Document:

EXHIBIT 10.1

 

 

AMENDMENT TO

 

PULP SUPPLY AGREEMENT

 

 

between

 

KIMBERLY-CLARK GLOBAL SALES, INC.

 

and

 

NEENAH PAPER, INC.

 

 

Made as of the 17th day of January 2006

 

 

AMENDMENT TO PULP SUPPLY
AGREEMENT

 

This Amendment to Pulp Supply Agreement (this “Amendment”),
is entered into as of the 17th day of January 2006, by and
between Neenah Paper, Inc., a Delaware corporation (“Seller”) and
Kimberly-Clark Global Sales, Inc., a Delaware corporation (“K-C”).
Capitalized terms used, but not specifically defined, in this Amendment shall
have the meanings ascribed to them in that certain Pulp Supply Agreement, dated
as of November 30, 2004 (the “Supply Agreement”).

 

WITNESSETH

 

WHEREAS, Seller and K-C are parties to the Supply
Agreement pursuant to which Seller agreed to sell and K-C agreed to purchase
Pulp in the amounts and upon the terms and conditions set forth in the Supply
Agreement; and

 

WHEREAS, Seller and K-C desire to amend the terms
and conditions of the Supply Agreement as set forth herein.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing
premises and the mutual covenants set forth herein, Seller and K-C agree to
amend the Supply Agreement as follows:

 

ARTICLE ONE

 

AMENDMENTS TO SUPPLY AGREEMENT

 

1.01      2006 Obligations.

 

(a)   At K-C’s option, it may elect to reduce the
Annual Supply Obligation and Annual Purchase Obligation for North American
Softwood Pulp during the 2006 Contract Year, as set forth on Exhibit A of
the Supply Agreement, from 360,000 ADMT to some lower amount but not less than
310,000 ADMT subject to the following limitations:

 

(i)            Prior to the execution of this Amendment, K-C
shall deliver to Seller a written forecast (the “Initial Forecast”) which shall
include the ADMT quantity of Pulp by which K-C has elected to reduce its 2006
Annual Purchase Obligation, an identification of each month in 2006 that K-C
has elected to exercise its reduction option, and the ADMT quantity so reduced
in each such month. The Initial Forecast shall be K-C’s best estimate of its
Pulp needs, and shall be non-binding (and therefore, in the nature of a
forecast under Sections 2.03 and 2.04 of the Supply Agreement); and

 

(ii)           Such Initial Forecast shall also include K-C’s
good faith, non-binding estimate, for each month during 2006, of the quantity
of K-C’s remaining 2006 Annual Purchase Obligation and the anticipated
deliveries from each of Seller’s Pulp mills during each such month.

 

 

(b)   It is expressly understood and agreed by the
parties that this reduction right is intended to assist the parties for planning
purposes and is not to be utilized to leverage price changes in the
marketplace.

 

1.02      Definitions.  Article 1 of the Supply
Agreement is hereby amended to add the definitions contained in Sections 1.16 –
1.21 set forth below:

 

1.16         Force Majeure Event.  Any
cause or event that is beyond the affected party’s immediate or reasonable
control and which arises without its fault or negligence, including an act of
God, war or threat of war, strike or other form of labor disturbances (but
excluding a lock-out by the employer), fire, explosion, or other casualty, any
law, restraint, rule, regulation or other governmental restriction, or by any
Environmental/Safety Laws.

 

1.17         Force Majeure Period.  The
period of time beginning on the first day that a Force Majeure Event prevents a
party from performing its obligations hereunder and ending on the date that
such event no longer prevents the applicable party from performing its
obligation hereunder.  In the event of a
Force Majeure Event affecting Seller’s ability to perform its obligations,
hereunder, the commencement date of such Force Majeure Period shall be the day
of the month on which Seller is no longer able to ship Pulp to K-C in
accordance with the K-C forecast in effect on the date of Seller’s Force Majeure
Notice.

