Document:

ex101143.htm

    Exhibit
      10.114.3

    EMPLOYMENT
      AGREEMENT

     

    This
      Employment Agreement (this "Agreement") is executed as of February 26, 2008
      by
      NTS Communications, Inc. (the "Employer"), and Brad Worthington, an individual
      (the "Executive") to be effective on the date of consummation of the
      transactions contemplated by the Stock Purchase Agreement (as defined herein)
      (the “Effective Date”).

     

    RECITALS

     

    The
      Executive is currently the Executive Vice President – Chief Operating Officer
      and a shareholder of the Employer.  Concurrently with the execution
      and delivery of this Agreement, XFone, Inc. (“XFone” or “Parent”) is purchasing
      the issued and outstanding common stock of NTS Communications, Inc. pursuant
      to
      and in accordance with that certain Stock Purchase Agreement dated August 22,
      2007, as amended, among XFone, the Employer, and the shareholders of the
      Employer (the "Stock Purchase Agreement").  The Executive's continued
      employment with the Employer after the stock purchase and the Executive's
      execution of this Agreement is a condition to the consummation of the stock
      purchase pursuant to the Stock Purchase Agreement by XFone.  The
      Employer agrees to employ the Executive, and the Executive wishes to accept
      such
      continued employment, upon the terms and conditions set forth in this
      Agreement.

     

    AGREEMENT

     

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

     

    1.           
      DEFINITIONS

     

    For
      the
      purposes of this Agreement, the following terms have the meanings specified
      or
      referred to in this Section 1.

     

    "Agreement"--this
      Employment Agreement, as amended from time to time.

     

    "Compensation"--Salary
      and Benefits.

     

    "Benefits"--as
      defined in Section 3.1(b).

     

    "Board
      of
      Directors"--the board of directors of the Employer.

     

    "Confidential
      Information" means any and all of the following with respect to the
      Employer or XFone, their Subsidiaries or any of their affiliates (the “XFone
      Companies”):

     

    (a)           
      trade secrets concerning the business and affairs of the XFone Companies,
      product specifications, data, know-how, formulae, compositions, processes,
      designs, sketches, photographs, graphs, drawings, samples, inventions and ideas,
      past, current, and planned research and development, current and planned
      manufacturing or distribution methods and processes, customer lists, current
      and
      anticipated customer requirements, price lists, market studies, business plans,
      computer software and programs (including object code and source code), computer
      software and database technologies, systems, structures, and architectures
      (andrelated
      formulae, compositions, processes, improvements, devices, know-how, inventions,
      discoveries, concepts, ideas, designs, methods and information, any other
      confidential or proprietary information or data), and any other information,
      however documented, that is a trade secret within the meaning of any applicable
      federal or state laws; and

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    (b)           
      information concerning the business and affairs of the XFone Companies (which
      includes but is not limited to historical financial statements, financial
      projections and budgets, historical and projected sales, capital spending
      budgets and plans, the names and backgrounds of key personnel, personnel
      training and techniques and materials, interconnect agreements, supply sources,
      marketing, production or merchandising systems or plans), however documented;
      and

     

    (c)           
      notes, analysis, compilations, studies, summaries, and other material prepared
      by or for the XFone Companies containing or based, in whole or in part, on
      any
      information included in the foregoing.

     

    "Disability"--as
      defined in Section 6.4.

     

    "Effective
      Date"--the date stated in the first paragraph of the
      Agreement.

     

    "Executive
      Invention"--any idea, invention, technique, modification, process, or
      improvement (whether patentable or not), any industrial design (whether
      registerable or not), any mask work, however fixed or encoded, that is suitable
      to be fixed, embedded or programmed in a semiconductor product (whether
      recordable or not), and any work of authorship (whether or not copyright
      protection may be obtained for it) created, conceived, or developed by the
      Executive, either solely or in conjunction with others, during the Employment
      Period with Employer or any predecessor or successor of the Employer, or a
      period that includes a portion of the Employment Period, that relates in any
      way
      to, or is useful in any manner in, the business then being conducted or proposed
      to be conducted by the Employer, and any such item created by the Executive,
      either solely or in conjunction with  others, following termination of
      the Executive's employment with the Employer, that is based upon or uses
      Confidential Information.

     

    "Employment
      Period"--the term of the Executive's employment under this Agreement, as
      the same may be extended and as used herein the term "Employment Year" means
      each twelve month period occurring during the employment period. "Employment
      Year 1" shall mean the first twelve months of employment from the Effective
      Date, "Employment Year 2" shall mean the 12 month period following Employment
      Year 1, "Employment Year 3" shall mean the 12 month period following Employment
      Year 2, "Employment Year 4" shall mean the 12 month period following Employment
      Year 3, and "Employment Year 5" shall mean the 12 month period following
      Employment Year 4.

     

    "Fiscal
      Year"--the Employer's fiscal year, as it exists on the Effective Date or
      as changed from time to time.

     

    "For
      cause"--as defined in Section 6.2.

     

    "For
      good
      reason"--as defined in Section 6.3.

     

    "Parent
      Common Stock" shall mean shares of the common stock of the
      Parent.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    "Person"--any
      individual, corporation (including any non-profit corporation), general or
      limited partnership, limited liability company, joint venture, estate, trust,
      association, organization, or governmental body.

     

    "Post-Employment
      Period"--as defined in Section 8.2.

     

    "Proprietary
      Items"--as defined in Section 7.2(a)(iv).

     

    "Salary"--as
      defined in Section 3.1(a).

     

    “Subsidiaries”–
      shall mean, with respect to any
      Person (the “parent”) at any date, any corporation, limited liability company,
      partnership, association or other entity the accounts of which would be
      consolidated with those of the parent in the parent’s consolidated financial
      statements if such financial statements were prepared in accordance with GAAP
      as
      of such date, as well as any other corporation, limited liability company,
      partnership, association or other entity of which securities or other ownership
      interests representing more than 50% of the equity securities or more than
      50%
      of the voting securities or, in the case of a partnership, more than 50% of
      the
      general partnership interests are, as of such date, owned, controlled or held,
      directly or indirectly, by one or more of the parent and its
      Subsidiaries.

     

    2.           
      EMPLOYMENT TERMS AND DUTIES

     

    2.1           
      EMPLOYMENT

     

    The
      Employer hereby employs the Executive, and the Executive hereby accepts
      employment by the Employer, upon the terms and conditions set forth in this
      Agreement.

     

    2.2           
      TERM

     

    Subject
      to the provisions of Section 6, the term of the Executive's employment under
      this Agreement will be five (5) years, beginning on the Effective Date and
      ending on the fifth anniversary of the Effective Date.

     

    2.3           
      DUTIES

     

    The
      Executive will have such duties as are assigned or delegated to the Executive
      by
      the Board of Directors or Chairman of the Board, and will initially serve as
      Executive Vice President – Chief Operating Officer of the
      Employer.  The Executive will devote his entire business time,
      attention, skill, and energy exclusively to the business of the Employer, will
      use his best efforts to promote the success of the Employer's business, and
      will
      cooperate fully with the Board of Directors in the advancement of the best
      interests of the Employer.  If the Executive is elected as a director
      of the Employer or as a director or officer of any of the XFone Companies,
      the
      Executive will fulfill his duties as such director or officer without additional
      compensation.

