SERVICE AGREEMENT
Exhibit
10.88
THIS
AGREEMENT
(the
“Agreement”) is made and entered into this 6th
day of
December, 2005, by and between
ELITE FINANCIAL COMMUNICATIONS GROUP, LLC,
located
at 000 Xxxxxxxx Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxx, Xxxxxxx 00000,
(hereinafter referred to as “ELITE”) and XFONE,
INC., located
at c/o Swiftnet Limited, Britannia House, 000 Xxxx Xxxx, Xxxxxx X00 0XX, Xxxxxx
Xxxxxxx, (hereinafter referred to as the “Company”).
WITNESSETH:
For
and
in consideration of the mutual promises and covenants contained herein, the
parties hereto agree as follows:
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1)
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EMPLOYMENT
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Company
hereby hires and employs ELITE as an independent contractor, and ELITE does
hereby accept its position as an independent contractor to the Company upon
the
terms and conditions hereinafter set forth.
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2)
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TERM
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The
term
of this Agreement shall be for twenty five (25) months. However, the Company
shall retain the right to terminate this Agreement at any time and for any
reason, at its sole discretion.
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3)
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DUTIES
AND OBLIGATIONS OF ELITE
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a)
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ELITE
will review and analyze various aspects of the Company’s goals and make
recommendations on feasibility and achievement of desired
goals.
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b)
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Through
its Tele-Market Relations Group, ELITE will provide exposure to its
network of firms and brokers that may be interested in participating
with
the Company, schedule and conduct the necessary due diligence, and
obtain
the required approvals necessary for those firms to participate.
ELITE
will also interview and make determinations on any brokerage or
institutional firms referred by the Company with regard to their
participation.
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c)
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At
the Company’s request, ELITE will be available to manage any calls from
firms, individual investors/shareholders and brokers inquiring about
the
Company. In addition, ELITE will assist the Company in preparing
its
quarterly communications relative to its financial results and coordinate
corresponding news announcements, conference calls and simulcasts
on the
Internet in accordance with Regulation
FD.
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d)
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ELITE
will feature the Company on the Internet via ELITE’s home web site
(xxx.xxxx.xxx)
within the Elite
Financial Forum
which will feature comprehensive information relative to the Company’s
fundamental and technical strengths, as well as industry and corporate
overviews; management biographies; stock trading history; market
making
activity; conference call/webcast archives; and other information
meaningful to the investment community. The Forum
will
be updated routinely and provide for site visitors to request ongoing
information about the Company as it is
released.
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e)
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ELITE
shall write, produce and/or assist the Company in preparing and releasing
all news announcements. The Company shall be solely responsible for
paying
all fees associated with the actual release(s) through BusinessWire,
PR
Newswire, or any other comparable news dissemination source. ELITE
will
create, build and continually enhance a database of all brokers,
investors, analysts and media contacts who have expressed an interest
in
receiving ongoing information on the Company and manage the ongoing
distribution of news announcements and/or other Company approved
communications.
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f)
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ELITE
shall serve as the Company’s publicist and will strive to obtain coverage
in both national and industry publications, in financial newsletters,
on
financial radio and television programming and via traditional press
mediums. Specifically, ELITE will facilitate an ongoing outreach
program
to an intelligently targeted universe of media professionals. Further,
ELITE will track published articles and provide monthly clippings
of those
articles/mentions featuring the
Company.
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g)
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At
the Company’s request, strive to obtain the Company analyst coverage
and/or investment banking
sponsorship.
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h)
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ELITE
shall arrange for a series of due diligence meetings with select
broker/dealers, institutional investors and analysts at predetermined
dates throughout the campaign term, while remaining compliant with
the
rules and regulations associated with Regulation
FD.
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i)
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ELITE
shall develop customized, high-quality, high-impact and fully integrated
financial communications programs and platforms, and leverage our
strategic resources to enhance general product/service marketing
programs
initiated by the Company.
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j)
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In
association with the Company’s management team, ELITE will coordinate a
nationwide meeting schedule (road show) providing for one-on-one
meetings
with appropriate institutional investors.
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k)
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ALL
OF THE FOREGOING ELITE-PREPARED DOCUMENTATION CONCERNING THE COMPANY,
INCLUDING, BUT NOT LIMITED TO, INFORMATIONAL WRITE-UPS, NEWS
ANNOUNCEMENTS, SHAREHOLDER LETTERS, ET AL, SHALL BE PREPARED BY ELITE
USING MATERIALS SUPPLIED TO IT BY THE COMPANY AND SHALL BE APPROVED
BY THE
COMPANY PRIOR TO DISSEMINATION BY
ELITE.
