Document:

Exhibit 10.70

Exhibit
    10.70
    

    

    

    AGREEMENT

    GENERAL
      TERMS AND CONDITIONS

    

    THIS
      AGREEMENT
      is made
      by and between Xfone.USA,
      Inc.
      (“Xfone.USA”),
      a
      Mississippi corporation, and EBI Comm, Inc. (“EBI”), a Mississippi corporation,
      and shall be effective on the Effective Date, as defined herein. This Agreement
      may refer to either Xfone.USA
      or EBI
      or both as a “Party” or “Parties.” This Agreement reflects the terms and
      conditions to acquire certain assets owned by EBI, (the “Transaction”).

    

    
      	1.  	
              Transaction
                Terms. 

            

    

     

    
      	(a)  	
              Transaction
                Structure. Xfone.USA
                will purchase the customer base, including Dial-Up, Dedicated, Wholesale,
                DSL and Hosted Domain customers, and certain equipment items of EBI
                through the transfer of EBI’s assets, as described herein.
                

            

    

     

    
      	(b)  	
              Assets
                to be Acquired.
                Xfone.USA
                will purchase certain assets, tangible and intangible, owned by EBI
                that
                are used in, or necessary for the conduct of its business, including,
                without limitation: (i) EBI’s trade name(s), trademarks and all related
                intellectual property; (ii) EBI’s fixed assets, including assets in the
                following locations: New Orleans - one (1) Cisco 24-Port Ethernet
                Switch,
                one (1) OmniView 8-Port KVM Switch, one (1) Barracuda Spam Firewall
                300,
                one (1) Dell Server, two (2) Custom Servers, one (1) Livingston Portmaster
                2E, one (1) Dymeta TrimMail 420 Spam Filter; Columbus, MS - three
                (3)
                Custom Workstations, three (3) Custom Servers, one (1) Cisco Router,
                two
                (2) 3Com SW 3300 Ethernet Switches, 3 APC UPS Back ups; (iii) entire
                customer base, including all hosted domains and all related peripheral
                equipment, including cables and wires; (iv) any and all customer
                lists;
                and (iv) EBI’s current assets, including but not limited to, accounts
                receivable. 

            

    

     

    
      	(c)  	
              Liabilities
                to be Assumed.
                Xfone.USA
                will not assume any of EBI’s liabilities whatsoever, including but not
                limited to accounts payable, payroll liabilities and any other payables
                and accruals.

            

    

     

    Xfone.USA
      shall
      not be responsible for any liabilities of EBI whatsoever and the assets
      purchased shall be transferred to Xfone.USA
      free and
      clear of all liens or encumbrances of any kind or nature.

     

    
      	(d)  	
              Consideration.
                The aggregate consideration for the assets to be purchased will be
                paid in
                cash, cash equivalents or immediately available funds and will consist
                of:
                (i) a payout of fifty-percent (50%) of the monthly collected revenue
                from
                the customer base during the initial twelve (12) month period, which
                shall
                commence on the Effective Date of this agreement; (ii) any payment
                due to
                EBI will first be credited to I-55 Internet Services, Inc. or I-55
                Telecommunications against any outstanding and unpaid amounts owed
                for
                services previously provided to EBI from the I-55 companies. *
                THE AGREED TO BE DEDUCTED FROM THE 1ST
                MONTH COLLECTIONS IS $7,728.00.

            

    

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    
      	(e)  	
              Transition
                Assistance.
                Simultaneously with the execution of this Agreement as defined herein.
                EBI
                will use its reasonable best efforts to assist Xfone.USA
                to
                make a swift and complete transition. Beginning on the Effective
                Date of
                this Agreement, EBI will immediately remit, to Xfone.USA,
                any funds received from its customers, along with the pertinent billing
                information for each customer so Xfone.USA
                can apply the proper credits to each customer’s
                account.

            

    

     

    
      	(f)  	
              Conditions
                for Closing.
                The closing of the Transaction is subject to the acceptance and execution
                of this Agreement by the Owner/Manager or duly authorized executive
                officer of EBI. 

            

    

     

    
      	(g)  	
               Cooperation
                of the Parties.
                Xfone.USA
                and EBI will cooperate with each other to the fullest extent in the
                execution of the Agreement. Xfone.USA
                and
                EBI will use their best efforts to take all steps necessary to consummate
                the Transaction as soon as practicable but, in any event, prior to
                December 31, 2005. 

            

    

     

    Additionally,
      EBI will continue to assist Xfone.USA
      in the
      transition of EBI customers to Xfone.USA
      after
      the
      close of the Transaction and throughout the initial twelve (12) month period
      to
      assist in collection of payments and with customer issues to insure the
      retention of the customer base purchased during that time.

     

    
      	(h)  	
              Indemnification.
                EBI hereby indemnifies and agrees to hold Xfone.USA
                harmless from, against and in respect of (and shall on demand reimburse)
                Xfone.USA
                for (i) any and all debts, all liabilities or obligations of EBI,
                direct
                or indirect, fixed, contingent or otherwise, which exists at or as
                of the
                Effective Date or which arises after the Effective Date but which
                are
                based upon or arise from any act, omission, transaction, circumstance,
                sale of goods or services, state of facts or other conditions which
                occurred or existed on or before the Effective Date and (ii) any
                loss,
                liability or damage suffered or incurred by Xfone.USA
                by
                reason of any untrue representation or non-fulfillment of any covenant
                by
                EBI contained in this Agreement or in any document executed or delivered
                in connection with this Agreement. EBI shall reimburse Xfone.USA
                for any indemnity claim within ten (10) days of demand and if the
                claim is
                not satisfied within said period, then Xfone.USA
                shall be entitled to set off the amount of such indemnity claim against
                any amounts due to EBI under this Agreement or any other
                agreement.

            

    

     

    
      	(i)  	
              Confidentiality.
                The confidentiality shall not apply to any information which is (i)
                publicly available, (ii) known to Xfone.USA,
                as shown by credible evidence, prior to the date hereof, (iii)
                independently developed by Xfone.USA
                after the date hereof, as shown by credible evidence, or (iv) acquired
                by
                Xfone.USA
                from a third party who has no obligation to keep such information
                confidential. In the event the Transaction is not consummated for
                any
                reason whatsoever, Xfone.USA
                shall promptly return all information to EBI and shall not make use
                of any
                proprietary information and/or trade secrets of
                EBI.

            

    

     

    
      	(j)  	
              Conduct
                in Ordinary Course.
                In
                addition to the conditions discussed in this Agreement, consummation
                of
                the Transaction is subject to EBI conducting its business in the
                ordinary
                course during the period between the date hereof and the date of
                final
                transition and there having been no material adverse change in EBI’s
                business, financial condition or
                prospects.

            

    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    2.
      Expenses.
      EBI, on
      one hand and Xfone.USA,
      on the
      other hand, shall bear their respective expenses, costs and fees (including
      attorneys and accountants) in connection with the Transaction contemplated
      herby.

    

    3.
      Public
      Announcements.
      Neither
      EBI nor Xfone.USA
      will
      make any announcement of the Transaction contemplated by this Agreement prior
      to
      the execution of this Agreement without the prior written approval of the other,
      which approval will not be unreasonably withheld or delayed. By executing this
      Agreement, EBI hereby authorizes Xfone.USA
      to
      publicize the signing of this Agreement. The foregoing shall not restrict in
      any
      respect EBI or Xfone.USA
      ability
      to communicate information concerning this Agreement and the transactions
      contemplated hereby to their respective affiliates’, officers, directors,
      employees and professional advisers, and, to the extent relevant, to third
      parties whose consent is required in connection with the transaction
      contemplated by this Agreement.

    

    4.
      Effective
      Date.
      The
      Effective Date of this Agreement will be the date that of the last signature
      affixed to this Agreement.

     

    5.
      Miscellaneous.
      This
      Agreement shall be governed by the substantive laws of the State of Mississippi
      without regard to conflict of law principles. This Agreement constitutes the
      entire understanding and agreement between the parties hereto and their
      affiliates with respect to its subject matter and supersedes all prior or
      contemporaneous agreements, representations, warranties and understandings
      of
      such parties (whether oral or written). No promise, inducement, representation
      or agreement, other than as expressly set forth herein, has been made to or
      by
      the parties hereto. This Agreement may be amended only by written agreement,
      signed by the parties to be bound by the amendment. Evidence shall be
      inadmissible to show agreement by and between such parties to any term or
      condition contrary to or in addition to the terms and conditions contained
      in
      this letter. This Agreement shall be construed according to its fair meaning
      and
      not strictly for or against either party.

    

    IN
      WITNESS WHEREOF, the Parties have executed this Agreement the day and year
      written below.

    

     

    
      	
              Xfone.USA,
                Inc.  

            	 	
              EBI

            
	 	 	 
	
              By:
                /s/ Wade Spooner

            	 	
              By:
                /s/ Gene Imes 

            
	
              Name:
                Wade Spooner

            	 	
              Name:
                Gene Imes

            
	
              Title:
                CEO/President

            	 	
              Title:
                Owner

            
	
              Date:
                1/1/06

            	 	
              Date:
                27 Dec 05

            

    

    

    
      
        
        

      

      
        -3-Exhibit
      10.71
      Asset
        Purchase Agreement

       

      Between

       

      Canufly.net,
        Inc. as Seller

       

      And

       

      XFone
        USA, Inc., as Purchaser

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 	
                PAGE

              
	
                ARTICLE
                  1 SALE
                  AND TRANSFER OF ASSETS

              	
                1

              
	
                1.1 Sale
                  and Transfer of Business and Assets 

              	
                1

              
	
                1.2 Assumption of Liabilities 

              	
                2

              
	
                1.3 Purchase
                  Price 

              	
                3

              
	
                1.4 Closing 

              	
                4

              
	
                1.5 Seller's
                  Obligations at Closing; Further Acts and Assurances 

              	
                4

              
	
                ARTICLE
                  2 REPRESENTATIONS
                  AND WARRANTIES BY SELLER AND SHAREHOLDERS 

              	
                5

              
	
                2.1 Organization,
                  Corporate Power and Qualification 

              	
                5

              
	
                2.2 Capitalization 

              	
                5

              
	
                2.3 Subsidiaries 

              	
                5

              
	
                2.4 Financial
                  Statements 

              	
                5

              
	
                2.5 Absence
                  of Undisclosed Liabilities 

              	
                6

              
	
                2.6 Letters
                  of Credit 

              	
                6

              
	
                2.7 Absence
                  of Certain Recent Changes 

              	
                6

              
	
                2.8 Title
                  to Properties 

              	
                8

              
	
                2.9 Agreements,
                  Contracts and Commitments 

              	
                8

              
	
                2.10 Burdensome
                  Agreements 

              	
                11

              
	
                2.11 Related
                  Party Transactions 

              	
                11

              
	
                2.12 Execution,
                  Delivery and Performance of Agreement; Authority 

              	
                11

              
	
                2.13 Customer
                  Contracts 

              	
                11

              
	
                2.14 Equipment 

              	
                12

              
	
                2.15 Receivables 

              	
                12

              
	
                2.16 Relationship
                  with Suppliers 

              	
                12

              
	
                2.17 Guarantees 

              	
                12

              
	
                2.18 Permits
                  and Licenses 

              	
                12

              
	
                2.19 Assets
                  Necessary to Business 

              	
                12

              
	
                2.20 Litigation 

              	
                12

              
	
                2.21 Compliance
                  With Laws and Other Instruments 

              	
                13

              
	
                2.22 Taxes 

              	
                13

              
	
                2.23 Investment
                  Representation; Legends 

              	
                14

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                2.24 Environmental
                  Matters 

              	
                14

              
	
                2.25 ERISA 

              	
                15

              
	
                2.26 Employee
                  Matters 

              	
                15

              
	
                2.27 Insurance 

              	
                15

              
	
                2.28 Labor
                  Matters 

              	
                16

              
	
                2.29 Books
                  of Account; Reports; Bank Accounts 

              	
                16

              
	
                2.30 Intellectual
                  Property 

              	
                16

              
	
                2.31 No
                  Finders or Brokers 

              	
                16

              
	
                2.32 Restrictions
                  on Business Activities 

              	
                16

              
	
                2.33 Disclosure 

              	
                16

              
	
                ARTICLE
                  3 REPRESENTATIONS
                  AND WARRANTIES OF PURCHASER 

              	
                17

              
	
                3.1 Organization
                  and Standing of Purchaser 

              	
                17

              
	
                3.2 Authority;
                  Binding Effect 

              	
                17

              
	
                3.3 No
                  Finders or Brokers 

              	
                17

              
	
                ARTICLE
                  4 COVENANTS
                  OF PURCHASER 

              	
                17

              
	
                4.1 Corporate
                  Action 

              	
                17

              
	
                4.2 Handling
                  of Documents 

              	
                17

              
	
                ARTICLE
                  5 COVENANTS
                  OF SELLER AND SHAREHOLDERS 

              	
                18

              
	
