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PENNIES FROM HEAVEN

The key facts of `Penny Shares' and the services of City Equities Limited

We've made becoming a client as simple as possible. At this stage all we need you to do is read this brochure then complete and sign the `Your Signature' form on the last page. This can be returned to us in a prepaid envelope provided, or faxed to 020 7489 5588.

USEFUL CONTACT DETAILS

Main Dealing Line: ........ 020 7489 5500 Switchboard: .................. 020 7489 5555 Facsimile: ....................... 020 7489 5588 Email: ....... [email protected] Website:............ www.cityequities.com Address: ................... Aldermary House, 10-15 Queen Street, London EC4N 1TY

If you have any complaint about our service to you, please put it in writing to: The Compliance Officer City Equities Ltd Aldermary House 10 ­ 15 Queen Street London EC4N 1TY CEL is Authorised and regulated by the Financial Services Authority. Our registration number is 155051. Issued by: City Equities Ltd Aldermary House 10 ­ 15 Queen Street London EC4N 1TY Telephone: 020 7489 5555 Facsimile: 020 7489 5588 www.cityequities.com

RISK WARNING: There is an extra risk of losing money when shares are bought in some smaller companies including `Penny Shares'. There is a big difference between the buying price and the selling price of these shares. If they have to be sold immediately, you may get back much less than you paid for them or you may have difficulty in selling them. Past performance is not a reliable indicator of future results. The price may change quickly and it may go down as well as up. You could lose every penny put into a particular share. Issued by City Equities Ltd, Aldermary House, 10-15 Queen Street, London EC4N 1TY. Registered in England. Registered No. 274287. Registered Address: Amwell House, 19 Amwell Street, Hodderson Herts, EN11 8TS. CEL is authorised and regulated by the Financial Services Authority. Our Registration number is 155051.

Welcome

An Introduction to City Equities Limited (CEL)

Established in its niche industry in 1992, CEL has since attained a position as one of the market leaders. Having built a solid reputation within the industry we have also experienced considerable company growth attracting over ten thousand retail clients (Private clients).

So what can we do for you?

Our aim at CEL is to make trading as smooth and simple as possible for all of our clients, whilst offering the best possible guidance and service we can. We focus exclusively on the smaller companies sector, which has the potential to offer substantial capital growth. Each investment opportunity we bring to you will have been the subject of detailed and committed study. We have a well-qualified research team with a combined background of over 25 years' experience in the market. Consequently CEL can offer valuable investment advice to any private investor. Once you become a client you will receive a complimentary copy of our Equity Market Update (EMU), an extensive research and company report that will be sent to you, free of charge, on a quarterly basis. You will also be allocated a personal dealer who will be your point of contact and keep you up to date with any information you may require with regards your portfolio.

Becoming a client

We have made becoming a client as easy and simple as possible. All you have to do now is read through this brochure and sign the `Your Signature' form provided at the back. We would like you to remember that even after you have become a client of CEL you will, at no time, ever be under any obligation to transact business with us.

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Treating Customers Fairly

As a regulated company we strive to provide clearly defined services so that you can be confident that you are being treated fairly and know the level of service that you can expect from us. We aim to ensure that any advice that we offer to you is both suitable and appropriate and designed to meet your needs. We also try to ensure that clients receive clear information, before, during and after sales. We are governed by the Financial Services and Markets Act 2000 (FSMA) and we are regulated by the Financial Services Authority (The `FSA'). One of the FSA's statutory objectives is the protection of consumers. At CEL we will always endeavour to provide a first class service to all of our clients. In the event that you have a complaint about the service you receive from CEL, you should contact us and we will take all appropriate steps to resolve your complaint within a reasonable time schedule, whilst keeping you informed at every stage. If we do not resolve the complaint to your satisfaction, you may refer the issue to The Financial Ombudsman Service. The Financial Ombudsman Service is free to clients and can help resolve disputes between clients and financial companies. Naturally, we will make every effort to work with you to avoid having to resort to the Ombudsman. The Financial Services Compensation Scheme is available if a company cannot meet its liabilities. Full details can be obtained from our Compliance Department.

A copy of our internal complaints handling procedure is available upon request.

Why Choose City Equities?

CEL has been awarded the Private Investor Award for `Best Small Cap Service Provider' for three consecutive years, 2005, 2006 and 2007. The winners are voted for by Digital Look.com and ProShare Investment Clubs and as such represent an authoritative guide to the most popular financial services and companies in the UK.

The Private Investor

Awards

As our name suggests, we are situated in the City of London, a location traditionally considered to be at the heart of the leading specialist brokers and information providers. We believe our position can help us to consolidate and expand our network of relationships within the investment community. As an established and respected company we have significant buying power and can act as an institutional investor, allowing us access to numerous new issues and placings not available to the general public. Our Authorisation also allows us to arrange deals in investments including corporate business finance. In the majority of deals we make with clients we act as `Principal'. This means that City Equities will identify a company through our research team and then purchase the stock in that company `IN SIZE' before selling them on. As we buy the shares in bulk, we will often receive a discount on the prevailing market price. In turn we can guarantee that you will never pay commission on purchases recommended by us, and you will never pay above the market `offer' price. With CEL you will benefit from an experienced team of professionals who will advise you from your very first trade. You will be assigned your own personal dealer who will keep you informed on the shares you have purchased from City Equities Ltd.

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How do we choose the right investments for you?

Our research team boasts over 25 collective years of experience within financial research roles. During this time the team has built up a large portfolio of contacts with brokers, advisors and financial institutions. This network enables the department to keep its finger on the pulse and hear about a wide variety of potential investment opportunities, including new issues, pre IPO situations and placings. The research process followed when investigating any potential company involves intelligencegathering from public domain sources such as press, investment publications and journals. We also use broker and third party research and in-house information systems such as Fidessa and Factiva. As well as fundamental analysis, the team endeavours to meet the Directors of the Company in question, in order to get a full view of the situation. This is achieved in the vast majority of cases, and in addition, members of the department may visit sites, mines, or factories in order to consolidate and expand knowledge of the business. Once an investment has been made, the research team strive to stay up to date with developments at that particular company and remain in contact with directors and brokers. Focusing on AIM and the small cap arena means that the companies we look to identify are high risk and contain an element of volatility. However, what we aim to look for are undervalued situations where we feel the investment is right for our clients. Research reports are produced for clients with the aim of giving a balanced and thorough view. The intention is to adopt a `warts and all' style so that you are fully informed on all decisions you have to make. Once an investment has been made, the research team strive to stay up to date with developments at that particular company and remain in contact with directors and brokers. Our investment research is `non-independent'. This means that it is prepared in-house on the basis of publicly available information and it is intended only for the use of our clients and potential clients. There are legal requirements that independent research must obey in order to for it to be considered independent. These include restrictions on trading in the shares that are the subject of the research before public announcement of information that the researcher already has. Some of these requirements do not apply to our research. To reflect the above all our research publications will contain the statements that they: a) have not been prepared in accordance with legal requirements designed to promote the independence of investment research; and b) are not subject to any prohibition on dealing ahead of the dissemination of investment research. Our research is produced and intended for our clients and is compiled from material from the public domain. It covers companies that we are likely to recommend to our clients, with City Equities having bought shares `Acting as Principal'. Independent research seeks to give a personal view of a company in which the analyst has no personal interest and is prepared in accordance with the FSA rules on Research, which do not apply to non-independent research.