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4)
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ELITE’S
COMPENSATION
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a)
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Elite
will be entitled to receive a monthly retainer fee of $7,000, payable
in
cash with the first payment due upon execution of this Agreement
and
subsequent payments due every month thereafter for the term of the
Agreement.
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b)
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In
addition, Elite will be entitled to receive a value of $3,000 per
month,
payable in cash or restricted shares of the Company’s common stock,
payable quarterly with the first payment due 90 days following execution
of this Agreement and subsequent quarterly issuances due every 90
days
thereafter for the term of the Agreement. The price basis for each
quarterly issuance of restricted shares shall be based on the closing
price of the Company’s common stock on March 1, 2006, June 1, 2006 and
September 1, 2006, December 1, 2006. In order to remove doubt, the
Company
shall have the sole discretion to decide whether to pay Elite in
cash or
in restricted shares of its common stock.
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c)
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ELITE
would also be entitled to receive a warrant to purchase up to 100,000
common shares of the Company’s common stock, exercisable as
follows:
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i)
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25,000
at $4.00 per share;
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ii)
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25,000
at $4.50 per share;
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iii)
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25,000
at $5.00 per share; and
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iv)
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25,000
at $5.50 per share.
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-
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The
warrants shall vest at a rate of 4,000 warrants each month (1,000
of each
category) for 25 consecutive
months.
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Issuance
of the warrants shall be subject to the provisions of Section 4.14
of the
September 28, 2005 Securities Purchase Agreement by and between the
Company and certain investors.
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d)
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The
Company shall agree to issue ELITE piggyback registration rights
for the
common shares underlying the warrants listed above, whereby these
shares
will be registered for resale by ELITE on the first applicable
Registration Statement filed by the Company with the U.S. Securities
&
Exchange Commission; said underlying common shares shall be held
by the
Company until such time as ELITE elects to exercise its warrants to
purchase the common shares. The term of the warrants shall expire
at the
later of: (1) 36 months from the day of grant; (2) 6 months after
the
underlying shares are effective. In the event the Company elects
early
termination of this Agreement, pursuant to Section 2 herein, then
any
warrants that have not yet reached their vesting date will be deemed
null
and void.
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5)
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ELITE’S
EXPENSES AND COSTS
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Company
shall pay all reasonable costs and expenses incurred by ELITE, its directors,
officers, employees and agents, in carrying out its duties and obligations
pursuant to the provisions of this Agreement, excluding ELITE’s general and
administrative expenses and costs, but including and not limited to the
following costs and expenses; provided all costs and expense items in
excess of $1.00 (One Dollar) must
be
approved by the Company in writing prior to ELITE’s incurrence of the
same:
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a)
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Travel
expenses, including but not limited to transportation, lodging and
food
expenses, when such travel is conducted on behalf of the
Company.
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b)
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Seminars,
expositions, money and investment
conferences.
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c)
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Radio
and television time and print media advertising costs, when/if
applicable.
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d)
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Subcontract
fees and costs incurred in preparation of independent third party
research
reports, when/if applicable.
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e)
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Cost
of on-site due diligence meetings, if
applicable.
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f)
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Printing
and publication costs of brochures and marketing materials, which
are not
supplied by the Company.
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g)
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Corporate
web site development costs.
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h)
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Printing
and publication costs of Company annual reports, quarterly reports,
and/or
other shareholder communication collateral material, which is not
supplied
by the Company.
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6)
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COMPANY’S
DUTIES AND OBLIGATIONS
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Company
shall have the following duties and obligations under this
Agreement:
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a)
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Cooperate
fully and timely with ELITE so as to enable ELITE to perform its
obligations under this Agreement.
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b)
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Within
ten (10) days of the date of execution of this Agreement to deliver
to
ELITE a complete due diligence package on the Company, including
all the
Company’s filings with the U.S. Securities and Exchange Commission within
the last twelve months; the last six (6) months of press announcements
on
the Company; and all other relevant materials with respect to such
filings, including but not limited to, corporate reports, brochures,
and
the like, and a list of analysts and or fund managers, who have been
following the Company.
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c)
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The
Company will act diligently and promptly in reviewing materials submitted
to it from time to time by ELITE and inform ELITE of any inaccuracies
contained therein prior to the dissemination of such
materials.
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d)
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Promptly
give written notice to ELITE of any change in the Company’s financial
condition or in the nature of its business or operations which had
or
might have an adverse material effect on its operations, assets,
properties or prospects of its
business.