                5.1 Access
                  and Information 

              	
                18

              
	
                5.2 Conduct
                  of Business 

              	
                18

              
	
                5.3 Best
                  Efforts to Secure Consents 

              	
                18

              
	
                5.4 Unusual
                  Events 

              	
                18

              
	
                5.5 Interim
                  Financial Statements 

              	
                18

              
	
                ARTICLE
                  6 CONDITIONS
                  PRECEDENT TO THE OBLIGATIONS OF SELLER 

              	
                19

              
	
                6.1 Representations
                  and Warranties True 

              	
                19

              
	
                6.2 No
                  Obstructive Proceeding 

              	
                19

              
	
                6.3 Proceedings
                  and Documents Satisfactory 

              	
                19

              
	
                6.4 Shareholder
                  Approval 

              	
                19

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                ARTICLE
                  7 CONDITIONS
                  PRECEDENT TO THE OBLIGATIONS OF PURCHASER 

              	
                19

              
	
                7.1 Representations
                  and Warranties True 

              	
                19

              
	
                7.2 No
                  Obstructive Proceeding 

              	
                20

              
	
                7.3 Shareholder
                  Approval 

              	
                20

              
	
                7.4 Consents
                  and Approvals; Releases 

              	
                20

              
	
                7.5 Proceedings
                  and Documents Satisfactory 

              	
                20

              
	
                7.6 No
                  Adverse Change 

              	
                20

              
	
                7.7 Federal
                  and State Approvals; Licensing 

              	
                20

              
	
                7.8 Due
                  Diligence 

              	
                20

              
	
                ARTICLE
                  8 TERMINATION 

              	
                21

              
	
                8.1 Optional
                  Termination 

              	
                21

              
	
                8.2 Notice
                  of Abandonment 

              	
                21

              
	
                8.3 Mandatory
                  Termination 

              	
                21

              
	
                8.4 Termination 

              	
                21

              
	
                ARTICLE
                  9 INDEMNIFICATION 

              	
                22

              
	
                9.1 Grant
                  of Indemnity. 

              	
                22

              
	
                ARTICLE
                  10 MISCELLANEOUS 

              	
                23

              
	
                10.1 Expenses/Taxes 

              	
                23

              
	
                10.2 Notices 

              	
                23

              
	
                10.3 Entire
                  Agreement 

              	
                24

              
	
                10.4 Governing
                  Law 

              	
                24

              
	
                10.5 WAIVER
                  OF TRIAL BY JURY 

              	
                25

              
	
                10.6 Legal
                  Fees and Costs 

              	
                25

              
	
                10.7 Time 

              	
                25

              
	
                10.8 Section
                  Headings 

              	
                25

              
	
                10.9 Waiver 

              	
                25

              
	
                10.10 Exhibits 

              	
                25

              
	
                10.11 Set-off
                  Rights 

              	
                25

              
	
                10.12 Assignment 

              	
                25

              
	
                10.13 Binding
                  on Successors and Assigns 

              	
                26

              
	
                10.14 Parties
                  in Interest 

              	
                26

              
	
                10.15 Amendments 

              	
                26

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                10.16 Drafting
                  Party 

              	
                26

              
	
                10.17 Counterparts 

              	
                26

              
	
                10.18 Reproduction
                  of Documents 

              	
                26

              
	
                10.19 Public
                  Disclosure 

              	
                26

              
	
                10.20 Access
                  to Records After Closing 

              	
                27

              
	
                10.21 Non-Competition
                  and Non-Solicitation

              	
                27

              
	 	 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ASSET
        PURCHASE AGREEMENT

       

      Asset
        Purchase Agreement ("Agreement") executed as of January 10, 2006, to be
        effective as of January 1, 2006 between Canufly.net, Inc., a Mississippi
        corporation (the "Seller") and XFone USA, Inc., a Mississippi corporation
        (the
        "Purchaser"), and Michael Nassour, as the principal shareholder of the Seller
        (the "Shareholder").

       

      WHEREAS,
        Seller
        owns, holds, and uses certain assets and rights in connection with the
        telecommunications business currently operated by Seller (the
        "Business");

       

      WHEREAS,
        Purchaser
        is a wholly-owned subsidiary of XFone, Inc., an Arizona corporation
        ("XFone");

       

      WHEREAS,
        Buyer
        desires to purchase all of assets of Seller, and Seller desires to sell the
        assets to Purchaser, all in accordance with and subject to the terms and
        conditions hereinafter set forth, and

       

      NOW
        THEREFORE, in
        consideration of the foregoing and of the mutual covenants and agreements
        hereinafter set forth, the parties hereto hereby agree as follows:

       

      ARTICLE
        1  

      SALE
        AND TRANSFER OF ASSETS

       

      1.1  Sale
        and Transfer of Business and Assets.
        Subject
        to and upon the terms and conditions set forth in this Agreement, Seller
        will
        sell, transfer, convey, assign and deliver to Purchaser, and Purchaser will
        purchase, at the Closing Date hereunder, all of the business, assets,
        properties, goodwill and rights of Seller as a going concern, of every nature,
        kind and description, tangible and intangible, wheresoever located and whether
        or not carried or reflected on the books and records of Seller (hereinafter
        sometimes collectively called "Seller's Assets"), including, without limitation,
        (i) the right to use Seller's corporate name and all variations thereof other
        than canufly.org and canufly.com, and the customer list and all information
        and
        records with respect to the customers of the Seller (the “Transferred
        Customers”) together with all service contracts with the Transferred Customers
        for services provided by the Seller to the Transferred Customers, (ii) the
        assets referred to in the form of Bill of Sale attached hereto as Schedule
        "1"
        and (iii) the assets reflected on the Balance Sheet referred to in Section
        2.4
        hereof, with only such dispositions of such assets reflected on the Balance
        Sheet as shall have occurred in the ordinary course of Seller's business
        between
        the date thereof and the Closing and which are permitted by the terms hereof,
        and excluding only (a) the minute books, corporate seal and stock records
        of
        Seller, or (b) the assets set forth on Exhibit “A” to the Bill of Sale
        (collectively the "Excluded Assets"). Seller's Assets shall be conveyed free
        and
        clear of all liabilities, obligations, liens and encumbrances excepting only
        those liabilities and obligations which are expressly to be assumed by Purchaser
        hereunder and those liens and encumbrances securing the same which are
        specifically disclosed herein or expressly permitted by the terms
        hereof.

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      1.2  Assumption of Liabilities.
        Purchaser
        hereby agrees to assume, pay, perform and discharge only the liabilities
        of
        Seller set forth on Schedule 2 (the "Assumed Liabilities").

       

      It
        is
        expressly acknowledged and agreed that Purchaser will not assume and shall
        not
        be liable, either expressly or impliedly, for any of the obligations or
        liabilities of Seller of any kind and nature other than those specifically
        assumed in Section 1.2
        as set
        forth on Schedule 2; without limiting the foregoing, Purchaser shall not
        assume
        or become liable (expressly or impliedly) with respect to any of the
        following:

       

      (a)  except
        as
        set forth on Schedule 2, any liability of Seller, either directly or indirectly,
        for either principal or interest, with respect to advances or loans made
        to or
        owed by Seller;

       

      (b)  any
        liability or claim arising out of or related to the operation and use of
        the
        Seller's Assets prior to the Closing Date (as hereinafter defined), including,
        without limitation, any obligations or liabilities of Seller with respect
        to
        contract, negligence, strict liability in tort, product liability or breach
        of
        warranty claims;

       

      (c)  except
        as
        set forth on Schedule 2, any liability arising out of any employee benefit
        plans
        maintained by Seller for the benefit of any employees of Seller or any other
        liability of Seller with respect to any employees including but not limited
        to
        incentive compensation plans, severance pay, accrued salaries, wages, bonuses,
        payroll taxes, hospitalization and medical insurance, deferred compensation
        and
        vacation and sick pay;

       

      (d)  any
        liability attributable to personal property tax assessed by any governmental
        entity, federal, state, or local, against any of the assets to be conveyed
        or
        leased hereunder, such taxes to remain the responsibility of Seller;
        and

       

      (e)  any
        liability for any other tax assessed by any governmental entity, federal,
        state,
        or local, attributable to the business of Seller relating to the period on
        or
        before the Closing Date, including but not limited to, any income, franchise,
        excise, sales, or use taxes.

       

      Seller
        covenants and agrees to satisfy or pay when due, any and all liabilities
        of
        Seller not expressly assumed by Purchaser.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      1.3  Purchase
        Price.

       

      (a)  In
        consideration of the sale, transfer, conveyance, assignment and delivery
        of the
        Seller's Assets by Seller to Purchaser, and in reliance upon the representations
        and warranties made herein by Seller, Purchaser will, in full payment thereof,
        pay to Seller at the Closing a total purchase price of up to $740,000.00,
        payable as follows:

      (i)  Cash
        in
        the amount of One Hundred Eighty-five Thousand and no/100 Dollars payable
        in
        twelve equal monthly installments with the first installment of $15,416.66
        to be
        paid at closing and thereafter on the last day of the month for the eleven
        months following closing. 
         

      

      (ii)  Purchaser
        shall payoff the loan with the B&K Bank in an amount not to exceed
        $275,000.

       

      (iii)  A
        number
        of restricted shares of the common stock of XFone, Inc. (“Purchaser Common
        Stock”) with an agreed market value of $90,000.00 determined using the average
        closing price of the Parent Common Stock for the ten (10) trading days preceding
        the trading day immediately prior to the Closing Date, which shall be issued
        to
        the Seller’s stockholders on a pro-rata basis based on their respective
        ownership interest in the Seller as certified by the Seller and Stockholder
        at
        Closing. 

       

      (iv)  A
        number
        of Parent Stock Warrants (as defined herein) with a value of $45,000.00
        calculated one day prior to the Closing Date assuming a 90% volatility of
        the
        underlying Parent Common Stock pursuant to the Black Scholes option - pricing
        model, which shall be issued to the stockholders of Seller on a pro-rata
        basis
        based on their respective ownership interest in the Seller as certified by
        the
        Seller and Stockholder as of the Closing Date. “Parent Stock Warrants’ shall
        mean warrants convertible on a one to one basis into Parent Common Stock
        with a
        term of five (5) years, a strike price that is 10% above the closing price
        of
        the Parent Common Stock on the Closing Date and the Parent Common Stock into
        which the warrant is convertible is restricted stock.

       

      (v)  Escrow
        Additional Parent Common Stock and Additional Common Stock Warrants. Provided
        that one year from the Closing Date, the monthly revenue from the Transferred
        Customers is at 85% or more of the December 2005 monthly revenue of the
        Transferred Customers as set forth in Schedule 3 hereto, then there shall
        be
        issued a number of Parent Common Stock with a value equal to $90,000 and
        Parent
        Stock Warrants equal in value to $45,000, which Parent Common Stock and Parent
        Stock Warrants shall be valued as on the same basis the Parent Common Stock
        and
        Parent Stock Warrants issued at the Closing Date; provided for every one
        percent
        (1%) that the average customer billings fall below eighty-five percent, then
        there would be a reduction in value of $2,450 for the Parent Stock Warrants
        and
        $4,950 for the Parent Common Stock; and further provided there shall be a
        dollar
        for dollar reduction for any Loss (as defined in Article 9) of the Purchaser
        Indemnified Parties, for which two-thirds of the Loss shall be applied to
        reduce
        the amount of the Parent Common Stock and one-third of the Loss shall be
        applied
        to reduce the amount of Parent Stock Warrants. In the event a claim for a
        Loss
        has been made but not finally determined, then an amount of Parent Common
        Stock
        and Parent Stock Warrants shall be reserved to cover the alleged Loss until
        finally resolved. During the one year period, the Purchaser shall provide
        to the
        Seller on a monthly basis as report of the monthly revenue billings for the
        Transferred Customers. At the end of the one year period, the Purchaser shall
        provide notice to the Seller of the amount of the Escrow Additional Parent
        Common Stock and Additional Stock Warrants it proposes to be issued and the
        basis therefore based on the calculation of the monthly revenue of the
        Transferred Customers. In the event the Seller does not notify the Purchaser
        in
        writing within ten business days from the date of receipt of the notice that
        it
        disputes the calculation, the calculation shall be deemed final. In the event
        the Seller shall dispute the calculation by giving notice, then in such event
        the parties shall attempt in good faith for thirty (30) days to resolve the
        dispute and if the parties are able to resolve the dispute, the parties shall
        set forth its agreement in writing. In the event the parties are not able
        to
        resolve the dispute, the parties agree to submit the claim to arbitration
        to be
        administered by the American Arbitration Association in accordance with its
        Commercial Arbitration Rules by a single arbitrator and the decision of the
        arbitrator shall be binding on the parties. The Additional Parent Common
        Stock
        and Parent Stock Warrants shall be issued to the Canufly.net, Inc. stockholders
        on the same basis as the Parent Common Stock and Parent Stock Warrants issued
        at
        Closing.