 

1.18         Force Majeure Notice.  A
written notice given by one party to the other pursuant to Section 9.01
that (a) specifies the Force Majeure Event that prevents the affected party
from timely performing its obligations under this Agreement, (b) quantifies,
to the extent practicable, the quantities of Pulp that the affected party
expects to be able to deliver or purchase during the Force Majeure Period, and (c) provides
the affected party’s best estimate under the circumstances of when the Force Majeure
Period commenced or will commence and when the Force Majeure Period will end,
each to the best knowledge of the party providing the Force Majeure Notice.

 

1.19         Resumption Notice.  A
written notice given by a party who has previously given a Force Majeure Notice
stating that the Force Majeure Event has ended and that such party is no longer
prevented from performing its obligations under this Agreement because of the
Force Majeure Event. The Resumption Notice shall specify the quantities of Pulp
and the date on which purchases and sales of such quantities of Pulp previously
affected by the Force Majeure Event will be available for purchase and sale,
and the amount of the Annual Supply Obligation and the Annual Purchase
Obligation for the remainder of the Contract Year in which the resumption date
occurs.

 

1.20         Step-down Notice.  A
written notice given by K-C pursuant to Section 9.01(e).

 

1.21         Reduction Notice.  A
written notice given by Seller pursuant to Section 6.05.

 

 

1.03      Force Majeure. 
Section 9.01 of the Supply Agreement is hereby superseded and
replaced with the following:

 

9.01         Force Majeure.

 

(a)           If
either party is prevented or delayed in the performance of its obligations
under this Agreement because of a Force Majeure Event, then the obligations of
the parties to sell and deliver or to purchase and receive Pulp shall be
reduced or canceled during the Force Majeure Period with regard to the quantity
of Pulp which cannot be delivered or purchased as a direct consequence of such
event.

 

(b)           During
the continuance of any one or more Force Majeure Event(s) impairing Seller’s
ability to perform, Seller shall offer available supplies first to its long
term contract customers, including K-C, and shall allocate to K-C quantities
not less than that quantity determined by multiplying K-C’s percentage of such
total long term contract amounts by the total available supply. During the
continuance of any one or more Force Majeure Event(s) impairing K-C’s ability
to accept or utilize Pulp, K-C’s obligations to purchase Pulp shall be reduced
by such quantity as K-C shall be unable to accept or utilize.

 

(c)           Quantities
which Seller is unable to deliver by reason of a Force Majeure Event shall be deducted from K-C’s Annual Purchase Obligation and
Seller’s Annual Supply Obligation. If a Force Majeure Event shall
prevent a party from performing its obligations under this Agreement for more
than twelve (12) months, the other party may, upon written notice, terminate
this Agreement as to that portion affected by the Force Majeure Event.

 

(d)           The party affected by a Force Majeure Event
shall promptly provide the other party with a Force Majeure Notice. During the
Force Majeure Period, the parties will regularly communicate with each other
about the progress, if any, that has been made in resolving the Force Majeure
Event. Subject to Section 9.01(e) below, the parties shall cooperate
to the extent commercially reasonable for the orderly resumption of the
purchase and sale of Pulp following the end of the Force Majeure Period. Upon
receipt of a Resumption Notice, the parties shall, subject to the provisions of
Section 9.01(e) hereof, promptly endeavor to agree as appropriate
upon quarterly estimates pursuant to Section 2.03 and K-C shall provide
Seller with Delivery Schedules pursuant to Section 2.06.

