Document:

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                                                                    EXHIBIT 10.5

                   CONFIDENTIAL INVOICE DISCOUNTING AGREEMENT

                                     BETWEEN

                           HUGO INTERNATIONAL LIMITED

                                       AND

                     FIVE ARROWS COMMERCIAL FINANCE LIMITED

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MC/PW/

To the Directors
Hugo International Limited
6 Waterside Drive
Slough
Berks
SL3 6EZ

                                                              23rd December 1998

Dear Sirs

We attach in duplicate the Term Sheet and Agreement confirming the terms and
conditions upon which we are willing to discount the receivables of your
business and you will note that certain expressions are defined in Clause 1 of
the Agreement. The enclosed documents supersede any previous discussions,
quotations or agreements between us and, subject to any variation in accordance
with Clause 14.4(b), these will be the only terms and conditions of our
Agreement. Will you please indicate your acceptance of these terms by signing
the Term Sheet in duplicate and executing the agreement where indicated and
return both copies to us.

We very much hope for a long and mutually rewarding association.

                                Yours faithfully

                                  MARK CONNELLY
                                ------------------
                                Managing Director

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                     FIVE ARROWS COMMERCIAL FINANCE LIMITED

                                   TERM SHEET

                                Serial No. MAO313

 CLIENT:   HUGO INTERNATIONAL LIMITED ("the Client")

Registered Office: 122 (a) Nelson Road, Whitton, Twickenham

Registered No.: 02757258

This Term Sheet is the Term Sheet described in the attached Master Invoice
Discounting Agreement ("the Agreement") Serial No.: MA03 13 dated 18/March 1999
and supersedes all prior Term Sheets relative to the Agreement. The terms of the
Agreement shall be incorporated herein as though set out in full.

1.       TERMS:

(a)      Bank                                Royal Bank of Scotland PLC
                                             PG Box 450, 5-10 Great Tower Street
                                             London, EC3P 3JX
                                             Sort Code: 16-04-00

         Trust Account No.                   20248787

(b)      Commencement Date                   19/March/1999

(c)      Initial Payment   70%

(d)      Initial Set-up Charge               0.3%

(e)      Margin (over the Rate)              2.5%

(f)      Minimum Annual Service Charge       pound sterling 12,000

(g)      Minimum Period                      12 months

(h)      Reserve Fund Percentage             30%

(i)      Review Limit                        pound sterling 600,000

(j)      Service Charge                      0.3%

(k)      Settlement Date                     90 days from month in which the
                                             invoice is raised

(All charges are exclusive of any applicable Value Added Tax)

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Dated 18th/March l999

FIVE ARROWS                                       HUGO INTERNATION LIMITED
COMMERCIAL FINANCE LIMITED

By: /s/ Mark Connelly                                By: /s/ D. W. Foden
   ----------------------                               ---------------------

Name: Mark Connelly                                  Name: D. W. Foden

Office: Director                                     Office:  M.D.

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                      MASTER INVOICE DISCOUNTING AGREEMENT

                                                               SERIAL NO: MAO313

         PARTIES:

         (1)      FIVE ARROWS COMMERCIAL FINANCE LIMITED whose registered office
                  is at New Court, St Swithin's Lane, London, EC4P 4DU ("Five
                  Arrows") (which expression shall include its successors and
                  assigns).

         (2)      THE CLIENT whose name and registered office address are set
                  out in the Term Sheet ("the Client").

         DEFINITIONS:

         1.1   In this Agreement except where the context otherwise requires
               each of the following expressions shall bear the meaning
               respectively shown opposite it below:

               "Bank"               the bank named in the Term Sheet or such
                                    other bank in Great Britain as Five Arrows
                                    may nominate by an amendment to the Term
                                    Sheet from time to time;

               "Business Day"       a day (other than a Saturday) on which
                                    banks are open for the transaction of
                                    business in London of the nature required
                                    for this Agreement;

               "Client"             the Client named in the Term Sheet;

               "Collection Payment" any amount received by Five Arrows from a
                                    Customer in respect of a Debt less the
                                    aggregate of:

                                         (i)  the Initial Payment (if any)
                                              already paid to the Client;

                                        (ii)  the Service Charge;

                                       (iii)  Costs and all other sums due to
                                              Five Arrows in respect of the Debt

               "Commencement Date"  the date specified in the Term Sheet;

               "Contract of Sale"   a contract for the sale of goods
                                    and/or work done and materials supplied
                                    and/or services rendered and/or hiring by
                                    the Client to a customer under which a Debt
                                    arises;

               "Customer"           in relation to a Contract of Sale, the
                                    purchaser, hirer or other person liable for
                                    the price or other payment and named in the
                                    relative Invoice;

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               "Debt"              a Debt (whether presently payable or not)
                                   arising from a Contract of Sale to a
                                   Customer calculated at the gross book value
                                   including VAT and before taking into account
                                   any reduction which may be agreed between
                                   the Client and the relative Customer or any
                                   prompt payment discount;

               "Discount Charge"   an amount calculated by daily applying the
                                   aggregate of the Margin and the Rate to the
                                   difference between the total amount paid by
                                   Five Arrows to the Client, by way of Initial
                                   Payments together with all other sums paid
                                   to the Client, or paid on the Client's
                                   behalf or at the Client's direction or
                                   debited to the Client's account with Five
                                   Arrows pursuant to this Agreement, and the
                                   total of receipts from Customers;

               "Initial Payment"   The percentage specified in the Term Sheet
                                   of Debts notified to Five Arrows less the
                                   Service Charge;

               "Initial Set-up     either the percentage specified in the Term
               Charge"             Sheet of the gross book value of the Debts
                                   taken over on the Commencement Date or the
                                   flat amount so specified (as the case may be)
                                   plus in either case VAT;

               "Insolvent" and/or  in relation to any person, firm or company
               "Insolvency"        any of following:

                                   (a)      any act of bankruptcy,
                                            sequestration or the passing of a
                                            resolution or the presentation of a
                                            petition for the winding up of a
                                            company;

                                   (b)      the appointment of a Receiver, the
                                            making of any composition or
                                            arrangement (whether formal or
                                            informal) with or for the benefit
                                            of creditors or the calling of a
                                            meeting for the same;