       

      
        
          
          

        

        
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      1.4  Closing.
        The
        Closing shall take place at 10:00 A.M., local time, on the 24th day of January,
        2006 at the offices of Watkins Ludlam Winter & Stennis, P.A. or such other
        time and place as the parties may agree upon provided that the parties agree
        that the closing and transfer of assets shall be effective as of January
        1, 2006
        (the “Closing Date”). January 1, 2006 is herein sometimes referred to as the
        Closing Date. In the event either of the parties is entitled not to close
        on the
        scheduled date because a condition to the Closing set forth in Article 6
        or 7
        hereof has not been met (or waived by the party or parties entitled to waive
        it), such party may postpone the Closing from time to time, by giving at
        least
        five days prior notice to the other party, until the condition has been met
        (which all parties will use their best efforts to cause to happen), but in
        no
        event to a date later than June 30, 2006.

      
         

      

      1.5  Seller's
        Obligations at Closing; Further Acts and Assurances.

       

      (a)  At
        the
        Closing, Seller will deliver to Purchaser and the Purchaser will deliver
        the
        Purchase Price:

       

      (i)  a
        Bill of
        Sale duly executed by Seller in the form of Schedule “1” annexed hereto (the
“Bill of Sale”);

       

      (ii)  a
        certificate of the Seller setting forth (i) all the stockholders of the Seller
        as of the Closing Date and the number of shares owned by each and each
        stockholders respective ownership interest in the Seller at the Closing Date;
        (ii) a certified resolution of the Seller’s Board of Directors and Shareholder
        approving this Agreement and the transactions contemplated hereby; and (iii)
        the
        certifications required by Article 7;

       

      (iii)  all
        Required Consents as set out in Exhibit
        5.3
        of the
        Exhibit Volume;

       

      (iv)  such
        other good and sufficient instruments of conveyance, and transfer, in form
        and
        substance satisfactory to Purchaser's counsel, as shall be effective to vest
        in
        Purchaser good and marketable title to Seller's Assets;

       

      (v)  all
        contracts, files and other data and documents pertaining to Seller's Assets,
        except Seller's minute books and stock ledger records; and

       

      (vi)  all
        documents required to be delivered to Purchaser under the provisions of this
        Agreement.

       

      (b)  At
        any
        time and from time to time after the Closing, at Purchaser's request and
        without
        further consideration, Seller and Shareholder will execute and deliver such
        other instruments of sale, transfer, conveyance, assignment and confirmation
        and
        take such action as Purchaser may reasonably deem necessary or desirable
        in
        order to more effectively transfer, convey and assign to Purchaser, and to
        confirm Purchaser's title to, all of Seller's Assets, to put Purchaser in
        actual
        possession and operating control thereof and to assist Purchaser in exercising
        all rights with respect thereto.

       

      (c)  Seller
        agrees that Purchaser shall have the right and authority to collect for its
        own
        account all receivables and other items which shall be transferred to Purchaser
        as provided herein and to endorse with the name of Seller any checks received
        on
        account of any such receivables or other items. Seller agrees that it will
        promptly transfer and deliver to Purchaser any cash or other property which
        Seller may receive in respect of such receivables or other items.

       

      
        
          
          

        

        
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      ARTICLE
        2  

      REPRESENTATIONS
        AND WARRANTIES BY SELLER AND SHAREHOLDERS

       

      Seller
        and Shareholder, jointly and severally, hereby represent and warrant to
        Purchaser as follows:

       

      2.1  Organization,
        Corporate Power and Qualification.
        Seller
        is
        a corporation duly organized, validly existing and in good standing under
        the
        laws of the State of Mississippi and has full corporate power and authority
        and
        all authorizations, licenses and permits necessary to own, lease and operate
        its
        properties and assets and to carry on its business as and where it is now
        being
        conducted, to enter into this Agreement, and to consummate the transactions
        contemplated hereby Seller is duly qualified to do business and is in good
        standing in each jurisdiction in which the character of the properties owned
        or
        leased by it or the nature of the business transacted by it makes such
        qualification necessary. A copy of Seller's Articles of Incorporation and
        all
        amendments thereto as of the date hereof and a copy of Seller's by-laws,
        as
        amended to the date hereof (both certified by the Secretary of Seller), are
        included as Exhibit
        2.1B
        of the
        Exhibit Volume and are true, accurate and complete as of the date hereof.
        

       

      2.2  Capitalization.
        Except
        as
        noted in Exhibit
        2.2,
        the
        authorized capital stock of Seller consists of 1,000,000 shares of no par
        value
        common stock, of which as of the date hereof, 669,154.92 shares have been
        duly
        authorized by all necessary corporate action on the part of Seller, are validly
        issued and outstanding, fully paid and non-assessable and all of which are
        owned
        beneficially and of record by the Shareholders as set forth in Exhibit
        2.2.
        There
        are no other authorized or outstanding or authorized equity securities of
        Seller
        of any class, kind or character, and there are no outstanding rights, contracts,
        rights to subscribe, conversion rights, exchange rights, warrants, options,
        calls puts or other agreements or commitments of any character relating to
        the
        capital stock of Seller or any securities convertible or exchangeable or
        exercisable for any shares of stock of any class of capital stock of
        Seller.

       

      2.3  Subsidiaries.
        Seller
        has and at Closing will have no direct or indirect ownership interest in,
        by way
        of stock ownership or otherwise, any corporation, association, joint venture,
        partnership or business enterprise and has no commitment to purchase any
        such
        interest, direct or indirect.

       

      2.4  Financial
        Statements.
        Exhibit
        2.4
        consists
        of the following financial statements of Seller: unaudited balance sheet
        (“Balance Sheet”) of Seller as of December 31, 2005 (“Balance Sheet Date”) and
        unaudited Statement of Operations of Seller for the month ending December
        31,
        2005 and year ending 2005, (unaudited financial statements and the related
        notes
        being herein called "Seller Financial Statements").

       

      The
        Seller Financial Statements are true, complete and accurate, have been based
        upon the information contained in the books and records of Seller and present
        fairly the assets, liabilities and financial condition of Seller as at the
        respective dates thereof and the results of their operations for the periods
        ended at the respective dates thereof, in each case prepared in conformity
        with
        generally accepted accounting principles applied on a consistent basis
        throughout the periods involved and with prior periods, except that in the
        unaudited portion of the Seller Financial Statements (i) are subject to year-end
        audit adjustments, and (ii) do not contain footnotes. The Seller Financial
        Statements do not contain any material inaccuracy and do not suffer from
        any
        material omissions.

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

      2.5  Absence
        of Undisclosed Liabilities. Except
        as
        and to the extent reflected or reserved against in the Balance Sheet as of
        the
        Balance Sheet Date, Seller had no liabilities, claims or obligations (whether
        accrued, absolute, contingent, unliquidated or otherwise, whether or not
        known
        to Seller or Shareholder or any directors, officers or employees of Seller,
        whether due to become payable and regardless of when or by whom asserted).
        Since
        the Balance Sheet Date, Seller has not made any contract, agreement or
        commitment or incurred any obligation or liability (contingent or otherwise),
        nor has there been any discharge or satisfaction of any obligation or liability
        owed by Seller, which is not in the ordinary course of business nor has there
        occurred any loss or material injury to any of the Seller’s Assets as the result
        of any fire, accident, act of God or the public enemy, or other casualty,
        or any
        adverse material change in the any of the Seller’s Assets or in the condition
        (financial or otherwise) of the Business. 

       

      2.6  Letters
        of Credit.
        Except
        as
        disclosed in Exhibit
        2.6
        hereto,
        there are no outstanding letters of credit issued at the request of Seller
        to
        any suppliers or obligees of Seller with respect to the operations of
        Seller.

       

      2.7  Absence
        of Certain Recent Changes.
        Except
        as
        expressly provided in this Agreement or as set forth on Exhibit
        2.7
        in
        alphabetical order corresponding to the following subsections since the Balance
        Sheet Date, and through the Closing Date, Seller has not been and will not
        have:

       

      (a)  except
        current liabilities for trade or business obligations incurred in connection
        with the purchase of goods or services in the usual and ordinary course of
        business, consistent with past practice, and in an amount which is usual
        and
        normally incurred, both individually and in the aggregate, any indebtedness
        or
        other liabilities (whether accrued, absolute, contingent or otherwise),
        guaranteed any indebtedness or sold any assets other than inventory in the
        normal course of business;

       

      (b)  suffered
        any damage, destruction or loss, whether or not covered by
        insurance;

       

      (c)  suffered
        the resignation or other termination of any management personnel of Seller,
        or
        the loss of or other termination of a business relationship with any customers
        or suppliers of Seller's business;

       

      (d)  increased
        the regular rate of compensation payable to any employee, other than normal
        merit and cost of living increases granted in the ordinary course of business;
        or increased such compensation by bonus, percentage, compensation service
        award
        or similar arrangement theretofore in effect for the benefit of any employees,
        and no such increase is required;

       

      (e)  established
        or agreed to establish, amended or terminated any pension, retirement or
        welfare
        plan or arrangement for the benefit of their employees not theretofore in
        effect;

       

      (f)  suffered
        any change in financial condition, assets, liabilities, operations, prospects
        or
        business or suffered any other event or condition of any character which
        individually or in the aggregate has or might reasonably have a material
        adverse
        effect on Seller;

       

      
        
          
          

        

        
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      (g)  had
        any
        change in the capitalization of Seller, including, without limitation, the
        issuance by Seller of any shares of stock of any class, any subscriptions,
        options, warrants, convertible securities, rights, calls, agreements,
        commitments or rights affecting or relating in any manner whatsoever to any
        equitable interests in Seller;

       

      (h)  declared
        or paid any dividend or other distribution on any class of the capital stock
        of
        Seller or purchased or redeemed any of its capital stock;

       

      (i)  failed
        to
        replenish its inventories and supplies in a normal and customary manner
        consistent with past practice and prudent business practice prevailing in
        the
        industry or made any purchase commitments in excess of normal, ordinary and
        usual for the business or at any price in excess of current market price
        or
        terms more onerous than customary in the industry or made any change in its
        selling, pricing, advertising or personnel practices inconsistent with prior
        practices and prudent business practices prevailing in the
        industry;

       

      (j)  experienced
        any labor organizational efforts, strikes or complaints other than grievance
        procedures in the ordinary course of business or entered into any collective
        bargaining agreements with any union;

       

      (k)  made
        any
        single capital expenditure which exceeded $2,000 or made aggregate capital
        expenditures which exceeded $10,000;

       

      (l)  permitted
        or allowed any of the Seller's Assets (real, personal or mixed, tangible
        or
        intangible) to be subjected to any mortgage, pledge, lien, security interest,
        encumbrance, restriction or charge of any kind;

       

      (m)  written
        down the value of any of the Seller's Assets, or written off as uncollectible
        any notes or accounts receivable;

       

      (n)  paid,
        discharged or satisfied any claims, liabilities or obligations (absolute,
        accrued, contingent or otherwise) other than in the usual and ordinary course
        of
        business;

       

      (o)  canceled
        any debts or waived any claims or rights whether or not in the usual and
        ordinary course of business;

       

      (p)  paid,
        lent or advanced any amount to, or sold, transferred or leased any properties
        or
        assets (real, personal or mixed, tangible or intangible) to, or entered into
        any
        agreement or arrangement with, Seller or any of the officers or directors
        of
        Seller or of any "affiliate" or "associate" of any of their officers or
        directors (as such terms are defined in the rules and regulations of the
        Securities and Exchange Commission under the Securities Act of 1933, as
        amended), except for reimbursement of ordinary and reasonable business expenses
        related to the business of Seller and compensation to officers at rates not
        exceeding the rates of compensation at the Balance Sheet Date;

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      (q)  amended,
        terminated or otherwise altered (whether by action or inaction) any contract,
        agreement or license to which Seller is a party, or received any notice of
        termination or violation of the same;

       

      (r)  entered
        into a material transaction other than in the ordinary course of business
        or
        made any change in any method of accounting or accounting practice;

       

      (s)  canceled,
        or failed to continue, insurance coverages; or

       

      (t)  agreed,
        whether in writing or otherwise, to take any action described in this
§ 2.7.

       

      2.8  Title
        to Properties.

       

      (a)  The
        Seller has good and valid title to, or, in the case of leased properties
        and
        assets, valid leasehold interests in, all of its properties and assets, real,
        personal and mixed, used or held for use in its business, free and clear
        of any
        Liens, except: (i) as reflected in the Financials; (ii) Liens for Taxes not
        yet
        due and payable; and (iii) such imperfections of title and encumbrances,
        if any,
        which do not detract materially from the value of, or interfere materially
        with
        the present use of, the property subject thereto or affected
        thereby.