     

    3.           
      COMPENSATION

     

    (a)           
      Salary.  The
      Executive will be paid an annual salary of $243,840.00 for Employment Year
      1 and
      the Salary for each employment year thereafter shall be set by the
      Boardof
      Directors of the Employer which in no event shall be less than the Salary for
      Employment Year 1 (the "Salary").  The Salary will be payable in equal
      periodic installments according to the Employer's customary payroll practices,
      but no less frequently than monthly, and shall be subject to all applicable
      withholding and other applicable taxes as required by law.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (b)           
      Benefits.  The
      Executive will, during the Employment Period, be permitted to participate in
      such life insurance, hospitalization, major medical, and other Executive benefit
      plans of the Employer that may be in effect from time to time, to the extent
      the
      Executive is eligible under the terms of those plans (collectively, the
      "Benefits"); provided that such Benefits will be substantially similar to those
      enjoyed by the Employee under the terms of his employment with the Company
      as of
      the Effective Date.

     

    (c)           
      Bonus.  On
      the Effective Date, Executive will receive a one-time cash signing bonus in
      the
      amount of $243,840.00.  Executive acknowledges that this signing bonus
      paid by Employer is in lieu of any “stay pay” bonuses previously approved by the
      board of the Employer, and by accepting the signing bonus Executive agrees
      to
      forego any such “stay pay” bonuses previously approved by the
      Employer.

     

    (d)           
      Stock Option
      Plan.  The Executive will receive options to purchase Parent
      Common Stock as set forth below:

     

    
      	
               

            	
              (i)

            	
              On
                the Effective Date, the Employee shall be granted fully vested options
                with a term of five years for 400,000 shares of Parent Common Stock
                with a
                strike price of 10% above the average closing price for the prior
                ten
                trading days immediately prior to the date of execution of the Stock
                Purchase Agreement; and 

            

    

     

    
      	
               

            	
              (ii)

            	
              At
                the end of the Second Employment Year, the Employee shall be granted
                fully
                vested options with a term of five years for an additional 267,000
                shares
                of the Parent Common Stock with a strike price of $5.00 per share.
                

            

    

     

    4.           
      FACILITIES AND EXPENSES

     

    The
      Employer will furnish the Executive office space, equipment, supplies, and
      such
      other facilities and personnel as the Employer deems necessary or appropriate
      for the performance of the Executive's duties under this Agreement.

     

    5.           
      VACATIONS AND HOLIDAYS

     

    The
      Executive will be entitled to four weeks' paid vacation each Employment Year
      in
      accordance with the vacation policies of the Employer in effect for its
      executive officers from time to time. Vacation must be taken by the Executive
      at
      such time or times as approved by the Chairman of the Board. The Executive
      will
      also be entitled to the paid holidays set forth in the Employer's policies.
      Up
      to ten vacation days during any Employment Year that are not used by the
      Executive during such Employment Year may be used in any subsequent Employment
      Year.  The Executive shall be allowed to keep and use 33 accrued sick
      days that have been earnedduring
      the course of his employment with the Company prior to the execution date of
      this Agreement.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    6.           
      TERMINATION

     

    6.1           
      EVENTS OF TERMINATION

     

    The
      Employment Period, the Executive's Compensation, and any and all other rights
      of
      the Executive under this Agreement or otherwise as an Executive of the Employer
      will terminate (except as otherwise provided in this Section 6):

     

    (a)           
      upon the death of the Executive;

     

    (b)           
      for cause (as defined in Section 6.2), immediately upon notice from the Employer
      to the Executive, or at such later time as such notice may specify;

     

    (c)           
      for good reason (as defined in Section 6.3) upon not less than thirty days'
      prior notice from the Executive to the Employer;

     

    (d)           
      upon termination of employment by Executive for any reason other than for good
      reason (as defined in Section 6.3); or

     

    (e)           
      upon the disability of the Executive (as defined in Section 6.4).

     

    6.2           
      DEFINITION OF "FOR CAUSE"

     

    For
      purposes of Section 6.1, the phrase "for cause" means: (a) the Executive's
      breach of this Agreement which remains uncorrected for 30 days following notice
      from the Employer; (b) the Executive's failure to adhere to any written
      Employer policy if the Executive has been given a reasonable opportunity to
      comply with such policy or cure the failure to comply (which reasonable
      opportunity must be granted during the ten-day period preceding termination
      of
      this Agreement); (c) the appropriation (or attempted appropriation) of a
      material business opportunity of the Employer, including attempting to secure
      or
      securing any personal profit in connection with any transaction entered into
      on
      behalf of the Employer; (d) the misappropriation (or attempted
      misappropriation) of any of the Employer's funds or property; or (e) after
      the Execution Date hereof, the conviction of, the indictment for (or its
      procedural equivalent), or the entering of a guilty plea or plea of no contest
      with respect to, a felony, the equivalent thereof, or any other crime with
      respect to which imprisonment is a possible punishment.

     

    6.3           
      DEFINITION OF "FOR GOOD REASON"

     

    For
      purposes of Section 6.1, the phrase "for good reason" means the Employer's
      material breach of this Agreement which is not cured within 30 days from the
      date of notice from the Executive.

     

    6.4           
      DEFINITION OF "DISABILITY"

     

    For
      purposes of
      Section 6.1, the Executive will be deemed to have a "disability" if,
      forphysical
      or mental reasons, the
      Executive is unable to perform the Executive's duties under this Agreement
      for
      60 consecutive calendar days or more or 90 calendar days or more during any
      twelve month period, as determined in accordance with this Section 6.4. The
      disability of the Executive will be determined by a medical doctor selected
      by
      written agreement of the Employer and the Executive upon the request of either
      party by notice to the other. If the Employer and the Executive cannot agree
      on
      the selection of a medical doctor, each of them will select a medical doctor
      and
      the two medical doctors will select a third medical doctor who will determine
      whether the Executive has a disability. The determination of the medical doctor
      selected under this Section 6.4 will be binding on both parties. The Executive
      must submit to a reasonable number of examinations by the medical doctor making
      the determination of disability under this Section 6.4, and the Executive hereby
      authorizes the disclosure and release to the Employer of such determination
      and
      all supporting medical records. If the Executive is not legally competent,
      the
      Executive's legal guardian or duly authorized attorney-in-fact will act in
      the
      Executive's stead, under this Section 6.4, for the purposes of submitting the
      Executive to the examinations, and providing the authorization of disclosure,
      required under this Section 6.4.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    6.5           
      TERMINATION PAY

     

    Effective
      upon the termination of this Agreement, the Employer will be obligated to pay
      the Executive (or, in the event of his death, his designated beneficiary as
      defined below) only such compensation as is provided in this Section 6.5, and
      in
      lieu of all other amounts and in settlement and complete release of all claims
      the Executive may have against the Employer. For purposes of this Section 6.5,
      the Executive's designated beneficiary will be such individual beneficiary
      or
      trust, located at such address, as the Executive may designate by notice to
      the
      Employer from time to time or, if the Executive fails to give notice to the
      Employer of such a beneficiary, the Executive's estate. Notwithstanding the
      preceding sentence, the Employer will have no duty, in any circumstances, to
      attempt to open an estate on behalf of the Executive, to determine whether
      any
      beneficiary designated by the Executive is alive or to ascertain the address
      of
      any such beneficiary, to determine the existence of any trust, to determine
      whether any person or entity purporting to act as the Executive's personal
      representative (or the trustee of a trust established by the Executive) is
      duly
      authorized to act in that capacity, or to locate or attempt to locate any
      beneficiary, personal representative, or trustee.