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e)
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Promptly
pay all Company pre-approved costs and expenses incurred by ELITE
under
the provisions of this Agreement when presented with invoices for
the same
by ELITE.
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f)
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Give
full disclosure of all material facts concerning the Company to ELITE
and
update such information on a timely
basis.
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g)
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Promptly
pay the compensation due ELITE under the provisions of this Agreement,
and
as defined in Section 4 and Sections 5 and 6 (if and when applicable)
herein.
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7)
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NONDISCLOSURE
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a)
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Except
as may be required by law, the Company, its officers, directors,
employees, agents and affiliates shall not disclose the contents
and
provisions of this Agreement to any individual or entity without
ELITE’s
expressed written consent subject to disclosing same further to Company
counsel, accountants and other persons performing investment banking,
financial, or related functions for the
Company.
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b)
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Except
as may be required by law, ELITE, its officers, directors, employees,
agents and affiliates shall not furnish, disclose, deliver or otherwise
make available or accessible to any third party, directly or indirectly,
any Confidential Information of the Company without the prior written
consent of the Company.
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8)
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COMPANY’S
DEFAULT
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In
the
event of any default in the payment of ELITE’s compensation to be paid to it
pursuant to this Agreement, or any other charges or expenses on the Company’s
part to be paid or met, or any part or installment thereof, at the time and
in
the manner herein prescribed for the payment thereof and as when the same
becomes due and payable, and such default shall continue for five (5) days
after
ELITE’s written notice thereof is received by Company; in the event of any
default in the performance of any of the other covenants, conditions,
restrictions, agreements, or other provisions herein contained on the part
of
the Company to be performed, kept, complied with or abided by, and such default
shall continue for five (5) days after ELITE has given Company written notice
thereof, or if a petition in bankruptcy is filed by the Company, or if the
Company is adjudicated bankrupt, or if the Company shall compromise all its
debts or assign over all its assets for the payment thereof, of if a receiver
shall be appointed for the Company’s property, then upon the happening of any of
such events, ELITE shall have the right, at its option, forthwith or thereafter
to accelerate all compensation, costs and expenses due or coming due hereunder
and to recover the same from the Company by suit or otherwise and further,
to
terminate this Agreement. The Company covenants and agrees to pay all reasonable
attorney fees, paralegal fees, costs and expenses due of ELITE, including court
costs, (including such attorney fees, paralegal fees, costs and expenses
incurred on appeal) if ELITE employs an attorney to collect the aforesaid
amounts or to enforce other rights of ELITE provided for in this Agreement
in
the event of any default as set forth above and ELITE prevails in such
litigation.
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9)
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COMPANY’S
REPRESENTATIONS AND
WARRANTIES
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The
Company represents and warrants to ELITE for the purpose of inducing ELITE
to
enter into and consummate this Agreement as follows:
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a)
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The
Company has the power and authority to execute, deliver and perform
under
this Agreement.
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b)
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The
execution and delivery by the Company of this Agreement have been
duly and
validly authorized by all requisite action by the Company. No license,
consent or approval of any form is required for the Company’s execution
and delivery of this Agreement.
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c)
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No
representation or warranty by the Company in this Agreement and no
information in any statement, certificate, exhibit, schedule or other
document furnished, or to be furnished by the Company to ELITE pursuant
hereto, or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact,
or omits
or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading. There is no fact which
the
Company has not disclosed to ELITE, in writing, or in SEC filings
or news
announcements, which materially adversely affects, nor, so far as
the
Company can now reasonably foresee, may adversely affect the business,
operations, prospects, properties, assets, profits or condition (financial
or otherwise) of the Company. IN NO EVENT WILL THE COMPANY BE LIABLE
FOR
ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES NOR FOR ANY CLAIM
AGAINST
ELITE BY ANY PERSON OR ENTITY ARISING FROM OR IN ANY WAY RELATED
TO THIS
AGREEMENT,
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10)
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ELITE’S
DEFAULT
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In
the
event of any default in the performance by ELITE pursuant to this Agreement,
at
the sole discreation of the company, and such default shall continue for five
(5) days after the company’s written notice thereof is received by ELITE; in the
event of any default in the performance of any of the other covenants,
conditions, restrictions, agreements, or other provisions herein contained
on
the part of ELITE to be performed, kept, complied with or abided by, and such
default shall continue for five (5) days after Company has given ELITE written
notice thereof, or if a petition in bankruptcy is filed by the ELITE, or if
ELITE is adjudicated bankrupt, or if ELITE shall compromise all its debts or
assign over all its assets for the payment thereof, of if a receiver shall
be
appointed for ELITE’s property, then upon the happening of any of such events,
the Company shall have the right, at its option, forthwith or thereafter to
get
back all of its money from ELITE by suit or otherwise and further, to terminate
this Agreement. ELITE covenants and agrees to pay all reasonable attorney fees,
paralegal fees, costs and expenses due of the Company, including court costs,
(including such attorney fees, paralegal fees, costs and expenses incurred
on
appeal) if the Company employs an attorney to collect the aforesaid amounts
or
to enforce other rights of the Company provided for in this Agreement in the
event of any default as set forth above and the Company prevails in such
litigation.