                                   (c)      an encumbrancer taking possession
                                            of the whole or any material part
                                            of its assets or any distress
                                            execution or sequestration being
                                            levied upon or sued out against any
                                            of its assets;

                                   (d)      the making of a petition or
                                            application for any order under the
                                            Insolvency Act 1986;

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                                   (e)      the remaining unsatisfied of any
                                            judgement or award of any court
                                            tribunal or arbitration for a
                                            period of seven days;

                                   (f)      the ceasing or threat of ceasing to
                                            carry on business;

                                   (g)      the giving of notice of suspension,
                                            or of a moratorium on payment, of
                                            debts;

                                   (h)      inability to pay all debts as they
                                            fall due or any other similar event
                                            under any applicable law;

               "Margin"            for the purposes amongst other things of "the
                                   Discount Charge" the percentage per annum
                                   specified in the Term Sheet;

               "Minimum Annual     for the purposes amongst other things of
                Service Charge"    Clause 7(c) the amount exclusive of VAT
                                   specified in the Term Sheet commencing from
                                   the first day of the month following the
                                   Commencement Date;

               "Minimum Period"     the minimum number
                                    of months specified in the
                                    Term Sheet from the
                                    Commencement Date for which
                                    this Agreement is to
                                    continue;

               "Purchase Price"     the meaning ascribed to that term in Clause
                                    5.3;

               "the Rate"           the base rate of the
                                    Bank from time to time
                                    subject to a minimum base
                                    rate of 5.5% per annum (or
                                    if the Bank ceases to quote
                                    a base rate the base rate
                                    or other comparable rate
                                    quoted by a London clearing
                                    bank selected by Five
                                    Arrows);

               "Receiver"           a receiver, receiver and
                                    manager, administrator,
                                    administrative receiver,
                                    liquidator or other person
                                    entrusted by law with the
                                    management of a company's
                                    affairs (other than its
                                    directors) under any
                                    applicable law;

               "Reserve Fund"       the balance which Five Arrows in its sole
                                    discretion from time to time and at any time
                                    considers necessary to hold on the Client's
                                    account as a reserve against sums actually
                                    or contingently due to Five Arrows from the
                                    Client and until Five Arrows otherwise
                                    determine it will be not less than the
                                    percentage specified in the Term Sheet of
                                    all unpaid Debts;

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               "Schedule"           a schedule in a form specified by Five
                                    Arrows from time to time duly executed by an
                                    authorised signatory of the Client;

               "Security Interest"  any mortgage, pledge, encumbrance, right of
                                    set off or other security interest howsoever
                                    created or arising;

               "Service Charge"     the percentage specified in the Term Sheet
                                    of the gross book value of each Debt before
                                    any credit purchased by Five Arrows;

               "Settlement Date"    the date by which each Debt is to be paid
                                    namely the date which is the number of days
                                    specified in the Term Sheet after the end of
                                    the month as at which the relative invoice
                                    is dated;

               "Termination Event"  any event referred to in Clause 6.2;

               "Term Sheet"         the term sheet as executed by the Client and
                                    Five Arrows to which this Agreement is
                                    attached, as such term sheet may be
                                    substituted from time to time;

               "Trust Account"      for the purposes amongst other things of
                                    Clauses 12 and 13 an account of the Client
                                    with the Bank as specified by Five Arrows in
                                    the Term Sheet to which payment of all debts
                                    is to be credited;

               "VAT"                Value Added Tax.

1.2.              Any reference in this Agreement to a Termination Event
                  includes a reference to any event which with the giving of
                  notice and/or the lapse of time and/or a determination being
                  made under the relevant sub-clause would constitute a
                  Termination Event.

1.3.              Reference in this Agreement in Clause 8.1 include references
                  to the Term Sheet, each Schedule, any documents related to
                  this Agreement or any Schedule (in particular but without
                  limitation the Debenture referred to in Clause 2) and any
                  assignment, assignation or other document referred to in
                  Clause (3) and any documents necessary for enforcement.

1.4.     Clause headings are for ease of reference only.

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         COMMENCEMENT AND DURATION

         2.1      This Agreement shall commence on the Commencement Date and
                  will (subject to Clauses 2.2 and 6.2) remain in force for the
                  Minimum Period.

         2.2      Five Arrows's obligations under this Agreement are conditional
                  on the execution and registration of a first fixed Legal
                  Charge over all the book and other debts of the Client in
                  favour of Five Arrows and in form and substance satisfactory
                  to Five Arrows.

         PURCHASE OF DEBTS AND NOTIFICATION

         3.1      The Client agrees to sell and Five Arrows agrees to purchase
                  all Debts notified in a Schedule. The ownership of each such
                  Debt will vest in Five Arrows on the date Five Arrows receives
                  the relative Schedule.

         3.2      On a Debt vesting in Five Arrows there shall automatically
                  vest in Five Arrows all the Client's rights in relation to the
                  relative Contract of Sale and all remedies for enforcing
                  payment of the Debt together with the Client's title to and
                  all rights in the goods to which the Contract of Sale relates
                  and all insurances and securities taken or held by the Client
                  in connection therewith.

         3.3      On request by Five Arrows or on Five Arrows's behalf the
                  Client will forthwith create and deliver to Five Arrows at the
                  Client's cost, formal written, executed and duly stamped
                  assignments or assignations of the Debt or of the title,
                  rights, instruments, insurances and securities referred to
                  above and the Client shall thereupon give notice to Customers
                  of the assignment of Debts hereby constituted.

         3.4      The Client will on the Commencement Day, deliver to Five
                  Arrows a Schedule notifying Five Arrows of the existence of
                  all Debts outstanding on that date (other than Debts under
                  Clause 4.1). Each Schedule shall also specify separately those
                  Debts then existing which are not being notified by virtue of
                  Clause 4.1. Thereafter from time to time (but not more than
                  once in every 7 days, or at such interval as Five Arrows may
                  agree) the Client will deliver further Schedules as Debts
                  arise. With each Schedule the Client will deliver to Five
                  Arrows a copy of the invoice referred to therein together with
                  such proof as Five Arrows may require of the performance of
                  the Contract of Sale or its terms. Each invoice will show its
                  due date for payment. Until Five Arrows otherwise directs, the
                  Client should not disclose the purchase of Debts by Five
                  Arrows to Customers.

