Document:

acro_10k-ex102501.htm

    Exhibit
10.25.1

     

    

     

    AMENDMENT
TO AMENDED EMPLOYMENT AGREEMENT

     

    THIS
AMENDMENT (this “Amendment”) to that certain Amended Employment Agreement dated
March 31, 2008 (the “Original Agreement”) is entered into by and between Acacia
Technologies LLC, a Delaware limited liability company ("Acacia”), and Clayton
J. Haynes (“You”), effective as of December 17, 2008, on the following terms and
conditions.

     

    BACKGROUND

     

    A.           Acacia
and You are parties to the Original Agreement.

     

    B.           Acacia
and You desire to amend the Original Agreement as set forth below.

     

    NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants set forth
herein, Acacia and You, intending to be legally bound, hereby agree as
follows:

     

    
      	
               
      

            	
              1.

            	
              Section
      3.2 of the Original Agreement is hereby amended and restated to read in
      its entirety as follows:

            

    

     

    “Discretionary
Bonus.  You shall be eligible for a discretionary bonus equal in value
of up to Thirty percent (30%) of your annual salary.  Such bonus shall
be at the sole discretion of the Compensation Committee of Acacia Research
Corporation, and shall be based upon personal performance, overall company
performance, and any other factors that the Compensation Committee elects to
consider.  This bonus is solely within the discretion of the
Compensation Committee, which may elect to pay You no bonus in any given year or
years.  The Compensation Committee may increase the amount of the
discretionary bonus, but has no obligation to do so.  In order to be
eligible for the discretionary annual bonus, this Agreement must be in full
force and effect at the time of the payment of such bonus.  Such
discretionary annual bonus shall be evaluated and paid (if applicable) no later
than December 31 of the calendar year following the calendar year to which such
bonus relates.  The discretionary annual bonus shall be subject to all
appropriate federal and state withholding taxes in accordance with the normal
payroll procedures of Acacia.”

     

    
      	
               
      

            	
              2.

            	
              Approval by Board of
      Directors.  The Board of Directors of the Company
      approved the provisions of this Amendment at a meeting held, pursuant to
      notice duly given, on December 17,
2008.

            

    

     

    
      	
               
      

            	
              3.

            	
              Counterparts.  This
      Amendment may be executed in multiple counterparts, each of which shall be
      deemed an original, and all of which shall constitute one
      Amendment.

            

    

     

    
      	
               
      

            	
              4.

            	
              Terms and Conditions
      of the Original Agreement.  Except as specifically
      amended by this Amendment, all terms and conditions of the Original
      Agreement shall remain in full force and
effect.

            

    

     

    IN
WITNESS WHEREOF, the parties have executed this Amendment as of the date first
above written.

     

    
    

    
      ACACIA
TECHNOLOGIES LLC

    

     

    By:           /s/ Paul R.
Ryan                        
                                           

    Name:      Paul
R. Ryan

    Its:           Chairman
and CEO

     

    /s/ Clayton J.
Haynes                                
                                                                

    Clayton
J. Haynes

     

     

     

    III-8acro_10k-ex1026.htm

    Exhibit
10.26

    

    ACACIA
RESEARCH CORPORATION

    AMENDED
AND RESTATED

    EXECUTIVE
SEVERANCE POLICY

    

    Full time
employees with the title of Senior Vice President and higher of Acacia Research
Corporation or any successor thereto (“Acacia”) shall receive the benefits set
forth below. This Executive Severance Policy may not be amended or modified in a
manner that adversely effects an employee who is a duly appointed Senior Vice
President or higher executive officer of Acacia at the time of such proposed
amendment or modification.

    

    1. Severance
Benefits.  If Acacia terminates the employment of an employee
who is a Senior Vice President or higher (“Officer”) for other than Cause (as
defined below) or other than on account of death or disability, Acacia shall (i)
within thirty (30) days of such termination pay to the Officer a lump sum amount
equal to the aggregate of (a) Accrued Obligations
(i.e., the Officer’s annual base salary through the date of termination to the
extent not theretofore paid and any compensation previously deferred by the
Officer (together with any accrued interest or earnings thereon) and any accrued
vacation pay, and reimbursable expenses, in each case to the extent not
theretofore paid) and (b) three (3) months of the Officer’s base
salary for each full year that the Officer was employed by Acacia (the
“Severance Period”), up to a maximum of twelve (12) months of the Officer's base
salary and (ii) provide to the Officer, Acacia paid COBRA coverage for the
medical and dental benefits selected by the Officer in the year in which the
termination occurs, for the duration of the Severance Period.

