Document:

ex10116.htm

    Exhibit
      10.116

    ESCROW
      AGREEMENT

     

    This
      Escrow Agreement, dated as of February 26, 2008 (the “Closing Date”), among
      XFone, Inc., a Nevada corporation (“Purchaser”) and Chris Chelette, Robert
      Healea and Kevin Buxkemper, (collectively the “Sellers’ Representative”) for
      each of the persons and entities listed on Exhibit A hereto who were selling
      Shareholders of NTS Communications, Inc. (the “NTS Sellers”), and Trustmark
      National Bank, as escrow agent (“Escrow Agent”).

     

    This
      is
      the Escrow Agreement referred to in the Stock Purchase Agreement dated August
      22, 2007, as amended (the “Stock Purchase Agreement”), among Purchaser, the
      Company and the NTS Sellers.  Capitalized terms used in this agreement
      without definition shall have the respective meanings given to them in the
      Stock
      Purchase Agreement.

     

    In
      order
      to provide Purchaser security for obligations under Section 2.2(d) and (e)
      of
      the Stock Agreement for working capital adjustments and rights of
      indemnification that the Purchaser possesses under Article VII of the Stock
      Purchase Agreement, the NTS Sellers and the Purchaser have agreed that the
      cash
      and the XFone Common Stock (“XFone Common Stock”) as set forth in Exhibit “A”
for each of the NTS Sellers, which constitutes part of the Purchase Price under
      the Stock Purchase Agreement, shall be deposited with the Escrow Agent by
      Purchaser to be held and administered by Escrow Agent in accordance with the
      terms and conditions herein set forth.

     

    The
      parties, intending to be legally bound, hereby agree as follows:

     

    1.           
      ESTABLISHMENT OF ESCROW

     

    (a)           
      Deposit.  The
      Purchaser hereby deposits in escrow the amount of cash and number of shares
      of
      XFone Common Stock set out opposite the names of the NTS Sellers on Exhibit
“A”
attached to this Agreement (collectively, the “Escrow Fund”).  The
      XFone Common Stock shall be registered in the name of the Escrow Agent or its
      nominee.  For all purposes, the value of the XFone Common Stock shall
      be valued at the value as set forth on Exhibit “A.”  For purposes of
      clarity, such value shall be the average per share closing price on the American
      Stock Exchange of XFone Common Stock for the ten (10) consecutive trading days
      preceding the trading day immediately prior to the Closing Date.  As
      used herein, the “Pro-Rata Share” refers to each NTS Seller’s percentage of the
      total Escrow Fund as of the date hereof as set forth on Exhibit “A” hereto which
      shall equal each such NTS Seller’s Allocable Shares as set forth in the Stock
      Purchase Agreement.  For any NTS Seller that has had cash and XFone
      Common Stock deposited into the Escrow Fund on it behalf, such NTS Seller’s
      Pro-Rata Share shall be satisfied from the cash and XFone Common Stock in the
      same proportions as the cash or XFone Common Stock originally deposited in
      the
      Escrow Fund on the date hereof for such NTS Seller, all as set forth in Exhibit
      “A,” except that such NTS Seller’s Pro-Rata Share of fees or other amounts due
      to the Escrow Agent pursuant to Section 4(i) shall be satisfied in
      cash.

     

    (b)           
      Escrow
      Fund.  Escrow Agent hereby acknowledges receipt of the Escrow
      Fund as provided in Section 1(a).  The Escrow Fund (as increased by
      all income, property andEarnings
      resulting therefrom) (“Escrow Fund”) shall be held and administered by the
      Escrow Agent for the benefit of the NTS Sellers and Purchaser on the terms
      set
      out herein.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    (c)           
      Investment of Escrow
      Funds.  Except as Purchaser and Sellers’ Representative may
      from time to time jointly instruct Escrow Agent in writing, the cash portion
      of
      the Escrow Fund shall be invested from time to time, to the extent possible,
      in
      a money market fund comprised of United States Treasury bills having a remaining
      maturity of ninety (90) days or less and repurchase obligations secured by
      such
      United States Treasury bills, with any remainder being deposited and maintained
      in a money market deposit account with Escrow Agent until disbursement of the
      entire Escrow Fund. Escrow Agent is authorized to liquidate in accordance with
      its customary procedures any portion of the Escrow Fund consisting of
      investments to provide for payments required to be made under this
      Agreement.  Interest, dividends, earnings and gains on the Escrow Fund
      are hereinafter referred to collectively as the “Earnings.”

