Exhibit 10.5


 


EMPLOYMENT AGREEMENT


 


THIS
AGREEMENT is dated May 1, 2015 by and between Telkonet, Inc, a Utah corporation ("Telkonet" or "Company")
and Gerrit J. Reinders (“Executive”). 


 


WHEREAS,
Telkonet desires to employ Executive and to secure for itself the experience, abilities and services of Executive in the
capacity of President and Chief Vice President of Sales & Marketing of Telkonet upon the terms and
conditions specified herein; and


 


WHEREAS,
Executive desires to provide his services to Telkonet, upon the terms and conditions specified herein.


 


NOW,
THEREFORE, in consideration of the mutual covenants contained herein, and for such other good and valuable consideration,
the receipt and sufficiency of which are hereby conclusively acknowledged, the parties, intending to be legally bound, agree as
follows:


 


1.
Duties and Scope of Employment.


 





(a)Positions
and Duties. Telkonet hereby employs Executive in the capacity of Executive Vice President of Sales & Marketing of
Telkonet to perform such executive, management and administrative services and other customary duties of those positions
consistent with Executive's position as the most senior executive officer within the Company as set forth in the Telkonet
by-laws and as Telkonet, by action of its Board of Directors ("Board"), may request from time to time.


 


(b) Location. Executive’s
place of work shall be 20800 Swenson Dr., Suite 175, Waukesha, WI 53186. The Company shall be entitled to require the Executive
to travel to work at such other places as business needs require.


 


2.
Term. The Initial Term of the Executive's employment hereunder (the "Initial Term") shall commence on May
1, 2015 (the "Effective Date"), and continuing until May 1, 2016. If neither the Company nor the Executive has provided
the other with written notice of an intention to terminate this Agreement at least thirty (30) days before the end of the Initial
Term (or any subsequent renewal period), this Agreement will automatically renew for a twelve (12) month. period. For purposes
of this Agreement, the word "Term" means the Initial Term and any renewal period pursuant to the preceding sentence
and any extension pursuant to clause (ii) of the following sentence. Notwithstanding the preceding sentences (i) this Agreement
may be terminated earlier as provided pursuant to Section 6.


 


3.
Extent of Services. During the Term and any extension thereof, Executive shall devote his full time and efforts to
the performance, to the best of his abilities, of such duties and responsibilities, as described in Section 1 above, and as the
Chief Executive Officer shall determine, consistent therewith.


 


4.
Compensation.


 


(a)Salary.
Executive shall be paid $154,500.00 on an annualized basis in accordance with Telkonet's normal payroll practices, and
be subject to all lawfully required Withholdings. The base salary may be increased, but not decreased, at any time during the
term of employment as determined by the Chief Executive Officer and the Board of Directors.


 


(b)Incentives.
The Chief Executive Officer, Board of Directors of Telkonet and the Executive will agree upon terms and conditions. The
actual incentive amount will be recommended by the CEO and approved by the Board of Directors.


 


(c)Executive Participation in Telkonet
Staff Benefits Plans. During the Term, Executive shall be entitled to participate in any group health programs and other benefit
plans, which may be instituted from time-to-time for Telkonet employees, and for which Executive qualifies under the terms of such
plans. All such benefits shall be provided on the same terms and conditions as generally apply to all other Telkonet employees
under these plans and may be modified by Telkonet from time-to-time.


 


 


 






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(d)Expenses. Executive shall be reimbursed
by Telkonet for all ordinary, reasonable, customary and necessary expenses incurred by him in the performance of his duties and
responsibilities. Executive agrees to prepare documentation for such expenses as may be necessary for Telkonet to comply with the
applicable rules and regulations of the Internal Revenue Service and Telkonet's existing policy. 


 


(e)Equity. Executive is eligible to
participate in the Company's Employee Stock Option Plan, in accordance with the terms of such plan and awards as granted by the
Compensation Committee of the Company's Board of Directors.


 


5. Vacation.
At full pay and without any adverse effect to his compensation, provided that all other terms and conditions of
this Agreement are satisfied, Executive shall be entitled to five (5) weeks of vacation for each full calendar year during
the term of this Agreement. Executive agrees to schedule his vacation leave in advance upon written notice to Chief Executive
Officer or other designated individuals. Carryover of vacation days shall be consistent with Company
policy.


