<PAGE>
                                                                     Exhibit 2.1



STOCK AND ASSET PURCHASE AGREEMENT

The following schedules have been omitted:

<TABLE>
<S>         <C>
Exhibit A   Assets of direcTEL Canada


Exhibit B   Bill of Sale for assets assigning assets of direcTEL, Inc. to
            Websmart Teleservices Group, Inc.

Exhibit C   Assignment of Lease

Exhibit D   Bill of Sale and Transfer of Protel/Prodial Platform

Exhibit E   Bill of Sale and Transfer of Protel/Prodial Assets

Exhibit F   Undisclosed Liabilities

Exhibit G   Changes Since Due Diligence

Exhibit H   Pending Litigation and Investigations

Exhibit I   Assignment of Leases and Contracts

Exhibit J   Secured Promissory Note

Exhibit K   Pledge and security Agreement
</TABLE>

We agree to furnish supplementally a copy of any omitted schedule to the
Commission upon request.

<PAGE>
                       STOCK AND ASSET PURCHASE AGREEMENT

AGREEMENT, made this 30th day of June 2001, by and among DIRECTEL INC., a New
Brunswick, Canada corporation ("direcTEL Canada"), DIRECTEL, INC. an Alabama
corporation ("direcTEL US"), Touch 1 Communications, Inc., an Alabama
corporation ("Touch 1"), Z-TEL TECHNOLOGIES, INC., a publicly held Delaware
corporation, of 601 South Harbour Island Blvd., Suite 220, Tampa, FL, 33602
("Z-TEL"), and WEBSMART TELESERVICES GROUP, INC., a North Dakota corporation,
609 30th Avenue, NW, Minot, ND 58703, ("WEBSMART").

RECITALS:

WHEREAS:      Z-TEL is a publicly held corporation. Its wholly-owned subsidiary
              corporation Touch 1 owns all the outstanding shares of stock of
              direcTEL US, which in turn owns all the outstanding shares of
              stock of direcTEL Canada;

WHEREAS:      direcTEL Canada owns and operates a telemarketing call center in
              Saskatoon, Saskatchewan;

WHEREAS:      direcTEL US owns and operates telemarketing call centers in Minot
              and Grand Forks, North Dakota;

WHEREAS:      Touch 1 has a certain lease with G.F. West Properties, a General
              Partnership, for the Grand Forks call center;

WHEREAS:      WEBSMART is a privately held corporation operating a telemarketing
              call center in Minot, North Dakota;

WHEREAS:      direcTEL US wishes to sell and WEBSMART wishes to buy all the
              outstanding shares of direcTEL Canada and certain of direcTEL US'
              operating assets; and

WHEREAS:      The parties have entered into a Letter of Intent, dated June 18,
              2001, setting forth the general agreement of the parties, and
              calling for this Agreement.

NOW, THEREFORE, the parties agree that for mutual considerations, the receipt
and sufficiency of which are hereby acknowledged, hereby promise and agree as
follows:

1.  NATURE OF THE TRANSACTION: WEBSMART will buy or assume all of the
outstanding shares of stock of direcTEL Canada; all of the operating assets
located at the Grand Forks, North Dakota call center; any rights direcTEL US may
have to the ProTEL/ProDIAL dialing platform, including all source code and
associated licenses; certain hardware associated with the ProTEL/ProDIAL dialing
platform; and certain leases to office space and call centers. WEBSMART will
hire all of direcTEL US' employees located at the Grand Forks call center as of
July 3, 2001; and license back to direcTEL US the rights to continue to utilize
the ProTEL/ProDIAL dialing platform it is currently using at its Minot centers,
and to provide technical hardware and software support for the Minot centers. In
addition, Z-TEL agrees to provide WEBSMART with a right of first refusal to
purchase the remaining call center assets of direcTEL US.

2.  TERM: The term of this transaction shall be from July 1, 2001 and run until
WEBSMART's obligations hereunder, including any obligations under the promissory
note described in Section 8 hereof, have been fulfilled.



                                      -1-


<PAGE>
3.   PURCHASE OF DIRECTEL CANADA STOCK:

     (a)  Sales of shares. Z-TEL shall sell and transfer to WEBSMART, and
WEBSMART agrees to purchase and acquire from Z-TEL at the Closing 170,000 shares
of stock owned by Z-TEL in direcTEL Canada, which will represent 100% of the
issued and outstanding stock of the corporation. WebSmart will pay or cause to
be paid to direcTEL US a fee equal to $15 per paid hour for work performed by
direcTEL Canada hourly employees before the Closing.

