MANAGEMENT AGREEMENT
Exhibit
10.69
THIS
MANAGEMENT AGREEMENT is effective as of the 12th day of October, 2005 and is
by
and between I-55 Telecommunications, L.L.C., a Louisiana limited liability
company (“I-55 Telecom”) and XFone USA, Inc., a Mississippi corporation ("XFone
USA" or "Manager") (referred to collectively hereinafter as "the
Parties").
WITNESSETH:
WHEREAS,
pursuant to the terms of that certain Agreement and Plan of Merger dated as
of
August 26, 2005 (the "Merger Agreement") among I-55 Telecom, Guarantor, XFone
USA and XFone, Inc. (the "Parent"), I-55 Telecom is to be merged with and into
XFone USA (the "Merger") for the Merger Consideration to be paid by Parent
(capitalized terms not otherwise defined herein shall have the meaning as set
forth in the Merger Agreement); and
WHEREAS,
certain regulatory approvals are required before the Merger may be consummated
and the parties desire that XFone USA provide management services to I-55
Telecom in accordance with the terms of this Agreement pending the consummation
of the Merger.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the Parties agree as follows:
1. Retention
of XFone USA.
I-55
Telecom does hereby hire and appoint XFone USA as Manager to be responsible
for
the operation and management of all of I-55 Telecom's business operations (the
"Business") and XFone USA hereby accepts such appointment as Manager and shall
manage the operations of the Business upon the terms set forth herein. Manager
agrees to perform all of its obligations under this Agreement in good faith.
The
management services to be performed by Manager under this Agreement shall be
performed by Manager as agent for I-55 Telecom and without limiting the
foregoing, I-55 Telecom hereby grants the Manager the authority and powers
necessary for the management of the Business in the ordinary and usual course
of
business generally consistent with past practice, including, without limitation,
the following:
(a) Personnel.
Supervising the current employees and independent contractors of I-55 Telecom
with the Manager having the authority to hire, discharge and direct such
personnel for the conduct of the Business.
(b) Accounting.
Supervision and administration of all accounting and the maintenance of all
books and records for the Business, including, without limitation, (i) all
billing, communications and other services provided to customers serviced under
I-55 Telecom's licenses; (ii) collection on behalf of I-55 Telecom of all fees,
charges and other compensation relating to the Business; (iii) review of all
bills received for services, work or supplies in connection with maintaining
and
operating the Business and paying all such bills as and when the same shall
become due and payable except for the Long Term Liabilities (as defined in
the
Merger Agreement); and (iv) preparation on a monthly basis of a balance sheet
and income and expense statement with respect to the Business.
(c) Contracts.
Maintain all existing contracts necessary for the operation of the Business
and
the authority to enter into or renew contracts in the ordinary course of
business in I-55 Telecom's name as necessary for the continuing operation of
the
Business provided that the consent of I-55 Telecom shall be required for any
new
contracts or renewals of existing contracts that are not terminable on 60 days
notice, or that require the commitment of more than $5,000.00, which is not
included in an approved operating budget.
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(d) Policies/Procedures.
Preparation of all policies and procedures for the operation of the
Business.
(e) Budgets.
Preparation of all operating, capital or other budgets which shall be prepared
and submitted on a schedule to be approved by the Parties.
2. Assignment
of Revenues and Payment of Expenses.
(a) For
and
in consideration of the management services to be provided hereunder, I-55
Telecom hereby assigns and transfers to Manager all revenues generated from
the
operations of the Business (the "Revenues"), to be used in accordance with
this
Agreement and Manager agrees to pay and cause to be paid from the Revenues
the
normal operating, maintenance, administrative, and similar expenses of the
Business incurred in the ordinary course of business during the term hereof,
exclusive of the Long Term Liabilities (as defined in the Merger Agreement)
("Expenses").
(b) I-55
Telecom shall designate the Manager as the controlling party of the current
operating accounts of the Business (the "Accounts") and all funds collected
from
the operations, fees, sales and other collections and operations of the Business
shall be deposited in the Accounts and the Manager shall control and have
authority with respect to all disbursements from said Accounts and the Manager
agrees that the normal operating expenses shall be paid from the Revenues
collected and deposited in such Accounts and then to the extent of available
funds, the Long Term Liabilities and other non-recurring liabilities shall
be
paid.
3. Loans
by Manager.
The
Manager, in its discretion, shall have the right to make advances or loans
(the
"Manager Loans") to I-55 Telecom payable on demand (or if no demand payable
in
equal quarterly installments of principal and interest) for an aggregate amount
up to $500,000.00, with interest at 7% per annum from the date advanced until
paid for the payment of any amounts due during the term of this Management
Agreement under any of the Long Term Liabilities (as defined in the Merger
Agreement) or for any other liabilities the Manager deems appropriate for which
there are not sufficient Revenues generated to pay such debts and expenses.
