Exhibit
10.35.1


SEPARATION
AGREEMENT AND RELEASE





This Separation Agreement and Release
(this “Agreement”) is entered into as of the 15th day of
August 2008, between Ted Parsons (“Parsons”) and Xfone USA, Inc. (the
“Company”).





RECITALS





A.           Parsons
was employed by the Company as Executive Vice President and Chief Marketing
Officer pursuant to an Employment Agreement dated March 10, 2005 (the
“Employment Agreement”) which expired on March 10, 2008 and Parsons was notified
in writing on March 11, 2008 that the Company was not renewing the Employment
Agreement and Parsons’ employment with the Company ended at the close of
business on March 11, 2008 (the “Employment Expiration Date”).





B.           Parsons
and the Company wish to compromise and settle all claims and issues arising from
or related to Parsons’ employment with the Company, on the terms and conditions
expressed in this Agreement.





NOW, THEREFORE, based upon the
foregoing recitals, in consideration of the mutual terms, covenants and
conditions hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged by each party, Parsons and the
Company agree as follows:





Section
1


Payments to
Parsons




1.1           In
full settlement of any and all claims by Parsons against the Company, the
Company shall cause to be paid to Parsons the following:





(i)           Cash
Payments.  $115,340.00 payable in twenty four (24) bi-monthly
payments of $4805.84 on the 15th and the
last day of each month or on the next business day if a payment date falls on
either a weekend or holiday beginning following the date that this Agreement is
no longer revocable as provided in Section 19 hereof.  The Company
agrees to direct deposit these payments to a bank account specified by Parsons
in writing to the Company.





(ii)           New
Warrants.  150,000 non-tradable warrants (“New Warrants”) to
purchase restricted common stock of Xfone, Inc. (“Xfone Common Stock”) which
warrants shall be issued upon and subject to the approval of the American Stock
Exchange, the Tel-Aviv Stock Exchange and/or any other applicable exchange or
market where the Xfone Common Stock is traded (jointly or severally the
“Exchange”).  Parsons acknowledges that the foregoing Exchange
approval may be conditional upon the approval of the issuance of the New
Warrants by the shareholders of Xfone, Inc., and that Xfone, Inc. shall seek
such shareholder approval, if so required by the Exchange, at its 2008 annual
meeting of shareholders.  The New Warrants shall provide for a five
(5) year term from the date of issuance and be convertible on a one-to-one basis
into restricted Xfone Common Stock with a strike price of $3.63 per
share.  For a period of five (5) years after the date
hereof,  whenever Xfone, Inc. (“Xfone”) proposes to file a
registration statement under the Securities Act of 1933, as amended, pertaining
to the sale by Xfone of common stock or securities convertible into common stock
in an underwritten offering, and the registration form to be used may be used
for the registration of the shares underlying the New Warrants granted to
Parsons under this Section 1.1(ii) (in this Section 1.1(ii) a "Piggyback
Registration"), Xfone will give prompt written notice to Parsons of its
intention to effect such a registration and will include in such registration
the shares underlying Parsons’ New Warrants issued under this Section 1.1(ii)
unless Parsons objects to inclusion of such shares by a written notice to Xfone
within two (2) business days after the receipt of Xfone’s notice to
Parsons.  If a Piggyback Registration is an underwritten primary
registration on behalf of Xfone, and the managing underwriters advise Xfone in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering,
Xfone will include in such registration (i) first, the securities Xfone proposes
to sell, and (ii) second, the shares underlying New Warrants of Parsons
requested to be included in such registration and securities held by other
persons having piggyback registration rights, if any, pro rata among the holders
of such securities on the basis of the number of shares of registerable
securities held by such holders.  Xfone will pay the Registration
Expenses with respect to all Piggyback Registrations.  The term
"Registration Expenses" means expenses incident to registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses and fees and disbursements of counsel
for Xfone and all independent certified public accountants, and other persons
retained by Xfone.  Parsons shall pay, with respect to the underlying
shares registered and proposed to be resold by him, all applicable underwriting
or brokerage fees, as well as the fees and disbursements of any counsel employed
by him in connection with such registration statement.  Parsons shall
cooperate with Xfone with respect to the preparation and filing of the
registration statement, and shall complete and execute any required
questionnaire.


-1-




Parsons
acknowledges and agrees that his 250,000 unvested options for Xfone Common Stock
which were granted pursuant to Section 3.3 of the Employment Agreement were
terminated on March 11, 2008, and that the remaining 50,000 vested options
terminated on June 11, 2008 and he does not hold and is not due any other
options under the Employment Agreement or otherwise.