 

(e)           If Seller provides K-C with a Force Majeure
Notice, then, until such time as Seller provides K-C with a Resumption Notice,
K-C may at its option seek alternative sources of Pulp, including entering into
supply and purchase agreements for such Pulp with third party producers.  The parties recognize that because the date
on which a Force Majeure Event is concluded is not predictable, it is possible
that Seller will be able to begin manufacturing and shipping Pulp to K-C at a time
when K-C has outstanding commitments to purchase Pulp from other producers (“Third
Party Pulp”) and, accordingly, may not immediately need the additional Pulp
that Seller is then able to produce. Accordingly, if Seller provides K-C with a
Force Majeure Notice with respect to its Terrace Bay, Ontario pulp operations (“Terrace
Bay”), then at K-C’s option, it may elect, on one occasion only, to reduce its
Annual Purchase Obligation(s) from Seller’s Terrace Bay mill by up to 80,000
ADMT (the “Resumption Reduction Quantity”)

 

 

for the year or years in which it takes delivery of
such Third Party Pulp.  K-C may exercise
this option by giving Seller a Step-down Notice within ten (10) days
following its receipt of the Resumption Notice. The Step-down Notice shall
identify the aggregate amount of Pulp to be reduced from the applicable Annual
Supply Obligation(s), the months when K-C expects to take delivery of the Third
Party Pulp, and the resulting amount of Pulp during such months that K-C
expects to take delivery from Seller under this Agreement; provided, however,
in order to ensure a orderly and efficient resumption of production at Seller’s
Terrace Bay mill, any such Step-down Notice (and the obligations of K-C to
purchase and receive Pulp and the obligations of Seller to sell and deliver
Pulp from Seller’s Terrace Bay mill) shall, unless the parties otherwise agree
in writing, be in accordance with the periods and quantities set forth in the
following table (provided in all events that the aggregate reduction may not
exceed 80,000 ADMT):

 

	
  Months After the Date

  of Resumption Notice 

  	
   

  	
  Required Purchases/Sales Per

  Month of Terrace Bay Pulp

  
	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  0 ADMT

  
	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  0 ADMT

  
	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  0 ADMT

  
	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  up to 5,000 ADMT

  
	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  not less than 10,000 ADMT

  
	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  not less than 15,000 ADMT

  
	
   

  	
   

  	
   

  
	
  Succeeding Months

  	
   

  	
   

  	
  not less
  than the average monthly

  ADMT purchase quantity needed to

  fulfill K-C’s Annual Purchase Obligation(s)

  

 

Any reduction in the Annual Purchase Obligation
pursuant to this Section 9.01(e) shall reduce the Annual Supply
Obligation by an equal amount.

 

(f)            If a Force Majeure Event occurs involving
Seller’s Terrace Bay pulp operations but not its Pictou, Nova Scotia pulp
operations (“Pictou”) and to the extent that during the Force Majeure Period,
K-C requests that Seller supply Pulp from Pictou to delivery points that are
customarily supplied from Terrace Bay, the parties acknowledge that the freight
and other shipping costs to be incurred by Seller under Section 4.03 could
be higher because Pictou is further from some delivery points than is Terrace
Bay.  In order to create an incentive for
K-C to plan purchases of Third Party Pulp in a manner that will result in lower
freight and shipping costs under Section 4.03, Seller will make a payment
to K-C and K-C will make a payment to Seller, in the amounts and on the terms
and conditions set forth below:

 

 

(i)            Definitions.

 

A.    Group I Delivery Points means Chester, Pennsylvania; Mobile,
Alabama; Huntsville, Ontario; and New Milford, Connecticut;

 

B.    Group II Delivery Points means Beech Island, South Carolina; Jenks,
Oklahoma; Corinth, Mississippi; and All European Delivery Points;

 

C.    Group I Base Line means 40% of Pictou Pulp tonnage shipped to
all K-C delivery points during a Freight Agreement Period;

 

D.    Group II Base Line means 46% of Pictou Pulp tonnage shipped to
all K-C delivery points during a Freight Agreement Period; and

 

E.     Freight Agreement Period means each period following a Force Majeure
Event that begins on the first day of a Force Majeure Period with respect to
Seller’s Terrace Bay mill and ends six (6) months after the end of such
Force Majeure Period, unless the parties otherwise agree in writing.  If, as a result of a Reduction Notice,
Terrace Bay ceases supplying Pulp to K-C delivery points and Pictou resumes the
delivery of Pulp to K-C delivery points formerly supplied by Terrace Bay, the
Freight Agreement Period shall begin again on the date that Terrace Bay ceases
supplying Pulp to K-C delivery points and shall continue in effect during the
remaining term of the Supply Agreement.

