Contract
THIS
ASSET PURCHASE AGREEMENT,
dated
as of July 16, 2007 (this “Agreement”),
is by
and among Microwave
Satellite Technologies, Inc., a New Jersey corporation, with an address at
000-000 Xxxxxx Xxxx, Xxxxxxxxx, XX 00000
(“Purchaser”),
Newport
Telecommunications Co., a New Jersey general partnership, with an address at
000
Xxxx Xxxxxx Xxxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000
(“Seller”)
and,
with respect to Section 6 of this Agreement, Telkonet, Inc., a Delaware
corporation, with an address at 0000 Xxxxxx Xxxxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000-0000 (“Telkonet”).
W
I T N E S S E T H:
WHEREAS,
Seller
owns and operates facilities and holds certain rights over and pursuant to
which
it provides one or more of the following telecommunications services to its
customers at certain residential and commercial properties in the Jersey City,
New Jersey development known as Newport which are set forth on Schedule
A
annexed
hereto (collectively, the “Newport
Properties”):
(i)
certain broadband internet services through Cogent Communications and others;
and (ii) certain telephone service through Verizon (collectively, the
“Broadband
Business”);
and
WHEREAS,
Seller
desires to sell and transfer to Purchaser and Purchaser desires to purchase
substantially all of the assets of Seller in connection with Seller’s operation
of the Broadband Business, as more particularly described herein.
NOW,
THEREFORE,
in
consideration of the foregoing premises and of the mutual covenants and
agreements hereinafter set forth, the parties hereto mutually covenant and
agree
as follows:
1. Purchase
and Sale; Closing.
(a) Sale
Assets.
In
consideration of the Purchase Price (as defined in Section 2(a)), Seller agrees
to sell to Purchaser, and Purchaser agrees to purchase from Seller, all of
the
following, free and clear of all liens, claims and encumbrances (except as
otherwise expressly set forth in this Agreement), on the terms and conditions
set forth herein: all properties, privileges, rights, interests and claims,
real
and personal, tangible and intangible, of every type and description, including
goodwill, owned by Seller in connection with, or relating to, the Broadband
Business and those other personal property assets identified on Schedule
4(c)
attached
hereto (collectively, the “Sale
Assets”),
including, without limitation, to the extent applicable: (i) all
franchises, contracts and other instruments (including without limitation the
Business Instruments (as defined in Section 4(e)) and set forth on Schedule 4(e)),
all
permits, licenses, governmental authorizations, and other intangibles and all
goodwill in connection therewith; (ii) all electronic devices, trunk and
distribution cable, amplifiers, power supplies, vaults and pedestals, grounding
and pole hardware, “Subscriber” (as hereinafter defined) devices (including,
without limitation, converters, traps, decoders, switches and fittings) and
headend equipment (origination, signal processing and transmission);
(iii) all equipment and any inventory (including without limitation the
items set forth on Schedule
4(c));
(iv) all Seller’s Subscriber credit information and Subscriber lists for
the Broadband Business; (v) all Seller’s rights to enter upon the Newport
Properties, including the buildings situated thereon, in order to operate the
Broadband Business thereat; (vii) all engineering specifications, maps,
plans, diagrams and blue prints, including system engineering drawings and
as-built maps for the Broadband Business; and (viii) all books, records and
computer files relating to the Broadband Business; provided,
however,
that
the Sale Assets shall not include, and Purchaser shall not acquire any interest
in, any of the Excluded Assets (as defined in Section 1(b)).
(b) Excluded
Assets.
For
purposes of this Agreement, the “Excluded
Assets”
means
(i) Seller’s cash and cash-equivalents as of the Closing Date (as defined in
Section 1(c)) and any securities and similar
investments, whether marketable or unmarketable; (ii) any and all insurance
policies, bonds, letters of credit and other similar items and any rights and
claims thereunder; (iii) any and all claims and rights of any nature
whatsoever for any period prior to the Closing Date, including, without
limitation, any and all claims against former employees or agents of Seller
relating to any third-party reimbursements due to Seller for any period prior
to
the Closing Date, and any and all claims, rights and interests in and to any
refunds for taxes or fees of any nature whatsoever for any period prior to
the
Closing Date; (iv) Seller’s business certificates and partnership records
(except to the extent relating to the Broadband Business); (v) Seller’s
employee records and records relating to pensions and benefit plans, (vi)
Seller’s trademarks, trade names, service marks, service names, logos, websites
and similar proprietary rights; (vii) all rights accruing to Seller under this
Agreement; (viii) all programming agreements other than those set forth on
Schedule
1(b)(viii), provided,
that
Purchaser shall be entitled to designate as an Excluded Asset any of such
agreements set forth on Schedule
1(b),
by
giving Seller written notice thereof at least thirty (30) days prior to Closing;
(ix) Seller’s accounts receivable for services relating to the Broadband
Business, including, but not limited to, Seller’s pro-rata portion of its
accounts receivable for the services relating to the Broadband Business which
were provided during the calendar month in which the Closing occurs (which
is
acknowledged to be based on the numbers of days in such month prior to the
Closing) (provided that any
accounts receivable with respect to services provided in connection with the
Broadband Business which remain uncollected sixty days after invoices are mailed
or 60 days after the Closing, whichever shall occur later, shall become the
property of Purchaser); (x) all telephone wire; (xi) all assets of Seller
identified on Schedule
1(b)(xi);
and
(xii) all other assets of Seller other than the Sale Assets.
(c) Closing. The
closing of the transactions contemplated hereby (the “Closing”)
shall
take place simultaneously upon the execution of this Agreement (the
“Closing
Date”).
The
Closing shall be deemed to be effective as of 12:01 a.m. on the Closing Date.
2. Purchase
Price; Adjustment of Purchase Price.
(a) Purchase
Price.
The
purchase price for the Sale Assets shall be Two Million Five Hundred Fifty
Thousand Dollars ($2,550,000.00) consisting of: (a) One Million Five Hundred
and
Thirty Thousand Dollars ($1,530,000.00) (the “Stock
Consideration”)
paid
in unregistered shares of $0.001 par value common stock of Telkonet (the
“Telkonet
Common Stock”)
based
on the average of the closing price for one share of Telkonet Common Stock
for
the ten (10) trading days occurring immediately prior to the Closing Date;
and
(b) One Million Twenty Thousand Dollars ($1,020,000.00) (the “Cash
Consideration”,
together with the Stock Consideration, as adjusted pursuant to Section 2(b)
hereof, the “Purchase
Price”)
payable by wire transfer. The Purchase Price will be paid by Purchaser as
provided in Section 2(b), hereof.