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         NON-NOTIFIABLE DEBTS

         4.1      Until Five Arrows gives the Client notice to the contrary the
                  Client will not be required to deliver Schedules relating to
                  the following classes of Debts:

                  (i)      Debts due from a director or shareholder or employee
                           of the Client;

                  (ii)     Debts due from any person whose relationship with the
                           Client is within the meaning of "associate" as
                           defined by Section 184 of the Consumer Credit Act
                           1974;

                  (iii)    Debts due from the sale of any of the Client's
                           capital assets;

                  (iv)     Debts which are not due in respect of the Customer's
                           trade occupation or profession or where the Customer
                           does not have an established place of business;

                  (v)      Debts arising under a conditional sale or hire
                           purchase or leasing or consumer credit sale
                           agreement;

                  (vi)     Debts due in respect of goods delivered on sale or
                           return or on approval;

                  (vii)    Debts arising under any Contract of Sale involving
                           progress payments or RIBA or JCT or similar terms or
                           where payment is required prior to completion of
                           performance of the Contract of Sale;

                  (viii)   Debts arising under any Contract of Sale with a
                           Ministry of the Crown.

         4.2      Until the Client is required to deliver Schedules in respect
                  of the above classes of Debts Five Arrows shall not be obliged
                  to purchase any Debts of those classes or make any Initial
                  Payments to the Client and the trust provisions of Clause 13
                  shall not apply and no Service Charge shall accrue to Five
                  Arrows in respect thereof.

         PURCHASE PRICE

         5.1      The Purchase Price for each Debt vesting in Five Arrows shall
                  be the Initial Payment and the Collection Payment relating to
                  such Debt.

         5.2      Out of the Purchase Price Five Arrows will maintain the
                  Reserve Fund. The Client will not be entitled to interest on
                  the Reserve Fund.

         5.3      Subject to the requirements of the Reserve Fund Five Arrows
                  will deal with the Purchase Price of each Debt as follows:

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         (a)      The Initial Payment relative to that Debt will be available to
                  the Client in Sterling, not later than two Business Days after
                  receipt of the relative Schedule, and

         (b)      The Collection Payment will be available to the Client
                  forthwith after receipt of a payment from the Customer subject
                  to all rights in Five Arrows's favour contained in this
                  Agreement and to Five Arrows's right to withhold the
                  Collection payment until banker's cleared funds are available.

5.4      Five Arrows will be under no obligation to make available to the Client
         either any Initial Payments or Collection Payments whilst the aggregate
         amount of Initial Payments in respect of Debts vesting in Five Arrows
         and remaining unpaid together with any unpaid Service Charges and
         Discount Charges and other charges and fees exceeds the Review Limit
         specified in the Term Sheet.

5.5      (a)      The Client shall pay all Bank Charges and/or commission for
                  collection and/or where a Debt is payable otherwise than in
                  Sterling conversion into Sterling; and

         (b)      Where a Debt is payable otherwise than in Sterling the
                  Purchase Price shall be calculated by reference to the rate of
                  exchange for the purchase of Sterling with the other currency
                  quoted by the Bank at or about 11:00 am on the date of
                  Collection but for administrative convenience Five Arrows
                  shall provisionally apply the said rate of exchange on the
                  date of receipt of the relative Schedule making such
                  adjustments as may thereafter be necessary. A similar
                  provision shall apply to the calculation and payment of the
                  Re-purchase Price where Five Arrows exercises its right of
                  Re-purchase so that the Client bears any risk, but receives
                  any reward, resulting from exchange rate fluctuations.

         REPURCHASE

         6.1      Upon notification from Five Arrows the Client shall repurchase
                  a Debt or the balance thereof unpaid by the Customer upon any
                  of the following events:

                  (a)      the Insolvency of the Customer;

                  (b)      the Customer failing to pay the gross invoice value
                           (less any prompt payment discount not exceeding 5%)
                           by the Settlement date; or

                  (c)      upon Solicitors or any collection agent being
                           instructed to collect the Debt.

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         6.2      Five Arrows may terminate this Agreement and upon notification
                  from Five Arrows the Client will repurchase all Debts
                  specified by Five Arrows at any time after any of the
                  following events:

                  (a)      the Client fails to pay any amount due under this
                           Agreement on the due date or on demand if so payable;

                  (b)      the Client fails to observe or perform any of its
                           obligations under this Agreement and in the case of a
                           failure capable of being remedied Five Arrows does
                           not determine that it has been remedied to Five
                           Arrows's satisfaction within 21 days of the Client
                           becoming aware of such failure;

                  (c)      any warranty, representation or statement made or
                           acknowledged to have been made by the Client in this
                           Agreement or any Schedule or to Five Arrows in
                           connection therewith proves to be incorrect in any
                           material respect;

                  (d)      Insolvency occurs in relation to the Client or any
                           guarantor or indemnitor of the Client;

                  (e)      Five Arrows in its absolute discretion considers
                           that:

                           (i)      a material adverse change in the Client's
                                    financial condition or performance has
                                    occurred;

                           (ii)     changes in the officers, senior management
                                    or shareholders (legal or beneficial) in the
                                    Client are adverse to Five Arrows's
                                    interest;

                           (iii)    the Client's administration, management or
                                    controls are inadequate for the proper
                                    operation of this Agreement; or

                  (f)      this Agreement is terminated under Clause 6.3.

         6.3      Either Five Arrows or the Client may at any time after the
                  expiry of the Minimum Period terminate this Agreement without
                  prejudice to Five Arrows's rights actual or contingent accrued
                  at that date by not less than six months' prior notice.

         6.4      The Repurchase Price of each Debt shall be a sum representing
                  the difference between:

                  (a)      the aggregate of:

                           (i)      the Initial Payment;

                           (ii)     the Service Charge;

                           (iii)    the Discount Charge; and

                           (iv)     the costs and all other sums due to Five
                                    Arrows hereunder;

                           AND

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                  (b)      all sums received from the Customer in respect of
                           that Debt.

