erf_8kfront-ex1001.htm


    Exhibit
10.1

    


     ASSET
PURCHASE AGREEMENT

     

    THIS ASSET PURCHASE AGREEMENT
(the “Agreement”), made and entered into as of this 29th day of May, 2009, by
and between ERF Wireless, Inc., a Nevada corporation (“Parent”), and ERF
Wireless Bundled Services, Inc., a Texas corporation and wholly-owned subsidiary
of Parent, (“Subsidiary”) (Parent and Subsidiary hereinafter collectively
referred to and jointly and severally liable as “Buyer”), and
Frontier Internet, LLC, a Texas limited liability company
headquartered in Granbury, Texas (“Seller”).

     

    W
I T N E S S E T H:

     

    WHEREAS, Seller presently
operates a business engaged in providing a comprehensive full range of internet
services including internet access, dial-in, ISDN, wireless, and networking
solutions to commercial businesses and residential customers (the “Business”);
and

     

    WHEREAS, Seller desires to
sell substantially all of the assets and contracts of the Business to Buyer, and
Buyer desires to purchase such assets and contracts from Seller, on the terms
and subject to the conditions set forth herein.

     

    NOW, THEREFORE, Buyer and
Seller, in consideration of the mutual promises hereinafter set forth, do hereby
promise, and agree as follows:

     

    ARTICLE ONE: ASSETS TO BE
PURCHASED

     

    
      	
              1.1  

            	
              Purchased
      Assets.  Upon the terms and subject to the conditions set
      forth in this Agreement, Seller hereby agrees to sell to Subsidiary and
      Subsidiary hereby agrees to purchase from Seller, at the Closing, all of
      Seller's right, title, and interest in substantially all of the assets
      associated with the Business, including the following (collectively, the
      “Purchased Assets”):

            


    

    


    The
assets being acquired include the rights, title, and interest in substantially
all of the assets associated with the Business, including:

     

    
      	
              a.  

            	
              all
      (i) wireless network infrastructure equipment, including subscriber units,
      access nodes, backhaul links, towers, radios, antennas, switches, routers
      and servers with related software, (ii) all vehicles and trailers, (iii)
      all transferable equipment and software, (iv) all inventory, goods, and
      documents,  (v) all documents, files and records containing
      technical support, including all additions, accessions and substitutions
      thereto, and all other information, and (vi) all cash in bank accounts and
      accounts receivable of Seller, pertaining to the operation of the Business
      that are in Seller’s possession or control; (collectively, the “Assigned
      Tangible Property”);

            


    

     

    
      	
              b.  

            	
              all
      rights to equipment, tower and facilities space leases, including real
      property leases, related to the Business (“Assigned
    Leases”);

            


    

     

    
      	
              c.  

            	
              all
      transferable customer and contractual rights held by the Seller related to
      the Business, including (i) all ISP Subscriber Agreements, (ii) all
      Design Agreements, (iii) all Equipment Purchase Agreements, (iv) all
      Internet Access and Monitoring and Maintenance Agreements with customers
      with fixed wireless broadband, (v) all other work in progress and (vi) all
      other contracts and agreements, (collectively, the “Assigned
      Contracts”);

            


    

     

    
      	
              d.  

            	
              all
      general intangibles related to the Business, including (i) trademarks,
      trade names and symbols used in connection with Frontier Internet, LLC and
      (ii) all internet address space registered with the American Registry for
      Internet Numbers, (“ARIN”) by Frontier Internet, LLC and its internet
      suppliers that is transferable according to the rules, regulations or
      procedures promulgated by ARIN (collectively, the “Assigned Intangible
      Property”);

            


    

     

    
      	
              e.  

            	
              all
      legally assignable government permits, licenses and certifications related
      to the Business (“Governmental
Permits”).

            


    

     

    
 

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Seller
will provide to Buyer copies of the following books, records, manuals and other
materials in any tangible form to the extent such books, records, manuals and
other materials relate to the Business and/or the Purchased Assets: (i) records
relating to customers that are parties to any contracts, (ii) records relating
to vendors, and (iii) all other books, records, files, correspondence, documents
and information owned by Seller relating to the Business that are currently in
the possession of the employees of the Seller, however maintained or stored
(collectively, the “Records”), it being understood that the Seller may delete
confidential information that does not relate to the Purchased Assets or the
Business.

     

    
      	
              1.2  

            	
              Excluded
      Assets.  The Purchased Assets shall not include the
      following (herein referred to as the “Excluded
  Assets”):

            


    

     

    
      	
               
      

            	
              a.

            	
              all
      corporate minute books, stock transfer books and other documents relating
      to the organization, maintenance and existence of Seller as a limited
      liability company;

            


    

     

    
      	
               
      

            	
              b.

            	
              all
      rights of Seller pursuant to this Agreement, including the consideration
      paid to Seller pursuant to this
Agreement;

            


    

     

    
      	
               
      

            	
              c.

            	
              all
      originals of personnel records and other records that Seller is required
      by applicable law to retain in its
possession;

            


    

     

    
      	
            	
              d. 

            	
              all
      tax refunds which are due to
Seller;

            


    

     

    
      	
               
      

            	
              e.

            	
              all
      membership interests in Seller; and

            


    

     

    
      	
            	
              f. 

            	
              any
      other item specifically listed in Schedule
      1.2.

            


    

     

    1.3  Purchase
Price; Payment of Purchase Price.  In addition to the Assumed
Liabilities described below, the aggregate consideration for the Purchased
Assets (the “Purchase Price”) shall be the amount equal to $1,350,000.
The Purchase Price shall be subject to adjustment as set forth in Section 1.7
below.

     

    1.4  Payment
Terms.  The Purchase Price shall be payable by Buyer to Seller
on the Closing Date as follows:

     

    
      	
              a.  

            	
              $150,000 in cash, by wire
      transfer of immediately available funds, to the account designated by
      Seller (the “Cash Amount”);

            


    

     

    
      	
              b.  

            	
              $369,010 payable by a
      Secured Convertible Promissory Note in the form attached hereto as Exhibit 1.4(b)
      (the “Promissory Note”);

            


    

     

    
      	
              c.  

            	
              Approximately $29,817.93 to be paid
      by the assumption of the following liabilities: (i) the Erving Leasing
      obligation totaling $1,414.13 at May 14, 2009 (the “Erving Obligation”),
      (ii) Delage Landen note payable totaling $13,852.58 at May 14, 2009 (the
      “Delage Landen Obligation”), and (iii) Toyota Motor Credit
      obligations totaling $14,551.22 at May 14, 2009 (collectively, the “Toyota
      Obligations”) (the Toyota Obligations, the Erving Obligation and the
      Delage Landen Obligation are sometimes referred to herein as the “Assigned
      Obligations”); provided, however, that in the event creditors of any of
      the Assigned Obligations do not agree to the assignment and assumption of
      such Assigned Obligations by Buyer (the “Restricted Obligations”), Buyer
      and Seller agree to enter into a mutually agreed upon side letter, whereby
      Buyer agrees to pay to Seller in cash, an amount equal to the value of the
      aggregate monthly payments of such Restricted Obligations until they have
      been paid in full; and

            


    

     

    
      	
              d.  