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Buying Shares ­ Key Facts

So what exactly is a `Penny Share'?

City Equities consider a `Penny Share' as one that costs no more that 100p, bought in a company worth less than £100 million at the time of recommendation. In accordance with the FSA definition there must be at least a 10% difference (known as the `Spread') between the bid and offer price for a share to be considered as a `Penny Share'. City Equities, however, are still able to offer you the chance to deal in shares with a smaller Spread. `Penny Shares' have a wider `Bid Offer Spread' than other shares and consequently are considered as a high-risk investment. (Please refer to the diagram below) `Penny Shares' can be bought and sold in exactly the same way as other shares. The buyer pays and/or the seller receives the price quoted at the time of each transaction. You may buy or sell whenever you wish so long as the market conditions allow. The aim of investing is to achieve a high percentage capital gain should the company's fortunes improve and the share price rise. Investors should appreciate that there is no set time limit in which you are guaranteed to see a return on your investment.

Calculation of the share price

The market `Offer' price of the shares is determined by the `Yellow Strip Price'. The `Yellow Strip Price' shows the best `Bid' and `Offer' prices, as quoted by the market makers who deal in that particular share. The `Yellow Strip Price' is also known as the `Bid Offer Spread'. Market size is dictated by the Market Makers and can fluctuate up and down.

* TABLE SOURCED BY FIDESSA

· Bid Price

The `Bid' price is the best quoted price at which the shares can be sold to one or more Market Makers within a certain size.

· Offer Price

The `Offer price' is the best-quoted price at which the shares are offered by one or more Market Makers within a certain size.

· Yellow Strip Price

The yellow strip price shows the best `bid' and `offer' prices as quoted by the Market Makers. It is also known as the `Bid Offer Spread'.

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When do I have to pay for my shares?

For their first transaction all new clients are required to pay for their shares within 3 working days from the date of purchase via cheque. For following transactions you have 10 working days, after the deal has been transacted, in which to pay for your shares. This is known as the `T+10' settlement. In comparison, when dealing in other markets you will only be offered a `T+5' settlement, allowing you only 5 working days from the day of purchase until payment is due. In addition to cheques, after your first transaction you may also pay via debit card, bank transfer or BACS.

Will I receive an income from my `Penny Shares'?

In most cases you will not receive any dividends from a `Penny Share'. CEL primarily recommends `Penny Shares' for their capital growth prospects rather than any income element.

On what market are my shares quoted?

CEL only deal in shares that are quoted in the UK on the fledgling Alternative Investment Market (AIM) and have at least two independent Market Makers. Where shares advance to a listing on the full Official list, there may be further opportunities to deal. We specialise in the smaller companies sector.

So what is AIM?

The Alternative Investment Market was created by the London Stock Exchange in 1995. Since then over 2,700 companies have chosen to join AIM in order to increase their growth, raising more that £3.4 billion in the process. On AIM you will find a variety of businesses ranging from young venture capital ­ backed start-ups to well-established organisations looking to expand. AIM is an ideal market for young businesses seeking growth as it offers all of the benefits of being traded on a world-class public market, within a regulatory environment that has been designed specifically to meet their needs.

How do I sell my `Penny Shares'?

You can telephone us, and we will sell them for you upon your instruction. Alternatively, you can sell through your regular broker, your bank or building society (where a share dealing service is provided) or any other share trading facility. Remember that you may only be able to sell your `Penny Shares' when market-trading conditions allow, and this may not be exactly when you want, in the size you want or at the price you want.

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What sort of service should I expect from City Equities?

Once you have signed the `Your Signature' form and have been approved as a client, you will receive an introductory call from your assigned dealer. This telephone call will be used as an introduction and will help to ascertain a little about what you hope to achieve by becoming a client of CEL. Our services will be explained and your dealer will attempt to answer any questions or queries you may have. It is our hope that you will build an ongoing and lasting relationship with your assigned dealer. Once you have dealt your dealer will contact you a minimum of once every quarter to update you with any news relevant to your portfolio, including corporate actions and warrant expiries (Open Offers, Rights Issues and Consolidations are typical corporate actions relevant to `Penny Shares'). If at any point you have a query or wish to discuss your portfolio, you are welcome to contact your dealer who will be happy to help you. It is important to stress that the relationship between you and your dealer will be telephone based and you should expect to make decisions over the phone. If at any point you wish to buy or sell shares you may contact us via telephone, written and signed documentation or email. CEL operates an advisory, not discretionary service. You will be offered advice and reasons as to when best to buy the shares that we recommend and also further advice if we feel you should sell them, but all final decisions are yours to make. Examples of circumstances in which we may advise you to sell shares include `bids from the market' for shares that clients have already bought on CEL's recommendation. We may also believe that a particular client or clients should benefit from a rise in the share price. Because we only recommend shares that we believe are likely to achieve capital growth it is very unlikely that we would advise you to sell simply because the share price has fallen. From time to time we may believe that it is appropriate for a particular client to cut their losses. We only provide information and advice on shares so that clients can make a decision whether to buy or sell a share. We do NOT offer any of the following services: a) Any form of portfolio management b) A stop loss policy c) Tax advice: or (d) Advice on any financial products other than those we recommend There are a number of documents that you can expect to receive from us including: 1. A quarterly Equity Market Update 2. A monthly statement of accounts relevant to your portfolio 3. A CREST statement of accounts every six months 4. An annual Fact Find to allow you to update your details

All of these documents are supplied to ensure that you fully understand all transactions and changes within your account. As a client of CEL, it is our aim to keep you informed and up to date on all relevant financial news. We endeavour to give you honest and accurate advice, and to make trading as simple and straightforward as possible.

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Are `Penny Shares' right for you?

`Penny Shares' carry a number of additional risks in comparison to other quoted shares, such as: 1. Companies may be new and therefore their performance may be unpredictable. 2. Companies may have a history of financial difficulties. 3. Companies are less likely to distribute any profits made to a shareholder, (i.e. pay a dividend). 4. The shares may be difficult to sell. 5. The share price is likely to go down as well as up. 6. There will be a wider percentage between the `Bid-offer' spread in `Penny Shares' in comparison to shares on the FTSE-100 index, (main UK share index based on 100 leading shares). This reflects the high-risk nature of `Penny Shares'. 7. If you have to sell immediately you run the risk of doing so at a significant loss. 8. Whilst every care will be taken to ensure this does not happen, it is always possible that your personal portfolio will result in losses only. Every penny put in to high-risk shares may be lost. 9. You should only consider trading in the `Penny Share' market if you can afford to lose all of the money you invest. 10. Generally you should not invest more than 20% of your portfolio in the speculative end of the market. Consequently `Penny Shares' are not suitable for everyone and CEL will only deal with people for whom `high risk' is acceptable.