2
(b) Adjustment
to Purchase Price.
The
Purchase Price shall be paid as follows: Upon the signing of this Agreement,
Five Hundred Ten Thousand Dollars ($510,000.00) shall be delivered to Seller
by
wire transfer pursuant to wire instructions provided by Seller and the remainder
of the Cash Consideration (which is acknowledged to be Five Hundred Ten Thousand
Dollars ($510,000.00) (the “Deposited
Cash Consideration”)
and
the Stock Consideration will be deposited by the Purchaser with U.S. Bank
Corporate Trust Services (the “Escrow
Agent”)
and
shall be subject to and disbursed pursuant to the terms of that certain Escrow
Agreement to be entered into by and between Purchaser, Seller and Escrow Agent
attached hereto as Exhibit
A
(the
“Escrow
Agreement”).
The
Escrow Agent shall deposit the Deposited Cash Consideration into a high yield
interest bearing account (the “Escrow
Fund”)
which
shall be held therein until released from escrow pursuant to the terms of the
Escrow Agreement (the “Escrow
Period”).
The
Stock Consideration shall be deposited with the Escrow Agent by the Purchaser
delivering to the Escrow Agent: (i) stock certificates representing an aggregate
amount of shares of Telkonet Common Stock equal to the Stock Consideration
(the
“Deposited
Shares”);
and
(ii) stock powers for the Deposited Shares, duly endorsed in blank by Telkonet.
Escrow Agent shall pay to Seller the Stock Consideration and Deposited Cash
Consideration (and any earnings thereon) in accordance with, and pursuant to
the
terms of, the Escrow Agreement, less any credits to be provided to Purchaser
in
accordance with this Section 2(b). A credit shall be provided to Purchaser
if
the number of “Subscribers” in “Good Standing” (as such terms are defined
below), delivered to Purchaser at Closing is less than 1841 (which is
acknowledged to be 95% of the 1938 Subscribers that Seller believes to be in
Good Standing). In the event that a credit shall be issued to Purchaser in
accordance with this Section 2(b), the credit to Purchaser shall be an amount
equal to the product of: (i) the difference between: (A) 1841; less (B) the
actual number of Subscribers in Good Standing; multiplied by (ii) a fraction
having a numerator of 2,550,000 and a denominator of 1938 (i.e. the number
of
Subscribers Seller believes will be in Good Standing (such fraction, the
“Credit
Per Subscriber”).
If
the Subscribers in Good Standing are at least 1841, the Escrow Agent shall
pay
all of the Deposited Cash Consideration, Stock Consideration and earnings
thereon to the Seller. At the end of the Escrow Period if the number of
Subscribers in Good Standing delivered to Purchaser at Closing exceeds 2035
(i.e. which is 105% of the 1938 Subscribers Seller believes will be in Good
Standing), the Purchaser shall immediately pay additional consideration (in
addition to the Stock Consideration and the Cash Consideration (including any
earnings thereon) in the amount equal to the product of: (i) the difference
between: (A) the actual number of Subscribers in Good Standing; less (B) 2035;
multiplied by (ii) the Credit Per Subscriber. The amount of any credit to be
provided to Purchaser or additional consideration to be paid to Seller pursuant
to this Section 2(b) shall be paid: (i) all in cash so long as such amount
does
not exceed $100,000.00; or (ii) 40% in cash and 60% in Telkonet Common Stock
(based on the average of the closing price for one share of Telkonet Common
Stock for the ten (10) trading days occurring immediately prior to the Closing
Date), if such amount exceeds $100,000.00. For purposes of this Agreement the
term “Subscriber”
shall
mean any customer of Seller who is existing as of the date of Closing. For
purposes of clarity: (i) a customer shall include any person or entity from
whom
Seller, directly or indirectly, receives compensation with respect to or in
exchange for providing telephone or internet services, including any person
who
becomes a customer prior to the Closing Date as a result of any marketing
program or campaign conducted by or on behalf of Seller described in Schedule
4(l) hereof; and (ii) a customer shall count as one Subscriber of Seller
regardless of whether such customer subscribes to one or a combination of the
internet or telephone services provided by Seller. A Subscriber shall be in
“Good Standing” if his or her account is no more than sixty (60) days’ in
arrears on the date of Closing, measured from the date that payment is due
for
the first unpaid month’s services. The procedure for finalizing the number of
Subscribers in Good Standing, additional consideration to be paid to Seller,
if
any, and the credits to be provided to Purchaser, if any, shall be as set forth
in the Escrow Agreement. The credits to be paid to Purchaser, if any, or the
additional consideration to be paid to Seller, if any, shall be paid pursuant
to
the terms of this Section 2(b) and the Escrow Agreement.
3
(c) Allocation
of Purchase Price.
The
Purchase Price shall be allocated among the Sale Assets in accordance with
Schedule
1(c).
Seller
and Purchaser shall be bound by such allocations, shall not take any position
inconsistent with such allocations, and shall file all returns and reports
with
respect to the transactions contemplated by this Agreement on the basis of
such
allocations.
3. Liabilities
Not Assumed.
Seller
agrees that Purchaser is not assuming any liabilities or obligations of Seller
hereunder other than: (i) obligations and liabilities with respect to the period
from and after the Closing arising under any of the Business Instruments and
Licenses set forth on Schedule 4(e)
and
Schedule
4(f),
respectively, (ii) obligations and liabilities arising out of Purchaser’s
operation of the Broadband Business from and after the Closing including,
without limitation, executory Subscriber contracts and (iii) obligations and
liabilities for Subscriber prepayments, deposits and credits of the Broadband
Business as of the Closing Date (all such liabilities and obligations described
in Sections 3(i), (ii) and (iii) being hereinafter collectively referred to
as
the “Assumed
Liabilities.”
For
purposes of clarity, the parties agree that Purchaser is not assuming any
obligations or liabilities arising under or related to the legal proceedings
described in Schedule
4(g)
hereto
and should Purchaser incur any loss or damage directly resulting from the
obligations or liabilities arising under or related to the legal proceedings
described in Schedule
4(g)
and seek
indemnification for such losses or damages in accordance with the terms of
this
Agreement, the limitations set forth in Section 9(e) hereof shall not apply.