         6.5      Upon Five Arrows giving notice that Five Arrows no longer
                  require a Debt to be vested in Five Arrows or upon payment of
                  the Repurchase Price under Clause 6.4 the ownership and all
                  subsisting rights in respect of the Debt shall be re-vested in
                  the Client. Five Arrows shall be entitled to give notice of
                  the same to the Customer where Five Arrows considers it
                  appropriate. On such re-vesting all Five Arrows's rights and
                  obligations under this Agreement in relation to such Debt
                  shall thereafter cease but without prejudice to Five Arrows's
                  rights accrued before re-vesting. If such Debt has been
                  formally assigned to Five Arrows under Clause 3.3 Five Arrows
                  will upon request execute a formal re-assignment thereof to
                  the Client.

         CHARGES

         7.       The Client's account with Five Arrows will be subject to the
                  following charges:

                  (a)      A Service Charge in respect of each Debt purchased by
                           Five Arrows;

                  (b)      An Initial Set-up Charge which will be payable on the
                           Commencement Date;

                  (c)      A sum equal to the deficiency (if any) between the
                           Minimum Annual Service Charge and the Service Charges
                           in any period of twelve months expiring on the
                           anniversary of the first day of the month succeeding
                           the Commencement Date. A pro rata sum on account of
                           any Minimum Annual Service Charge may be debited to
                           the Client's account immediately on a monthly basis.
                           In the event of Termination of this Agreement other
                           than under the terms of Clause 6.3, Five Arrows may
                           at our absolute discretion charge the higher of six
                           months' pro rata Minimum Charges or a sum equal to
                           six times the average monthly Service Charge actually
                           debited by Five Arrows in the twelve months period or
                           pro rata part thereof prior to the termination of
                           this Agreement;

                  (d)      the Discount Charge;

                  (e)      Interest at the rate per annum equal to the aggregate
                           of the Margin and the Rate upon any balance from time
                           to time due from the Client to Five Arrows other than
                           a balance in respect of which the Discount Charge is
                           payable.

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         GENERAL ACCOUNTING PROCEDURES

         8.1      Five Arrows may debit the Client's account with all expenses
                  incurred by Five Arrows in or enforcing this Agreement and any
                  ancillary documentation including all legal fees together with
                  all stamp duties, penalties and fines payable on assignments
                  and reassignments of any nature together with any losses,
                  expenses or damages (contingent or otherwise) suffered by Five
                  Arrows in the event of any breach of this Agreement. Five
                  Arrows may debit its reasonable estimate of such expenses to
                  the Client's account subject to later adjustment.

         8.2      Five Arrows may debit the Client's account on an indemnity
                  basis with legal and all other costs and expenses incurred by
                  Five Arrows in collecting or attempting to collect any Debt or
                  disposing of any litigation whether these are Five Arrows's
                  own or those due to any other person.

         YOUR RECORDS AND REPORTS

         9.1      The Client shall maintain a monthly open item ageing analysis
                  in such form as Five Arrows may require showing the position
                  of each Customer's account with the Client on the last day of
                  each month including details of any outstanding credit
                  balances. The Client will supply Five Arrows with copies of
                  such analysis and the Client's sales ledger control by the
                  tenth day of the following month and at any time forthwith
                  upon request.

         9.2      The Client will keep all books required by law together with
                  true and accurate accounts and minute books. All ledgers of
                  Debts shall bear a conspicuous notation that they have been
                  assigned to Five Arrows. The Client shall allow Five Arrows
                  and its authorised representatives to inspect the same and all
                  orders, original correspondence and the Client's bank
                  statements without prior notice and if requested shall provide
                  Five Arrows with copies.

         9.3      The Client shall within seven days of Five Arrows's request
                  provide Five Arrows with financial statements and such other
                  information and documents relating to the Client's business
                  and to Debts and Contracts of Sale as Five Arrows may require.
                  In particular the Client will keep available for Five Arrows's
                  inspection copies of all invoices and debit and credit notes
                  and documents evidencing how Debts are reduced paid or
                  otherwise satisfied, together with information regarding
                  disputed Debts or Debts placed with Solicitors for collection
                  or any Debts where there have been breaches of the warranties
                  contained herein or where the Customer has become insolvent or
                  been unable to pay by the Settlement Date. The Client will
                  send to Five Arrows each day a report of the collections made
                  by the Client.

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         9.4      Upon the Client's failure to assist Five Arrows, then, without
                  prejudice to any other rights in Five Arrows's favour, Five
                  Arrows may immediately adjust the Reserve Fund and at the
                  Client's expense appoint accountants and professional experts
                  to obtain such information as Five Arrows may require.

         9.5      The Client will send to Five Arrows as soon as they become
                  available but in any event within three months after the end
                  of each of its financial periods (which shall not be longer
                  than fifteen months) copies of its audited financial
                  statements for that period. The Client shall also send to Five
                  Arrows copies of its quarterly management accounts within one
                  month after the end of that quarter, copies of each of its
                  interim statements and other circulars to its shareholders
                  when sent to shareholders and the Client will promptly supply
                  to Five Arrows with such additional financial or other
                  information as Five Arrows may reasonably request.

         RECORDS TO BE MAINTAINED BY FIVE ARROWS

         10.1     Five Arrows will maintain such accounts as Five Arrows shall
                  consider necessary to record the amounts due from Five Arrows
                  however arising to the Client and/or vice versa.

         10.2     Copies of such accounts will be delivered to the Client at
                  such intervals as Five Arrows shall consider necessary. Unless
                  the Client notifies Five Arrows within 30 days of receipt that
                  any item therein is disputed then such record (save for
                  manifest error) will be binding upon the Client.