 


6.
Termination. This Agreement shall terminate in accordance with Section 2 of this Agreement, or upon the first to occur
of any of the following events:


 


(a)The death of Executive;


 


(b)The mutual consent of Executive and Telkonet.
Executive shall then receive (i) an amount equal to Executive's base salary for the period starting on the first day after the
termination and ending upon the six (6) month anniversary date of the termination in accordance with the Company's payroll schedule
applicable to all employees and (ii) if the Executive elects to participate, in a timely manner, in the Company's group health
insurance plan hi accordance with the mandates of the Consolidated Omnibus Reconciliation Act of 1985, as amended ("COBRA"),
the Company will, pay for any applicable health insurance premiums for such COBRA coverage, for a period starting on the first
day after the termination and ending upon the six (6) month anniversary date of the termination. If the Executive becomes eligible
for similar benefits from another employer, Telkonet will reimburse Executive for the Employee's share of current employer's health
insurance premium ending upon the six (6) month anniversary date of the termination; Should the Executive wish to continue COBRA
coverage after the period of time during which the Company has agreed to pay the normal employer's share of COBRA coverage, the
Executive agrees and acknowledges that they will be solely responsible for payment of any amounts required by the Company to continue
health insurance coverage in accordance with COBRA. The Executive agrees to notify the Company in the event he obtains other health
insurance coverage within ten (10) business days of becoming eligible for such coverage.


 


(c)"Cause" exists for termination.
For purposes of this Agreement, "cause" shall mean the occurrence of any of the following: (1) theft, fraud, embezzlement,
or any other act of intentional dishonesty by Executive; (2) any material breach by Executive of any provision of this Agreement
Which breach is not cured within a reasonable time (but not to exceed fourteen (14) days) after written notification thereof to
Executive by Telkonet; (3) any habitual neglect of duty or misconduct of Executive in discharging any of his duties and responsibilities
under this Agreement after a written demand for performance was delivered to Executive that specifically identified the manner
in which the Board believed the Executive had failed to discharge his duties and responsibilities, and the Executive failed to
resume substantial performance of such duties and responsibilities on a continual basis immediately following such demand; (4)
conunission by Executive of a felony or any offense involving moral turpitude; or (5) any default of Executive's obligations hereunder,
or any failure or refusal of Executive to comply with the policies, rules and regulations of Telkonet generally applicable to Telkonet
employees, which default, failure or refusal is not cured within a reasonable time (but not to exceed fourteen (14) days) after
written notification thereof to Executive by Telkonet. If cause exists for termination, Executive shall be entitled to no further
compensation, except for accrued payables, payroll, leave and vacation and except as may be required by applicable law.


 


 






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(d)"Good reason" exists for
Executive to terminate his employment with Telkonet. For purposes of this Agreement, "good reason" shall mean the
occurrence of any of the following: (1) any material adverse reduction in the scope of Executive's authority or
responsibilities; (2) any reduction in the amount of Executive's compensation or participation in any employee benefits; or
(3) Executive's principal place of employment is actually or constructively moved to any office or other location 75 miles or
more outside of Milwaukee, WI. If Executive terminates his employment with Telkonet for "good reason," then, upon
notice to Telkonet by Executive of such termination, Telkonet shall continue to pay Executive's base salary and provide
Executive with continued participation in each employee benefit plan in which Executive participated immediately prior to the
termination date for the period starting on the first day after the termination date and ending upon expiration of the Term,
or if such period is less than six (6) months, for a period of six (6) months from notice.


 


(e) If Executive is
terminated by Telkonet for any reason other than for "cause" the Executive shall receive: (i) an amount equal to
Executive's base salary for the period starting on the first day after the termination and ending upon the six (6) month
anniversary date of the termination in accordance with the Company's payroll schedule applicable to all employees and (ii)
pay for any applicable health insurance premiumS , for a period • starting on the first day after the termination and
ending upon the six (6) month anniversary date of the termination.. If the Executive becomes eligible for similar benefits
from another employer, Telkonet will reimburse Eiecutive for the Employee's share of current employer's health insurance
premium ending upon the six (6) month anniversary date of the termination.


 


(f) In the event of a termination
under (a), (b), (c), (d) or (e) of this paragraph 6, within thirty (30) days of the separation date, Telkonet shall make a lump
sum payment of any fees, payments, back pay, Executive loans or deferments then due and owing. Notwithstanding anything to the
contrary herein, this Agreement shall not terminate or expire under (e) and (f) of this paragraph six unless and until (iii) Executive
is reimbursed for any fees, payments, back pay, Executive loans or deferments then due and owing.


 


(g) If Executive's employment terminates by reason
of death or disability, then (i) Executive will be entitled to receive benefits only in accordance with the Company's then applicable
plans, policies, and arrangements.


 


(h)Separation Agreement
and Release of Claims. The receipt of any severance pursuant to this Agreement will be subject to Executive signing and not
revoking a separation agreement and release of claims (the "Release") in a form reasonably acceptable to the Company,
which becomes effective within thirty (30) days following Executive's separation from service. The Release will provide (among
other things) that Executive will not disparage the Company, its directors, or its executive officers for 12 months following
the date of termination and the Company will instruct its officers and directors not to disparage the Executive. No severance
pursuant to this Agreement will be paid or provided until the Release becomes effective.