     

    (a)           
      Termination by the
      Executive for Good Reason.  If the Executive terminates this
      Agreement for good reason, the Employer will pay the Executive the Executive's
      Salary for the remainder of the term of this Agreement (the "Remainder Term")
      as
      and when such salary would otherwise become due and
      payable.  Notwithstanding the preceding sentence, if the Executive
      obtains other employment or becomes self-employed as a consultant or otherwise
      prior to the end of the Remainder Term, he must promptly give notice thereof
      to
      the Employer, and the Salary payments under this Agreement for any period after
      the Executive obtains such other employment will be reduced by the amount of
      the
      cash compensation received and to be received by the Executive from the
      Executive's other employment for services performed during such
      period.

     

    (b)           
      Termination by the
      Employer for Cause or Termination by Executive without Good
      Reason.  If the Executive terminates his employment for any
      reason other than for good reason (as defined in Section 6.3), the Executive
      will be entitled to receive his Salary onlythrough
      the date such termination is effective and any unexercised vested options for
      Parent Common Stock and rights to receive any additional options for Parent
      Common Stock shall be cancelled.  If the Employer terminates this
      Agreement for cause, the Executive will be entitled to receive his Salary
      through the date such termination is effective and any option for Parent Common
      Stock issued in any year subsequent to Employment Year 1 shall be
      cancelled.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    (c)           
      Termination upon
      Death/Expiration.  If this Agreement is terminated because of
      the Executive's death, the Executive will be entitled to receive his Salary
      through the end of the calendar month in which his death occurs and any right
      to
      receive any additional options for Parent Stock shall be
      cancelled.  If this Agreement expires after the performance for the
      full term hereof and the Employer and Employee can not agree on the terms for
      the extension of this Agreement or a new employment agreement to replace this
      Agreement, and the Employee terminates employment, then in such event the
      Employee will be entitled to receive him salary for a period of three (3) months
      following the date of such termination as severance pay.

     

    (d)           
      Termination Upon
      Disability.  If
      this Agreement is terminated by
      either party as a result of the Executive's disability, as determined under
      Section 6.4, the Employer will pay the Executive his Salary
      through the remainder of the
      calendar month during which such termination is effective and any right to
      receive any additional options for Parent Stock shall be
      cancelled.

     

    (e)           
      Benefits.  The
      Executive's accrual of, or participation in plans providing for, the Benefits
      will cease at the effective date of the termination of this Agreement, and
      the
      Executive will be entitled to accrued Benefits pursuant to such plans only
      as
      provided in such plans.  The Executive will only receive, as part of
      his termination pay pursuant to this Section 6, any payment or other
      compensation for any vacation, holiday, sick leave, or other leave unused on
      the
      date the notice of termination is given under this Agreement if the termination
      is due to the death or disability of Executive or termination by the Executive
      for Good Reason per Section 6.3.

     

    6.6           
      TERMINATION DAMAGES PAYABLE BY EXECUTIVE

     

    The
      Executive and the Employer agree that it is impossible to determine with any
      reasonable accuracy the amount of the prospective damages to the Employer if
      the
      Executive's employment is terminated for any reason other than death, disability
      or for good reason (as defined in Section 6.3) by the Executive (such
      termination referred to in this paragraph as "Executive Termination Without
      Cause").  In the event of any Executive Termination Without Cause, the
      Executive agrees to pay as liquidated damages to the Employer an amount equal
      as
      follows:

     

    (a)           
      If the Executive Termination Without Cause occurs during Employment Year 1,
      then
      the Executive shall immediately pay to the Employer an amount equal to
      $487,680.00.

     

    (b)           
      If the Executive Termination Without Cause occurs during Employment Year 2,
      then
      the Executive shall immediately pay to the Employer an amount equal to
      $390,144.00.

     

    (c)           
      If the Executive Termination Without Cause occurs during Employment Year 3,
      then
      the Executive shall immediately pay to the Employer an amount equal to
      $292,608.00.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (d)           
      If the Executive Termination Without Cause occurs during Employment Year 4,
      then
      the Executive shall immediately pay to the Employer an amount equal to
      $195,072.00.

     

    (e)           
      If the Executive Termination Without Cause occurs during Employment Year 5,
      then
      the Executive shall immediately pay to the Employer an amount equal to
      $97,536.00.

     

    7.           
      NON-DISCLOSURE COVENANT; EXECUTIVE INVENTIONS; NON-COMPETE

     

    7.1           
      ACKNOWLEDGMENTS BY THE EXECUTIVE

     

    The
      Executive acknowledges that (a) during the Employment Period and his prior
      employment period with the Employer and as a part of his employment with the
      Employer, the Executive was and will continue to be afforded access to
      Confidential Information; (b) public disclosure of such Confidential
      Information could have an adverse effect on the Employer and its business;
      (c) because the Executive possesses substantial technical expertise and
      skill with respect to the Employer's business, the Employer desires to obtain
      exclusive ownership of each Executive Invention, and the Employer will be at
      a
      substantial competitive disadvantage if it fails to acquire exclusive ownership
      of each Executive Invention; (d) Employer has required that the Executive
      make the covenants in this Section 7 as a condition to the stock purchase
      pursuant to the Stock Purchase Agreement and the continued employment of the
      Executive under this Employment Agreement; and (e) the provisions of this
      Section 7 are reasonable and necessary to prevent the improper use or disclosure
      of Confidential Information and to provide the Employer with exclusive ownership
      of all Executive Inventions.

     

    7.2           
      AGREEMENTS OF THE EXECUTIVE

     

    In
      consideration of the compensation and benefits to be paid or provided to the
      Executive by the Employer under this Agreement, the Executive covenants as
      follows:

     

    (a)           
      Confidentiality.

     

    
      	
               

            	
              (i)

            	
              During
                and following the Employment Period, the Executive will hold in confidence
                the Confidential Information and will not disclose it to any person
                except
                with the specific prior written consent of the Employer or except
                as
                otherwise expressly permitted by the terms of this Agreement.
                

            

    

     

    
      	
               

            	
              (ii)

            	
              Any
                trade secrets of the Employer will be entitled to all of the protections
                and benefits under any applicable federal or state trade secret law
                and
                any other applicable law. If any information that the Employer deems
                to be
                a trade secret is found by a court of competent jurisdiction not
                to be a
                trade secret for purposes of this Agreement, such information will,
                nevertheless, be considered Confidential Information for purposes
                of this
                Agreement. The Executive hereby waives any requirement that the Employer
                submits proof of the economic value of any trade secret or posts
                a bond or
                other security. 

            

    

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              (iii)

            	
              None
                of the foregoing obligations and restrictions applies to any part
                of the
                Confidential Information that the Executive demonstrates was or became
                generally available to the public other than as a result of a disclosure
                by the Executive.