         WARRANTIES, UNDERTAKINGS AND INDEMNITY

         11.1     The Client represents and warrants to Five Arrows (and upon
                  each delivery of a Schedule, shall be deemed to represent and
                  warrant to Five Arrows) that:

                  (a)      each Debt will arise and each sale of a Debt will be
                           made in the ordinary course of its business;

                  (b)      each sale of a Debt pursuant to this Agreement shall
                           be made by the Client to Five Arrows with Full Title
                           Guarantee subject to disclosure in accordance with
                           Clause 11.3 below;

                  (c)      each Contract of Sale, and each instrument or other
                           document referred to in Clause 3 shall be governed by
                           English law and each Debt will be governed by the
                           laws of England;

<PAGE>   16

                  (d)      each Debt is undisputed, is payable on or before the
                           Settlement Date and each Debt and each Contract of
                           Sale is legally enforceable in accordance with its
                           terms by Five Arrows as assignee of the Client;

                  (e)      there are no contra accounts, set-offs, counterclaims
                           or deductions allowable or enforceable against any
                           Debt by the Customer or any other person (including
                           without limitation any supplier or other person
                           claiming retention of title);

                  (f)      all statements contained in and all signatures
                           appearing on every order, invoice and other document
                           relating to a Debt or a Contract of Sale or on any
                           other document delivered to Five Arrows hereunder are
                           true and genuine accurate and complete;

                  (g)      the Client is duly incorporated in England as a
                           limited liability company;

                  (h)      the Client's Memorandum and Articles of Association
                           authorise and all necessary corporate action has been
                           taken to authorise the Client to enter into this
                           Agreement and each Supply Contract, to make Offers
                           pursuant hereto and to perform the transactions
                           contemplated hereby;

                  (i)      neither the execution of this Agreement or the sale
                           of Debts hereunder nor the performance of any of the
                           transactions contemplated in this Agreement will:

                           (i)      contravene or constitute a default under any
                                    provision of the Client's Memorandum and
                                    Articles of Association or

                           (ii)     cause any limitation on it or the powers of
                                    its directors to be exceeded whether imposed
                                    by or contained in any agreement,
                                    instrument, law, judgement, order licence,
                                    permit or consent by which it or any of its
                                    assets is bound or affected;

                  (j)      no Termination Event has occurred; and

                  (k)      the Client has fully disclosed to Five Arrows all
                           facts relating to the Client which the Client knows
                           or should reasonably know and which are material for
                           disclosure to Five Arrows in the context of this
                           Agreement.

         11.2     The Client undertakes with Five Arrows until all its
                  liabilities under this agreement are finally discharged that
                  it will:

                  (a)      duly and punctually perform all its obligations under
                           each Contract of Sale and not without Five Arrows's
                           prior written consent rescind vary or terminate a
                           Contract of Sale to which a Debt relates;

<PAGE>   17

                  (b)      indemnify Five Arrows against any claim by a Customer
                           to reject the goods and/or work and/or services under
                           a Contract of Sale or to set-off or counter-claim any
                           amount and against all costs charges and expenses
                           incurred by Five Arrows as a result;

                  (c)      pay to Five Arrows on demand an amount equal to any
                           cash discount or credit note issued to or debit note
                           issued by the Customer relied on in relation to any
                           Debt;

                  (d)      comply with Five Arrows's reasonable accounting
                           administrative and procedural requirements in
                           relation to the operation of this Agreement; and

                  (e)      notify Five Arrows promptly in writing as soon as
                           either any dispute with a Customer (whether justified
                           or not) arises or a Customer claims any set-off or
                           counter-claim relative to a Debt.

         11.3     The Client also undertakes with Five Arrows that until all its
                  liabilities under this Agreement have been finally discharged:

                  (a)      the liabilities of the Client under this Agreement
                           will rank at least equally and rateably (pari passu)
                           in point of priority and security with all its other
                           liabilities (both actual and contingent) except:

                           (i)      liabilities which are subject to liens or
                                    rights of set-off arising in the normal
                                    course of trading and the aggregate amount
                                    of which is not material;

                           (ii)     liabilities which are preferred solely by
                                    virtue of English law and not by reason of
                                    any Security Interest;

                           (iii)    liabilities which existed at and were
                                    disclosed in writing to Five Arrows before,
                                    the Commencement Date;

                            and the Client will not create or permit to exist
                            over all or any part of its business or assets any
                            Security Interest (other than any permitted under
                            sub-paragraph (i) above) without the prior written
                            consent of Five Arrows;

                  (b)      save pursuant to this Agreement the Client shall not
                           nor shall the Client agree to factor, discount,
                           encumber, assign or deal with any of its debts
                           otherwise than getting in the same in the normal
                           course of trading and paying the proceeds to Five
                           Arrows or as it may direct;

                  (c)      the Client will forthwith notify Five Arrows if it
                           becomes aware of the occurrence of any Termination
                           Event and provide Five Arrows with full

<PAGE>   18

                           details of the steps it is taking to remedy or
                           mitigate the effect of the Termination Event or
                           otherwise in connection with it;

                  (d)      the Client will and will procure that its officers,
                           employees, agents and contractors will assist Five
                           Arrows in every lawful way to safeguard Five Arrows's
                           interests; and

                  (e)      the Client will carry out any procedures Five Arrows
                           may reasonably require in relation to the day to day
                           administration of this Agreement.

         11.4     The Client shall fully indemnify Five Arrows from and against
                  any expense loss damage or liability (as to the amount of
                  which a certificate of an Officer of Five Arrows shall in the
                  absence of manifest error be conclusive) which Five Arrows may
                  incur as a consequence of the occurrence of a Termination
                  Event. Without prejudice to its generality, the foregoing
                  indemnity shall extend to any interest fees or other sums
                  whatsoever paid or payable on account of any funds borrowed in
                  order to carry any unpaid amount and to any loss (including
                  loss of profit) premium penalty or expense which may be
                  incurred in liquidating or employing deposits from third
                  parties acquired to make maintain or fund any amount due or to
                  become due from the Client under this Agreement.

         COLLECTIONS

         12.1     For the purpose of facilitating the collection by Five Arrows
                  of Debts purchased hereunder the Client will as Five Arrows's
                  agent and at the Client's own expense collect the Debts. The
                  Client will, at such intervals as Five Arrows may instruct,
                  supply Five Arrows with reports of all monies collected by the
                  Client as Five Arrows's agent. Such agency may be terminated
                  forthwith by Five Arrows at any time by written notice to the
                  Client.