(iii)           WS Telecom Merger
Warrants.  Parsons and the Company agree that Parsons was
issued 39,198 warrants for restricted Xfone Common Stock with a strike price of
$3.63 and a term of 5 years from the date of issue on March 10, 2005 (the “WS
Telecom Merger Xfone Warrants”) in connection with the consummation of the
merger of WS Telecom, Inc. with and into Xfone USA, Inc. on March 10, 2005
pursuant to the Agreement and Plan of Merger dated May 28, 2004 (the “WS Telecom
Merger Agreement”).




Parsons
and the Company agree that pursuant to Xfone’s Registration Statement on Form
SB-2 (File No. 333-139024) which was declared effective by the U.S. Securities
and Exchange Commission (the “SEC”) on December 12, 2006, that 39,198 shares of
Xfone Common Stock which may be issued in the event of exercise of the WS
Telecom Merger Xfone Warrants were registered.




Within
fourteen (14) business days of receipt by Xfone’s transfer agent (the “Transfer
Agent”) of the original warrant certificate(s) evidencing the 39,198 WS Telecom
Merger Xfone Warrants the Company shall cause the Transfer Agent to issue a
replacement warrant certificate for 39,198 Xfone warrants exercisable on a one
for one basis into unrestricted Xfone Common Stock with an expiration date of
March 10, 2010 and a strike price of $3.63 per share.




(iv)           Acquisition Bonus
Warrants.  Pursuant to Section 3.4 of the Employment Agreement,
Parsons was to receive acquisition warrants (the “Acquisition Bonus Warrants”)
for restricted Xfone Common Stock with a value equal to 0.666% of the Aggregate
Transaction Consideration (as defined in the Employment Agreement) of each
acquisition closed during Parsons’ employment period, with the value of the
warrants received to be calculated by Xfone one day prior to the closing of each
acquisition assuming a 90% volatility of the underlying Parent Common Stock
pursuant to the Black Scholes option-pricing model, with vesting six months from
the date of issue.  The warrants were to be convertible on a
one-to-one basis into restricted Xfone Common Stock with a term of five years
and a strike price equal to 10% above the closing price of the Parent Common
Stock one day prior to the closing date of each acquisition.  Parsons
was issued 16,195 Acquisition Bonus Warrants on July 11, 2006 which
warrants are exercisable on a one to one basis into restricted Xfone Common
Stock with an exercise price of $3.285 per share and an expiration date of
July 11, 2011.  Pursuant to Xfone’s Registration Statement on
Form SB-2 (File No. 333-139024) which was declared effective by the SEC on
December 12, 2006, 16,195 shares of Xfone Common Stock which may be issued in
the event of the exercise of the 16,195 Acquisition Bonus Warrants were
registered.




The
parties to this Agreement disagree as to the total number of Acquisition Bonus
Warrants that Parsons was entitled to receive under Section 3.4 of his
Employment Agreement for acquisitions completed by the Company during the term
of his employment.  The parties agree that in full settlement and
satisfaction of any Acquisition Bonus Warrants due to Parsons under Section 3.4
of the Employment Agreement, Xfone shall issue to Parsons an additional 10,727
non-tradable warrants convertible on a one to one basis into restricted Xfone
Common Stock with 1,242 of the warrants to have an expiration date of December
30, 2010 with a strike price of $3.04 per share and 9,485 of the warrants to
have an expiration date of March 31, 2011 with a strike price of $3.26 per share
(the “Additional Acquisition Bonus Warrants”).  The Additional
Acquisition Bonus Warrants shall be issued upon and subject to the approval of
the Exchange.  Parsons acknowledges that the foregoing Exchange
approval may be conditional upon the approval of the issuance of the Additional
Acquisition Bonus Warrants by the shareholders of Xfone and that Xfone shall
seek such shareholder approval, if so required by the Exchange, at its 2008
annual meeting of shareholders.  Through the expiration date of the
Additional Acquisition Bonus Warrants, whenever Xfone proposes to file a
registration statement under the Securities Act of 1933, as amended, pertaining
to the sale by Xfone of common stock or securities convertible into common stock
in an underwritten offering, and the registration form to be used may be used
for the registration of the shares underlying the unexpired Additional
Acquisition Bonus Warrants granted to Parsons under this Section 1.1(iv) (in
this Section 1.1(iv) a "Piggyback Registration"), Xfone will give prompt written
notice to Parsons of its intention to effect such a registration and will
include in such registration the shares underlying Parsons’ unexpired Additional
Acquisition Bonus Warrants issued under this Section 1.1(iv) unless Parsons
objects to inclusion of such shares by a written notice to Xfone within two (2)
business days after the receipt of Xfone’s notice to Parsons.  If a
Piggyback Registration is an underwritten primary registration on behalf of
Xfone, and the managing underwriters advise Xfone in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering, Xfone will include in
such registration (i) first, the securities Xfone proposes to sell, and (ii)
second, the shares underlying unexpired Additional Acquisition Bonus Warrants of
Parsons requested to be included in such registration and securities held by
other persons having piggyback registration rights, if any, pro rata among the
holders of such securities on the basis of the number of shares of registerable
securities held by such holders.  Xfone will pay the Registration
Expenses with respect to all Piggyback Registrations.  The term
"Registration Expenses" means expenses incident to registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses and fees and disbursements of counsel
for Xfone and all independent certified public accountants, and other persons
retained by Xfone.  Parsons shall pay, with respect to the underlying
shares proposed to be resold by him, all applicable underwriting or brokerage
fees, as well as the fees and disbursements of any counsel employed by him in
connection with such registration statement.  Parsons shall cooperate
with Xfone with respect to the preparation and filing of the registration
statement, and shall complete and execute any required
questionnaire.