At
and after the Closing Date, Purchaser shall assume, discharge and otherwise
satisfy the Assumed Liabilities. Other than any Assumed Liabilities, obligations
and liabilities with respect to the pre-Closing period shall be the
responsibility of Seller, and if any such item is paid by Purchaser following
the Closing, Seller shall be obligated to reimburse Purchaser therefor in
accordance with the terms of this Agreement.
4. Seller’s
Representations and Warranties.
Seller
represents and warrants to Purchaser as follows:
(a) Organization;
Authority.
Seller
is a New Jersey general partnership and has all requisite power and authority
to
conduct the Broadband Business as it is now being conducted and to own and
operate the Sale Assets. Newport Telecommunications Company., Inc., the
corporate general partner of Seller is authorized to execute and deliver this
Agreement on behalf of Seller in accordance with Seller’s partnership agreement.
This Agreement is the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms except insofar as enforceability
may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or
similar laws now or hereafter in effect affecting creditors’ rights generally,
or by principles governing the availability of equitable remedies.
4
(b) Consents.
Except
as set forth on Schedule 4(b),
neither
the execution and delivery of this Agreement by Seller nor the consummation
by
Seller of the transactions contemplated hereby will (i) violate or conflict
with
Seller’s partnership agreement; (ii) violate, conflict with, constitute a
default under, result in the termination of, accelerate the performance required
by or result in the imposition of any encumbrance pursuant to any agreement
or
other instrument to which the Seller is a party or by which Seller is bound
except where the violation, conflict, default, termination, acceleration or
imposition would not have a Material Adverse Effect; or (iii) violate any
statute, law, rule or regulation or any judgment, decree, order, regulation
or
rule of any court or federal, state or local governmental authority to which
Seller is subject. Schedule
4(b) sets
forth a true and complete list of all consents, approvals, waivers, filings
and
notices necessary or required to consummate the transactions contemplated hereby
(collectively, the “Required
Consents”).
As
used in this Agreement the term “Material
Adverse Effect”
means
any effect or change that would be materially adverse to the Broadband Business
or the Sale Assets, or on the ability of Seller to timely consummate the
transactions contemplated hereby.
(c) Title
to Sale Assets. Except
as
set forth on Schedule
4(c),
Seller
has sole, good and valid title to all of the Sale Assets consisting of tangible
and intangible personal property, including without limitation Business
Instruments (subject to the terms of such Business Instruments), Licenses
(subject to the terms of such Licenses), Subscriber accounts, Subscriber lists,
inventory, equipment and general intangibles, all free and clear of any liens,
claims and other encumbrances. A true and complete list of Seller’s material
tangible assets is set forth on Schedule
4(c).
(d) Right
of Access to Real Property. Attached
as Exhibit
B
is that
certain Grant of License and Right of Entry Agreement dated as of January 1,
2007, between Xxxxxx Conduit Associates LLC (“Xxxxxx
Conduit”)
and
Seller (the “License
and XXX”),
permitting Seller to have access to those Newport Properties set forth in the
License and XXX in order to provide the Broadband Business thereat, through
a
certain conduit owned by Xxxxxx Conduit. Seller has a good and valid license
and
right of access and entry to those Newport Properties described in the License
and XXX in order to provide the Broadband Business thereat. The License and
XXX
is subject to Permitted Encumbrances (as
hereinafter defined). As
used
herein, “Permitted
Encumbrances”
means
(a) liens for taxes, assessments and governmental charges not yet due and
payable; (b) zoning laws and ordinances and similar legal requirements; (c)
rights reserved to any governmental authority to regulate the affected real
property; and (d) mortgages, deeds of trust or similar instruments, (e) ground
or underlying leases, (f) security interests of the applicable property owners
and (g) all easements, rights-of-way, servitudes, permits, restrictions and
imperfections or irregularities in title which are reflected in the public
records and that do
not
individually or in the aggregate materially or adversely interfere with any
rights of Seller in and to the License and XXX, including but not limited to
rights to conduct the Broadband Business or to consummate the transactions
contemplated herein. The Parties agree that no access rights have been provided
for telecommunications services provided by Seller to its customers at the
Shore
Condominium Residences at Newport located at 00 Xxxxxxx Xxxxxxx, Xxxxxx Xxxx,
Xxx Xxxxxx (the “Shore
Building”)
since
Purchaser has obtained or will obtain access rights separately from Shore at
Newport Condominium Association, Inc.
5
(e) Business
Instruments.
Schedule
4(e)
sets
forth a true and complete list of all contracts, franchises, leases (for real
and personal property), licenses, pole attachment and other utility agreements,
retransmission consent agreements, service and access agreements and all other
agreements and instruments (other than Licenses) relating to the Broadband
Business which are not Excluded Assets (the “Business
Instruments”),
including the parties thereto and the subject matter and expiration dates
thereof. Seller has delivered to Purchaser true and complete copies of all
Business Instruments, including all amendments, modifications and supplements
thereto. Each Business Instrument is in full force and effect and constitutes
the legal, valid and binding obligation of Seller
and, to
Seller’s Knowledge any other party(ies) thereto and is enforceable in accordance
with its respective terms, except insofar as enforceability may be limited
by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect affecting creditors’ rights generally, or by
principles governing the availability of equitable remedies. There are no
defaults which have occurred and are continuing beyond any applicable notice
and
cure periods under any of the Business Instruments by Seller or, to Seller’s
Knowledge, the other party(ies) thereto; nor has any event occurred that, with
the giving notice or the passage of time or both, would constitute a default
or
event of default thereunder. The Business Instruments delivered to Purchaser
contain all obligations and liabilities of Seller with respect to such
instruments or the rights granted thereunder. Seller is not a party to, and
neither Seller, the Sale Assets nor the Broadband Business is subject to or
bound by, any agreement limiting Seller’s ability to compete in any services
provided in connection with the Broadband Business in the United States. As
used
in this Agreement the term “Knowledge
of Seller”
or
“Seller’s
Knowledge”
shall
mean the actual knowledge of Xxxx Xxxxxxxx, Seller’s, General Manager and all
direct reports to him and/or such knowledge that such individuals could be
expected to discover or otherwise become aware in the course of conducting
a
reasonably comprehensive investigation concerning the existence of such fact
or
matter.
(f) Licenses.
Schedule
4(f)
sets
forth a true and complete list of all governmental or regulatory licenses,
permits and other governmental authorizations and approvals held by Seller
relating to the Broadband Business (“Licenses”),
including the grant and the termination dates thereof. To the Knowledge of
Seller, all Licenses are in full force and effect, and Seller has not been
notified that it is subject to any fines or penalties in connection
therewith.