    

    2. 
Definition of
Cause.  For purposes of this Severance Policy, “Cause” shall
mean that Acacia, acting in good faith based upon the information then known to
Acacia, determines that the applicable employee has engaged in any act of fraud,
embezzlement or dishonesty, any unauthorized use or disclosure by such employee
of confidential information or trade secrets of Acacia (or any subsidiary), or
any other intentional misconduct by such employee that adversely affects the
business or affairs of Acacia (or any subsidiary) in a material manner, after
reasonable written notice and reasonable time to cure such misconduct if such
misconduct is subject to cure.

    

    3.
 Section
409A.  Notwithstanding anything herein to the contrary, to the
extent any payments to Officer  pursuant to Section 1 are treated as
non-qualified deferred compensation subject to Section 409A of the Code, then
(i) no amount shall be payable pursuant to such section unless Officer’s
termination of employment constitutes a “separation from service” with Acacia
(as such term is defined in Treasury Regulation Section 1.409A-1(h) and any
successor provision thereto) (a “Separation from Service”), and (ii) if Officer,
at the time of his Separation from Service, is determined by Acacia to be a
“specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code and
Acacia determines that delayed commencement of any portion of the termination
benefits payable to Officer pursuant to this Agreement is required in order to
avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code (any
such delayed commencement, a “Payment Delay”), then such portion of the
Officer’s termination benefits described in Section 1 shall not be provided to
Officer prior to the earlier of (A) the expiration of the six-month period
measured from the date of the Officer’s Separation from Service, (B) the date of
the Officer’s death or (C) such earlier date as is permitted under Section
409A.  Upon the expiration of the applicable Code Section
409A(a)(2)(B)(i) deferral period, all payments deferred pursuant to a Payment
Delay shall be paid in a lump sum to Officer within five (5) business days
following such expiration, and any remaining payments due under the Agreement
shall be paid as otherwise provided herein.  The determination of
whether Officer is a “specified employee” for purposes of Section
409A(a)(2)(B)(i) of the Code as of the time of his Separation from Service shall
made by Acacia in accordance with the terms of Section 409A of the Code and
applicable guidance thereunder (including without limitation Treasury Regulation
Section 1.409A-1(i) and any successor provision thereto).

    

    Notwithstanding
the paragraph above, to the maximum extent permitted by applicable law, amounts
payable to Officer pursuant to Section 1 shall be made in reliance upon Treasury
Regulation Section 1.409A-1(b)(9) (with respect to separation pay plans) or
Treasury Regulation Section 1.409A-1(b)(4) (with respect to short-term
deferrals).  Accordingly, the severance payments provided for in
Section 1 are not intended to provide for any deferral of compensation subject
to Section 409A of the Code to the extent (i) the severance payments payable
pursuant to Section 1, by their terms and determined as of the date of Officer’s
Separation from Service, may not be made later than the 15th day of the third
calendar month following the later of (A) the end of Acacia’s fiscal year in
which Officer’s Separation from Service occurs or (B) the end of the calendar
year in which Officer’s Separation from Service occurs, or (ii) (A) such
severance payments do not exceed an amount equal to two times the lesser of (1)
the amount of Officer’s annualized compensation based upon Officer’s annual rate
of pay for the calendar year immediately preceding the calendar year in which
Officer’s Separation from Service occurs (adjusted for any increase during the
calendar year in which such Separation from Service occurs that would be
expected to continue indefinitely had Officer remained employed with Acacia) or
(2) the maximum amount that may be taken into account under a qualified plan
pursuant to Section 401(a)(17) for the calendar year in which Officer’s
Separation from Service occurs, and (B) such severance payments shall be
completed no later than December 31 of the second calendar year following the
calendar year in which Officer’s Separation from Service occurs.

     

     

    III-9tko_8k-ex0401.htm

    Exhibit 4.1

     

    
      STOCK
PURCHASE AGREEMENT

      

      

      THIS
STOCK PURCHASE AGREEMENT, together with all Schedules and Exhibits to be
delivered pursuant hereto (collectively, this “Agreement”), is made and shall be
effective as of February 26, 2009, by and between William H. Davis, with an
address of 29 Glen Green, Winchester, MA (“Buyer”), and Telkonet, Inc., a Utah
corporation with an address of 20374 Seneca Meadows
Parkway, Germantown, Maryland 20876 (“Seller”).