            

    

     

    
      	
               

            	
              (iv)

            	
              The
                Executive will not remove from the Employer's premises (except to
                the
                extent such removal is for purposes of the performance of the Executive's
                duties at home or while traveling, or except as otherwise specifically
                authorized by the Employer) any document, record, notebook, plan,
                model,
                component, device, or computer software or code, whether embodied
                in a
                disk or in any other form (collectively, the "Proprietary Items").
                The
                Executive recognizes that, as between the Employer and the Executive,
                all
                of the Proprietary Items, whether or not developed by the Executive,
                are
                the exclusive property of the Employer. Upon termination of this
                Agreement
                by either party, or upon the request of the Employer during the Employment
                Period, the Executive will return to the Employer all of the Proprietary
                Items in the Executive's possession or subject to the Executive's
                control,
                and the Executive shall not retain any copies, abstracts, sketches,
                or
                other physical embodiment of any of the Proprietary Items.
                

            

    

     

    (b)           
      Executive
      Inventions.  Each Executive Invention will belong exclusively
      to the Employer.  The Executive acknowledges that all of the
      Executive's writing, works of authorship, and other Executive Inventions are
      works made for hire and the property of the Employer, including any copyrights,
      patents, or other intellectual property rights pertaining thereto. If it is
      determined that any such works are not works made for hire, the Executive hereby
      assigns to the Employer all of the Executive's right, title, and interest,
      including all rights of copyright, patent, and other intellectual property
      rights, to or in such Executive Inventions. The Executive covenants that he
      will
      promptly:

     

    
      	
               

            	
              (i)

            	
              disclose
                to the Employer in writing any Executive Invention;
                

            

    

     

    
      	
               

            	
              (ii)

            	
              assign
                to the Employer or to a party designated by the Employer, at the
                Employer's request and without additional compensation, all of the
                Executive's right to the Executive Invention for the United States
                and all
                foreign jurisdictions; 

            

    

     

    
      	
               

            	
              (iii)

            	
              execute
                and deliver to the Employer such applications, assignments, and other
                documents as the Employer may request in order to apply for and obtain
                patents or other registrations with respect to any Executive Invention
                in
                the United States and any foreign jurisdictions;
                

            

    

     

    
      	
               

            	
              (iv)

            	
              sign
                all other papers necessary to carry out the above obligations; and
                

            

    

     

    
      	
               

            	
              (v)

            	
              give
                testimony and render any other assistance in support of the Employer's
                rights to any Executive Invention. 

            

    

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    7.3           
      DISPUTES OR CONTROVERSIES

     

    The
      Executive recognizes that should a dispute or controversy arising from or
      relating to this Agreement be submitted for adjudication to any court,
      arbitration panel, or other third party, the preservation of the secrecy of
      Confidential Information may be jeopardized. All pleadings, documents,
      testimony, and records relating to any such adjudication will be maintained
      in
      secrecy and will be available for inspection by the Employer, the Executive,
      and
      their respective attorneys and experts, who will agree, in advance and in
      writing, to receive and maintain all such information in secrecy, except as
      may
      be limited by them in writing.

     

    8.           
      NON-COMPETITION AND NON-INTERFERENCE

     

    8.1           
      ACKNOWLEDGMENTS BY THE EXECUTIVE

     

    The
      Executive acknowledges that:  (a) the services to be performed by
      him under this Agreement are of a special, unique, unusual, extraordinary,
      and
      intellectual character; (b) the Employer's business is currently regional
      in scope and its products are marketed or may be marketed throughout the States
      of Mississippi, Alabama, Georgia, Tennessee, Florida, Kentucky, Louisiana,
      North
      Carolina, South Carolina, Texas, Arizona, Colorado, Kansas, New Mexico and
      Oklahoma (the "Restricted Area"); (c) the Employer competes with other
      businesses that are or could be located in any part of the Restricted Area;
      (d) the Employer has required that the Executive make the covenants set
      forth in this Section 8 as a condition to the stock purchase under the Stock
      Purchase Agreement and the continued employment of the Executive under this
      Agreement; and (e) the provisions of this Section 8 are reasonable and
      necessary to protect the Employer's business.

     

    8.2           
      COVENANTS OF THE EXECUTIVE

     

    In
      consideration of the acknowledgments by the Executive, and in consideration
      of
      the compensation and benefits to be paid or provided to the Executive by the
      Employer, as a material inducement to the Employer to enter into and perform
      its
      obligations under this Agreement, and in order to preserve and protect the
      trade
      secrets and proprietary, confidential information of the Employer and XFone
      Companies, the Executive covenants as follows:

     

    (a)           
      For the greater of (i) 5 years from the date of this Agreement or (ii) the
      Employment Period and for a period of two (2) years following the date that
      the
      employment by the Employer (or an affiliate thereof) of the Executive ends
      (the
      "Noncompetition
      Period"), the Executive will not, directly or indirectly, either for
      himself or for any partnership, limited liability company, individual,
      corporation, joint venture or any other entity "participate in" (as defined
      below) any business (including, without limitation, any division, group or
      franchise of a larger organization) which engages in the "Telecommunications
      Business" in the States of Mississippi, Alabama, Georgia, Tennessee, Florida,
      Kentucky, Louisiana, North Carolina, South Carolina, Texas, Arizona, Colorado,
      Kansas, New Mexico and Oklahoma (the "Restricted Area").  For purposes
      of this Agreement, "Telecommunications
      Business" shall mean the business of providing any type of
      telecommunication services or internet access services to any person or customer
      within the Restricted Area, including, without limitation, local, long distance,
      broadband, dial up data services, wireless, DSL, Voice-over-Internet Protocol
      (VoIP) and anyother
      service or product being offered or provided by the Employer or any of the
      XFone
      Companies.  For purposes of this Agreement, the term "participate in"
      shall include, without limitation, having any direct or indirect interest in
      any
      corporation, partnership, limited liability company, joint venture or other
      entity, whether as a sole proprietor, owner, shareholder, partner, member,
      manager, joint venturer, creditor or otherwise, or rendering any direct or
      indirect service or assistance to any individual corporation, partnership,
      limited liability company, joint venture and other business entity (whether
      as a
      director, officer, manager, supervisor, employee, agent, consultant or
      otherwise).  Notwithstanding the foregoing, nothing in this Section
      8.2 shall prohibit the Executive from owning not more than five percent (5%)
      of
      the debt or equity securities of a publicly traded corporation which may compete
      with the Employer or XFone Companies.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    (b)           
      During the Noncompetition Period, and in order to preserve and protect the
      trade
      secrets and proprietary, confidential information of the Employer or XFone
      Companies after the Effective Date, neither the Executive shall not (i) induce
      or attempt to induce any employee of the Employer or XFone Companies to leave
      the employ of the Employer or XFone Companies, or in any way interfere with
      the
      relationship between the Employer or XFone Companies and any employee thereof,
      (ii) hire directly or through another entity any individual employed by the
      Employer or XFone Companies, or (iii) induce or attempt to induce any customer,
      supplier, licensee, distributor or other business relation of the Employer
      or
      XFone Companies to cease doing business with the Employer or XFone Companies,
      or
      in any way interfere with the relationship between any such customer, supplier,
      licensee, distributor or business relation and the Employer or XFone Companies
      (including, without limitation, making any negative statements or communications
      concerning the Employer or XFone Companies).