     (b)  direcTEL Canada assets. Z-TEL warrants and represents that the assets
listed on Exhibit A, attached hereto, constitute all of the assets of the
Saskatoon call center owned and operated by direcTEL Canada on June 30, 2001 and
include all personal property being utilized by direcTEL Canada in such
business.

     (c)  Assumption of Lease. WEBSMART agrees to assume the obligations under
that certain lease dated January 9, 2001, between Northstar Innovative
Developments, Inc. and direcTEL Canada. Z-TEL shall either provide an opinion of
its Canadian legal counsel that this stock purchase of direcTEL Canada is not
considered an assignment or subletting under paragraph 11(8)i, page 6 of that
lease, or, assign such lease to WEBSMART and obtain the necessary consent of
Northstar Innovative Developments, Inc.

4.   PURCHASE OF GRAND FORKS CALL CENTER AND ASSETS:

     (a)  Sales of assets. At the Closing (as defined herein), direcTEL US shall
sell, transfer and deliver to WEBSMART, and WEBSMART shall purchase and acquire,
all of direcTEL US' then existing assets of the business it operates in Grand
Forks, North Dakota as a going concern, by bill of sale. Such bill of sale is
attached hereto as Exhibit B, and made a part hereof. It is the intention of the
parties that the assets identified in Exhibit B include all personal property
being utilized by direcTEL US in such business. Z-TEL warrants and represents
that the assets to be sold and delivered constitute all of the assets of the
Grand Forks center, necessary to operate the Grand Forks call center, owned by
direcTEL US on June 30, 2001. The sale shall be made free and clear of all
liabilities, obligations, security interests, and encumbrances, except those
disclosed herein. Commencing 12:05 A.M. Central time, July 3, 2001, all
employees of direcTEL US in Grand Forks, North Dakota shall become employees of
WEBSMART, upon the same terms as their employment with direcTEL US. DirecTEL US
warrants and represents that it employs approximately 52 hourly sales
associates, 7 salaried sales supervisors, 2 salaried shift managers, 2 salaried
general managers and 2 hourly administrative personnel. direcTEL US will pay and
be responsible for all salaries, wages and benefits accrued through July 2,
2001. WEBSMART will assume all trade payables associated with the Grand Forks
call center from and after 12:05 A.M. Central time, July 2, 2001. Such payables
are listed in Exhibit F. direcTEL warrants that it is not in default with
respect to any trade payables and that such trade payables do not in the
aggregate exceed $100 as of June 30, 2001. direcTEL will charge WEBSMART and
WEBSMART will pay a fee equal to $15.00 per paid hour for work performed by
hourly direcTEL US, or direcTEL Canada sales associates before and after the
Closing. The parties agree that WEBSMART has had its own employees working at
direcTEL US centers for much of the month of June under an oral agreement, to
keep those employees productive until Closing of this transaction. The parties
acknowledge that, what ever hours the WEBSMART employees have logged at the
direcTEL centers, shall be set off, hour for four, against any hours of direcTEL
US or CANADA sales associates that WEBSMART has utilized prior to closing. The
actual number of hours shall be trued up within 15 days of closing, and the
party that has the most hours of use of the other parties employees, shall pay
to the other party, the difference in hours, at the rate of $15.00 per hour.

     (b)  Assignment of Lease. Touch 1 agrees to assign to WEBSMART that certain
lease dated May 1, 1999, between Touch 1 and G.F. West Properties, a General
Partnership, for the Grand Forks call center. WEBSMART agrees to accept such
assignment, and assume all liabilities associated therewith. Z-TEL shall obtain
the necessary written consent from G.F. West Properties of such assignment under
paragraph 15 on page 7 of such lease. The Assignment of Lease is attached hereto
as Exhibit C and made a part hereof.


                                      -2-


<PAGE>
5.   PURCHASE OF PRODIAL/PROTEL PLATFORM:

     (a) Sale of Software. At the Closing Z-Tel, Touch 1 and direcTEL US shall
transfer and assign to WEBSMART, all of their right, title and interest in the
proprietary legacy dialing platform, known as"ProDIAL" and/or "ProTEL" ("ProTEL
platform"), including all source code and associated intellectual property. Such
transfer and assignment shall include all rights to any patents, trademarks or
copyrights associated with the ProTEL platform along with all written, printed
or electronic documentation. Further, Z-TEL shall release all claims to the
ProTEL platform, except to the extent that rights will be licensed back to Z-TEL
hereunder. Such transfer document is attached hereto as Exhibit D and made a
part hereof.

