STOCK PURCHASE AGREEMENT
Exhibit
2
EXECUTION
COPY
THIS
STOCK PURCHASE AGREEMENT is made and entered into as of this 2nd
day of October,
2007, by and among TELKONET, INC., a Utah corporation (“Purchaser”),
Geeks On Call America, Inc., a Virginia corporation (the “Company”),
Xxxxxxx X. Xxxx and Xxxxxxxxx Xxxx (collectively, “Xxxx”), Xxxxx Xxxxxxxx
and Xxxxxxxx Xxxxxxxx (collectively, “Xxxxxxxx”), and Xxxxxxx X. Xxxxx
and Xxxxxxx X. Xxxxx (collectively “Xxxxx,” and together with Xxxx and
Xxxxxxxx, the “Stockholders”). Capitalized terms used herein
and not otherwise defined herein shall have the meanings given to such terms
in
Section 1.1 hereof.
WHEREAS,
the Company is engaged in the business of computer support services (the
“Business”);
WHEREAS,
the Stockholders own, in the aggregate, 1,160,043.435 shares of the issued
and
outstanding common stock of the Company (the “Company Common
Stock”);
WHEREAS,
the Stockholders desire to sell, and Purchaser desires to purchase, in the
aggregate, 1,160,043.435 shares of the Company Common Stock (collectively,
the
“Company Shares”), on the terms and subject to the conditions set forth
herein.
NOW,
THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE
I
“Affiliate”
means,
with respect
to any specified Person, any other Person which, directly or indirectly,
controls, is under common control with, or is controlled by, such specified
Person.
“Agreement”
means this Agreement and the Company Disclosure Schedules hereto, as this
Agreement may be amended from time to time.
“Benefit
Plan” means any
collective bargaining agreement, any Pension Plan or any bonus, profit sharing,
deferred compensation, incentive compensation, performance, retirement,
vacation, severance or termination, disability, death benefit, employment,
consulting, independent contractor, member, retention, hospitalization, fringe
benefit, medical, dental, vision or other material plan, program, policy,
arrangement or Contract (whether or not subject to the Laws of the United
States) established, maintained, contributed to or required to be established,
maintained or contributed to by the Company or any ERISA Affiliate, in each
case, providing benefits to any employee of the Company, and in each case
whether written or oral, informal or formal, subject to ERISA or
not.
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“Business
Day” means any day
other than (i) a Saturday or Sunday, or (ii) a day on which banking institutions
located in Maryland are permitted or required by Law, executive order or decree
of a Governmental Entity to remain closed.
“Closing”
is
defined in Section
8.1.
“Closing
Date” is defined in Section 8.1.
“Closing
Date Price” is defined
in Section 2.2.
“Code”
means
the Internal
Revenue Code of 1986, as amended.
“Commission”
means
the
Securities and Exchange Commission, or any other federal agency at the time
administering the Securities Act.
“Company”
has the meaning set forth in the Recitals.
“Company
Certificate” is defined in Section 7.2(a).
“Company
Common Stock” has the meaning set forth in the Recitals.
“Company
Indemnified Party” is defined in Section 10.3.
“Company
Intellectual Property”
means all Intellectual Property owned, used, under development or filed
by or
licensed to the Company.
“Constitutive
Documents” means
the Company’s Certificate of Incorporation and Bylaws.
“Contract”
means
any loan or
credit agreement, bond, debenture, note, mortgage, indenture, guarantee, lease
or other contract, commitment, agreement, instrument, obligation, undertaking,
concession, franchise, license or legally binding arrangement or understanding,
whether written or oral.
“Copyright”
means
any registered
copyright (i) licensed from any third party (other than “shrink-wrap” software),
or (ii) assigned, registered or applied for.
“Disclosure
Schedule” means a
schedule of exceptions to the representations and warranties of the Company
and
the Stockholders set forth in Article III, delivered contemporaneously with
this
Agreement.
“Encumbrances”
is
defined in
Section 4.2.
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“Environment”
means
any and all
environmental media, including, but not limited to, ambient air, surface water,
ground water, drinking water supply, land surface, subsurface strata, wetlands
or sediments.
“Environmental
Law” means any
and all federal, state, local or foreign statutes, laws, codes, regulations,
rules, orders, judgments, binding judicial decisions, permits, writs, decrees,
licenses, approvals, injunctions, written policies, ordinances and binding
directives pertaining to or relating to protection or restoration of the
Environment, pollution, health and safety, noise, radiation, or the manufacture,
generation, handling, storage, use, emission, discharge, release,
transportation, treatment, disposal or remediation of any Hazardous Material
and
the health or safety of employees in the workplace environment with respect
to
Hazardous Material, including the Clean Air Act, the Clean Water Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation, and Liability Act, the Occupational Safety and Health
Act, the Toxic Substances Control Act, the Emergency Planning and Community
Right-to-Know Act, the Federal Insecticide, Fungicide, and Rodenticide Act,
the
Safe Drinking Water Act, the Hazardous Materials Transportation Act and any
similar federal, state or local law, as each is in effect as of the date
hereof.