     

    (c)           
      If, at the time of enforcement of this Section 8.2, a court shall hold that
      the
      duration, scope or area restrictions stated herein are unreasonable under
      circumstances then existing, the parties hereto agree that the maximum duration,
      scope or area reasonable under such circumstances shall be substituted for
      the
      stated duration, scope or area and that the court shall be allowed to revise
      the
      restrictions contained herein to cover the maximum period, scope and area
      permitted by law. The Executive agrees that the restrictions contained in this
      Section 8.2 are reasonable.

     

    (d)           
      If at any time during the Noncompetition Period the Executive desires to
      participate in an activity that he or he believes might be prohibited by this
      Section 8.2, such person may request in writing (a "Clarification
      Request") a determination by Employer as to whether such proposed
      activity would violate this Section 8.2.  The Employer shall respond
      in writing to such Clarification Request (a "Clarification
      Response") within thirty (30) days of receipt thereof from the requesting
      person.

     

    If
      any
      covenant in this Section 8.2 is held to be unreasonable, arbitrary, or against
      public policy, such covenant will be considered to be divisible with respect
      to
      scope, time, and geographic area, and such lesser scope, time, or geographic
      area, or all of them, as a court of competent jurisdiction may determine to
      be
      reasonable, not arbitrary, and not against public policy, will be effective,
      binding, and enforceable against the Executive.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    The
      period of time applicable to any covenant in this Section 8.2 will be extended
      by the duration of any violation by the Executive of such covenant.

     

    The
      Executive will, while the covenant under this Section 8.2 is in effect, give
      notice to the Employer, within ten days after accepting any other employment,
      of
      the identity of the Executive's employer. The Employer may notify such employer
      that the Executive is bound by this Agreement and, at the Employer's election,
      furnish such employer with a copy of this Agreement or relevant portions
      thereof.

     

    9.           
      GENERAL PROVISIONS

     

    9.1           
      INJUNCTIVE RELIEF AND ADDITIONAL REMEDY

     

    The
      Executive acknowledges that the injury that would be suffered by the Employer
      as
      a result of a breach of the provisions of this Agreement (including any
      provision of Sections 7 and 8) would be irreparable and that an  award
      of monetary damages to the Employer for such a breach would be an inadequate
      remedy. Consequently, the Employer will have the right, in addition to any
      other
      rights it may have, to obtain injunctive relief to restrain any breach or
      threatened breach or otherwise to specifically enforce any provision of this
      Agreement, and the Employer will not be obligated to post bond or other security
      in seeking such relief.  Without limiting the Employer's rights under
      this Section 9 or any other remedies of the Employer, if the Executive breaches
      any of the provisions of Section 7 or 8, the Employer will have the right to
      cease making any payments otherwise due to the Executive under this
      Agreement.

     

    9.2           
      COVENANTS OF SECTIONS 7 AND 8 ARE ESSENTIAL AND INDEPENDENT
      COVENANTS

     

    The
      covenants by the Executive in Sections 7 and 8 are essential elements of this
      Agreement, and without the Executive's agreement to comply with such covenants,
      the Employer would not have consummated the stock purchase under the Stock
      Purchase Agreement and the Employer would not have entered into this Agreement
      or employed or continued the employment of the Executive. The Employer and
      the
      Executive have independently consulted their respective counsel and have been
      advised in all respects concerning the reasonableness and propriety of such
      covenants, with specific regard to the nature of the business conducted by
      the
      Employer.

     

    The
      Executive's covenants in Sections 7 and 8 are independent covenants and the
      existence of any claim by the Executive against the Employer under this
      Agreement or otherwise, or against the Employer, will not excuse the Executive's
      breach of any covenant in Section 7 or 8.

     

    If
      the
      Executive's employment hereunder expires or is terminated, this Agreement will
      continue in full force and effect as is necessary or appropriate to enforce
      the
      covenants and agreements of the Executive in Sections 7 and 8.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    9.3           
      REPRESENTATIONS AND WARRANTIES BY THE EXECUTIVE

     

    (a)           
      The Executive represents and warrants to the Employer that the execution and
      delivery by the Executive of this Agreement do not, and the performance by
      the
      Executive of the Executive's obligations hereunder will not, with or without
      the
      giving of notice or the passage of time, or both: (a) violate any judgment,
      writ, injunction, or order of any court, arbitrator, or governmental agency
      applicable to the Executive; or (b) conflict with, result in the breach of
      any provisions of or the termination of, or constitute a default under, any
      agreement to which the Executive is a party or by which the Executive is or
      may
      be bound.

     

    (b)           
      The Employer represents and warrants to the Executive that the execution and
      delivery by the Employer of this Agreement do not, and the performance by the
      Employer of the Employer's obligations hereunder will not, with or without
      the
      giving of notice or the passage of time, or both: (a) violate any judgment,
      writ, injunction, or order of any court, arbitrator, or governmental agency
      applicable to the Employer; or (b) conflict with, result in the breach of
      any provisions of or the termination of, or constitute a default under, any
      agreement to which the Employer is a party or by which the Employer is or may
      be
      bound.

     

    9.4           
      OBLIGATIONS CONTINGENT ON PERFORMANCE

     

    The
      obligations of the Employer hereunder, including its obligation to pay the
      Compensation provided for herein, are contingent upon the Executive's
      performance of the Executive's obligations hereunder.

     

    9.5           
      WAIVER

     

    The
      rights and remedies of the parties to this Agreement are cumulative and not
      alternative. Neither the failure nor any delay by either party in exercising
      any
      right, power, or privilege under 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 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.

     

    9.6           
      BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED

     

    This
      Agreement shall inure to the benefit of, and shall be binding upon, the parties
      hereto and their respective successors, assigns, heirs, and legal
      representatives, including any entity with which the Employer may merge or
      consolidate or to which all or substantially all of its assets may be
      transferred. The duties and covenants of the Executive under this Agreement,
      being personal, may not be delegated.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    9.7           
      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 facsimile (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 facsimile numbers set forth below
      (or to such other addresses and facsimile numbers as a party may designate
      by
      notice to the other parties):

     

    If
      to
      Employer:

     

    c/o
      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

            

    

     

    with
      a
      copy to:

     

    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 the
      Executive:

     

    Brad
      Worthington

    3517
      158th Street

    Lubbock,
      Texas 79423

    Telephone:           806-441-8200

    Facsimile:              806-788-3398

    
      	
               

            	
              Email:

            	
              bradw@ntscom.com
                

            

    

     

    9.8           
      ENTIRE AGREEMENT; AMENDMENTS

     

    This
      Agreement, the Stock Purchase Agreement, and the documents executed in
      connection with the Stock Purchase Agreement, contain the entire agreement
      between the parties with respect to the subject matter hereof and supersede
      all
      prior agreements and understandings, oral or written, between the parties hereto
      with respect to the subject matter hereof. ThisAgreement
      may not be amended orally, but only by an agreement in writing signed by the
      parties hereto.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    9.9           
      GOVERNING LAW

     

    This
      Agreement will be governed by the laws of the State of Texas without regard
      to
      conflicts of laws principles.

     

    9.10           
      JURISDICTION

     

    Any
      action or proceeding seeking to enforce any provision of, or based on any right
      arising out of, this Agreement may be brought against either of the parties
      in
      the courts of the State of Texas, or, if it has or can acquire jurisdiction,
      in
      any of the United States District Courts in Texas, 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 either party anywhere in the
      world.

