Document:

Exhibit 10.3

 

  

VOTING AGREEMENT

 

This VOTING AGREEMENT (the
“Agreement”), dated as of August
6, 2021, is entered into by and between VDA Group S.p.A., an Italian joint stock company incorporated under the laws of the republic of
Italy (“VDA”), and the person
or entity listed on the signature page hereof as a shareholder (the “Shareholder”).

 

RECITALS

 

WHEREAS, VDA and Telkonet,
Inc., a Utah corporation (“Company”) have entered into a Stock Purchase Agreement dated as of the date hereof (as it
may be amended from time to time, the “Purchase
Agreement”), pursuant to which VDA shall acquire the Telkonet Shares and the Warrant (the “Acquisition”)
and shall become the majority shareholder of the Company;

 

WHEREAS, as of the date hereof,
the Shareholder: (a) “beneficially owns” (as such term is defined in Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended) the number of shares of Company Common Stock $.001 par value (“Common Stock”), excluding Incentive
Equity Securities (as defined below), or Company Series A or Series B Preferred Stock $.001 par value (collectively, “Preferred
Stock”, and together with the Common Stock, the “Shares”) as set forth on Schedule A
hereto (the “Committed Shares”);
and (b) controls the number of other securities which may be exercised, exchanged or converted for Common Stock set forth on Schedule B
hereto (the “Incentive Equity Securities”), which schedule indicates the number of shares of Common Stock for which
such Incentive Equity Securities may be exercised, exchanged or converted, (or the method of such calculation if the actual number of
shares of Common Stock cannot be definitively determined on the date hereof) and whether such Incentive Equity Securities are vested or
unvested; and

 

WHEREAS, as an inducement
to entering into the Purchase Agreement, VDA has required that the Shareholder agree, and the Shareholder has agreed, to the matters set
forth herein.

 

NOW, THEREFORE, in consideration
of the foregoing and the respective representations, warranties, covenants and agreements set forth below, the parties hereto, intending
to be legally bound hereby, agree as follows:

 

Section 1.               
Definitions. Capitalized terms used but not otherwise defined
herein, and the term “control,” shall have the meanings set forth in the Purchase Agreement.

 

Section 2.               
Voting Agreement, Grant of Irrevocable Proxy, No Disposition or Solicitation.

 

(a)              
Voting Agreement. Until the termination of this Agreement in accordance with Section 5,
the Shareholder hereby agrees that at each annual, special or other meeting of the shareholders of Company, however called, or at any
adjournment or postponement thereof or in any other circumstances upon which a vote, consent or other approval of all the shareholders
of Company is sought, the Shareholder shall (i) when a meeting is held, appear at such meeting or otherwise cause the Committed Shares
to be counted as present thereat for the purpose of establishing a quorum and (ii) vote (or cause to be voted) the Committed Shares:
(A) in favor of the Amendment and the issuance of the Telkonet Shares, the Warrant and the Warrant Shares to VDA as set forth in
the Purchase Agreement, if a vote, consent or other approval with respect to any of the foregoing is sought and (B) except as otherwise
agreed in writing in advance by VDA, against any (1) agreement relating to any Acquisition Proposal (other than the Acquisition), or (2) amendment
of the Company’s Organizational Documents (other than the Amendment) or other proposal, agreement, action or transaction involving
Company or the Telkonet Subsidiary that would, or would reasonably be expected to, (x) interfere with, delay in any material respect or
prevent the Acquisition, the Purchase Agreement or any of the other Contemplated Transactions or (y) result in a breach in any material
respect of any representation, warranty, covenant or agreement of Company under the Purchase Agreement.

 

 

    	 	1	 

     

    

 

