Document:

ntn_10k-ex1020.htm

Exhibit 10.20

 

3450 west burnsville parkway • burnsville, mn 55337

952-890-8838 • fax 952-890-8917

www.datasales.com

Master Equipment Lease

	
NTN Buzztime, Inc.

	  	
3-10125

	
Name of Lessee

	  	
Master Equipment Lease No.

	  	  	  
	
5966 La Place Court

	  	
9/29/09

	
Street Address

	  	
Date

	  	  	  
	
Carlsbad, CA 92008

	  	  
	
City, State and Zip Code

	  	  

 

Form of Organization:   o sole proprietor   x Corporation   o limited liability company   o partnership   o other _____________

	
Delaware

	  	
2033004

	
Lessee State of Organization

	  	
State of Organization No.

1. LEASE:

Data Sales Co., Inc. ("Lessor"), by its acceptance hereof at its home office, agrees to lease to Lessee and Lessee agrees to lease from Lessor, in accordance with the terms and conditions hereinafter set forth, the items of equipment and other property (the "Equipment") described in each equipment schedule ("Equipment Schedule) in the form of Exhibit "A" attached hereto, executed from time to time pursuant to this Master Equipment Lease ("Master Equipment Lease"). Each Equipment Schedule shall incorporate the terms of this Master Equipment Lease and shall constitute a separate and enforceable lease of the Equipment described in such Equipment Schedule. Any reference to the "Lease"shall mean each such Equipment Schedule (including all amendments, addenda or riders thereto) to the extent it incorporates this Master Equipment Lease. In the event of any conflict between the terms of an Equipment Schedule and the terms of this Master Equipment Lease, the terms of the Equipment Schedule shall prevail.

2. DEFINITIONS:

A. The "Installation Date" means the date determined in accordance with the Equipment Schedule.

B. The "Commencement Date" means the first day of the month following the Installation Date, unless the Installation Date occurs on the first day of a month, in which case the Commencement Date shall be the Installation Date.

3. TERM OF LEASE:

The term of the Lease as to Equipment designated on the Equipment Schedule shall begin on the Installation Date in accordance with the Equipment Schedule, and shall continue for an initial period ending that number of months from the Commencement Date as is specified on the Equipment Schedule (the "Initial Term"). THE LEASE IS NON-CANCELABLE FOR THE INITIAL TERM and Lessee has no right of prepayment unless such right is specifically granted to Lessee in the Equipment Schedule. Lessee shall execute and deliver to Lessor a Certificate of Delivery and Acceptance.

("Acceptance") on the date the Equipment has been installed and accepted by Lessee, and Lessor shall have no obligation to advance funds for the Equipment's purchase unless and until Lessor receives such Acceptance.

Except as otherwise provided in the Equipment Schedule or any amendment thereto, Lessee or Lessor may terminate the Lease at the expiration of the Initial Term by giving the other at least two (2) months prior written notice of termination. If neither party gives such notice, then the term shall automatically be extended on the same rental terms for successive periods of one (1) month until terminated by either Lessee or Lessor giving the other at least two (2) months written notice of termination.

4. RENTAL PAYMENTS:

The monthly rental payments for each item of Equipment (the "Monthly Rental Payments") shall be set forth In the applicable Equipment Schedule, shall begin to accrue on the Installation Date of the Equipment and shall be due and payable by Lessee in advance on the first day of each month. If the Installation Date does not fall on the first day of the month, the rental for that period of time from the Installation Date until the first day of the succeeding month shall be a pro rata portion of the Monthly Rental Payment, calculated on a 30-day basis, due and payable on the Installation Date. Lessee shall pay a late charge on all Monthly Rental Payments unpaid after the due date thereof equal to one and one-half percent (1-1/2%), or the highest rate permissible by law, whichever is less.

5. NET AND NON-CANCELABLE LEASE:

This is a net Lease and Lessee's obligation to pay the rent and other amounts due hereunder Is unconditional and not subject to abatement, reduction or set off, defense, counterclaim or interruption of any kind. The Lease is a non-cancelable lease and will not terminate in the event of any damage to or destruction of the equipment. The lease may be terminated only as expressly provided herein. To the extent permitted by law, Lessee waives the right to (i) cancel the Lease; (ii) repudiate the Lease; (iii) revoke acceptance of the equipment (iv) recover damages from Lessor for any breaches of warranty or for any other reasons; (v) grant a security interest in the equipment to a third party; (vi) deduct from rents all or any part of claimed damages resulting from Lessor's default, if any.

 

 

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6. PAYMENT OF TAXES:

Lessee shall also pay all taxes, however designated, which are levied or based on the Lease, the Equipment or its purchase, use, lease, operation, control or value, including, without limitation, personal property taxes, state and local privilege or excise taxes based on gross revenue, and any penalties or interest in connection therewith, or taxes or amounts in lieu thereof paid or payable by Lessor or Lessee in respect of the foregoing, but excluding taxes based on Lessor's net income. Charges for taxes, penalties and interest, if any, shall be promptly paid by Lessee. In the event Lessee defaults in the payment of any such tax, Lessor may pay such tax and shall be promptly reimbursed by Lessee, with interest (plus attorneys' fees and costs if any) as additional rent.

7. ARTICLE 2A LEASE; DISCLAIMER OF WARRANTIES:

This Lease is a true lease, which is a "finance lease", as that term is defined under Uniform Commercial Code ("UCC") Article 2A-103. Lessor has not selected, manufactured or supplied the Equipment. Lessee has selected the Equipment from the manufacturer, supplier or distributor of the Equipment (the "Vendor"). Lessor acquired the Equipment or the right to possession and use of the Equipment only in connection with this Lease. Either Lessee has assigned to Lessor its acquisition agreement for the Equipment on or before signing this Lease or Lessee's approval of the contract evidencing Lessor's purchase of the Equipment is a condition to the effectiveness of this Lease (and Lessee's execution of this Lease evidences its approval of said contract). Lessor hereby informs Lessee that Lessee may have rights under the contract evidencing Lessor's purchase of the Equipment and advises Lessee to contact the Vendor for a description of any such rights. If Lessee has entered into any acquisition agreement with Vendor, Lessee shall perform all of the obligations set forth therein as if this Lease did not exist. LESSOR HAS NOT MADE AND MAKES NO, AND HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR EXPRESS OR IMPLIED WARRANTY WHATSOEVER HEREUNDER, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY PURPOSE, OR OTHERWISE, REGARDING THE EQUIPMENT OR ANY PART OR THE DESIGN, QUALITY, OPERATION OR CONDITION THEREOF OR WITH RESPECT TO PATENT INFRINGEMENT OR THE LIKE. Lessor hereby grants, transfers and assigns to Lessee during the term of this Lease all of its right, title and interest in any express or implied warranties, indemnities or service agreements of the Vendor which are assignable by Lessor. Lessor shall permit Lessee, as Lessee's sole remedy, to enforce any such representation, warranty, indemnity or service agreement against the Vendor in the name of Lessor, and not against Lessor or Assignee (as hereinafter defined).