(g) Legal
Proceedings.
Except
as set forth on Schedule
4(g),
there is
(i) no suit, action or proceeding pending or, to Seller’s Knowledge, threatened,
against Seller or the Broadband Business or any of the Sale Assets, and (ii)
no
judgment, decree, injunction, rule or order or any investigation or proceeding
of any court, governmental department, agency or instrumentality involving
Seller and/or the Sale Assets or the Broadband Business.
6
(h) Financial
Statements.
Seller
has delivered to Purchaser true and correct copies of the financial statements
identified on Schedule
4(h)
(collectively, the “Seller’s Financial
Statements”).
Seller’s
Financial Statements: (i) are correct and complete in accordance with the books
and records of Seller, (ii) fairly present the financial condition of Seller
as
of such dates and the results of its operations for the periods covered thereby,
and (iii) were prepared in accordance with GAAP (subject to year-end adjustments
and except for the omission of certain footnotes and other presentation items
required by GAAP with respect to audited financial statements, which
adjustments, footnotes and presentation items, if prepared as required for
audited financial statements, would not reveal any fact or condition materially
adverse to the financial condition or results of Seller presented in such
unaudited Statements).
(i) Conduct
of Business.
Except
as set forth on Schedule
4(i):
(i),
Seller has operated the Broadband Business in compliance in material respects
with all applicable laws, regulations, ordinances and other legal requirements;
and (ii) the Sale Assets constitute all of the assets, rights and properties
necessary to conduct, operate and maintain the Broadband Business as conducted,
operated and maintained by Seller immediately prior to the date
hereof.
(j) Brokers.
Seller
has not employed any broker, finder or investment banker in connection with
the
Sale Assets transaction contemplated by this Agreement, nor is any broker,
finder or investment banker entitled to any brokerage, finder or other fee
or
commission from Purchaser, in connection with this Agreement or the transactions
contemplated hereby.
(k) Sales
Tax.
There
is no sales tax due from Seller with respect to the Broadband Business for
periods prior to the Closing Date that are outstanding other than sales taxes
for periods for which as of the Closing Date a sales tax return is not yet
required to be filed.
(l) Long
Term Obligations.
The
form(s) of all written agreement(s), if any, which Seller may enter into with
Subscribers, obligating Seller to provide specific services in connection with
the Broadband Business, is/are attached to Schedule
4(l)
hereof.
5. Purchaser’s
Representations and Warranties.
Purchaser represents and warrants to Seller as follows:
(a) Organization;
Authority.
Purchaser is a corporation duly organized and in good standing under the laws
of
the State of New Jersey and has all requisite power and authority to carry
on
its business as it is now being conducted and to own and operate the properties
and assets it now owns. Purchaser, has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement is the legal, valid and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its terms, except
insofar as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect or by
principles governing the availability of equitable remedies.
(b) No
Violation.
Neither
the execution and delivery of this Agreement by Purchaser nor the consummation
by Purchaser of the transactions contemplated hereby will (i) violate or
conflict with Purchaser’s certificate of formation or operating agreement; (ii)
violate, conflict with, constitute a default under, result in the termination
of
or accelerate the performance required by any agreement or arrangement to which
Purchaser is a party or by which Purchaser is bound; or (iii) violate any
statute, law, rule or regulation or any judgment, decree, order, regulation
or
rule of any court or federal, state or local governmental authority, which
violation, conflict, default, termination or acceleration would have a material
adverse effect on the ability of Purchaser to perform its obligations
hereunder.
7
(c) Legal
Proceedings.
There
is no (i) suit, action, proceeding pending or to Purchaser’s Knowledge,
threatened against Purchaser, and (ii) judgment, decree, injunction, rule or
order or any investigation or proceeding of any court agreement department,
agency or instrumentally involving Purchaser, which would cause Purchaser to
be
unable to consummate the transactions contemplated by this Agreement.
As
used
in this Agreement the term “Knowledge
of Purchaser”
or
“Purchaser’s
Knowledge”
shall
mean the actual knowledge of Xxxxx Xxxxxxxxx Purchaser’s, Chief Executive
Officer and/or such knowledge that such individual could be expected to discover
or otherwise become aware in the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or matter
(d) Brokers.
Purchaser has not employed any broker finder or investment banker in connection
with the Sale Assets Transaction contemplated by this agreement, nor is any
broker, finder or investment banker entitled to any brokerage finder or other
fee or commission from Purchaser or Telkonet in connection with this Agreement
or the transactions contemplated hereby.
(e) Financial
Statements.
The
Purchaser’s financial statements are identified on Schedule 5(e) (the
“Purchaser’s Financial Statements”). Purchaser’s
Financial Statements: (i) are correct and complete in accordance with the books
and records of Purchaser, (ii) fairly present the financial condition of
Purchaser as of such dates and the results of its operations for the periods
covered thereby, and (iii) were prepared in accordance with GAAP (subject to
year-end adjustments and except for the omission of certain footnotes and other
presentation items required by GAAP with respect to audited financial
statements, which adjustments, footnotes and presentation items, if prepared
as
required for audited financial statements, would not reveal any fact or
condition materially adverse to the financial condition or results of Purchaser
presented in such unaudited Statements).
6. Telkonet’s
Representations and Warranties; Breach of Representations or
Warranties.
(a) Telkonet
hereby represents and warrants to Seller, the following:
(i) Organization.
Telkonet is a corporation duly organized and validly existing under the laws
of
the State of Delaware and is in good standing under such laws. Telkonet has
the
requisite corporate power to own and operate its properties and assets and
to
carry on its business as presently conducted and as proposed to be conducted.
Telkonet is qualified to do business as a foreign corporation in each
jurisdiction in which the ownership of its property or the nature of its
business requires such qualification.
8
(ii) Authority;
No Conflict.
The
execution, delivery and performance by Telkonet of its obligations under this
Agreement and the consummation by Telkonet of all transactions contemplated
to
consummated by Telkonet pursuant to this Agreement have been duly authorized
by
all necessary corporate action. This Agreement has been duly executed and
delivered by Telkonet and constitutes the valid and binding obligations of
Telkonet enforceable in accordance with its respective terms, except
as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors’ rights and
general principles of equity that restrict the availability of equitable
remedies.