(b)              
Grant of Irrevocable Proxy. In furtherance of the Shareholder’s
agreement in Section 2(a) of this Agreement, contemporaneously with the execution of this Agreement (i) the Shareholder hereby
irrevocably grants to, and appoints, VDA and any other individual designated in writing by VDA, and each of them individually, the Shareholder’s
proxy and attorney-in-fact (with full power of substitution and re-substitution), for and in the name, place and stead of Shareholder,
to vote the Committed Shares or provide written consents as indicated in Section 2(a) of this Agreement, (ii) hereby affirms that
the irrevocable proxy set forth in this Section 2(b), if it becomes effective pursuant to clause (i), is given in connection with
the execution of the Purchase Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Shareholder
under this Agreement and (iii) hereby (a) affirms that the irrevocable proxy is coupled with an interest and (b) affirms that such irrevocable
proxy, if it becomes effective pursuant to clause (i), is executed and intended to be irrevocable and coupled with an interest in accordance
with the provisions of Section 16-10a-722 of the URBCA. This proxy shall only be effective if the Shareholder fails to appear, or otherwise
fails to cause the Committed Shares to be counted as present for purposes of calculating a quorum, at each annual, special or other meeting
of the shareholders of Company and to vote the Committed Shares in accordance with Section 2(a) above, and VDA hereby acknowledges
that the proxy granted hereby shall not be effective for any other purposes. VDA also acknowledges that, except as provided for herein,
Shareholder retains the rights to vote the Committed Shares in Shareholder's sole discretion with respect to any matter other than those
set forth in Section 2(a) and Section 2(d). The Shareholder hereby represents that all proxies, powers of attorney, instructions
or other requests given by the Shareholder prior to the execution of this Agreement in respect of the voting of the Committed Shares,
if any, are not irrevocable and the Shareholder hereby revokes (or causes to be revoked) any and all previous proxies, powers of attorney,
instructions or other requests with respect to the Committed Shares. Upon the effectiveness of the proxy, the vote, if any, of the proxy
holder pursuant to the proxy set forth in this Section 2(b) shall control the outcome, and be determinative, of any conflict between
the vote by the proxy holder of the Committed Shares and a vote by the Shareholder of the Committed Shares. The Shareholder shall take
such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy and the proxy and power
of attorney granted hereunder is a durable power of attorney and shall survive the dissolution, bankruptcy, death or incapacity or the
Shareholder. The proxy and power of attorney granted hereunder shall terminate only upon the termination of this Agreement in accordance
with Section 5 hereof.

 

(c)              
No Disposition. After the execution of this Agreement and until its termination in accordance with Section 5, the
Shareholder agrees not to, directly or indirectly, except to Company (i) sell, transfer, exchange, offer, tender, pledge, encumber, assign,
hypothecate or otherwise dispose of (collectively, a “Transfer”)
or enter into any agreement, option or other arrangement with respect to, or consent to, a Transfer of, any or all of the Committed Shares,
the Incentive Equity Securities or any interest therein, or (ii) grant any proxies or powers of attorney, deposit any Committed Shares
into any voting trust or enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to any of the
Committed Shares. The Shareholder acknowledges and agrees that the intent of the foregoing sentence is to ensure that the Committed Shares
are voted in accordance with Section 2(a). Notwithstanding the foregoing, the Shareholder may Transfer Committed Shares (i) to
any member of Shareholder’s immediate family or to a trust established for the benefit of Shareholder and/or for the benefit of
one or more members of Shareholder’s immediate family or upon the death of Shareholder, (ii) in connection with or for the purpose
of personal tax-planning, or (iii) to a charitable organization qualified under Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended; so long as either the Shareholder retains control over the voting and disposition of such Committed Shares and agrees in writing
prior to such Transfer to continue to vote such Committed Shares in accordance with this Agreement or the transferee shall have agreed
to be bound by the terms of this Agreement. The Shareholder shall not request that Company or its Transfer Agent register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest representing any of the Shareholder’s Committed Shares and
hereby consents to the entry of stop transfer instructions by Company of any transfer of the Shareholder’s Committed Shares, unless
such transfer is made in compliance with this Agreement.

 

(d)              
Additional Shares. In the event (i) of any stock dividend, stock split, recapitalization, reclassification, combination
or exchange of shares of capital stock of Company on, of or affecting any of the Shareholder’s Committed Shares or (ii) the Shareholder
becomes the beneficial owner of any additional Shares (including by the issuance of Common Stock following the exercise, conversion or
exchange of Incentive Equity Securities), then the terms of this Agreement shall apply to the Shares held by such Shareholder immediately
following the effectiveness of the events described in clause (i) or the Shareholder becoming the beneficial owner thereof, as described
in clause (ii), as though they were included in the Shareholder’s Committed Shares hereunder. The Shareholder hereby agrees to notify
VDA of the number of any new Shares acquired by the Shareholder, if any, after the date hereof. If Shareholder beneficially owns additional
Shares not included on Schedule A, those Shares shall also be deemed Committed Shares.