       

      (b)  Exhibit
        2.8
        contains
        an accurate and complete list and description of all real property owned
        by the
        Seller or in which the Seller has a leasehold or other interest or which
        is used
        by the Seller in connection with the operation of its business (the “Real
        Property”), together with a description of each lease, sublease, license, or any
        other instrument under which the Seller claims or holds such leasehold or
        other
        interest or right to the use thereof or pursuant to which the Seller has
        assigned, sublet or granted any rights therein, identifying the parties thereto,
        the rental or other payment terms, expiration date and cancellation and renewal
        terms thereof, and all machinery, tools, equipment, motor vehicles, rolling
        stock and other tangible personal property (other than inventory and supplies),
        owned, leased or used by the Seller except for items having a value of less
        than
        $2,000 which do not, in the aggregate, have a total value of more than $10,000,
        setting forth with respect to all such listed property a summary description
        of
        all leases, liens, claims, encumbrances, charges, restrictions, covenants
        and
        conditions relating thereto, identifying the parties thereto, the rental
        or
        other payment terms, expiration date and cancellation and renewal terms
        thereof.

       

      (c)  The
        Seller has not granted to any third party any right or license to use the
        Seller's customer lists, customer contact information, customer correspondence
        or customer licensing and purchasing histories relating to its current and
        former customers.

       

      2.9  Agreements,
        Contracts and Commitments.
        

       

      (a)  Except
        as
        set forth on Exhibit
        2.9
        of the
        Exhibit Volume, the Seller is not presently a party to or bound by:

       

      (i)  any
        employment, consulting or sales agreement with any employee, consultant or
        salesperson of the Seller;

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

      (ii)  any
        agreement or plan relating to employee benefits or compensation, including
        without limitation any option plan or purchase plan with respect to Equity
        Interests of the Seller, any of the benefits of which will be increased,
        or the
        vesting of benefits of which will be accelerated, by the occurrence of any
        of
        the transactions contemplated by this Agreement or the value of any of the
        benefits of which will be calculated on the basis of any of the transactions
        contemplated by this Agreement;

       

      (iii)  any
        fidelity or surety bond or completion bond;

       

      (iv)  any
        lease
        of personal property having an annual rental rate in excess of $2,000
        individually or $15,000 in the aggregate;

       

      (v)  any
        agreement, contract or commitment relating to capital expenditures and involving
        future payments in excess of $2,000 individually or $10,000 in the
        aggregate;

       

      (vi)  any
        agreement, contract or commitment relating to the disposition or acquisition
        of
        assets or any interest in any business enterprise outside the ordinary course
        of
        the Seller's business;

       

      (vii)  any
        payables, mortgages, indentures, guarantees, loans or credit agreements,
        security agreements or other agreements or instruments relating to the borrowing
        of money or extension of credit or evidencing any debt or any payable, debt
        or
        agreement which is secured by any assets of the Seller;

       

      (viii)  any
        purchase order or contract for the purchase of materials or services involving
        in excess of $2,000 individually or $10,000 in the aggregate;

       

      (ix)  any
        construction contracts;

       

      (x)  any
        dealer, distribution, joint marketing or development agreement or agreements
        relating to territorial arrangements, sales representation, operating or
        consulting agreements;

       

      (xi)  any
        remarketer, reseller or other agreement for use or distribution of the Seller's
        products, technology or services;

       

      (xii)  any
        supplier or third party provider agreements;

       

      (xiii)  any
        joint
        venture, partnership or other management agreements;

       

      
        
          
          

        

        
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      (xiv)  any
        advertising, marketing, telemarketing or promotional agreements; yellow pages
        ad

       

      (xv)  any
        tax
        sharing agreement with any other party;

       

      (xvi)  any
        non-compete or other agreements restricting the business in any
        way;

       

      (xvii)  any
        independent agent or independent contractor agreements;

       

      (xviii)  any
        agreements for the discount of the services or products offered by the Seller;
        Wireless Services - City of Vicksburg; Culkin Water; Michael Nassour; Domains
        -
        Roy Strickland

       

      (xix)  any
        agreements pursuant to which the Seller is obligated to indemnify any
        party;

       

      (xx)  any
        agreements with any current or former officer, director, employee, consultant
        or
        equity holder or any partnership, corporation, joint venture or other entity
        in
        which any such person has an interest;

       

      (xxi)  any
        irrevocable right of use or similar agreements;

       

      (xxii)  any
        agreement providing for the purchase of telecommunications minutes, services
        or
        traffic; or

       

      (xxiii)  any
        other
        agreement, contract or commitment that involves $2,000 individually or $20,000
        in the aggregate or more and is not cancelable without penalty within thirty
        (30) calendar days.

       

      (b)  The
        Seller is in compliance with and has not breached, violated or defaulted
        under,
        or received notice that it has breached, violated or defaulted under, any
        of the
        terms or conditions of any agreement, contract, lease, license or commitment
        to
        which it is a party or by which it is bound, including those included on
        Exhibit
        2.7
        (collectively, the "Contracts"),
        nor
        does the Seller have knowledge of any event that would constitute such a
        material breach, violation or default with the lapse of time, giving of notice
        or both. Each Contract is in full force and effect and is not subject to
        any
        material default thereunder, nor, to the knowledge of the Seller, is any
        party
        obligated to the Seller pursuant thereto subject to any material default
        thereunder.

       

      (c)  The
        Seller has obtained, or will obtain prior to the Closing Date, all necessary
        consents, waivers and approvals of parties to any Contract as are required
        thereunder in connection with the Merger or for such Contracts to remain
        in
        effect without modification, limitation or alteration after the Closing Date.
        Following the Closing Date, the Seller will be permitted to exercise all
        of its
        rights under the Contracts without the payment of any additional amounts
        or
        consideration other than amounts or consideration which the Seller would
        otherwise be required to pay had the transactions contemplated by this Agreement
        not occurred.

       

      
        
          
          

        

        
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      2.10  Burdensome
        Agreements.
        Except
        as
        is set forth in Exhibit
        2.10
        of the
        Exhibit Volume, Seller is not a party to, nor are any of the properties or
        assets of Seller subject to or bound or affected by, any provision of any
        order
        of any court or other agency of government or any indenture, agreement or
        other
        instrument or commitment which adversely affects the operations, earnings,
        assets, properties, liabilities, business or prospects of Seller or Seller's
        condition, financial or otherwise.

       

      2.11  Related
        Party Transactions.
        Except
        as set forth on Exhibit
        2.11,
        during
        the past three years Seller has not, directly or indirectly, purchased, leased
        from others or otherwise acquired any property or obtained any services from,
        or
        sold, leased to others or otherwise disposed of any property or furnished
        any
        services to, or otherwise dealt with (except with respect to remuneration
        for
        services rendered as a director, officer or employee of Seller), in the ordinary
        course of business or otherwise, (i) any shareholder of Seller or (ii) any
        person, firm or corporation which, directly or indirectly, alone or together
        with others, controls, is controlled by or is under common control with Seller
        or any shareholder of Seller. Seller does not owe any amount to, or have
        any
        contract with or commitment to, any of its shareholders, directors, officers,
        employees or consultants (other than compensation for current services not
        yet
        due and payable and reimbursement of expenses arising in the ordinary course
        of
        business), and none of such persons owes any amount to Seller. No part of
        the
        property or assets of any Shareholder or any direct or indirect subsidiary
        or
        affiliate of any Shareholder is used by Seller.

       

      2.12  Execution,
        Delivery and Performance of Agreement; Authority.
        Neither
        the execution, delivery nor performance of this Agreement by Seller or
        Shareholder will, with or without the giving of notice or the passage of
        time,
        or both, conflict with, result in a default, right to accelerate or loss
        of
        rights under, or result in the creation of any lien, charge or encumbrance
        pursuant to, any provision of Seller's certificate of incorporation or bylaws
        or
        any franchise, mortgage, deed of trust, lease, license, agreement,
        understanding, law, rule or regulation or any order, judgment or decree to
        which
        Seller or Shareholder is a party or by which any of them may be bound or
        affected. Seller and Shareholder have the full power and authority to enter
        into
        this Agreement and to carry out the transactions contemplated hereby, all
        proceedings required to be taken by each of them to authorize the execution,
        delivery and performance of this Agreement and the agreements relating hereto
        have been properly taken and this Agreement and each document to be executed
        in
        connection herewith constitutes a valid and binding obligation enforceable
        in
        accordance with its terms against Seller and Shareholder.

       

      2.13  Customer
        Contracts.
        The
        contracts, agreements, understandings and commitments set forth and described
        in
Exhibit
        2.13 (the
        "Customer
        Contracts") are
        all
        of the customer contracts, agreements, commitments or understandings (both
        written and oral) relating to the business and operations thereof to which
        the
        Seller is a party. Separately described in Exhibit
        2.13
        of the
        Exhibit Volume are all Customer Contracts of the Seller that have generated
        $2,000 or more in revenue in any month since June 1, 2004 ("Significant
        Customer Contracts").

       

      The
        Seller has not entered into any binding agreement with respect to any Customer
        Contract that could adversely affect the Sellers' ability to enforce its
        rights
        under such Customer Contract. The Seller has delivered true and complete
        copies
        of all written Customer Contracts (and all amendments and modifications thereto)
        to Parent and Subsidiary prior to the execution of this Agreement, and each
        Customer Contract represents the entire agreement between the Seller and
        any
        other party to such Customer Contract.

       

      Since
        120
        days prior to the date of this Agreement, (i) no customer (or group of related
        customers) purchasing in the aggregate $2,000 in products and services over
        the
        past twelve (12) months-has terminated its relationship with the Seller,
        and
        (ii) the Seller has not received any written or oral communication from any
        customer (or group of related customers) purchasing in the aggregate $2,000
        in
        products and services over the past twelve (12) months to the effect that
        such
        customer (or group of related customers) is experiencing financial difficulties
        which reasonably could be expected to affect adversely full and timely payment
        by such customer for services rendered by the Seller.

       

      
        
          
          

        

        
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      2.14  Equipment.
        All
        assets of Seller consisting of personal property, including furniture, fixtures
        or equipment, whether reflected in the Seller Financial Statements or otherwise,
        are well maintained and in good operating condition, except for reasonable
        wear
        and tear and except for items which have been written down in the Seller
        Financial Statements to a realizable market value or for which adequate reserves
        have been provided in the Seller Financial Statements. The present quantity
        of
        all such furniture, fixtures or equipment of Seller is reasonable and warranted
        in the present course of the business conducted by Seller. The only transactions
        related thereto since the Balance Sheet Date, have been additions thereto
        in the
        ordinary course of business.

       

      2.15  Receivables.
        All
        receivables of Seller (including accounts receivable, loans receivable and
        advances) which are reflected in the Balance Sheet, and all such receivables
        which will have arisen since the date thereof, shall have arisen only from
        bona
        fide transactions in the ordinary course of Seller's business and shall be
        (or
        have been) fully collected when due, or in the case of each account receivable
        within 90 days after it arose, without resort to litigation and without offset
        or counterclaim, in the aggregate face amounts thereof except to the extent
        of
        the normal allowance for doubtful accounts with respect to accounts receivable
        computed as a percentage of sales consistent with Seller's prior practices
        as
        reflected on the most recent annual Financial Statement.

       

      2.16  Relationship
        with Suppliers.
        The
        Seller or Shareholder do not know of any written or oral communication, fact,
        event or action which exists or has occurred within 120 days prior to the
        date
        of this Agreement which would indicate that any current supplier to the Company
        or its Subsidiaries of items or services essential to the conduct of the
        business of the Company and its Subsidiaries may terminate or materially
        reduce
        its business with the Company.

       

      2.17  Guarantees.
        There
        are
        no guarantees, matters of suretyship and contingent liabilities of Seller
        not
        reflected in the Seller Financial Statements.

       

      2.18  Permits
        and Licenses.
        Included
        as Exhibit
        2.18
        in the
        Exhibit Volume is a schedule of permits and licenses, listing and briefly
        describing each permit, license or similar authorization from each governmental
        authority issued with respect to the operation or ownership of properties
        by
        Seller together with the designation of the respective expiration dates of
        each,
        and also listing and briefly describing each association in which Seller
        is a
        member and each association or governmental authority by which Seller is
        accredited or otherwise recognized. Seller is not required to obtain any
        additional permits, licenses or similar authorizations from any governmental
        authority for the proper conduct of its business other than those listed
        on
Exhibit
        2.18
        in the
        Exhibit Volume.

       

      2.19  Assets
        Necessary to Business.
        Seller
        presently has and at Closing will have and transfer to Purchaser title to
        all
        property and assets, real, personal and mixed, tangible and intangible, and
        all
        leases, licenses and other agreements, necessary to permit Purchaser to carry
        on
        the business of Seller.