Lessee acknowledges that it is not relying on Lessor's skill or judgment to select or furnish goods suitable for any particular purpose and that there are no warranties which are not contained in this Lease. LESSOR SHALL NOT BE LIABLE FOR DAMAGES, INCLUDING SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, arising out of or in connection with the performance of the Equipment or the use thereof by Lessee and shall not be liable for any special, incidental or consequential damages, arising out of or in connection with Lessor's failure to perform its obligations hereunder. Upon written request from the Lessee, Lessor shall take all reasonable action requested by Lessee to enforce any manufacturer's warranty express or implied, relating to the condition or performance of the Equipment which is enforceable by Lessor in its own name, provided, however, that Lessor shall not be obligated to resort to litigation to enforce any such warranty unless Lessee shall pay all expenses incurred in connection therewith.  Similarly, if any such warranty shall be enforceable by Lessee in its own name, Lessee shall take reasonable action requested by lessor to enforce any such warranty. Lessee shall indemnify and hold Lessor and its assigns harmless from any liability, claim, loss, damage or expense (including reasonable attorneys' fees) of any kind or nature caused, directly or indirectly by (1) inadequacy of any Equipment for any purpose, (2) any deficiency or defect in any Equipment, (3) the use or performance of any Equipment, (4) any interruption or loss of service, use or performance of any Equipment, (5) any patent, copyright, or other infringement, or (6) any loss of business or other consequential damage whether or not resulting directly from any or all of the above. Lessee acknowledges that it has made the selection of the Equipment based on its own judgment, and expressly disclaims any reliance upon statements made by Lessor. Lessee acknowledges that Lessor has made no statements or representations upon which Lessee is relying in leasing the Equipment, and that this Lease contains all agreements and understandings between the parties.

8. RISK OF LOSS:

A. Lessor shall not be responsible for, nor shall the Monthly Rental Payments or other sums due hereunder above for any reason, including, but not limited to, any interruption in or loss of the service or use of the Equipment or any part thereof, or any loss or damage caused thereby, or by error in programming or instruction to the Equipment, latent defect, wear and tear, or gradual deterioration of the Equipment or any part thereof.

B. Lessee assumes and shall bear the entire risk of partial or complete loss, theft, damage, destruction or other interruption or termination of use of the Equipment from any cause whatsoever, from the date of delivery of the Equipment to Lessee until the Equipment is returned to and received by Lessor.

During the term of the Lease, and until the Equipment is redelivered to Lessor, Lessee shall be liable for the prompt repair of the Equipment at its sole expense. If the Equipment or any portion thereof is lost, stolen, destroyed or damaged beyond repair, Lessee, at its option, will (i) continue to make the Monthly Rental Payments, and, at Lessee's sole expense, replace the Equipment with equipment of identical value to that of the Equipment replaced (in which case Lessee will transfer title to the replacement Equipment to the Lessor free of all liens, claims and encumbrances), or (ii) pay Lessor on the next Monthly Rental Payment date following the loss, theft, damage or destruction of the Equipment an amount equal to the replacement value or the minimum casualty value, whichever is greater, attached to the applicable Equipment Schedule for such Equipment in effect on the date of the loss, theft, damage or destruction thereof and all rent accrued on such Equipment up to the date of payment and all other amounts then due in connection with such Equipment. Upon such payment, the Equipment Schedule, or portion thereof, as applicable, will terminate with respect to the Equipment so paid for, and Lessor will transfer full ownership and title to such Equipment to Lessee, free of liens, claims and encumbrances created by Lessor.

 

 

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9. INSURANCE AND INDEMNITY:

Lessee shall at all times during the term of this Lease, at its own expense, maintain: (A) all-risk property damage insurance covering the Equipment in an amount not less than the greater of (i) the replacement value of the Equipment, or (ii) the minimum casualty value of such Equipment as set forth in the Equipment Schedule, and (B) public liability coverage in such amounts, and with such companies as are in general usage by companies owning or operating similar property and engaged in a business similar to Lessee's. The insurance required by this Section 9 may be obtained by Lessee by endorsement on any blanket insurance policies maintained by Lessee or its parent. All insurance so maintained shall provide for a thirty-day (30) prior written notice to Lessor and Assignee of any cancellation or reduction of coverages and an option in favor of Lessor or Assignee to prevent cancellation by payment of premiums, which shall promptly be repaid by Lessee, and further shall provide that all insurance proceeds shall be payable to the Lessee, Lessor and any Assignee as their respective interests may appear. Lessor and any such Assignee shall be named as loss payee and additional insured on all public liability insurance policies so maintained. Lessee shall furnish to Lessor copies of such insurance policies and satisfactory insurance certificates on or before the Installation Date. Lessee's above obligation shall commence on the date of delivery of the Equipment and shall continue until the Initial Term (or any extension or renewal thereof) of each Equipment Schedule expires and the Equipment is returned to Lessor. By this Section 9, Lessor does not modify or limit any provision of this Lease relating to disclaimer of warranties and liability, or indemnity.

Lessee assumes all risk and liabilities, whether or not covered by insurance, and shall indemnify and hold Lessor and its assigns (including any Assignee) harmless of and from any liability, claim, loss, damage or expense (including reasonable attorneys' fees) for injuries or deaths of persons and for damage to property, howsoever arising from or incident to the use, operation or storage of the Equipment, whether such injury or death to person be of agents or employees of Lessee or be of third persons and whether such damage to property be of Lessee, or to property of others.

