring any such successor or surviving entity to comply with the
      provisions of this paragraph
      (c)
      and
      insuring that this Warrant (or any such replacement security) will be similarly
      adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction.

     

    12.
      Payment
      of Exercise Price.
      The
      Holder shall pay the Exercise Price by check or a wire transfer of immediately
      available funds.

     

    13.
      No
      Fractional Shares.
      No
      fractional shares of Warrant Shares will be issued in connection with any
      exercise of this Warrant. In lieu of any fractional
      shares which would, otherwise be issuable, the Company shall pay
      cash equal
      to
      the product of such fraction multiplied by the
      VWAP
      of the Common Stock for the thirty (30)-trading day period immediately preceding
      the Date of Exercise.

     

    14.
      Notices.
      Any and
      all notices or other communications or deliveries hereunder
      (including without limitation any Exercise Notice) shall be in
      writing
      and
      shall be deemed given and effective on the earliest of (i) the date of
transmission,
      if such notice or communication is delivered via facsimile at the
      facsimile number specified in this Section
      14
      prior to
      6:30 p.m. (New York City time) on a Business Day, (ii) the next Business Day
      after the date of transmission,
      if such notice or communication is delivered via facsimile at the facsimile
      number specified in this Section
      14
      on a day
      that is not a Business Day or later
      than 6:30 p.m. (New York City time) on any Business Day, (iii) the
      Business
      Day
      following the date of mailing, if sent by nationally recognized overnight
courier
      service, or (iv) upon actual receipt by the party to whom such notice
      is required
      to be given. The addresses for such communications shall be: (i) if
      to
      the
      Company, to Millennium Cell Inc., 1 Industrial Way West, Eatontown, New
Jersey,
      07724, Facsimile No.: (732) 542-4010, Attn: Chief Financial Officer,
      or
      (ii) if
      to the Holder, to the address or facsimile number appearing on the Warrant
      Register or such other address or facsimile number as the Holder may provide
      to
      the Company in accordance with this Section.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    15.
      Warrant
      Agent.
      The
      Company shall serve as warrant agent under this Warrant. Upon thirty (30) days'
      notice to the Holder, the Company may appoint a new warrant agent. Any
      corporation into which the Company or any new warrant agent may be merged or
      any
      corporation resulting from any consolidation to which the Company or any new
      warrant agent shall be a party or any corporation to which the Company or any
      new warrant agent transfers substantially all of its corporate trust or
      shareholders services business shall be a successor warrant agent under this
      Warrant without any further act. Any such successor warrant agent shall promptly
      cause notice of its succession as warrant agent to be mailed
      (by first class mail, postage prepaid) to the Holder at the Holder's
      last
      address
      as shown on the Warrant Register.

     

    16.
      Miscellaneous.

     

    (a)  This
      Warrant shall be binding on and inure to the benefit of the parties hereto
      and
      their respective successors and assigns. Subject to the preceding sentence,
      nothing in this Warrant shall be construed to give to any Person other than
      the
      Company and the Holder any legal or equitable right, remedy or cause of action
      under this Warrant. This Warrant may be amended only in writing signed by the
      Company and the Holder and their successors and assigns.

     

    (b)  All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be governed by and construed and enforced in accordance
      with the internal laws of the State of Delaware, without regard to the
      principles of conflicts of law thereof. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by this Warrant (whether brought against a party
      hereto or its respective affiliates, directors, officers, shareholders,
      employees or agents) shall be commenced in the state and federal courts sitting
      in Delaware . Each party hereto hereby irrevocably submits to the exclusive
      jurisdiction of the state and federal courts sitting in the Delaware for the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein (including with respect
      to
      the enforcement of this Warrant), and hereby irrevocably waives, and agrees
      not
to
      assert
      in any suit, action or proceeding, any claim that it is not
      personally
      subject
      to the jurisdiction of any such court, that such suit, action or proceeding
      is
      improper. Each party hereto hereby irrevocably waives personal service
      of process and consents to process being served in any such suit,
      action
      or
      proceeding by mailing a copy thereof via registered or certified mail or
      overnight delivery (with evidence of delivery) to such party at the address
      in
      effect for notices to it under this Warrant and agrees that such service shall
      constitute good and sufficient service of process and notice thereof. Nothing
      contained herein shall be deemed to limit in any way any right to serve process
      in any manner permitted by law. Each party hereto (including its affiliates,
      agents, officers, directors and employees) hereby irrevocably waives, to the
      fullest extent permitted by applicable law, any and all right to trial by jury
      in any legal proceeding arising out of or relating to this Warrant or the
      transactions contemplated hereby. 

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c)  The
      headings herein are for convenience only, do not constitute
      a part of this Warrant and shall not be deemed to limit or affect
      any
      of the
      provisions hereof.

     

    (d)  In
      case
      any one or more of the provisions of this Warrant shall be invalid or
      unenforceable in any respect, the validity and enforceability
      of the remaining terms and provisions of this Warrant shall not in
      any
      way be affected or impaired thereby and the parties will attempt in
      good
      faith to
      agree upon a valid and enforceable provision which shall be a commercially
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Warrant.

     

    [remainder
      of page intentionally left blank, signature page follows]

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly
      executed
      by its authorized officer as of the date first indicated above.

     

    

    MILLENNIUM
      CELL INC.

    

    

    /s/John
      D. Giolli

    Name:
      John D. Giolli 

    Title:
      Chief Financial Officer

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    FORM
      OF NOTICE OF EXERCISE

    

    Millennium
      Cell Inc.

    1
      Industrial Way West

    Eatontown,
      New Jersey 07724

    Attention:
       Chief
      Financial Officer

    

    1. The
      undersigned hereby elects to purchase, pursuant to the provisions of that
      certain Warrant No. B-1 dated as of May 30, 2006, issued by Millennium Cell
      Inc.
      (the “Company”)
      and
      held by the undersigned (the “Warrant”),
                             
      shares
      of Common Stock, by exercise of the Warrant with respect to that number of
      Warrant Shares. Capitalized terms used but not defined in this Notice of
      Exercise shall have the meanings given such terms in the Warrant.

     

    2. The
      exercise of the Warrant is pursuant to Section 12 of the Warrant, and
      payment, in cash or by check, of the aggregate Purchase Price under such Warrant
      with respect to the number of Warrant Shares set forth in Section
      1
      of this
      Notice of Exercise, accompanies this Notice of Exercise.

     

    3. Please
      issue a certificate or certificates representing said shares of Common Stock
      in
      the name of the undersigned or in such other name as is specified
      below:

     

    _______________________________________

    (Name)

    _______________________________________

    (Address)

    _______________________________________

    

    _______________________________________

    

    Dated:
      ________________________   

    [HOLDER]

    

    Signature:
      _________________________________________      

    

    Address: 
      _________________________________________

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