     (b) Sale of Hardware. At the closing TEL, Touch 1 and direcTEL US shall
sell, transfer and deliver to WebSmart, certain of the hardware assets
associated with the ProTEL platform by bill of sale. Such bill of sale is
attached hereto as Exhibit E and made a part hereof. The parties recognize that
there may be certain items of hardware or software that they must share in order
to allow both parties to fully utilize the ProTEL platform because of the
current configuration of the hardware that Z-TEL is retaining, and the hardware
that it is selling hereunder. Z-TEL agrees that any hardware or software that it
is retaining, that is necessary for the full utilization of the ProTEL platform
by WEBSMART, WEBSMART shall have joint use of, but that WEBSMART shall also
share in the maintenance and repair of such hardware as well.

     (c) License to Z-TEL. WEBSMART shall provide a royalty-free,
non-exclusive, non-transferable (except to an affiliate), non-sublicensable,
worldwide, perpetual, multi-site license to Z-TEL for the continued internal use
of the ProTEL platform. In addition, WEBSMART shall provide technical hardware
and software support for the ProTEL platform and provide upgrades to such
platform, as it may develop at its sole option, to Z-TEL so long as this
Agreement remains in effect, but in any event for a period of at least three
years. As part of this Agreement Z-TEL agrees to allow WEBSMART to occupy the
sixth and seventh floors of the Z-TEL Center where the IT hardware and
management offices are currently located. WEBSMART agrees that it will pay the
rent for such floors as is set forth in the lease between Minot Downtown
Properties, Inc and direcTEL US, dated March 27, 2001. Such monthly rent is
$2093.75 for 6th floor, and $2,519.91 for 7th floor. The parties then agree that
WebSmart shall provide technical software and hardware support (including for
the ProTel Platform) back to Z-TEL, at its costs of labor plus benefits, in such
quantities as Z-TEL needs. WEBSMART shall bill Z-TEL monthly for such support,
and the support costs will be set off against WEBSMART's lease obligations for
6th and 7th floors, and trued up each month. The parties agree to execute a
separate memorandum setting forth the hourly rates to be applied to cover
WEBSMART's labor and benefits for its employees providing such support. At the
end of the term of this Agreement, Z-TEL may, at its option, require WEBSMART or
its successors or assigns, to continue to provide technical support and upgrades
to the ProTEL platform for a reasonable compensation to be negotiated by the
parties at that time.

6.   CLOSING. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place on July 1, 2001, at the Law Offices of Lamont &
Skowronek at 116 1st St. SW, Minot, North Dakota, or on such other date, or
other location as Z-TEL and WEBSMART agree.

7.   PURCHASE PRICE. As consideration for the purchase, WEBSMART shall pay
direcTEL US $530,000.00 US dollars and issue to direcTEL US 270,000 share of $1
par preferred stock in WEBSMART, the details of which are more fully set forth
in paragraph 8 below.

8.   MANNER OF PAYMENT. WEBSMART shall pay $530,000.00 US by delivery at the
Closing of a secured promissory note, in substantially the same form as the
promissory note appearing as Exhibit J attached hereto and incorporated herein,
bearing interest at 7% and calling for repayment in 60 equal amortized payments
of $10,494.64, beginning on September 15, 2001, and due on the 15th day of each
month thereafter. At the Closing, WEBSMART shall execute and deliver to direcTEL
US a security agreement in substantially the same for as Exhibit K attached
hereto and incorporated herein. In addition, WEBSMART shall grant to direcTEL
US, 270,000 shares of WEBSMART (or its successor


                                      -3-
<PAGE>
agreed upon by the Parties) preferred stock with a $1 par value. Such preferred
stock shall be non-participatory, non-convertible preferred stock, with a
non-cumulative 8% annual dividend. Such preferred stock shall have a mandatory
seven-year redemption. In the event of default of redemption, Z-TEL shall allow
WEBSMART to redeem the preferred stock through an in-kind contribution by way of
discounted hours for telemarketing work that Z-TEL would receive. The discounted
hourly rate would be high enough for WEBSMART to cover, at a minimum, its fixed
and variable costs associated with the performance of the work. WEBSMART may
redeem the preferred stock for cash, at any time, without penalty.

9.  RIGHT OF FIRST REFUSAL. If at any time direcTEL US decides to sell or close
the Minot Metro center and Minot Z-TEL center (the "Minot centers"), direcTEL US
hereby grants to WEBSMART a right of first refusal to purchase the Minot
centers. Such Right of First Refusal shall run until December 31, 2003. DirecTEL
US shall give WEBSMART written notice of any bonafide offer to purchase the
Minot centers (only if it intends to accept the offer) or of its intention to
close the Minot centers. WEBSMART will thereafter have 30 days to match the
bonafide offer or to negotiate a purchase of the Minot centers from direcTEL US.
If WEBSMART matches the bonafide offer it will then purchase the Minot centers
in accordance with the terms of such offer. If WEBSMART does not match such
offer or consummate a negotiated purchase of the Minot centers within 30 days
after delivery of the written notice, then direcTEL US may sell the Minot
centers in accordance with the bonafide offer or close the Minot centers in its
discretion. In the event that WEBSMART does not match such offer, or consummate
a negotiated purchase, and direcTEL US sells the centers to another purchaser,
or closes the centers, direcTEL US agrees to give WEBSMART up to 60 days to
relocate all the ProTEL platform and associated hardware etc., from the 6th and
7th floors of the Z-TEL Center and vacate those floors.