“ERISA”
means
the Employee
Retirement Income Security Act of 1974.
“ERISA
Affiliate” means any
Person which is (or at any relevant time was) a member of a “controlled group of
corporations” with, under “common control” with, or a member of an “affiliate
service group” with the Company as such terms are defined in Section 414(b),
(c), (m) or (o) of the Code.
“Escrow
Account” is defined in
Section 2.2
“Escrow
Agent” is defined in
Section 2.2.
“Escrow
Agreement” is defined in
Section 2.2.
“Financial
Statements” are
defined in Section 3.9(a).
“GAAP”
means
United States
generally accepted accounting principles, consistently applied.
“Governmental
Entity” means any
nation, state, province, county, city or political subdivision and any official,
agency, arbitrator, authority, court, department, commission, board, bureau,
instrumentality or other governmental or regulatory authority of any thereof,
whether domestic or foreign.
“Hazardous
Material” means,
whether alone or in combination, whether solid, liquid or gaseous: (i) any
pollutant, contaminant, substance, chemical or material that is listed,
classified or regulated pursuant to any Environmental Law; (ii) any petroleum,
petroleum product, waste oil, crude oil and its fractions, asbestos and
asbestos-containing material, urea formaldehyde, nuclear material, natural
or
synthetic gas, pesticide, or polychlorinated biphenyl; (iii) any pollutant,
contaminant, substance, material, chemical or waste that is explosive or
radioactive; or (iv) any hazardous chemical, pollutant, contaminant, hazardous
waste, toxic chemical, all as defined as hazardous under the Environmental
Law.
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“Indebtedness” of
any Person means, without duplication: (i) all indebtedness of such Person
for
borrowed money, with respect to deposits or advances of any kind or for the
deferred purchase price of property or services (other than current trade
liabilities incurred in the Ordinary Course of Business and payable in
accordance with customary practices or being disputed in good faith); (ii)
all
principal, interest, prepayment penalties and premiums and other obligations
of
such Person evidenced by bonds, debentures, notes or similar instruments; (iii)
all Indebtedness of third parties secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by)
any Lien or other claim on property owned or acquired by such Person, whether
or
not the obligations secured thereby have been assumed; and (iv) all guarantees
by such Person of Indebtedness of third parties.
“Indemnified
Party” means either
a Purchaser Indemnified Party or a Company Indemnified Party.
“Indemnifying
Party” means the
party from which indemnification is sought pursuant to Article IX.
“Intellectual
Property” means
any (i) Patents, (ii) Marks, (iii) Copyrights, (iv) trade secrets, as defined
in
the Uniform Trade Secrets Act, including confidential research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, methods, schematics, technology, technical data, designs, drawings,
flowcharts, block diagrams, specifications, customer and supply lists, pricing
and cost information, and business and marketing plans and proposals, (v)
software or computer programs, (vi) licenses and agreements pursuant
to which a Person has acquired rights in or to any of the foregoing or licenses
or agreements pursuant to which a Person has licensed or transferred the right
to use any of the foregoing, or (vii) domain names, and (viii) unregistered
rights in copyright to print or electronic publications and
content.
“Issued
Patent” means a Patent
which has been granted by the PTO, or any patent office of any other country,
which is unexpired and which has not been held invalid by a decision of a court
or other appropriate body of competent jurisdiction.
“IRS”
means
the United States
Internal Revenue Service.
“Xxxxxx”
is
defined in Section
6.1.
“Judgment”
means
any judgment,
order or decree of, or issued by, any Governmental Entity.
“Knowledge”
means,
with respect
to any matter in question, the actual knowledge of Xxxx after reasonable
inquiry. Known has a correlative meaning.
“Law”
means
any constitution,
act, statute, law, ordinance, treaty, rule or regulation of any Governmental
Entity.
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“Legal
Proceeding” means any
action, suit, proceeding, claim, arbitration or investigation before any
Governmental Entity or before any arbitrator or mediator or similar party,
or
any investigation or review by any Governmental Entity.
“Lien” means
any
lien, pledge, claim, charge, mortgage, encumbrance or other security interest
of
any kind, whether arising by Contract or by operation of Law.
“Losses”
means
any debts,
obligations and other liabilities (whether known or unknown, absolute or
contingent, liquidated or unliquidated, due or to become due, accrued or not
accrued, asserted or unasserted or otherwise), losses, claims, damages, Taxes,
interest obligations, deficiencies, Judgments, assessments, fines, fees,
penalties, expenses (including amounts paid in settlement, interest, court
costs, costs of investigators, fees and reasonable expenses of attorneys,
accountants, financial advisors, consultants and other experts, and other
expenses of litigation).
“Xxxx”
means
any trademark,
trade name, trade dress, service xxxx or domain name.
