EXHIBIT
4.1
No. 001
THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD, TRANSFERED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE
CORPORATION HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY
SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
TELKONET,
INC.
PROMISSORY
NOTE
(non-negotiable)
$400,000.00 |
Germantown,
Maryland
|
|
May 6,
2008
|
FOR VALUE
RECEIVED Telkonet, Inc., a Utah corporation (the “Company”), promises
to pay to RALPH W. HOOPER (the “Holder”), the
principal amount of FOUR HUNDRED THOUSAND DOLLARS ($400,000.00), or such lesser
amount as shall equal the outstanding principal amount. All unpaid
principal, together and any other amounts payable hereunder, shall be due and
payable on the earlier of (i) the Next Financing (as hereinafter defined) or
(ii) November 6, 2008 (the “Maturity
Date”).
The
following is a statement of the rights of the Holder of this Note and the
conditions to which this Note is subject, and to which the Holder, by the
acceptance of this Note, agrees:
1. Certain
Definitions.
(a) “Default”
means:
(i) the
Company shall default in the payment of interest and/or principal on this Note
and such default shall continue for ten (10) business days after the due date
thereof; or
(ii) any of
the representations or warranties made by the Company herein or in any
certificate or financial or other statements heretofore or hereafter furnished
by or on behalf of the Company to Holder in connection with the execution and
delivery of this Note shall be false or misleading in any material respect at
the time made; or
(iii) the
Company shall fail to materially perform any covenant, term, provision,
condition, agreement or obligation of the Company under this Note or the SPA
(other than for non-payment) and such failure shall continue uncured for a
period of ten (10) business days after notice from the Holder of such failure;
or
(iv) a
trustee, liquidator or receiver shall be appointed for the Company or for a
substantial part of its property or business without its consent and shall not
be discharged within thirty (30) days after such appointment; or
(v) any
governmental agency or any court of competent jurisdiction at the insistence of
any governmental agency shall assume custody or control of the whole or any
substantial portion of the properties or assets of the Company and shall not be
dismissed within thirty (30) days thereafter; or
(vi) bankruptcy,
reorganization, insolvency or liquidation proceedings or other proceedings, or
relief under any bankruptcy law or any law for the relief of debt shall be
instituted by or against the Company and, if instituted against the Company
shall not be dismissed within thirty (30) days after such institution, or the
Company shall by any action or answer approve of, consent to, or acquiesce in
any such proceedings or admit to any material allegations of, or default in
answering a petition filed in any such proceeding; or
(b) “Next Financing” means
the next transaction (or series of related transactions) after the date of this
Note in which the Company issues and sells shares of its capital stock or
securities convertible into shares of capital stock in exchange for aggregate
gross proceeds of not less than $3 million (including any amounts received upon
conversion or cancellation of indebtedness).
2. Prepayment. The
Company may prepay this Note at any time, in whole or in part, provided any such
prepayment will be applied first to the payment of expenses due under this Note,
second to interest accrued on this Note and third, if the amount of prepayment
exceeds the amount of all such expenses and accrued interest, to the payment of
principal of this Note.
3. Security. To
secure the payment of this Note and all other Liabilities, the Maker hereby
grants to and creates in favor of the Company a lien upon and security interest
in the Collateral. Maker hereby agrees to execute all documents and take any
other actions reasonably requested by the Company in order to perfect the
security interest contemplated hereby. The term "Collateral", as used herein,
shall mean: (i) certificates representing Two Million Four Hundred and Fifty
Four Thousand (2,454,000 shares of Common Stock, par value $.01 per share, of
Geeks on Call Holdings, Inc. (the "Shares") held by the Maker, together with a
stock power executed in blank, and (ii) any and all dividends, distributions and
other rights on or with respect to, and substitutions for and proceeds of, any
of the foregoing. The term "Liabilities", as used herein, shall mean all
obligations of the Maker under this Note. Holder agrees that this
Note does not constitute or create, and that it shall not take, any lien or
security or other charge or encumbrance of any kind on any of the Company’s
inventory or accounts receivable.
4. Remedies
(a) If the
Maker shall Default, the Holder may, to the fullest extent permitted by
applicable law and, without notice, advertisement, hearing or process of law of
any kind, sell any or all of the Collateral, free of all rights and claims of
Maker therein and thereto. Any proceeds of any of the Collateral may be applied
by the Holder to the payment of expenses in connection with the Collateral, free
of all rights and claims of the Maker therein and thereto. Any proceeds of any
of the Collateral may be applied by the Company to the payment of expenses in
connection with the Collateral, including reasonable attorneys' fees and legal
expenses, and any balance of such proceeds may be applied by the Company toward
the payment of such of the Liabilities. No delay on the part of the Holder in
the exercise of any right or remedy shall operate as a waiver therefore, and no
single or partial exercise by the Holder of any right or remedy shall preclude
other or further exercise thereof or the exercise of any other right or
remedy.
(b) Notwithstanding
anything to the contrary herein, recourse of the Holder of this Note shall be
limited to the Collateral, twenty percent (20%) of the outstanding principal
amount of this Note and all accrued interest hereunder. The Maker (its officers,
directors and employees) shall have no personal liability to the Holder of this
Note except as provided in the preceding sentence.
5. Miscellaneous.
(a) Priority.
This Note will be senior in right of payment to all other indebtedness of the
Company.
(b) Loss, Theft, Destruction or
Mutilation of Note. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Note and, in the case of loss, theft or destruction, delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Note, the
Company shall execute and deliver, in lieu of this Note, a new note executed in
the same manner as this Note, in the same principal amount as the unpaid
principal amount of this Note and dated the date to which interest shall have
been paid on this Note or, if no interest shall have yet been so paid, dated the
date of this Note.
(c) Payment. All
payments under this Note shall be made in lawful tender of the United
States.
(d) Waivers. The
Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
(e) Usury. In
the event that any interest paid on this Note is deemed to be in excess of the
then legal maximum rate, then that portion of the interest payment representing
an amount in excess of the then legal maximum rate shall be deemed a payment of
principal and applied against the principal of this Note.
(f) Waiver and
Amendment. Any provision of this Note may be amended, waived
or modified only by an instrument in writing signed by the party against which
enforcement of the same is sought.
(g) Notices. Any
notice, request or other communication required or permitted hereunder shall be
given in accordance with the SPA.
(h) Expenses; Attorneys’
Fees. If action is instituted to enforce or collect this Note,
the Company promises to pay all reasonable costs and expenses, including,
without limitation, reasonable attorneys’ fees and costs, incurred in connection
with such action.
(i) Successors and
Assigns. This Note may be assigned or transferred by the
Holder upon prior written notice to the Company. Subject to the
preceding sentence, the rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
(j) Governing Law;
Jurisdiction. THIS NOTE SHALL BE GOVERNED IN ALL RESPECTS BY
THE INTERNAL LAWS OF THE STATE OF MARYLAND WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICTS OF LAWS. COMPANY CONSENTS TO THE EXCLUSIVE JURSDICTION OF THE FEDERAL
OR STATE COURTS LOCATED IN NEW YORK, NEW YORK, WITH RESPECT TO ANY CLAIM OR
CONTROVERSY RELATED TO THE ENFORCEMENT OR INTERPRETATION OF THIS
NOTE.
IN
WITNESS WHEREOF, the Company has caused this Note to be executed as of the date
first above written by its duly authorized officer.
|
TELKONET,
INC. |
|
|
|
By: /s/ Richard J.
Leimbach
|
|
Name: Richard
J. Leimbach |
|
Title: Chief
Financial Officer |
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