EXECUTION COPY

Between

Longtail Aviation International

Limited

And

Longtail Aviation Ltd. And Its

Shareholders

headings are for reference only and do not affect interpretation;

the singular includes the plural and vice versa, a gender includes other genders and different grammatical forms of defined expressions have corresponding meanings;

examples and use of the word including and similar expressions do not limit what else may be included; and

unless the context requires otherwise, a reference in this agreement to:

a document or agreement includes that document or agreement as novated, altered, amended, supplemented or replaced from time to time;

clauses, schedules and annexures are to those in this agreement, and a reference to this agreement includes any schedule and annexure;

a person includes a natural person, partnership, body corporate, incorporated and unincorporated association, governmental or local authority or agency or other entity;

legislation or other law or a provision of them includes regulations and other instruments under them, and any consolidation, amendment, re-enactment or replacement.

Name

Address

 

Mark Byrne

Crawford House, 23 Church Street,

Hamilton HM 11, Bermuda

David A. Brown

Crawford House, 23 Church Street,

Hamilton HM 11, Bermuda

James O’Shaughnessy

Crawford House, 23 Church Street,

Hamilton HM 11,  Bermuda

Donald A. Emeigh

Crawford House, 23 Church Street,

Hamilton HM 11, Bermuda

1.  

80% of the consideration shall be paid within two business clays of the approval of the amalgamation by the Registrar of Companies.

2.  

The remaining 20% (the retained amount) shall be paid on or before September 30th, 2007 after the final review of the Balance Sheet has been completed by the Flagstone CFO. The intention of the retained amount is to allow Flagstone additional time to complete its review of the Balance Sheet. In the event that the CFO of Flagstone determines in his reasonable discretion, after consultation with Mark Byrne, that any financial asset included on the Balance Sheet is not collectable, such amount shall be deducted from the retained amount and to the extent that such amount is insufficient to repay Longtail International, Mr. Byrne shall pay Longtail. International an amount no greater than the full consideration paid pursuant to this paragraph 5.2. Provided however, in the event of a disagreement, above, Longtail International shall, in the event the parties cannot agree, assign any and all of its rights to collect such amounts to Mark Byrne.

Changes Since July 31st, 2007

There has been no material adverse change in its financial condition;

No material change has occurred in the assets and liabilities shown in its respective Accounts other than financial losses sustained in the ordinary course of business. Longtail has disclosed to the Longtail International that Longtail has made financial losses almost continuously since commencement of operations.

It has not, other than in the usual course of business:

acquired or disposed of, or agreed to acquire or dispose of, an asset; or

assumed or incurred, or agreed to assume or incur, a liability, obligation or expense (actual or contingent);

It has not factored, sold or agreed to sell a debt (other than in the usual course of business);

Its business has not been materially and adversely affected by the termination of, or a change in the terms of, an agreement or by the loss of a customer or supplier or by an abnormal factor not affecting similar businesses and to the best of its knowledge, information and belief, no fact or circumstance exists which might have a material and adverse effect on its business;

It has not declared, paid or made a dividend or distribution except as provided in its respective Accounts;

It has not changed its financial year-end; and

It has not created, allotted, issued, acquired, repaid or redeemed share or loan capital or made an agreement or arrangement or undertaken an obligation to do any of those things.

Legally and beneficially owned solely by it free from any Encumbrance except for letters of credit issued in the ordinary course of business; and

Where capable of possession, in the possession or under its control.

No person (including, without limitation, the landlord or licensor) may bring the term to an end before the expiry of the Licence by effluxion of time (except by forfeiture or default or by the provisions of the License);

There is no fact or circumstance (and, to the best of each of Longtail’s knowledge, information and belief, no fact or circumstance will within 6 months starting on the date of this agreement occur or arise) which:

Could entitle or require a person (including, without limitation, the landlord or licensor) to forfeit or enter on, or take possession of, or occupy, the Premises, other than in accordance with the provisions of the License; or

Could restrict or terminate Longtail’s continued and uninterrupted occupation of the Premises.

A rent or fee payable in respect of the Premises is not at the date of this agreement being reviewed and cannot be reviewed before the Effective Date.

In addition to the Premises, Longtail occupies additional space on a similar basis but without benefit of a contract (the “Month to Month” space). Longtail has no reason to expect that this space will be rescinded, or that the terms will change, but can make no representations in this regard.

SIGNED for and on behalf of

Signature

Print name and position

SIGNED for and on behalf of

Signature

Mark Byrne, Longtail Shareholder

Signature

Mark Byrne, for and on behalf of all Byrne Entities

Signature

Anthony Philip, Longtail Shareholder