            	
              $801,172.07 to be paid
      by issuance of Rule 144 Restricted Stock valued on the basis of the
      average closing price for Parent’s Common Stock (hereinafter defined) as
      quoted on the OTC Bulletin Board Market (“OBB”) for the ten (10) trading
      days immediately prior to Closing. In the event that all of the shares of
      Rule 144 Restricted Stock that are issued to Seller are sold in open
      market transactions and the aggregate value of such sales totals less than
      $799,948, Buyer agrees to make up for this shortfall in the value of the
      Rule 144 Restricted Stock issued to Seller by issuing Freely Tradable
      Common Stock to Seller within five business days following Seller’s
      written notice with documentation evidencing such shortfall to the Buyer,
      unless this shortfall guarantee (the “Shortfall Guarantee”)
      expires according the following provisions.  The Shortfall
      Guarantee shall expire on the earliest to occur of: (i) following the
      expiration of the six (6) month holding period for Rule 144 Restricted
      Stock, the sale of the Rule 144 Restricted Stock by Seller for an
      aggregate value of $799,948, (ii) following the expiration of the six (6)
      month holding period for Rule 144 Restricted Stock, the aggregate market
      value of the sold and unsold Rule 144 Restricted Shares reaches $850,000,
      or (iii) eighteen (18) months following the
  Closing.

            


    

    


    For
purposes of this Agreement, “Rule 144 Restricted Stock” shall mean shares of the
common stock, par value $.001, of Parent (the “Common Stock”) the issuance of
which to Seller has not been registered under the Securities Act of 1933, as
amended (the “Securities Act”) and that are considered “restricted securities”
as defined in Section 144 of the Securities Act.

     

    For
purposes of this Agreement, “Freely Tradable Common Stock” shall refer to Common
Stock of Parent the issuance of which to Seller has been registered under the
Securities Act, and that has not subject to any contractual, regulatory or other
legal restrictions on transfer, is free and clear of all liens and encumbrances,
and is freely tradable to members of the general public.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.5 Assumed
Liabilities; No Other Assumption of Liabilities.  As partial
consideration for the Purchased Assets, Buyer shall assume and agree to pay,
perform and discharge the following liabilities and obligations of Seller (the
“Assumed Liabilities”):

     

    
      	
              a.  

            	
              any
      liability arising after the Closing in connection with the operation, use,
      or performance of any of the Purchased Assets by the
  Buyer;

            


    

     

    
      	
              b.  

            	
              the
      Erving Obligation;

            


    

     

    
      	
              c.  

            	
              the
      Delage Landen Obligation;

            


    

     

    
      	
              d.  

            	
              the
      Toyota Obligations; and

            


    

     

    
      	
              e.  

            	
              all
      outstanding accounts payable, if any, that remain unpaid by Seller, as of
      Closing, subject to the adjustments set forth in Section
      1.7.

            


    

    


    The
Assumed Liabilities shall expressly exclude (i) any accrued payroll and payroll
taxes, (ii) any unpaid obligations of Seller to 1st Tel,
(iii) all vendor obligations arising prior to November 1, 2007, (iv) any
accounts payable obligations for goods and services delivered or rendered prior
to the Closing Date that are not covered by cash and accounts receivable for
service periods prior to the Closing Date, (v) any liabilities or obligations
related to the Assigned Leases or Assigned Contracts that arise from breach of
contract, default or other such tortious claim occurring prior to Closing,
(collectively, the “Specified Retained Liabilities”).  The Specified
Retained Liabilities shall either be retained by Seller after Closing or fully
paid by Seller prior to Closing.

     

    Except
for the Assumed Liabilities, Buyer shall not assume or be obligated under, or
become liable for, any debt, liability, contract or obligation whatsoever of
Seller or the Business, and Seller shall be responsible for the payment or
performance and full discharge of all debts, liabilities, contracts and
obligations whatsoever of Seller, including those related to the Business, that
arise prior to the Closing and the Specified Retained Liabilities.  In
particular (and by way only of example and not by way of limitation), Seller
shall be and remain solely responsible for, and shall timely pay or perform and
discharge, all debts, liabilities, contracts and obligations with respect to the
Business other than the Assumed Liabilities, including (i) the Specified
Retained Liabilities, (ii) any tax liability or obligation arising in connection
with transactions occurring prior to the Closing, but excluding any sales, use,
transfer or other tax obligation arising out of or in connection with the
transactions contemplated by this Agreement or the performance, use or operation
of the Purchased Assets by Buyer, which Buyer hereby agrees to be responsible
for; (iii) any liability or obligation to Seller's employees for salaries and
wages, whether relating to the termination of their employment or otherwise,
arising prior to and including the Closing; and (iv) any legal claim or any
other liability or obligation whatsoever incurred by Seller relating to the
Business for periods or occurrences prior to and including the Closing
Date.

     

    1.6  Allocation
of Purchase Price.  The Purchase Price shall be allocated for
federal income tax purposes in accordance with Schedule 1.6.  After
the Closing, the parties shall make consistent use of the allocation specified
on Schedule 1.6 for
all federal income tax purposes and in all filings, declarations and reports
with the Internal Revenue Service (the “IRS”) in respect thereof, including the
reports required to be filed under Section 1060 of the Internal Revenue
Code, as amended (the “Code”).  Each of the parties will file all tax
returns and information reports, including the IRS Form 8594 and any disclosures
that are required under Section 1060 of the Code, in a manner consistent with
the allocation specified in Schedule
1.6.  In any Proceeding (hereinafter defined) related to the
determination of any tax, neither Buyer nor Seller shall contend or represent
that such allocation is not a correct allocation.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    1.7  Adjustments
to Purchase Price.  The Purchase Price shall be subject to the
following additional credits and adjustments (either as additions or reductions
to the Purchase Price, as the case may be), which shall be reflected in a
closing statement to be agreed upon and to be executed and delivered by Buyer
and Seller at Closing: (a) cash plus accounts receivable plus any prepaid
expenses (including but not limited to taxes and other similar expenses directly
related to the Purchased Assets and Assumed Liabilities which shall be prorated
at Closing) less (b) any accounts receivable collected and not set aside in
Seller’s bank account(s) for any services to be performed post-Closing that have
been prepaid prior to Closing and (c) trade accounts payable and credit card
obligations for Business expenses paid by Buyer on behalf of Seller for
obligations and services rendered prior to the
Closing.  Notwithstanding the above provision, Seller agrees to track
and set aside in the Seller’s bank account(s) those funds received prior to
Closing for services to be performed post-Closing. The amount of the adjustment
described in this Section 1.7 shall be
identified as Purchase Price Adjustment (“PPA”).  At the end of the
ninety (90) day period immediately following Closing, Buyer and Seller shall
review the PPA and revise it as follows:

     

    
      	
              i.  

            	
              Reduce
      or increase the PPA, as the case may be, by an amount equal to any
      customer accounts receivable purchased at Closing that are deemed
      uncollectible or understated; and

            


    

     

    
      	
              ii.  

            	
              Decrease
      or increase the PPA, as the case may be, by an amount equal to any
      increase in the accounts payable assumed by Buyer at Closing which
      resulted from such accounts payable having been understated-yet-due by
      Seller as of the Closing date, or
overstated.