     

    9.11           
      SECTION HEADINGS, CONSTRUCTION

     

    The
      headings of Sections in this Agreement are provided for convenience only and
      will not affect its construction or interpretation. All references to "Section"
      or "Sections" refer to the corresponding Section or Sections of this Agreement
      unless otherwise specified. All words used in this Agreement will be construed
      to be of such gender or number as the circumstances require. Unless otherwise
      expressly provided, the word "including" does not limit the preceding words
      or
      terms.

     

    9.12           
      SEVERABILITY

     

    If
      any
      provision of this Agreement is held invalid or unenforceable by any court of
      competent jurisdiction, the other provisions of this Agreement will remain
      in
      full force and effect. Any provision of this Agreement held invalid or
      unenforceable only in part or degree will remain in full force and effect to
      the
      extent not held invalid or unenforceable.

     

    9.13           
      COUNTERPARTS

     

    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.

     

    9.14           
      WAIVER OF JURY TRIAL

     

    THE
      PARTIES HERETO HEREBY WAIVE A JURY TRIAL IN ANY LITIGATION WITH RESPECT TO
      THIS
      AGREEMENT.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    9.15           
      PIGGYBACK REGISTRATION RIGHTS

     

    On
      or
      after the Effective Date, and continuing until this Agreement expires or is
      earlier terminated, whenever the Parent proposes to file a registration
      statement under the Securities Act of 1933, as amended, to register any shares
      of the Parent Common Stock for sale in a secondary offering, and the
      registration form to be used may be used for the registration of the restricted
      Parent Common Stock the Executive may hold as a result of exercising any options
      granted hereunder or the Parent Common Stock underlying the options which the
      Executive holds (a "Piggyback Registration"), the Company will give prompt
      written notice to the Executive of its intention to effect such a registration
      and will include in such registration such of the Employee’s registerable
      securities of the Parent as the Executive has requested be included in such
      Piggyback Registration by notice to the Parent within 15 days after the receipt
      of the Parent’s notice.  The Parent will pay the registration expenses
      with respect to such Piggyback Registrations.  The Executive shall
      fully cooperate by giving such information as is required for such Piggyback
      Registration.

     

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

     

    
      
        	 
                
                EMPLOYER:

              	 	 	 
                
                EXECUTIVE:
                  

              	 
	 	 	 	 	 
	NTS
                Communications, Inc.	 	 	 	 
	 	 	 	 	 
	
                /s/
                  Guy
                  Nissenson

              	 	 	
                /s/
                  Brad
                  Worthington

              	 
	
                Guy
                  Nissenson

              	 	 	
                Brad
                  Worthington

              	 
	
                 Chairman

              	 	 	
                Individually
                  

              	 

      

    

     

    
      	
               

            	
               

            

    

     

    
      
        
        

      

      
        -16-ex10115.htm

    

      Exhibit
        10.115

      FREE
        CASH FLOW PARTICIPATION AGREEMENT

       

      This
        Cash
        Flow Participation Agreement (this "Agreement") is executed as of February
        26,
        2008 by XFone, Inc., a Nevada corporation ("XFone"), and NTS Holdings, Inc.,
        a
        Texas corporation ("Holdings") to be effective on the date of consummation
        of
        the transactions contemplated by the NTS Stock Purchase Agreement (as defined
        herein) (the “Effective Date”).

       

      RECITALS

       

      Holdings
        and XFone are joint venturers in connection with the acquisition of NTS
        Communications, Inc. (“NTS”).  Concurrently with the execution and
        delivery of this Agreement, XFone is purchasing the issued and outstanding
        common stock of NTS pursuant to and in accordance with that certain Stock
        Purchase Agreement dated August 22, 2007, as amended, among NTS, XFone, and
        the
        shareholders of the NTS which are parties thereto (the "NTS Stock Purchase
        Agreement").  XFone and Holdings’ entering this Agreement is a
        condition to the fulfillment of their joint venture for the consummation
        of the
        stock acquisition of the stock of NTS.  XFone and Holdings wish to
        enter into this free cash flow participation arrangement upon the terms and
        conditions set forth in this Agreement.

       

      AGREEMENT

       

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

       

      1.           
        DEFINITIONS

       

      Capitalized
        terms not expressly defined
        in this Agreement shall have the meanings ascribed to them in the NTS Stock
        Purchase Agreement.  For the purposes of this Agreement, the
        following terms have the meanings specified or referred to in this
        Section 1.

       

      "Agreement"--this
        Cash Flow Participation Agreement, as amended from time to time.

       

      “Amortization
        Expense”– the cumulative amortization expense of the US Operations as
        determined by XFone’s independent auditors in accordance with GAAP and
        consistent with the financial statements for the US Operations, beginning
        with
        the Effective Date through the end of the fiscal year in which the Effective
        Date occurred and each fiscal year thereafter.

       

      “Capital
        Expenditures”– the cumulative capital
        expenditures of the
        US Operations as determined by XFone’s independent auditors in accordance with
        GAAP and consistent with the financial statements for the US Operations,
        beginning with the Effective Date through the end of the fiscal year in
        which the Effective Date occurred and each fiscal year thereafter.

       

      “Capitalized
        Expenses”–
the
        cumulative expenses of the US
        Operations which are capitalized rather than expensed at the time such expenses
        are incurred as determined by XFone’s independent auditors in accordance with
        GAAP and consistent with the financial statements for the US Operations,
        beginning with the Effective Date through the end of the fiscal year in
        which the Effective Date occurred and each fiscal year thereafter.

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      “Change
        in Working Capital”–
the cumulative
        positive or
        negative change in Working Capital of the US Operations as determined by
        XFone’s
        independent auditors in accordance with GAAP and consistent with the financial
        statements for the US Operations, beginning with the Effective Date
        through the end of the fiscal year in which the Effective Date occurred and
        each fiscal year
        thereafter.

       

      “Current
        Assets”shall
        mean the sum of those accounts
        required to be included in the determination of current assets in accordance
        with GAAP and consistent with the financial
statementsfor
        the US Operations; provided that the
        foregoing accounts
        shall be adjusted appropriately to exclude intercompany or similar duplicating
        accounts.

       

      “Current
        Liabilities”shall
        mean all the liabilities of the US
        Operations required to be included in the determination of current liabilities
        in accordance with GAAP and consistent with the financial statements for
        the US
        Operations.

       

      “Depreciation
        Expense”– the cumulative
        depreciation expense (other than depreciation attributable to capitalized
        leases) of the US Operations as determined by XFone’s independent auditors in
        accordance with GAAP and consistent with the financial statements for the
        US
        Operations, beginning with the Effective Date through the end of the
        fiscal year in which the Effective Date occurred and
        each fiscal year
        thereafter.

       

      "Effective
        Date"--the date stated in the first paragraph of the
        Agreement.

       

      “Excess
        Free Cash Flow”– The amount by which the Free Cash Flow of the US
        Operations exceeds (a) the Invested Capital plus (b) the cumulative Excess
        Free
        Cash Flow in all prior years for which a Participation Amount has previously
        been paid.

       

      "Excess
        Free Cash Flow Date"– the date at which Excess Free Cash Flow shall have
        been achieved by the US Operations.

       

      "Fiscal
        Year"– XFone's fiscal year, as it exists on the Effective Date or as
        changed from time to time.