10.  REPRESENTATIONS AND WARRANTIES. Z-TEL represents and warrants as follows:

     (a)  Schedule of assets. Z-TEL has delivered to WEBSMART copies of
schedules for all assets being purchased hereunder, which assets are included in
the exhibits attached as Exhibits A, B, D, and E, which asset schedules are true
and complete.

     (b)  All assets purchased. Z-TEL warrants that WEBSMART by purchasing all
stock of direcTEL Canada is acquiring control of all the assets to its
Saskatoon, Saskatchewan call center and WEBSMART is purchasing all assets of the
Grand Forks call center, as well as all assets associated with the ProTEL
platform. From time to time, at WEBSMART's request, Z-TEL will execute and
deliver all further instruments of conveyance and transfer and take all other
action that WEBSMART reasonably may require to more effectively convey and
transfer to WEBSMART any of the assets warranted to be sold hereunder, and will
assist WEBSMART in the identification and possession of such assets.

     (c)  Title to shares. direcTEL US is and will be, on the closing date, the
owner, free and clear of any encumbrances, of the shares being transferred
hereunder. All such shares have been validly issued and are fully paid and
non-assessable.

     (d)  Absence of undisclosed liabilities. Except as disclosed herein,
neither Z-TEL nor any of its subsidiaries, as of the date of this purchase
agreement, had any liabilities or obligations of any nature, whether accrued,
absolute, contingent, or otherwise which are or could become a claim, lien or
encumbrance on or against direcTEL Canada or the shares or assets described in
Exhibits A, B, D or E, attached hereto, except those described in Exhibit F.

     (e)  Title to assets. Z-TEL or the corporations it directly or indirectly
controls have good and marketable title to all of the assets reflected on the
bills of sale and transfer documents (Exhibits A, B, D and E), subject to no
mortgage, pledge, lien, encumbrance, security interest, charge or claim, except
as disclosed herein.

     (f)  Reliance. Z-TEL makes all warranties and representations with the
knowledge and expectation that WEBSMART is placing complete reliance on them.


                                      -4-


<PAGE>
     (g)  Organization of the Company. Z-TEL is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Touch 1 is a duly organized, validly existing and good standing corporation
under the laws of the State of Alabama. direcTEL Canada is a duly organized,
validly existing and good standing corporation under the laws of the Province of
New Brunswick, Canada, and is authorized to do business, and in good standing in
the Province of Saskatchewan. direcTEL US is a duly organized, validly existing
and good standing corporation under the laws of the State of Alabama, and is
authorized to do business, and in good standing in the State of North Dakota.
Z-TEL has the power to own its wholly owned subsidiaries and their stock and
assets and it, or they, are duly qualified to do business, and in good standing
as foreign entities in each jurisdiction in which the failure to do so would
have a material adverse effect ("Material Adverse Effect") on the business,
assets (including intangible assets), financial condition or results of
operations of Z-TEL or any of its subsidiaries. The Company has delivered true
and correct copies of the Articles of Incorporation, amended to date and bylaws
of both of direcTEL US and direcTEL Canada to WEBSMART.

     (h)  Authority. Z-TEL, and each of its subsidiaries, has all requisite
necessary power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized. This Agreement has been duly executed and delivered by Z-TEL on
behalf of it and its wholly owned subsidiaries and constitutes the valid and
binding obligations of each of them, enforceable in accordance with its terms.

     (i)  No Default; Non-Contravention. Neither the execution and delivery of
this Agreement and all other documents contemplated hereby nor the consummation
of the transactions hereby contemplated by the parties will constitute any
violation or breach of Z-TEL or either of its subsidiaries, Articles of
Incorporation or Bylaws or any provision of any contract, agreement, instrument
or order or decree to which any are a party.

     (j)  Sole Owners. Z-TEL is the sole owner of its subsidiaries, and there
are no options, warrants, calls, conversion rights, commitments or agreements of
any character to which Z-TEL or any of its subsidiaries are a party or by which
Z-TEL or its subsidiaries may be bound that do or may obligate Z-TEL to issue,
deliver or sell, or cause to be issued, delivered or sold, additional ownership
equity in either of its subsidiaries or that do or may obligate Z-TEL to grant,
extend or enter into any such option, warrant, call, conversion right,
commitment or agreement on behalf of either subsidiary. There are no outstanding
arrangements, agreements, commitments or understandings of any kind affecting or
relating to the voting, issuance, purchase, redemption, repurchase or transfer
of any equity of either subsidiary, or any other securities of such
subsidiaries.