      

      BACKGROUND

      

      Seller owns 18,500,000 shares of the
common stock of MSHI
Holdings, Inc. (the “Company”).  Seller is interested in
selling to Buyer, and Buyer is interested in purchasing from Seller, 2,800,000
shares of the common stock of the Company owned by Seller (the
“Shares”).

      

      TERMS

      

      NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:

      

      ARTICLE
I

      

      SALE
OF SHARES AND CLOSING

      

      1.01           Purchase and Sale.
Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, all of
the right, title and interest of Seller in and to the Shares at the Closing (as
defined in Section 1.03), free and clear of any and all liens, claims and
encumbrances of any nature whatsoever, on the terms and subject to the
conditions set forth in this Agreement.

      

      1.02           Purchase Price. The
aggregate purchase price (“Purchase Price”) for the Shares shall be Ten Thousand
Dollars ($10,000.00), payable by Buyer to Seller.

      

      1.03           Closing.

      

      (a)           The
closing of the transactions contemplated by this Agreement (the “Closing”) shall
take place by the electronic exchange of documents on Friday, February 13, 2009,
or at such place or on such other date as is mutually agreed upon by the parties
(the “Closing Date”). The Closing shall be effective as of the close of business
on the Closing Date.

      

      (b)           Subject
to the conditions set forth in this Agreement, on the Closing Date or, with respect
to subparagraph (i) below, as soon as reasonably practicable
thereafter:

      

      (i)           Seller
shall transfer to Buyer the Shares by delivering to Buyer stock certificates
representing the Shares, duly endorsed for transfer or accompanied by duly
executed stock powers endorsed in blank with requisite stock transfer tax
stamps, if any, attached;

      

      (ii)           Buyer
shall deliver the Purchase Price in accordance with Article IV hereof;
and

      

      (iii)           Each
of the parties hereto shall deliver to the other the documents required to be
delivered pursuant to Article IV hereof, and such other certificates and
documents as the parties or their respective counsel may reasonably request in
order to consummate the transactions contemplated hereby.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      
 

      ARTICLE
II

      

      REPRESENTATIONS
AND WARRANTIES OF SELLER

      

      As a
material inducement to Buyer to enter into this Agreement and to close
hereunder, Seller hereby represents and warrants to Buyer as
follows:

      

      2.01           Ownership of Capital
Stock. Except as set forth in Schedule 2.01 hereto, Seller owns,
beneficially and of record, all right, title and interest in and to the Shares,
free and clear of any adverse interests, security interests, claims, liens,
pledges, options, encumbrances, charges, agreements, voting trusts, proxies or
other arrangements, restrictions or limitations of any kind. On the Closing
Date, the delivery by Seller of stock certificates in the manner set forth in
Section 1.03(b) hereof will transfer title to the Shares to Buyer, free and
clear of any adverse claim, security interests, claims, liens, pledges, options,
encumbrances, charges, agreements, voting trusts, proxies or other arrangements,
restrictions or other legal or equitable limitations of any kind.

      

      2.02           Capacity, Execution,
Delivery; Valid and Binding Agreements. Seller has the sole authority and
legal capacity to execute and deliver this Agreement and the other agreements
contemplated hereby and to perform its respective obligations hereunder and
thereunder (including, without limitation, the power to sell, transfer and
convey the Shares as provided by this Agreement). This Agreement has been duly
executed and delivered by Seller and constitutes the valid and binding
obligation of Seller, enforceable in accordance with its terms. Except as set
forth in Schedule 2.02 hereto, no consent is required with respect to Seller or
the Company in connection with the execution, delivery, and performance of this
Agreement or any other agreement contemplated hereby.

      

      2.03           Incorporation and Corporate
Power. The Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Utah. The Seller has full power
and authority and all authorizations, licenses, permits and certifications
necessary to own and operate its properties and to carry on its business as now
conducted and presently proposed to be conducted.