10. MAINTENANCE, REPAIRS, INSTALLATION AND RETURN:

Unless otherwise agreed to by Lessor in writing, Lessee shall, at its expense, obtain and keep in full effect, throughout the term of this Lease, a contract from the manufacturer of the Equipment (or another reputable maintenance organization approved by Lessor) providing for prime shift maintenance service (as that term is defined by the manufacturer) and will otherwise maintain the Equipment in good working order and appearance and make all necessary adjustments and repairs thereto. Lessee will at all times cooperate with Lessor in allowing the manufacturer or Lessor to control and install all engineering changes on the Equipment as when determined necessary or desirable by the manufacturer or Lessor. Upon termination of the Lease, Lessee, at its sole expense, shall return the Equipment, together with manufacturer's certificate of authenticity, if provided, to Lessor, or to such other location within the Continental U.S. designated by Lessor, in good condition and repair excepting only reasonable wear and tear, and eligible for a manufacturer's standard, full service maintenance contract. If the Equipment returned is not so eligible, Lessee shall reimburse Lessor for the cost of qualifying the Equipment for such maintenance contract eligibility. Lessee shall pack the Equipment to be so returned in accordance with the manufacturer's guidelines.

If Lessee fails to return the Equipment In accordance with the preceding paragraph upon the expiration of the Initial Term or any extension thereof, Lessee shall be obligated to pay to Lessor per diem rent until the Equipment is returned in addition to all other remedies available to Lessor pursuant to Section 16 hereunder.

Lessee will provide the required suitable electric current to operate the Equipment, with all appropriate facilities as specified by the manufacturer. Lessee will grant access to the Equipment to Lessor, its designee, or the manufacturer, during normal working hours for inspection, repair, maintenance, installation or engineering changes, and for any other reasonable purpose. Lessee shall immediately notify Lessor of all details concerning any accident arising out of the alleged or apparent improper manufacture, functioning or operation of the Equipment.

11. ALTERATION AND ATTACHMENTS:

No alterations or attachments to the Equipment shall be made without first obtaining in each instance the prior written approval of Lessor, which approval shall not unreasonably be withheld. If, after such written approval has been obtained, the alterations or attachments interfere with the normal or satisfactory maintenance, operation or insurability of the Equipment, or any part thereof, in such manner as to increase the cost of maintenance or insurance thereof, or create a safety hazard, Lessee will, upon notice from Lessor to that effect, promptly remove the alterations or attachments and restore the Equipment to its normal condition. In the case of increased cost of maintenance and insurance, or either, Lessee shall pay such increase.

12. ASSIGNMENTS:

Lessee may not assign the Lease or any of Lessee's rights hereunder or sublease any Equipment or its use without the prior written consent of Lessor or any such assignment or sublease shall be void. Any permitted sublessee or assignee of Lessee must execute an assumption of this Lease in form and substance acceptable to Lessor, but no sublease or assignment shall relieve Lessee of any of its obligations or liabilities under this Lease.

Lessor may assign or transfer this Lease to an assignee or may grant a security interest in all or part of this Lease, the Equipment and/or sums payable hereunder as collateral security for any loans or advances made or to be made to Lessor by a financial institution (such assignee or financial institution, herein, the "Assignee"), Lessee hereby consents to such assignment, transfer and/or grant of security interest Lessee, upon receipt of notice of any such transfer, assignment, or grant to an Assignee and instructions from Lessor, shall pay all outstanding Monthly Rental Payments and all other sums when due under this Lease (hereafter, collectively, the 'Payments'), to such Assignee in the manner specified in said instructions, and Lessee's obligation to make the Payments to such Assignee shall be absolute and unconditional. Upon notice of any intended transfer, assignment, or granting of a security interest: (a) Lessee shall promptly submit to Lessor such documents as may be reasonably required by the Intended Assignee, in form and substance satisfactory to the intended Assignee, including, without limitation: (i) A certificate that the equipment was delivered and accepted; (2) if Lessee Is a corporation, a certified copy of resolutions adopted by Lessee's Board of Directors authorizing execution of the Lease; (3) an acknowledgement to the Lessor's transfer, assignment or granting of a security interest; (4) a UCC Financing Statement; (b) In the event of any such assignment, transfer, or granting of a security interest: (1) Lessee shall send copies of any notices which are required hereunder to be sent to Lessor to the Assignee as well as to Lessor; (2) Lessee shall not permit the Lease to be amended or any provision thereof to be waived without the prior written consent of the Assignee; (3) Lessee agrees not to look to the Assignee to perform any of Lessor's obligations hereunder, (4) Lessee agrees that Assignee shall be exclusively entitled to all of the rights and remedies provided to the Lessor under the Lease; (c) no such transfer, assignment or granting of a security interest by lessor shall relieve Lessor of any of its obligations hereunder the Lease, or shall limit Lessee's rights to look to Lessor for the performance for such obligations.

 

 

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Notwithstanding any assignment, transfer or grant by Lessor, and so long as the Lessee shall not be in default hereunder, neither Lessor, nor any Assignee, shall interfere with Lessee's right of quiet enjoyment and use of the Equipment. In the event that Lessor notifies Lessee of its intention to transfer, assign, or grant a security interest in all or any part of this Lease, the Equipment and/or sums payable hereunder, Lessee agrees to execute such documents as may be reasonably necessary to secure and/or complete such transfer, assignment or grant.

13. USE OF EQUIPMENT:

The Equipment will be kept by Lessee in its sole possession and control, will at all times be located at the location stated in the Equipment Schedule, and will not be removed therefrom, without prior written consent of Lessor, which shall not be unreasonably withheld. Notwithstanding the preceding sentence, Lessor shall allow Lessee, in the normal course of Lessee's business, to locate Equipment at Lessee's customer premises where Lessee has an existing contract with said customer to provide services and where delivery of such services requires Equipment to be located at Lessee's customer's premises. Lessee shall provide to Lessor the address of Equipment located at customer premises as soon as it is reasonably available and provide updated address should Equipment be re-located during the Lease. Lessee and Lessee's applicable customers will not use the Equipment for any purpose other than which it was designed and in accordance with the manufacturer's specification. Lessee and Lessee's applicable customers will keep and maintain the Equipment free and clear of all liens, charges and encumbrances (except any placed thereon by Lessor). This Lease shall be binding upon, and shall inure to, the benefit of the parties hereto and their respective successors and assigns.