I-55
Telecom, by execution of this Agreement, grants to the Manager a security
interest in all of the assets, whether now owned or hereafter acquired and
wherever located, of I-55 Telecom, including without limitation, all accounts,
goods, equipment, inventory, contracts and contract rights, instruments, chattel
paper, securities and other investment property. The Manager is hereby
authorized to file such financing statements and amendments thereto and
continuations thereof in such offices as necessary to perfect the security
interest granted hereby.
4. Terms.
The
term of this Agreement shall commence on the date hereof and shall continue
until the consummation of the Merger, provided that this Agreement may be
terminated by either party at any time after March 1, 2006 upon 30 days prior
notice.
5. Termination
Fee.
In the
event that the Agreement is terminated by either party as provided in Paragraph
4 (other than due to the consummation of the Merger), then the Parties agree
that the "Net Revenue" or "Net Loss" during the term of this Agreement shall
be
divided 50% to I-55 Telecom and 50% to the Manager, provided that in the event
the Manager or any of its affiliates has made any Manager Loans to I-55 Telecom,
that the Manager may offset against any amounts due under any Manager Loans
any
amounts due to I-55 Telecom for the "Net Revenue" and in the event there is
a
"Net Loss", then I-55 Telecom's share of the "Net Loss" shall be added to the
principal due under the Manager Loans. If this Agreement is terminated due
to
the consummation of the Merger, then in such event the Manager shall be entitled
to all the Net Revenues or Net Losses. For purposes of this section "Net
Revenue" is the excess of gross revenues derived from the Business during the
Term, over expenses paid and losses incurred during the Term, and "Net Loss"
is
the excess of expenses paid and losses incurred during the Term, over gross
revenues derived from the Business during the Term.
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6. Insurance.
I-55
Telecom shall include the Manager as an additional insured on all insurance
currently maintained and such insurance shall continue throughout the term
of
this Management Agreement.
7. Independent
Contractor.
It is
the expressed intent of I-55 Telecom, on the one hand, and Manager, on the
other
hand, that neither a partnership, joint venture, nor employment relationship
is
created between the Parties by this Agreement; rather, it is the express intent
of the Parties that this Agreement represents an independent contractor
relationship under which I-55 Telecom is retaining the services of
Manager.
8. Force
Majeure.
The
obligations of the Parties hereto shall be excused during such time as, and
to
the extent that, performance is prevented by any occurrence or act beyond their
respective control and not due to their fault or negligence, including, without
limitation, action of the elements, riots, fire, terrorism, war, acts of God,
and any ruling, ordinance, law or regulation of any local, state or federal
governmental body having jurisdiction over either party.
9. Compliance
with Law. Each of the Parties shall comply in all material respects with all
applicable laws and regulations. Manager and I-55 Telecom shall immediately
notify the other of any pending or threatened action by the FCC, PSC or any
other Governmental Authority or third party to suspend, revoke, terminate,
or
challenge the licenses, or otherwise investigate the licenses of I-55 Telecom.
I-55 Telecom shall cooperate with Manager to assist Manager in fulfilling
Manager's obligations under the terms of this Agreement.
10. Modifications.
This
Agreement constitutes the entire understanding and agreement between the Parties
and it may not be altered or amended in any way whatsoever except in writing
and
signed by all of the Parties hereto.
11. Confidentiality.
During
the term of this Agreement, each party will have access to certain confidential
information of the other party, including but not limited to trade secrets,
financial data and projections, data regarding suppliers and customers
operations methods and practices, and marketing and sales approaches (the
"Confidential Information"). Each party acknowledges that all Confidential
Information which may be disclosed to it by the other party or which may come
to
the attention of such party (or its agents) in connection with the provision
of
services under this Agreement is confidential. Accordingly, each party agrees
not to disclose such Confidential Information (or suffer its agents to disclose
such Confidential Information) unless required to do so by law or unless such
party has first obtained the prior written consent of the other party. Each
party further agrees not to use such Confidential Information (or suffer its
agents to use such Confidential Information) in any manner except in connection
with the performance of the services described in this Agreement. Each party
further agrees to take reasonable steps necessary to insure that no disclosure
or use prohibited by this paragraph is made, including, without limitation,
those steps, which a reasonable person would take to protect his own
information, data or other tangible or intangible property, which he regards
as
proprietary or confidential. Upon breach of this paragraph, the non-breaching
party shall be entitled to injunctive relief, either pending litigation or
permanently or both, against the breaching party, since the Parties acknowledge
that a remedy at law would be inadequate and insufficient. In addition, the
non-breaching party shall be entitled to recover such damages as it may
demonstrate as sustained by reason of such breach. Nothing contained herein
or
in any other provision of this Agreement shall be construed as limiting a
party's remedies under this paragraph in any manner.