 

 

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(e)              
Non-Solicitation. Subject to Section 6(o), the Shareholder shall not directly or indirectly, (i) solicit, initiate or knowingly
encourage or facilitate any inquiry, proposal or offer with respect to, or the making or completion of, any Acquisition Proposal (other
than the Acquisition), or any inquiry, proposal or offer that would reasonably be expected to lead to any Acquisition Proposal (other
than the Acquisition), (ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to
any Person other than VDA or any Representatives of the foregoing Persons any information or data with respect to or for the purpose of
facilitating, any Acquisition Proposal (other than the Acquisition), or (iii) enter into any letter of intent, definitive acquisition
agreement, agreement in principle, purchase agreement, option agreement, joint venture agreement or partnership agreement requiring it
to abandon, terminate or materially breach its obligations hereunder or fail to consummate the Acquisition. Shareholder shall immediately
cease any and all activities, solicitations, encouragement, discussions or negotiations with any Person other than VDA or any Representatives
of the foregoing Persons conducted heretofore with respect to any Acquisition Proposal (other than the Acquisition).

 

Section 3.               
Representations and Warranties of Shareholder. The Shareholder
hereby represents and warrants to VDA as follows:

 

(a)              
Authorization; Validity of Agreement; Necessary Action. The Shareholder has the requisite capacity and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Shareholder and, assuming this Agreement constitutes a valid and binding obligation of the
other party hereto, constitutes a legal, valid and binding obligation of the Shareholder, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity
or at law).

 

(b)              
The Committed Shares. Schedule A sets
forth the number of Committed Shares over which the Shareholder has beneficial ownership as of the date hereof, and Schedule B
sets forth the number of Incentive Equity Securities over which the Shareholder has control as of the date hereof. As of the date of this
Agreement, except as otherwise noted on Schedule A and Schedule B or as would not materially impair the ability of
the Shareholder to perform its obligations hereunder or to consummate the transactions contemplated hereby on a timely basis, the Shareholder
is the beneficial and sole record owner of the Committed Shares, has the power to direct the voting of the Committed Shares, owns and
controls the Incentive Equity Securities, and, except as may be limited by the agreements granting the Incentive Equity Securities or
governing the plans pursuant to which they were issued, has the power to direct the conversion, exchange or exercise of the Incentive
Equity Securities. As of the date of this Agreement, except for the Incentive Equity Securities, the Committed Shares represent all of
the Shares owned, beneficially or of record, by the Shareholder. Except as set forth on Schedule B,
the Shareholder does not own or hold any right to acquire any additional shares of any class of capital stock of Company or other securities
of Company or any interest therein or any voting rights with respect thereto. Except as otherwise noted on Schedule A and
Schedule B, the Shareholder has good and valid title to the Committed Shares and the Incentive Equity Securities, free and clear
of any and all Encumbrances, adverse claims, options and demands of any nature or kind whatsoever, other than those created by this Agreement
and any Organizational Document.

 

(c)              
No Conflicts. The execution and delivery of this Agreement
by the Shareholder, and the consummation by the Shareholder of the transactions contemplated hereby, do not and will not (i) conflict
with or violate any Law applicable to the Shareholder or by which the Committed Shares are bound or affected or (ii) result in any
breach or violation of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under,
or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of any Encumbrance on
the properties or assets of the Shareholder pursuant to any note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Shareholder is a party or by which the Shareholder or any of its assets or properties
is bound, except for any of the foregoing as would not reasonably be expected, either individually or in the aggregate, to materially
impair the ability of the Shareholder to perform its obligations hereunder or to consummate the transactions contemplated hereby on a
timely basis.

 

(d)              
Consents and Approvals. The execution and delivery of this Agreement by the Shareholder does not, and the performance by
the Shareholder of its obligations under this Agreement and the consummation by it of the transactions contemplated hereby will not,
require the Shareholder to obtain any consent, approval, authorization or permit of, or to make any filing with or notification to, any
Governmental Body, other than filings under the Exchange Act, except
as would not materially impair the ability of the Shareholder to perform its obligations hereunder or to consummate the transactions
contemplated hereby on a timely basis.

 

 

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(e)              
Absence of Litigation. As of the date hereof, there is no Legal Proceeding pending or, to the knowledge of the Shareholder,
threatened against or affecting the Shareholder or any of its Affiliates before or by an Governmental Body that would reasonably be expected
to materially impair the ability of the Shareholder to perform its obligations hereunder or to consummate the transactions contemplated
hereby on a timely basis.

 

(f)               
Finder’s Fees. No investment banker, broker, finder or other
intermediary is entitled to a fee or commission from VDA or Company in respect of this Agreement based upon any arrangement or agreement
made by or on behalf of the Shareholder.