         12.2     Should Notice of Assignment of all or any Debts be required to
                  be given pursuant to Clause 3.3 then the Client will not
                  thereafter attempt to obtain payment of all or any of those
                  Debts. The Client will co-operate with Five Arrows to secure
                  collection and enforcement of the same. Thereafter Five Arrows
                  and its assigns will have the sole and unfettered right to
                  collect such Debt, and to enforce payment thereof in such
                  manner and to such extent as Five Arrows shall in its absolute
                  discretion think fit, including without prejudice to the
                  foregoing either in its own and/or the Client's name
                  instituting carrying on or defending any legal proceedings
                  (whether in the UK or elsewhere) and settling compromising or
                  adjusting any claim. However, Five Arrows shall be under no
                  obligation to institute or defend any proceedings by or
                  against Five Arrows relating to such Debt. The Client agrees
                  to be bound by anything done by Five Arrows hereunder in such
                  collection or enforcement procedures.

<PAGE>   19

         TRUST

         13.      All payments in respect of a Debt received by the Client shall
                  be held by the Client on trust for Five Arrows. Unless
                  otherwise directed by Five Arrows the Client will immediately
                  deliver to the Trust Account the identical cash, cheque, bill
                  of exchange or negotiable instrument, paying all bank charges
                  in respect thereof, and if necessary the Client will endorse
                  the cheque, bill of exchange or negotiable instrument to Five
                  Arrows prior to such delivery. If any formal assignment or
                  assignation of a Debt or of the other matters referred to in
                  Clause 3.3 hereof or the vesting in Five Arrows of a Debt
                  under Clause 3.1 hereof shall be of no effect at law then the
                  Client shall nevertheless hold the Debt and the said other
                  matters in trust for Five Arrows.

         MISCELLANEOUS

         14.1     Evidence of indebtedness

                  In any proceedings relating to this Agreement, a statement as
                  to any amount due to Five Arrows under this Agreement which is
                  certified as being correct by an Officer of Five Arrows shall
                  unless otherwise provided in this Agreement be prima facie
                  evidence that such amount is in fact due and payable.

         14.2     Application of monies

                  If any sum paid or recovered in respect of the Client's
                  liabilities under this Agreement is less than the amount then
                  due, Five Arrows may apply that sum to any category of amount
                  due under this Agreement (whether in the nature of interest,
                  fees, charges, capital or revenue) in such proportions and
                  order and generally in such manner as Five Arrows may
                  determine.

         14.3     Set-off

                  At any time Five Arrows may without notice to the Client
                  combine consolidate or merge all or any of the Client's
                  accounts with and liabilities to Five Arrows and may set-off
                  or transfer any sum standing to the credit of any such
                  accounts in or towards the satisfaction of any of The Client's
                  liabilities to Five Arrows under this Agreement and may do so
                  notwithstanding that the balances on such accounts and the
                  liabilities may not be expressed in the same currency and Five
                  Arrows is hereby authorised to effect any necessary
                  conversions at the Bank's rate of exchange then prevailing.

         14.4     Exclusion of other terms, rights cumulative, waivers

                  (a)      This Agreement, the Term Sheet and any Schedule
                           contain all the terms agreed between Five Arrows and
                           the Client to the exclusion of representations or
                           statements made by or on behalf of Five Arrows
                           whether orally or in writing prior to the making of
                           this Agreement.

<PAGE>   20

                  (b)      Any variation to the Term Sheet shall be by a
                           substituted Term Sheet signed by Client and Five
                           Arrows.

                  (c)      The rights of Five Arrows under this Agreement are
                           cumulative, may be exercised as often as it considers
                           appropriate and are in addition to its rights under
                           the general law. The rights of Five Arrows in
                           relation to this Agreement and/or any Schedule and/or
                           any purchase of Debts hereunder (whether arising
                           under this Agreement or under the general law) shall
                           not be capable of being waived or varied otherwise
                           than by an express waiver or variation in writing and
                           in particular any failure to exercise or delay in
                           exercising any of such rights shall not operate as a
                           waiver or variation of that or any other such right;
                           any defective or partial exercise of any such rights
                           shall not preclude any other or further exercise of
                           that or any other such right and no act, course of
                           conduct or negotiation on its part shall in any way
                           preclude Five Arrows from exercising any such right
                           or constitute a suspension or variation of any such
                           right.

         14.5     Notices

                  Any notice or communication under or in connection with this
                  Agreement shall be in writing and in the case of notices or
                  communications to Five Arrows shall be given only by recorded
                  delivery or registered post to Five Arrows's registered office
                  or such other place as Five Arrows may last have notified to
                  the Client; and in the case of notices or communications to
                  the Client may be delivered personally or by first class
                  prepaid post or by telex or by facsimile transmission to the
                  address given in this Agreement or at such other address as
                  the Client may last have notified to Five Arrows in writing.
                  Proof of posting or despatch of any notice or communication to
                  the Client shall be deemed to be proof of receipt:

                  (a)      in the case of a letter on the third Business Day
                           after posting;

                  (b)      in the case of a telex and/or facsimile transmission
                           on the Business Day immediately following the date of
                           despatch.

         14.6     Invalidity

                  If any of the provisions of this Agreement becomes invalid
                  illegal or unenforceable in any respect under any applicable
                  law, the validity legality and enforceability of the remaining
                  provisions shall not in any way be affected or impaired.

<PAGE>   21

         14.7     Benefit of Agreement

                  Five Arrows may assign its rights under this Agreement or any
                  part thereof and/or with consent of the Client (which shall
                  not be unreasonably withheld or delayed) transfer its
                  obligations hereunder or any part thereof subject to the terms
                  of this Agreement and

                  (a)      for this purpose may disclose to a potential assignee
                           or transferee such information about the Client as
                           shall have been made available to Five Arrows for the
                           purposes of the Agreement; and

                  (b)      the Client shall execute such documents as are
                           reasonably necessary to release Five Arrows to the
                           extent of the transfer and join the transferee as a
                           party hereto.

                  The Client may not assign any of its rights or transfer any of
                  its obligations under this Agreement.

         14.8     Change in Constitution of Client

                  This Agreement shall remain effective notwithstanding any
                  change in the constitution composition or legal personality of
                  the Client.