     

    (d)           
      Voting Rights of
      Shares in Escrow.  The NTS Sellers shall retain all rights with
      respect to the XFone Common Stock commensurate with the ownership of common
      stock, including, without limitation, the right to dividends and the right
      to
      vote such shares.  All voting rights with respect to the XFone Common
      Stock composing a part of the Escrow Fund may be exercised by the NTS Seller
      who
      deposited such XFone Common Stock in escrow, and the Escrow Agent shall from
      time to time execute and deliver to each NTS Seller such proxies, consents,
      or
      other documents as may be necessary to enable such NTS Seller to exercise such
      rights with respect to its XFone Common Stock.

     

    (e)           
      Distributions on
      Escrow Fund.  All Earnings made on the cash portion of the
      Escrow Fund shall be deemed to be that of the NTS Sellers, in accordance with
      their respective Pro-Rata Share of the cash portion of the Escrow Fund, for
      income tax purposes, but shall be received by the Escrow Agent and constitute
      part of the Escrow Fund.

     

    (f)           
      Taxes and Charges
      on
      Escrow Fund.  For those NTS Sellers who have provided the
      Escrow Agent with a properly completed Internal Revenue Service W-9 Form
      indicating that no taxes are to be withheld, the Escrow Agreement by no later
      than March 15 of each year shall pay to such NTS Seller an amount equal to
      30%
      of such NTS Seller’s Pro-Rata share of the Earnings from the cash portion of the
      Escrow Fund.  The NTS Sellers, with respect to their respective
      Pro-Rata Share of the Escrow Fund, shall maintain the Escrow Fund free and
      clear
      of all liens and encumbrances and shall, promptly upon request by the Escrow
      Agent, pay and discharge all taxes, assessments, and governmental charges
      imposed on or with respect to the Escrow Fund.

     

    (g)           
      Acceptance of
      Escrow.  Escrow Agent hereby agrees to act as escrow agent and
      to hold, safeguard, administer and disburse the Escrow Fund pursuant to the
      terms and conditions hereof.

     

    (h)           
      Notice of
      Claim.  Purchaser shall be entitled to recover under this
      Escrow Agreement in respect of (i) any working capital adjustment as provided
      in
      Section 2.2(d) of the Stock Purchase Agreement (“Working Capital Adjustment”);
      or (ii) any Adverse Consequences (as provided in Article VII of the Stock
      Purchase Agreement) and, during the Escrow Period,may
      give
      notice in writing in the form attached hereto as Appendix A (“Pending Claims
      Notice”) to the Escrow Agent and the Sellers’ Representative of any claim on
      which any Working Capital Adjustment is asserted or Adverse Consequences may
      be
      based, which Pending Claims Notice shall include a brief description of the
      nature of the claim, the identity of the party by whom it is being asserted,
      and
      an estimate of the amount of Adverse Consequences that may be sustained by
      Purchaser (the “Estimated Adverse Consequences”).

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (i)           
      Sellers’
Representative Action.  The Sellers’ Representative
      Committee
      shall act on the affirmative vote of a majority of the members of such committee
      and the Escrow Agent shall be entitled to rely on any direction given by any
      two
      members of the Sellers’ Representative Committee as the act of the Sellers’
Representative under this Agreement.

     

    2.           
      DISTRIBUTIONS FROM ESCROW FUND

     

    (a)           
      Purchaser
      Request.  If Purchaser submits a notice and request to the
      Sellers’ Representative and Escrow Agent in substantially the form attached as
      Appendix B stating that (i) a Working Capital Adjustment has been determined
      to
      be due to Purchaser by the NTS Sellers in accordance with Section 2.2(d) of
      the
      Stock Purchase Agreement and the dollar amount due to Purchaser by virtue of
      the
      Working Capital Adjustment; or (ii) Adverse Consequences (as defined in the
      Stock Purchase Agreement) has been determined in accordance with Article VII
      of
      the Stock Purchase Agreement and specifying the dollar amount of the Adverse
      Consequences, then on the 30th Business Day following such notice, Escrow Agent
      shall release as directed in said notice an amount from the Escrow Fund equal
      to
      the amount of the Working Capital Adjustment or Adverse Consequences, as the
      case may be, and applying such amount to each NTS Seller’s Pro-Rata share of the
      Working Capital Adjustment or Adverse Consequences, as the case may be, unless
      the Escrow Agent has received a Counter-Notice (as defined herein) from the
      Sellers’ Representative that the requested release from the Escrow Fund is
      disputed.