“Material
Adverse Change” means
any change, circumstance, development, state of facts, event or effect (i)
that
has had or would reasonably be expected to have a material adverse change or
effect (taken alone or in the aggregate with any other adverse change or effect)
in or with respect to the business, properties, assets, condition (financial
or
otherwise), liabilities (contingent or otherwise) or results of operations
of
the Business in an amount in excess of $250,000, or (ii) that would reasonably
be expected to prevent or materially impede, interfere with, hinder or delay
the
consummation by the Company of the transactions contemplated by this Agreement;
provided that none of the following shall be deemed to constitute, and none
of
the following shall be taken into account in determining whether there has
been
or will be a Material Adverse Change: (a) any change relating to the United
States economy or securities markets in general, so long as any impact on the
Business is not disproportionate, (b) any adverse change, effect, event,
occurrence, state of facts or development described in clause (i) or (ii) above
resulting from conditions generally affecting the industry in which the Company
participates, (c) the announcement or consummation of the closing of the
transactions contemplated hereby, and (d) changes in any applicable
Law.
“Merger
Transaction” is defined
in Section 6.6.
“Most
Recent Balance Sheet” is
defined in Section 3.8.
“Most
Recent Balance Sheet Date”
means December 31, 2006.
“Ordinary
Course of
Business” means any action taken if: (i) such action is consistent
with past practice including as to amount and frequency and is taken in the
course of normal day-to-day operations and (ii) such action complies with
Law.
“Party”
means
a party to this
Agreement.
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“Patent”
means
any United States
or foreign patent, any application for a United States or foreign patent, or
any
continuation, continuation-in-part, division, renewal, extension (including
any
supplemental protection certificate), reexamination or reissue
thereof.
“Pension
Plan” means any
“employee pension benefit plan,” as defined in Section 3(2) of
ERISA.
“Permit”
means
any federal,
state or local, domestic or foreign, governmental consent, approval, order,
authorization, certificate, filing, notice, permit, concession, registration,
franchise, license or right.
“Permitted
Liens” means the
following, to the extent not securing Indebtedness: (i) statutory Liens for
Taxes not yet due or payable or being contested in good faith by appropriate
proceedings; (ii) Liens for assessments and other governmental charges or Liens
of landlords, carriers, warehousemen, mechanics and repairmen incurred in the
Ordinary Course of Business, in each case for sums not yet due and payable
or
due but not delinquent or being contested in good faith by appropriate
proceedings; (iii) Liens incurred in the Ordinary Course of Business in
connection with workers’ compensation, unemployment insurance and other types of
social security; and (iv) any interest or title of a lessor under an operating
lease or capitalized lease or of any licensor under a license.
“Person”
means
an individual,
corporation, partnership, limited liability company, joint venture, association,
trust, Governmental Entity, unincorporated organization or other
entity.
“Preferred
Stock” is defined in
Section 3.5.
“Private
Placement” is defined
in Section 6.7.
“PTO”
means
the United States
Patent and Trademark Office.
“Purchase
Price” is defined in
Section 2.2.
“Purchase
Shares” means the
shares of Telkonet Common Stock issued as the Stock Consideration.
“Purchaser”
has the meaning set forth in the Recitals.
“Purchaser
Certificate” is defined in Section 7.3(a).
“Purchaser
Indemnifiable Loss” is defined in Section 10.2.
“Purchaser
Indemnified Party” is
defined in Section 10.2.
“Real
Property” is defined in
Section 3.12.
“Registration
Date” means the
date on which Purchaser files a registration statement covering the Purchase
Shares.
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“Representatives”
means,
with
respect to a Person, such Person’s legal, financial, internal and independent
accounting and other advisors and representatives.
“Securities
Act” means the
Securities Act of 1933, as amended, or any similar successor United States
statute, and the rules and regulations of the Commission issued under such
act,
as they each may, from time to time, be in effect.
“Series
A Stock” is defined in
Section 3.5.
“Series
B Stock” is defined in
Section 3.5.
“Series
C Stock” is defined in
Section 3.5.
“Subsidiary”
means,
with respect
to any Person, another Person (i) of which 50.0% or more of any class of capital
stock is owned or controlled, directly or indirectly, by such first Person,
or
(ii) of which such first Person is a general partner.
“Tax”
means
any United States
federal, state, local and foreign income, profits, franchise, license, capital,
transfer, ad valorem, wage, severance, occupation, import, custom,
gross receipts, payroll, sales, employment, use, stamp, alternative or add-on
minimum, environmental, withholding and any other tax, duty, assessment or
governmental tax charge of any kind whatsoever, imposed or required to be
withheld by any taxing authority, including any interest, additions to tax,
or
penalties applicable or related thereto.
“Tax
Return” means any return,
declaration, report, claim for refund, or information return or statement or
other form relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
“Third
Party Claim” means any
suit, proceeding, claim or demand by a Person other than a Person from which
indemnification may be sought under Article X.
“Trading
Market” means whichever of the New York Stock Exchange, the
American Stock Exchange, the NASDAQ Global Market, the NASDAQ Capital Market
or
OTC Bulletin Board on which Common Stock is listed or quoted for trading on
the
date in question.