 


(i)No Duty to Mitigate.
Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any earnings
that Executive may receive from any other source reduce any such payment.


 


(j)No-Inducement.
In the event of a termination of Executive's employment that otherwise would entitle Executive to the receipt of severance and
other benefits pursuant to this Agreement, Executive agrees that as a condition to receipt of such severance, during the 12 month
period following termination of employment, Executive, directly or indirectly, whether as employee, owner, sole proprietor, partner,
director, founder or otherwise", will not, solicit, induce, or influence any person to modify their employment or consulting
relationship with the Company (the "No-Inducement"). If Executive breaches the No-Inducement, all payments and benefits
to which Executive otherwise may be entitled pursuant to this Section 6 will cease immediately.


 


7. Surrender of Books and Papers. Upon termination
of this Agreement (irrespective of the time, manner, or cause of termination, be it for cause or otherwise), Executive shall immediately
surrender to Telkonet all books, records, or other written papers or documents entrusted to him or which he has otherwise acquired
pertaining to Telkonet and all other Telkonet property in Executive's possession, custody or control.


 


 






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8.
Inventions and Patents. Executive agrees that Executive will promptly from time-to time fully inform and disclose to
Telkonet any and all ideas, concepts, copyrights, copyrightable material, developments, inventions, designs, improvements and
discoveries of whatever nature that Executive may have or produced during the term of Executive's employment under this Agreement
that pertain or relate to the then current business of Telkonet (the "Creations"), whether conceived by Executive alone
or with others and whether or not conceived during regular working hours. All Creations shall be the exclusive property of Telkonet
and shall be "works made for hire" as defined in 17 U.S.C. §101, and Telkonet shall own all rights in and to the
Creations throughout the world, without payment of royalty or other consideration to Executive or anyone claiming through Executive.
Executive hereby transfers and assigns to Telkonet (or its designee) all right, title and interest in and to every Creation. Executive
shall assist Telkonet in obtaining patents or copyrights on all such inventions, designs, improvements and discoveries being patentable
or copyrightable by Executive or Telkonet and shall execute documents and do all things reasonably necessary (at Telkonet's
sole cost and expense) to obtain letters of patent or copyright, vest Telkonet with full and exclusive title thereto, and protect
the same against infringement by third parties, and such assistance shall be given by Executive, if needed, after termination
of this Agreement for whatever cause or reason. Executive hereby represents and warrants that Executive has no current or future
obligation with respect to the assignment or disclosure of any or all developments, inventions, designs, improvements and discoveries
of whatever nature to any previous Employer, entity or other person and that Executive does not claim any rights or interest in
or to any previous unpatented or uncopyrighted developments, inventions, designs, improvements or discoveries.


 


9.
Trade Secrets, Non-Competition and Non-Solicitation.


 


(a)Trade Secrets.
Contemporaneous with the execution of this Agreement and during the term of employment under this Agreement, Telkonet shall deliver
to Executive or permit Executive to have access to and become familiar with various confidential information and trade secrets
of Telkonet, including without limitation, data, production methods, customer lists, product format or developments, other information
concerning the business of Telkonet and other unique processes, procedures, services and products of Telkonet, which are regularly
used in the operation of the business of the Telkonet (collectively, the "Confidential Information") For purposes of
the preceding sentence, information is not treated as being Confidential Information if it: (i) is or becomes generally available
to the public other than by Executive in violation of this Agreement; (ii) is obtained by Executive in good faith from a third
party who discloses such information to Executive on a non-confidential basis without violating any obligation of confidentiality
or secrecy relating to the information disclosed; (iii) is independently developed by Executive outside the scope of his employment
without use of Confidential Information; or (iv) is Executive's personnel information. Executive shall not disclose any of the
Confidential Information that he receives from Telkonet or their clients and customers in the course of his employment with Telkonet,
directly or indirectly, nor use it in any way, either during the term of this Agreement or for a period of five (5) years thereafter,
except as required in the course of employment with Telkonet. Executive further acknowledges and agrees that Executive owes Telkonet,
a fiduciary duty to preserve and protect all Confidential Information from unauthorized disclosure or unauthorized use. All files,
records, documents, drawings, graphics, processes, specifications, equipment and similar items relating to the business of Telkonet,
whether prepared by Executive or otherwise coming into Executive's possession in the course of his employment with Telkonet, shall
remain the exclusive property of Telkonet and shall not be removed from the premises of Telkonet without the prior written consent
of Telkonet unless removed in relation to the performance of Executive's duties under this Agreement. Any such files, records,
documents, drawings, graphics, specifications, equipment and similar items, and any and all copies of such materials which have
been removed from the premises of Telkonet, shall be returned by Executive to Telkonet. For purposes of this Section 9, "Telkonet"
means Telkonet, Inc., including its subsidiaries and affiliates and all successors and predecessors in interest to Telkonet.