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All you need to know about CREST

CREST is an electronic settlement system set up in 1996 by the Bank of England and run by Euroclear UK and Ireland Ltd (formerly known as CREST Co). It is a Recognised Clearing House and means that your shares are dematerialised (no longer held in certificated form) and held in an electronic account. You can, at any point, request that your shares be re-materialised back into certificated form providing this is possible (some shares can only be held electronically).

What are the benefits of holding your shares in CREST?

By holding your shares in CREST they are secure and more accessible when it comes to making transfers or sales. Funds can be transferred straight into your account without the complications and delays caused by having to locate and post share certificates.

What is a Personal Member?

If you wish to be a personal member an account is set up which you operate in your own name. CREST will notify you of all corporate actions and in turn you will be required to inform us. You will be responsible for all of your own personal administration and documents such as transferrals, and corporate actions will be sent directly to your home from the Registrar's office.

What is a Nominee Member?

If you wish to hold a `nominee' account we will set one up for you within CEL. We will hold all shares in trust for you and our back-office team will deal with all corporate actions. Your dealer will buy and sell any required stock on your behalf. Your shares will be dematerialised and held in electronic form in CREST, unless you request otherwise. City Equities will be responsible for all of your administrative duties, and we will forward any documentation from the Registrar's office to your home address.

What is the CEL standing charge for a CREST account?

Personal Member: £15 per annum (payable at the end of July each year) Nominee Account: £25 per annum (payable at the end of July each year)

What to expect following your first transaction

Following your first purchase you will receive contract notes confirming the transaction along with a CREST Personal Member Admission Document. This document will further explain your membership with CREST; supply the CREST Personal Member Terms and Conditions, and provide a copy of the CREST Admission Agreement that you will be required to sign. Your account will be set up as a nominee account until we have received the personal member documentation required from you.

Will I receive a share certificate?

No, if you purchase a CREST security. Yes, if the security is not a CREST Designated stock. Yes, if you have specifically opted to receive certificates.

Transfer Charges and Late Delivery Charges for non CREST clients

To receive a certificate, or transfer shares out to a third party a charge of £10 per security is required and is payable before the transaction will be completed. If the value of the shares is below £100 this charge does not apply. City Equities will carry out delivery to the market on your behalf. If a share certificate and/or Transfer form has not arrived 5 days after the settlement date, we may apply a charge of £30. After this a further £30 may be applied for every additional 5 days until delivery has been made.

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Our Charges Explained

When City Equities Acts as Principal

When a client buys a share in any CREST or Non CREST, UK or Irish Registered Securities there is no commission charge. When a client sells a share CEL will occasionally purchase these shares for its own account. There will be no commission fee for the sale of any securities but there may be an administration charge. Where a client purchases a Depositary Interest Receipt security, the share will be held in a specially designed "Pool" Nominee Account administered by City Equities Ltd. No CREST Management Fee will be charged to a certificated client and no commission fee will be taken.

SDRT *

Rate Rounded up to the nearest.

Administration Fee

CREST Personal Member CREST Nominee Certified

When a Client buys a share

UK Registered Securities CREST Settled Non CREST Settled Irish Regulated Securities CREST Settled Non CREST Settled Depositary Receipts 0.50% 0.50% 1p £5 £20 £20 £22.50 £22.50 £30 £30

1.00% 1.00% 0.50%

50p 50p 1p

£20 £20 £20

£22.50 £22.50 £22.50

£30 £30 £30

* Stamp Duty Reserve Tax (or SDRT) is a UK tax on the electronic transfer of certain securities.

SDRT *

Rate Rounded up to the nearest.

Administration Fee

CREST Personal Member £20 CREST Nominee Certified

When a Client sells a share

All Securities

NIL

£22.50

£30

For Example if you are a personal member and choose to buy:

Bought 10,000 Sopheon Securities X + + Rate 21p per share CREST Fee S.D.R.T Total Total £2,100 £20 £10.50 £2130.50

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When City Equities Acts as Agent

When acting as Agent, the rates for Stamp Duty Reserve Tax will apply as for Principal Transactions. When acting as Agent we will also charge a commission based on whether the share is being traded is a `Penny Share'.

Commission

Rate Minimum Charge

Administration Fee

CREST Personal Member CREST Nominee Certified

When a Client buys a share £

`Penny Shares' Consideration Up to £10,000 10,001 and above First £10,000 Excess Any Consideration

0.75%

£25

£20

£22.50

£30

When a Client buys Non `Penny Shares'

0.75% 0.50% 2%

£75.00 £0.01 £30

£20 £20

£22.50 £22.50

£30 £30

Commission

Rate Minimum Charge

Administration Fee

CREST Personal Member CREST Nominee Certified

When a Client sells a share £

`Penny Shares'** Consideration Up to £10,000 10,001 and above First £10,000 Excess Any Consideration

0.75%

£25

Free

Free

£30

When a Client sells Non `Penny Shares'

Usually 0.75% 0.50% 2%

£75 £0.01 £25

Free

Free

£30

Free

Free

£30

** Including any share previously recommended by CEL but no longer fitting the above definition.

For Example if you are a personal member and choose to sell:

Sold 100,000 Regency Mines Securities X Minus commission Rate 7p per share 0.75% of £7,000 Admin Fee Total you would receive Total £7,000 £52.50 NIL £6947.50

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ID Requirements ­ To Become a Client

Along with all UK regulated firms, we are required to comply with the Money Laundering Regulations issued by the government and implemented by our Regulator, the FSA, in their handbook. Before we can offer you any free information or advice, we are required to identify you. The simplest way for us to do this is via an electronic search, undertaken through a recognised reference agency. CEL is licensed to hold financial information under the Data Protection Act 1998. The information we hold must be relevant to the work we do and must not be excessive. It will not be a credit search, as City Equities does not offer credit facilities. In the majority of cases, such a check will suffice, and there will be no further ID documents to send in.

If we are unable to identify you with an electronic search:

We may have to ask some people, including those in other European Union countries, to supply us with two pieces of identification. One of these must be a certified copy of: 1. A current signed passport. 2. A current full UK or EEA driving licence. 3. A firearms certificate. 4. An EEA member state identity card. 5. A residence permit issued by the Home Office. 6. An Inland Revenue tax notification (not a P60 or P45). The certifier must be available for contact. The document must be copied in black and white and signed by the certifier as "original seen". Contact details (name and telephone number) should be clearly stated on the copy. The person certifying the document as "original seen" must be one of the following: 7. A regulated person. 8. A professional person covered by money laundering regulations, such as a solicitor or accountant. 9. An official of a government department. Should you be a non-UK national, you may have your copy certified by your embassy, consulate or high commission. The second piece of identification required from UK nationals can be either: 10. An original utilities bill (no more than 3 months old). 11. A current, local authority tax bill. If you are a European Union client, the second piece of identification we require from you must be a letter from your bank confirming you identity and address. Any piece of documentation not already used as original identification can be used as secondary identification.