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(v)           Xfone
shall use commercially reasonable efforts to obtain the Exchange approval and
shareholder approval, if required for the issuance of the New Warrants and
Additional Acquisition Bonus Warrants.




1.2           From
and after the Employment Expiration Date, Parsons is not eligible to participate
in any employee benefit plans of the Company other than to elect and to pay in
accordance with the requirements of COBRA to continue coverage at Parsons’ own
expense under the Company’s group health insurance plan.  Parsons
further acknowledges and agrees that other than the warrants as provided in
Section 1.1 hereof, that he is due no other warrants under the Employment
Agreement or otherwise.





1.3           Parsons
represents and warrants that the consideration recited in this Agreement
constitutes a payment in compromise and settlement of claims for general damages
as alleged by Parsons and as consideration for his obligations as provided in
Sections 2, 3, 4 and 23 of this Agreement.  Except as specifically set
forth herein, the Company or Parsons makes no representation or warranty
concerning the tax treatment of the consideration for this
Agreement.  Parsons and not the Company shall be solely liable for any
taxes, penalties, interest, liens or subrogated claims (if any) payable, or
alleged by any authority to be payable, as a result of the payments due under
Section 1.1(i) or the issuance or exercise of any of the warrants issued
pursuant to Section 1.1.  Parsons shall defend, indemnify and hold the
Company harmless with respect to any actual or alleged liability for any such
taxes, penalties, interest, liens or subrogated claims.  Parsons
acknowledges and agrees that he accepts the warrants issued hereunder and the
risk of any loss related thereto, including without limitation, the loss in
value of the warrants or any loss resulting from the sale of any Xfone Common
Stock acquired by exercise of any of the warrants.





Section
2


Release




2.1           Subject
to the provisions of Section 19 of this Agreement, through the execution hereof,
Parsons forever releases and discharges the Company, Xfone, NTS Communications,
Inc., the Oberon Group, LLC and their respective affiliates (including
subsidiaries), shareholders, directors, officers, employees, agents and
attorneys (in their individual and representative capacities), including,
without limitation Guy Nissenson, Barbara Baldwin and Adam Breslawsky
(collectively the “Released Entities and Persons”) from any and all claims,
demands, losses, damages, actions, causes of action, suits, debts, promises,
liabilities, obligations, liens, costs, expenses, attorney’s fees, indemnities,
subrogations  (contractual or equitable) or duties, of any nature,
character or description whatsoever, arising from or relating to, directly or
indirectly, Parsons’ employment and discontinuation of employment with the
Company.





2.2           The
release of claims in Subsection 2.1 includes, but is not limited to, claims at
law or equity or sounding in contract (express or implied) or torts arising
under federal, state or local laws or the common law prohibiting age, sex, race,
national origins, disability, veteran status or any other forms of
discrimination (including, but not limited to, the Family and Medical Leave Act,
the Age Discrimination in Employment Act of 1967, the American with Disabilities
Act of 1991, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1866, the Civil Rights Act of 1991, the Older Workers Benefit Protection Act,
42  U.S.C. § 1981, the National Labor Relation Act, and all amendments
to the aforementioned statutes).