       

      2.20  Litigation.
        Except
        as set forth in Exhibit
        2.20,
        there
        is no claim, legal action, suit, arbitration, governmental investigation
        or
        other legal or administrative proceeding, nor any order, decree or judgment
        in
        progress, pending or in effect, or to the knowledge of Seller or any Shareholder
        threatened, against or relating to Seller, its officers, directors or employees,
        its properties, assets or business or the transactions contemplated by this
        Agreement, and neither Seller nor any Shareholder knows or has reason to
        be
        aware of any basis for the same.

       

      
        
          
          

        

        
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      2.21  Compliance
        With Laws and Other Instruments.
        Except
        as set forth in Exhibit
        2.21,
        Seller
        has complied with all existing laws, rules, regulations, ordinances, orders,
        judgments and decrees now or hereafter applicable to its business, properties
        or
        operations as presently conducted. Neither the ownership nor use of Seller's
        properties nor the conduct of its business conflicts with the rights of any
        other person, firm or corporation or violates, or with or without the giving
        of
        notice or the passage of time, or both, will violate, conflict with or result
        in
        a default, right to accelerate or loss of rights under, any terms or provisions
        of its certificate of incorporation or bylaws as presently in effect, or
        any
        lien, encumbrance, mortgage, deed of trust, lease, license, Agreement,
        understanding, law, ordinance, rule or regulation, or any order, judgment
        or
        decree to which Seller is a party or by which it may be bound or affected.
        Neither Seller nor any Shareholder is aware of any proposed laws, rules,
        regulations, ordinances, orders, judgments, decrees, governmental takings,
        condemnations or other proceedings which would be applicable to its business,
        operations or properties and which might adversely affect its properties,
        assets, liabilities, operations or prospects, either before or after
        Closing.

       

      2.22  Taxes.
        All
        taxes, including, without limitation, income, property, sales, use, franchise,
        added value, employees' income, withholding and social security taxes imposed
        by
        the United States, or any foreign country or by any state, municipality,
        subdivision or any other taxing authority, which are due and payable by Seller
        and any interest or penalties thereon having been paid in full. All federal,
        state and other tax returns of Seller and its subsidiaries required by law
        to be
        filed have been timely filed, and Seller and its subsidiaries have paid or
        accrued on the balance sheets included in the Seller Financial Statements
        (including taxes on properties, income, franchises, licenses, sales and
        payrolls) which have become due pursuant to such returns or pursuant to any
        assessment. All such tax returns have been prepared in compliance with all
        applicable laws and regulations and are true and accurate in all respects.
        The
        amounts set up as provisions for taxes (including provision for deferred
        income
        taxes) on the Seller Financial Statements are sufficient for the payment
        of all
        unpaid federal, state, county and local taxes accrued for or applicable to
        all
        periods (or portions thereof) ending on or before the Closing Date. Except
        as
        disclosed in Exhibit
        2.22-A
        of the
        Exhibit Volume, there are no tax liens on any of the property of Seller except
        those with respect to taxes not yet due and payable. There are no pending
        tax
        examinations nor has Seller received a revenue agent's report asserting a
        tax
        deficiency. Seller does not expect any taxing authority to claim or assess
        any
        amount of additional taxes against it. No claim has ever been made by a taxing
        authority in a jurisdiction where Seller does not file tax returns that Seller
        or any of its subsidiaries is or may be subject to taxes assessed by such
        jurisdiction. The Federal income tax liability of Seller and its subsidiaries
        has been examined and reported on by the Internal Revenue Service (or closed
        by
        applicable statutes) and satisfied for all fiscal years prior to and including
        the fiscal year ended December 31, 2001. Seller has never filed a consent
        under § 341(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
        relating to collapsible corporations.

       

      Copies
        of
        Seller's last three federal, state and local income tax returns are included
        as
Exhibit
        2.22-B
        of the
        Exhibit Volume. No waivers of any statute of limitations relating to the
        payment
        of taxes have been given by Seller and no waivers therefor have been requested
        by the Internal Revenue Service from Seller. No extensions have been obtained
        to
        file any tax return which has not heretofore been filed. Seller and its
        subsidiaries have withheld from each payment made to employees of Seller
        and its
        subsidiaries the amount of all taxes (including, but not limited to, federal,
        state and local income taxes and Federal Insurance Contribution Act taxes)
        required to be withheld therefrom and all amounts customarily withheld
        therefrom, and have set aside all other employee contributions or payments
        customarily set aside with respect to such wages and have paid or will pay
        the
        same to, or have deposited or will deposit such payment with, the proper
        tax
        receiving officers or other appropriate authorities.

       

      
        
          
          

        

        
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      2.23  Investment
        Representation; Legends.
        The
        Seller acknowledges and agrees:

       

      (a)  The
        Parent Common Stock and the Parent Stock Warrants to be issued pursuant to
        the
        terms of this Agreement have not been registered under the Securities Act
        of
        1933 as amended (the "Securities Act") and the Parent Common Stock and Parent
        Stock Warrants are "restricted securities" as the term is defined in Rule
        144
        promulgated by the Securities and Exchange Commission (the "SEC") under the
        Securities Act and the Seller shareholders cannot transfer any of such Parent
        Common Stock and Parent Stock Warrants unless such shares are subsequently
        registered under the Securities Act or in a transfer that, in the opinion
        of
        legal counsel to Parent, is exempt from such registration.

       

      (b)  Each
        shareholder of the Seller has been advised that the Parent Common Stock and
        the
        Parent Stock Warrants issued hereunder have not been and are not being
        registered under the Securities Act or under the Blue Sky laws of any
        jurisdiction, and that Parent in issuing such shares is relying upon, among
        other things, the representations and warranties of the Seller and Stockholders
        contained in this Section including that such issuance is a "private offering"
        and does not require compliance with the registration provisions of the
        Securities Act

       

      (c)  The
        Parent Common Stock and all the Parent Stock Warrants to be issued in the
        Merger
        shall be characterized as "restricted securities" for purposes of Rule 144
        under
        the Securities Act, and each certificate representing any of such shares
        shall
        bear a legend identical or similar in effect to the following legend (together
        with any other legend or legends required by applicable state securities
        laws or
        otherwise):

       

      THE
        SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
        ACT
        OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES
        LAWS,
        AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED
        OR
        HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT AND SUCH LAWS OR IN
        COMPLIANCE WITH AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

       

      2.24  Environmental
        Matters.
        Except
        as disclosed on Exhibit
        2.24:

       

      (a)  All
        federal, state and local permits, licenses and authorizations required for
        the
        use and operation of the Seller's Assets or the Real Property have been obtained
        and are presently in effect.

       

      (b)  None
        of
        the Seller's Assets or the Real Property has been used by Seller or by any
        other
        Person at any time to handle, treat, store or dispose of any hazardous or
        toxic
        waste or substance, nor are any of the Seller's Assets or the Real Property,
        including all soils, groundwaters and surface waters located on, in or under
        the
        Seller's Assets or the Real Property, contaminated with pollutants or other
        substances which contamination may give rise to a clean-up obligation under
        any
        federal, state or local law, rule, regulation or ordinance, including, but
        not
        limited to, the federal Comprehensive Environmental Response, Compensation
        and
        Liability Act, 42 USC 9601 et esq., and the common law.

       

      (c)  All
        underground tanks located in, on or under any Real Property are in a state
        of
        good condition and repair and have not leaked nor are they presently lacking
        any
        of the contents which they have held or presently hold.

       

      
        
          
          

        

        
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      (d)  There
        are
        no outstanding violations or any consent decrees entered against Seller
        regarding environmental and land use matters, including, but not limited
        to,
        matters affecting the emission of air pollutants, the discharge of water
        pollutants, the management of hazardous or toxic substances or wastes, or
        noise.

       

      (e)  There
        are
        no claimed, threatened or alleged violations with respect to any federal,
        state
        or local environmental law, rule, regulation, ordinance, permit, license
        or
        authorization, and there are no present discussions with any federal, state
        or
        local governmental agency concerning any alleged violation of environmental
        laws, rules, regulations, ordinances, permits, licenses or
        authorizations.

       

      (f)  All
        operations conducted by Seller on the Real Property have been and are in
        compliance with all federal, state and local statutes, rules, regulations,
        ordinances, permits, licenses and authorizations relating to environmental
        compliance and control.

       

      2.25  ERISA.
        Except
        as
        listed in Exhibit
        2.25
        of the
        Exhibit Volume, Seller has no "employee benefit plans", as such term is defined
        under Section 3(3) of the Employee Retirement Income Security Act of 1974,
        as
        amended ("ERISA"), or any other plan or similar arrangement, written or
        otherwise, which provides any type of pension or welfare benefit any of the
        directors, employees, or former employees of their. No "prohibited transaction",
        as such term is defined under Section 4975(c) of the Internal Revenue Code
        or
        under Section 406 of ERISA, and the respective regulations thereunder, has
        occurred or is occurring with respect to any "employee benefit plan" maintained
        by Seller or with respect to any trustee or administrator thereof. No “employee
        benefit plan” as defined in Section 3(2) of ERISA has been terminated, nor has
        there been any reportable event as defined in Section 4043 of ERISA. No
        "unfunded accrued liability's, as such term is defined under Section 3(30)
        of
        ERISA, exists with respect to any "employee pension benefit plan" listed
        in
Exhibit
        2.25.
        The
        Seller retains liability with respect to any employee benefit plans and the
        termination thereof after the Closing Date.

       

      2.26  Employee
        Matters.
         (a)
        Included
        as Exhibit
        2.27A
        of the
        Exhibit Volume is a list of all employees of Seller, together with their
        annual
        rates of compensation and a list of all people who were paid bonuses in the
        last
        twelve months plus the amount thereof. No written employment agreement to
        which
        Seller is a party requires longer than a two-week notice before termination
        or
        agreement to lend to or guarantee any loan to an employee or an agreement
        relating to a bonus, severance pay or similar plan, agreement, arrangement
        or
        understanding.

       

      (b)  Purchaser
        will not have any responsibility for continuing any person in the employ
        (or
        retaining any person as a consultant) of the Purchaser from and after the
        Closing Date or have any liability for any severance payments to or similar
        arrangements with any such person who shall cease to be an employee or
        consultant of the Seller at or prior to the Closing Date.

       

      2.27  Insurance.
        Exhibit
        2.28
        of the
        Exhibit Volume contains a list and brief description of all policies of fire,
        general liability, product liability, environmental impairment liability,
        worker's compensation, health and other forms of insurance policies or binders
        currently in force insuring against risks of Seller. All insurance policies
        or
        binders of Seller are valid, outstanding and enforceable and will continue
        to be
        valid, binding and enforceable through Closing.

       

      
        
          
          

        

        
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      2.28  Labor
        Matters.
        There
        are no collective bargaining agreements with any labor union to which Seller
        is
        a party or by which Seller is bound, and them are not currently negotiating
        with
        a labor union. No employees of Seller have ever petitioned for a representation
        election. Seller is in compliance with all applicable laws respecting employment
        and employment practices, terms and conditions of employment and wages and
        hours, and are not engaged in any unfair labor practice. There is no unfair
        labor practice complaint against Seller pending before the National Labor
        Relations Board. There is no labor strike, dispute, slowdown or stoppage
        actually pending or, to its knowledge, threatened against or affecting Seller.
        Except as may be required by §4980B of the Code or applicable state health care
        continuation coverage statutes, Seller has no liability under any plan or
        arrangement which provides welfare benefits, including medical and life
        insurance, to any current or future retiree or terminated employee.

       

      2.29  Books
        of Account; Reports; Bank Accounts.
        The
        books
        of account of Seller are accurate and complete and fairly reflect the
        transactions and the disposition of its assets. Seller has filed all reports
        and
        returns required by any law or regulation to be filed by it. Exhibit
        2.29 of
        the
        Exhibit Volume contains a true and complete list of the names and locations
        of
        all financial institutions at which the Seller maintains a checking account,
        deposit account, securities account, safety deposit box or other deposit
        or
        safekeeping arrangement, the number or other identification of all such accounts
        and arrangements and the names of all persons authorized to draw against
        any
        funds therein.

       

      2.30  Intellectual
        Property.
        Seller
        owns or possesses the royalty free licenses or other rights to use all
        copyrights, trademarks, service marks, service names, trade names, patents,
        trade secrets and other proprietary rights necessary to conduct its business
        as
        it is presently operated. Seller is not infringing upon or otherwise acting
        adversely to any copyrights, trademarks, trademark rights, service marks,
        service names, trade names, patents, patent rights, licenses, trade secrets
        or
        other proprietary rights owned by any other person or persons, and there
        is no
        claim or action by any such person pending, or to the knowledge of Seller
        or any
        Shareholder threatened, with respect thereto.

       

      2.31  No
        Finders or Brokers.
        Neither
        Seller, Shareholder, nor any officer or director of Seller has engaged any
        finder or broker in connection with the transactions contemplated
        hereunder.