ARTICLE
II
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Price
in
Telkonet Common Stock, the number of shares of Telkonet Common Stock issuable
pursuant to this Section 2.2 shall be determined assuming a per share price
equal to the average closing price of the Telkonet Common Stock on the American
Stock Exchange (“AMEX”) during the ten (10) trading days immediately
preceding the Closing Date (the “Closing Date Price”). The
Telkonet Common Stock shall be held in escrow (the “Escrow Account”) in
accordance with the terms of an escrow agreement (the “Escrow Agreement”)
by and among Purchaser, the Stockholders and StockTrans, Inc. as escrow agent
(the “Escrow Agent”) until the Registration Date, subject to the
provisions of Section 2.3, it being the intent of the parties that title to
the
Telkonet Common Stock for tax purposes shall not transfer to the Stockholders
until the adjustment contemplated by Section 2.3 is
effectuated. Notwithstanding anything to the contrary contained in
this Agreement, the Purchaser may elect, in its sole discretion, at any time
on
or before the Registration Date to modify the percentage of cash versus Telkonet
Common Stock paid as the Purchase Price and the number of shares of Telkonet
Common Stock held in the Escrow Account shall be increased or decreased
proportionately in accordance with such election.
ARTICLE
III
Except
as
set forth in the Company Disclosure Schedule delivered to Purchaser
simultaneously with the execution hereof, the Company represents and warrants
to
the Purchaser as follows, as of the Closing Date:
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(a) The
execution and delivery by the Company of this Agreement, the consummation of
the
transactions contemplated by this Agreement and the compliance by the Company
with the provisions of this Agreement do not and will not conflict with, or
result in any violation or breach of, or default (with or without notice or
lapse of time or both) under, or give rise to a right of, or result in,
termination, cancellation or acceleration of any obligation or to a loss of
a
material benefit under, or result in the creation of any Lien in or upon any
of
the properties or assets of the Company under, or give rise to any increased,
additional, accelerated or guaranteed rights or entitlements under, any
provision of: (i) the Constitutive Documents; (ii) assuming all consents set
forth in Section 3.13 of the Disclosure Schedule are obtained, any
indebtedness, loan or credit agreement, bond, debenture, note, mortgage,
indenture, guarantee, lease or other contract that is material to the Company
to
which the Company is a party or bound by or its properties or assets are bound
by or subject to or otherwise under which the Company has rights or benefits;
or
(iii) any (A) Law, or (B) Judgment, in each case, applicable to the Company,
its
properties or assets other than in the cases of (ii) and (iii) above, any such
conflicts, violations, breaches, defaults, rights, entitlements, losses or
Liens
that have not given rise to, or would not reasonably be anticipated to give
rise
to, an event constituting a Material Adverse Change.
(b) No
consent, approval, order or authorization of, registration, declaration or
filing with, or notice to, any Governmental Entity is required by or with
respect to the Company in connection with the execution and delivery by the
Company of this Agreement, the consummation by the Company of the transactions
contemplated hereby or the compliance by the Company with the provisions of
this
Agreement, except for such consents, approvals, orders, authorizations,
registrations, declarations, filings and notices, the failure of which to be
obtained or made individually or in the aggregate would not impair in any
material respect the ability of the Company to perform its obligations under
this Agreement and will not result in a Material Adverse Change.
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(a) The
Company has conducted its business only in the Ordinary Course of
Business;
(b) there
has occurred no Material Adverse Change, nor any change, circumstance,
development, state of facts, event or effect that would reasonably be expected
to result in a Material Adverse Change;
(c) The
Company has not: (i) amended its Constitutive Documents; (ii) issued, sold,
transferred, pledged, disposed of or encumbered any of its capital stock or
any
commitments or rights of any kind to acquire any of its capital stock; or (iii)
purchased or otherwise acquired directly or indirectly any of its capital stock,
or any instrument or security which consists of or includes a right to acquire
such capital stock;
(d) The
Company has not adopted a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring or other reorganization of the
Company;
(e) The
Company has not changed in any material respect any of the accounting policies
or methods used by it;
(f) The
Company has not incurred loss of, or significant injury to, any of its assets
whether as a result of any natural disaster, labor trouble, accident, other
casualty or otherwise;
(g) The
Company has not mortgaged, pledged or subjected to any Lien (other than
Permitted Liens), any of its assets;
(h) The
Company has not sold, exchanged, transferred or otherwise disposed of any of
its
assets, except in the Ordinary Course of Business;
(i) The
Company has not canceled any debts or claims;
(j) The
Company has not reserved for or written down the value of any assets or written
off as uncollectible any accounts receivable, except in the Ordinary Course
of
Business and none of which, individually or in the aggregate, would result
in a
Material Adverse Change; and
(k) The
Company has not made any agreement to do any of the foregoing, other than
negotiations with Purchaser and its Representatives regarding the transactions
contemplated by this Agreement.