2.3           Subject
to the provision of Section 19 of this Agreement, through the execution hereof,
the Company forever releases and discharges Parsons and his agents and attorneys
(in their individual and representative capacities), from any and all claims,
demands, losses, damages, actions, causes of action, suits, debts, promises,
liabilities, obligations, liens, costs, expenses, attorney’s fees, indemnities,
subrogations  (contractual or equitable) or duties, of any nature,
character or description whatsoever, arising from or relating to, directly or
indirectly, Parsons’ employment with the Company.  The Company shall
use commercially reasonable efforts to remove Parsons from any personal guaranty
of any accounts of the Company.





Section
3


Non-Disparagement/Confidentiality




3.1           Parsons
understands and agrees that Parsons shall not, publicly or privately, disparage
or make any state­ments (written or oral) that could impugn the integrity,
acumen, ethics, or business practices of the Released Entities and Persons
except to the extent (and only to the extent) necessary in any judicial or
arbitration action to enforce the provisions of this Agree­ment or in
connection with any judicial or admin­istrative proceeding to the extent
required by applicable law.  Company agrees not to make any statements
(written or oral) that could impugn the integrity, acumen, ethics, or business
practices of Parsons except to the extent (and only to the extent) necessary in
any judicial or arbitration action to enforce the provisions of this
Agree­ment or in connection with any judicial or admin­istrative
proceeding to the extent required by applicable law.


-3-





3.2           The
parties agree that the terms and conditions of this Agreement and the disputes,
claims and discussions that gave rise to this Agreement shall be maintained in
confidence, except that any party may reveal the terms of this Agreement to
their respective accountants or attorneys or in connection with any action to
enforce the terms of this Agreement or to the extent otherwise required by
federal, state, or local laws or by the SEC or the Exchange.





Section
4


Cooperation




4.1           For
a period of one year following the date of this Agreement Parsons understands
and agrees that Parsons shall provide reasonable cooperation in connection with
any action or proceeding which relates to the Company and/or its affiliates,
including without limitation in connection with any litigation and/or disputes
arising out of actions or inactions of the Company and/or its affiliates of
which Parsons has knowledge or information.  Parsons further agrees to
cooperate with the Company and its affiliates in a reasonable manner in
supplying data, information, and expertise within Parsons’ special knowledge or
competence and otherwise assist the Company and its affiliates in the protection
of the interests of the Company and its affiliates.  The Company shall
pay Parsons a consulting fee of $100.00 per hour for each hour exceeding 5 hours
per month and reimburse Parsons for reasonable out-of-pocket expenses
pre-approved by the Company (such as hotel and travel expenses) incurred by
Parsons in connection with such cooperation following its receipt of Parsons’
appropriately itemized request.  Consulting payments and expense
reimbursement shall be paid on the 15th of the month following the month in
which such fee or expense was incurred, or on the next business day if a payment
date falls in either a weekend or holiday.





Section
5


Company
Property




5.1           Parsons
agrees to return to the Company all Company documents (and all copies thereof)
and any and all other Company property in Parsons’ possession, custody or
control, including, but not limited to, financial information, customer
information, customer lists, employee lists, Company files, notes, cellular
telephones, personal computers (provided that Parsons may purchase his laptop
for $300.00 upon return of a disc with any Company information and a
certification that all Company information on the laptop has been transferred
and returned to the Company and has been deleted from his laptop), contracts,
drawings, records, business plans and forecasts, financial information,
specifications, computer-recorded information, software, tangible property,
credit cards, entry cards, identification badges and keys, and any materials of
any kind which contain or embody any proprietary or confidential material of the
Company (and all reproductions thereof).  Upon return of such Company
information by Parsons, the Company shall be responsible for retaining and/or
maintaining such documents and/or property commensurate with its records
retention policy.





Section
6


Authority to
Execute




6.1           Each
of the persons signing this Agreement represents and warrants that he or she has
all requisite authority to execute and perform this Agreement.





Section
7


Binding
Effect




7.1           This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective heirs, successors and assigns.  Except as
specifically provided in Section 2 of this Agreement and except to the extent
that the rights created hereunder inure to the benefit of Parsons’ heirs, this
Agreement is not intended to create, and shall not create, any rights in any
person who is not a party to this Agreement.


