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Important New Info:

• Important Information
• Terms And Conditions of Business
• Client Classification
• Best Execution Disclosure Statement
• Conflicts Policy
• Non-Independent Research

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 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.

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 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 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 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.

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.