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ARTICLE
IV
Each
Stockholder represents and warrants to the Purchaser as follows, as of the
Closing Date:
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ARTICLE
V
Purchaser
represents and warrants to the Company and the Stockholders as follows, as
of
the Closing Date:
(a) The
execution and delivery by Purchaser of this Agreement, the consummation of
the
transactions contemplated hereby, and the compliance by Purchaser with the
provisions of this Agreement do not and will not conflict with, or result in
any
violation or breach of, or default (with or without notice or lapse of time
or
both) under, or give rise to a right of, or result in, termination, cancellation
or acceleration of any obligation or to a loss of a material benefit under,
or
result in the creation of any Lien in or upon any of the properties or assets
of
Purchaser under, or give rise to any increased, additional, accelerated or
guaranteed rights or entitlements under, any provision of (i) Purchaser’s
certificate of incorporation or bylaws, (ii) any Law or Judgment, with respect
to Purchaser’s properties or assets, other than, in the case of clause (ii), any
such conflicts, violations, breaches, defaults, rights, losses, Liens or
entitlements that individually or in the aggregate are not likely to impair
in
any material respect the ability of Purchaser to perform its obligations under
this Agreement, or prevent or materially impede or delay the consummation of
the
transactions contemplated hereby.
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(b) No
consent, approval, order or authorization of, registration, declaration or
filing with, or notice to, any Governmental Entity is required by or with
respect to Purchaser in connection with the execution and delivery by Purchaser
of this Agreement, the consummation by Purchaser of the transactions
contemplated by this Agreement or the compliance by Purchaser with the
provisions of this Agreement, except for such consents, approvals, orders,
authorizations, registrations, declarations, filings and notices, the failure
of
which to be obtained or made individually or in the aggregate would not impair
in any material respect the ability of Purchaser to perform its obligations
under this Agreement, or prevent or materially impede or delay the consummation
of the transactions contemplated hereby.
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ARTICLE
VI
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(a) From
the date of this Agreement until the Closing Date (the “No Shop Period”),
neither the Company nor any of the Stockholders shall, nor shall either of
them
authorize or permit any of their Affiliates or any officer, director, employee,
investment banker, attorney or other adviser or representative of the Company
or
the Stockholders or any of their Affiliates to, (i) solicit, initiate, or
intentionally encourage the submission of, any Acquisition Proposal (as
hereinafter defined), (ii) enter into any agreement with respect to any
Acquisition Proposal, or (iii) participate in any discussions or
negotiations regarding, or furnish to any Person any information for the purpose
of responding to, facilitating the making of, or take any other action for
the
purpose of responding to, facilitating any inquiries or the making of, any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal other than the transactions contemplated
hereby.
(b) For
purposes of this Agreement, “Acquisition Proposal” means any proposal for
a merger or other business combination involving the acquisition of the Company
by any Person other than Purchaser or any proposal or offer to acquire in any
manner, directly or indirectly, any of the equity securities, voting securities
or assets of the Company, other than the transactions contemplated
hereby.
(c) The
Company and the Stockholders will, and except as otherwise provided in this
Agreement, will cause their Affiliates to, immediately cease and cause to be
terminated any activities, discussions or negotiations existing as of the date
of this Agreement with any Persons (other than Purchaser and its
Representatives) conducted heretofore with respect to any Acquisition Proposal,
and will not pursue, directly or indirectly, any Acquisition Proposal received
on or prior to the date of this Agreement from any Person (other than Purchaser
and its Representatives) during the No Shop Period. Nothing in this
Section 6.4 shall permit the Company or the Stockholders to terminate this
Agreement (except as expressly provided in Article IX) or affect any other
obligations of the Company or the Stockholders under this
Agreement.
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ARTICLE
VII
(a) All
authorizations, consents, orders, declarations or approvals of, or filings
with,
or terminations or expirations of waiting periods imposed by any law or
Governmental Entity, necessary or required in order for the consummation of
any
of the transactions contemplated by this Agreement and which, if not obtained,
made or occurring, would make any of the transactions contemplated hereby
illegal or would result in a Material Adverse Change to the Company, shall
have
been obtained, made or occurred.
(b) No
Governmental Entity or court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which (i) is in effect, and (ii) has the
effect of making the transactions contemplated hereby illegal or otherwise
prohibiting or preventing the consummation of the transactions contemplated
hereby.
(a) The
representations and warranties of each of the Company and the Stockholders
contained in this Agreement that are qualified as to materiality or Material
Adverse Change shall be true and correct, and that are not so qualified shall
be
true and correct in all material respects on the date of this Agreement and
on
and as of the Closing Date, as though made on and as of the Closing Date (except
for representations and warranties made as of a specified date, which need
be
true and correct only as of the specified date). Purchaser shall have
received a certificate dated as of the Closing Date and signed by an executive
officer of the Company certifying that the conditions specified in Section
7.2(a) and (b) have been satisfied (the “Company
Certificate”).
(b) Each
of the Company and the Stockholders shall have performed and complied in all
material respects with all the agreements and covenants contained herein that
are required to be performed by them prior to or at the Closing.
(c) There
shall have occurred no effects, events, occurrences, developments or changes
that have resulted in, or are reasonably likely to result in, a Material Adverse
Change since the date of this Agreement, except for changes expressly
contemplated by this Agreement.
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(d) The
Company shall have received all necessary consents, waivers, assignments,
approvals, or transfers in form and substance reasonably satisfactory to
Purchaser, from all Governmental Entities, and all Contracts, leases or
agreements to which the Company is a party, or that concern or relate to the
Permits held by the Company, except where the failure to receive such consent,
waiver, assignment, approval or transfer would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse
Change.