      

      2.04           No Breach. Except as
set forth in Schedule 2.04 hereto, the execution, delivery and performance of
this Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under, result in a violation of, result in
the creation of a right of termination or acceleration or any lien, security
interest, charge or encumbrance upon any of the Shares or any assets of Seller
or the Company, or require any authorization, consent, approval, exemption or
other action by or notice to any third party, court or other governmental body,
under the provisions of the Articles of Incorporation or Bylaws of Seller or the
Company or any indenture, mortgage, lease, loan agreement or other agreement or
instrument by which Seller or the Company is bound or affected, or any law,
statute, rule or regulation or order, judgment or decree to which Seller or the
Company is subject.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
 

      2.05           Governmental Authorities;
Consents. Except as set forth in Schedule 2.05 hereto, Seller is not
required to submit any notice, report or other filing with any governmental
authority in connection with the execution or delivery by it of this Agreement
or the consummation of the transactions contemplated hereby. No consent,
approval or authorization of any governmental or regulatory authority or any
other party or person is required to be obtained by Seller, in connection with
the execution, delivery and performance of this Agreement or the transactions
contemplated hereby.

       

      2.06           Brokerage. No third
party shall be entitled to receive any brokerage commissions, finder's fees,
fees for financial advisory services or similar compensation in connection with
the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Seller.

       

      2.07           Disclosure. No
representation or warranty by Seller hereunder, nor any statement contained in
any certificate, schedule, list or other writing furnished or to be furnished by
Seller to Buyer pursuant to this Agreement (i) contains or shall contain any
untrue statement of a material fact, or (ii) omits or shall omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading.

      

      ARTICLE
III

      

      REPRESENTATIONS
AND WARRANTIES OF BUYER

      

      As a
material inducement to Seller to enter into this Agreement and to close
hereunder, Buyer hereby represents and warrants to Seller as
follows:

      

       3.01         
Execution, Delivery;
Valid and Binding Agreement. This Agreement has been duly executed and
delivered by Buyer and constitutes the valid and binding obligation of Buyer,
enforceable in accordance with its terms.

      

      3.02          
Investigation; Economic
Risk. Buyer acknowledges that it has knowledge and experience in
financial and business matters such that it is capable of evaluating the risks
of the transactions contemplated by this Agreement. The parties acknowledge and
agree that nothing in this Section 3.02 shall limit or modify any
representation or warranty of the Seller in Section 2 hereof, or the right
of Buyer to rely thereon.

      

      3.03          
Buyer
acknowledges that the Shares will initially be "restricted securities" (as such
term is defined in Rule 144 promulgated under the Securities Act of 1933,
as amended ("Rule 144"), and that the Shares will bear substantially the
following restrictive legend:

      

      The
shares represented by this certificate have not been registered under the
Securities Act of 1933 (the “Act”), and are Restricted Securities as that term
is defined in Rule 144 under the Act, and requires written release from either
the issuing company or their attorney prior to legend removal.

      

      ARTICLE
IV

      

      CLOSING

      

      4.01           Seller’s Documents.
At the Closing, or as soon as reasonably practicable thereafter, Seller shall
deliver to Buyer the stock certificates issued to Seller representing the
Shares, duly endorsed for transfer or accompanied by a duly executed stock
power, with requisite stock transfer stamps, if any, attached.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      
 

      4.02          
Buyer's Documents. At
the Closing, Buyer shall deliver to Seller the Purchase Price in immediately
available funds by wire transfer to an account designated by
Seller.

      

      4.03          
Conditions to
Closing. Each of Buyer and Seller shall have performed and complied in
all material respects with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it or
them on or before the Closing.

      

      ARTICLE
V

      

      SURVIVAL;
INDEMNIFICATION

      

      5.01           Survival of Representations
and Warranties. Notwithstanding any investigation made by or on behalf of
any of the parties hereto or the results of any such investigation and
notwithstanding the participation of such party in the Closing, the
representations and warranties contained in Article II and Article III hereof
shall survive the Closing.