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Risk Warning

There is an extra risk of losing money when shares are bought in some smaller companies including `Penny Shares'.

There is a big difference between the buying price and the selling price of these shares. If they have to be sold immediately, you may get back much less than you paid for them or you may have difficulty in selling them.

Past performance is not a reliable indicator of future results.

The price may change quickly and it may go down as well as up.

You could lose every penny put into a particular share.

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Glossary

You may find the following definitions useful. Agent ­ Any person who acts on behalf of another. AGM ­ Annual General Meeting. A meeting of shareholders and the board of the company to accept the Report and Accounts and vote on such things as director reappointment. Alternative Investment Market (`AIM') ­ A share trading mechanism established and regulated by the London Stock Exchange. Bid-Offer Spread ­ This is the difference in price between the Market Makers best offer to purchase shares from you (`Bid') and the best offer to sell shares to you (`Offer') in a particular screen quoted Market Size. Bid Price ­ The price shown by a `Market Maker' at which an investor may sell shares, so long as the number of shares does not exceed the indicated Market Size. The `Bid Price' is not a guaranteed selling price when a transaction is in excess of (outside) Market Size. Corporate Actions ­ A generic term for events such as Right Issues, Open Offers and Share Consolidations/splits. These events usually require shareholders to vote on the proposals at an AGM or EGM. Dividend ­ A pro rata payout in cash based on an element of a company's distributable profits. Dividend income is often expressed as the `Yield'. Earnings Per Share ­ The profit of a company, after tax, divided by a weighted average number of shares the company had in issue during the accounting period. EGM ­ Extraordinary General Meeting. Where a shareholder meeting is called and voting required on an event that is outside of the day-to-day organisation and running of the firm, such as approving a share issue or acquisition. `Execution Only' transaction - If you instruct City Equities to buy or sell shares on your behalf without any advice, this is deemed to be `Execution Only'. Gearing ­ A ratio between a company's borrowing and its share capital, or shareholders' funds, which is expressed as a percentage. High gearing means a proportionately high level of debt and vice versa. Holding Company ­ A company that controls one or more other companies. Liquidity ­ The degree of ease with which an asset can be turned into cash. A `liquid market' is one with many buyers and sellers where dealing is usually easier and the shares have a narrow `Bid-Offer Spread'. Market Capitalisation ­ The value of a company calculated by multiplying the number of shares in issue by the `Mid-Price' of the share. Market Maker ­ A person employed by a company that is prepared to buy and sell shares at prices determined by them. The market makers also determine the `Market Size' and `Bid-Offer Spread'. Market Size ­ An indicated number of shares in which a Market Maker is willing to make a transaction at the `Bid' and `Offer' prices that they are quoting. Market Size is subject to constant change and may affect your ability to trade. Mid-Price ­ The mid-point between the Bid and Offer prices. This is used for many valuation and ratio calculations and is the price shown when companies are featured in newspapers such as The Financial Times. Net Asset Value ­ The assets of a company, minus its liabilities, divided by the number of shares in issue.

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Glossary continued

Nominal Value ­ The value of a security as printed on a share certificate, for example `Ordinary 10p shares'. Also called `par value' or `face value', the measure has, however, no bearing on the actual price of a share in the open market. Offer Price ­ The price shown by a Market Maker at which an investor may buy shares, so long as the number of shares does not exceed the indicated Market Size. The Offer-Price is not a guaranteed buying price when a transaction is in excess of (outside) Market Size. Open Offer ­ See `Rights Issue' Option ­ An instrument that gives its holder the right to purchase shares (new or existing shares held by a third party) in a company at a set price, normally before a specific date. Options can be transferable, but unlike Warrants, they would not have their own exchange list. Placing ­ A method of raising money for a company. Usually, a placing is effected by institutional subscription to a new share issue, which is not open to the general public. Price/Earnings Ratio (P/E Ratio) ­ A simple valuation measure that gives the investor a guide to how profitable a company is, compared to its market value. The ratio is derived by dividing a company's share price by its reported (or predicted) earnings per share. A high ratio may mean that the market considers the company to have strong growth prospects and is therefore highly valued compared to the amount of profit that it actually makes. Alternatively, a low ratio can reflect market scepticism about the likelihood of a company sustaining growth in future points. Rights Issue ­ A way of raising money from its existing shareholders, perhaps to fund an acquisition. A Rights Issue takes the form of a pro rata offer of shares, usually at a discounted price to make it attractive for people to take up. Existing shareholders will have an allocation of Right Issue shares that they can elect to take up or sell `nil paid' in the market, if there is a premium available (i.e. if the prevailing share price remains higher than the Rights Issue price). They may even take no action and `let the issue lapse' in the hope that, at the end of the process a buyer or underwriter is found who is willing to take up the `rump' of the Issue at a higher level than the Rights Issue price. In this case, the existing shareholder could receive the difference in price in cash on a pro rata basis. An Open Offer specifically differs from a Rights Issue in that the existing holder has only two choices: To take up the offer or ignore it. There is no potential premium paid if a holder elects to lapse their Open Offer entitlement. Share Consolidation/Split ­ An event that takes place when a company wants to rebase its share capital. A 10-for-1 Consolidation, for example, would notionally move the share price up tenfold, but reduce an individual's holding by a factor of ten. However, the individual's shareholding by way of a percentage of the company in question remains unchanged. The opposite of a Consolidation is a Split. A Consolidation or Split could be undertaken to make the shares more attractive to trade by a wider body of investors. Warrant ­ An instrument that gives its holder the right to purchase new shares in a company at a set price, normally before a specific date. Warrants can sometimes be listed as tradable, the feature being that their gearing (or leverage) against the price of underlying share, is usually much greater. Traded warrants are, consequently, very high risk/high return instruments. Yield ­ The annual income from a share based on its current price. Yield for an individual investor will depend on the price they have paid for the share.

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CEL

Terms and Conditions of Business

Advisory Retail Clients CEL is Authorised and regulated by the Financial Services Authority (FSA), whose address is 25 The North Colonnade, Canary Wharf, London E14 5HS. Our registration number is 155051. CEL is also a member of the London Stock Exchange. Our full name and address is City Equities Ltd, Aldermary House, 10-15 Queen Street, London, EC4N 1TY. It is essential that you read and understand these Terms and Conditions of Business in conjunction with our Key Features Document, Pennies from Heaven, and Risk Warning documentation prior to agreeing to use our services.

By signing the Your Signature form at the end of this document you are confirming that: 1. You have read and understood these Terms and Conditions of Business; 2. You agree to abide by these Terms and Conditions of Business; 3. You have read and understood the description of CEL's policy on Conflicts of Interest; 4. You have read and understood the disclosure statement about CEL's Order Execution policy; (See Annex 2) 5. Your investment objectives are to invest in penny shares with the intention of maximising potential capital growth; and 6. You accept the Risk Warning applying to investment in penny shares.