12. Delegation
and Assignment.
Except
as expressly provided herein, no party shall delegate its duties or assign
its
rights hereunder in whole or in part, without the prior written consent of
the
other.
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13. Notices.
All
notices required to be given hereunder shall be in writing and shall be deemed
given if delivered in person, transmitted by electronic facsimile, or deposited
in United States first class mail, postage prepaid, certified or registered
mail, return receipt requested, addressed to the Parties as set forth opposite
their respective names below. Notice shall be deemed given on the date it is
personally delivered, on the date it is transmitted by electronic facsimile,
or
on the date it is deposited in the mail, as indicated by the United States
postmark thereon, in accordance with the foregoing. Any party may change the
address or facsimile number at which to send notices by notifying the other
party of such change of address or facsimile number in writing in accordance
with the foregoing.
14. Further
Assurances.
Each of
the Parties hereto shall execute and deliver all documents, papers and
instruments necessary or convenient to carry out the terms of this
Agreement.
15. Entire
Agreement.
The
Parties acknowledge and agree that this document, together with all other
documents expressly referred to herein, constitutes the entire agreement between
the Parties. Except as set forth in such other documents (including the exhibits
and schedules thereto and ancillary agreements referenced therein), no
representatives, promises, conditions or warranties with reference to the
execution of this document have been made or entered into between the Parties
hereto.
16. Waiver
of Provisions.
Any
waiver of any term and condition hereof must be in writing and signed by the
party giving the waiver. A waiver of any of the terms and conditions hereof
shall not be construed as a waiver of any other terms and conditions
hereof.
17. Captions.
Any
captions to or headings of the articles, sections, subsections, paragraphs
or
subparagraphs of this Agreement are solely for the convenience of the Parties,
are not a part of this Agreement, and shall not be used for the interpretation
or determination of validity of this Agreement or any provision
hereof.
18. Severability.
The
invalidation of any clause or provision of this Agreement shall have no effect
on the remaining provisions of this Agreement, and as such, the remaining
Agreement shall remain in full force and effect, and be interpreted as
consistently as possible.
19. Authority.
The
Parties hereto represent and warrant that all necessary corporate action
required to approve and authorize the execution of this Agreement has been
accomplished and that this Agreement is a legally binding obligation of the
Parties.
20. Counterparts/Facsimile
Delivery.
This
Agreement and any subsequent amendments may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement. This Agreement and any subsequent
amendments may be signed and delivered by facsimile transmission, which delivery
shall have the same binding effect as delivery of the document containing the
original signature. At the request of any party, any document delivered by
facsimile signature shall be followed by or re-executed by all Parties in an
original form, provided that the failure of any party to do so will not
invalidate the signature delivered by facsimile transmission.
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IN
WITNESS WHEREOF, the Parties have executed this Agreement effective the day
and
year first above written.
|
XFone
USA, Inc.
|
I-55
Telecommunications, L.L.C
|
||
| /s/ Xxxx Xxxxxxx | /s/ Xxxxxxx Xxxx Xxxxx Xxxxxx | ||
|
Xxxx Xxxxxxx |
Xxxxxxx Xxxx Xxxxx Xxxxxx |
||
| President |
|
Address: 0000
Xxxxxxxx Xxxxx
Xxxxx
000
Xxxxxxx,
XX
Telephone: 000-000-0000
Facsimile: 000-000-0000
Email: xxxxxxxx@xxxxxxx.xxx
with
copy
to:
The
Oberon Group, LLC
00
Xxxxxxx Xxx., 0xx Xxxxx
Xxx
Xxxx,
XX 00000
Attention: Xxxx
Xxxxxxxxxx
Facsimile: 000-000-0000
Email: xxxx@xxxxxxxxxxx.xxx
and
Xxxxxxx
Xxxxxx Winter & Stennis, P.A.
000
Xxxxx
Xxxxx Xxxxxx (39202)
P.
O. Xxx
000
Xxxxxxx,
XX 00000-0000
Attention: Xxxx
X.
Xxxxxx
Telephone: 000-000-0000
Facsimile: 601-949-4804
Email: xxxxxxx@xxxxxxxxxxxxx.xxx
I-55
Telecommunications, L.L.C.
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