      

      5.02           Indemnification.  (a)
Seller shall indemnify in full
Buyer, his attorneys, agents, successors and assigns (collectively, the “Buyer
Indemnified Parties”) and hold them harmless against any loss, liability,
deficiency, damage, expense or cost (including reasonable legal expenses,
including costs) (collectively, “Losses”), which Buyer Indemnified Parties may
suffer, sustain or become subject to, as a result of (i) any breach of any of
the representations or warranties of Seller contained in this Agreement or in
any exhibit, schedule or certificate delivered or to be delivered by or on
behalf of Seller pursuant to the terms of this Agreement, (ii) any breach of, or
failure to perform, any agreement of Seller contained in this Agreement.
(b) Buyer shall indemnify and
hold harmless Seller, including its managers, members, officers, directors,
employees, attorneys, agents, successors and assigns (collectively, the “Seller
Indemnified Parties”) against all Losses that Seller Indemnified Parties may
suffer, sustain, or become subject to as a result of (i) any breach of any of
the representations or warranties of Buyer contained in this Agreement or in any
exhibit, schedule or certificate delivered or to be delivered by or on behalf of
Buyer pursuant to the terms of this Agreement, (ii) any breach of, or failure to
perform, any agreement of Buyer contained in this Agreement.

      

      5.03           Method of Asserting
Claims. As used herein, an “Indemnified Party” shall refer to the party
entitled to indemnification hereunder, the “Indemnified Party” and the
“Indemnifying Party” shall refer to the party obligated to provide the
indemnity.

      

      (a)           In
the event that any of the Indemnified Parties is made a defendant in or party to
any action or proceeding, judicial or administrative, instituted by any third
party for the liability or the costs or expenses of which are Losses (any such
third party action or proceeding being referred to as a "Claim"), the
Indemnified Party shall give the Indemnifying Party prompt notice thereof. The
failure to give such notice shall not affect any Indemnified Party's ability to
seek reimbursement unless such failure has materially and adversely affected the
Indemnifying Party's ability to defend successfully a Claim. The Indemnifying
Party shall be entitled to contest and defend such Claim. Notice of the
intention to contest and defend shall be given by the Indemnifying Party to the
Indemnified Party within 20 business days after the Indemnified Party's notice
of such Claim (but, in all events, at least five business days prior to the date
that an answer to such Claim is due to be filed). Such contest and defense shall
be conducted by reputable attorneys engaged by the Indemnifying Party and
approved by the Indemnified Parties. The Indemnified Party shall be entitled at
any time, at its own cost and expense (which expense shall not constitute a
Loss), to participate in such contest and defense and to be represented by
attorneys of its own choosing. If the Indemnified Party elects to participate in
such defense, the Indemnified Party will cooperate with the Indemnifying Party
in the conduct of such defense. Neither the Indemnified Party nor the
Indemnifying Party may concede, settle or compromise any Claim without the
consent of the other party, which consents will not be unreasonably withheld.
Notwithstanding the foregoing, (i) if a Claim seeks equitable relief or (ii) if
the subject matter of a Claim relates to the ongoing business of any of the
Indemnified Parties, which Claim, if decided against any of the Indemnified
Parties, would materially adversely affect the ongoing business or reputation of
any of the Indemnified Parties, then, in each such case, the Indemnified Parties
alone shall be entitled to contest, defend and settle such Claim in the first
instance and, if the Indemnified Parties do not contest, defend or settle such
Claim, the Indemnifying Party shall then have the right to contest and defend
(but not settle) such Claim.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      
 

      (b)           In
the event any Indemnified Party should have a claim against any Indemnifying
Party that does not involve a Claim, the Indemnified Party shall deliver a
notice of such claim with reasonable promptness to the Indemnifying Party. If
the Indemnifying Party notifies the Indemnified Party that it does not dispute
the claim described in such notice or fails to notify the Indemnified Party
within 30 days after delivery of such notice by the Indemnified Party whether
the Indemnifying Party disputes the claim described in such notice, the Loss in
the amount specified in the Indemnified Party's notice will be conclusively
deemed a liability of the Indemnifying Party and the Indemnifying Party shall
pay the amount of such Loss to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its Liability with respect to such claim,
then such dispute shall be resolved pursuant to the provisions of Section 6.05
below.

      

      ARTICLE
VI

      

      GENERAL
PROVISIONS

      

      6.01           Expenses. Except as
otherwise expressly provided for herein, Seller and Buyer will pay all of their
own expenses (including attorneys’ and accountants fees) in connection with the
negotiation of this Agreement, the performance of their respective obligations
hereunder and the consummation of the transactions contemplated by this
Agreement.

      

      6.02           Further Assurances.
Seller and Buyer agree that, on and after the Closing Date, each shall take all
appropriate action and execute any documents, instruments or conveyances of any
kind which may be reasonably requested by the other party hereto to carry out
any of the provisions hereof.