Definitions 1. "CEL", "we", "us", "our" or "company" means City Equities Limited. 2. "You", "yours", "yourself", or "client" means the person to whom we provide our services under these terms and conditions. The minimum age to use CEL's services is 18 years. 3. "Research" means "non-independent investment research" as defined in the FSA Rules. 4 a. "Retail Client" has the meaning given it in the FSA Rules. 4 b. "Person" or "Persons" includes one or more individuals, bodies corporate, partnerships, firms, associations (whether incorporated or unincorporated), Trustees, Personal Representatives, and any other person or entity recognised by law. 5. "Terms" means these terms and conditions of business and any versions which may supersede them from time to time. 6. "CREST" means Euroclear UK & Ireland Limited (formerly CRESTCo Limited) and is the organisation responsible for the paperless registration, transfer and settlement of transferable securities.

7. "London Stock Exchange" or "LSE" means The London Stock Exchange Plc. 8. "AIM" means the Alternative Investment Market of the LSE. 9. Reference to "days" means business days or working days when The London Stock Exchange is open to transact business and excludes public or bank holidays. 10. "Settlement day" means the day payment for a transaction is due from you, in the case of a purchase of an investment, or us, in the case of a sale of an investment. 11. "Penny Shares" has the meaning given it in the FSA Rules. CEL treats some other shares as if they were `Penny Shares', (see page 6 of Pennies From Heaven.) About CEL 12. We are authorised by the FSA to advise on, deal and arrange deals as principal and agent in shares; debentures; government and public Securities; warrants; certificates and rights to or interests in investments and to conduct corporate finance business. 13. The services offered by CEL are normally only

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available in relation to investments listed on AIM. 14. CEL may deal in transactions as principal with you and therefore we have a personal interest in most business conducted for you. To ensure fair treatment to you we will always disclose where we have acted as principal when making a recommendation to buy an investment. 15. CEL is licensed under the Data Protection Act 1998. 16. You will be classified as a Retail Client, as defined by the FSA. We currently only deal with Retail Clients. You may ask to be treated as a Professional Client but we are not obliged to agree to your request. (See Annex 1) Service Provided by CEL: Advisory Dealing Services 17. We will provide you with an advisory service only in respect of investments which we recommend that you purchase. 18. The recommendations we make to you will only be in respect of investments listed on AIM. 19. We will allocate a personal dealer to administer your account. In their absence another Dealer will be able to deal with any enquiries you have about your account. 20. The advisory service we provide is primarily via telephone. If it is not possible for us to contact you by telephone please get in touch with us to discuss possible alternative arrangements for communicating with you. Where we deem it necessary or appropriate to do so and in so far as it is reasonably practicable we will put these in place. 21. Normal market hours are 8.00 am to 4.30 pm and so are our trading hours (or such other hours as the LSE is open for business). During these hours you should be available for us to contact you by telephone. 22. We will provide information on the investments that you have purchased through CEL from the recommendations made to you. These are the only investments on which we will provide information. 23 a. We aim to keep you updated at least once every business quarter on the investments you have purchased through CEL from the recommendations we have made to you. Our business quarters are: March to May, June to August, September to November and December to February. 23 b. When we become aware of information, which in our opinion is of an exceptional nature, we will also try to contact you by telephone to give you the information. This information may include corporate actions, suspension from trading or news on the investments you have purchased through CEL from the recommendations we have made to you; The only information available to us

to pass on to you is that which is available in the public domain. 23 c. In certain circumstances we may also discuss with you options for selling part or all of your holding of a particular share. These circumstances are discussed further in the Pennies from Heaven brochure. We will keep you informed of any corporate actions including the exercising of warrants and options held, open offers to buy shares or rights issues the companies may have from time to time as well as other corporate actions such as cash offers or takeovers. CEL may offer advice to you as to whether or not we believe that you should exercise such actions on investments recommended by and purchased through CEL. 24. If you keep your investments in our CREST Nominee account, CEL will process the corporate actions set out in clause 23c for you once you have given your express instructions to do so. 25. If you keep your investments in a CREST Personal account sponsored by CEL you will be notified directly of corporate actions by the companies in which you hold investments. An exception is the issue of warrants, about which we will inform you. Advice may be offered to you by CEL as to whether or not we believe that you should exercise such actions on investments recommended by and purchased through CEL. 26. If you do not instruct us to exercise such rights arising from any securities eligible to be transferred into your name then we may do so at our own cost and for our own benefit. 27. Service Provided by CEL: Non Principal Transactions. We will act as agent for you in relation to any transactions where you: a. wish subsequently to sell investments that you have bought on the recommendation of CEL. b. wish to buy and sell investments, listed on the LSE or AIM, that you have not bought on the recommendation of CEL, on the terms set out in our Pennies From Heaven Brochure. Transactions of these types will be execution only transactions where we do not offer or give advice to you (see below) Service Provided by CEL: Execution Only Services Where we conduct transactions on an execution only basis you understand that we will not advise you on the merits or suitability of any order given by you. We give no warranty, advice or other assurance as to the suitability of investments traded under this service.

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Services Not Provided by CEL 28. We do not offer discretionary portfolio management. We can only transact business for you with your agreement obtained at or about the time the transaction is executed. 29. We will not accept an instruction to buy or sell an investment at a given price at some time in the future. Instructions you give to buy or sell an investment will only apply on the day given and will be cancelled if not effected when the LSE closes for business on that day (normally 4.30pm). 30. CEL will not operate a stop loss policy for you or set price targets for an investment or specify a time scale for which investments should be held. 31. We do not offer tax advice. We will not be responsible for the tax implications for you of any recommendations that we may make. 32. We do not offer advice on any financial products other than those we recommend to you. Telephone calls (see also communications) 33. All our telephone calls are recorded and they may be used for training purposes or as evidence in the event of any dispute. 34. By agreeing to these Terms you agree, authorise us and are willing to accept us making telephone calls to you at the telephone number(s) given or any other numbers you subsequently supply. 35. All telephone calls to you will be at a reasonable time, convenient to you but having regard to clause 21. On occasion we may telephone you outside normal market hours. 36. You should inform us of times when you do not wish to be telephoned for reasons of work, religion or other personal reasons. The information we require from you 37. By agreeing to these Terms you are agreeing to provide the following before we commence transacting business for you. 38. A signed "Your Signature" form. 39. Satisfactory verification of your identity. Wherever possible we will verify your identity by electronic means using a credit reference agency. By agreeing to these Terms you are agreeing to be so identified. This is not a credit check and will not affect your credit history. Where electronic verification is not available or is unsatisfactory we will ask you to provide other documentation, including certified copies of documents, to verify your identity. 40. Details of your personal and financial circumstances. We need these to complete a fact find, which will be used by us to assess whether any transaction is suitable for you having regard to your knowledge and experience, your financial