            


    

    


    Upon
mutual agreement by the parties of the revision to the PPA, Buyer shall execute
and deliver a post-closing statement reflecting such revision to the PPA (the
“Post-Closing Statement”) to the Seller.  If  after thirty
(30) days, the parties are unable to reach an agreement as to how to revise the
PPA, the parties will refer the matter to a certified public accounting firm
that has not previously done work for Buyer or Seller (the “Independent
Accountant”) as mutually agreed upon by the parties.  The Independent
Accountant will resolve the disputed matter in a manner consistent with this
Section 1.7,
and the determination of the Independent Accountant regarding such disputed
matter will be final, binding and conclusive on the Buyer and the
Seller.  Upon final determination of the matter by the Independent
Accountant, the Post-Closing Statement will be executed and delivered by the
Buyer and the Seller.  The fees and expenses of the Independent
Accountant will be paid one-half by the Buyer and one-half by the
Seller.  Upon execution and delivery of the Post-Closing Statement by
Buyer and Seller, the amount of the Rule 144 Restricted Stock issuable to Seller
as described in Section 1.4 shall be
increased or decreased, as applicable, to reflect such revisions to the
PPA.  The price of the Rule 144 Restricted Stock to be added to or
subtracted from the Purchase Price shall be valued on the basis of the average
closing price for Parent’s Common Stock as quoted on the OBB for the ten (10)
trading days immediately prior to the execution and delivery of the Post-Closing
Statement

     

    ARTICLE TWO:
CLOSING

     

    2.1  Time and
Place of Closing; Closing Deliveries. The closing of the purchase and
sale contemplated herein (the “Closing”) shall take place at 11:00 a.m., on May
29, 2009 at the offices of Parent, located in League City, Texas. The date of
Closing is hereinafter referred to as the “Closing Date.”

     

    At the
Closing, Buyer shall deliver to Seller according to Seller’s
instructions:

     

    
      	
              a.  

            	
              the
      Cash Amount by wire transfer or certified bank
  check;

            


    

     

    
      	
              b.  

            	
              certificates
      representing a number of shares of Rule 144 Restricted Stock of the
      Parent, as determined in accordance with Section 1.4
      (the “Stock Certificates”), or evidence satisfactory to Seller that Buyer
      has instructed its transfer agent to prepare and deliver such Stock
      Certificates and that such Stock Certificates will be delivered to Seller
      no later than five (5) days following
Closing;

            


    

     

    
      	
              c.  

            	
              the
      executed Promissory Note; ;

            


    

     

    
      	
              d.  

            	
              the
      executed Security Agreement, the form of which is attached hereto as Exhibit 2.1(d)
      (the “Security Agreement”); and

            


    

     

    
      	
              e.  

            	
              the
      documents, certificates, agreements and instruments described below in
      Section
      2.3.

            


    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    2.2  Conditions
Precedent to Buyer's Obligation. The obligation of Buyer to consummate
the transactions contemplated herein is subject to the satisfaction (or, in
Buyer's sole discretion, written waiver thereof) of the following conditions as
of the Closing:

     

    
      	
               
      

            	
              a.

            	
              The
      representations and warranties of Seller made in this Agreement shall be
      true and correct in all material respects at
  Closing;

            


    

     

    
      	
               
      

            	
              b.

            	
              No
      demand, action, suit, audit, investigation, review, claim or other legal
      or administrative proceeding (collectively, a “Proceeding”) by any nation
      or government, any state or other political subdivision thereof, including
      any governmental agency, department, commission, or instrumentality of the
      United States, any State of the United States or any political subdivision
      thereof or, any self-regulatory agency or authority (collectively,
      “Governmental Authority”) or other person shall have been instituted or
      threatened against Seller which seeks to enjoin, restrain or prohibit, or
      which questions the validity or legality of, the transactions contemplated
      hereby or which otherwise seeks to affect or could reasonably be expected
      to affect the transactions contemplated
hereby;

            


    

     

    
      	
               
      

            	
              c.

            	
              Seller's
      members shall have approved this Agreement and the transactions
      contemplated hereby;

            


    

     

    
      	
               
      

            	
              d.

            	
              Seller
      shall have performed in all material respects its obligations described in
      Section
      5.1;

            


    

     

    
      	
               
      

            	
              e.

            	
              Buyer
      and Cresson Crossroads shall have entered into an agreement for providing
      broadband services in the Cresson Crossroads development on a post-closing
      basis.

            


    

     

    
      	
               
      

            	
              f.

            	
              Buyer
      shall have received from Seller all of the
  following:

            


    

     

    (i) A
duly executed bill of sale, the form of which is attached hereto as Exhibit 2.2(e)(i)
(the “Bill of Sale”), which includes a complete list of the Assigned Tangible
Assets, conveying to Buyer the Assigned Tangible Assets free and clear of all
pledges, security interests, or other similar liens granted by Seller and free
and clear of all other adverse claims of any kind whatsoever known by Seller
(collectively, “Encumbrances”), except (A) Encumbrances for taxes, the payment
of which are not delinquent, (B) materialmen's, warehousemen's, mechanic's,
lender’s, lessor’s, or other Encumbrances arising by operation of law in the
ordinary course of business for sums not due and which do not materially detract
from the value of such assets or properties or materially impair the operation
of the Business, and (C) statutory Encumbrances incurred in the ordinary course
of business in connection with worker's compensation, unemployment insurance or
other forms of governmental insurance or benefits (collectively “Permitted
Encumbrances”);

     

    (ii) A
duly executed assignment and assumption agreement, the form of which is attached
hereto as Exhibit
2.2(f)(ii) (the “Assignment and Assumption Agreement”), which includes a
complete list of all Assigned Leases, Assigned Contracts and Governmental
Permits;

     

    (iii)
Duly executed trademark, copyright and other intellectual property assignment
documents, as reasonably requested by Buyer to fully effectuate the use by or
transfer to Buyer of the intellectual property;

     

    (iv)
Actual or constructive physical possession of the Purchased Assets and the
Records;

     

    (v) An
executed certificate of amendment to Seller’s Certificate of Formation effecting
a change in Seller’s name (the “Amendment”); and

     

    (vi) A
certificate of the managers of Seller certifying, as complete and accurate as of
the Closing (A) copies of the governing documents of Seller, (B) all requisite
resolutions or actions of Seller's managers and members approving the execution
and delivery of this Agreement and the consummation of the contemplated
transactions, and (C) the incumbency and signatures of the managers of Seller
executing this Agreement and any other document relating to the contemplated
transactions.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    2.3  Conditions
Precedent to Seller's Obligations. The obligation of Seller to consummate
the transactions contemplated herein is subject to the satisfaction (or, in
Seller’s sole discretion, written waiver thereof) of the following conditions as
of the Closing:

     

    
      	
               
      

            	
              a.

            	
              The
      representations and warranties of Buyer made in this Agreement shall be
      true and correct in all material respects at
  Closing;

            


    

     

    
      	
               
      

            	
              b.

            	
              No
      Proceeding by any Governmental Authority or other person shall have been
      instituted or threatened against Buyer which seeks to enjoin, restrain or
      prohibit, or which questions the validity or legality of, the transactions
      contemplated hereby or which otherwise seeks to affect or could reasonably
      be expected to affect the transactions contemplated
  hereby;

            


    

     

    
      	
               
      

            	
              c.

            	
              Buyer’s
      operations have been in compliance with all applicable Laws and
      regulations that could have a material adverse impact on the
      Business;

            


    

     

    
      	
               
      

            	
              d.

            	
              Buyer
      shall have performed in all material respects its obligations described in
      Section
      5.1 and elsewhere in this
Agreement;

            


    

     

    
      	
               
      

            	
              e.

            	
              Seller
      shall have received from Buyer all of the
  following:

            


    

     

    (i) The
Purchase Price (including the duly executed Promissory Note, Security Agreement,
and the stock certificates representing the shares of Rule 144 Restricted Stock
as described in Section
1.4(d));

     

    (ii) The
Assignment and Assumption Agreement, duly executed by Subsidiary;
and

     

    (iii) A
certificate of the Secretary of each of Parent and Subsidiary certifying, as
complete and accurate as of the Closing (A) attached copies of the governing
documents of each of Parent and Subsidiary, as amended and restated, as
applicable, (B) all requisite resolutions or actions of each of Parent’s and
Subsidiary’s board of directors approving the execution and delivery of this
Agreement and the consummation of the contemplated transactions, and (C) the
incumbency and signatures of the officers of each of Parent and Subsidiary
executing this Agreement and any other document relating to the contemplated
transactions.