(e) The
Purchaser shall have received final approval from its Board of
Directors.
(a) The
representations and warranties of the Purchaser contained in this Agreement
that
are qualified as to materiality shall be true and correct, and that are not
so
qualified shall be true and correct in all material respects on the date of
this
Agreement and on and as of the Closing Date, as though made on and as of the
Closing Date (except for representations and warranties made as of a specified
date, which need be true and correct only as of the specified
date). The Company shall have received a certificate dated as of the
Closing Date and signed by an executive officer of Purchaser certifying that
the
conditions specified in Section 7.3(a) and (b) have been satisfied (the
“Purchaser Certificate”).
(b) Purchaser
shall have performed and complied in all material respects with all
the agreements and covenants contained herein that are required to be performed
by it prior to or at Closing.
ARTICLE
VIII
(i) copies
of the resolutions of the board of directors of the Company authorizing the
execution, delivery and performance of this Agreement, and the incumbency of
the
persons executing this Agreement and other documents on behalf of the Company,
all certified by an executive officer of the Company.
(ii) certificates
evidencing the Company Shares duly endorsed for transfer.
-
21
-
(iii) the
Private Label Agreement (the “Private Label Agreement”) in substantially
the form attached hereto and made a part hereof as Exhibit A.
(iv) the
Registration Rights Agreement (the “Registration Rights Agreement”) in
substantially the form attached hereto and made a part hereof as Exhibit
B.
(v) the
Escrow Agreement.
(vi) the
Company Certificate.
(b) At
the Closing, Purchaser shall deliver to the Company and/or the Stockholders,
or,
with regard to the Purchase Shares, to the Escrow Agent, as appropriate, the
following:
(i) copies
of the resolutions of the board of directors of Purchaser authorizing the
execution, delivery and performance of this Agreement, and the incumbency of
the
persons executing this Agreement and other documents on behalf of Purchaser,
all
certified by an executive officer of Purchaser.
(ii) the
Private Label Agreement.
(iii) the
Registration Rights Agreement.
(iv) the
Escrow Agreement.
(v) the
Purchaser Certificate.
(vi) the
Purchase Shares.
ARTICLE
IX
(a) by
mutual written consent of the Company, the Stockholders and
Purchaser;
(b) by
either the Company and the Stockholders or Purchaser:
(i) if
the transactions contemplated hereby shall not have been consummated within
thirty (30) days following the date of this Agreement; provided that the
terminating party shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the failure to consummate the transactions contemplated hereby
by
such date; or
(ii) if
any Governmental Entity of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining
or
otherwise prohibiting the transactions contemplated hereby and such order,
decree or ruling or other action shall have become final and nonappealable;
provided, however, that the right to terminate this Agreement pursuant to this
Section 9.1(b)(ii) shall not be available to any party who has not used its
commercially reasonable efforts to cause such order, decree or ruling to be
lifted.
-
22
-
(c) by
Purchaser if (i) the representations and warranties of the Company or any
Stockholder contained in this Agreement shall not be true and correct in all
material respects, or (ii) the Company or any Stockholder shall have failed
to perform in any material respect any material obligation or to comply in
any
material respect with any material agreement or material covenant of the Company
or any Stockholder to be performed or complied with by it under this Agreement,
in each case, such that the conditions set forth in Sections 7.2(a) or (b)
would
not be satisfied, and in the case of clause (i) such untruth or
incorrectness cannot be or has not been cured within thirty (30) days after
the
giving of written notice to the Company and the Stockholders, and, in the case
of clause (ii), such failure cannot be or has not been cured within thirty
(30) days after the giving of written notice to the Company and the
Stockholders; or
(d) by
the Company and the Stockholders if (i) the representations and warranties
of Purchaser contained in this Agreement shall not be true and correct in all
material respects, except to the extent that any breach (either individually
or
in the aggregate with all other such breaches) would not have a material adverse
effect on Purchaser; or (ii) Purchaser shall have failed to perform in any
material respect any material obligation or to comply in any material respect
with any material agreement or material covenant of Purchaser to be performed
or
complied with by it under this Agreement, in each case such that the conditions
set forth in Sections 7.3(a) or (b) would not be satisfied, and in the case
of
clause (i) such untruth or incorrectness cannot be or has not been cured
within thirty (30) days after the giving of written notice to Purchaser, and,
in
the case of clause (ii), such failure cannot be or has not been cured
within thirty (30) days after the giving of written notice to
Purchaser.
ARTICLE
X
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23
-
(a) any
material breach of any representation or warranty of the Company or any
Stockholder contained in this Agreement or in any other agreement or instrument
executed and delivered by the Company or any Stockholder pursuant to this
Agreement; or
(b) any
material breach or failure to perform any covenant or agreement of the Company
or the Stockholders contained in this Agreement or any agreement or instrument
furnished by the Company or the Stockholders pursuant to this
Agreement.
(a) any
material breach, as of the Closing Date, of any representation or warranty
of
Purchaser contained in this Agreement or any other agreement or instrument
furnished by Purchaser to the Company or the Stockholders pursuant to this
Agreement; or
(b) any
material failure to perform any covenant or agreement of Purchaser contained
in
this Agreement or any agreement or instrument furnished by Purchaser to the
Company or the Stockholders pursuant to this Agreement.