       

      2.32  Restrictions
        on Business Activities.
        There is
        no agreement (noncompete or otherwise), commitment, judgment, injunction,
        order
        or decree to which the Seller is a party or otherwise binding upon the Seller,
        which has or may reasonably be expected to have the effect of prohibiting
        or
        impairing in any material respect any business practice, any acquisition
        of
        property, the conduct of business as currently conducted or otherwise materially
        limiting the freedom of the Seller to engage in any line of business or to
        compete with any person.

       

      2.33  Disclosure.
        No
        representations and warranties by the Seller and Shareholder in this Agreement
        and no statement in this Agreement or any document or certificate furnished
        or
        to be furnished to Purchaser pursuant hereto contains or will contain any
        untrue
        statement or omits or will omit to state a fact necessary in order to make
        the
        statements contained therein not misleading. Seller and Shareholder have
        disclosed to Purchaser all facts known to any of them material to the assets,
        liabilities, business, operation and property of Seller. There are no facts
        known to the Seller or Shareholder not yet disclosed which would adversely
        affect the Seller's Assets or future operations of the Seller's
        business.

       

      
        
          
          

        

        
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      ARTICLE
        3  

      REPRESENTATIONS
        AND WARRANTIES OF PURCHASER

       

      Purchaser
        hereby represents and warrants as follows:

       

      3.1  Organization
        and Standing of Purchaser.
        Purchaser
        is a corporation duly organized, validly existing and in good standing under
        the
        laws of the state of Mississippi and has full corporate power and authority
        to
        conduct its business as now being conducted.

       

      3.2  Authority;
        Binding Effect.
        Purchaser
        has corporate power to execute and deliver this Agreement and consummate
        the
        transactions contemplated hereby and each has taken (or by the Closing Date
        will
        have taken) all action required by law, its Articles of Incorporation, by-laws
        or otherwise to authorize such execution and delivery and the consummation
        of
        the transactions contemplated hereby. The execution, delivery, and performance
        of this Agreement constitutes the valid and binding agreement of Purchaser
        enforceable in accordance with its terms.

       

      3.3  No
        Finders or Brokers.
        Neither
        Purchaser nor any officer or director thereof has engaged any finder or broker
        in connection with the transactions contemplated hereunder.

       

      ARTICLE
        4  

      COVENANTS
        OF PURCHASER

       

      Purchaser
        hereby covenants and agrees as follows:

       

      4.1  Corporate
        Action.
        Purchaser
        will take all necessary corporate and other action and use its best efforts
        to
        obtain all consents or approvals required of it to carry out the transactions
        contemplated by this Agreement and to satisfy the conditions specified
        herein.

       

      4.2  Handling
        of Documents.
        With
        respect to information provided by Seller pursuant to this Agreement prior
        to
        the Closing, Purchaser agree to keep all such information confidential which
        is
        not in the public domain, except to the extent that such information (i)
        becomes
        generally available to the public other than as a result of a disclosure
        directly or indirectly by Purchaser, (ii) was known by Purchaser on a
        non-confidential basis prior to disclosure to Purchaser by Seller pursuant
        to
        this Agreement or (iii) becomes available to Purchaser on a non-confidential
        basis from a source (other than Seller) which is entitled to disclose the
        same,
        and to exercise the same care in handling such information as it would exercise
        with similar information of its own.

       

      
        
          
          

        

        
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      ARTICLE
        5  

      COVENANTS
        OF SELLER AND SHAREHOLDERS

       

      Seller
        hereby covenants and agrees as follows:

       

      5.1  Access
        and Information.
        Between
        the date of this Agreement and the Closing Date; Seller will: (i) provide
        to
        Purchaser and its officers, attorneys, accountants and other representatives,
        during normal business hours, or otherwise if Purchaser deems necessary,
        free
        and full access to all of the properties, assets, agreements, commitments,
        books, records, accounts, tax returns, and documents of Seller and permit
        them
        to make copies thereof; (ii) furnish Purchaser and its representatives with
        all
        information concerning the business, properties and affairs of Seller as
        Purchaser requests and certified by the officers, if requested; (iii) cause
        the
        independent public accountants of Seller to make available to Purchaser and
        its
        representatives all financial information relating to Seller requested,
        including all working papers pertaining to audits and reviews made heretofore
        by
        such auditors; (iv) furnish Purchaser true and complete copies of all financial
        and operating statements of Seller; (v) permit access to Seller’s employees,
        attorneys, customers and suppliers for consultation or verification of
        information related to the Seller or the Business.

       

      No
        information or knowledge obtained in any investigation pursuant to this Section
        5.1 shall affect or be deemed to modify: any representation or warranty
        contained herein, the conditions to the obligations of the parties to consummate
        the Merger in accordance with the terms and provisions hereof, or the
        indemnification obligations of the Seller.

       

      5.2  Conduct
        of Business.
        Between
        the date hereof and the Closing Date, except as otherwise expressly approved
        in
        writing by Purchaser, Seller and Shareholders shall cause Seller to conduct
        its
        business only in the ordinary course thereof consistent with past practice
        and
        in such a manner that the representations and warranties contained in Article
        2
        of this Agreement shall be true and correct at and as of the Closing Date
        (except for changes contemplated, permitted or required by this Agreement)
        and
        so that the conditions to be satisfied by Seller at the Closing shall have
        been
        satisfied. Seller and Shareholders shall cause Seller, consistent with
        conducting its business in accordance with reasonable business judgment,
        to
        preserve the business of Seller intact; use their best efforts to keep available
        to Purchaser the services of the present employees of Seller (except those
        dismissed for cause or those who voluntarily discontinue their employment)
        and
        preserve for Purchaser the goodwill of the suppliers, customers and others
        having business relations with Seller.

       

      5.3  Best
        Efforts to Secure Consents.
        Seller
        and Shareholder shall take, and shall cause Seller to take such actions and
        use
        their best efforts to secure before the Closing Date all necessary consents
        and
        approvals required to carry out the transactions contemplated by the Agreement
        and to satisfy all other conditions precedent to the obligations of Purchaser
        and Seller, including the Required Consents set out in Exhibit
        5.3.

       

      5.4  Unusual
        Events.
        Until
        the
        Closing Date, Seller and Shareholder shall supplement or amend all relevant
        Exhibits in the Exhibit Volume with respect to any matter thereafter arising
        or
        discovered which, if existing or known at the date of this Agreement, would
        have
        been required to be set forth or described in such Exhibits; provided, however,
        that for the purposes of the rights and obligations of the parties hereunder,
        any such supplemental disclosure shall not be deemed to have been disclosed
        as
        of the date Seller delivers to Purchaser the Exhibit Volume or any other
        date,
        and shall not be deemed to amend or supplement any Exhibits or to prevent
        or
        cure any misrepresentation, breach of warranty or breach of covenant, unless
        agreed to in writing by Purchaser.

       

      5.5  Interim
        Financial Statements.
        Within
        30
        days after the end of each calendar month subsequent to the date of this
        Agreement and prior to the Closing Date, Seller shall deliver to Purchaser
        an
        unaudited balance sheet of Seller as at the end of such calendar month together
        with the related consolidated statement of operations.

       

      
        
          
          

        

        
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      ARTICLE
        6  

      CONDITIONS
        PRECEDENT TO THE OBLIGATIONS OF SELLER

       

      All
        obligations of Seller to consummate the transactions contemplated by this
        Agreement are subject to the satisfaction, at or prior to the Closing, of
        each
        of the following conditions (unless expressly waived in writing by Seller
        at any
        time at or prior to the Closing):

       

      6.1  Representations
        and Warranties True.
        All of
        the representations and warranties made by Purchaser contained in Article
        3 of
        this Agreement shall be true as of the date of this Agreement and shall be
        deemed to have been made again at and as of the date of Closing, and shall
        be
        true at and as of the date of Closing in all material respects; Purchaser
        shall
        have performed and complied in all material respects with all covenants and
        conditions required by this Agreement to be performed or complied with by
        them
        prior to or at the Closing; and Seller shall have been furnished with a
        certificate of the President or any Vice President of Purchaser, dated the
        Closing Date, in such officer's capacity, certifying to the truth of such
        representations and warranties as of the Closing and to the fulfillment of
        such
        covenants and conditions.

       

      6.2  No
        Obstructive Proceeding.
        No
        action or proceedings shall have been instituted and no order, decree or
        judgment of any court, agency, commission or governmental authority shall
        be
        subsisting which questions the validity of this Agreement or seeks to restrain
        the transactions contemplated hereby Also, no substantive legal objection
        to the
        transactions contemplated by this Agreement shall have been received from
        or
        threatened by any governmental department or agency.

       

      6.3  Proceedings
        and Documents Satisfactory.
        All
        proceedings in connection with the transactions contemplated hereby and all
        certificates and documents delivered to Seller pursuant to this Agreement
        shall
        be satisfactory in form and substance to Seller and its counsel acting
        reasonably and in good faith.

       

      6.4  Shareholder
        Approval.
        The
        shareholders of Seller shall have approved this Agreement as required by
        the
        corporation laws of Mississippi. The Seller shall immediately call a special
        meeting for the purpose of approving this Agreement.

       

      ARTICLE
        7  

      CONDITIONS
        PRECEDENT TO THE OBLIGATIONS OF PURCHASER

       

      All
        obligations of Purchaser to consummate the transactions by this Agreement
        are
        subject to the performance, at or prior to the Closing, of each of the following
        conditions (unless expressly waived in writing by Purchaser at any time at
        or
        prior to the Closing):

       

      7.1  Representations
        and Warranties True.
        All of
        the representations and warranties of Seller and Shareholder contained in
        Article 2 of this Agreement shall be true as of the date of this Agreement,
        shall be deemed to have been made again at and as of the Closing, and shall
        be
        true at and as of the date of Closing in all material respects (without taking
        into account any disclosures made by Seller to Purchaser pursuant to Article
        5
        hereof); Seller shall have performed or complied in all material respects
        with
        all covenants and conditions required by this Agreement to be performed or
        complied with by it prior to or at the Closing; and Purchaser shall be furnished
        with a certificate of the president or any vice president of Seller, dated
        the
        Closing Date certifying to the truth of such representations and warranties
        as
        of the time of the Closing and to the fulfillment of such covenants and
        conditions.

       

      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      

      7.2  No
        Obstructive Proceeding.
        No
        action
        or proceedings shall have been instituted and no order, decree or judgment
        of
        any court, agency, commission or governmental authority shall be subsisting
        which questions the validity of this Agreement or seeks to restrain the
        transactions contemplated hereby Also, no substantive legal objection to
        the
        transactions contemplated by this Agreement shall have been received from
        or
        threatened by any governmental department or agency.

       

      7.3  Shareholder
        Approval.
        XFone,
        Inc. as the sole shareholder of the Purchaser shall have approved the Agreement
        and the transactions contemplated hereby.

       

      7.4  Consents
        and Approvals; Releases.
        Each
        of
        the parties to any agreement or instrument under which the transactions
        contemplated hereby would constitute or result in a default or acceleration
        of
        obligations shall have given such consent as may be necessary to permit the
        consummation of the transactions contemplated hereby without constituting
        or
        resulting in a default or acceleration under such agreement or instrument,
        and
        any consents required from any public or regulatory agency or organization
        having jurisdiction shall have been given, including, without limitation
        the
        Required Consents set forth in Exhibit
        5.3
        of the
        Exhibit Volume. 

       

      7.5  Proceedings
        and Documents Satisfactory.
        All
        proceedings in connection with the transactions contemplated hereby and all
        certificates and documents delivered to Purchaser pursuant to this Agreement
        shall be satisfactory in form and substance to Purchaser and its counsel
        acting
        reasonably and in good faith.

       

      7.6  No
        Adverse Change.
        From
        the
        date of this Agreement until the Closing, the operations of Seller shall
        have
        been conducted in the ordinary course of business consistent with past practice
        and from the date of the Seller Financial Statements until the Closing no
        event
        shall have occurred or have been threatened which has or would have a material
        and adverse affect upon the financial condition, assets, liabilities,
        operations, prospects or business of Seller; and Seller shall have not sustained
        any loss or damage to their assets, whether or not insured, or union activity
        that affects materially and adversely their ability to conduct their
        businesses.

       

      7.7  Federal
        and State Approvals; Licensing.
        Purchaser shall have received such licenses, and other regulatory approvals
        as
        are otherwise necessary to operate the businesses of Seller.

       

      7.8  Due
        Diligence.
        Purchaser
        shall be satisfied with the results of its legal, accounting, business,
        environmental, architectural, engineering and other due diligence review
        of
        Seller.

       

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      

      ARTICLE
        8  

      TERMINATION

       

      8.1  Optional
        Termination.
        This
        Agreement may be terminated and the transactions contemplated hereby abandoned
        at any time prior to the Closing Date, notwithstanding Seller approval as
        follows:

       

      (a)  By
        the
        mutual consent of Purchaser and Seller; or

       

      (b)  By
        Seller, if any of the conditions set forth in Article 6 shall not have met
        by
        April 30, 2006; provided that Seller shall not be entitled to terminate this
        Agreement pursuant to this § 8.1(b) if Seller's willful breach of this Agreement
        has prevented the consummation of the transactions contemplated hereby;
        or

       

      (c)  By
        Purchaser, if any of the conditions provided in Article 7 hereof have not
        been
        met by April 30, 2006; provided that Purchaser shall not be entitled to
        terminate this Agreement pursuant to this § 8.1(c) if Purchaser's willful breach
        of this Agreement has prevented the consummation of the transactions
        contemplated hereby.