     

    (b)           
      If a counter-notice (“Counter-Notice”) is given with respect to a request for
      distributions from the Escrow Fund, then the Escrow Agent shall make a
      distribution from the Escrow Fund only in accordance with (i) joint written
      instructions of Purchaser and the Sellers’ Representative or (ii) a final
      non-appealable order of a court of competent jurisdiction or, in the case of
      a
      Working Capital Adjustment, the binding determination of the Arbitrator pursuant
      to Section 2.2(e) of the Stock Purchase Agreement.  Any court order or
      arbitrator order shall be accompanied by a legal opinion by counsel for the
      presenting party satisfactory to the Escrow Agent to the effect that the order
      is final and non-appealable.  Escrow Agent shall act on such court or
      arbitrator order and legal opinion without further question.

     

    (c)           
      Notwithstanding anything to the contrary contained in this Agreement, the Escrow
      Agent shall make distributions from the Escrow Fund in accordance with the
      joint
      written instructions of Purchaser and the Sellers’ Representative.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    3.           
      DURATION AND TERMINATION OF ESCROW

     

    (a)           
      On the second anniversary date of this Agreement (“Escrow Period”), the Escrow
      Agent shall retain an amount of the then remaining Escrow Fund (taken on a
      Pro-Rata Share from each NTS Seller’s portion of the Escrow Fund) equal to the
      aggregate dollar value of the Estimated Adverse Consequences for all outstanding
      Pending Claims Notices, if any, received during the Escrow Period and the
      remainder of each NTS Seller’s portion of the Escrow Fund (including all
      Earnings) shall be disbursed to each NTS Seller to the address as provided
      in
      Exhibit “A” hereto.  After the resolution of all outstanding Pending
      Claims Notices received during the Escrow Period, the Escrow Agent shall
      promptly deliver the balance, if any, of the Escrow Fund (including all
      Earnings) to each NTS Seller to the address provided in Exhibit
“A”.

     

    (b)           
      The Escrow Agreement shall terminate and be of no further force or effect on
      the
      first to occur of (i) the close of business on the date on which the Escrow
      Agent delivers to Purchaser and/or the NTS Sellers, as the case may be, the
      entire Escrow Fund (and any Earnings thereon) in accordance with the terms
      of
      this Agreement or (ii) December 31, 2020, at which time this Escrow Fund shall
      terminate and any Escrow Fund remaining shall be interpled with the registry
      or
      custody of any court of competent jurisdiction and thereupon the Escrow Agent
      shall be discharged of all further duties under this Agreement.

     

    4.           
      DUTIES OF ESCROW AGENT

     

    (a)           
      Escrow Agent shall not be under any duty to give the Escrow Fund held by it
      hereunder any greater degree of care than it gives its own similar property
      and
      shall not be required to invest any funds held hereunder except as directed
      in
      this Agreement. Uninvested funds held hereunder shall not earn or accrue
      interest.

     

    (b)           
      Escrow Agent shall not be liable, except for its own gross negligence or willful
      misconduct and, except with respect to claims based upon such gross negligence
      or willful misconduct that are successfully asserted against Escrow Agent,
      the
      others hereto shall jointly and severally indemnify and hold harmless Escrow
      Agent (and any successor Escrow Agent) from and against any and all losses,
      liabilities, claims, actions, damages and expenses, including reasonable
      attorneys’ fees and disbursements, arising out of and in connection with this
      Agreement.

     

    (c)           
      Escrow Agent shall be entitled to rely upon any order, judgment, certification,
      demand, notice, instrument or other writing delivered to it hereunder without
      being required to determine the authenticity or the correctness of any fact
      stated therein or the propriety or validity of the service thereof. Escrow
      Agent
      may act in reliance upon any instrument or signature believed by it to be
      genuine and may assume that the person purporting to give receipt or advice
      or
      make any statement or execute any document in connection with the provisions
      hereof has been duly authorized to do so. Escrow Agent may conclusively presume
      that the undersigned representative of any party hereto which is an entity
      other
      than a natural person has full power and authority to instruct Escrow Agent
      on
      behalf of that party unless written notice to the contrary is delivered to
      Escrow Agent.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (d)           
      Escrow Agent may act pursuant to the advice of counsel with respect to any
      matter relating to this Agreement and shall not be liable for any action taken
      or omitted by it in good faith in accordance with such advice.

     

    (e)           
      Escrow Agent does not have any interest in the Escrow Fund deposited hereunder
      but is serving as escrow holder only and having only possession thereof. Any
      payments of income from this Escrow Fund shall be subject to withholding
      regulations then in force with respect to United States taxes. The parties
      hereto will provide Escrow Agent with appropriate Internal Revenue Service
      Forms
      W-9 for tax identification number certification, or non-resident alien
      certifications. Section 4(e) and Section 4(b) shall survive notwithstanding
      any
      termination of this Agreement or the resignation of Escrow Agent.