 

(g)              
Reliance by VDA. The Shareholder understands and acknowledges that VDA is entering into the Purchase Agreement in reliance
upon the Shareholder’s execution and delivery of this Agreement and the representations and warranties of Shareholder contained
herein. The Shareholder understands and acknowledges that the Purchase Agreement governs the terms of the Acquisition and the other transactions
contemplated thereby.

 

Section 4.               
Representations and Warranties of VDA. VDA hereby represents
and warrants to each Shareholder as follows:

 

(a)        Authorization;
Validity of Agreement; Necessary Action. VDA has all necessary corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement
by VDA and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the
part of VDA and no other corporate proceedings on the part of VDA are necessary to approve this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by VDA, and assuming the due authorization, execution and delivery
by the other party hereto, constitutes a valid and binding obligation of VDA, enforceable against it in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar laws affecting the rights of creditors generally
and the availability of equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

(b)        No
Conflicts. The execution and delivery of this Agreement by VDA, and the consummation by VDA of the transactions contemplated
hereby, do not and will not (i) conflict with or violate any Law applicable to VDA or by which VDA is bound or affected or (ii) result
in any breach or violation of, or constitute a default (or an event that with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of any Encumbrance
on the properties or assets of VDA pursuant to any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which VDA is a party or by which VDA or any of its assets or properties is bound, except for any
of the foregoing as would not reasonably be expected, either individually or in the aggregate, to materially impair the ability of VDA
to perform its obligations hereunder or to consummate the transactions contemplated hereby on a timely basis.

 

(c)       Consents
and Approvals. The execution and delivery of this Agreement by VDA does not, and the performance by VDA of its obligations under
this Agreement and the consummation by it of the transactions contemplated hereby will not, require VDA to obtain any consent, approval,
authorization or permit of, or to make any filing with or notification to, any Governmental Entity, other than filings under the
Exchange Act, except for any of the foregoing as would not reasonably be expected, either individually or in the aggregate, to materially
impair the ability of VDA to perform its obligations hereunder or to consummate the transactions contemplated hereby on a timely basis.

 

(d)        VDA
Acknowledgement. VDA acknowledges that the Shareholder has not made and Shareholder is not making any representation or warranty of
any kind except as expressly set forth in this Agreement.

 

Section
5.                Termination.
This Agreement will terminate automatically, without any action on the part of either party hereto, on the earlier of (i) the Effective
Time, (ii) the termination of the Purchase Agreement pursuant to its terms or (iii) notice by VDA to the Shareholder; provided,
however, that (a) Sections 6(a)-(o) shall survive any termination
of this Agreement and (b) termination of this Agreement shall not relieve any party from liability for any breach of its obligations
hereunder committed prior to such termination.

 

 

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Section 6.               
Miscellaneous.

 

(a)              
Entire Agreement. This Agreement (including the Purchase
Agreement as applicable), together with any Schedules hereto constitutes the entire agreement and understanding of the parties in respect
of the subject matter hereof and supersedes all prior understandings, agreements or representations by or among the parties, written or
oral, to the extent they relate in any way to the subject matter hereof.

 

(b)              
Assignment; Binding Effect; Third Party Beneficiaries. Except
as contemplated by Section 2(c), no party may assign either this Agreement or any of its rights, interests or obligations hereunder
without the prior written approval of the other party, and any such assignment by a party without prior written approval of the other
party will be deemed invalid and not binding on such other party. All of the terms, agreements, covenants, representations, warranties
and conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by, the parties and their respective
successors and permitted assigns. No third party beneficiaries have any rights under or with respect to this Agreement.

 

(c)              
Notices. All notices, requests and other communications
provided for or permitted to be given under this Agreement must be in writing and given by personal delivery, by certified or registered
United States mail (postage prepaid, return receipt requested) or by a nationally recognized overnight delivery service for next day delivery
as follows (or to such other address as any party may give in a notice given in accordance with the provisions hereof):

 

If to VDA:

 

V.D.A. Group S.p.A. 

Viale L. Zanussi, 3 

33170 Pordenone, Italy 

Attention: Piercarlo Gramaglia 

E-mail: piercarlo.gramaglia@vdagroup.com 

 

with a copy to: 

 

Moses & Singer
LLP 

Attention: Francesco
Di Pietro, Esq. 

Allan Grauberd,
Esq. 