 

(ii)           During any Freight Agreement Period:

 

A.    If Seller’s Pictou mill ships more tons to
Group I Delivery Points than the Group I Base Line, then Seller will pay K-C
$8.00/ADMT for each ton in excess of the Group I Base Line;

 

B.    If Seller’s Pictou mill ships less tons to
Group I Delivery Points than the Group I Base Line, then K-C will pay Seller
$8.00/ADMT for each ton less than the Group I Base Line;

 

C.    If Seller’s Pictou mill ships more tons to
Group II Delivery Points than the Group II Base Line, then K-C will pay Seller
$8.00/ADMT for each ton in excess of the Group II Base Line; and

 

D.    If Seller’s Pictou mill ships less tons to
Group II Delivery Points than the Group II Base Line, then Seller will pay K-C
$8.00/ADMT for each ton less than the Group II Base Line.

 

(iii)          Such amounts shall be due and payable within
thirty (30) days after the end of each calendar quarter (i.e., March 31, June 30,
September 30 and December 31) during a Freight Agreement Period.

 

 

(iv)          In no event will any payments made under this
Section 9.01(f) by either party to the other party exceed $1,300,000
in any four (4) consecutive calendar quarters.

 

1.04         Bale Finishing.  The
first sentence of Section 5.04 of the Supply Agreement is amended to read
as follows:

 

“For North America, Seller will use commercially
reasonable best efforts to work with K-C to develop and supply wireless bales
meeting K-C technical and transportation requirements no later than June 1,
2006 at Seller’s Pictou mill and no later than June 1, 2007 at Seller’s
Terrace Bay mill”.

 

1.05         Partial Termination.  A
new Section 6.05 is hereby added to read as follows:

 

6.05         Partial Termination. Seller may at any time prior to June 30,
2007 elect to permanently reduce its Annual Supply Obligation by giving K-C a
Reduction Notice. The Reduction Notice shall specify the Effective Date of the
reduction, the amount of the reduced Annual Supply Obligation for softwood
Pulp, and shall reduce the Annual Supply Obligation for hardwood Pulp to zero.
The Reduction Notice shall be subject to the following limitations:

 

(a)           Without K-C’s written consent, the Annual
Supply Obligation for softwood Pulp may not be reduced below the amounts set
forth on the attached Schedule A.

 

(b)           Without the prior written consent of K-C, the
Effective Date of the reduction may not be less than one hundred and eighty
(180) days after the date of the Reduction Notice. Notwithstanding such one
hundred and eighty (180) day period, at the request of Seller, K-C shall exercise
commercially reasonable efforts to purchase Pulp from third party producers as
promptly as possible so as to enable the Effective Date to occur earlier than
stated in the Reduction Notice. To this end, K-C shall regularly communicate
with Seller regarding its efforts to purchase Pulp from third party producers
and will provide Seller with such other information regarding such efforts as
the parties may reasonably agree upon. Nothing herein shall obligate K-C to
disclose to Seller any information that K-C deems to be confidential or
proprietary in the exercise of K-C’s reasonable commercial judgment, or that is
subject to a confidentiality agreement with a third party.

 

Any reduction in the Annual Supply Obligation
pursuant to this Section 6.05(b) shall reduce the Annual Purchase
Obligation by an equal amount.

 

(c)           To
the extent permitted by applicable law, rule, regulation or disclosure
obligation, as determined in the sole discretion of Seller, the Reduction
Notice will be provided to K-C no less than thirty (30) days prior to any
public disclosure of the event, circumstance or reason for the giving of the
Reduction Notice.