     

    (f)           
      Escrow Agent makes no representation as to the validity, value, genuineness
      or
      the collectibility of any security or other document or instrument held by
      or
      delivered to it.

     

    (g)           
      Escrow Agent (and any successor Escrow Agent) may at any time resign as such
      by
      delivering the Escrow Fund to any successor Escrow Agent jointly designated
      by
      the other parties hereto in writing, or to any court of competent jurisdiction,
      whereupon Escrow Agent shall be discharged of and from any and all further
      obligations arising in connection with this Agreement. The resignation of Escrow
      Agent will take effect on the earlier of (a) the appointment of a successor
      (including a court of competent jurisdiction) or (b) the day which is 30 days
      after the date of delivery of its written notice of resignation to the other
      parties hereto. If at that time Escrow Agent has not received a designation
      of a
      successor Escrow Agent, Escrow Agent’s sole responsibility after that time shall
      be to retain and safeguard the Escrow Fund until receipt of a designation of
      successor Escrow Agent or a joint written disposition instruction by the other
      parties hereto or a final non-appealable order of a court of competent
      jurisdiction.

     

    (h)           
      In the event of any disagreement between the other parties hereto resulting
      in
      adverse claims or demands being made in connection with the Escrow Fund or
      in
      the event that Escrow Agent is in doubt as to what action it should take
      hereunder, Escrow Agent shall be entitled to retain the Escrow Fund until Escrow
      Agent shall have received (i) a final non-appealable order of a court of
      competent jurisdiction or arbitrator directing delivery of the Escrow Fund
      or
      (ii) a written agreement executed by the other parties hereto directing delivery
      of the Escrow Fund, in which event Escrow Agent shall disburse the Escrow Fund
      in accordance with such order or agreement. Any court or arbitrator order shall
      be accompanied by a legal opinion by counsel for the presenting party
      satisfactory to Escrow Agent to the effect that the order is final and
      non-appealable. Escrow Agent shall act on such court order and legal opinion
      without further question.

     

    (i)           
      Purchaser and the NTS Sellers shall pay Escrow Agent compensation (as payment
      in
      full) for the services to be rendered by Escrow Agent hereunder in the amount
      of
      $1,500.00 at the time of execution of this Agreement and $1,500.00 annually
      thereafter (the “Annual Fee”) and $25.00 per distribution to each Seller, and
      agree to reimburse Escrow Agent for all reasonable expenses, disbursements
      and
      advances incurred or made by Escrow Agent in performance of its duties hereunder
      (including reasonable fees, expenses and disbursements ofits
      counsel). Any such compensation and reimbursement to which Escrow Agent is
      entitled shall be borne 50% by Purchaser, and 50% by the NTS Sellers with each
      NTS Seller responsible for its Pro-Rata Share of such 50% which may be deducted
      from each NTS Seller’s cash portion of its share of the Escrow
      Fund.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    (j)           
      No printed or other matter in any language (including, without limitation,
      prospectuses, notices, reports and promotional material) that mentions Escrow
      Agent’s name or the rights, powers, or duties of Escrow Agent shall be issued by
      the other parties hereto or on such parties’ behalf unless Escrow Agent shall
      first have given its specific written consent thereto.

     

    5.           
      LIMITED RESPONSIBILITY

     

    This
      Agreement expressly sets forth all the duties of Escrow Agent with respect
      to
      any and all matters pertinent hereto. No implied duties or obligations shall
      be
      read into this agreement against Escrow Agent. Escrow Agent shall not be bound
      by the provisions of any agreement among the other parties hereto except this
      Agreement.

     

    6.           
      OWNERSHIP FOR TAX PURPOSES

     

    Each
      NTS
      Seller will be treated as the owner of its respective portion of the Escrow
      Fund, and each NTS Seller will report all income, if any, that is earned on,
      or
      derived from, each NTS Seller’s portion of the Escrow Fund as their income, in
      such proportions, in the taxable year or years in which such income is properly
      includible and pay any taxes attributable thereto.