The Chrysler Building 

405 Lexington Avenue 

New York, New York
10174-1299 

Fax No.: (212)
554-7700 

E-mail: fdipietro@mosessinger.com 

agrauberd@mosessinger.com

  

If to the Shareholder, to the contact information
for

the Shareholder set forth on Schedule A hereto

 

with a copy (which
shall not constitute notice) to:

Husch Blackwell LLP 

511 North Broadway,
Suite 1100 

Milwaukee, WI 53202

Fax No.: 414.223.5000 

Attention: Kate
Bechen 

E-mail: kate.bechen@huschblackwell.com 

 

All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, (b) on the first Business
Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier, (c) on the date delivered
if sent by email, upon confirmation of receipt by email or (d) on the earlier of confirmed receipt or the fifth Business Day following
the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall
be delivered to the addresses set forth above, or pursuant to such other instructions as may be designated in writing by the party to
receive such notice.

 

 

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(d)              
Specific Performance; Remedies. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms
or were otherwise breached. Accordingly, each of the parties shall be entitled to seek specific performance of the terms hereof, including
an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement
in the United States District Court located in the Borough of Manhattan (unless the United States District Court located in the Borough
of Manhattan shall decline to accept jurisdiction over a particular matter, in which case, in any state court of the State of New York
within the Borough of Manhattan in the City of New York), this being in addition to any other remedy to which such party is entitled at
law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy
at law would be adequate and (b) any requirement under any law to post security as a prerequisite to obtaining equitable relief.

 

(e)              
Submission to Jurisdiction. Each of the parties irrevocably
agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any other party or its successors or
assigns shall be brought and determined in the United States District Court located in the Borough of Manhattan (unless the United States
District Court located in the Borough of Manhattan shall decline to accept jurisdiction over a particular matter, in which case, in any
state court of the State of New York within the Borough of Manhattan in the City of New York), and each of the parties hereby irrevocably
submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally,
with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each
of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in New York,
other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in New York
as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process
and the parties further waive any argument that such service is insufficient. In the event of any litigation before a court of competent
jurisdiction relating to a dispute with respect to this Agreement, the non-prevailing party in such litigation shall reimburse the prevailing
party’s reasonable and documented costs and expenses (including reasonable and documented attorney’s fees and any costs of
investigation or preparation) incurred in connection with such litigation, including any appeal therefrom. Each of the parties hereby
irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any
action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it
is not personally subject to the jurisdiction of the courts in New York as described herein for any reason, (b) that it or its property
is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that
(i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action
or proceeding is improper, or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

 

(f)               
WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(g)              
Headings. The article and section headings contained in
this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.

 

(h)              
Governing Law. This Agreement and all disputes or controversies
arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance
with, the internal laws of the State of New York, without regard to the laws of any other jurisdiction that might be applied because of
the conflicts of laws principles of the State of New York, and except that the URBCA shall control to the extent such necessarily applies
to any aspect of this Agreement.

 

(i)                
Amendment. This Agreement may not be amended or modified
except by a writing signed by the parties.

 

(j)                
Extensions; Waivers. Either party may, for itself only,
(i) extend the time for the performance of any of the obligations of any other party under this Agreement, (ii) waive any inaccuracies
in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions for the benefit of such party contained herein. Any such extension or waiver will
be valid only if set forth in a writing signed by the party to be bound thereby. No waiver by any party of any default, misrepresentation
or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation
or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence.
Neither the failure nor any delay on the part of the party to exercise any right or remedy under this Agreement will operate as a waiver
thereof, nor will any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other
right or remedy.

 

 

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(k)              Severability. Whenever possible, each provision or portion
of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision
or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law
or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained herein.

 

(l)             
Counterparts; Effectiveness; Electronic Signature.

 

(i)                
This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall
become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

 

(ii)             
The exchange of copies of this Agreement and of signature pages by facsimile transmission, by electronic mail in “portable
document format” (“.pdf”) form, DocuSign or similar program or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, or by a combination of such means, shall constitute effective execution and delivery
of this Agreement as to the parties and may be used in lieu of an original Agreement for all purposes. Signatures of the parties transmitted
by facsimile or DocuSign or similar program shall be deemed to be their original signatures for all purposes.

 

(m)            
Construction. This Agreement has been freely and fairly
negotiated among the parties. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of
any provision of this Agreement.

 

(n)              
Further Assurances. If any further action is necessary or
reasonably desirable to carry out this Agreement’s purposes, each party will take such further action (including executing and delivering
any further instruments and documents and providing any reasonably requested information) as the other party reasonably may request.