The
execution and delivery of this Agreement and the consummation of the
transactions contemplated to be consummated by Telkonet hereunder, including,
without limitation, the issuance, sale and delivery of the shares of Telkonet
common stock comprising: (i) the Stock Consideration; and (ii) the additional
consideration to be delivered to Seller in accordance with the terms of Section
2(b) of this Agreement, if applicable, (collectively, the “Shares”),
will
not: (A) conflict with or violate any provision of the Certificate of
Incorporation, Bylaws or other governing document of Telkonet; or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of or create in any party the right to accelerate, terminate,
modify or cancel any contract, lease, sublease, license, agreement, mortgage
for
borrowed money, instrument of indebtedness or other arrangement to which
Telkonet is a party or by which Telkonet is bound or to which its assets are
subject.
(iii) Legal
Proceedings.
There
is no (i) suit, action, proceeding pending or to the knowledge of Telkonet,
threatened against Telkonet, and (ii) judgment, decree, injunction, rule or
order or any investigation or proceeding of any court agreement department,
agency or instrumentally involving Telkonet, which would restrict of prohibit
Telkonet from consummating the transactions contemplated by this Agreement,
including, without limitation, issuing and delivering all of the Shares to
Seller, as contemplated under this Agreement.
(iv) Governmental
Consents.
No
consent, approval, order or authorization of, or registration qualification,
designation declaration or filing with any
federal,
state, local or provincial governmental authority or
any
other regulatory agency or authority is required in connection with the
issuance, sale and delivery of the Shares as contemplated by this Agreement
except for filings which have been made prior to Closing under applicable
federal and state securities laws.
(v) Issuance
of Stock Consideration.
The
issuance, sale and delivery of the Shares has been duly authorized by all
necessary corporate action on the part of Telkonet. The Shares, when so issued,
sold and delivered in accordance with this Agreement, will be duly and validly
issued, fully paid and non-assessable.
(vi) Title
to Shares.
Telkonet is the sole owner of the Shares, has the unrestricted right to sell
and
transfer the Shares to Seller and Telkonet will transfer and deliver the Shares
to Seller free and clear of all liens, encumbrances, options or other adverse
claims (as defined in the Uniform Commercial Code) of any kind whatsoever.
9
(b) Indemnification
by Telkonet.
The
representations and warranties contained in this Section 6 shall survive for
the
duration of the applicable statute of limitations with respect to the matters
set forth therein. Telkonet shall indemnify and hold all “Seller Indemnitees”
(as defined in Section 9, below) harmless from and against any “Damages” (as
defined in Section 9, below) asserted against, imposed upon or incurred by
any
such Seller Indemnitee to the extent resulting from a breach of any of
Telkonet’s representations or warranties set forth in this Section
6.
7. Purchaser’s
Access to Seller’s Books and Records After Closing.
Seller
shall, for a period of three (3) years after Closing, give Purchaser’s officers,
employees, accountants and other representatives, at Purchaser’s expense,
reasonable access to Seller’s business and financial records and accounts during
Seller’s business hours to the extent reasonably necessary (and at no expense to
Seller), to enable Purchaser to obtain any information and data required in
connection with the preparation of Purchaser’s and its affiliates’ financial
statements and any regulatory filings relating to the Broadband
Business.
8. Closing
Conditions and Deliveries.
(a) Seller’s
Deliveries.
At or
prior to the Closing, Seller shall deliver the following to
Purchaser:
(i)
Four
(4)
originals of the Escrow Agreement in the form of Exhibit
A
annexed
hereto, duly executed by Seller;
(ii)
Four
(4)
original of the Assignment and Assumption Agreement in the form of Exhibit
C
annexed
hereto, duly executed by Seller;
(iii) such
other instruments or documents as Purchaser shall request to evidence the
transfer of all the Sale Assets to Purchaser in accordance with the terms hereof
(including, without limitation, a Xxxx of Sale in the form of Exhibit
D,
attached hereto);
(iv) All
Required Consents, other than any renewal of Seller’s ARIN membership, in a form
reasonably satisfactory to Purchaser, the terms of which shall not contain
any
change in the underlying instrument that would constitute a Materially Adverse
Effect;
(v)
a
true
and complete list of Subscribers as of a date reasonably close to (and not
more
than five (5) business days preceding) the Closing Date, an updated list of
Subscriber deposits and prepayments;
(vi) a
true
and complete accounts receivable aging report as of a date not more than two
(2)
business days prior to the Closing Date;
(vii) evidence,
reasonably satisfactory to Purchaser, of the release or termination of all
security interests, liens and other encumbrances affecting the Sale Assets
(other than the Permitted Encumbrances), if any;
(viii)
Four
(4)
original executed copies of an Agreement of Lease between 00 Xxxxx Xxxxx Xxxxx
Xxxxx Renewal Company, as Landlord and Microwave Satellite Technologies, Inc.,
as tenant for the office premises located on the 6th floor of Newport Office
Center VIII, 000 Xxxx Xxxxxx Xxxxx, Xxxxxx Xxxx, Xxx Xxxxxx.
10
(ix) A
Certificate dated as of the Closing Date and signed by the duly authorized
officer of the corporate general partner of Seller: (A) attesting to the
incumbency of each person who shall execute this Agreement as an officer of
the
corporate general partner on behalf of Seller and any other agreement entered
into in connection with this Agreement to which Seller is a party; and (B)
certifying that attached thereto is a true and complete copy of the Partnership
Agreement of the Seller as in effect as of the Closing Date; and
(x)
Written
resolutions of the corporate general partner of Seller authorizing the
execution, delivery and performance of the corporate general partner on behalf
of the Seller of this Agreement and any other agreement executed in connection
with this Agreement to which Seller shall be a party.
(b) Purchaser’s
Deliveries.
At or
prior to the Closing, Purchaser shall deposit the Stock Consideration and the
Deposited Cash Consideration with the Escrow Agent as provided for in Section
2(b) herein and shall deliver the following to Seller:
(i)
Five
Hundred Ten Thousand Dollars ($510,000.00) shall be delivered to Seller by
wire
transfer pursuant to wire instructions provided by Seller;
(ii)
Four
(4)
originals of the Escrow Agreement in the form of Exhibit
A
annexed
hereto, duly executed by Purchaser;
(iii) Four
(4)
original of the Assignment and Assumption Agreement in the form of Exhibit
C
annexed
hereto, duly executed by Purchaser;
(iv) Four
(4)
originals of a fully executed License from Purchaser to Realty Information
Systems Co. to use fiber constituting a portion of the Sale Assets in the form
annexed hereto as Exhibit
E.
