ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT is entered into as of July 31, 2018, by and between TELECON WIRELESS RESOURCES, INC., a New York corporation having its office and principal place of business at 299A North Comrie Avenue, Johnstown, New York (“Buyer” or “TWR”)), and KONATEL, INC., a Nevada corporation having its office and principal place of business at 13601 Preston Rd. STE E816, Dallas, TX 75240 (“Seller”).  Buyer and Seller are each referred to herein as a “Party” and collectively as the “Parties”.

WHEREAS, Seller is the owner of various assets employed in connection with a wireless service provider and telecommunications business currently operating a retail office under the fictitious business name of “Telecon Wireless” at 299A North Comrie Avenue, Johnstown, New York (the “Premises”); and

WHEREAS, William Sullivan, the principal of TWR shall guarantee all of the obligations of Buyer hereunder; and

WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain assets of Seller, as described on Schedule “1” attached hereto and made part hereof for all purposes (hereafter, the assets described on Schedule “1” are referred to collectively as the “Acquired Assets”.

NOW, THEREFORE, in consideration of the foregoing recitals, and mutual promises herein contained, and for other good and valuable consideration, the receipt and adequacy of which is hereby mutually acknowledged, the Parties hereto agree as follows:

Section 1.  Definitions.

“Acquired Assets” means (a) all right, title, and interest, free and clear of all claims, liens and encumbrances, in and to all of the assets of Seller, identified in Schedule 1, attached hereto and incorporated herein by reference, subject to the exclusions set forth below; (b) the conveyance of any rights Seller may have to occupy the Premises; and (c) the trade name “Telecon Wireless” and any other intellectual property of any kind or description associated with the fictitious trade name being transferred hereunder; (The term “Acquired Assets” does not include (a) any patents, trademarks, service marks, trade names, copyrights, licenses (trade secrets, proprietary information, Intellectual Property (as is defined below) or any other intangible property except as specifically set forth herein or in any Schedule hereto); or (b) any financial books or records.

“Liabilities” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for any Tax, as hereinafter defined.

“Tax” means any federal, state, local, or foreign income, gross receipts, sales, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Sec. 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

Section 2.  Purchase and Sale.

(a)

Conditional upon the execution of this Agreement by all Parties, Seller hereby sells, transfers, assigns, and conveys the Acquired Assets to Buyer subject to the terms and conditions of this

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Agreement.  The purchase price shall be $406,289.90 (“Purchase Price”), which shall be payable as follows:

(i)

Buyer shall pay Seller’s American Express account number 371551894573008 in an amount of not less than $40,246.85 on or before Closing;

(ii)

Buyer shall pay Seller the sum of $ $266,043.05 in cash on or before Closing (the “Cash Payment”; and

the then remaining balance of $100,000.00 shall be evidenced by a Promissory Note (the “Note”) from Buyer to Seller, in a form agreed to by the Parties, which shall be secured by a first priority purchase money security interest in and to the Acquired Assets evidenced by that certain Security Agreement and UCC-1 Financing Statements also in a form agreed to by the Parties.

(b) The Parties hereto acknowledge that Buyer is in the retail wireless telecommunications business, and Seller is in the wholesale wireless telecommunications business.  As further security for the repayment of the Note, until such time as the Note has been satisfied in full, Buyer shall not purchase any “Telecommunications Services” from any other supplier, vendor, or provider other than Seller.  , The term “Telecommunications Services” shall mean all wholesale wireless voice minutes, wireless messaging (“SMS” and “MMS” text messaging), wireless data or any other wholesale telecommunications services which Buyer desires to use for resale or internal use or otherwise.  Buyer’s execution of Seller’s standard Wholesale Telecommunications Agreement is a condition precedent to the Closing.

Section 3. Closing.

The closing of the sale and purchase of the Acquired Assets (the “Closing”) shall take place as of before July 31, 2018, unless extended by the parties in a writing executed by both of them.   It is acknowledged by the Parties that the execution and delivery of the necessary documents and instruments (including, but not limited to this Agreement) evidencing this transaction may occur several days following the “as of” Closing date.

(a)

Buyer’s Deliveries at Closing.  At the Closing, the Buyer shall deliver to the Seller:

(i)

evidence of payment of American Express payable set forth in Section 2(a)(i) above;

(ii)

the Cash Payment and the executed Note, Security Agreement and UCC-1 Financing Statements;

(iii)

seller’s standard Wholesale Telecommunications Agreement executed by Buyer in accord with the provisions of Section 2(b), above.