situation and your investment objectives. You must provide sufficient information to enable us to carry out this assessment. 41. We also need to establish the level of risk you are prepared to assume to confirm that investment in penny shares is suitable for you and we will record this in your fact find. 42. Details of any restriction on the type of penny share you wish to buy. These will be entered on the fact find. 43. Where you are over the age of 75 you will be required to sign an Age Declaration Form giving you the right to appoint (or not appoint) a third party to oversee your account. 44. If you do not provide us with the necessary information for us to assess suitability we will not be able to provide you with advisory services. 45. Where we provide you with execution only services we may be required to assess whether the product or service is appropriate for you having regard to your knowledge and experience. If you fail to provide us with sufficient information to assess appropriateness or we believe that it is not appropriate for you to deal in Penny Shares we will issue you with a warning to that effect. 46. A copy of the fact find will be sent to you and you will be required to sign and return a fact find confirmation. Until the original of this is received by CEL the only transaction you will be permitted to complete is a single principal transaction. Any advice given will be based on the documentation that is in our possession. If any information recorded is inaccurate or incomplete you must advise CEL immediately. 47. By agreeing to these Terms you consent to our keeping information on you electronically and in written form, in accordance with the Data Protection Act 1998. You have the right to review any information we hold on you at any time on payment of the appropriate fee. 48. To ensure the suitability of any recommendations to you, you must inform us immediately of any changes to your circumstances. In particular you must inform us of any change in your risk profile or employment status. It is your responsibility to keep us informed of any matters we should take into account when giving advice to you. 49. Any advice that we provide will be based on the information that you have given to us in relation to your personal and financial circumstances. Such advice may be given verbally or in writing. 50. At least once every year we will formally discuss and update with you the fact find information we hold for you. If we are unable to complete the fact find update with you we will be unable to continue to make recommendations to

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you and give you advice. 51. If a period of six months or more elapses between principal transactions with you, you will be required to sign a new risk warning to continue to receive advice to buy an investment from a CEL principal position. This also affects the advice we may offer from time to time on the sale of an investment purchased from a recommendation made by CEL. Principal Purchases 52. Where we act as principal we may acquire the securities at a discount to the market price, which we will sell to you at the yellow strip price, (see page 4 of the Pennies from Heaven brochure). We will always tell you the price we paid. 53. If we receive commission or other benefits from the issuer of a security or from another intermediary we will notify you of such an arrangement and provide you with further details on request. 54. Your first transaction with CEL must be a purchase from one of our principal positions. No agency transactions will be accepted until payment by cheque for the first principal transaction has been received and cleared (see also clause 66). Agency Transactions 55. All sales and agency purchases are transacted through third party stockbrokers unless we advise you otherwise. 56. All instructions will be executed in a timely fashion. 57. You must not give instructions to sell shares which are not registered in your name. 58. If the investment you are requesting us to sell is held in certificated form you must confirm, at the time of giving the order to sell, that the certificate is in your possession. 59. By giving us an instruction to sell an investment you are confirming that you own that investment and have the right to sell it free from any liens and any other restrictions and to receive the proceeds personally. 60. We will accept verbal, signed written and e-mail instructions from you to effect an agency purchase or sale. Where the instruction is received in either written or e-mail form it must be from an address we already have recorded in our records. In respect of all orders communicated to us by email, we shall not be obliged to execute such orders unless or until you receive a message from us confirming receipt of the order (for the avoidance of doubt automatic communications confirming receipt of your email should not be taken as confirmation of receipt of the order). 61. Agency dealing instructions can be carried out

in either of the following methods: At Best: This is an instruction to buy or sell an investment at the best price available in the market and is the most common method. You may be quoted a price at the time your order is placed but this price cannot be guaranteed as the market price can change at any time between the receipt of your instruction and execution in the market and can go up or down. At a Limit: A limit is set on the price you are prepared to pay for a purchase or accept for a sale. We will not buy for more than the limit or sell for less than the limit. The limit order will remain in place to the end of the working day (4.30pm) on the day the instruction is given. The order will then be cancelled if it is not possible to execute the transaction. 62. If we are unable to carry out any buy or sell transaction we will inform you as quickly as is practicable, in order to get your further instructions. 63. Where business is executed on an "execution only" basis we will send you a letter to confirm this. Settlement of Transactions 64. After each transaction we will send you a contract note showing the amount payable by you or to you and the date by which payment is to be made, the settlement date. 65. There are no rights of withdrawal from a share contract unless you are advised otherwise at the time of trade. 66. Payment for your first transaction must be by cheque and drawn on an account in your name i.e. the name your account has been set up in with CEL. All future cheques must be from an account in your name and must be from an EU regulated bank. 67. Payments after the first payment may be made by electronic transfer, bank transfer or debit card providing such payments are made from an account in your name. Payments by debit card will only be accepted from an account where payment has previously been made by cheque. Bank transfers must contain the details of the account from which the payment is being made, including name and account number. 68. CEL accepts payment in £Sterling or Euros, but only pays in £Sterling. Clients paying in Euros should be aware of the impact of exchange rate fluctuations, both when settling their transaction, as the £Sterling amount received upon conversion, may not cover the contract value, and on the long term value in Euros of their investments. Clients will also be liable for any charges levied by our bankers when processing a currency exchange. 69. Where securities are held in certificated form, or by a third party i.e. a CREST account operated by another sponsor, payment of monies due to you

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in respect of a sale transaction, will not be made until the relevant certificate or transfer is received by us. 70. In respect of sold transactions, if securities are not delivered 10 days after the settlement date, CEL reserves the right to buy-back the shares and charge this to the client's account. 71. You agree to indemnify us from all fines, taxes and charges that CREST, the LSE or any other exchange or clearing house may impose on us as a result of your failure to deliver money or documents to allow transactions to be settled. 72. In respect of purchased investments (both principal and agency transactions) the investment will not be transferred into your name until the funds for settlement have cleared. Best Execution 73. CEL is required to take all reasonable steps to obtain the best possible result for its clients. This is known as Best Execution. 74. Accordingly, CEL has an Order Execution Policy setting out how it will obtain best execution for its clients. We will execute your orders in accordance with the policy, a description of which is attached to these Terms. (See Annex 2). Conflicts of Interest 75. CEL has also implemented a conflicts of interest policy. This policy documents the conflicts of interest arising from the activities undertaken by CEL and the measures adopted to mitigate the risk of damage to the interests of clients which might otherwise result from such conflicts. Conflicts may arise where CEL deals as principal with a client and where CEL issues non-independent research. 76. CEL has put in place arrangements relating to the remuneration and supervision of staff, personal account dealing and information barriers. Further details of the policy are available on request. Communications 77. All communications whether verbal or written will be in English. 78. Where these Terms apply to more than one person, any instruction, notice, demand, acknowledgement, request or other communication, by any means, by or to you may be given by or to any one of you, whom you have nominated to receive them. 79. By accepting these Terms you expressly agree that we may contact you, by telephone, with our recommendations to enter into transactions with us to buy or sell investments, in particular, investments where we are acting as principal for our own account. 80. We will act upon any communication, in any form, which purports to have been made, and which we reasonably believe to have been made,