 

(o)              
Shareholder Capacity. The parties acknowledge that this Agreement is entered into by the Shareholder solely in the Shareholder’s
capacity as the beneficial owner of the Committed Shares and the Person controlling the Incentive Equity Securities and not in the Shareholder’s
capacity as a director, officer or fiduciary of the Company, if applicable. Nothing in this Agreement restricts or limits any action
taken by such Shareholder, his or her or its Affiliates, or their respective Representatives, in their capacity as a director or officer
of Company and the taking of any actions (or failure to act) by any such Person in their capacity as an officer or director of Company
will not be deemed to constitute a breach of this Agreement.

 

 

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IN WITNESS WHEREOF, each of
the parties hereto has caused this Agreement to be signed as of the date first written above.

 

VDA Group S.p.A. 

 

By: _____________________________

 

Name: ___________________________

 

Title: ____________________________

 

 

Shareholder

 

By: _____________________________

 

Name: ___________________________

 

 

 

[Signature Page to Voting Agreement]

 

 

 

 

    	 	 	 

     

    

 

  

SCHEDULE A

TO

VOTING AGREEMENT

 

	
     

     

    Shareholder Name and Address

     
	
     

     

    Common Stock

     
	
     

     

    Preferred Stock

     

	 	 	 

 

 

 

 

 

 

    	 	A-1	 

     

    

 

 

SCHEDULE B

TO

VOTING AGREEMENT

 

 

 

	Shareholder Name and Address	Incentive Equity Securities (Options)

 

 

 

 

 

 

 

    	 	B-1Exhibit 10.4

 

Execution Version

  

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this "Agreement")
is made and entered into as of August 6, 2021, among Telkonet, Inc., a Utah corporation (the "Company"), and VDA Group
S.p.A., an Italian joint stock company incorporated under the laws of the republic of Italy (the "Investor") to be effective
upon the Closing of the Purchase Agreement (as defined below).

 

WHEREAS, the Company and the
Investor have entered into a Stock Purchase Agreement dated as of the date hereof (as it may be amended from time to time, the “Purchase
Agreement”), pursuant to which the Investor shall acquire the Telkonet Shares and the Warrant (the “Acquisition”)
and shall become the majority shareholder of the Company;

 

WHEREAS, in connection with
the consummation of the transactions contemplated by the Purchase Agreement and pursuant to the terms of the Purchase Agreement, the parties
hereto desire to enter into this Agreement in order to grant certain registration rights to the Investor as set forth below.

 

NOW, THEREFORE, in consideration of the foregoing
and the mutual and dependent covenants hereinafter set forth, the parties hereto agree as follows:

 

1.                 
Defined Terms. Capitalized terms used but not defined herein shall have the meaning given to such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the following meanings:

 

"Agreement"
has the meaning set forth in the preamble.

 

"Board"
means the board of directors (or any successor governing body) of the Company.

 

"Commission"
means the Securities and Exchange Commission or any other federal agency administering the Securities Act and the Exchange Act at the
time.

 

"Common Stock"
means the common stock, par value of $.001 per share, of the Company and any other shares of stock issued or issuable with respect thereto
(whether by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with
a combination of shares, distribution, recapitalization, merger, consolidation, other corporate reorganization or other similar event
with respect to the Common Stock).

 

"Company"
has the meaning set forth in the preamble and includes the Company's successors by merger, acquisition, reorganization or otherwise.

 

"Controlling
Person" has the meaning set forth in Section 5(q).

 

"Demand Registration"
has the meaning set forth in Section 2(b).

 

"DTCDRS"
has the meaning set forth in Section 5(r).

 

"Exchange
Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

"Inspectors"
has the meaning set forth in Section 5(h).

 

"Investor"
has the meaning set forth in the preamble.

 

"Long-Form
Registration" has the meaning set forth in Section 2(a).

 

 

    	 	 	 

     

    

 

"Person"
means an individual, corporation, partnership, joint venture, limited liability company, Governmental Body, unincorporated organization,
trust, association or other entity.

 

"Piggyback
Registration" has the meaning set forth in Section 3(a).

 

"Piggyback
Registration Statement" has the meaning set forth in Section 3(a).

 

"Piggyback
Shelf Registration Statement" has the meaning set forth in Section 3(a).

 

"Piggyback
Shelf Takedown" has the meaning set forth in Section 3(a).