     

    7.           
      NOTICES

     

    All
      notices, consents, waivers and other communications under this Agreement must
      be
      in writing and will be deemed to have been duly given when (a) delivered by
      hand (with written confirmation of receipt), (b) sent by telecopier (with
      written confirmation of receipt) provided that a copy is mailed by registered
      mail, return receipt requested, or (c) when received by the addressee, if
      sent by a nationally recognized overnight delivery service (receipt requested),
      in each case to the appropriate addresses and telecopier numbers set forth
      below
      (or to such other addresses and telecopier numbers as a party may designate
      by
      notice to the other parties):

     

    IF
      TO
      COMPANY OR SHAREHOLDER REPRESENTATIVE, TO:

     

    Chris
      Chelette

    Robert
      Healea

    c/o
      Telephone Electronics Corporation

    236
      East
      Capitol Street

    Jackson,
      MS  39201

    Telephone:                                
      (601) 354-9070

     Facsimile:                                
      (601) 352-1394

    Email:                      
      cchelette@communigroup.com
      and bhealea@tec.com

     

    and

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    Kevin
      Buxkemper

     

    1414
      Peoria Street

    Slaton,
      TX  79364

    Telephone:                                
      _________________

    Facsimile:                                  
       _________________

    Email:                                         
      _________________

    

    
      	
               

            	
              IF
                TO PURCHASER, TO: 

            

    

     

    XFone,
      Inc.

    Britannia
      House

    960
      High
      Road

    London,
      N129RY

    United
      Kingdom

    
      	
               

            	
              Attention:

            	
              Guy
                Nissenson 

            

    

    
      	
               

            	
              Telephone:

            	
              +44
                208-446-9494 

            

    

    
      	
               

            	
              Facsimile:

            	
              +44
                208-446-7010 

            

    

    
      	
               

            	
              Email:

            	
              guy@xfone.com

            

    

     

    and

     

    XFone,
      Inc.

    c/o
      XFone
      USA, Inc.

    2506
      Lakeland Drive, Suite 100

    Flowood,
      MS  39232

    Attention:            Wade
      Spooner

    
      	 	
              Telephone:

            	
              (601)
                664-1108 

            

    

    
      	 	
              Facsimile:

            	
              (601)
                664-1190 

            

    

    
      	
               

            	
              Email:

            	
              wspooner@xfone.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

            

    

     

    
      	
               

            	
              IF
                TO ESCROW AGENT: 

            

    

     

    Trustmark
      National Bank

    248
      East
      Capitol Street

    Jackson,
      MS  39201

    Attention:
      W. Sanders (“Sandy”) Carter, V.P.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    8.             JURISDICTION;
      SERVICE OF PROCESS

     

    Any
      action or proceeding seeking to enforce any provision of, or based on any right
      arising out of, this Agreement may be brought against any of the parties in
      the
      courts of Hinds County, Mississippi, State of Mississippi or, if it has or
      can
      acquire jurisdiction, in the United States District Court for the Southern
      District of Mississippi, and each of the parties consents to the jurisdiction
      of
      such courts (and of the appropriate appellate courts) in any such action or
      proceeding and waives any objection to venue laid therein. Process in any action
      or proceeding referred to in the preceding sentence may be served on any party
      anywhere in the world.

     

    9.           
      COUNTERPARTS

     

    This
      Agreement may be executed in one or more counterparts, each of which will be
      deemed to be an original and all of which, when taken together, will be deemed
      to constitute one and the same.

     

    10.           
      SECTION HEADINGS

     

    The
      headings of sections in this Agreement are provided for convenience only and
      will not affect its construction or interpretation.

     

    11.           
      WAIVER

     

    The
      rights and remedies of the parties to this Agreement are cumulative and not
      alternative. Except as set forth in this Agreement or the Stock Purchase
      Agreement, neither the failure nor any delay by any party in exercising any
      right, power, or privilege under this Agreement or the documents referred to
      in
      this Agreement will operate as a waiver of such right, power, or privilege,
      and
      no single or partial exercise of any such right, power, or privilege will
      preclude any other or further exercise of such right, power, or privilege or
      the
      exercise of any other right, power, or privilege. To the maximum extent
      permitted by applicable law, (a) no claim or right arising
      out  of this Agreement or the documents referred to in this Agreement
      can be discharged by one party, in whole or in part, by a waiver or renunciation
      of the claim or right unless in writing signed by the other party; (b) no
      waiver that may be given by a party will be applicable except in the specific
      instance for which it is given; and (c) no notice to or demand on one party
      will be deemed to be a waiver of any obligation of such party or of the right
      of
      the party giving such notice or demand to take further action without notice
      or
      demand as provided in this Agreement or the documents referred to in this
      Agreement.