     (k)  No Conflicts. The execution and delivery of this Agreement by Z-TEL
does not, and as of the closing the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of any benefit under (i) any provision of the Articles of Incorporation or
Bylaws of Z-TEL, or any of its subsidiaries or (ii) any mortgage, indenture,
lease, contract or other agreement or commitment (any such instrument being
referred to as a "Contract"), permit concession, franchise, license, judgment,
order, decree, statue, law, ordinance, rule or regulation applicable to Z-TEL or
its properties or assets or subsidiaries.

     (f)  No Undisclosed Liabilities. Except as set forth in Exhibit F, attached
hereto and made a part hereof, neither direcTEL Canada, nor direcTEL US has any
liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured,
un-matured or other (whether or not required to be reflected in financial
statements in accordance with GAAP).


                                      -5-


<PAGE>
     (m)  No Changes. Except as specifically set forth in Exhibit G, attached
hereto and made a part hereof, since the provision of any due diligence
documents in connection with the negotiations surrounding this Agreement, there
had not been, occurred or arisen any:

     -  transaction by Z-TEL or its subsidiaries that affects in any way the
        assets;

     -  destruction of, damage to or loss of any of the assets (whether or not
        covered by insurance);

     -  amendment or termination of any Contract that affects the assets;

     -  the granting of any lien to any person or entity relating to the assets;

     -  the commencement or notice or threat of commencement of any lawsuit or
        proceeding against or investigation of Z-TEL or any of its subsidiaries,
        or their affairs;

     -  notice of any claim of ownership by a third party of the assets;

     -  issuance or sale by any of its subsidiaries of any of their shares of
        equity, or securities exchangeable, convertible or exercisable
        therefore, or of any other of their securities;

     -  any event or condition of any character that has or could be reasonably
        expected to have a Material Adverse Effect; or

     -  negotiation or agreement by Z-TEL or any of its subsidiaries, or any
        other officer or employees of either or any, to do any of the things
        described in any of the immediately preceding bullet points (other than
        negotiations with WEBSMART and its representatives regarding the
        transactions contemplated by this Agreement);

     -  restrictions on business activities. Except as otherwise disclosed in
        writing contemporaneously herewith, there is no agreement (non-compete
        or otherwise), commitment, judgment, injunction, order or decree to
        which Z-TEL or any of its subsidiaries is a party or otherwise binding
        upon Z-TEL or its subsidiaries which has or reasonably could be expected
        to have the effect of prohibiting or impairing any business practice of
        Z-TEL or its subsidiaries, any acquisition of property (tangible or
        intangible) by Z-TEL or its subsidiaries or the conduct of business by
        either;

     -  agreements, contract and commitments. Neither of Z-TEL's subsidiaries
        has, nor is a party to, nor is bound by any agreement other than the
        agreements set forth in writing contemporaneously herewith.

     (n)  Litigation. Except as set forth in Exhibit H attached hereto, and made
a part hereof, there is no investigation pending or threatened against Z-TEL,
its properties, subsidiaries or any of its officers or partners (nor is there
any basis therefore) by or before any Governmental Entity. Exhibit H sets forth,
with respect to any pending or threatened action, suit, proceeding or
investigation, the forum, the parties thereto, the subject matter thereof and
the amount of damages claimed or other remedy requested. No Governmental Entity
has at any time challenged, questioned or reviewed the legal right of Z-TEL's
subsidiaries to conduct its business.

     (o)  No Defaults. Z-TEL is not, nor has any of its subsidiaries or
officers, or officers of its subsidiaries, received notice that it is or would
be with the passage of time, (i) in violation of any provision or its Articles
or Incorporation or Bylaws or those of its subsidiaries (ii) in default or
violation of any term, condition or provision of any judgment, decree, order,
injunction or stipulation applicable to Z-TEL or its subsidiaries or any
agreement, note, mortgage, indenture, contract, lease, sublease or instrument,
permit, concession, franchise or license to which Z-TEL or either of its
subsidiaries is a party or by which Z-TEL or its subsidiaries, properties or
assets may be bound.

     (p)  Representations and warranties. No representation or warranty by Z-TEL
in this Agreement or any documents provided hereunder contains or will contain
any untrue statement or omits or will omit to state any material fact necessary
to make the statements contained herein not misleading. All representations and
warranties made by Z-TEL in this Agreement and all documents provided hereunder
shall be true and correct as of the date of closing with the same force and
effect as if they had been made on and as of such date.