     

    2.4 Consents
and Other Conditions to Closing.  It shall also be a condition
precedent to closing that:

     

    
      	
              a.  

            	
              Buyer
      and Seller shall have obtained all necessary written consents or approvals
      from all governmental or regulatory authorities that are necessary to
      acquire the Purchased Assets and for Subsidiary to continue the historical
      operations of the Seller;

            


    

     

    
      	
              b.  

            	
              Seller
      shall not be involved in or threatened with any litigation that would have
      a material adverse effect on the Purchased Assets;
  and

            


    

     

    
      	
              c.  

            	
              Seller
      shall have obtained all necessary consents from any utility companies,
      governmental or regulatory authorities, landlords, lenders, suppliers and
      other third parties in connection with the material contracts described in
      Schedule
      2.4 (the “Material Contracts”) to be assumed by Subsidiary at
      Closing (the “Material Consents”).  If Seller is unable to
      obtain any Material Consents as of the Closing Date (each such Material
      Contract for which a Material Consent was not obtained as of the Closing
      Date shall be referred to as a “Restricted Material Contract”), Buyer may
      waive the closing conditions as to any such Material Consent and
      either:

            


    

     

    (i) elect
to have Seller continue its efforts to obtain the Material Consents;
or

     

    (ii)
elect to have Seller retain such Restricted Material Contract and all
liabilities arising therefrom or relating thereto.

     

    If Buyer
elects to have Seller continue its efforts to obtain any Material Consents and
the Closing occurs, notwithstanding Sections 1.1 and 1.5
to the contrary, neither this Agreement nor the Assignment and Assumption
Agreement nor any other document related to the consummation of the transactions
contemplated in this Agreement shall constitute a sale, assignment, assumption,
transfer, conveyance, delivery, or an attempted sale, assignment, assumption,
transfer, conveyance or delivery of the Restricted Material Contracts. Following
the Closing, the parties shall use their Best Efforts (hereinafter defined)
(other than that Seller and Buyer shall have no obligation to offer or pay any
consideration in order to obtain any such Material Consents) and cooperate with
each other to obtain the Material Consents relating to the Restricted Material
Contracts as quickly as practicable.  Pending the obtainment of such
Material Consents relating to the Restricted Material Contracts, the parties
shall cooperate with each other in any reasonable and lawful arrangements
designed to provide to Buyer the benefits of use of each Restricted Material
Contract for the term of such agreement (or any right or benefit arising
thereunder, including the enforcement for the benefit of Buyer of any and all
rights of Seller against a third party thereunder).  Once a Material
Consent for the sale, assignment, assumption, transfer, conveyance and delivery
of a Restricted Material Contract is obtained, Seller shall promptly assign,
transfer, convey and deliver such Restricted Material Contract to Buyer, and
Buyer shall assume the obligations under such Restricted Material Contract
assigned to Buyer from and after the date of assignment to Buyer pursuant to a
special-purpose assignment and assumption agreement substantially similar in
terms to those of the Assignment and Assumption Agreement (which special-purpose
agreement the parties shall prepare, execute and deliver in good faith at the
time of such transfer, all at no additional cost to Buyer).

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    If there
are any consents not listed on Schedule 2.4
that are necessary for the assignment and transfer of any Seller contracts to
Buyer (the “Nonmaterial Consents”) which have not yet been obtained (or
otherwise are not in full force and effect) as of the Closing Date, Buyer shall
elect at the Closing, in the case of each Seller contract for which a
Nonmaterial Consents was not obtained (or otherwise are not in full force and
effect) as of the Closing Date (the “Restricted Nonmaterial
Contracts”), whether to:

     

    (i)
accept the assignment of such Restricted Nonmaterial Contract, in such case, as
between Buyer and Seller, such Restricted Nonmaterial Contract shall, to the
maximum extent practicable and notwithstanding the failure to obtain the
applicable Nonmaterial Consent, be transferred at the Closing pursuant to the
Assignment and Assumption Agreement or as elsewhere provided under this
Agreement; or

     

    
      	
               
      

            	
              (ii)
      reject the assignment of such Restricted Nonmaterial Contracts, in which
      case, notwithstanding Sections 1.1 and
      1.5, (A) neither this Agreement nor the Assignment and Assumption
      Agreement nor any other document related to the consummation of the
      transactions contemplated by this Agreement shall constitute a sale,
      assignment, assumption, conveyance or delivery or an attempted sale,
      assignment, assumption, transfer, conveyance or delivery of such
      Restricted Nonmaterial Contract, and (B) Seller shall retain such
      Restricted Nonmaterial Contract and all liabilities arising therefrom or
      relating thereto.

            


    

     

    “Best
Efforts” means the efforts that a prudent person desirous of achieving a result
would use in similar circumstances to achieve that result as expeditiously as
possible, provided, however, that a person required to use Best Efforts under
this Agreement will not be required to take actions that would result in a
material adverse change in the benefits to such person of this Agreement and the
contemplated transactions, or to dispose of or make any change to its business,
expend any material funds or incur any other material burden.

     

    2.5 Failure
of Conditions.  If any of the material conditions to Closing
set forth in Sections
2.2, 2.3 and 2.4 have not been satisfied, the party or parties entitled
to the benefit of such material conditions may elect to (i) waive such
conditions, (ii) terminate this Agreement without further liability of the
terminating party, or (iii) to consummate the transactions contemplated
hereby.

     

    ARTICLE THREE: WARRANTIES
AND REPRESENTATIONS OF SELLER

     

    Seller
hereby warrants and represents to Buyer, which warranties and representations
shall survive the Closing for one year, as follows:

     

    3.1  Corporate
Matters; No Conflict.  Seller is a limited liability company
duly formed, validly existing and in good standing under the Laws of the State
of Texas and has the authority and power, corporate and otherwise, to carry on
the Business in the places and in the manner presently conducted. Seller has the
corporate power and authority to enter into this Agreement and all other
agreements and documents to be executed and delivered pursuant to this Agreement
(the “Ancillary Agreements”) by Seller and to consummate the transactions
contemplated hereby.

     

    The
execution, delivery and performance of this Agreement, the Ancillary Agreements
to be executed by Seller, and the consummation of the transactions contemplated
hereby have been approved by all necessary corporate action of Seller. This
Agreement and the Ancillary Agreements to be executed by Seller constitute, or,
in the case of such Ancillary Agreements that are not executed as of Closing,
upon the execution and delivery of such agreements by Seller, will constitute,
valid and legally binding obligations of Seller, enforceable against it in
accordance with the respective terms of such agreements, except as such
enforceability may be limited by bankruptcy and other Laws generally affecting
the rights of creditors, and general principles of equity.

     

    To the
knowledge of Seller, there are no material adverse environmental liabilities
associated with the Business or the Purchased Assets.