     

    12.           
      EXCLUSIVE AGREEMENT AND MODIFICATION

     

    This
      Agreement supersedes all prior agreements among the parties with respect to
      its
      subject matter and constitutes (along with the documents referred to in this
      Agreement) a complete and exclusive statement of the terms of the agreement
      between the parties with respect to its subject matter. This Agreement may
      not
      be amended except by a written agreement executed by the Purchaser, the
      Principals and the Escrow Agent.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    13.           
      GOVERNING LAW

     

    This
      Agreement shall be governed by the laws of the State of Mississippi, without
      regard to conflicts of law principles.

     

    IN
      WITNESS WHEREOF, the parties have executed and delivered this Agreement as
      of
      the date first written above.

     

    
      
        	 PURCHASER:	 	 	 SELLERS’
                REPRESENTATIVE: 	 
	 	 	 	 	 
	 XFone,
                Inc. 	 	 	 	 
	 	 	 	 	 
	
                /s/ Guy
                  Nissenson

              	 	 	
                /s/
                  Chris Chelette

              	 
	
                Guy
                  Nissenson

              	 	 	
                Chris
                  Chelette

              	 
	
                President
                  and CEO

              	 	 	
                 

              	 

      

    

     

    
      
        
          	 ESCROW
                  AGENT:	 	 	 	 
	 	 	 	 	 
	
                  /s/
                    W. Sanders "Sandy" Carter, Jr.

                	 	 	
                  /s/
                    Robert Healea

                	 
	
                  
                    

                    W.
                      Sanders "Sandy" Carter, Jr.

                  

                	 	 	
                  Robert
                    Healea

                	 
	
                  
                    

                    First
                      Vice President & Trust Officer

                  

                	 	 	
                   

                	 

        

      

    

    

    
      
        	 	 	 	 	 
	 	 	 	
                /s/
                  Kevin Buxkemper 

              	 
	
                 

              	 	 	
                Kevin
                  Buxkemper 

              	 
	
                 

              	 	 	
                 

              	 

      

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    APPENDIX
      A

     

    PENDING
      CLAIM
      NOTICE

     

    To:                      
      _______________________, or its successor (“Escrow Agent”)

     _______________________
      (“Sellers’
Representative”)

    
      	
              From:

            	
              XFone,
                Inc. (“Purchaser”) 

            

    

     

    
      	
              Date:

            	
              _____________________
                

            

    

     

    Please
      be
      advised that, pursuant to Section 1(h) of the Escrow Agreement dated
      ____________, 200___ by and among the undersigned, the Escrow Agent, and the
      Sellers’ Representative, each of you are hereby notified that, Purchaser
      believes that the Purchaser has or may suffer Adverse Consequences pursuant
      to
      the provisions of Article VII of the Stock Purchase Agreement dated as of
      _______________________ (“Stock Purchase Agreement”) by virtue of

     

    
      

    

     

    
      

    

     

    
      

    

     

     

    Purchaser
      estimates that the Adverse Consequences is $_____________ (“Estimated Adverse
      Consequences”).

     

    Signed
      this _____ day of _________________, 2008.

     

    
      
        	 	XFone,
                Inc.	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

      

    

                                                               
      

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    APPENDIX
      B

     

    PURCHASER
      DEPOSITION NOTICE
      REQUEST

     

    
      	
              To:

            	
              ______________________,
                or its successor (“Escrow Agent”) 

            

    

    ______________________
      (“Sellers’ Representative”)

     

    
      	
              From:

            	
              XFone,
                Inc. (“Purchaser”) 

            

    

     

    
      	
              Date:

            	
              _______________________
                

            

    

     

    
      	
              Re:

            	
              Escrow
                Agreement Dated ____________, 200__ Among the Above-referenced Parties
                (“Escrow Agreement”) 

            

    

     

    Please
      be
      advised that pursuant to Section 2(a) of the Escrow Agreement you are hereby
      notified that Adverse Consequences (as defined in the Stock Purchase Agreement
      dated August 22, 2007) has been determined and you are hereby instructed to
      deliver to XFone, Inc. each NTS Seller’s Pro-Rata Share thereof from the Escrow
      Funds.

     

    Check
      One:

     

    
      	
              ____

            	
              This
                is the Adverse Consequences as determined for Pending Claims Notice
                dated.
                

            

    

     

    
      	
              ____

            	
              This
                notice also constitutes a Pending Claims Notice and the Adverse
                Consequences arises out of the following:

            

    

     

    
       

      
        
          	 	Sincerely,	 
	 	 	 
	 	XFone,
                  Inc.	 
	 	 	 	 