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Section
8


Waiver




8.1           Neither
the failure nor any delay on the part of either party to exercise any right,
remedy, power or privilege under this Agreement shall operate as a waiver of
that right, remedy, power or privilege.  No waiver of any right,
remedy, power or privilege with respect to any particular occurrence shall be
construed as a wavier of such right, remedy, power or privilege with respect to
any other occurrence.





Section
9


Time of the
Essence




9.1           Time
is of the essence in the performance of this Agreement and all of its terms,
provisions, conditions and covenants.





Section
10


Entire
Agreement




10.1           This
Agreement contains the entire agreement between the parties with respect to the
subject matter hereof and may not be changed or terminated orally, but only by a
written instrument executed by the parties after the date of this
Agreement.  The Company and Parsons further acknowledge and agree that
neither party will make any claim, at any time or place, that this Agreement has
been orally altered or modified in any respect whatsoever.  It is
expressly acknowledged and recognized by all parties that there are no oral or
written collateral agreements between Parsons and the Company other than such
agreements as may be contained or referenced herein.





Section
11


Construction/Breach




11.1           The
terms and conditions of this Agreement shall be construed as a whole according
to the fair meaning and not strictly for or against any party.  The
parties acknowledge that each of them has reviewed this Agreement and has had
the opportunity to have it reviewed by its attorneys, and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in the interpretation of this Agreement,
including any exhibits or amendments thereto.





11.2           Parsons
understands and agrees that a breach of any of his obligations or duties under
Sections 2, 3, 4, 5 of this Agreement, or Sections 7, 8 and 9 of the Employment
Agreement which are not cured within ten (10) days of notice thereof from the
Company will cause, without prejudice to any other remedy that the Released
Entities and Persons may have against Parsons under any applicable law, any
future payments due Parsons to not be paid, will cause a forfeiture of any prior
payments under Section 1.1(i) of this Agreement, cancellation of the New
Warrants granted hereunder in Section 1.1(ii) hereof, and will give the Company
the right to purchase any Xfone Common Stock acquired by exercise of any of the
New Warrants of Parsons granted under Section 1.1(ii) hereunder at the strike
price therefore.





Section
12


Partial
Invalidity




12.1           If
any term of this Agreement or the application of any term of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
all provisions, covenants and conditions of this Agreement, and all of their
applications, not so held invalid, void or unenforceable, shall continue in full
force and effect and shall not be affected, impaired or invalidated in any
way.


-5-





Section
13


Attorneys’
Fees




13.1           In
any action or proceeding to enforce the terms of this Agreement or to redress
any violation of this Agreement, the prevailing party shall be entitled to
recover as damages its reasonable attorneys’ fees and costs incurred, whether or
not the action is reduced to judgment.  For the purposes of this
provision, the “prevailing party” shall be that party who is successful with
regard to the main issue, even if that party did not prevail on all
issues.





Section
14


Governing
Law




14.1           The
laws of the State of Mississippi applicable to contracts made or to be wholly
performed in the State of Mississippi (without giving effect to choice of law or
conflict of law principles) shall govern the validity, construction, performance
and effect of this Agreement.





Section
15


Consent to Jurisdiction and
Venue; Service of Process




15.1           Each
of the parties to this Agreement submit to the personal jurisdiction of the
courts of the State of Mississippi, County of Rankin and the Federal courts of
the United States sitting in the Southern District of Mississippi, and any
appellate court from any such state or Federal court, and hereby irrevocably and
unconditionally agree that all claims, actions and proceedings arising out of or
relating to this Agreement may be heard and determined in such courts or, to the
extent permitted by law, in such Federal court.  Each of the parties
to this Agreement agree that a final nonappealable judgment in any such claim,
action or proceeding shall be conclusive and may be enforced in any other
jurisdiction by suit on the judgment or in any other manner provided by
law.




15.2           Each
of the parties to this Agreement irrevocably and unconditionally waives, to the
fullest extent that each such party may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any related
matter in the courts of the State of Mississippi, County of Rankin and the
Federal courts of the United States sitting in the Southern District of
Mississippi, and the defense of an inconvenient forum to the maintenance of such
claim in any such court.





15.3           Parsons
agrees that process may be served on him by registered mail, addressed to
Parsons’ last address known to the Company, or in any other manner authorized by
law.





Section
16


Necessary
Action




16.1           Each
of the parties shall do any act or thing and execute any or all documents or
instruments necessary or proper to effectuate the provisions and intent of this
Agreement.