 

 

(d)           Without
the prior written consent of K-C, no Reduction Notice may be sent prior to December 1,
2006 unless accompanied by (i) a legal opinion in form and substance, from
McDermott, Will & Emery or another law firm with a national reputation
for a federal tax practice, acceptable to K-C in its sole discretion who will
act as counsel to K-C for the purposes of such opinion, to the effect that any
actions to be taken by Seller with respect to its Terrace Bay pulp mill in
connection with the submission of the Reduction Notice will not adversely
affect the tax-free nature of the transactions described in the private letter
ruling issued by the Internal Revenue Service (“IRS”) to Kimberly-Clark
Corporation and dated September 15, 2004 (the “Private Letter Ruling”); (ii) a
private letter ruling from the IRS that (A) approves a change in the “active
trade or business” under the existing Private Letter Ruling from Seller’s
Terrace Bay mill to another entity or business of Seller and (B) does not
otherwise adversely affect the tax-free nature of the transactions described in
the Private Letter Ruling, or (iii) a private letter ruling from the IRS
which would otherwise establish that the actions to be conducted by Seller in
connection with the submission of the Reduction Notice will not adversely
affect the tax-free nature of the transactions described in the Private Letter
Ruling. At the request of Seller, K-C will cooperate with and support Seller’s
reasonable efforts (and K-C agrees to undertake to engage the support and
cooperation of Kimberly-Clark Corporation), on a timely basis, to obtain the
legal opinion or the private letter rulings described in subparagraphs (i), (ii) and
(iii) above; provided that Seller shall be responsible for, and shall
promptly reimburse K-C for, all reasonable fees and expenses of K-C and/or
Kimberly-Clark Corporation incurred by them in connection with any such
requested cooperation.

 

(e)           It is expressly understood and agreed between
the parties that during the period of time between the delivery date and the
Effective Date of the Reduction Notice, Seller may satisfy its obligation to
supply Pulp under the Supply Agreement by supplying Pulp purchased from third
parties that meets the Specifications and the provisions of Sections 9.02 and
9.03 and Articles 3 and 11 of the Supply Agreement.

 

ARTICLE TWO

 

MISCELLANEOUS

 

2.01         No
Other Amendments. Except as expressly
amended pursuant to this Amendment, the Supply Agreement remains in full force
and effect.

 

2.02         Waiver of Breach. No waiver of breach or non-performance of any
of the provisions of this Agreement shall be construed as a waiver of any
succeeding breach or non-performance of the same or any other provision.

 

2.03         Severability of Provisions. If any provision of this Agreement
shall be determined to be invalid, illegal or unenforceable under law, the
validity and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

 

 

2.04         Headings.  Article and
section headings used in this Amendment are for the purpose of reference
only and shall not be considered in construing this Agreement.

 

2.05         Entire Agreement.  The
Supply Agreement, as amended by this Amendment, constitutes the entire
agreement between the parties related to the subject matter hereof, and cancels
and supersedes all prior or contemporaneous agreements, whether oral or
written, relating to the subject matter of the Supply Agreement.

 

2.06         Counterparts.  This
Amendment may be executed by the parties in two or more counterparts, each of
which shall be deemed an original, but which together shall constitute one and
the same agreement.

 

2.07         Tax Sharing Agreement. Nothing in this Amendment, and no
actions taken by any party pursuant to the terms of or as contemplated by this
Amendment, is intended to alter in any way the respective obligations of Seller
and Kimberly-Clark Corporation under that certain Tax Sharing Agreement, dated
as of November 30, 2004 (the “Tax Agreement”). Without limiting the
foregoing, Seller acknowledges that K-C’s entering into this Amendment, its and
Kimberly-Clark Corporation’s cooperation with Seller as may be requested or
mandated by the terms of this Amendment, and any other actions taken by K-C or
Kimberly-Clark Corporation in connection with the terms of this Amendment shall
not constitute a consent to any action by Seller that is contrary to the terms
of Section 8(b) of the Tax Agreement or a waiver of any of
Kimberly-Clark Corporation’s rights under the Tax Agreement including, without
limitation, the provisions of Section 8(b) thereof.