14. TRANSPORTATION AND INSTALLATION:

The Equipment is to be installed at the location indicated on the Equipment Schedule.

All transportation, rigging, drayage, and any other charges for the delivery of the Equipment to Lessee's premises shall be paid by the Lessee, unless indicated otherwise on the Equipment Schedule. All installation charges shall be paid by Lessee unless indicated otherwise on the Equipment Schedule. All charges for the deinstallation shall be paid by Lessee. Transportation, rigging, and drayage from Lessee's premises at the termination of the Lease shall be arranged for by Lessor and paid by Lessee.

15. DEFAULT:

Any one of the following events shall constitute an "Event of Default" hereunder (a) Lessee shall fail to pay when due any installment of rent or other amount due hereunder (b) Lessee shall fail to observe or perform any other agreement to be observed or performed by Lessee hereunder; (c) Lessee, any guarantor of the Lease, or any partner of Lessee if Lessee is a partnership shall cease doing business as a going concern or make an assignment for the benefit of creditors; (d) Lessee, any guarantor of the Lease, or any partner of Lessee if Lessee is a partnership shall voluntarily file, take any action to authorize the filing, or have filed against it involuntarily, a petition for liquidation, reorganization, adjustment of debt or similar relief under the federal or state bankruptcy or insolvency law, (e) a trustee, receiver, or liquidator be appointed for Lessee, any guarantor of the Lease, or for all or a substantial part of the assets of Lessee or any guarantor; (f) any individual Lessee or individual guarantor of the Lease, or partner of Lessee if Lessee Is a partnership, shall die; (g) an event of default shall occur under any other obligation Lessee or any guarantor of the Lease owes to Lessor, (h) an event of default by Lessee shall occur under any agreement involving Lessee's or a guarantor's indebtedness to a lender for borrowed money; or () Lessee shall have terminated its corporate existence, consolidated with, merged into, or conveyed or leased substantially all of its assets as an entity to any person unless:(i) such person executes and delivers to Lessor an agreement satisfactory in form and substance to Lessor, in its sole discretion, containing such person's effective assumption and its agreement to pay, perform, comply with and otherwise be liable for all of Lessee's obligations having previously arisen, or then or thereafter arising, under the Lease together with any documents, Agreements investments, certificates, opinions and filings by Lessor; and (ii) Lessor (and any Assignee) is satisfied as to the creditworthiness of such person.

16. REMEDIES:

Upon the occurrence of an Event of Default and at any time thereafter, Lessor or Assignee may exercise from time to time any one or more of the following remedies: (a) terminate this Lease as to any portion or all of the Equipment; (b) take immediate possession of any or all of the Equipment; wherever situated, and for such purpose enter upon any premises without liability for so doing or requirement to post bond in any legal proceeding; (c) hold, use, lease, sell or otherwise dispose of any or all of the Equipment in such manner as Lessor in its sole discretion may decide. With respect to any exercise of its rights to recover and/or dispose of any Equipment, Lessee acknowledges and agrees that Lessor shall have no obligation, subject to the requirements of commercial reasonableness, to clean up or otherwise prepare the Equipment for disposition; (d) accelerate the due date of all remaining rent payments due hereunder for the entire remaining Initial Term of this Lease or any amendment thereto, including any renewal term then in effect, whereupon said amounts shall be immediately due and payable; (e) recover the sum of: (i) any accrued and unpaid rent, plus (ii) the present value of all future rentals reserved in this Lease and contracted to be paid over the unexpired Initial Term of this Lease (or any renewal period then in effect), discounted at the rate of four percent (4%) per annum; plus (ill) the anticipated residual value of the Equipment as of the expiration of this Lease or any renewal thereof discounted at the rate of four percent (4%) per annum, (iv) any indemnity payment, if then determinable; (v) all reasonable costs and expenses incurred by Lessor in any repossession, recovery, storage, repair, sale, re­lease or other disposition of the Equipment, including but not limited to costs of transportation, possession, storage, refurbishing, advertising and broker's fees together with all attorney's fees and cost incurred in connection therewith or otherwise resulting from Lessee's default (including any incurred at trial, on appeal or any other proceeding) of the foregoing at the rate of one and one-half (134%) per month ("default interest') (f) expend such monies as Lessor deems appropriate to cure or mitigate the effect of the Event of Default, or to protect the Lessor's interest in the Equipment and this Lease, with all such sums to be immediately reimbursed to Lessor by Lessee; (g) setoff Lessee's security deposit or any other property of Lessee held by Lessor against any amount owed by Lessee to Lessor, and (h) exercise any other remedy permitted by law, equity or any other agreements with Lessee or any guarantor of this Lease. No remedy given in this paragraph is intended to be exclusive and each shall be cumulative. No express or implied waiver by Lessor of any Event of Default shall constitute a waiver of any subsequent Event of Default.

 

 

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17. REPRESENTATIONS AND WARRANTIES BY LESSEE:

Lessee represents and warrants to Lessor that: (a) the Lease constitutes the Lessee's legal, valid and binding obligation and is enforceable against Lessee in accordance with its terms; (b) Lessee's entry into and performance under the Lease will not result in any breach, default or violation under Lessee's charter documents (articles of incorporation and bylaws in the case of a corporation or partnership agreement in the case of a partnership or articles of organization and operating agreement in the case of a limited liability company) or any other agreement to which Lessee is a party or to which it or its property is subject; (c) there are no suits or proceedings pending or threatened before any court, government agency or arbitrator which, if determined adversely to Lessee, would have a material adverse effect on its financial condition or ability to perform its obligations under the Lease; (d) that any financial statements or other information which Lessee has furnished Lessor concerning the business or condition of Lessee was true, correct and complete at the time furnished or as of the date of such financial statements; (e) the Equipment shall remain personal property; with respect to any Equipment that is the subject of any sale and leaseback transaction pursuant hereto, Lessee has good title to, rights in, and/or power to transfer all of the same. The Equipment is removable from and is not essential to the premises upon which it is located regardless of its attachment to realty, and Lessee agrees to take such action at its expense as may be necessary to prevent any third party from acquiring any interest in the Equipment as a result of its attachment to realty with respect to all of the Equipment leased hereto.