by you. You will be bound by any transaction entered into and/or expenses incurred on your behalf in reliance on such a communication. 81. You should inform us whether you agree to the transmission of electronic communications (e-mail) from us to you. You should confirm your agreement (or non-agreement) to this when accepting these Terms. You may change this decision afterwards by giving us notice in writing or electronic form or by telephone call. 82. For the avoidance of any doubt, if you have given us a facsimile number, notice by facsimile transmission from us to you will constitute notice in writing. 83. It is your obligation to advise CEL of any changes to your address. You must confirm any notification of a change of address in writing. A standard change of address form is available in PDF format at www.cityequities.com or by request from your Dealer. 84. If we communicate with you by e-mail it is your obligation to advise CEL of any changes to your e-mail address. We may require confirmation of this by a signed letter. 85. It is your obligation to keep us informed of any changes in telephone numbers, including mobile telephone numbers or any additional numbers we may contact you on. 86. If we are unable to contact you by telephone or do not receive replies to written communications over a period of three months your account will be designated as "Unable to Contact". No further attempt to contact you, by your Dealer, will be made. You will be informed of the action taken in writing. Charges and fees will continue to be charged to your account and if they remain unpaid we may recover these as set out in Clause 90 Client Monies 87. All monies belonging to clients are held in a separate client account that is identified as a trust account. All clients' money is segregated from the funds belonging to us. 88. No interest will be paid to clients on client monies. 89. If we receive money from you for investment, we will hold it in our client account until we make payment on your behalf for the investment you have agreed to buy. If we receive money payable to you that is not committed for investment, it will be forwarded to you at the latest address we have for you by crossed cheque or, if requested, by bank transfer. 90. If we have been unable to pay any client monies to you for six years the balance may be transferred into the CEL business account. Before we do so a notice will be sent to you, at your last known address, giving you 28 days in which to

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make a claim. Records will be made and retained of all client monies transferred to CEL's business account and we undertake to make good any valid claim in respect of client monies transferred to CEL's business account. Accounts 91. We will report to you on a monthly basis, by issue of a statement of account, provided you have transacted business with us during the preceding month, giving details of all transactions effected by us on your behalf. The statement will be issued to you no later than 25 days after the end of the previous month. 92. If you do not pay monies due on the date payment should be made we may: a) Sell any investments purchased or cancel any transactions and charge you all expenses or losses resulting from this. b) Charge interest on any monies due, calculated up to the date payment is finally received, at 5% above the Bank of England base rate during that period. You will be given three days notice of our intentions in writing. Charges 93. A full list of CEL's charges is set out in our "Pennies from Heaven" document and will include: a) An administration charge for buying investments. b) An administration charge for selling an investment if you are a non CREST client with CEL. c) An administration charge, if as a CREST Personal Member account, you request a certificate. d) An annual CREST management fee will be charged to your account in July each year if you hold investments in either our CREST Nominee account or your CREST Personal Member account sponsored through CEL. e) A CREST movement fee where applicable. See Clause 95. Where applicable Government Stamp Duty Reserve Tax. 94. Charges may be due if you close your account. See Clauses 109 and 110. How we collect our charges is described in the Pennies From Heaven brochure. Securities 95. All CREST registered investments will be held in your Personal Member account or in your designated account name registered in CEL Nominee account held by the CREST settlements system once cleared funds for the investment have been received.

96. You may request your CREST registered investments are held by a third party but such delivery will be at your own risk and we accept no responsibility for any acts or omissions by the third party. 97. If you require a share certificate or request your CREST holdings to be transferred, a CREST movement fee will be charged, currently £10 per investment. On payment of the fees investments will be transferred and/or documents sent to you as soon as is reasonably practicable. 98. We will account to you for income entitlement on your investments within ten days of receipt of such income by us. 99. We will send you a statement of your CREST account at the end of May and at the end of November each year, where the assets will be valued at the mid-price. The mid-price is the mid point between the bid price (selling price) and offer price (buying price). 100. We reserve the right to retain your investments or other assets until monies due to us in respect of outstanding transactions, delivery of sold investments, or charges relating to the administration or custody of your assets have been paid for. 101. If you are a CREST Personal member it is your obligation to inform CRESTCo of any changes to your address. A change of address form can be downloaded from, and CREST's Terms are available at www.euroclearCREST.co.uk Complaints 102. If you should have any complaint about our products or services please write to The Compliance Officer, City Equities Limited, Aldermary House, 10-15 Queen Street, London EC4N 1TY; Telephone: 0207 489 5555. A copy of our complaint handling procedure is available on request and if you are not satisfied with our response you may have the right to take your complaint to the Financial Services Ombudsman. 103. Where possible we will deal with your complaint, to your satisfaction, promptly. If we are unable to do this we will follow the time frame set out by the FSA and explained in our complaints handling procedures. 104. If you make a valid claim against us in respect of the investments we buy or sell for you and we are unable to meet our liabilities in full, you may be entitled to redress from the Financial Services Compensation Scheme (the FSCS); details of the cover provided by the FSCS are given in a leaflet, which we will send to you on request. Further information is available from the FSA and the FSCS. Commencement/Variation/Termination 105. These Terms will commence upon the date we accept your signed "Your Signature" form and in particular satisfaction by you of clauses 38, 40 to 42 and where applicable clause 43.

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106. We may amend these Terms at any time by giving you ten business days notice of the amendment. You will be deemed to have accepted the amendment unless you write to us informing us that you wish to terminate the contract and close your account. This will not affect any outstanding order or transaction commenced prior to the amendment. 107. Notices sent to you in writing shall have been deemed to be received by you no later than two business days after posting. 108. Notices may also be delivered to you by facsimile, electronically or other virtually instantaneous communication medium, and if so delivered shall have been deemed to have been received by you immediately and the notice period will have commenced from that time. 109. You or we may terminate our authority to act for you at any time without penalty. Notice of termination from us must be given in writing, but will be without prejudice to the completion of transactions already initiated. Notice of termination from you will be accepted verbally but you may be requested to confirm this in writing in which case it will not be operative until we receive it therefore, it will not affect transactions commenced prior to the receipt of the notice. 110. In the event of termination of this agreement by either you or us all investments/securities we hold on your behalf in a CREST account will be returned to you in certificated form or transferred to a third party, at your request. A fee of £10 for each investment/security held will be charged and must be paid before a certificate will be requested from the Registrar. General 111. We keep records of all our business transactions for at least five years from the date of the transaction and you have a right to inspect copies of contract notes, vouchers, and entries in our books or electronic recording media relating to your transactions. We may charge a fee for providing this information. 112. We are under no obligation to disclose to you any information that comes to our notice from conducting transactions for other clients. 113. In the event of any failure, interruption or delay in the performance of our obligations, resulting from acts, events or circumstances outside our reasonable control (which circumstances will include, but not be limited to unanticipated dealing volumes, industrial disputes, acts or regulations of any governmental or supranational bodies or authorities, act of God, threats or acts of terrorism, fire, war, civil commotion, insurrection, embargo, breakdown, failure, malfunction or delay caused by any public utility, telecommunications or computer service or systems) we shall not be liable for any loss or damage incurred or suffered by you.