(v) A
Secretary’s Certificate dated as of the Closing Date and signed by the Secretary
of Purchaser: (A) attesting to the incumbency of each person who shall execute
this Agreement and any other agreement entered into in connection with this
Agreement to which Purchaser is a party; (B) certifying that attached thereto
is
a true and complete copy of the Certificate of Incorporation of the Purchaser
as
in effect as of the Closing Date; and (C) certifying that attached thereto
is a
true and complete copy of Purchaser’s Bylaws as in effect as of the Closing
Date.
(vi) Written
resolutions or the requisite approvals of the board of directors of the
Purchaser and the shareholders of the Purchaser, in form and substance
reasonably satisfactory to Seller, authorizing the execution, delivery and
performance by Purchaser of this Agreement and any other agreement executed
in
connection with this Agreement to which Purchaser is a party, which copy shall
be certified by the appropriate officer of the Purchaser as being the true
and
correct copies of such approvals.
(vii) Written
resolutions or the requisite approvals of the board of directors of Telkonet,
in
form and substance reasonably satisfactory to Seller, authorizing the issuance
of the Shares and the execution, delivery and performance by Telkonet of its
obligations under this Agreement, which copy shall be certified by the
appropriate officer of Telkonet as being the true and correct copies of such
approvals.
11
9. Survival
and Indemnification.
(c) Survival
of Representations and Warranties.
The
representations and warranties contained in this Agreement shall survive the
Closing for a period of one (1) year, except that the representations and
warranties set forth in: (i) the second sentence of Section 4(a), (ii) Section
4(c) (to the extent related to the title of the Sale Assets), (iii) Section
4(j), (iv) the second sentence of Section 5(a) and (v) Section 5(d) shall
survive for the duration of the applicable statute of limitations with respect
to the matters set forth therein.
(d) Indemnification
by
Seller.
Subject
to the limitations set forth in Section 9(e) below, Seller
shall indemnify and hold Purchaser and its affiliates (including said parties’
officers, directors, partners, shareholders, managers, members, employees and
agents) (“Purchaser
Indemnitees”)
harmless from and against any demand, claim, action, damage or liability
(including without limitation reasonable attorney’s fees) (collectively,
“Damages”)
asserted against, imposed upon or incurred by any such Purchaser Indemnitee
to
the extent resulting from: (i) a breach of any of Seller’s representations or
warranties set forth herein; (ii) a breach of any of Seller’s covenants set
forth herein; (iii) any litigation, legal proceeding or claim against Purchaser
or Purchaser Indemnitees relating to Seller’s relationship with any Subscriber,
the Broadband Business or the Sale Assets during the time period prior to the
Closing Date; or (iv) any liability or obligation relating to the period prior
to the Closing
Date and not specifically assumed by Purchaser in accordance with the provisions
hereof (any such claim, a “Purchaser Indemnification Claim”).
(e) Indemnification
by
Purchaser.
Purchaser shall indemnify and hold Seller and its affiliates (including said
parties’ officers, directors, partners, shareholders, managers, members,
employees and agents (“Seller
Indemnitees”)
harmless from and against any Damages asserted against, imposed upon or incurred
by any such Seller Indemnitee to the extent resulting from: (i) a breach of
any
of Purchaser’s representations or warranties set forth herein; (ii) a breach of
any of Purchaser’s covenants set forth herein; (iii) any litigation, legal
proceeding or claim against Seller or Seller Indemnitees relating to Purchaser’s
relationship with any of its customers (including, any Subscriber), the
Broadband Business or the Sale Assets during the time period following the
Closing Date; or
(iv)
any liability or obligation relating to the period prior to the Closing Date
and
which has been specifically assumed by Purchaser in accordance with the
provisions hereof
(any
such
claim, a “Seller
Indemnification Claim”).
(f) Indemnification
Procedures.
Purchaser
shall promptly notify Seller of any
Purchaser Indemnification Claim and Seller shall promptly notify Purchaser
of
any Seller Indemnification Claim, provided,
that the failure to give such notice shall not affect any of Purchaser’s or
Seller’s right to indemnification unless the
party
from which indemnification is sought
shall
have been materially prejudiced thereby.
If the
claim is as a result of a third party matter, the
indemnifying party
shall be
entitled to participate in the defense thereof, and, if it so chooses, to assume
the defense thereof with counsel that it selects, and subject to the
other
party’s
right
to participate in such defense and to employ its own counsel, at its own
expense. Neither
Seller
nor
Purchaser shall consent to the entry of any judgment or enter into any
settlement with respect to the
other
party without
the prior written consent of such other party,
which
consent will not be unreasonably withheld,
provided
that Seller or Purchaser, shall have assumed the defense of a Purchaser
Indemnification Claim
or
Seller Indemnification Claim, as applicable, and such party shall
have
acknowledged in writing its obligation
to
provide
indemnification in connection
with
such
claim.
12
(e) Limitations.
Seller
shall not be liable to the Purchaser Indemnitees under this Section 9 for any
Damages unless and until the cumulative amount otherwise due to the Purchaser
Indemnitees for all claims for Damages under this Section 9 exceeds Seventy-Five
Thousand Dollars ($75,000.00). Thereafter, the amount due to the Purchaser
Indemnitees for all claims for indemnification under this Section 9 in excess
of
Seventy-Five Thousand Dollars ($75,000.00) shall be indemnifiable, but in no
event shall the Seller be required to indemnify the Purchaser Indemnitees under
this Section 9 once the aggregate of: (i) the amount of Seller’s liability to
the Purchaser Indemnitees under this Section 9 for any Damages; and (ii) the
aggregate amount incurred by the “Newport Entities” (as defined in that certain
Agreement dated as of the date hereof, by and among Seller, Purchaser and those
other parties identified therein as “Building Owners” which provides for
agreements among the parties relating to DirecTV programming services at certain
Newport Properties (the “DirecTV Agreement”)) arising from or related to the
“Newport Entities Obligations” (as defined in the DirecTV Agreement) exceed One
Million Dollars ($1,000,000.00).
(f) Sole
Remedy.
The
remedies set forth in this Section 9 of the Agreement shall be the exclusive
remedies of the: (i) parties to this Agreement, (ii) the Seller Indemnitees
and
(iii) the Purchaser Indemnitees with respect to the subject matter of this
Agreement and shall control and determine the rights and obligations of the:
(A)
parties to this Agreement, (B) the Seller Indemnitees, and (C) the Purchaser
Indemnitees, with respect to all claims, demands, losses and other causes of
action arising in connection with this Agreement.