 

"Prospectus"
means the prospectus or prospectuses included in any Registration Statement (including, without limitation, a prospectus that includes
any information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance on Rule 430A under
the Securities Act or any successor rule thereto), as amended or supplemented by any prospectus supplement, including any Shelf Supplement,
with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all
other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in
such prospectus or prospectuses.

 

"Purchase
Agreement" has the meaning set forth in the recitals.

 

"Records"
has the meaning set forth in Section 5(h).

 

"Registrable
Securities" means (a) the Telkonet Shares, (b) any shares of Common Stock issued or issuable to Investor from the exercise of
the Warrant (as if on such date the Warrant is exercised in full without regard to any exercise limitations therein) and (c) any shares
of Common Stock issued or issuable to Investor with respect to any shares described in subsections (a) or (b) above by way of a stock
dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares,
distribution, recapitalization, merger, consolidation, other reorganization or other similar event with respect to the Common Stock.

 

"Registration
Statement" means any registration statement of the Company, including the Prospectus, amendments and supplements (including Shelf
Supplements) to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference
in such registration statement.

 

"Rule 144"
means Rule 144 under the Securities Act or any successor rule thereto.

 

"Securities
Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

"Selling Expenses"
means all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities, and fees
and disbursements of counsel for the Investor, except for the reasonable fees and disbursements of counsel for the Investor required to
be paid by the Company pursuant to Section 6.

 

"Shelf Registration"
has the meaning set forth in Section 2(c).

 

"Shelf Registration
Statement" has the meaning set forth in Section 2(c).

 

"Shelf Supplement"
has the meaning set forth in Section 2(d).

 

"Shelf Takedown"
has the meaning set forth in Section 2(d).

 

"Shelf Takedown
Notice" has the meaning set forth in Section 2(d).

 

"Short-Form
Registration" has the meaning set forth in Section 2(b).

 

 

    	 	2	 

     

    

 

2.                 
Demand Registration.

 

(a)                
At any time following (i) the filing of the Company’s 2021 10-K form on or about March 31, 2022 with the SEC and (ii) one
year from the Closing Date, the Investor may request registration under the Securities Act of all or any portion of its Registrable Securities
pursuant to a Registration Statement on Form S-1 or any successor form thereto (each, a "Long-Form Registration"). Each
request for a Long-Form Registration shall specify the number of Registrable Securities requested to be included in the Long-Form Registration.
The Company shall prepare and file with (or confidentially submit to) the Commission a Registration Statement on Form S-1 or any successor
form thereto covering all of the Registrable Securities that the Investor has requested to be included in such Long-Form Registration
within 45 calendar days after the date on which the initial request is given and shall use its commercially reasonable best efforts to
cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter; provided, that
the Company may use a Registration Statement on Form S-3 or any successor form thereto if the Company would qualify to use such form within
30 calendar days after the date on which the initial request is given and the Company shall not be required to file such Registration
Statement until it is so qualified. The Company shall not be required to effect a Long-Form Registration more than two (2) times for the
Investor; provided, that a Registration Statement shall not count as a Long-Form Registration requested under this Section 2(a)
if (i) it is filed on Form S-3 or any successor form thereto or (ii) unless and until it has become effective and Investor is able to
register and sell at least seventy-five percent (75%) of the Registrable Securities requested to be included in such registration.

 

(b)               
The Company shall use its reasonable efforts to qualify and remain qualified to register the offer and sale of securities under
the Securities Act pursuant to a Registration Statement on Form S-3 or any successor form thereto. At such time as the Company shall have
qualified for the use of a Registration Statement on Form S-3 or any successor form thereto, the Investor shall have the right to request
an unlimited number of registrations under the Securities Act of all or any portion of its Registrable Securities pursuant to a Registration
Statement on Form S-3 or any similar short-form Registration Statement (each, a "Short-Form Registration" and, collectively
with each Long-Form Registration and Shelf Registration (as defined below), a "Demand Registration"). Each request for
a Short-Form Registration shall specify the number of Registrable Securities requested to be included in the Short-Form Registration.
The Company shall prepare and file with (or confidentially submit to) the Commission a Registration Statement on Form S-3 or any successor
form thereto covering all of the Registrable Securities that the Investor has requested to be included in such Short-Form Registration
within 30 calendar days after the date on which the initial request is given and shall use its commercially reasonable best efforts to
cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter.