     

    To the
knowledge of Seller, except as set forth in Schedule 3.1, the
execution, delivery and performance of this Agreement and such Ancillary
Agreements to be executed by Seller, and the consummation of the transactions
contemplated hereby: (i) do not and will not violate, conflict with, or result
in the breach of, or default under any term, condition or provision of, give
rise to any right to terminate, cancel, modify, accelerate or otherwise change
the existing rights or obligations of such party with respect to, (A) any
domestic or foreign federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, policy, guideline or other
requirement of or by any Governmental Authority, each as amended through the
date hereof (collectively, “Laws”) which are applicable to the Seller, the
Business and/or the Purchased Assets, (B) any judgment, order, writ, injunction,
decree, directive or award of any arbitrator or Governmental Authority
(collectively, an “Order”) which is applicable to the Seller, the Business
and/or the Purchased Assets, (C) the charter documents of Seller or any
securities issued by Seller, or (D) any authorization, approval, consent,
qualification, permit or license (collectively, an “Authorization”) of any
Governmental Authority, any material agreement, or other material instrument,
document or understanding, oral or written, to which the Seller is a party, by
which Seller may have rights or by which any of the Purchased Assets may be
bound or affected; or (ii) result in the creation or imposition of any
Encumbrance, excluding Permitted Encumbrances, on the Purchased
Assets.

     

    No
Authorization or other action of, or registration, declaration, recording or
filing with, any Governmental Authority or other person (other than the approval
of the managers and members of Seller) is required in connection with (i) the
execution and delivery of this Agreement and any Ancillary Agreements to be
executed and delivered pursuant this Agreement by Seller and/or (ii) the
consummation by Seller of the transactions contemplated hereby.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    3.2  Title to
the Purchased Assets.  Seller has good and valid title to all
of the assets constituting the Purchased Assets described in Section 1.1, free and
clear of all Encumbrances, excluding the Permitted Encumbrances.

     

    3.3  Commitments;
Customers and Vendors. To the knowledge of
Seller, the Material Contracts listed on Schedule 2.4 are all
of the material agreements, arrangements, and other commitments of the Business
with its customers (whether written, oral or otherwise), which if not assigned
to or assumed by Buyer as an “Assigned Contract” hereunder, would result in
liabilities or obligations of Seller accruing after the Closing. True and
correct copies of each of the Material Contracts and all amendments and
modifications thereof, have been delivered to Buyer. Assuming that the consents
of the parties to the Material Contracts, all of the Material Contracts are
assignable by Seller.

     

    3.4  Each
Assigned Contract is in full force and effect.  To the
knowledge of Seller, Seller has not been made aware of any facts that would
suggest that any of the Material Contracts within Purchased Assets are not
valid, binding and enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy and other Laws generally affecting
the rights of creditors, and general principles of equity. Except as set forth
in Schedule
3.4, neither Seller nor, to the knowledge of Seller, any other party to
an Assigned Contract is in breach or default under any such contract (with or
without the lapse of time, or the giving of notice, or both).

     

    3.5  Brokers,
Agents. Seller has not dealt with any agent, finder, broker or other
representative (other than representatives of Buyer) in any manner which could
result in Buyer being liable for any finder's, broker's or other fees or
commissions in connection with the subject matter of this
Agreement.

     

    3.6  Warranties
True and Correct. No representation or warranty by Seller contained in
this Agreement or in any writing to be furnished pursuant hereto contains or
will contain any untrue statement of fact or omits or will omit to state any
material fact required to make the statements herein or therein complete and not
misleading.

     

    3.7  Exclusion
of Implied Warranties.  SELLER EXCLUDES AND DISCLAIMS ANY AND
ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE
PURCHASED ASSETS AND EACH OF THEM.  NOTWITHSTANDING ANYTHING TO THE
CONTRARY HEREIN, SELLER MAKES NO WARRANTIES TO BUYER IN CONNECTION WITH THE SALE
OR TRANSFER OF THE PURCHASED ASSETS TO SUBSIDIARY OR THE CONDITION OR PROSPECTS
OF THE BUSINESS OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS ARTICLE
THREE.

     

    ARTICLE FOUR: WARRANTIES AND
REPRESENTATIONS OF BUYER

     

    Each of
Parent and Subsidiary hereby warrants and represents to Seller, which warranties
and representations shall survive the Closing for a period of three (3) years
following Closing as follows:

     

    4.1  Corporate
Matters; No Conflict. Each of Parent and Subsidiary is a corporation duly
organized, validly existing and in good standing under the Laws of the state
where it was incorporated.  Each of Parent and Subsidiary has the
authority and power, corporate or otherwise, to carry on all business activities
in the places and in the manner currently conducted by it.  Each of
Parent and Subsidiary has the corporate power and authority to enter into this
Agreement and the Ancillary Agreements to be executed and delivered by it, and
to consummate the transactions contemplated hereby.  The execution,
delivery, and performance of this Agreement and the Ancillary Agreements by each
of Parent and Subsidiary have been approved by all necessary corporate action.
This Agreement and the Ancillary Agreements to be executed and delivered by each
of Parent and Subsidiary constitute, or in the case of the Ancillary Agreements,
upon their execution and delivery by each of Parent and Subsidiary, as
applicable, will constitute, valid and legally binding obligations of each of
Parent and Subsidiary, enforceable against each in accordance with the
respective terms except as such enforceability may be limited by bankruptcy and
other Laws generally affecting the rights of creditors, and general principles
of equity.

     

    The
execution, delivery and performance of this Agreement and the Ancillary
Agreements to be executed and delivered by each of Parent and Subsidiary, as
applicable, the consummation of the transactions contemplated hereby, and the
compliance herewith: (i) do not, and will not violate, conflict with or result
in the breach of, or default under, any term, condition or provision of, give
rise to any right to terminate, cancel, modify, accelerate or otherwise change
the existing rights or obligations of such party with respect to, (A) any Laws
which are applicable to each of Parent and Subsidiary, the Business and/or the
Purchased Assets, (B) any Order which is applicable to each of Parent and
Subsidiary, the Business and/or the Purchased Assets, (C) the charter documents
of each of Parent and Subsidiary or any securities issued by Parent or
Subsidiary, or (D) Authorization of any Governmental Authority, or any material
agreement, or other material instrument, document or understanding, oral or
written, to which Parent or Subsidiary is a party, by which Parent or Subsidiary
may have rights or by which any of the Purchased Assets may be bound or
affected.

     

    No
Authorization or other action of, or registration, declaration, recording or
filing with, any Governmental Authority or other person is required in
connection with the execution and delivery of this Agreement and/or any
Ancillary Agreement to be executed and delivered pursuant hereto by each of
Parent and Subsidiary, as applicable, and/or the consummation by each of Parent
and Subsidiary of the transactions contemplated hereby.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    4.2  Capitalization.  All
of the Common Stock of Parent to be issued in connection with the transactions
contemplated by this Agreement, including shares of Parent’s Common Stock to be
issued in connection with (i) Closing, (ii) the Shortfall Guarantee, and (iii)
the Promissory Note, or otherwise, have been duly authorized and will be validly
issued, fully paid, and nonassessable.

     

    4.3  SEC
Filings; Financial Statements.

     

    
      	
              a.  

            	
              The
      Parent has made available to the Seller, upon request of the Seller,
      accurate and complete copies (excluding copies of exhibits) of each
      report, registration statement and definitive proxy statement filed by the
      Parent with the U.S. Securities Exchange Commission (the “SEC”) between
      December 31, 2004 and the date of this Agreement (the “Parent SEC
      Documents”).  As of the time it was filed with the SEC (or, if
      amended or superseded by a filing prior to the date of this Agreement,
      then on the date of such filing):  (i) each of the Parent
      SEC Documents complied in all material respects with the applicable
      requirements of the Securities Act or the Securities Exchange Act of 1934
      (as the case may be); and (ii) none of the Parent SEC Documents
      contained any untrue statement of a material fact or omitted to state a
      material fact required to be stated therein or necessary in order to make
      the statements therein, in the light of the circumstances under which they
      were made, not misleading.