 


(b)Non-Competition.
Executive acknowledges that he will be provided with and have access to the Confidential Information, the unauthorized use
or disclosure of which would cause irreparable injury to Telkonet, that Telkonet's willingness to enter into this Agreement is
based in material part on Executive's agreement to the provisions of this Section 9(b)  and that Executive's breach of
the provisions of this Section would materially and irreparably damage Telkonet. In consideration for Telkonet's disclosure of
Confidential Information to Executive, Executive's access to the Confidential Information, and the salary paid to executive hereunder,
Executive agrees that during the term of Executive's employment under this Agreement and for one (1) year after the termination
of Executive's employment and regardless whether such termination is with or without cause, Executive shall not, directly or indirectly,
either as an executive, employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director, advisor
or in any other individual or representative capacity, engage or participate in any business that is in competition in any manner
whatsoever with the Restricted Business (as defined herein) in North Ameriica. "Restricted Business" means
any business conducted by Telkonet at the time of separation of the Executive from Telkonet.


 


(c)Reasonableness of
Restrictions. Executive acknowledges that the restrictions set forth in Section 9(b)  of this Agreement are reasonable
in scope and necessary for the protection of the business and goodwill of Telkonet. Executive agrees that should any portion of
the covenants in Section 9  be unenforceable because of the scope thereof or the period covered thereby or otherwise, the
covenant shall be deemed to be reduced and limited to enable it to be enforced to the maximum extent permissible under the laws
and public policies applied in the jurisdiction in which enforcement is sought.


 


 






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(d)Injunctive Relief;
Extension of Restrictive Period. In the event of a breach of any of the covenants by Executive or Telkonet contained in this
Agreement, it is understood that damages will be difficult to ascertain, and either party may petition a court of law or equity
for injunctive relief in addition to any other relief which Executive or Telkonet may have under the law, including but not limited
to reasonable attorneys' fees.


 


10.Indemnification
and Insurance. Executive will be covered under the Company's insurance policies and, subject to applicable law, will be
provided indemnification to the maximum extent permitted by the Company's bylaws, Certificate of Incorporation, and standard form
of Indemnification Agreement, with such insurance coverage and indemnification to be in accordance with the Company's standard
practices for senior executive officers but on terms no less favorable than provided to any other Company senior executive officer
or director.


 


11.Miscellaneous.


 


(a)This Agreement shall
be binding upon the parties and their respective heirs, executors, administrators, successors and assigns. Executive shall not
assign any part of his rights under this Agreement without the prior written consent of Telkonet.


 


(b)This Agreement contains
the entire agreement and understanding between the parties and supersedes any and all prior understandings and agreements between
the parties regarding Executive's employment.


 


(c)No modification hereof
shall be binding unless made in writing and signed by the party against whom enforcement is sought. No waiver of any provisions
of this Agreement shall be valid unless the same is in writing and signed by the party against whom it is sought to be enforced,
unless it can be shown through custom, usage or course of action.


 


(d)This Agreement is executed
in, and it is the intention of the parties hereto that it shall be governed by, the laws of the State of Wisconsin without giving
effect to applicable conflict of laws provisions.


 


(e)The provisions of this
Agreement shall be deemed to be severable, and the invalidity or unenforceability of any provision shall not affect the validity
or enforceability of the other provisions hereof.


 


(f)Any notice or communication
permitted or required by this Agreement shall be in writing and shall become effective upon personal service, or service by wire
transmission, which has been acknowledged by the other party as being received, or two (2) days after its mailing by certified
mail, return receipt requested, postage prepaid addressed as follows:


 


(1) If to Telkonet: Attn: General
Counsel Telkonet, Inc. 20800 Swenson Drive, Suite 175, Waukesha, WE 53186.


 


(2)
If to Executive, to: Gerritt J. Reinders at the last residential address known by the Company as provided by Executive
in writing.


 


(g)Acknowledgment.
Executive acknowledges that he has had the opportunity to discuss this matter with and obtain advice from his private attorney,
has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly
and voluntarily entering into this Agreement.


 


(h)Counterparts.
This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the undersigned.


 


 






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IN WITNESS WHEREOF,
Telkonet and Executive have executed this Agreement as of the date first set forth above.




 


 





	/s/ Jeffrey
    P. Andrews	 	/s/ Gerritt J. Reinders
	Chairman - Compensation Committee	 	Gerritt J. Reinders
	 	 	 
	5/14/2015	 	6/5/2015
	Date	 	Date