                                      -6-


<PAGE>
     (q)  Taxes. All required and appropriate tax returns have been filed as
required by law by Z-TEL and both of its subsidiaries, and all taxes shown
thereon have been paid when due.

     (r)  Contingencies in Closing. The Parties agree that there are several
unresolved issued at closing, and Z-TEL agrees to the identification of those
issues, and makes the following commitment to them:

               1.  Informix Licensing. Z-TEL will be responsible for payment of
                   all outstanding license fees to Informix that are due and
                   owing on the date of Closing. In addition, Z-TEL agrees to
                   effect a transfer of the Informix Licenses to WEBSMART and
                   cover all associated costs, if any, to accomplish such
                   transfer.

               2.  Income Taxes in Canada. Z-TEL has paid its estimated tax
                   liabilities for direcTEL Canada, and will agree to pay any
                   additional taxes that may be due as of the date of Closing,
                   and indemnify and hold WEBSMART harmless as to the payment of
                   the same.

               3.  Telephony Issues. Z-TEL and WEBSMART have agreed with Sprint
                   to work out a joint volume discount contract for Long
                   Distance and t-1 usage. The Parties agree that those
                   negotiations will continue past Closing, and that they should
                   not interfere with Closing, and both parties will work
                   towards getting those contracts resolved for their mutual
                   benefit.

               4.  Grand Forks Lease. Z-TEL has not, as of Closing, obtained
                   Landlord consent to the lease for the Grand Forks Center, but
                   the parties agree that such consent is eminent, and Z-TEL
                   will continue to warrant that it shall obtain such consent.
                   WEBSMART agrees that issue should not delay Closing.

               5.  WEBSMART financing. The parties acknowledge that, while
                   WEBSMART has received tentative approval from its Bank for
                   its operating line, such approval is not in the form of a
                   written commitment, pending the Bank's boards approval and
                   Economic Development written commitments. Those written
                   approvals and commitments are expected by July 12, 2001. The
                   parties agree that WEBSMART's obligations hereunder are still
                   subject to getting those written commitments. However,
                   WEBSMART also agrees that if for some unforeseeable reason,
                   those commitments are not received, that WEBSMART will
                   diligently work to obtaining alternative financing
                   arrangements, and shall cover all the costs of the assets and
                   employees hereunder from and after the date of Closing and
                   until such alternative financing is arranged. Z-TEL will
                   assist WEBSMART in any way it can during that process and is
                   comfortable with moving forward with Closing with that
                   commitment from WEBSMART.

11.  CONDUCT OF BUSINESS PENDING CLOSING. Prior to closing, Z-TEL and its
subsidiaries agree that:


                                      -7-


<PAGE>
     (a)  Ordinary Course. The business of Z-TEL and its subsidiaries will be
conducted only in the ordinary course.

     (b)  Corporate Documents. No charge will be made in the Articles of
Incorporation or the Bylaws (or Canadian equivalent of either) of either of
direcTEL US or direcTEL Canada.

     (c)  Stock Shares. No change will be made in the authorized corporate
shares of direcTEL Canada.

     (d)  Dividends. No dividend or other distribution or payment will be
declared or made in respect of the shares of direcTEL Canada, and direcTEL
Canada will not directly or indirectly redeem, purchase, or otherwise acquire
any of such shares without the written consent of WEBSMART.

     (e)  Operations, inspection. The subsidiaries shall continue to operate
their respective call centers in the manner heretofore operated by them. No
contracts or purchase orders, other than in the ordinary course of business,
unless with WEBSMART's consent, will be entered into or delivered by the
subsidiaries. Until closing, WEBSMART shall have the right during normal
business hours, to visit the centers of either subsidiary and observe the
operation of the business and shall have access to all of the subsidiaries
records.

     (f)  Casualty. Z-TEL will keep all of its inventory and other property
fully insured against all loss, either by fire, other casualty or theft. If
prior to the closing date such property is totally or substantially damaged by
reason of fire or other casualty, or is lost by reason of theft, either Z-TEL or
WEBSMART may, in the exercise of their sole discretions, terminate this
Agreement without penalty and all parties shall be released from any further
liability hereunder.

     (g)  Employee compensation. No increase will be made in the compensation
payable or to become payable by Z-TEL to any officer, employee or agent of
either subsidiary, nor will any bonus payment or arrangement be made by Z-TEL to
or with any officer, employee or agent that may increase WEBSMART's ongoing
obligations to that officer, employee or agent. Exempt are bonus payments to
employees (officers and agents excluded) in accordance with the established
practice of Z-TEL.