	
                   

                	
                  By:
                    

                	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

        

      

                                                                 
        

    

    
      
        
        

      

      
        -11-ex10117.htm

    Exhibit
      10.117

    RELEASE

     

    This
      Release (this “Release”) is entered into by Barbara Baldwin, Jerry Hoover, and
      Brad Worthington (each an “Officer” of the Company (as defined herein) and
      collectively, the “Officers”), effective as of the 26th day of February, 2008 in
      connection with the Contemplated Transactions under the terms and provisions
      of
      that certain Stock Purchase Agreement dated August 22, 2007, as amended (the
      “Stock Purchase Agreement”), by and among NTS Communications, Inc., a Texas
      corporation (the “Company”), XFone, Inc., a Nevada corporation (the
“Purchaser”), and the shareholders of the Company identified as the “Sellers” on
      the signature pages of the Stock Purchase Agreement.  Capitalized
      terms used but not defined herein shall have the meanings ascribed to such
      terms
      in the Stock Purchase Agreement.

     

    WHEREAS,
      execution of this Release by each of the Officers is a condition precedent
      to
      the Closing of the Stock Purchase Agreement and as such is a material inducement
      to the Purchaser in order for it to enter into the Stock Purchase Agreement;
      and

     

    WHEREAS,
      the Purchaser would not have closed the Stock Purchase Agreement (the “Closing”)
      without the execution of this Release by each and everyone of the undersigned
      Officers; and

     

    WHEREAS,
      each Officer has agreed to execute this Release.

     

    NOW,
      THEREFORE, as additional consideration for the Stock Purchase Agreement and
      the
      covenants, representations, agreements and undertakings contained herein and
      other good and valuable consideration, the receipt and sufficiency of all of
      which is hereby acknowledged and intending to be legally bound, the undersigned
      parties do hereby severally agree as follows:

     

    1.           
      Recitals.  Each
      of the above referenced recitals is true and correct and incorporated into
      this
      Release by this reference.

     

    2.           
      Release by Each
      Officer.  Each Officer hereby severally releases and forever
      discharges the Company, the Purchaser and each of their respective officers,
      directors, shareholders, employees and their successors and assigns
      (collectively, “Releasees”) of and from any and all claims, causes or rights of
      action, demands and damages of every kind and nature which such Officer may
      now
      have, whether known or unknown, anticipated or unanticipated and whether accrued
      or hereafter to accrue, against Releasees, caused by or arising out of or in
      any
      way related to the following:  (i) the business, affairs, actions
      or omissions of the Company and/or the officers or directors or any other
      employee or independent contractor of the Company through the date of Closing;
      and (ii) any amounts due from the Company to such Officer for serving as an
      officer, director or employee of the Company through the date of Closing
      including any bonuses due to such Officer arising from the consummation of
      the
      Contemplated Transactions under the Stock Purchase Agreement, other than base
      salary and benefits for the pay period ending immediately after the Effective
      Date and the reimbursement of reimbursable business expenses for the pay period
      ending immediately after the Effective Date.  Notwithstanding anything
      in this Release to the contrary, nothing contained in this Release will operate
      to release, relieve or otherwise limit the rights of such Officer to (a) file
      claims with andotherwise
      pursue recovery under the Company’s director’s and officer’s liability insurance
      or require indemnification and reimbursement from the Company for acts taken
      in
      their capacity as an Officer of the Company as specifically allowed under the
      articles of incorporation and bylaws of the Company, each as amended and/or
      restated and in force at the date of closing under the Stock Purchase Agreement
      or (b) any obligations of the Purchaser arising under the Stock Purchase
      Agreement, including, without limitation, Article VII and Section 8.2 of the
      Stock Purchase Agreement or (c) any obligations of the Company to such Officer
      arising under the Employment Agreement with such Officer executed as of the
      Closing Date or (d) file claims or seek reimbursement or recovery for
      reimbursable business expenses or under any Employee Benefit Plan in which
      such
      Officer participates.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    3.           
      Compromise.  Each
      Officer agrees that this Release is a compromise of doubtful and disputed claims
      through the date of Closing, and that the consideration recited herein is not
      to
      be construed as an admission of any liability whatsoever by Releasees and that
      Releasees expressly deny any such liability.

     

    4.           
      Scope of
      Release.  Each Officer agrees that the consideration for this
      release was delivered to secure full, complete, and final discharge of Releasees
      from any and all matters hereby released as set forth in Section 2 hereof,
      and
      each Officer agrees that such claims, demands, actions, or causes of action
      are
      wholly and forever satisfied and extinguished.