114. Joint Accounts. If you are a party to these Terms with another person, the liability of each of you will be joint and several. Where such persons are trustees, you warrant that you have been validly appointed and will inform us in writing of any changes to the trustees. 115. Power of Attorney and Agents. Any notice given by us under these Terms will be deemed to have been duly given to you if it is given to the person(s) whom you have informed us is your agent or to the person(s) whom you have informed us holds a power of attorney granted by you. 116. Unless we consent in writing or you have informed us of the appointment of an agent to act on your behalf or a person(s) who hold a power of attorney granted by you, you may not transfer your rights under these Terms. Any transactions effected under or pursuant to it are non- assignable and unenforceable by third parties whether under the Contract (Rights of Third Parties) Act 1999 or otherwise and your obligations shall not be capable of performance by anyone else. 117. Each provision of these Terms is severable and if any provision is or becomes invalid for any reason or contravenes any applicable regulations, the remaining provisions will not be affected and will remain enforceable.

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ANNEX 1

Client classification

Under the rules of the FSA, clients fall into one of three possible categories: 1. Eligible counterparties, who are considered to be the most sophisticated investors and are likely to be large organisations such as investment firms, credit institutions, pension funds and national governments. Eligible counterparty status is relevant only for certain types of investment business; 2. Professional clients, who are considered to possess the experience, knowledge and expertise to make their own investment decisions and assess the risks inherent in those decisions. The definition of professional client includes all those entities that may be treated as eligible counterparties and some others. 3. Retail clients, who are any clients who do not come under either of the other two categories, such as private individuals. The greatest regulatory protections are provided to retail clients and the least to eligible counterparties.

CEL's clients

Currently CEL treats all its clients as retail clients. If you wish to be treated as a professional client you must state in writing to us that you wish to be so treated, either for a particular transaction or in general. We are not required to agree to your request however. If we do agree we must give you a clear written warning of the protections and investor compensation rights that you may lose as a result and you must confirm that you are aware of the consequences of losing such protections.

Moving between categories

Clients who meet certain qualifying criteria can request to change their category upwards or downwards. Retail clients who wish to be treated as professional clients must satisfy two of the following: 1. They have carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters; 2. They own a financial instrument portfolio, defined as including cash deposits and financial instruments, exceeding 500,000; and 3. They work or have worked in the financial sector for at least one year in a professional position which requires knowledge of the transactions or services envisaged.

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ANNEX 2

Best Execution Disclosure Statement

CEL will only place other considerations, such as market impact and likelihood of execution, over price where we believe that it is necessary to do so in order to deliver the best result for you.

Introduction

When executing your orders, CEL will take all reasonable steps to obtain the best possible result for you. This does not mean that we will obtain the best possible result for each order; rather we will apply our execution policy to each order with a view to obtaining the best possible result. This is known as "best execution". The purpose of this document is to provide you with appropriate information about our execution policy. Our commitment to provide you with best execution does not mean that we owe you any fiduciary responsibilities over and above the specific regulatory obligations placed upon us or as may be otherwise contracted between us.

Execution Arrangements

CEL may either execute your orders itself or it may transmit the order to a third party for execution. The arrangements for achieving the best possible result, whether in terms of price or otherwise, differ according to the capacity in which the Company is acting. The capacity in which CEL is acting will be made clear to you at the time of trading.

Executing Orders

Where CEL executes your orders it will always do so by trading with you as principal. This means that CEL will sell securities to you from its own account (and vice versa). CEL does not offer access to any other execution venues when executing your orders.

Services & Products

CEL offers to provide the following services to its clients: Executing orders; and Receiving and transmitting orders. The arrangements for achieving the best possible result, whether in terms of price or otherwise, differ according to the capacity in which the Company is acting. Further information on how we will provide best execution in relation to each service is provided below. CEL offers the above services in relation to shares admitted to trading on AIM. AIM is not a regulated market (as defined by the FSA).

Transmitting Orders

CEL may transmit your orders to a third party for execution. Where it does so CEL will act as agent for you. CEL has selected the parties to which it will transmit your orders based on the following considerations: The entities are themselves subject to the obligation to provide best execution; Each entity is a member of the LSE and has access to market makers for AIM listed securities; and The costs associated with each entity are reasonable having regard to the market as a whole. When transmitting a client order to a third party broker, CEL will have regard to the Execution Factors as set out above (i.e. that price is the determining factor).

The Execution Factors

When executing orders or receiving and transmitting orders on your behalf, CEL will have regard to the following criteria (known as `execution factors'): 1. Price; 2. Costs; 3. Speed; 4. Likelihood of execution and settlement; 5. Size; 6. Nature; or 7. Any other consideration relevant to the execution of an order The best possible result for your orders will be determined by reference to the total consideration involved in the execution of the order. This means that CEL will have regard to both the price at which the security is traded as well as any costs related to execution.

Orders Above Standard Market Size

For orders which are above the standard market size, other factors may become instrumental in delivering the best possible result for you. Market impact and likelihood of execution may outweigh price considerations, particularly if there is limited liquidity in a security. 23

Notes

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Please tear along the perforated line, sign, and send back in the prepaid envelope.

Your Signature

I have read and understood these Terms and Conditions of Business; I agree to abide by these Terms and Conditions of Business; I have read and understood the description of CEL's policy on Conflicts of interest; I have read and understood the disclosure statement about CEL's Order Execution Policy; (Annex 2) My investment objectives are to invest in `Penny Shares' with the intention of maximising potential capital growth; I accept the Risk Warning applying to investment in `Penny Shares'. I have read and understood all research material issued will constitute non-independent research.

Name Address

Contact Number

Signature

Date

RISK WARNING: There is an extra risk of losing money when shares are bought in some smaller companies including `Penny Shares'. There is a big difference between the buying price and the selling price of these shares. If they have to be sold immediately, you may get back much less than you paid for them or you may have difficulty in selling them. Past performance is not a reliable indicator of future results. The price may change quickly and it may go down as well as up. You could lose every penny put into a particular share. Issued by City Equities Ltd, Aldermary House, 10-15 Queen Street, London EC4N 1TY. Registered in England. Registered No. 274287. Registered Address: Amwell House, 19 Amwell Street, Hodderson Herts, EN11 8TS. CEL is Authorised and regulated by the Financial Services Authority. Our Registration number is 155051.

V2

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Please tear along the perforated line, sign, and send back in the prepaid envelope.

Issued by City Equities Ltd, Aldermary House, 10-15 Queen Street, London EC4N 1TY. Registered in England. Registered No. 274287. Registered Address: Amwell House, 19 Amwell Street, Hodderson Herts, EN11 8TS. CEL is Authorised and regulated by the Financial Services Authority.

Information

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