     (h)  Center Manager for direcTEL Canada. Z-TEL shall use its best efforts
to cause direcTEL Canada to hire and have on-board a new center manager for its
Saskatoon call center by Closing. There is one candidate that has been
identified by the executive search firm hired by Z-TEL, and that candidate is
acceptable to WEBSMART. Z-TEL shall consult with WEBSMART, and obtain its
consent to any salary and benefit package prior to hiring. Z-TEL shall cover all
the costs direcTEL Canada incurs in recruiting, interviewing and hiring such
center manager.

     (i)  Status Quo. Z-TEL will use its best efforts to preserve direcTEL
Canada's business organization, to keep available the services of its officer
and other employees, and to preserve friendly relations with its vendors and
landlords. Z-Tel shall cause direcTEL Canada and its Grand Forks call center
operation to operate under a hiring freeze prior to closing, except for the
center manager referred to in 11(h) above.

     (j)  Significant out of the ordinary course of business decisions. Any
business decisions to be made out of the ordinary course of business by direcTEL
Canada or by direcTEL US in its Grand Forks call center operation shall be
discussed with WEBSMART. If Z-TEL makes or causes to be made with respect to
direcTEL Canada, or its direcTEL US Grand Forks call center operation, a
significant, out of the ordinary business decision, and WEBSMART, after being
notified of the decision to be made, objects to that decision, and the decision
is made regardless of WEBSMART's objections, then in that event, WEBSMART may,
by written notice prior to closing, withdraw its agreement to purchase the stock
and/or assets described herein without penalty.

12.  INDEMNIFICATION. Z-TEL shall indemnify, defend and hold harmless WEBSMART
against and in respect of:


                                      -8-


<PAGE>
     (a)  Liabilities and Obligations. Except as specifically set forth herein,
all liabilities and obligations of, or claims against, direcTEL Canada and
direcTEL US existing at July 1, 2001;

     (b)  Misrepresentation of breach. Any damage or deficiency resulting from
any misrepresentation, breach of warranty, or non-fulfillment of any agreement
by Z-TEL under this agreement or from any misrepresentation in, or omission
from, any certificate or other instrument furnished or to be furnished to
WEBSMART under this agreement; and

     (c)  Suits or proceedings. All actions, suits, proceedings, demands,
assessments, judgments, attorney's fees, costs, and expenses incident to any of
the above.

     (d)  Sale not in ordinary course. As a protection to WEBSMART, and based on
the expired provision of bulk transfers under the Uniform Commercial Code, Z-TEL
will indemnify and defend WEBSMART and hold it harmless against all claims made
by Touch 1, direcTEL Canada's and direcTEL US' creditors, including, but not
limited to, reasonable attorney's fees and costs of defending such claims. Z-TEL
represents that except as disclosed herein there are no liabilities of any
nature (accrued, absolute, contingent or otherwise), liens, encumbrances, or
security interests on any of the stock or assets to be sold to WEBSMART, and
warrants that the title conveyed to WEBSMART will be free and clear. All of the
provisions, warranties and representations in this paragraph shall survive the
Closing.

     Z-TEL shall reimburse WEBSMART, on demand, for any payment made by WEBSMART
at any time after July 1, 2001 in respect of any liability, obligation, or claim
to which the foregoing indemnity by Z-TEL relates and/or authorizes WEBSMART to
deduct such payments from any amounts due Z-TEL under this Agreement.

13.  TRANSFER OF CONTRACTS. Z-TEL agrees to transfer and assign all contracts
with vendors or contractors for any service contracts, leases or other ongoing
obligations that are necessary for the operations of direcTEL Canada and
direcTEL US WEBSMART is purchasing hereunder. Z-TEL has disclosed all such
leases and contracts, and the assignment of the same is set forth in Exhibit I.

14.  SURVIVAL OF REPRESENTATIONS. All statements contained in any certificate or
other instrument delivered by or on behalf of Z-TEL pursuant hereto, or in
connection with the transactions contemplated hereby, shall be deemed
representations and warranties by Z-TEL hereunder. All representations,
warranties, and agreements made by Z-TEL in this Agreement, or pursuant hereto,
shall be deemed joint and several, except as otherwise expressly stated, and
shall survive the Closing and any investigation at any time made by or on behalf
of WEBSMART.

15.  WEBSMART'S REPRESENTATIONS AND WARRANTIES. The parties acknowledge that
WEBSMART has made all inspections to the full extent of its desire, and Z-TEL
has given WEBSMART ample opportunity to conduct such inspections. Further,
WEBSMART shall indemnify Z-TEL for any claims or liabilities that may arise by
virtue of its assumption of liabilities (e.g., building leases, copier leases,
service contracts, etc.) that WEBSMART may incur by way of this transaction.
WEBSMART agrees that Z-TEL shall be entitled to a first lien on all the stock
and assets being purchased and/or conveyed by way of this transaction.