     

    5.           
      Covenant Not to
      Sue.  Each Officer will forever refrain and desist from, either
      directly or indirectly, instituting, prosecuting, or asserting against
      Releasees, or any of them, any further claim, demand, action, cause of action
      or
      suit of any kind or nature on account of matters hereby released as set forth
      in
Section 2
      hereof.

     

    6.           
      No Prior
      Assignment.  Each Officer specifically acknowledges, covenants,
      represents and warrants that there has been no assignment of any right or claim
      released hereby.

     

    7.           
      Authority.  Each
      Officer represents and warrants that each is fully competent and authorized
      to
      execute this Release, and that upon execution this Release will be valid and
      binding upon each of them.  Each Officer represents and warrants that
      the undersigned constitute all of the officers of the Company.

     

    8.           
      Acknowledgment.  Each
      Officer represents and warrants that the terms of this Release have been read,
      voluntarily accepted, understood by each such Officer or explained to each
      such
      Officer by its attorney(s), and agreed to and approved by its
      attorney(s).  Each Officer further represents and warrants that it has
      relied upon its own judgment, knowledge and belief as to the nature and extent
      of any damages which may have been suffered or sustained, or may be sustained
      in
      the future, with regard to the items released hereby under Section 2
      hereof.

     

    9.           
      Entire
      Agreement.  This Release constitutes the entire agreement
      between the parties with respect to the releases contemplated hereby. All
      previous or contemporaneous agreements, understandings, representations,
      warranties and statements, oral or written are hereby superceded. Any
      alterations or additions shall be effective only if reduced to writing, dated
      and signed by the party against whom the enforcement thereof is or may be
      sought.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    10.           
      Waiver.  No
      waiver of a breach of any of the terms, covenants or conditions of this Release
      by any party shall be construed or held to be a waiver of any succeeding or
      preceding breach of the same or any other term, covenant or condition herein
      contained.  No waiver of any default by any party hereunder shall be
      implied from any omissions by either party to take any action on account of
      such
      default.  If such default persists or is repeated, and no express
      waiver shall affect a default other than as specified in such
      waiver.

     

    11.           
      Severability.  If
      any term, provision, covenant or condition of this Release is held to be
      invalid, void or otherwise unenforceable to any extent by any court of competent
      jurisdiction, the remainder of this Release shall not be affected thereby,
      and
      each term, provision, covenant or condition of this Release shall be valid
      and
      enforceable to the fullest extent permitted by law.

     

    12.           
      Successors.  Subject
      to the restriction on assignment provided herein, all terms of this Release
      shall be binding upon, inure to the benefit of, and be enforceable by the
      parties hereto and their respective heirs, legal representatives, successors
      and
      permitted assigns.

     

    13.           
      Assignment.  No
      party hereto shall assign their respective rights, obligations or interest
      under
      this Release in any manner.

     

    14.           
      Headings.  The
      captions and paragraph headings used in this Release are inserted for
      convenience of reference only and are not intended to define, limit or affect
      the interpretation or construction of any term or provision hereof.

     

    15.           
      Counterparts.  This
      Release may be executed in multiple copies, each of which shall be deemed an
      original, but all of which shall constitute one agreement binding on all
      parties.

     

    16.           
      Facsimile
      Signatures.  In order to expedite the Contemplated Transactions
      under the Stock Purchase Agreement, telecopied signatures may be used in place
      of original signatures on this Release.  All parties hereto intend to
      be bound by the signatures on the telecopied document, are aware that other
      parties will rely on the telecopied signatures, and hereby waive any and all
      defenses to the enforcement of the terms of this Release based on the form
      of
      signature.

     

    17.           
      Governing
      Law.  This Release shall be governed, construed and enforced in
      accordance with the laws of the State of Texas.

     

    18.           
      Effective
      Date.  The terms and provisions of this Release shall be
      effective upon Closing of the Stock Purchase Agreement.

     

    

     

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Officer set forth below has executed this Release on this
      26th day of February, 2008.

     

    

     

    

    /s/
      Barbara Baldwin

    Barbara
      Baldwin,

    President
      and CEO

    

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Officer set forth below has executed this Release on this
      26th day of February, 2008.

     

    

     

    

    /s/
      Jerry Hoover

    Jerry
      Hoover,

    Executive
      Vice President

    and
      Treasurer

    

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Officer set forth below has executed this Release on this
      26th day of February, 2008.

     

    

     

    

    /s/
      Brad Worthington

    Brad
      Worthington,

    Executive
      Vice President

    and
      Secretary

    

    

    

    
      
        
        

      

      
        -6-

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