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11)
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LIMITATION
OF ELITE LIABILITY
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If
ELITE
fails to perform its services hereunder, its entire liability to the Company
shall not exceed the lessor of (a) the amount of cash compensation ELITE has
received from the Company under Section 4 of this Agreement or (b) the actual
damage to the Company as a result of such non-performance. IN NO EVENT WILL
ELITE BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES NOR FOR
ANY
CLAIM AGAINST THE COMPANY BY ANY PERSON OR ENTITY ARISING FROM OR IN ANY WAY
RELATED TO THIS AGREEMENT, UNLESS SUCH DAMAGES RESULT FROM THE USE, BY ELITE,
OF
INFORMATION NOT AUTHORIZED BY THE COMPANY.
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12)
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MISCELLANEOUS
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a)
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Notices.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly
given
when delivered personally or sent by registered or certified mail,
return
receipt requested, postage prepaid to the parties hereto at their
addresses first above written. Either party may change his or its
address
for the purpose of this paragraph by written notice similarly
given.
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b)
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Entire
Agreement. This Agreement represents the entire agreement between
the
Parties in relation to its subject matter and supersedes and voids
all
prior agreements between such Parties relating to such subject
matter.
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c)
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Amendment
of Agreement. This Agreement may be altered or amended, in whole
or in
part, only in a writing signed by both
Parties.
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d)
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Waiver.
No waiver of any breach or condition of this Agreement shall be deemed
to
be a waiver of any other subsequent breach or condition, whether
of a like
or different nature, unless such shall be signed by the person making
such
waiver and/or which so provides by its
terms.
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e)
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Captions.
The captions appearing in this Agreement are inserted as a matter
of
convenience and for reference and in no way affect this Agreement,
define,
limit or describe its scope or any of its
provisions.
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f)
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g)
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Benefits.
This Agreement shall inure to the benefit of and be binding upon
the
Parties hereto, their heirs, personal representatives, successors
and
assigns.
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h)
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Severability.
If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall attach only
to
such provision and shall not in any way render invalid or unenforceable
any other provisions of this Agreement, and this Agreement shall
be
carried out as if such invalid or unenforceable provision were not
contained herein.
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i)
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Arbitration.
Any controversy, dispute or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration.
Arbitration proceedings shall be conducted in accordance with the
rules
then prevailing of the American Arbitration Association or any successor.
The award of the Arbitration shall be binding on the Parties. Judgment
may
be entered upon an arbitration award or in a court of competent
jurisdiction and confirmed by such court. Venue for arbitration
proceedings shall be located in Seminole County, Florida. The costs
of
arbitration, reasonable attorney’s fees of the Parties, together with all
other expenses, shall be paid as provided in the Arbitration
award.
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j)
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Currency.
In all instances, references to monies used in this Agreement shall
be
deemed to be United States dollars.
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k)
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Multiple
Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all
of such
counterparts shall constitute one (1)
instrument.
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IN
WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
as
follows:
CONFIRMED
AND AGREED ON THIS 6
DAY OF
DECEMBER,
2005.
| ELITE FINANCIAL COMMUNICATIONS GROUP, LLC | |||
| /s/ Xxxx X. Xxxxx | /s/ Xxxxxxxxx Xxxxxxxxxx | ||
|
Xxxx X. Xxxxx |
Xxxxxxxxx Xxxxxxxxxx |
||
| ELITE Officer | Witness |
CONFIRMED
AND AGREED ON THIS 6
DAY OF
DECEMBER,
2005.
| XFONE, INC. | |||
| /s/ Xxx Xxxxxxxxx | /s/ Xxxx Xxxxxxx | ||
|
Xxx Xxxxxxxxx |
Xxxx Xxxxxxx |
||
| Duly Authorized | Witness |
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