16.  CONDITIONS TO WEBSMART'S OBLIGATIONS. WEBSMART's obligations to the stock
and assets described herein are contingent upon:

     (a)  Financing. Obtaining an operating line of credit acceptable to
WEBSMART.

     (b)  Appropriate approvals. Obtaining approval from the various vendors and
landlords who currently have leases and service agreements with Z-TEL (e.g.,
Northstar Innovative Development Inc.; G.F. West Properties, a General
Partnership).


                                      -9-

<PAGE>
     (c) Records. WEBSMART shall be granted full and complete access to all of
Z-TEL's subsidiaries books, records, and any other information reasonably
calculated to permit WEBSMART to conduct due diligence. In the event WEBSMART
identifies substantial and material issues, which cannot be rectified by Z-TEL,
WEBSMART may withdraw from this transaction, without penalty by giving written
notice.

17.  RESTRICTIVE COVENANT. In consideration of WEBSMART purchasing goodwill as
well as the assets and stock described herein, Z-TEL shall not, anywhere in
Grand Forks County, North Dakota; and Saskatchewan for a period of five years
from and after the date hereof, directly or indirectly, engage in the business
of providing in-bound or out-bound telemarketing services. If any provisions of
this paragraph are held invalid, such provisions shall be severed and the
balance thereof shall remain valid and enforceable. In the event that a court of
competent jurisdiction determines that the scope of business restricted or the
time or geographical limitations imposed are too broad to be capable of
enforcement, such court may ignore such provisions and instead enforce such
provisions as to such scope, time and geographical area as the court deems
proper.

18.  SURVIVAL OF REPRESENTATIONS. Neither party has made any representation,
warranty, or covenant not set forth herein, and this Agreement constitutes the
entire agreement between the parties. All representations, warranties and
agreements shall survive the closing and any examination or investigation at any
time made by WEBSMART or Z-TEL.

19.  NOTICES. All notices, requests, demands, and other communications hereunder
shall be in writing, and shall be deemed to have been duly given if delivered or
mailed by certified mail, first class, postage prepaid, to the parties at the
following addresses:

      Z-TEL                              WEBSMART
      Z-Tel Technologies, Inc.           WebSmart Teleservices Group, Inc.
      c/o Gregg Smith, CEO               c/o John Skowronek, President, CEO
      601 South Harbour Island Blvd.     609 30th Ave. NW
      Tampa, FL 33602                    Minot, ND 58703

20.  COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.

21.  ACTIONS NECESSARY TO COMPLETE TRANSACTIONS/GOOD FAITH. All parties hereby
agree to execute and deliver all such other documents or instruments and to take
any action as may be reasonably required in order to effectuate the transactions
contemplated by this Agreement and agree to negotiate in good faith to that end.
If, at any time after the closing date, any further documents or any other
actions are reasonably necessary or desirable to carry out the intent of this
Agreement, the parties agree to execute and deliver any and all such agreements,
instruments or documents necessary to do so.

22.  WAIVER. Any waiver by any party of any breach of any term of condition of
this Agreement shall not be deemed a waiver of any other breach of such term or
condition, nor shall the failure of either party to enforce such provision
constitute a waiver of such provision or of any other provision, nor shall such
action be deemed a waiver or release of any other party for any claims arising
out of or connected with this Agreement.

23.  BINDING EFFECT. Except as otherwise expressly provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective legal representatives, successors, and assigns.

24.  GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Dakota.

25.  TIME OF ESSENCE. Time is of the essence of this Agreement.


                                      -10-
<PAGE>
26.  ENTIRE AGREEMENT; MODIFICATION. This Agreement supersedes all paper
agreements and constitutes the entire agreement among the parties with respect
to the subject matter hereof. It may not be amended or modified except by an
instrument executed by the parties.

27.  HEADINGS. Headings in this agreement are for reference and convenience only
and shall not be used to interpret or construe its provisions.

     IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
day and year first above written.

Z-Tel Technologies, Inc.                     WebSmart Teleservices Group, Inc.



By:  /s/ Gregg Smith                         By:   Illegible
   --------------------------------             --------------------------------
   Gregg Smith, as Chief Executive              CEO
   Officer

   direcTEL, Inc. (Alabama)                     direcTEL, Inc. (Canada)

By: /s/ James F. Corman                      By: /s/ James F. Corman
   --------------------------------             --------------------------------
   James F. Corman, as President                James F. Corman, as President

   Touch 1 Communications, Inc.

By: /s/ James F. Corman
   --------------------------------
   James F. Corman, as President


                                      -11-