       

      "Free
        Cash Flow" –
The cumulative
        cash flow of the US Operations as determined by XFone’s
        independent auditors according to the following formula:  Net Income
plus
        Depreciation Expense plus Amortization
        Expense plus/minus Change
        in
        Working Capital minus Capital
        Expenditures minus Capitalized
        Expenses plus
        Other Non-Cash Expenses minus Other
        Non-Cash
        Income, plus any Sale Proceeds.

       

      “Future
        Acquisitions”– any and all acquisitions and related transactions made by
        XFone, directly or indirectly through its Subsidiaries which become a part
        of
        its US Operations, including any acquisition structured as a merger,
        consolidation, recapitalization, purchase or sale of assets or capital stock,
        share exchange, or any similar transaction or business combination made by
        XFone
        at any time following the Stock Purchase.

       

      “GAAP”means
        United States generally accepted
        accounting principles as in effect from time to time, consistently
        applied.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      “Invested
        Capital”– the
        invested capital of XFone determined as the sum of the following:  1)
        the Purchase Price and Transaction Costs of the Stock Purchase; 2) the Purchase
        Price and Transaction Costs of all Future Acquisitions; and 3) through the
        Excess Free Cash Flow Date, an annual return on XFone’s Invested Capital of
        eight percent (8%) per year.

       

      “Net
        Income”– The cumulative net
        income/loss of the US Operations as determined by XFone’s independent auditors
        in accordance with GAAP and consistent with the financial statements for
        the US
        Operations, beginning with the Effective Date through the end of the
        fiscal year in which the Effective Date occurred and
        each fiscal year
        thereafter.

       

       “Other
        Non-Cash Expenses”– the
        cumulative non-cash expenses of the US Operations other than
        depreciation  and amortization expenses as determined by XFone’s
        independent auditors in accordance with GAAP and consistent with the financial
        statements for the US Operations, beginning with the Effective Date
        through the end of the fiscal year in which the Effective Date occurred and
        each fiscal year
        thereafter.

       

      “Other
        Non-Cash Income”-- the
        cumulative non-cash income of the US Operations as determined by XFone’s
        independent auditors in accordance with GAAP and consistent with the financial
        statements for the US Operations, beginning with the Effective Date
        through the end of the fiscal year in which the Effective Date occurred and
        each fiscal year
        thereafter.

       

      "XFone
        Common Stock" shall mean shares of the common stock of
        XFone.

       

      "Person"--any
        individual, corporation (including any non-profit corporation), general or
        limited partnership, limited liability company, joint venture, estate, trust,
        association, organization, or governmental body.

       

      "Purchase
        Price"— shall mean the aggregate amount payable by XFone to any Person in
        connection with the closing of the Stock Purchase or any Future Acquisition(s),
        (whether in the form of cash, stock, options, warrants, or any combination
        thereof) as set forth in the definitive agreement or any documents executed
        in
        connection therewith, including any employment, consulting or non-compete
        agreements applicable to such acquisition; provided that for purposes of
        valuing
        any non-cash consideration, such consideration shall be valued at the value
        it
        is assigned in the definitive agreement for such transaction, or if no value
        is
        assigned for options or warrants, then they shall be valued as of the closing
        date pursuant to the Black-Scholes option-pricing model, assuming a 90%
        volatility of the underlying security.

       

      “Sale
        Proceeds”– means the net proceeds when received of a bona fide sale of
        any part but not all of the US Operations to a third party not affiliated
        with
        XFone or Holdings and, to the extent such Sale Proceeds creates the right
        to a
        Participation Amount under this Agreement, such Participation Amount shall
        be
        paid in the form received by XFone from the acquiring third party in connection
        with such sale.

       

      "Stock
        Purchase"— the contemplated transactions pursuant to the NTS Stock
        Purchase Agreement.

       

      “Subsidiaries”–
        shall mean, with respect to any
        Person (the “parent”) at any date, any corporation, limited liability company,
        partnership, association or other entity the accounts of which would be
        consolidated with those of the parent in the parent’s consolidated
        financialstatements
        if such financial statements
        were prepared in accordance with GAAP as of such date, as well as any other
        corporation, limited liability company, partnership, association or other
        entity
        of which securities or other ownership interests representing more than 50%
        of
        the equity securities or more than 50% of the voting securities or, in the
        case
        of a partnership, more than 50% of the general partnership interests are,
        as of
        such date, owned, controlled or held, directly or indirectly, by one or more
        of
        the parent and its Subsidiaries.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

      “Transaction
        Costs”– all costs
        and expenses (including but not limited to legal fees) incurred by XFone
        in
        connection with the Stock Purchase and/or any Future Acquisitions.

       

      “US
        Operations”– the combined
        United States domestic operations of XFone USA, Inc. and its Subsidiaries
        and
        NTS Communications, Inc. and its Subsidiaries together with any Future
        Acquisitions.

       

      “Working
        Capital”means the
        positive difference between the
        Current Assetsof the US
        Operations and the
Current
Liabilitiesof
        the US Operations.

       

      2.           
        FREE CASH FLOW PARTICIPATION RIGHTS.

       

      (a)           
        General.  Upon
        the occurrence of the Excess Free Cash Flow Date, Holdings will be eligible
        to
        receive for the Fiscal Year in which the Excess Free Cash Flow Date occurs
        and
        each Fiscal Year thereafter five percent (5%) of the Excess Free Cash Flow
        of US
        Operations as calculated by the Company’s certified public accountant (the
        "Participation Amount").  The Participation Amount will be payable to
        Holdings no later than thirty (30) calendar days following completion of
        audited
        financial statements for XFone, Inc. for each such Fiscal Year.  The
        Participation Amount shall be subject to all applicable withholding and other
        applicable taxes as required by law.

       

      (b)           
        Example.  Assume
        XFone has Invested Capital of $50 million (comprised of Purchase Price of
        $42
        million and Transaction Costs of $8 million (bonuses, options, and other
        transaction costs), that there have been no Future Acquisitions or Sale Proceeds
        and the Free Cash Flow of the US Operations is $20 million per
        year.  At the end of Year 1, XFone’s Invested Capital would be $54
        million ($50 million x 1.08).  Since the Invested Capital exceeds the
        $20 million Free Cash Flow, there is no Excess Free Cash Flow from which
        a
        Participation Amount would be required hereunder.  Likewise, in Years
        2 and 3 when XFone’s Invested Capital is equivalent to $58.32 million and $63
        million, respectively, no Participation Amount would be triggered since the
        Free
        Cash Flow is only $40 million for Year 2 and $60 million for Year
        3.  However, in Year 4 when XFone’s Invested Capital is equivalent to
        $68 million and the US Operations’ Free Cash Flow is $80 million, Holdings would
        be entitled to a Participation Amount based on the Excess Free Cash Flow
        of $12
        million.  Accordingly, for Year 4 Holdings would be eligible to
        receive a Participation Amount of $600,000 representing 5% of the Excess
        Free
        Cash Flow.  Beginning in year 5 XFone would no longer accrue an 8%
        return on its Invested Capital.  If the Free Cash Flow in Year 5 is
        $20 million, then the Excess Free Cash Flow would be $20 million ($100M Free
        Cash Flow - $68M Invested Capital - $12M Excess Free Cash Flow from prior
        years)
        and Holdings would be entitled to a Participation Amount of $1,000,000
        representing 5% of the Excess Free Cash Flow.  If the Free Cash Flow
        in Year 6 is a negative $1 million and the Free Cash Flow in Year 7 is $5
        million and there is an acquisition in Year 7 equal to $1 million, then Holdings
        would not be entitled to a Participation Amount in Year 6 since the Excess
        Free
        Cash Flow is a negative $1 million ($99M Free Cash Flow - $68MInvested
        Capital - $32M Excess Free Cash Flow from Prior Years), but Holdings would
        be
        entitled to a Participation Amount in Year 7 of $150,000 representing 5%
        of the
        Excess Free Cash Flow in Year 7 of $3 million ($104M Free Cash Flow - $69M
        Invested Capital - $32M Excess Free Cash Flow from Prior Years).