      

      6.03           Amendment and Waiver.
This Agreement may not be amended or waived except in a writing executed by the
party against which such amendment or waiver is sought to be enforced. No course
of dealing between or among any persons having any interest in this Agreement
will be deemed effective to modify or amend any part of this Agreement or any
rights or obligations of any person under or by reason of this
Agreement.

       

      6.04           Notices. All notices,
demands and other communications to be given or delivered under or by reason of
the provisions of this Agreement shall be in writing and shall be deemed to have
been given when personally delivered or sent by nationally recognized overnight
courier service. Notices, demands and communications to Buyer and Seller will,
unless another address is specified in writing, be sent :

      

      If to Buyer:  At the
address indicated above, Attn.: William H. Davis

      

      If to Seller:  At the
address indicated above, Attn:  Jason Tienor

      

      With a copy to: Howard J. Barr at the
Seller’s address indicated above

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
 

      6.05           Arbitration. Neither
party shall institute a proceeding in any court or administrative agency to
resolve a dispute between the parties hereunder, whether arising prior to or
after the Closing Date, before that party has sought to resolve the dispute
through direct negotiation with the other party. If the dispute is not resolved
within three weeks after a demand for direct negotiation, the parties shall
resolve the dispute through arbitration, which shall be binding, before a single
arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association (the “Association”). The place of arbitration shall be
Philadelphia, Pennsylvania. The arbitrator shall be selected by the joint
agreement of Buyer and Seller, but if they do not agree within a reasonable
period of time, the selection shall be made pursuant to the rules from the
panels of the arbitrators maintained by the Association. The arbitrator shall
render his decision within one hundred eighty (180) days of appointment. Any
award rendered by the arbitrator shall be conclusive and binding upon the
parties hereto; provided, however, that any such award shall be accompanied by a
written opinion of the arbitrator giving the reasons for the award. This
provision for arbitration shall be specifically enforceable by the parties and
the decision of the arbitrator in accordance herewith shall be final and binding
and there shall be no right of appeal there from. Judgment upon the award
rendered by the arbitration may be entered by a court having jurisdiction
thereof. The costs and expenses of arbitration, including attorneys' fees and
expenses of the arbitrator shall be paid entirely by the Seller. The arbitrator
shall not be permitted to award punitive or similar type damages under any
circumstances. This arbitration provision shall constitute the sole and
exclusive remedy for any dispute under this Agreement.

      

      6.06           Assignment. This
Agreement and all of the provisions hereof will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, except that neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by any party hereto without the prior
written consent of the other party hereto.

       

      6.07           Severability.
Whenever possible, each provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

       

      6.08           Complete Agreement.
This Agreement, and the Exhibits and Schedules and the other documents referred
to herein, contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any
way.

       

      6.09           Counterparts. This
Agreement may be executed in one or more counterparts, anyone of which need not
contain the signatures of more than one party, but all such counterparts taken
together will constitute one and the same instrument.

       

      6.10           Governing Law. The
internal law, without regard to conflicts of laws principles, of the
Commonwealth of Pennsylvania will govern all questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement.

      

      6.11           Headings. The
headings of the several articles and sections of this Agreement are inserted for
convenience of reference only and shall not constitute part of this
Agreement.

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

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

      

       

      BUYER

       

      By: /s/ William H. Davis        

      Name:
William H. Davis

      Title:

       

       

      TELKONET,
INC.

       

      By: /s/ Richard J. Leimbach        

      Name:
Richard J. Leimbach

      Title:
CFO

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      

      

      Schedule
2.01

      

      Buyer
acknowledges that YA Global Investments LP holds a security interest in the
Shares and that its consent is necessary to the consummation of the transaction
contemplated herein.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      Schedule
2.02

      

      Buyer
acknowledges that YA Global Investments LP holds a security interest in the
Shares and that its consent is necessary to the consummation of the transaction
contemplated herein.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      Schedule
2.04

      

      Buyer
acknowledges that YA Global Investments LP holds a security interest in the
Shares and that its consent is necessary to the consummation of the transaction
contemplated herein.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      Schedule
2.05

      

      The sale
of the Shares constitutes the entry into a material definitive agreement not
made in the ordinary course of business of the Seller that is material to the
Seller and is therefore reportable pursuant to the Securities Exchange Act of
1934 and the rules of the Securities Exchange Administration.

      

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      11

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