       

      8.2  Notice
        of Abandonment.
        In
        the
        event of such termination by either Purchaser or Seller pursuant to § 8.1 above,
        written notice shall forthwith be given to the other party hereto.

       

      8.3  Mandatory
        Termination.
        If
        the
        Closing has not occurred by June 30, 2006, this Agreement shall automatically
        terminate and no longer be of any force or effect.

       

      8.4  Termination.
        In
        the
        event this Agreement is terminated as provided above, Purchaser shall deliver
        to
        Seller all documents (and copies thereof in its possession) concerning Seller
        previously delivered by Seller to Purchaser; and none of the parties nor
        any of
        their respective partners, shareholders, directors, or officers shall have
        any
        liability to the other party for costs, expenses, loss of anticipated profits,
        consequential damages, or otherwise, except for any breaches of any of the
        provisions of this Agreement at or prior to the termination.

       

      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

        

      

      ARTICLE
        9  

      INDEMNIFICATION

       

      9.1  Grant
        of Indemnity.
        

       

      (a)  Indemnification.
        Seller
        hereby indemnifies and agrees to hold Purchaser and its parent XFone, Inc.
        and
        their respective officers, directors, shareholders, employees or agents (each
        a
“Purchaser Indemnified Party”) harmless from, against and in respect of (and
        shall on demand reimburse Purchaser for) the following (each a “Loss” or
        collectively the “Losses”):

       

      (i)  any
        and
        all loss, liability or damage suffered or incurred by any Purchaser Indemnified
        Party by reason of any untrue representation, breach of warranty or
        nonfulfillment of any covenant by Seller or Shareholder contained herein
        or in
        any certificate, document or instrument delivered to Purchaser pursuant hereto
        or in connection herewith;

       

      (ii)  any
        and
        all loss, liability or damage suffered or incurred by any Purchaser Indemnified
        Party in respect of or in connection with any liabilities of Seller not
        specifically assumed by Purchaser pursuant to the terms of this
        Agreement;

       

      (iii)  any
        and
        all debts, liabilities or obligations of Seller, direct or indirect, fixed,
        contingent or otherwise, which exist at or as of the date of the Closing
        hereunder or which arise after the Closing but which are based upon or arise
        from any act, transaction, circumstance, sale of goods or services, state
        of
        facts or other condition which occurred or existed on or before the date
        of the
        Closing, whether or not then known, due or payable, except for the Assumed
        Liabilities;

       

      (iv)  any
        and
        all actions, suits, proceedings, claims, demands, assessments, judgments,
        costs
        and expenses, including, without limitation, legal fees and expenses, incident
        to any of the foregoing or incurred in investigating or attempting to avoid
        the
        same or to oppose the imposition thereof, or in enforcing this
        indemnity.

       

      (b)  (i)Indemnification
        Procedures.
        All
        claims for indemnification under Section 9.1(a) shall be asserted and resolved
        as follows:

       

      (ii)  Non-Third
        Party Claims.
        In the
        event a Purchaser Indemnified Party has a claim hereunder that does not involve
        a claim being asserted against or sought to be collected by a third party,
        the
        Purchaser Indemnified Party shall with reasonable promptness send a claim
        notice
        with respect to such claim to the Seller. If the Seller does not notify the
        Purchaser Indemnified Party within ten (10) calendar days from the date of
        receipt of such claim notice that Seller disputes such claim, the amount
        of such
        claim shall be conclusively deemed a liability of the Seller hereunder. In
        case
        the Seller shall object in writing to any claim made in accordance with this
        Section 9.1(b), the Purchaser Indemnified Party shall have fifteen (15) calendar
        days to respond in a written statement to the objection of the Seller. If
        after
        such fifteen (15) calendar day period there remains a dispute as to any claim,
        the parties shall attempt in good faith for sixty (60) calendar days to agree
        upon the rights of the respective parties with respect to each of such claims.
        If the parties should so agree, a memorandum setting forth such agreement
        shall
        be prepared and signed by all parties. In the event that the parties are
        not
        able to resolve such claim, the parties agree to submit the claim to arbitration
        to be administered by the American Arbitration Association in accordance
        with is
        Commercial Arbitration Rules (“AAA”) and the decision of the arbitration shall
        be binding and final and judgment on the award rendered may be entered in
        any
        court having jurisdiction thereof.

       

      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

        

      

      (c)  Nature
        and Survival of Representations and Warranties.
        Each
        statement, representation, warranty, indemnity, covenant and agreement made
        by
        Seller or Shareholder in this Agreement or in any document, certificate or
        other
        instrument delivered by or on behalf of Seller or Shareholder pursuant to
        this
        Agreement or in connection herewith shall be deemed the joint and several
        statement, representation, warranty, indemnity, covenant and agreement of
        Seller
        and such Shareholder. All statements, representations, warranties, indemnities,
        covenants and agreements made by each of the parties hereto shall survive
        the
        Closing.

       

      (d)  Third-Party
        Claims.
        In the
        event any Purchaser Indemnified Party becomes aware of a third-party claim
        that
        such Purchaser Indemnified Party believes may result in a demand under Section
        9.1, such Purchaser Indemnified Party shall notify the Seller of such claim,
        and
        the Seller shall be entitled, at its expense, to participate in, but not
        to
        determine or conduct, the defense of such claim. The Purchaser Indemnified
        Party
        shall have the right in its sole discretion to conduct the defense of and
        settle
        any such claim; provided, however, that except with the written consent of
        the
        Seller, no settlement of any such claim with third-party claimants shall
        alone
        be determinative of the amount of Losses relating to such matter.

       

      ARTICLE
        10  

      MISCELLANEOUS

       

      10.1  Expenses/Taxes.
        Except
        as otherwise specifically provided in this Agreement, all expenses of the
        preparation of this Agreement and of the transactions contemplated hereby,
        including, without limitation, counsel fees, accounting fees, investment
        adviser's fees and disbursements, shall be borne by the respective party
        incurring such expense. The Seller shall pay any transfer taxes resulting
        from
        the transfer of the Seller’s Assets. The Seller acknowledges and agrees that the
        Seller on its own behalf and on behalf of the shareholders of the Seller
        has
        relied on its advisors with respect to any tax consequences of the transactions
        contemplated hereby and is relying on its own advisors with respect to such
        matters.

       

      10.2  Notices.
        All
        notices, demands and other communications hereunder shall be in writing and
        shall be deemed to have been duly given if delivered in person or mailed
        by
        certified mail or registered mail (postage prepaid) or sent by reputable
        overnight courier service (charges prepaid):

       

      To
        Seller
        and Shareholder: Canufly.net,
        Inc.

       

      P.
        O. Box
        820744

      1529
        Walnut Street

      Vicksburg,
        MS 39182

      Attn:
        Michael Nassour

      Telephone:
        (601) 630-9888

      Facsimile:
        (601) 636-7322

      Email:
        mnassour@canufly.net 

       

      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

        

      

      To
        Purchaser: XFone
        USA, Inc.

       

      2506
        Lakeland Drive

      Suite
        100

      Jackson,
        MS 39232

      Attention:
        Wade Spooner

      Telephone:
        601-420-6500

      Facsimile:
        509-271-7741

      Email: wspooner@expetel.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 

       

      or
        to
        such other address as either Seller or Purchaser may designate by notice
        to the
        other.

       

      10.3  Entire
        Agreement.
        This
        Agreement and the Exhibits, schedules and documents delivered pursuant hereto
        constitute the entire contract between the parties hereto pertaining to the
        subject matter hereof and supersede all prior and contemporaneous agreements,
        understandings, negotiations and discussions, whether written or oral, of
        the
        parties, and there are no representations, warranties or other agreements
        between the parties in connection with the subject matter hereof, except
        as
        specifically set forth herein. No supplement, modification or waiver of this
        Agreement shall be binding unless executed in writing by the parties to be
        bound
        thereby.

       

      10.4  Governing
        Law.
        THE
        VALIDITY AND CONSTRUCTION OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
        OF THE
        STATE OF MISSISSIPPI.

       

      
        
          
          

        

        
          -24-

          
            

          

        

        
          
          

        

      

      10.5  WAIVER
        OF TRIAL BY JURY.
        TO
        THE
        EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY IRREVOCABLY WAIVES
        ALL
        RIGHT OF JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
        IN
        CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.

       

      10.6  Legal
        Fees and Costs.
        In
        the
        event either party elects to incur legal expenses to enforce or interpret
        any
        provision of this Agreement, the prevailing party will be entitled to recover
        such legal expenses, including, without limitation, reasonable attorneys'
        fees,
        costs and necessary disbursements, in addition to any other relief to which
        such
        party shall be entitled.

       

      10.7  Time.
        Time
        is
        of the essence for purposes of each and every provision of this
        Agreement.

       

      10.8  Section
        Headings.
        The
        Section headings are for reference only and shall not limit or control the
        meaning of any provision of this Agreement.

       

      10.9  Waiver.
        No
        delay
        or omission on the part of any party hereto in exercising any right hereunder
        shall operate as a waiver of such right or any other right under this
        Agreement.

       

      10.10  Exhibits.
        All
        Exhibits, Appendices, schedules and documents referred to in or attached
        to this
        Agreement are integral parts of this Agreement as if fully set forth herein
        and
        all statements appearing therein shall be deemed to be representations. All
        items disclosed hereunder shall be deemed disclosed only in connection with
        the
        specific representation to which they are explicitly referenced.

       

      10.11  Set-off
        Rights.
        Notwithstanding
        anything in this Agreement to the contrary, Purchaser shall be entitled to
        set-off against its payment obligations to Seller or any other agreement
        with
        Seller with respect to the items set forth in § 9.1. Such right of set-off shall
        be cumulative of rights to indemnity under Article 9 hereof and all other
        rights
        provided by applicable law. 

       

      10.12  Assignment.
        No
        party
        hereto shall assign this Agreement without first obtaining the written consent
        of the other party, except Purchaser shall have the right to assign this
        Agreement to an affiliated company, and Purchaser or such affiliated company
        shall have the right to collaterally assign the rights of Purchaser respecting
        remedies in the event of breaches of Seller's and Shareholder's representations,
        warranties and covenants and rights of indemnification hereunder to any
        financial institution which finances its transaction.

      
        
          
          

        

        
          -25-

          
            

          

        

        
          
          

        

      

       

      10.13  Binding
        on Successors and Assigns.
        This
        Agreement shall inure to the benefit of and bind the respective heirs,
        administrators, successors and assigns of the parties hereto. Nothing expressed
        or referred to in this Agreement is intended or shall be construed to give
        any
        person other than the parties to this Agreement or their respective successors
        or permitted assigns any legal or equitable right, remedy or claim under
        or in
        respect of this Agreement or any provision contained herein, it being the
        intention of the parties to this Agreement that this Agreement shall be for
        the
        sole and exclusive benefit of such parties or such successors and assigns
        and
        not for the benefit of any other person.

       

      10.14  Parties
        in Interest.
        Nothing
        in this Agreement is intended to confer any right on any person other than
        the
        parties to it and their respective successors and assigns, nor is anything
        in
        this Agreement intended to modify or discharge the obligation or liability
        of
        any third person to any party to this Agreement, nor shall any provision
        give
        any third person any right of subrogation or action over against any party
        to
        this Agreement.

       

      10.15  Amendments.
        This
        Agreement may be amended, but only in writing, signed by the parties
        hereto.

       

      10.16  Drafting
        Party.
        The
        provisions of this Agreement, and the documents and instruments referred
        to
        herein, have been examined, negotiated, drafted and revised by counsel for
        each
        party hereto and no implication shall be drawn nor made against any party
        hereto
        by virtue of the drafting of this Agreement.

       

      10.17  Counterparts.
        This
        Agreement may be executed in any number of counterparts, each of which shall
        be
        an original, but all of which together shall comprise one and the same
        instrument.

       

      10.18  Reproduction
        of Documents.
        This
        Agreement and all documents relating thereto, including without limitation,
        consents, waivers and modifications which may hereafter be executed, the
        Exhibits and documents delivered at the Closing, and financial statements,
        certificates and other information previously or hereafter furnished to
        Purchaser may be reproduced by Purchaser by any photographic, photostatic,
        microfilm, microcard, miniature photographic or other similar process and
        Purchaser may destroy any original documents so reproduced. Seller agrees
        and
        stipulates that any such reproduction shall be admissible in evidence as
        the
        original itself in any judicial or administrative proceeding (whether or
        not the
        original is in existence and whether or not such reproduction was made by
        Purchaser in the regular course of business) and that any enlargement, facsimile
        or further reproduction of such reproduction shall likewise be admissible
        in
        evidence.