(a) In
order for an Indemnified Party to be entitled to any indemnification provided
for under Section 10.2 or 10.3 in respect of, arising out of or involving a
Third Party Claim, such Indemnified Party must notify the Indemnifying Party
in
writing of the Third Party Claim within twenty (20) Business Days after receipt
by such Indemnified Party of notice of the Third Party Claim; provided,
however, that failure to give such notification shall not affect the
indemnification provided under Section 10.2 or 10.3, except to the extent the
Indemnifying Party has been actually prejudiced as a result of such
failure. Thereafter, the Indemnified Party shall deliver to the
Indemnifying Party, within ten (10) Business Days after the Indemnified Party’s
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the Third Party
Claim. The Indemnifying Party alone shall conduct and control the
defense of such Third Party Claim and the Indemnified Party shall have the
right
to participate in the defense of such claim at its own expense. The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party (such consent not to be unreasonably delayed, withheld or
conditioned), settle, compromise or offer to settle or compromise any such
claim
or demand on a basis which would result in the imposition of a consent order,
injunction or decree that does not include an unconditional release of the
Indemnified Party for any liability arising out of such claim or demand or
any
related claim or demand.
(b) In
order for an Indemnified Party to be entitled to any indemnification provided
for under this Agreement other than in respect of, arising out of or involving
a
Third Party Claim, such Indemnified Party shall deliver notice of such claim
with reasonable promptness to the Indemnifying Party; provided,
however, that failure to give such notification shall not affect the
indemnification provided under Section 10.2 or 10.3, except to the extent the
Indemnifying Party has been actually prejudiced as a result of such
failure. If the Indemnifying Party does not notify the Indemnified
Party within twenty (20) Business Days following its receipt of such notice
that
the Indemnifying Party disputes its liability to the Indemnified Party, such
claim specified by the Indemnified Party in such notice shall be conclusively
deemed a liability of the Indemnifying Party under Section 10.2 or 10.3 and
the
Indemnifying Party shall pay the amount of the Losses stated in such notice
to
the Indemnified Party on demand or, in the case of any notice in which the
Losses (or any portion thereof) are estimated, on such later date when the
amount of such Losses (or such portion thereof) becomes finally
determined.
-
24
-
ARTICLE
XI
-
25
-
To
the Company:
|
Geeks
On Call America, Inc.
000
Xxxxxxxxxx Xxxx
Xxxxxxx,
XX 00000
Attention:
Xxxxxxx Xxxx
|
|
To
Stockholders:
|
Xxxxxxx
X. Xxxx and Xxxxxxxxx Xxxx
c/o
Xxxxxxx X. Xxxx, Chairman and CEO
Geeks
On Call America, Inc.
000
Xxxxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxxx 00000
Xxxxxxx
X. Xxxxx and Xxxxxxx X. Xxxxx
000
Xxxxxx Xxxxx Xxxx
Xxxxxxxx
Xxxxx, Xxxxxxxx 00000
Xxxxx
Xxxxxxxx and Xxxxxxxx Xxxxxxxx
c/o
Xxxxxxx X. Xxxx, Chairman and CEO
Geeks
On Call America, Inc.
000
Xxxxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxxx 00000
|
To
Purchaser:
|
Chief
Executive Officer
Telkonet,
Inc.
00000
Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxxxx,
XX 00000
Facsimile
No.: (000) 000-0000
|
With
copies to:
|
Xxxxx
X. Xxxxxx, Esq.
Xxxxx
& Xxxxxxxxx LLP
0000
Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxx
0000
Xxxxxxxxxx,
XX 00000
Facsimile
No.: (000) 000-0000
|
or
to
such other address as any party notifies the other parties of in accordance
herewith.
-
26
-
11.7 Governing
Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT AND EACH OF THE ANCILLARY DOCUMENTS SHALL
BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF MARYLAND, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH
STATE.
11.8 Jurisdiction
and Venue. ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND EACH OF THE ANCILLARY DOCUMENTS SHALL BE BROUGHT IN,
AND
EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS WITH RESPECT
THERETO TO THE EXCLUSIVE JURISDICTION OF, ANY COURT OF THE STATE OF MARYLAND
LOCATED IN XXXXXXXXXX COUNTY, MARYLAND, OR THE FEDERAL COURTS OF THE UNITED
STATES OF AMERICA SITTING IN THE DISTRICT OF MARYLAND, AND ANY APPELLATE COURT
THEREFROM. EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW
OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUCH COURT OF ANY SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH OF THE
PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT.
-
27
-
[Signature
Page Follows]
-
28
-
TELKONET,
INC.
By:
/s/ X. X.
Xxxxxxx
Name:
X.X. Xxxxxxx
Title:
President and CEO
GEEKS
ON CALL AMERICA, INC.
By: /s/
Xxxxxxx X.
Xxxx
Name:
Xxxxxxx X. Xxxx
Title:
CEO
/s/
Xxxxxxx X.