18. GENERAL:

A. The Equipment remains the personal property of Lessor and may be removed at any time, without notice, after termination of this Lease. The Equipment is removable from and is not essential to the premises at which the Equipment is located.

B. At Lessor's request, Lessee shall affix to the Equipment and each unit or element thereof, in a prominent place, appropriate tags, decals, or plates stating that the Equipment is owned by Lessor, and Lessee shall not cause or permit any such tags, decals, or plates to be removed, defaced or covered in any way.

C. Each Equipment Schedule (and this Master Equipment Lease to the extent incorporated therein), shall constitute the entire agreement between Lessor and Lessee with respect to the lease of the Equipment described in each Equipment Schedule. No waiver, consent, modification or change of terms of this Lease shall bind either party, including Lessor's Assignee, unless in writing and signed by an officer of the waiving party, and then such waiver, consent, modification or change shall be effective only in the specific instance and for the specific purpose given.

D. Each Equipment Schedule shall be executed in counterparts. Only that counterpart of an Equipment Schedule marked 'Secured Party's Original" (together with a copy of this Master Equipment Lease) shall constitute 'chattel paper' under the UCC and be effective to transfer Lessor's rights therein and all other counterparts of such Equipment Schedule have been marked to indicate that they are not the 'Secured Party's Original.'

E. All notices and other communications hereunder shall be in writing and shall be transmitted by hand, overnight courier, United States first class mail or certified mail (return receipt requested), postage prepaid. Such notices and other communications shall be addressed to the respective party at the address set forth above or at such other address as any party may from time to time designate by notice duly given in accordance with this section. Notices shall be deemed received on the earlier of (i) three days after deposit, postage prepaid, in the United States mail, if sent by United States first class, certified, or registered mail; (ii) the next day after delivery to an overnight courier, expenses prepaid, or (iii) the date of actual delivery if delivered by hand.

F. Any provision hereof prohibited by, or unlawful or unenforceable under, any applicable law of any jurisdiction shall, at the sole option of the Lessor, be ineffective as to such jurisdiction without invalidating the remaining provisions of this Lease; provided, however, that where the provisions of any such applicable law may be waived, they are hereby waived by Lessee to the full extent permitted by law, and this shall be deemed to be a valid and binding Lease enforceable in accordance with its terms.

H. TITLE:

Title to the Equipment shall at all times remain with Lessor and Lessee shall protect and defend the title of Lessor and keep it free of all claims and liens other than those of Lessee hereunder or created by Lessor. If the Lease shall be construed by a court to be a lease 'intended as security' and not a "true" lease, then Lessee, to secure all of Lessee's payment and performance obligations under the Lease, hereby grants to Lessor a first priority security interest in the Equipment and any and all insurance or other proceeds of the property and other collateral to which a security interest is granted.

I. This Lease shall be binding upon and inure to the benefit of Lessor and Lessee and their respective successors, assigns and permitted sublessees (subject, with respect to Lessee, to the provisions of Section 12 setting forth restrictions on Lessee's ability to assign this Lease or sublease the Equipment).

J. Lessee hereby authorizes Lessor to execute and/or file against Lessee in any public filing office deemed advisable by Lessor, any and all UCC financing statements (and amendments thereto) describing the Equipment and this Lease, and Lessee further irrevocably appoints Lessor as Lessee's attorney in fact to execute and/or file any and all such UCC financing statements (and amendments thereto) as Lessor considers advisable.

The filing of UCC Financing Statements against Lessee is precautionary and shall not be evidence that the Lease is intended as security.

K. Notwithstanding any other provisions of this Lease Agreement to the contrary, Lessee agrees, following the execution of the Lease by Lessee, to provide to Lessor at Lessor's demand, from time to time, any and all information reasonably required to establish Lessee's creditworthiness, including, but not limited to, financial statements and profit and loss statements, for the current period and for the proceeding three fiscal years. Lessor agrees that such information shall be kept confidential.

 

 

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During the term of the Lease, as an additional condition of Lessee's performance, Lessee agrees to provide financial statements to Lessor within a reasonable period following the end of Lessee's fiscal year.

Lessee and Lessor do each hereby warrant and represent that their respective signatories whose signatures appear below have been and are on the date of this Lease duly authorized by all necessary and appropriate action to execute this Lease.

L. This Lease shall be governed by the laws of the State of Minnesota (without giving effect to principles of conflicts of law thereof). Lessee hereby: (i) irrevocably submits to the jurisdiction of any state or federal court located in Minnesota, over any action or proceeding to enforce or defend any matter arising from or related to this Lease; (ii) Irrevocably waives, to the fullest extent Lessee may effectively do so, the defense of an inconvenient forum to the maintenance of any such action or proceeding; and (iii) agrees that a final judgment In any such action or proceeding shall be conclusive and may be enforced in any other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this paragraph shall affect or impair Lessor's right to serve legal process in any manner permitted by law or Lessor's right to bring any action or proceeding against Lessee or its property in the courts of any other jurisdiction.

M. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS LEASE OR ANY OTHER AGREEMENT EXECUTED IN CONNECTION HEREWITH.

IN WITNESS WHEREOF, Lessor and Lessee have executed this Master Equipment Lease on the dates specified below. This Master Equipment Lease shall not become effective until accepted by Lessor, as evidenced by the signature below.

	LESSEE:	

NTN Buzztime, Inc.

	  	
ACCEPTED:

	 	
 

	  	
LESSOR: DATA SALES CO., INC.

	 	  	  	 	
 

	 	  	  	 	  
	By:	
/s/ Kendra Berg

	  	/s/	
Paul C. Breckner

	Title:	
CFO

	  	Title:	
President/CEO

	Date:	
10/1/09

	  	Date:	
9/29/09

 

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3450 west burnsville parkway

burnsville, minnesota 55337

952-890-8838 • fax 952-890-8917

MINIMUM CASUALTY VALUE

FOR ALL EQUIPMENT SCHEDULES

To

MASTER LEASE 3-10125 AGREEMENT DATED 9/29/09

Between data sales co., Inc. ("Lessor")

And                 NTN Buzztime Inc.              ("Lessee")

Pursuant to Article 8B (ii) of the Master Lease Agreement, the Minimum Casualty Value payable with respect to any item of Equipment in the above referenced Equipment Schedule will be the percent of Lessor's Acquisition Cost of such item set forth opposite the Monthly Rental Payment number due on the date such Minimum Casualty Value is payable.