         14.9     Plurality of Clients

                  Where, with Five Arrows's consent, the Client comprises two or
                  more persons, the Undertakings and Warranties contained in
                  this Agreement shall be deemed to be given by each of them and
                  each of the Client's obligations and liabilities hereunder
                  shall be joint and several and Five Arrows shall be at
                  liberty;

                  (i)      to release or conclude a compromise with any one or
                           more of them without affecting its rights against the
                           other or others of them;

                  (ii)     to treat a notice or demand by Five Arrows to any one
                           or more of them or to Five Arrows by any one or more
                           of them as a notice or demand given to or by the
                           other or others of them (but Five Arrows shall not be
                           obliged to treat such notice or demand in the manner
                           aforesaid).

                  The liability of any one or more persons comprised in the
                  Client shall not be affected or prejudiced by any act or
                  omission or any lack of corporate capacity or loss or identity
                  of any other or others of them.

<PAGE>   22

         14.10    Power of Attorney

                  (a)      As security for all sums due or to become due
                           hereunder from the Client to Five Arrows, the Client
                           hereby irrevocably appoints Five Arrows with power of
                           substitution to be the true and lawful attorney or
                           attorneys in the name of the Client or the attorney
                           or attorneys in accordance with Section 10 of the
                           Powers of Attorney Act 1971 and on the Client's
                           behalf as considered necessary by Five Arrows to:

                           (i)      execute or sign assignments or assignations
                                    of Debts and other Deeds and Documents

                           (ii)     obtain payment of Debts

                           (iii)    give notice of any assignment or assignation
                                    of Debts to the Customer(s) concerned

                           (iv)     complete deal with negotiate or endorse
                                    negotiable instruments and other remittances
                                    received from the Customer

                           (v)      settle the indebtedness of the Client to
                                    Five Arrows however arising

                           (vi)     deal with or perfect Five Arrows's title to
                                    the goods and services of the Client to
                                    which the Debts relate and

                           (vii)    secure the performance of any of the
                                    Client's obligations under this Agreement
                                    (in particular but without limitation under
                                    Clause 14.7)

                  (b)      Five Arrows is hereby empowered under the hand of any
                           of its Officers to appoint and remove any substitute
                           attorney or agent for the Client in respect of any of
                           the matters referred to above. The Client agrees to
                           ratify and confirm whatever Five Arrows any of its
                           Officers or its substitute attorney or agent shall do
                           by virtue of the powers granted above.

         14.11    Governing Law

                  This Agreement the Term Sheet and each Schedule shall be
                  governed by and shall be construed in accordance with the laws
                  of England.

<PAGE>   23

         14.12    Submission to Jurisdiction

                  The Client irrevocably:

                  (a)      submits to the non-exclusive jurisdiction of the
                           Courts of England and Scotland as Five Arrows may
                           elect

                  (b)      waives any objections on the ground of venue or forum
                           non-convenience or any similar grounds and

                  (c)      consents to service of process by mail or in any
                           other manner permitted by the relevant laws.

IN WITNESS whereof the Client has executed this Agreement and Five Arrows has
caused this Agreement to be signed this 18th day of March 1999.

Executed by the Company                  )
HUGO INTERNATIONAL                       )
LIMITED                                  )
acting by                                )

                 Director:      /s/ D. W. Foden

                 Secretary:     /s/ G. L. Foden

Signed by Mark Connelly

for and on behalf of                     )           /s/ Mark Connelly
FIVE ARROWS COMMERCIAL                   )
FINANCE LIMITED in the                   )
presence of:                             )

      Miss P. Warren

       Five Arrows Commercial Finance Ltd.
       Kings Court
       Exchange Street
       Manchester
       M2 3AX
<PAGE>   24
                     FIVE ARROWS COMMERCIAL FINANCE LIMITED

The Directors
Hugo International Limited
6 Waterside Drive
Slough                                                      Our ref: CTC/PB/3028
Berkshire
SL3 6EZ                                                     14th June 2000

Dear Sirs,

RE: TERMINATION OF CONFIDENTIAL INVOICE DISCOUNTING AGREEMENT
DATED 18th MARCH 1999 (the "Agreement")

Further to your recent discussions with Jane Leverington, I write to confirm
our decision to terminate your Agreement with ourselves, with effect from 1st
June 2000, in line with Clause 6.2 of the above mentioned Agreement. As
discussed, the termination is subject to a six-month notice period, during
which time the advance rate will reduce on a monthly basis. (Subject to
satisfactory operation of your account.) As follows: 1/7/00 55%, 1/8/00 40%,
1/9/00 25%, 1/10/00 10%, 1/11/00 0%. All debts should continue to be assigned
to ourselves as previously.

It is with regret that the decision has been taken to terminate the facility.
However the above method of retrenchment of the facility should assist in
providing time for you to source alternative funding.

Should you have any queries regarding the above, please do not hesitate to
contact me.

                                  Yours faithfully,

                                 /s/ Clive Cosgrove
                                 -----------------------
                                 Clive Cosgrove
                                 Audit Controller

<TABLE>
<S>                                          <C>                         <C>
Five Arrows Commercial Finance Limited       Telephone 0161 832 4462     Registered number 2227017 England
82 King Street                               Fax 0161 832 4050           Registered Office New Court
Manchester M1 4WQ                                                        St. Swithin's Lane
                                                                         London EC4P DU
                                                                         Regulated by SFA
                                                                         V.A.T. No. 519 0706 S3

Newy 1:741282:1:8/2/00

</TABLE><PAGE>   1

                                                                    EXHIBIT 10.6

                         DEED OF GUARANTEE AND INDEMNITY

                                     BETWEEN

                     HUGO INTERNATIONAL TELECOM INCORPORATED

                                       AND

                     FIVE ARROWS COMMERCIAL FINANCE LIMITED
<PAGE>   2
                      THIS DEED OF GUARANTEE AND INDEMNITY

is made on the date specified in the Schedule to this Deed

BETWEEN:

(1) "FIVE ARROWS" Five Arrows Commercial Finance Limited

AND

(2) "THE GUARANTOR" The Persons or Corporations executing this Deed.