            


    

     

    
      	
              b.  

            	
              Between
      the date of the most recently filed Parent SEC Document and the date of
      this Agreement, there has been no material adverse change in the Parent’s
      affairs that has not been disclosed in the Parent's SEC Documents, provided, however, that
      for purposes of determining whether there shall have been any such
      material adverse change, (i) any adverse change resulting from or relating
      to worldwide general business or economic conditions shall be disregarded,
      (ii) any adverse change resulting from or relating to conditions generally
      affecting the industry in which Parent competes shall be disregarded, and
      (iii) any adverse change to the stock price of the Parent’s Common Stock,
      as quoted on any nationally recognized stock quotation system, shall be
      disregarded. 

            


    

     

    
      	
              c.  

            	
              The
      consolidated financial statements contained in the Parent's SEC
      Documents:  (i) complied as to form in all material
      respects with the published rules and regulations of the SEC applicable
      thereto; (ii) were prepared in accordance with generally accepted
      accounting principles applied on a consistent basis throughout the periods
      covered, except as may be indicated in the notes to such financial
      statements and (in the case of unaudited statements) as permitted by
      Form 10-Q of the SEC, and except that unaudited financial statements
      may not contain footnotes and are subject to year-end audit adjustments;
      and (iii)  fairly present the consolidated financial position of the
      Parent and its subsidiaries as of the respective dates thereof and the
      consolidated results of operations of the Parent and its subsidiaries for
      the periods covered thereby.

            


    

     

    
      	
              d.  

            	
              The
      Parent qualifies as a registrant whose securities may be resold pursuant
      to Form S-1 or SB-2 promulgated by the SEC pursuant to the Securities
      Act.

            


    

    


    4.4  Acquisition
Subsidiary. Subsidiary was formed in October 2005, and is principally
engaged in providing internet access to commercial and residential clients.
Immediately following the Closing, Subsidiary will continue to operate as a
wholly owned subsidiary of Parent.

     

    4.5 Brokers;
Agents.  Buyer has not dealt with any agent, finder, broker or
other representative in any manner other than International Business Exchange,
as authorized by Seller, which could result in Seller being liable for any fee
or commission in the nature of a finder's or originator's fee in connection with
the subject matter of this Agreement.

     

    4.6  Warranties
True and Correct.  No warranty or representation by Buyer
contained in this Agreement or in any writing to be furnished pursuant hereto
contains or will contain any untrue statement of fact or omits or will omit to
state any material fact required to make the statements therein contained not
misleading.

     

    ARTICLE FIVE: ADDITIONAL
COVENANTS

     

    5.1  Publicity.  No party will make any
public disclosure or issue any press releases pertaining to the existence of
this Agreement without having first obtained the consent of the other parties,
excluding communications with employees, customers, suppliers, governmental
agencies, and other groups as may be legally required or necessary or
appropriate (i.e., any securities filings or notices), and which are not
inconsistent with the prompt consummation of the transactions contemplated in
this Agreement.  However, Parent is a public company and Seller agrees
that it will not unreasonably withhold consent for Parent to issue a public
press release, provided to Seller in advance, if requested by
Parent.

     

    5.2  Cooperation.
Seller shall cooperate with Buyer and use its Best Efforts to cause its
respective officers, employees, agents, accountants and representatives, if any,
to cooperate with Buyer after the Closing to facilitate the orderly transition
of the Business and the Purchased Assets to Buyer and to minimize any disruption
to the Business that might result from the transactions contemplated
hereby.

     

    5.3  Execution
of Additional Documents. From time to time, as and when requested by
Buyer, Seller shall execute and deliver, or cause to be executed and delivered,
all such documents and instruments of conveyance and shall take, or cause to be
taken, all such further or other actions as are necessary to consummate the
transactions contemplated by this Agreement and to convey, assign, transfer and
deliver to Buyer any of the properties or assets intended to be conveyed,
assigned, transferred and delivered pursuant to this Agreement.

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.4  Records.
For the five (5) year period commencing on the Closing Date, upon reasonable
notice, Buyer and Seller agree to furnish or cause to be furnished, during
normal business hours, to each other and their respective representatives,
employees, counsel and accountants access to such information and assistance
relating to the Business as is reasonably necessary for financial reporting and
accounting matters, the preparation and filing of any returns, reports or forms,
or the defense of any tax claim or assessment, relating to the Business;
provided, however, that such access does not unreasonably disrupt the normal
operations of Buyer or Seller.

     

    ARTICLE SIX: INDEMNIFICATION
& POST CLOSING CONDITIONS

     

    6.1  Indemnification
of Buyer. Seller agrees to indemnify Parent, Subsidiary and their
Affiliates, and their respective members, managers, shareholders, directors,
officers, employees, accountants, attorneys and agents (collectively, the “Buyer
Indemnified Parties”) against, and to hold each such person harmless from, any
and all damages, losses, deficiencies, actions, demands, judgments, diminution
in value, costs and expenses (including reasonable attorneys’ and accountants’
fees) (collectively, “Losses”) of or against such person resulting from (i) any
misrepresentation or breach of warranty on the part of Seller in this Agreement
or in any Ancillary Agreement; (ii) any breach or non-fulfillment of any
agreement or covenant contained herein or in any Ancillary Agreement on the part
of Seller; (iii) any failure of Seller to pay and/or perform any liabilities or
obligations of Seller or the Business (including the Specified Retained
Liabilities and any such liability arising by operation of law) other than the
Assumed Liabilities; and (iv) any claims and liabilities to the extent related
to both (A) Seller's operation of the Business and (B) periods or occurrences
prior to the Closing or, as Seller’s operation of the Business relates to a
Restricted Material Contract, prior to the deferred transfer date, if any,
applicable to such Restricted Material Contract.

     

    For
purposes of this Agreement, “Affiliate” shall mean, as to any person, any other
person which, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such
person.

     

    6.2  Indemnification
of Seller. Parent and Subsidiary jointly and severally agree to indemnify
Seller and its Affiliates and their respective shareholders, directors,
officers, employees, accountants, attorneys and  agents (collectively,
the “Seller Indemnified Parties”) against, and to hold each such person harmless
from, any and all Losses of or against such person resulting from (i) any
misrepresentation or breach of warranty on the part of either Parent or
Subsidiary in this Agreement or in any Ancillary Agreement; (ii) any breach or
non-fulfillment of any agreement or covenant contained herein or in any
Ancillary Agreement on the part of either Parent or Subsidiary; (iii) any
failure by Parent or Subsidiary to pay, discharge and/or perform any of the
Assumed Contracts or the Assumed Liabilities; and (iv) any claims and
liabilities to the extent related to both (A) Parent’s or Subsidiary’s operation
of the Business and (B) periods or occurrences after the Closing or, as Parent’s
or Subsidiary’s operation of the Business relates to a Restricted Material
Contract, after the deferred transfer date if any, applicable to such Restricted
Material Contract.

     

    6.3  Procedure
Relative to Indemnification. The following procedure shall govern
indemnification:

     

    
      	
               
      

            	
              a.