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

       

      3.           
        TERM OF AGREEMENT.

       

      (a)           
        General.  The
        term of Holdings’ right to participate in the Excess Free Cash Flow of the US
        Operations under this Agreement will be perpetual, beginning in the fiscal
        year
        of the Excess Free Cash Flow Date and extending in perpetuity, unless this
        Agreement is earlier terminated as provided in subparagraph 3(b)
        hereof.

       

      (b)           
        Termination Upon
        Sale
        of US Operations and Buyout.  In connection with a bona fide
        sale of the entire US Operations, whether structured as a merger, consolidation,
        recapitalization, purchase or sale of assets or capital stock, share exchange,
        or any similar transaction or business combination pursuant to which the
        US
        Operations are sold by XFone (as used in this subparagraph (b), a “Sale”) to a
        third party purchaser not affiliated with XFone or Holdings (as used in this
        subparagraph (b), a “Purchaser”), this Agreement may, at the option of the
        Purchaser:

       

      1)
        be
        retained by the Purchaser;

       

      2)
        be
        terminated by the Purchaser, but only under the following circumstances and
        upon
        the following buyout terms:

       

      (i)  If
        the Sale involves the
        Sale of the US Operations only, then the Purchaser may terminate this Agreement
        upon the Purchaser’s buyout of this Agreement by paying to Holdings an amount
        equal to five percent (5%) of the purchase price to be paid for the US
        Operations as set forth in the definitive agreement governing such Sale with
        such amount paid in the same form as the purchase price being received by
        XFone,
        Inc.

       

      (ii)  If
        the Sale involves
        the sale of XFone, Inc. or substantially all the assets of XFone, Inc., then
        the
        Purchaser may terminate this Agreement upon the Purchaser’s buyout of this
        Agreement by paying to Holdings an amount as calculated pursuant to the
        following formula:  ((Revenues of US Operations for the fiscal year
        immediately preceding the year in which the Sale occurs divided by Revenues
        of XFone, Inc. for fiscal year immediately preceding the year in which the
        Sale
        occurs) times
        (five percent (5%) of the purchase of XFone, Inc. as set forth in the definitive
        agreement governing such Sale)), with such amount paid in the same form as
        the
        purchase price being received by XFone, Inc.

       

      4.           
        WAIVER

       

      The
        rights and remedies of the parties to this Agreement are cumulative and not
        alternative. Neither the failure nor any delay by either party in exercising
        any
        right, power, or privilege under 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 can be discharged by one party, in whole or
        in
        part, by a waiver or renunciation ofthe
        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.

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

       

      5.           
        BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED

       

      This
        Agreement shall inure to the benefit of, and shall be binding upon, the parties
        hereto and their respective successors, assigns, heirs, and legal
        representatives, including any entity with which XFone may merge or consolidate
        or to which all or substantially all of its assets may be transferred. The
        duties and covenants of Holdings under this Agreement, being personal, may
        not
        be delegated.

       

      6.           
        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 facsimile (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 facsimile numbers set forth
        below
        (or to such other addresses and facsimile numbers as a party may designate
        by
        notice to the other parties):

       

      If
        to
        XFone:

       

      c/o
        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

              

      

       

      with
        a
        copy to:

       

      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

              

      

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      
        If
          to
          Holdings: 

      

       

      Barbara
        Baldwin,
        President

      5307
        W. Loop 289

      Lubbock,
        Texas 79414

      Telephone:             806-788-2906

      Facsimile:               806-788-3398

      
        	
                 

              	
                Email:

              	
                barbara.baldwin@ntscom.com
                  

              

      

       

      7.           
        ENTIRE AGREEMENT; AMENDMENTS

       

      This
        Agreement, the NTS Stock Purchase Agreement, and the documents executed in
        connection with the NTS Stock Purchase Agreement, contain the entire agreement
        between the parties with respect to the subject matter hereof and supersede
        all
        prior agreements and understandings, oral or written, between the parties
        hereto
        with respect to the subject matter hereof. This Agreement may not be amended
        orally, but only by an agreement in writing signed by the parties
        hereto.

       

      8.           
        GOVERNING LAW

       

      This
        Agreement will be governed by the laws of the State of Texas without regard
        to
        conflicts of laws principles.

       

      9.           
        JURISDICTION

       

      Any
        action or proceeding seeking to enforce any provision of, or based on any
        right
        arising out of, this Agreement may be brought against either of the parties
        in
        the courts of the State of Texas in Lubbock County, Texas, or, if it has
        or can
        acquire jurisdiction, in the United States District Courts in Texas, 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 either party anywhere in the
        world.

       

      10.           
        SECTION HEADINGS, CONSTRUCTION

       

      The
        headings of Sections in this Agreement are provided for convenience only
        and
        will not affect its construction or interpretation. All references to "Section"
        or "Sections" refer to the corresponding Section or Sections of this Agreement
        unless otherwise specified. All words used in this Agreement will be construed
        to be of such gender or number as the circumstances require. Unless otherwise
        expressly provided, the word "including" does not limit the preceding words
        or
        terms.

       

      11.           
        SEVERABILITY

       

      If
        any
        provision of this Agreement is held invalid or unenforceable by any court
        of
        competent jurisdiction, the other provisions of this Agreement will remain
        in
        full force and effect. Any provision of this Agreement held invalid or
        unenforceable only in part or degree will remain in full force and effect
        to the
        extent not held invalid or unenforceable.

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      12.           
        COUNTERPARTS

       

      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.

       

      13.           
        WAIVER OF JURY TRIAL

       

      THE
        PARTIES HERETO HEREBY WAIVE A JURY TRIAL IN ANY LITIGATION WITH RESPECT TO
        THIS
        AGREEMENT.

       

      

       

      

       

      [REMAINDER
        OF PAGE LEFT INTENTIONALLY BLANK]

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

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

       

      
        
          	 XFONE:	 	 	 HOLDINGS:
                  	 
	 	 	 	 	 
	 XFone,
                  Inc.	 	 	 
                  
                  NTS
                    Holdings, Inc. 

                	 
	 	 	 	 	 
	
                  /s/Guy
                    Nissenson

                	 	 	
                  /s/
                    Barbara Baldwin

                	 
	
                  Guy
                    Nissenson

                	 	 	
                  Barbara
                    Baldwin

                	 
	
                  President

                	 	 	
                  President
                    

                	 

        

      

       

       

      
        
          
          

        

        
          -9-

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