W I T N E S S E T H that in consideration of Five Arrows at the request of the
Guarantor entering into or continuing with an agreement with the Supplier named
in the Schedule to this Deed for invoice discounting and/or other financial
accommodation ("the Agreement") and/or approving any Debt thereunder THE
GUARANTOR hereby:

         1.       AGREES unconditionally and irrevocably and as primary obligor
                  to pay Five Arrows on demand all sums now or at any future
                  date due to Five Arrows from the Supplier.

         2.       GUARANTEES unconditionally and irrevocably and as primary
                  obligor the due performance of all other obligations of the
                  Supplier to Five Arrows however arising.

         3.       INDEMNIFIES Five Arrows against all actions claims demands
                  liabilities losses costs interest and damages which Five
                  Arrows may sustain or incur as a result of the insolvency of
                  the Supplier or of any breach or non-observance or
                  non-performance by the Supplier of any of its obligations to
                  Five Arrows or of any invalidity or other defect in the
                  Agreement.

         4.       AGREES THAT:

                  (i)      Variations may from time to time be made to the
                           Agreement without the consent of or notice to the
                           Guarantor even though the Guarantor's liability to
                           Five Arrows may be increased.

                  (ii)     The giving of time or the failure by Five Arrows to
                           enforce any remedies against the Supplier or any
                           customer or any other guarantor indemnitor or grantor
                           of security shall in no way affect the Guarantor's
                           liability to Five Arrows.

                  (iii)    The terms of this guarantee and indemnity shall
                           constitute a continuing security notwithstanding the
                           fulfillment from time to time of any of the
                           obligations of the Supplier to Five Arrows and shall
                           remain in force until all amounts due from the
                           Supplier to Five Arrows have been finally and
                           unconditionally discharged.
<PAGE>   3
                  (iv)     Any acknowledgment or admission by or any Judgment
                           obtained by Five Arrows against the Supplier shall be
                           binding on the Guarantor.

                  (v)      The Guarantor's obligations shall continue even
                           though Five Arrows may at any time relinquish in
                           whole or in part any charge lien or security taken
                           from the Supplier or any customer or any other
                           guarantor indemnitor or grantor of security.

                  (vi)     Until all sums due hereunder have been paid to Five
                           Arrows the Guarantor shall not be entitled to the
                           benefit of nor claim to be subrogated to any charge
                           lien or security held by Five Arrows for the due
                           performance of the Supplier's obligations nor shall
                           Five Arrows be under any obligation to enforce them
                           for the Guarantor's benefit.

                  (vii)    Any sums due hereunder to Five Arrows shall from the
                           due date for payment bear interest at the same rate
                           as the Discount Charge referred to in the Agreement.

                  (viii)   In arriving at the amount due to Five Arrows by the
                           Supplier Five Arrows shall be entitled to take into
                           account all liabilities whether actual or contingent
                           and to make a reasonable estimate thereof.

         5.       DECLARES THAT this Guarantee and Indemnity:

                  (i)      Shall be governed by English Law.

                  (ii)     Shall be binding upon the Guarantor's Executors or
                           Administrators or upon any Committee Receiver or
                           other person acting on the Guarantor's behalf.

                  (iii)    May be assigned by Five Arrows.

                  (iv)     Shall be in addition to and not in substitution for
                           any other security taken by Five Arrows for the
                           Supplier's obligation.

                  (v)      Shall not be discharged or prejudiced by any defect
                           in the Agreement or any other guarantee or indemnity
                           or security or in their respective executions or by
                           any other event, matter of circumstance which would
                           or might but for this clause have discharged or
                           prejudiced this Guarantee.

                  (vi)     Shall remain binding notwithstanding any change in
                           the constitution of the Supplier or the death or
                           legal disability of any other guarantor to Five
                           Arrows of the Suppliers' obligations.

         6.       ACCEPTS THAT any notice or demand by Five Arrows shall be
                  deemed to be validly served or made if sent or delivered to
                  the Guarantor's address stated below or to the registered
                  office of the Guarantor (if applicable) or to any other
                  address at which the Guarantor may carry on business and if
                  sent by post shall be

                                      -2-
<PAGE>   4
                  conclusively deemed to have been delivered to the Guarantor
                  within 72 hours of the time of posting.

         7.       AGREES THAT monies received by Five Arrows by virtue of or in
                  connection with the guarantee and indemnity may be placed to
                  the credit of a suspense account with a view to preserving the
                  right of Five Arrows to prove for the whole of its claim
                  against the Supplier in any proceedings in or analogous to
                  bankruptcy liquidation receivership composition or
                  arrangement.

         8.       CONFIRMS THAT if (a) this Guarantee is executed by more than
                  one person their obligations hereunder are joint and several,
                  and (b) any provision hereof shall be held invalid or
                  unenforceable it is hereby declared and confirmed that such
                  event shall not affect any other provisions all of which shall
                  remain in full force and effect. Where this Deed is executed
                  by more than one Guarantor and such execution shall be
                  defective this shall in no way affect the liability of the
                  remaining parties.

         9.       AGREES THAT definitions used in the Agreement shall bear the
                  same meaning in this Deed.

         10.      AGREES THAT this Guarantee and Indemnity shall be construed
                  according to English Law and the Guarantor submits to the
                  non-exclusive jurisdiction of the English Courts.

IN WITNESS thereof the Guarantor has caused this Deed to be sealed on the date
specified in the Schedule hereto.

                                      -3-
<PAGE>   5
                                  THE SCHEDULE

Date of Execution
of this Deed                        20th April 2000
                                    ---------------

Name of the Supplier                HUGO INTERNATIONAL LIMITED

Name and Address of
The First Guarantor                 HUGO INTERNATIONAL TELECOM INCORPORATED of

                                    1013 Centre Road
                                    City of Wilmington
                                    County of New Castle
                                    Delaware  19805/1297
                                    USA

EXECUTED                     )
by the FIRST GUARANTOR       )
acting by:                   )

                        Director:             /s/ D.W. Foden
                                              ----------------------------

                        Director/Secretary:   /s/ M. Christmas
                                              ----------------------------

                                      -4-

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