            	
              If
      either party hereto shall claim that it is entitled to be indemnified
      pursuant to the terms of this Article Six, it (the “Claiming Party”) shall
      so notify Seller in the case of a claim for indemnification hereunder (a
      “Claim”) by any Claiming Party who or which is a Buyer Indemnified Party
      or Buyer in the case of a Claim by a Claiming Party who or which is a
      Seller Indemnified Party (the “Indemnifying Party”) in writing of such
      claim promptly within ninety (90) days after receipt of a notice of such
      claim or notice of any claim of a third party that may reasonably be
      expected to result in a claim by the Claiming Party against the
      Indemnifying Party except that notice shall be given to the Indemnifying
      Party within such earlier period of time as may be reasonably necessary to
      allow the Indemnifying Party to respond to any pleading or other document
      for which a timely response is required; provided, however, that failure
      to timely give such notification shall not affect the indemnification
      provided hereunder except to the extent the Indemnifying Party shall have
      been actually prejudiced as a result of such failure. Such notice shall
      specify the breach of representation, warranty, or agreement claimed by
      the Claiming Party and the Losses incurred by, or imposed upon, the
      Claiming Party on account thereof. If such Losses are liquidated in
      amount, the notice shall so state and such amount shall be deemed the
      amount of the Claim of the Claiming Party. If such Losses are not
      liquidated in amount, the notice shall so state and, in such event, a
      Claim shall be deemed asserted against the Indemnifying Party by the
      Claiming Party, but no payment shall be made on account thereof until the
      amount of such Claim is liquidated and the Claim is finally determined. In
      the case of a Claim other than one which is based upon a Proceeding by any
      third party, including any Proceeding by any Governmental Authority (a
      “Third Party Claim”), if the Indemnifying Party agrees with such Claim for
      indemnification, it shall remit payment for the amount of such Claim
      promptly after receipt from the Claiming Party of the notice and invoice
      therefore. In the event of a dispute, the Claiming Party and the
      Indemnifying Party shall proceed in good faith and attempt to negotiate a
      resolution of such dispute, and if not resolved through negotiations, such
      dispute shall be resolved by litigation in an appropriate court of
      competent jurisdiction.

            


    

     

    
      	
               
      

            	
              b.

            	
              The
      following provisions shall apply to any Claim of the Claiming Party that
      is based upon a Third Party Claim:

            


    

     

    (i) The
Indemnifying Party shall, upon receipt of such written notice and at its
expense, defend such Third Party Claim in its own name or, if necessary, in the
name of the Claiming Party. The Claiming Party will cooperate with and make
available to the Indemnifying Party such assistance and materials as may be
reasonably requested of it and the Claiming Party shall have the right, at its
expense, to participate in such defense. The Indemnifying Party shall have the
right to settle and compromise such Third Party Claim only with the consent of
the Claiming Party, which consent shall not be unreasonably withheld; provided,
however, that, in making its determination as to whether to grant such consent,
the Claiming Party shall be entitled to consider the impact of the proposed
settlement upon its reputation and/or the goodwill of the businesses which it
conducts.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (ii) If
the Indemnifying Party shall notify the Claiming Party that it disputes any
Claim made by the Claiming Party with respect to, and/or it shall refuse or
choose not to conduct a defense against, such Third Party Claim, then the
Claiming Party shall have the right to conduct a defense against such Third
Party Claim and shall have the right to settle and compromise such Third Party
Claim without the consent of the Indemnifying Party. Once the amount of such
Claim is liquidated and the Claim is finally determined, the Claiming Party
shall be entitled to pursue each and every remedy available to it at law or in
equity to enforce the indemnification provisions of this Article Six and, if it
is determined, or the Indemnifying Party agrees, that it is obligated to
indemnify the Claiming Party for such Claim, the Indemnifying Party agrees to
pay all costs, expenses and fees, including all reasonable attorneys' fees,
which may be incurred by the Claiming Party in attempting to enforce
indemnification under this Article Six, whether the same shall be enforced by
suit or otherwise.

     

    6.4  Limitations
on Indemnification.  In no event shall
the aggregate liability of the Seller under Section 6.1 exceed
$50,000.  In no event shall the aggregate liability of the Buyer under
Section 6.2
exceed $ 50,000 (except that such limitation does not apply to Buyer’s
obligations pursuant to Section 1.4 of this
Agreement or the Promissory Note).  No person shall be entitled to
indemnification under this Article Six with respect to any Losses that are
attributable to any fraud, gross negligence or willful misconduct by such person
or any of its Affiliates.

     

    6.5  Closing
and Post Closing Conditions.

     

    6.5.1 Buyer’s
Obligations To Seller Concerning North Texas
Network.  Following the Closing, Buyer shall have the following
ongoing obligations and duties to Seller concerning the operations of the
Business and Buyer’s existing Granbury area operation, (collectively, “the North
Texas Network”) by Subsidiary:

     

    
      	
              a.  

            	
              Subsidiary’s
      Granbury-area operation will be domiciled, managed and operated from
      Granbury, Texas or the greater Fort Worth, Texas area, unless otherwise
      agreed to in writing by both Parent and Seller, until April 30, 2012
      or the date Buyer pays in full the Purchase
  Price.

            


    

     

    
      	
              b.  

            	
              Parent
      will operate the Subsidiary as a wholly owned subsidiary of Parent until
      April 30, 2012 or the date Buyer pays in full the Purchase
      Price.  Parent shall not, without the written approval of
      Seller, cause the Subsidiary to sell or otherwise dispose of any of its
      assets or of any Purchased Assets acquired from Seller until April 30,
      2012, or the date Buyer pays in full the Purchase Price, except in each
      case for dispositions made in the ordinary course of business or payment
      of expenses incurred by the Subsidiary pursuant to the transactions
      contemplated by this Agreement.

            


    

     

    
      	
              c.  

            	
              Buyer
      shall cause those employees of Seller listed on Exhibit 6.5.1
      to be offered at will employment with Subsidiary, subject to Closing, on
      terms no less favorable to such employees than they currently enjoy with
      Seller.

            


    

     

    
      	
              d.  

            	
              Following
      the Closing, the operation of the North Texas Network will be focused on
      the sales, design, installation, and implementation aspects of the
      Business and all “shared service” aspects of the Business will be provided
      by Parent to Subsidiary as a support function in order to reduce costs and
      achieve economies of scale.  Examples of such shared services
      include, but are not limited to, (i) administrative and financial
      transactions such as billing, collections, purchase orders, payments,
      accounting, etc., (ii) administrative matters related to personnel, such
      as payroll, insurance, stock plans and 401K plan, and (iii) legal, tax,
      leasing, public releases, investor relations, and human relations
      functions.

            


    

     

    
      	
              e.  

            	
              Following
      the Closing, all operations of the North Texas Network’s wireless
      broadband ISP service as well as all future ISP services to commercial
      businesses and residential customers will be conducted as a part of the
      Subsidiary’s operations.

            


    

     

    6.5.2  Parent’s
Obligation To Seller.

     

    
      	
              a.  

            	
              Parent
      agrees to comply with its SEC reporting obligations for so long as Seller
      owns Rule 144 Restricted Stock.

            


    

     

    
      	
              b.  

            	
              In
      the event that the Certificates are not physically delivered to Seller at
      Closing, Buyer agrees to deliver such Certificates to Seller no later than
      five (5) days following Closing.

            


    

    


    6.5.3  Seller’s
Obligations To Buyer.  Following the Closing, Seller will
assist Buyer with respect to Buyer’s integration activities as reasonably
requested by Buyer, provided that such assistance shall not require Buyer to
incur significant time and expense.

     

    
      	
              a.  