       

      10.19  Public
        Disclosure.
        The
        parties hereto agree that prior to the Closing Date, none of them will make
        or
        engage in any press release, publicity or other public disclosure of the
        matters
        which are the subject of this Agreement without the prior written consent
        of the
        Purchaser and Seller, unless such party believes in good faith upon consultation
        with counsel that such press release, publicity or other public disclosure
        is
        required by law or legal process, in which event such party will give the
        Purchaser and Seller as much advance notice thereof as is practicable under
        the
        circumstances and will give good faith consideration to any comments made
        with
        respect thereto by the other parties hereto prior to the time when such press
        release, publicity or other public disclosure is made.

       

      
        
          
          

        

        
          -26-

          
            

          

        

        
          
          

        

      

      10.20  Access
        to Records After Closing.
        Seller
        will and will cause its counsel and certified public accountants to afford
        to
        the representatives of Purchaser, including their counsel and accountants,
        reasonable access to, and copies of, any records not transferred to Purchaser,
        including, but not limited to, all audit and tax work papers. Purchaser will
        afford to the representatives of Seller reasonable access to, and copies
        of, the
        records transferred to Purchaser at the Closing during normal business hours
        after the Closing Date. Copies furnished to the party gaining such access
        shall
        be furnished at the cost to the recipient.

       

      10.21  Non-Competition
        and Non-Solicitation.

       

      (a)  As
        a
        material inducement to Purchaser 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 Purchaser and XFone, Inc. and
        its
        subsidiaries and affiliates (collectively for purposes of this Section 10.21
        the
“Purchaser”), for a period of the later of (i) two (2) years following the
        Closing Date or (ii) two (2) years from the date that Michael Nassour
        discontinues as an agent for the Purchaser (the "Noncompetition
        Period"),
        Michael Nassour 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
        or
        South Carolina (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 any other
        service or product being offered or provided by the Purchaser or any of its
        affiliates. 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 10.21
        shall
        prohibit Michael Nassour from owning not more than five percent (5%) of the
        debt
        or equity securities of a publicly traded corporation which may compete with
        Purchaser or from continuing to own and operate its existing computer sales
        and
        service business as such business is currently operating as of the Closing
        Date.

       

      (b)  During
        the Noncompetition Period, and in order to preserve and protect the trade
        secrets and proprietary, confidential information of Purchaser after the
        Closing
        Date, Michael Nassour shall not (i) induce or attempt to induce any employee
        of
        the Purchaser to leave the employ of Purchaser, or in any way interfere with
        the
        relationship between the Purchaser and any employee thereof, (ii) hire directly
        or through another entity any individual employed by Purchaser who was
        previously employed by the Seller, or (iii) induce or attempt to induce any
        customer, supplier, licensee, distributor or other business relation of the
        Purchaser to cease doing business with the Purchaser, or in any way interfere
        with the relationship between any such customer, supplier, licensee, distributor
        or business relation and the Purchaser (including, without limitation, making
        any negative statements or communications concerning the
        Purchaser).

       

      
        
          
          

        

        
          -27-

          
            

          

        

        
          
          

        

      

      (c)  If,
        at
        the time of enforcement of this Section 10.21, 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. Michael Nassour agrees that the restrictions contained
        in this
        Section 10.21 are reasonable.

       

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

       

      SELLER:

       

      CANUFLY.NET,
        Inc.

       

      By:/s/
        Michael Nassour

      Michael
        Nassour, President

       

      SHAREHOLDER:

       

      /s/
        Michael Nassour

      Michael
        Nassour

       

      PURCHASER:

       

      XFONE
        USA, INC.

       

      By:/s/
        Wade Spooner

      Wade
        Spooner, President

      

      
        
          
          

        

        
          -28-

          
            

          

        

        
          
          

        

      

      List
        of Exhibits

       

      

       

      Contained
        in Exhibit Volume

       

      

      Exhibit
        2.1 - Organizational Document

      Exhibit
        2.2 - Capitalization

      Exhibit
        2.4 - Financial Statements

      Exhibit
        2.6 - Letters of Credit

      Exhibit
        2.7 - Absence of Certain Recent Changes

      Exhibit
        2.8 - Title to Properties

      Exhibit
        2.9 - Agreements, Contracts and Commitments

      Exhibit
        2.10 - Burdensome Agreements

      Exhibits
        2.11 - Related Party Transactions

      Exhibits
        2.13 - Customer Contracts

      Exhibit
        2.18 - Permits and Licenses

      Exhibit
        2.20 - Litigation

      Exhibit
        2.21 - Compliance With Laws and Other Instruments

      Exhibit
        2.22A - Taxes

      Exhibit
        2.22B - Taxes

      Exhibit
        2.24 - Environmental Matters

      Exhibit
        2.25 - ERISA

      Exhibit
        2.27A - Employee Matters

      Exhibit
        2.8 - Insurance (DD Book)

      Exhibit
        2.29 - Books of Account; Reports; Bank Accounts

      Exhibit
        5.3 - Consents and Approvals; Releases

      

      
        
          
          

        

        
          -29-

          
            

          

        

        
          
          

        

      

      

      

      List
        of Schedules

       

      1.
         Bill
        of
        Sale

      2. Assumed
        Liabilities

      3. Transferred
        Customer Revenues for December

       

      
        
          
          

        

        
          -30-

          
            

          

        

        
          
          

        

      

      Schedule
        l to Asset Purchase Agreement

       

      BILL
        OF SALE

       

      Canufly.net,
        Inc., a Mississippi corporation (hereinafter called "Assignor"), for One
        Dollar
        ($1.00) and other valuable consideration to it in hand paid, receipt of which
        is
        hereby acknowledged, by these presents does sell, assign, transfer and convey
        unto XFone, USA, Inc., a Mississippi corporation (hereinafter called
        "Assignee"), its successors and assigns, the following described
        property:

      All
        property of every kind and description and wherever situated, tangible and
        intangible, owned by Assignor or to which Assignor has any right, title or
        interest on the date hereof, excepting only those properties of Assignor
        listed
        on Exhibit "A" annexed hereto (the "Excluded Assets"), and including, without
        limitation, all of "Seller's Assets" as defined in a certain Agreement of
        Purchase and Sale of Assets, dated effective January 1, 2006, between Assignor,
        as Seller and Assignee, as Purchaser (the "Agreement"), including, without
        limitations, the following:

      
        	 	
                (i)

              	
                The
                  rights to use the Seller’s corporate name and all variations thereof other
                  than the internet domain names of canufly.com and canufly.org which
                  is
                  owned by Nassour Aviation;

              

      

       

      
        	 	
                (ii)

              	
                All
                  customers of the Assignor as listed in Exhibit “B” hereto and all customer
                  lists and records and all information related to the customers
                  in any form
                  whatsoever (the “Transferred Customers”) and all deposits for the
                  Transferred Customers as set forth on Exhibit “B” and all service
                  contracts with any of the Transferred Customers for services provided
                  by
                  the Seller to the Transferred
                  Customers;

              

      

       

      
        	 	
                (iii)

              	
                All
                  cash, accounts receivable, loans receivable, marketable securities
                  and
                  investments;

              

      

       

      
        	 	
                (iv)
                  

              	
                All
                  merchandise and all inventories and other supplies and supply inventories,
                  prepaid insurance, prepaid interest and other prepaid items and
                  deposits,
                  chooses in action and causes of action, claims and rights of recovery
                  or
                  setoff of every kind or character arising out of transactions or
                  events
                  occurring on or prior to the date hereof irrespective of the date
                  on which
                  any such cause of action, claim or right may arise or accrue;
                  

              

      

       

      
        	 	
                (v)

              	
                All
                  real property owned by the
                  Assignor;

              

      

       

      
        	 	
                (vi)

              	
                All
                  personal property of the Seller, including all furniture, fixtures,
                  machinery, equipment, vehicles, leaseholds and leasehold improvements,
                  fixtures, tools and all other tangible assets owned, leased or
                  otherwise
                  held by Seller and which are used or useful to the Business, including
                  those set forth on Exhibit “C”
hereto;

              

      

       

      
        	 	
                (vi)

              	
                All
                  inventions, patents, licenses, permits and franchises, trademarks,
                  trade
                  names, service marks, service names, copyrights, or know-how;
                  

              

      

       

      
        
          
          

        

        
          -31-

          
            

          

        

        
          
          

        

      

      
        	 	
                (vii)

              	
                All
                  goodwill of Seller as a going
                  concern;

              

      

       

      
        	 	
                (viii)

              	
                The
                  contracts as listed in Exhibit “D” hereto;
                  and

              

      

       

      
        	 	
                (ix)

              	
                All
                  books and records of Assignor, excepting only its minute books,
                  corporate
                  seal and stock ledger records.

              

      

       

      Assignor
        hereby authorizes and grants its power of attorney to Assignee and appoints
        Assignee and its officers as Assignor's attorney-in-fact to take any appropriate
        action in connection with any of said rights, claims, causes of action and
        property, in the name of Assignor or in its own or any other name but at
        its own
        expense, it being understood that this authorization and power of attorney
        are
        coupled with an interest and irrevocable.

      TO
        HAVE
        AND TO HOLD said rights, claims, causes of action, property, assets, business
        and goodwill, as a going concern, unto the said Assignee, its successors
        and
        assigns, to and for its use forever.

      AND,
        Assignor does hereby warrant, covenant and agree that it:

      (a) Has
        good
        and marketable title to the properties and assets hereby sold, assigned,
        transferred, conveyed and delivered, free and clear of any liens, claims
        or
        encumbrances; and

      (b)
         Will
        warrant and defend the sale of said properties and assets against all and
        every
        person or persons whomsoever claiming or to claim against any or all of the
        same; 

      (c) All
        of
        the representations and warranties with respect to the Seller, Seller’s Assets
        and the Business made by Assignor in the Purchase Agreement are incorporated
        herein by this reference and are hereby confirmed and ratified as true, complete
        and accurate as of the date hereof. 

      IN
        WITNESS WHEREOF, Assignor has caused this instrument to be duly executed
        this
        ______ day of January, 2006 to be effective as of January 1, 2006.

       

      
        	 	 	 
	 	Assignor: 
                Canufly.net,
                Inc.
	 
 	 
 	 
 
                
                 

              
	 	By:  	 
	 	
                
Michael
                Nassour
	 	President

      

       

      
        	 	 	 
	 	
                Agreed
                  to and Accepted:

                 

                Assignee: XFONE USA, INC.

              
	 
 	 
 	 
 
	 	By:  	 
	 	
                
Wade
                Spooner
	 	President

      

       

      
        
          
          

        

        
          -32-

          
            

          

        

        
          
          

        

      

      Exhibit
        “A” to Bill of Sale

       

      

       

      Excluded
        Assets

       

      

      None

       

      
        
          
          

        

        
          -33-

          
            

          

        

        
          
          

        

      

      Exhibit
        “B” to Bill of Sale

       

      

       

      Customer
        List and Customer Deposits

       

      See
        attached Customer List as of December 31, 2005

       

      

      
        
          
          

        

        
          -34-

          
            

          

        

        
          
          

        

      

       

      Exhibit
        “C” to Bill of Sale

       

      

       

      Personal
        Property

       

      See
        attached Asset List.

      
        
          
          

        

        
          -35-

          
            

          

        

        
          
          

        

      

       

      Exhibit
        “D” to Bill of Sale

       

      

       

      Assigned
        Contracts (other than Customer Service Contracts)

       

      1. Culkin
        Water District dated ________________.

       

      2. City
        of
        Vicksburg dated February 10, 2005.

       

      

       

      
        
          
          

        

        
          -36-

          
            

          

        

        
          
          

        

      

      

       

      Schedule
        2 to Asset Purchase Agreement

      

      Assumed
        Liabilities

       

      1.Those
        agreed upon liabilities/payables directly attributed to the underlying services
        for providing the services to the Canufly customers beginning with January
        1,
        2006 billing cycles, until the transaction is closed.

      

      2.Loan
        with
        B&K Bank, not to exceed $275,000, which will be paid at closing.

       

      As
        of
        1/8/06 from Michael Nassour, the on-line balance is $254,758.32. This is
        the
        balance after the January 2006 monthly payment was made by Canufly. Per diem
        interest is $46.84. Will contact David Cox at B&K Bank to confirm final
        payoff at date of closing.

       

      NOTE:
        XFone is not assuming any other liabilities. The liabilities listed under
        current liabilities on the Balance Sheet, with the exception of the Advanced
        Payments category, which has been zeroed out between the parties, is the
        responsibility of Canufly.

      

      
        
          
          

        

        
          -37-

          
            

          

        

        
          
          

        

      

      Schedule
        3

      

      Transferred
        Customers for December

      

      
        
          
          

        

        
          -38-

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