Payment of the Minimum Casualty Value will be in addition to the then due Monthly Rental Payment for the Equipment.

	
On Due Date of

Monthly Rental

Payment No.

	
Percentage of the

Acquisition Cost

Of the Equipment

	
On Due Date of

Monthly Rental

Payment No.

	
Percentage of

The Acquisition

Cost of Equipment

	
1

	
110%

	
25

	
60%

	
2

	
110%

	
26

	
60%

	
3

	
110%

	
27

	
60%

	
4

	
110%

	
28

	
60%

	
5

	
110%

	
29

	
60%

	
6

	
110%

	
30

	
60%

	
7

	
100%

	
31

	
50%

	
8

	
100%

	
32

	
50%

	
9

	
100%

	
33

	
50%

	
10

	
100%

	
34

	
50%

	
11

	
100%

	
35

	
50%

	
12

	
100%

	
36

	
50%

	
13

	
80%

	
37

	
40%

	
14

	
80%

	
38

	
40%

	
15

	
80%

	
39

	
40%

	
16

	
80%

	
40

	
40%

	
17

	
70%

	
41

	
35%

	
18

	
70%

	
42

	
35%

	
19

	
70%

	
43

	
35%

	
20

	
70%

	
44

	
35%

	
21

	
70%

	
45

	
35%

	
22

	
70%

	
46

	
35%

	
23

	
70%

	
47

	
35%

	
24

	
70%

	
48

	
35%

 

	LESSEE:	

NTN Buzztime, Inc.

	  	

LESSOR: DATA SALES CO., INC.

	 	  	  	 	  
	By:	
/s/ Kendra Berg

	  	By:	
Paul C. Breckner

	Title:	
CFO

	  	Title:	
President/CEO

	Date:	
10/5/09

	  	Date:	
9/29/09

 

 

7telkonet_10k-ex1012.htm

    
      

    

    EXHIBIT 10.12

     

    DIRECTOR
AND OFFICER INDEMNIFICATION AGREEMENT

    

    This
Indemnification Agreement (“Agreement”) is made as of this
     day of ___________ 2010, by and between Telkonet, Inc.,
a Utah corporation (the “Company”), and
[                        ]
(“Indemnitee”).

     

    WHEREAS,
the Company desires to attract and retain the services of highly qualified
individuals, such as Indemnitee, to serve as officers and directors of the
Company and to indemnify its officers and directors so as to provide them with
the maximum protection permitted by law;

     

    WHEREAS,
the Company and Indemnitee recognize the increasing difficulty in obtaining
directors’ and officers’ liability insurance, the significant increases in the
cost of such insurance and the general reductions in the coverage of such
insurance;

     

    WHEREAS,
the Company and Indemnitee further recognize the substantial increase in
corporate litigation in general, subjecting officers and directors to expensive
litigation risks at the same time as the availability and coverage of liability
insurance has been severely limited;

     

    WHEREAS,
it is reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify its directors and certain of its officers to the
fullest extent permitted by applicable law so that they will serve or continue
to serve the Company free from undue concern that they will not be so
indemnified; and

     

    WHEREAS,
the Indemnitee is willing to serve, continue to serve and to take on additional
service for or on behalf of the Company on the condition that he may be so
indemnified.

     

    NOW,
THEREFORE, in consideration of the premises and the covenants contained herein,
the Company and the Indemnitee do hereby covenant and agree as
follows:

     

    1.           Certain
Definitions.

     

    In
addition to terms defined elsewhere herein, the following terms shall have the
meanings ascribed to them below when used in this Agreement with initial capital
letters:

     

    (a)
"Claim" means
any threatened, pending or completed action, suit or proceeding, or any inquiry
or investigation, whether instituted, made or conducted by the Company or any
other party, including without limitation any governmental entity, that
Indemnitee determines might lead to the institution of any such action, suit or
proceeding, whether civil, criminal, administrative, arbitrative, investigative
or other.

     

    (b)
"Expenses"
includes attorneys' and experts' fees, expenses and charges and all other costs,
expenses and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in, any Claim.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)
"Indemnifiable
Losses" means any and all Expenses, damages, losses, liabilities,
judgments, fines, penalties and amounts paid in settlement (including without
limitation all interest, assessments and other charges paid or payable in
connection with or in respect of any of the foregoing) (collectively, "Losses")
relating to, resulting from or arising out of any Claim by reason of the fact
that (i) Indemnitee is or was a director, officer, employee or agent of the
Company or (ii) Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.

     

    2.           
Indemnification.

     

    (a)           Third Party
Proceedings.  Subject to Section 2(b), the Company will indemnify
and hold harmless Indemnitee, to the fullest extent permitted by the laws of the
State of Utah in effect on the date hereof or as such laws may from time to time
hereafter be amended to increase the scope of such permitted indemnification,
against all Indemnifiable Losses relating to, resulting from or arising out of
any Claim if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.  The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that Indemnitee did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.

     

    (b)           Authorization. 
Any indemnification under this Agreement (unless ordered by a court) shall be
made by the Company only as authorized in the specific case upon a determination
that indemnification of the Indemnitee is proper in the circumstances because he
has met the applicable standard of conduct set forth in Section 2(a).  Such
determination shall be made (i) by a majority vote of the directors who were not
parties to such action, suit or proceeding, even though less than a quorum, (ii)
by a committee of such directors designated by majority vote of such directors,
even though less than a quorum, (iii) if there are no such directors, or, if
such directors so direct, by independent legal counsel in a written opinion or
(iv) by the stockholders.  To the extent, however, that Indemnitee has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys’ fees) actually
and reasonably incurred by him or her in connection therewith, without the
necessity of authorization in the specific case.

     

    3.           Expenses; Indemnification
Procedure.

     

    (a)           Advance of
Expenses.  Expenses incurred by Indemnitee in defending a Claim
shall be paid by the Company in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of Indemnitee
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Company as authorized under this
Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b)           Notice/Cooperation By
Indemnitee.  Indemnitee shall, as a condition precedent to his or
her right to be indemnified under this Agreement, give the Company notice in
writing as soon as reasonably practicable of any Claim made or threatened to be
made against Indemnitee for which indemnification is or will be sought under
this Agreement.  Notice to the Company shall be directed to the Company at
the address shown in Section 15 of this Agreement (or such address as the
Company shall designate in writing to Indemnitee).  In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee’s power.  The failure by
Indemnitee to notify the Company of such Claim will not relieve the Company from
any liability hereunder unless, and only to the extent that, the Company did not
otherwise learn of the Claim and such failure results in forfeiture by the
Company of substantial defenses, rights or insurance coverage.