Xxxx
Xxxxxxx
X. Xxxx
/s/
Xxxxxxxxx
Xxxx
Xxxxxxxxx
Xxxx
/s/
Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx
/s/
Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx
/s/
Xxxxx
Xxxxxxxx
Xxxxx
Xxxxxxxx
/s/
Xxxxxxxx
Xxxxxxxx
Xxxxxxxx
Xxxxxxxx
|
-
29
-
/s/
Xxxxx
X.
Xxxxxx
|
|
Xxxxx
X.
Xxxxxx
10/6/07
|
Acknowledged:
TELKONET,
INC.
|
|
By:
/s/ Xxxxxx X.
Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx
|
|
Chief
Executive Officer
|
|
GEEKS
ON CALL AMERICA, INC.
|
|
By:
/s/ Xxxxxxx X.
Xxxx
|
|
Xxxxxxx
X. Xxxx
|
|
Chief
Executive Officer
|
-
30
-
EXECUTION
COPY
/s/ Xxxxx
Xxxxxxx
|
|
Xxxxx
Xxxxxxx
|
|
Date: October 15, 2007 |
Acknowledged:
TELKONET,
INC.
|
|
By:
/s/ Xxxxxx X.
Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx
|
|
Chief
Executive Officer
|
|
GEEKS
ON CALL AMERICA, INC.
|
|
By:
/s/ Xxxxxxx X.
Xxxx
|
|
Xxxxxxx
X. Xxxx
|
|
Chief
Executive Officer
|
EXECUTION
COPY
/s/ Xxxxx
Xxxxxxxxx
|
|
Xxxxx
Xxxxxxxxx
|
|
Date: October __, 2007 |
Acknowledged:
TELKONET,
INC.
|
|
By:
/s/ Xxxxxx X.
Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx
|
|
Chief
Executive Officer
|
|
GEEKS
ON CALL AMERICA, INC.
|
|
By:
/s/ Xxxxxxx X.
Xxxxx
|
|
Xxxxxxx
X. Xxxxx
|
|
Corporate
Secretary
|
EXECUTION
COPY
/s/ Xxxxxxx
Xxxx
|
|
Xxxxxxx Xxxx
|
|
Date: October 17, 2007 |
/s/ Xxxxx
Xxxx
|
|
Xxxxx
Xxxx
|
|
Date: October 17, 2007 |
Acknowledged:
TELKONET,
INC.
|
|
By:
/s/ Xxxxxx X.
Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx
|
|
Chief
Executive Officer
|
|
GEEKS
ON CALL AMERICA, INC.
|
|
By:
/s/ Xxxxxxx X.
Xxxxx
|
|
Xxxxxxx
X. Xxxxx
|
|
Corporate
Secretary
|
EXECUTION
COPY
/s/ Xxxxxxx
Xxxxxxxxx
|
|
Xxxxxxx
Xxxxxxxxx
|
|
Date: October 17, 2007 |
Acknowledged:
TELKONET,
INC.
|
|
By:
/s/ Xxxxxx X.
Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx
|
|
Chief
Executive Officer
|
|
GEEKS
ON CALL AMERICA, INC.
|
|
By:
/s/ Xxxxxxx X.
Xxxxx
|
|
Xxxxxxx
X. Xxxxx
|
|
Corporate
Secretary
|
EXECUTION
COPY
/s/ Xxxxxx
X. Xxxxx
|
|
Xxxxxx
X. Xxxxx
|
|
Date: October 17, 2007 |
/s/ Xxxxxxx Xxxxx
|
|
Xxxxxxx
Xxxxx
|
|
Date: October 17, 2007 |
Acknowledged:
TELKONET,
INC.
|
|
By:
/s/ Xxxxxx X.
Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx
|
|
Chief
Executive Officer
|
|
GEEKS
ON CALL AMERICA, INC.
|
|
By:
/s/ Xxxxxxx X.
Xxxxx
|
|
Xxxxxxx
X. Xxxxx
|
|
Corporate
Secretary
|
EXECUTION
COPY
/s/ H.
Xxx Xxxxxxx, III
|
|
H.
Xxx Xxxxxxx III
|
|
Date: October 18, 2007 |
Acknowledged:
TELKONET,
INC.
|
|
By:
/s/ Xxxxxx X.
Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx
|
|
Chief
Executive Officer
|
|
GEEKS
ON CALL AMERICA, INC.
|
|
By:
/s/ Xxxxxxx X.
Xxxxx
|
|
Xxxxxxx
X. Xxxxx
|
|
Secretary
|
EXECUTION
COPY
/s/ Xxxxxxx
X. Xxxxxxx
|
|
Xxxxxxx
Xxxxxxx
|
|
Date: October 18, 2007 |
Acknowledged:
TELKONET,
INC.
|
|
By:
/s/ Xxxxxx X.
Xxxxxxx
|
|
Xxxxxx
X. Xxxxxxx
|
|
Chief
Executive Officer
|
|
GEEKS
ON CALL AMERICA, INC.
|
|
By:
/s/ Xxxxxxx X.
Xxxxx
|
|
Xxxxxxx
X. Xxxxx
|
|
Secretary
|