(b)

Seller’s Deliveries at Closing.  At the Closing, (i) Seller will deliver to Buyer the various instruments and documents referred to herein, including, but not limited to, a Bill of Sale in form and content reasonably acceptable to Buyer covering the Acquired Assets; (ii) evidence of compliance with the New York State “Bulk Sales” law, or evidence that this transaction is exempt from the same; and (iii) such other instruments as Buyer and its counsel may reasonably request.

(c)

Mutual Cooperation After Closing.  Buyer and Seller acknowledge that this transaction is being negotiated and closed quickly, and as a result of the speed with which the transaction is taking place, that there may be documents and instruments and acts that must be executed and performed, respectively, by each of them following the execution hereof to appropriately evidence and implement the transactions and obligations contemplated hereby.  Both parties hereby mutually covenant and agree that each shall cooperate with the other

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and execute all documents and instruments and perform all other acts and things which necessary and/or expedient in consummating may be and performing the various transactions and obligations contemplated by this Agreement.

(d)

The Parties agree to allocate the Purchase Price (and all other capitalizable costs) among the Acquired Assets for all purposes (including financial accounting and tax purposes) in accord with the Allocation Schedule attached hereto as Schedule 2 Allocation of Purchase Price attached hereto and made part hereof for all purposes.  Buyer shall pay all sales tax imposed on the Acquired Assets by any governmental taxing authority having or exercising jurisdiction over this Agreement.  The parties agree that they shall cooperate in whatever manner possible (other than purchase price allocation) to keep the sales tax as low as possible, including, but not limited to, jointly applying for any exemption from sales tax otherwise applicable to this transaction.

Section 4.  Representations and Warranties of Buyer.

Buyer represents and warrants to Seller that the statements contained in this Section 4 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 3).

(a)

Organization of Buyer.  Buyer is a corporation, duly organized, validly existing, and in good standing under the laws of the State of New York and is duly authorized to do business within the State of New York.

(b)

Authorization of Transaction.  Buyer has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder.  This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accord with its terms and conditions.

(c)

Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Buyer is subject or any provision of its charter or bylaws or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any Party the right to accelerate, terminate, modify, or cancel, or require any notice under any material agreement, contract, lease, license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which any of its assets is subject.  Except as set forth herein, Buyer does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transaction contemplated by this Agreement.

(d)  Buyer expressly acknowledges and agrees that the Acquired Assets are being conveyed to Buyer in AS IS WHERE IS condition, without any warranty whatsoever from the Seller (other than title and freedom from liens, claims and encumbrances which Seller expressly warrants), including, but not limited to, any warranty of merchantability or fitness for particular purpose.

Section 5.  Representations and Warranties of Seller.

(a)

Title to Assets.  Seller has good and marketable title to the Acquired Assets free and clear of all claims, liens and encumbrances.

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(b)

Organization of Seller.  Seller is a corporation, duly organized, validly existing, and in good standing under the laws of the State of Nevada and is duly authorized to do business within the State of New York and Nevada.

(c)

Authorization of Transaction.  Seller has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder.  This Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accord with its terms and conditions.

(d)

Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller is subject or any provision of its charter or bylaws or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any Party the right to accelerate, terminate, modify, or cancel, or require any notice under any material agreement, contract, lease, license, instrument, or other arrangement to which Seller is a party or by which it is bound or to which any of its assets is subject.  Except as set forth herein, Seller does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transaction contemplated by this Agreement.

Section 6. Conditions to Obligation of Seller.

The obligation of Seller to consummate the transaction to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:

(i)

the representations and warranties set forth in Section 3, above, shall be true and correct in all material respects at and as of the Closing Date;

(ii)

Buyer shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; and

(iii)

no action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction against either Party wherein an unfavorable injunction, judgment, order, decree, ruling or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement or (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect).

Section 7. Guaranty.

In addition, and not by way of exclusion, the Parties acknowledge that the Seller owes a certain payable to Sprint in the approximate amount of $144,000.00 that arose out of the operation of Telecon Wireless prior to the Cut Off Date.  Seller shall indemnify Buyer from any and all loss, cost, damage or claim arising out of any attempt by Sprint to collect such payable, including reasonable counsel fees and expenses at both trial and appellate levels.