     

    (c)           Procedure.  If a
Claim under Section 2 hereof is not paid in full by the Company within ninety
(90) days after a written claim has been received by the Company, or a claim
under Section 3(a) hereof for an advancement of expenses is not paid in full by
the Company within thirty (30) days after a written claim has been received by
the Company, Indemnitee may at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim.  If successful in whole
or in part in any such suit, or in a suit brought by the Company to recover an
advancement of expenses pursuant to Section 3(a), Indemnitee shall also be
entitled to be paid the expense of prosecuting or defending such suit, including
any reasonable attorneys’ fees.  In any suit by the Company to recover
an advancement of expenses pursuant to Section 3(a), the Company shall be
entitled to recover such expenses, upon a final judicial decision from which
there is no further right to appeal that Indemnitee has not met the standards of
conduct which makes it permissible under applicable law for the Company to
indemnify Indemnitee for the amounts claimed.  Neither the failure of the
Company (including its board of directors, independent legal counsel or
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of Indemnitee is proper in the circumstances because
Indemnitee has met the standards of conduct which makes it permissible under
applicable law for the Company to indemnify Indemnitee for the amounts claimed,
nor an actual determination by the Company (including its board of directors,
independent legal counsel, or stockholders) that Indemnitee has not met such
applicable standard of conduct, shall create a presumption that Indemnitee has
not met the applicable standard of conduct or, in the case of such a suit
brought by Indemnitee, be a defense to such suit.  In any suit brought by
Indemnitee to enforce a right to indemnification or to an advancement of
expenses pursuant to Section 3(a) hereunder, or by the Company to recover an
advancement of expenses pursuant to Section 3(a), the burden of proving that
Indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Agreement or otherwise shall be on the
Company.

     

    (d)           Notice to
Insurers.  If, at the time of the receipt of a notice of a Claim,
the Company has director and officer liability insurance in effect, the Company
shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in its policies.  The Company
shall thereafter take all necessary or desirable action to cause such insurers
to pay, on behalf of the Indemnitee, all amounts payable as a result of such
proceeding in accordance with and to the extent of the terms of such
policies.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     (e)           Selection of
Counsel.  In the event the Company shall be obligated under this
Agreement to pay any Expenses in connection with a Claim, the Company shall be
entitled to assume the defense thereof, with counsel approved by Indemnitee,
which approval shall not be unreasonably withheld or delayed, upon the delivery
to Indemnitee of written notice of the Company’s election so to do.  After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, provided that: (i) Indemnitee
shall have the right to employ his or her counsel in any such proceeding at
Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee at
the Company’s expense has been previously authorized by the Company, or (B) the
Company shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the reasonable fees and expenses of Indemnitee’s counsel shall
be at the expense of the Company.

     

    4.           Additional Indemnification
Rights: Nonexclusivity.

     

    (a)           Scope. 
Notwithstanding any other provision of this Agreement, the Company hereby agrees
to indemnify the Indemnitee to the fullest extent permitted from time to time by
the Utah General Corporation Law as the same presently exists or may hereafter
be amended (but, if permitted by applicable law, in the case of any amendment,
only to the extent that such amendment permits the Company to provide broader
indemnification rights than permitted prior to such amendment) or any other
applicable law as presently or hereafter in effect.  In the event of any
change in any applicable law, statute or rule which narrows the right of a
Delaware corporation to indemnify a member of its board of directors, an officer
or other corporate agent, such changes, to the extent not otherwise required by
such law, statute or rule to be applied to this Agreement, shall have no effect
on this Agreement or the parties’ rights and obligations hereunder.

     

    (b)           Nonexclusivity. 
The indemnification and advancement of Expenses provided by or granted pursuant
to this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may be entitled under the Company’s Articles of Amendment of the
Amended and Restated Articles of Incorporation (as the same may be amended from
time to time), the Company’s By-Laws (as the same may be amended from time to
time), any other agreement or contract, any vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such
office.

     

    5.           Partial
Indemnification.  If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of any
Indemnifiable Losses, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled.

     

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    6.           Subrogation.  In
the event of payment under this Agreement, the Company shall be subrogated to
the extent of such payment to all of the rights of recovery of Indemnitee, who
shall execute all documents required and shall do all acts that may be necessary
to secure such rights and to enable the Company effectively to bring suit to
enforce such rights.

     

    7.           Continuation of
Indemnification.  All agreements and obligations of the Company
contained herein shall continue during the period Indemnitee is a director
and/or officer of the Company or is serving at the request of the Company as a
director, officer, employee or agent or fiduciary of any other entity
(including, but not limited to, another corporation, partnership, joint venture
or trust) of the Company and shall also continue after the period of such
service with respect to any possible claims based on the fact that Indemnitee
was or had been a director and/or officer of the Company or was or had been
serving at the request of the Company as a director, officer, employee or agent
or fiduciary of any other entity (including, but not limited to, another
corporation, partnership, joint venture or trust).

     

    8.           Mutual
Acknowledgment.  Both the Company and Indemnitee acknowledge that,
in certain instances, Federal law or applicable public policy may prohibit the
Company from indemnifying its directors and officers under this Agreement or
otherwise.  Indemnitee understands and acknowledges that the Company
may be required in the future to submit for determination by an appropriate
regulatory agency the question of whether the Company’s obligation to indemnify
Indemnitee is barred as a matter of public policy.  Nothing in this
Agreement is intended to require or shall be construed as requiring the Company
to do or fail to do any act in violation of applicable law.  The Company’s
inability, pursuant to court order, to perform its obligations under this
Agreement shall not constitute a breach of this Agreement.