            	
              The
      Seller and Ike Thomas agree that for a period of two (2) years from the
      Closing Date, each of the Seller and Ike Thomas will not be involved in
      the internet access industry in Hood, Somervell, Johnson or Parker
      Counties, Texas, except that Seller may provide to Buyer those services
      described in this Section
      6.5.3.  Notwithstanding the foregoing, in the event that
      either Subsidiary or Parent fails to meet any of its obligations to Seller
      under this Agreement from and after the Closing Date, the foregoing
      covenant shall expire.

            


    

    


    6.5.4  Seller’s
Obligations To File Amendment.  Promptly following closing,
Seller will file the Amendment with the Texas Secretary of States
office.

     

    
      
        
        

      

      
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    ARTICLE SEVEN:
MISCELLANEOUS

     

    7.1  Expenses.
The parties hereto shall pay their own expenses, including accountants' and
attorneys' fees, incurred in connection with the negotiation and consummation of
the transactions contemplated by this Agreement and the Ancillary Agreements.
Buyer shall be liable for and shall pay and discharge when due any sales or
transfer taxes incurred in connection with the purchase and sale of the
Purchased Assets pursuant to this Agreement.

     

    7.2  Headings;
Use of Certain Words. The headings in this Agreement are for purposes of
convenience and ease of reference only and shall not be construed to limit or
otherwise affect the meaning of any part of this Agreement. Unless the context
clearly otherwise requires, as used herein, the term “Agreement” shall mean this
Agreement, including the Schedules and Exhibits attached hereto. The words
“herein,” “hereof” and “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision, and, except as expressly provided otherwise herein, references
herein to Articles or Sections or Schedules or Exhibits shall mean the Articles
and Paragraphs hereof and the Schedules and Exhibits attached hereto. The use of
the neuter pronoun “it” shall also refer as appropriate to the masculine and/or
feminine gender, and vice versa. The use of the singular herein shall, where
appropriate, be deemed to include the plural and vice versa. As used herein, the
word “person” refers to any individual, corporation, limited liability company,
partnership, trust, Governmental Authority or other organization or entity. As
used herein, the term “including” shall mean “including, without limitation. For
those warranties and representations set forth in Article Three which are
subject to the qualification “to the knowledge of Seller” or similar language,
Seller shall be deemed to have knowledge of a matter if any executive officer
has knowledge of the matter. For those warranties and representations set forth
in Article Four which are subject to the qualification “to the knowledge of
Buyer” or similar language, if any, Buyer shall be deemed to have knowledge of a
matter if any executive officer of either Parent of Subsidiary has knowledge of
the matter.

     

    7.3  Notices.
All notices or other communications required or permitted to be given hereunder
shall be in writing and shall be considered to be given and received in all
respects when personally delivered, when sent by facsimile transmission actually
received by the receiving equipment, when sent by reputable express or courier
delivery service, delivery charges prepaid, or three (3) days after being
deposited in the United States mail, certified mail, postage prepaid, return
receipt requested, addressed as set forth on the signature page, or to such
other address as shall be designated by the addressee by notice duly given in
accordance herewith.

     

    7.4  Assignment.
This Agreement and the rights hereunder shall not be assigned or transferred by
Parent, Subsidiary or Seller prior to or following the Closing without the prior
written consent of the other parties hereto.

     

    7.5 Binding
Effect. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective legal representatives, heirs,
beneficiaries, successors and permitted assigns. Nothing expressed or implied in
this Agreement is intended or shall be construed to confer upon or give any
person other than the parties hereto and their permitted successors or assigns
any rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby.

     

    7.6 Entire
Agreement; Amendment or Waiver; Cumulative Remedies. This Agreement, the
Schedules and Exhibits attached hereto and the agreements executed and delivered
in connection herewith constitute the entire agreement between the parties
hereto relating to the subject matter hereof, and all prior agreements,
correspondence, discussions, negotiations, agreements and understandings of the
parties (whether oral or written) are merged herein and superseded hereby. No
amendment, modification, or waiver hereto or hereunder shall be valid unless
made in writing and signed by an authorized signatory of each party to be
affected thereby against whom enforcement thereof is being sought. The failure
of any party hereto to enforce at any time any of the provisions of this
Agreement shall in no way be construed to be a waiver of any such provision, nor
in any way to affect the validity of this Agreement or any part hereof or the
right of such party thereafter to enforce each and every such provision. No
waiver of any breach of, or failure to comply with, this Agreement shall be held
to be a waiver of any other or subsequent breach or failure to comply. All
rights and remedies under this Agreement are cumulative to all other rights and
remedies that may be available to each party, including all rights and remedies,
whether in tort or otherwise, whatsoever at law or in equity with respect
hereto, which each party hereby expressly reserves.

     

    
      
        
        

      

      
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    7.7  Severability.
The parties agree that if any provision of this Agreement shall under any
circumstances be deemed invalid or inoperative, this Agreement shall be
construed with the invalid or inoperative provision deleted, and the rights and
obligations of the parties shall be construed and enforced
accordingly.

     

    7.8  Applicable
Law. This Agreement in all respects, including as to its validity,
interpretation, enforcement and effect, shall be governed by the Laws of the
State of Texas without regard to the Laws which otherwise would govern under
principles of conflicts of Laws thereof.

     

    7.9  Jurisdiction;
Service
of Process.  Any Proceeding arising out of or relating to
this  Agreement or any transactions contemplated hereby shall be
brought in the courts of the State of Texas, Hood County, or , if it has or can
acquire jurisdiction, in the United States District Court for Northern District
of Texas, Fort Worth Division.  Each of the parties irrevocably
submits to the foregoing jurisdiction of such court in any such Proceeding,
waives any objection it may now or hereafter have to venue or to convenience of
forum, agrees that all claims in respect of the Proceeding shall be heard and
determined only in such court and agrees not to bring any Proceeding arising out
of or relating to this Agreement or any transactions contemplated hereby in any
other court.  The parties agree that any of them may file a copy of
this paragraph with any court as written evidence of the knowing, voluntary and
bargained agreement between the parties irrevocably to waive any objections to
venue or to convenience of forum.

     

    7.10  Counterparts.
This Agreement may be executed in one or more counterparts, all of which shall
be considered but one and the same agreement, and shall become effective when
one or more such counterparts have been signed by each of the parties and
delivered to the other party.

     

    


     

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

    


     

    BUYER

     

    ERF
Wireless, Inc., a Nevada corporation (“Parent”)


     

    By: /s/ R. Greg Smith        

    Name: R.
Greg Smith

    Title:
Executive Vice President

     

    


     

    ERF
Wireless Bundled Services, Inc. a Texas corporation
(“Subsidiary”)


     

    By: /s/ Robert "Bobby Mack" McClung    

    Name:
Robert “Bobby Mack” McClung

    Title:
President & CEO

     

    Send Notices
to:

     

    Dr. H.
Dean Cubley, CEO

    ERF
Wireless, Inc.

    2911
South Shore Blvd., Suite 100

    League
City, TX 77573

    Telephone
281.538.2101

    Facsimile
281.538.2121

    Email
hdc@erfwireless.com

    SELLER

     

    Frontier
Internet, LLC

    


     

    By: /s/ Ike Thomas        

    Name: Ike
Thomas

    Title:
President

     

    


    Send Notices
to:

     

    Mr. Ike
Thomas

    Cresson
Crossroads

    919 East
Hwy 377

    Granbury,
Texas 76048

    Telephone:  (817)
219-4700

    Facsimile:  (817)
579-6378

    Email:
Ike Thomas (Ike@CressonCrossroads.com)

     

     

    14