(g) Insurance
Proceeds.
The
amount of any Damages for indemnification to be provided under this Section
9
shall be net of any amount actually recovered by the Purchaser Indemnitees
or
Seller Indemnitees, as applicable, under any applicable insurance policies
with
respect to such Damages.
10. Access
to Books and Records.
Seller
shall have the right, from time to time, at Seller’s expense, through its duly
authorized agents, to review and inspect, during reasonable business house
and
upon reasonable notice to the Purchaser, all corporate books and business
records pertaining to the Broadband Business for periods prior to the Closing
Date which were transferred from Seller to Buyer in accordance with the terms
of
this Agreement.
11.
Miscellaneous.
(g) Notices.
Any
notice or other correspondence to be given in connection with this Agreement
shall be in writing and shall be delivered by hand, overnight courier,
registered or certified mail (postage prepaid, with return receipt requested),
or by facsimile (provided that the sender receives printed confirmation of
receipt) to the addresses and/or facsimile numbers set forth below or to such
other address or facsimile number as a party may designate by notice given
to
the other party in accordance with the terms hereof. Any notice to be given
by a
party may be given by such party’s counsel. Each notice shall be deemed
effective upon its receipt or refusal.
13
Notices
to Seller :
Xxxxx
Xxxxx
Newport
Telecommunications Co.
000
Xxxx Xxxxxx Xxxxx
Xxxxxx
Xxxx, Xxx Xxxxxx 00000
|
with
a copy to:
Xxxxx
X. XxXxxx
Lefrak
Organization, Inc.
00
Xxxx 00xx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
|
with
a copy to:
Riker,
Danzig, Xxxxxxx Xxxxxx & Xxxxxxxx, LLP
Xxx
Xxxxxxxxx Xxxxxx
XX
Xxx 0000
Xxxxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Xxxxxx Xxxxx, Esq.
Fax:
(000) 000-0000
|
|
Notices
to Purchaser:
Xxxxx
X. Xxxxxxxxx
000-000 Xxxxxx
Xxxx
Xxxxxxxxx,
Xxx Xxxxxx 00000
Fax:
(000) 000-0000
|
with
a copy to:
Xxxxxx
Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
0000
Xxx Xxxxxx, X.X.
Xxxxxxx
Xxxxx
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxx
Fax:
(000) 000-0000
|
(h) Expenses;
Taxes.
Except
as otherwise set forth herein, each party shall be responsible for its own
fees
and expenses (including legal fees) in connection with the transactions
contemplated hereby. Purchaser shall be responsible for and shall pay all
federal, state and local transfer, sales, use and other taxes with respect
to
the sale of the Sale Assets.
(i) Further
Assurances.
Seller
and Purchaser hereby agree, at their own cost and expense, to execute and
deliver any agreement, document or instrument and to take or cause to be taken
any further action that the other may request in order to more fully give effect
to the transactions contemplated hereby.
(j) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
New
Jersey without giving effect to the principles of conflicts of
laws.
(k) Entire
Agreement; Amendment; Waiver.
This
Agreement (including all schedules, exhibits and other agreements executed
in
connection with this Agreement) constitutes the entire agreement and
understanding of the parties and supersedes any and all prior and
contemporaneous agreements, understandings, correspondence, representations
and
warranties, oral or written. This Agreement shall not be amended, nor shall
any
term or provision hereof be waived, except in a writing signed by the party(ies)
affected thereby. No waiver shall operate as a waiver of, or estoppel with
respect to, any subsequent breach.
14
(l)
Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that neither party shall
assign its obligations or rights hereunder without the other party’s prior
written consent. Any attempted or purposed assignment in violation of this
Section shall be null and void and have no force or effect.
(m) Counterparts;
Facsimile Signatures. This
Agreement may be executed in counterparts that together shall constitute a
single instrument. A facsimile copy of any signature hereto and to any amendment
or supplement hereto shall be valid.
(n) Confidentiality. The
parties covenant and agree not to communicate the terms or any aspect of this
Agreement and the transactions contemplated hereby to any person or entity
and
to hold, in the strictest confidence, the content of any and all information
in
respect of the Sale Assets, Broadband Business, Seller or Purchaser, which
is
disclosed by Seller to Purchaser or by Purchaser to Seller, as applicable,
without the express written consent of the party disclosing such information;
provided, however, that either party may, without consent, disclose the terms
hereof and the transactions contemplated hereby (a) to its respective advisors,
consultants, attorneys, accountants, partners, investors, and lenders (the
“Transaction
Parties”)
without the express written consent of the other party, so long as any such
Transaction Parties to whom disclosure is made shall also agree to keep all
such
information confidential in accordance with the terms hereof; and (b) if
disclosure is required by law or by regulatory or judicial process or pursuant
to any regulations promulgated by the New York Stock Exchange or other public
exchange for the sale and purchase of securities, provided that in such event
Seller or Purchaser, as applicable, shall notify the other party in writing
of
such required disclosure, shall exercise all commercially reasonable efforts
to
preserve the confidentiality of the confidential documents or information,
as
the case may be, including, without limitation, reasonably cooperating with
the
other party to obtain an appropriate order or other reliable assurance that
confidential treatment will be accorded such confidential documents or
information, as the case may be, by such tribunal and shall disclose only that
portion of the confidential documents or information which it is legally
required to disclose. The foregoing confidentiality obligations shall not apply
to the extent that: (A) any such information is: (i) a matter of public record;
(ii) is provided in other sources readily available or (iii) is otherwise
properly, legally and generally known, in the telecommunications industry other
than as a result of disclosure by Seller or Purchaser or the Transaction
Parties, as applicable; or (B) such information was
in
the party’s possession prior to entering into this Agreement or prior to the
disclosure by the other party.
The
provisions of this Section shall survive the Closing.
15
(i)
Non-competition.