     

    9.           Exceptions.  Any
other provision herein to the contrary notwithstanding, the Company shall not be
obligated pursuant to the terms of this Agreement:

     

    (a)           Excluded Acts. 
To indemnify Indemnitee for any acts or omissions or transactions from which an
officer or a director may not be relieved of liability under the Utah General
Corporation Law; or

     

    (b)           Claims Initiated by
Indemnitee.  To indemnify or advance expenses to Indemnitee with
respect to a proceeding (or part thereof) initiated or brought voluntarily by
Indemnitee and not by way of defense, except with respect to a proceeding (or
part thereof) brought to enforce a right to indemnification under this Agreement
and except with respect to a proceeding (or part thereof) authorized or
consented to by the board of directors of the Company; or

     

    (c)           Lack of Good
Faith.  To indemnify Indemnitee for any expenses incurred by the
Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or
interpret this Agreement, if a court of competent jurisdiction determines that
each of the material assertions made by the Indemnitee in such proceeding was
not made in good faith or was frivolous; or

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (d)           Insured Claims. 
To indemnify Indemnitee for expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement) to the extent paid, or acknowledged
to be payable, directly to or on behalf of Indemnitee by an insurance carrier
under a policy of officers’ and directors’ liability insurance; or

     

    (e)           Claims Under Section
16(B).  To indemnify Indemnitee for expenses and the payment of
profits arising from the purchase and sale by Indemnitee of securities that is
deemed, pursuant to a final judicial decision from which there is no further
right to appeal, in violation of Section 16(b) of the Securities Exchange Act of
1934, as amended, or any similar successor statute.

     

    10.           No Duplication of
Payments. The Company will not be liable under this Agreement to make any
payment in connection with any Indemnifiable Loss made against Indemnitee to the
extent Indemnitee has otherwise actually received payment (net of Expenses
incurred in connection therewith) under any insurance policy, the Corporate
Documents and Other Indemnity Provisions or otherwise of the amounts otherwise
indemnifiable hereunder.

     

    11.           Liability Insurance and
Funding. To the extent the Company maintains an insurance policy or
policies providing directors' and officers' liability insurance, Indemnitee will
be covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any director or officer of the
Company.

     

    12.           Counterparts. 
This Agreement may be executed in counterparts, each of which shall constitute
an original.

     

    13.           Binding Effect; Successors
and Assigns.  This Agreement shall be binding upon the Company and
its successors and assigns (including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business or assets of the Company), and shall inure to the benefit of Indemnitee
and Indemnitee’s estate, heirs, legal representative and assigns.  The
Company shall require and cause any successor (whether direct or indirect, and
whether by purchase, merger, consolidation or otherwise) to all or substantially
all of its business or assets expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that it would be required to
perform if no such succession had taken place. This Agreement is personal in
nature and neither of the parties hereto will, without the consent of the other,
assign or delegate this Agreement or any rights or obligations hereunder except
as expressly provided in this Section 12. Without limiting the generality or
effect of the foregoing, Indemnitee's right to receive payments hereunder will
not be assignable, whether by pledge, creation of a security interest or
otherwise, other than by a transfer by the Indemnitee's will or by the laws of
descent and distribution, and, in the event of any attempted assignment or
transfer contrary to this Section 12, the Company will have no liability to pay
any amount so attempted to be assigned or transferred.

     

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    14.           Attorney’s
Fees.  In the event that any action is instituted by Indemnitee
under this Agreement to enforce or interpret any of the terms hereof, Indemnitee
shall be entitled to be paid all costs and expenses, including reasonable
attorneys’ fees, incurred by Indemnitee with respect to such action, unless as a
part of such action, the court of competent jurisdiction determines that each of
the material assertions made by Indemnitee as a basis for such action were not
made in good faith or were frivolous.  In the event of an action instituted
by or in the name of the Company under this Agreement or to enforce or interpret
any of terms of this Agreement, Indemnitee shall be entitled to be paid all
costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee
in defense of such action (including with respect to Indemnitee’s counterclaims
and cross-claims made in such action), unless as a part of such action the court
determines that each of Indemnitee’s material defenses to such action were made
in bad faith or were frivolous.

     

    15.           Notice.  All
notices, requests, demands and other communications under this Agreement shall
be in writing, shall be deemed received three business days after the date
postmarked if sent by domestic certified or registered mail, properly addressed,
or if sent otherwise, when such notice shall actually be received, and shall be
delivered by Federal Express or a similar courier, personal delivery, certified
or registered air mail, or by facsimile transmission.  Addresses for notice
to either party are as follows (or at such other addresses for a party as shall
be specified by like notice):

     

    if to the
Company:

    Telkonet,  Inc.

    10200
Innovation Drive

    Suite
300

    Milwaukee,
WI 53226

    Attention:
General Counsel

    

    if to
Indemnitee:

    

    [Indemnitee]

    __________________

    __________________

    __________________

     

    16.           Choice of Law. 
This Agreement shall be governed by and its provisions construed in accordance
with the laws of the State of Wisconsin, as applied to contracts between
Delaware residents entered into and to be performed entirely within
Wisconsin.

     

    17.           Severability. 
The provisions of this Agreement shall be severable in the event that any of the
provisions hereof (including any provision within a single section, paragraph or
sentence) are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.  Furthermore, to the fullest extent
possible, the provision of this Agreement (including, without limitations, each
portion of this Agreement containing any provision held to be invalid, void or
otherwise unenforceable, that is not itself invalid, void or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    18.           Amendment and
Termination.  No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.

     

    19.           Integration and Entire
Agreement.  This Agreement sets forth the entire understanding
between the parties hereto and supersedes and merges all previous written and
oral negotiations, commitments, understandings and agreements relating to the
subject matter hereof between the parties hereto.

     

    20.           Terminology and
Headings. Words importing a gender include any other gender. Words in the
singular number include the plural and words in the plural number include the
singular.  Headings within this Contract are for convenient reference
only and have no effect in limiting or extending the language of the provisions
to which they refer.

     

    21.           No Construction as
Employment Agreement.  Nothing contained in this Agreement shall be
construed as giving Indemnitee any right to be retained in the employ of the
Company or any of its subsidiaries or affiliated entities.

     

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

     

    
      	 
      	
              TELKONET,
      INC.

            	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	
              By:

            	 
      	 
	 
      	 
      	
              Name:

            	 
	 
      	 
      	
              Title:

            	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	
              [INDEMNITEE]

            	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	 
      	
              Name:

            	 
	 
      	 
      	
              Title:

            	 

    

    
 

     

    
      
        
        

      

      
        8

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