Section
17


Notices




17.1           Any
and all notices and demands by or from any party required or desired to be given
under this Agreement shall be in writing and shall be validly given or made if
served either personally or if deposited in the United States mail, certified or
registered, postage prepaid, return receipt requested, or if sent by a
nationally recognized overnight delivery service.  If such notice or
demand is served by registered or certified mail or by overnight delivery in the
manner provided, service shall be conclusively deemed given upon receipt or
attempted delivery, whichever is sooner.





17.2           Any
notice of demand to Parsons shall be addressed to him at 855 South Pear Orchard
Road, Suite 200, Ridgeland, Mississippi 39157.


-6-





17.3           Any
notice of demand to the Company or Xfone shall be addressed as
follows:





Xfone
USA, Inc.


5307 West Loop 289, Suite
200


Lubbock,
TX  79414


ATTN:  President and
CEO


Phone: (806) 797-0687


E-mail:  Barbara.Baldwin@ntscom.com





with a copy to:





Xfone, Inc.


1 Haodem Street, 3rd Floor


Petach
Tikva


Israel


ATTN:  General
Counsel


Phone:
(011) 972-3925-4452


E-mail:
alon@xfone.com





and to:





Watkins Ludlam Winter & Stennis,
P.A.


633 North State Street


Jackson,
MS  39202


ATTN:  Gina M.
Jacobs


Phone:  (601)
949-4705


E-mail:  gjacobs@watkinsludlam.com





17.4           Any
party may change its address for receiving notices or demands by a written
notice given in the manner provided in this Section, which notice of change of
address shall not become effective, however, until its actual receipt by the
other party.





Section
18


Miscellaneous




The captions appearing at the
commencement of the Sections of this Agreement are descriptive only and for
convenience in reference to this Agreement and shall not define, limit or
describe the scope or intent of this Agreement, nor in any way affect this
Agreement.


-7-





Section
19


Revocation
Period




19.1           This
Agreement is enforceable when both parties have signed the
Agreement.  Parsons and the Company understand and acknowledge that
Parsons has seven (7) calendar days following his execution of this Agreement to
revoke his acceptance of this Agreement.





19.2           For
revocation under Section 19.1 to be effective, written notice of revocation must
be received by the Company no later than 5:00 p.m. on the seventh (7th)
calendar day after Parsons signs this Agreement.  If Parsons revokes
this Agreement, it shall not be effective or enforceable, and neither party will
be deemed to have released the other or to have waived any rights with respect
to the matters addressed in this Agreement.





Section
20


Time to Review
Agreement




20.1           Parsons
acknowledges that he received a copy of this Agreement and was given at least
twenty-one (21) days to review and consider the provisions of this Agreement
prior to execution.





Section
21


Advice of
Counsel




21.1           EACH
PARTY ACKNOWLEDGES THAT IT CONSULTED WITH AN ATTORNEY BEFORE SIGNING THIS
AGREEMENT.





Section
22


Voluntary Nature of
Agreement




22.1           Both
parties acknowledge that they have carefully read this Agreement; that they have
been afforded an opportunity for counsel of their choosing to read and review
it; that they have had the provisions fully explained to them by their counsel;
that the only promises made are those stated in this Agreement; and that they
are signing this Agreement freely, voluntarily and with full knowledge of its
terms and consequences.





Section
23


Confidentiality and
Non-Compete Agreement




23.1           For
and in consideration of the payments provided in Section 1.1 hereof, the terms
and conditions of the Confidentiality provisions as provided in Section 7 of the
Employment Agreement and Non-Compete and Non-Interference as provided in
Sections 8 and 9 of the Employment Agreement are not modified by this Agreement
and are hereby ratified by Parsons and shall remain in full force and
effect.





Section
24


Counterparts





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


-8-








[Remainder
of Page Intentionally Left Blank]


PLEASE
READ THIS AGREEMENT CAREFULLY.


IT
CONTAINS A RELEASE OF ALL CLAIMS.








PARSONS:                                                                                     COMPANY:





Xfone USA, Inc.


/s/ Ted
Parsons


Ted
Parsons


By: /s/ Guy
Nissenson


Date:
August 15,
2008                                                                                     Guy
Nissenson, Chairman





Date: August 15,
2008








Xfone,
Inc., solely for purposes of agreeing to provisions of Section
1.1(ii)-(v)








By: /s/ Guy
Nissenson


Guy
Nissenson, President and CEO





Date:
August 15,
2008


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