In
consideration of the payment of the Purchase Price and the other provisions
of
this Agreement, Seller shall not, for a period of three (3) years from the
date
of this Agreement: (a) own, operate, manage, maintain or participate in any
business which is primarily engaged in the business of offering or providing
telephone, video or internet services at the Newport Properties, whether on
a
resale basis or otherwise (b) market or assist in the marketing at the Newport
Properties of any telephone, video or internet services which are provided
at
the Newport Properties by any third party other than Purchaser or its
affiliates; (c) either alone or in conjunction with any other third party,
directly or indirectly, solicit or divert or attempt to solicit or divert any
employee of the Purchaser or in any way interfere with the relationship between
Purchaser and any of its employees, or (d) either alone or in conjunction with
any other third party, directly or indirectly, solicit or attempt to solicit
any
resident of the Newport Properties for the purpose of selling any telephone,
internet or video services at the Newport Properties which are then provided
by
Seller. Notwithstanding the foregoing, it is expressly understood and agreed
to
by Purchaser that Seller, its affiliates and/or any Owner (as defined in that
certain Master Communications Access and Service Agreement dated as of the
date
hereof (the “Master Access Agreement”)), whether or not an affiliate of Seller,
may assist (so long as such assistance is not in violation of that certain
Marketing Program and Support Agreement attached as Exhibit B to the Master
Access Agreement) other providers or resellers of telephone, video or internet
services in providing telephone, video or internet services at the Newport
Properties (even if such services are competitive with the Broadband Business),
which assistance shall include, but not be limited to, providing such providers
or resellers access to the Newport Properties to install or maintain facilities
or equipment at the Newport Properties; provided, however, that, except for
providing such entities with access to the Newport Properties through the Xxxxxx
Conduit, for which Seller, its affiliates or Owners, whether or not an affiliate
of Seller, may receive compensation and any charges which Realty Information
Systems Co. may
impose for permitted uses of certain fiber as provided for in that certain
License Agreement by and between Purchaser and Realty Information Systems Co.,
dated as of the date hereof, Seller shall not be permitted to receive
compensation in exchange for assisting such entities. Provided, further, that
nothing contained in this Agreement shall prohibit or impair Seller or its
affiliates or Owners from: (i) transacting business with or providing services
on behalf of Purchaser; or (ii) from satisfying any obligations or
responsibilities under any applicable federal, state or local law, rule,
regulation or ordinance or under that certain MDU System Operator Agreement
dated as of June 14, 2003 by and between Seller and Minnesota Digital Universe.
Provided, further that, subject to the forty (40) month and five percent (5%)
limitation on the new installation of wiring within certain buildings located
at
the Newport Properties as provided for in Section 1.01 of the Master
communications and Access Agreement, nothing contained herein shall prohibit
or
restrict Seller or its affiliates or Owners from assisting any tenant or
resident of the Newport Property in installing or maintaining any equipment
for
any video, internet or telephone services (even if such services are competitive
with the Broadband Business), including, without limitation, by providing or
facilitating such tenants or residents with access to certain areas located
at
the Newport Properties. Provided, further that nothing contained within this
Agreement shall prohibit Seller or its affiliates or owners from purchasing
or
otherwise
acquiring up to (but not more than) twenty-five percent (25%) of any class
of
the securities of any third party (but may not otherwise participate in the
activities of such third party) if such securities are listed on any national
or
regional securities exchange or have been registered under Section 12(g) of
the
Securities Exchange Act of 1934. Purchaser and Seller acknowledge and agree
that
providing tenants or residents of the Newport Properties with the phone numbers
and other contact information of any provider or reseller of telephone, video
or
internet services which is providing or re-selling such services at the Newport
Properties shall be permitted under this Agreement and shall not be deemed
to be
in violation of the Marketing Program and Support Agreement referenced above.
(j)
True
Up for Purchase of Centrex Lines.
Pursuant to the terms of this Agreement, all of Seller’s right, title and
interest in and to that certain
Services
Agreement dated as of December 30, 2004, by and between Newport
Telecommunication and Verizon New Jersey Inc. pertaining to Newport
Telecommunication’s purchase of Centrex lines from Verizon New Jersey, Inc. (the
“Centrex
Agreement”)
shall
be assigned and transferred to Purchaser.
In
connection therewith, Seller
and
Purchaser acknowledge and agree that in the event that Purchaser shall be
charged with any fee relating to Purchaser’s failure to purchase the requisite
minimum number of Centrex lines pursuant to the Minimum Line Obligation under
the Centrex Agreement, Seller hereby agrees to reimburse Purchaser the amount
of
any such fee to the extent that such amount exceeds the amount charged for
Purchaser’s actual purchase and usage of the Centrex lines.
16
(k) Satellite
Services.
From
the date hereof and until July 14, 2008, Purchaser shall not, directly or
indirectly, offer, sell or solicit sales of, take orders for, or provide or
install equipment for, any direct-to-home satellite broadcast services to be
provided at the Newport Properties.
(l) Packeteer
Lease.
Purchaser and Seller hereby acknowledge and agree that after the Closing :
(i)
Seller will assign and transfer to Purchaser all of its right, title and
interest in and to that certain Lease Agreement dated as of August 22, 2006
by
and between Newport Telecommunications Company, Inc. and CIT Technology
Financing Services, Inc. (“CIT”)
(the
“Packeteer
Lease”);
or
(ii) if Seller cannot transfer and assign all of its, right, title and interest
in the Packeteer Lease to Purchaser, Purchaser shall enter into a new lease
agreement with CIT for the same equipment that is the subject of the Packeteer
Lease (the “New
Packeteer Lease Agreement”).
In
the event that subsection (ii) of this Section 11(l) shall apply and Purchaser
shall enter into the New Packeteer Lease Agreement with CIT, Seller shall pay
Purchaser the excess amount, if any, that Purchaser shall be obligated to pay
under the New Packeteer Lease Agreement as compared with the amount that
Purchaser would have been obligated to pay to CIT under the Packeteer Lease.
[Remainder
of Page Intentionally Omitted]
[Next
Page is Signature Page]
17
IN
WITNESS WHEREOF,
this
Asset Purchase Agreement has been executed and delivered as of the date first
above written.
Microwave Satellite Technologies, Inc. | ||
|
|
|
By: | /s/ Xxxxx X. Xxxxxxxxx | |
Name: Xxxxx X. Xxxxxxxxx |
||
Title: Chief Executive Officer |
NEWPORT TELECOMMUNICATIONS CO. | ||
By:
Newport Telecommunications Company,
Inc.,
its partner
|
||
|
|
|
By: | /s/ Xxxxx X. XxXxxx | |
Name:
Xxxxx X. XxXxxx
|
||
Title:
Vice President
|
TELKONET,
INC. (solely with respect to Section
6
of this
Agreement)
|
||
|
|
|
By: | /s/ Xxx Xxxxxxx | |
Name:
Xxx Xxxxxxx
|
||
Title: President |