 

*****

 

Remainder of Page Intentionally
Left Blank

 

*****

 

 

IN WITNESS WHEREOF, this Agreement has been executed in
multiple counterparts by the duly authorized representatives of the parties as
of the date first written above.

 

 

	
  NEENAH
  PAPER, INC.

  	
  KIMBERLY-CLARK
  GLOBAL SALES, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/
  SEAN T. ERWIN

  	
   

  	
  By:

  	
  /s/
  DANNY M. SMITH

  	
   

  
	
   

  	
  Sean
  T. Erwin, Chairman of the Board,

  	
   

  	
  Danny
  M. Smith, Vice President

  
	
   

  	
  President
  and Chief Executive Officer

  	
   

  
						

 

 

SCHEDULE A

 

to

 

Amendment to Pulp Supply
Agreement

between Kimberly-Clark Global
Sales, Inc. and Neenah Paper, Inc.

 

NORTH AMERICAN AND EUROPEAN ANNUAL SOFTWOOD PULP PURCHASE

OBLIGATIONS, SUPPLY OBLIGATIONS, DELIVERY POINTS AND TRANSPORTATION

TERMS FOLLOWING THE EFFECTIVE DATE OF A REDUCTION NOTICE

 

 

NORTHERN BLEACH SOFTWOOD KRAFT
(NBSK)

 

	
  Contract Year*

  	
   

  	
  Annual Purchase Obligation (K-C)

  	
   

  	
  Annual Supply

  Obligation (Seller)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2006

  	
   

  	
  235,000 ADMT

  	
   

  	
  235,000 ADMT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2007†

  	
   

  	
  235,000 ADMT

  	
   

  	
  235,000 ADMT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2008

  	
   

  	
  215,000 ADMT

  	
   

  	
  215,000 ADMT

  
	
  and all subsequent Contract Years

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phase Down Year 1

  	
   

  	
  165,000 ADMT

  	
   

  	
  165,000 ADMT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phase Down Year 2

  	
   

  	
  101,000 ADMT

  	
   

  	
  101,000 ADMT

  

 

*The prorated tonnage
for any Contract Year during which a Reduction Notice becomes effective shall
be determined by multiplying the applicable Annual Purchase/Supply tonnage for
such Contract Year by a fraction the numerator of which is the number of days
from and including the Effective Date through the last day of such Contract
Year and the denominator of which is 365.

 

† Seller shall use its
commercially reasonable best efforts so that, as of January 1, 2007, each
K-C mill shall receive pulp solely from one Seller mill; provided, however,
following the Effective Date of a Reduction Notice, each K-C mill shall receive
Pulp solely from Seller’s Pictou mill.

 

Delivery Points and Transportation Terms for K-C
North America

 

Beech
Island, SC

Huntsville,
Ontario

Mobile,
AL

Jenks, OK

Chester,
PA

Loudon,
TN

Corinth,
MS

New Milford, CT

Owensboro,
KY

Marinette,
WI

Cellu-Tissue
Mills*

Schweitzer-Mauduit Lee, MA*

 

All transportation costs to above delivery points
to be paid by Seller.

 

*Solely for fiber needs related to K-C
products.

 

 

Delivery Points and Transportation Terms for K-C
Europe

 

	
  Europe
  (can only be supplied by Seller’s Pictou Mill)

  	
   

  	
   

  
	
  Duffel

  	
   

  	
  CIF*
  Flushing

  
	
  Northfleet

  	
   

  	
  CIF*
  Northfleet

  
	
  Barrow

  	
   

  	
  CIF*
  Northfleet/Barrow

  
	
  Rouen

  	
   

  	
  CIF*
  Rouen

  
	
  Salamanca

  	
   

  	
  CIF*
  Santander

  
	
  VSE

  	
   

  	
  CIF*
  Rouen

  

 

*
As defined according to INCOTERMS 2001(or applicable latest edition).

 

 

END OF SCHEDULE AExhibit 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-

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