Exhibit 10.69

Exhibit
    10.69

    MANAGEMENT
      AGREEMENT

     

    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.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    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.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    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.

     

    21.  Louisiana
      Law.
      This
      Agreement shall be governed by the laws of the state of Louisiana.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

     

    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/ Wade
              Spooner	 	 	/s/ Randall
              Wade James Tricou
	
              
Wade
              Spooner	 	 	
              
Randall
              Wade James Tricou
	President	 	 	
               

               

               

            


    

    Address:     2506
      Lakeland Drive

    Suite
      100

    Jackson,
      MS

    Telephone:   601-420-6500

    Facsimile:     601-420-6475

    Email:       wspooner@expetel.com

     

    with
      copy
      to:

     

    The
      Oberon Group, LLC

    79
      Madison Ave., 6th Floor

    New
      York,
      NY 10016

    Attention: Adam
      Breslawsky

    Facsimile: 212-447-7212

    Email: adam@oberongroup.com

     

    and

     

    Watkins
      Ludlam Winter & Stennis, P.A.

    633
      North
      State Street (39202)

    P.
      O. Box
      427

    Jackson,
      MS 39205-0427

    Attention: Gina
      M.
      Jacobs

    Telephone: 601-949-4705

    Facsimile: 601-949-4804

    Email: gjacobs@watkinsludlam.com

    I-55
      Telecommunications, L.L.C.

     

    
      
        
        

      

      
        -5-