 

(c)                
At such time as the Company shall have qualified for the use of a Registration Statement on Form S-3 or the then appropriate form
for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto
(a "Shelf Registration Statement"), the Investor shall have the right to request registration under the Securities Act
of all or any portion of its Registrable Securities for an offering on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act or any successor rule thereto (a "Shelf Registration"). Each request for a Shelf Registration shall specify the number
of Registrable Securities requested to be included in the Shelf Registration. The Company shall prepare and file with (or confidentially
submit to) the Commission a Shelf Registration Statement covering all of the Registrable Securities that the Investor has requested to
be included in such Shelf Registration within 30 calendar days after the date on which the initial request is given and shall use its
reasonable efforts to cause such Shelf Registration Statement to be declared effective by the Commission as soon as practicable thereafter.
The Investor may also require that a Shelf Registration be effected on a Form S-1 if the Company has not qualified for the use of a Form
S-3 pursuant to the terms of Section 2(a), including the limitation on Long-Form Registration requirements thereunder.

 

(d)               
The Company shall not be obligated to effect any Demand Registration within 120 calendar days after the effective date of (i) a
previous Demand Registration or Shelf Takedown or (ii) a previous Piggyback Registration in which the Investor was permitted to register
the offer and sale under the Securities Act, and actually sold, all of the shares of Registrable Securities requested to be included therein.
The Company may postpone for up to 30 calendar days the filing or effectiveness of a Registration Statement for a Demand Registration
or the filing of a prospectus supplement (“Shelf Supplement”) for the purpose of effecting an offering pursuant to
Rule 415 under the Securities Act or any successor rule thereto (a "Shelf Takedown") if the Board determines in its reasonable
good faith judgment that such Demand Registration or Shelf Takedown would (i) materially interfere with a significant acquisition, corporate
organization, financing, securities offering or other similar transaction involving the Company; (ii) require premature disclosure of
material information that the Company has a bona fide business purpose for preserving as confidential; (iii) render the Company unable
to comply with requirements under the Securities Act or Exchange Act; or (iv) have a material adverse effect on the Company; provided,
that in such event, the Investor shall be entitled to withdraw such request and, if such request for a Demand Registration is withdrawn,
such Demand Registration (if it was a Long-Form Registration) shall not count as one of the permitted Long-Form Registrations under Section
2(a) and the Company shall pay all registration expenses in connection with such registration. The Company may delay a Demand Registration
or Shelf Takedown hereunder only once in any period of 12 consecutive months.

 

 

    	 	3	 

     

    

 

(e)                
If the Investor elects to distribute the Registrable Securities covered by its request in an underwritten offering, it shall so
advise the Company as a part of its request made pursuant to Section 2(a), Section 2(b), Section 2(c) or Section 2(d). The Investor shall
select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering; provided,
that such selection shall be subject to the consent of the Company, which consent shall not be unreasonably withheld or delayed.

 

(f)                 
The Company shall not include in any Demand Registration or Shelf Takedown any securities which are not Registrable Securities
without the prior written consent of the Investor, which consent shall not be unreasonably withheld or delayed. If a Demand Registration
or Shelf Takedown involves an underwritten offering and the managing underwriter of the requested Demand Registration or Shelf Takedown
advises the Company and the Investor in writing that in its reasonable and good faith opinion the number of shares of Common Stock proposed
to be included in the Demand Registration or Shelf Takedown, including all Registrable Securities and all other shares of Common Stock
proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such underwritten
offering and/or the number of shares of Common Stock proposed to be included in such Demand Registration or Shelf Takedown would adversely
affect the price per share of the Common Stock proposed to be sold in such underwritten offering, the Company shall include in such Demand
Registration or Shelf Takedown (i) first, the shares of Common Stock that the Investor proposes to sell, and (ii) second, the shares
of Common Stock proposed to be included therein by any other Persons (including shares of Common Stock to be sold for the account of
the Company and/or other holders of Common Stock) allocated among such Persons in such manner as they may agree.

 

3.                 
Piggyback Registration.

 

(a)                
Whenever the Company proposes to register the offer and sale of any shares of its Common Stock under the Securities Act (other
than a registration (i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale
to employees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to
a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any
successor rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan), whether for its own account
or for the account of one or more shareholders of the Company and the form of Registration Statement (a "Piggyback Registration
Statement") to be used may be used for any registration of Registrable Securities (a "Piggyback Registration"),
the Company shall give prompt written notice (in any event no later than 20 calendar days prior to the filing of such Registration Statement)
to the Investor of its intention to effect such a registration and, subject to Section 3(b) and Section 3(c), shall include in such registration
all Registrable Securities with respect to which the Company has received written requests for inclusion from the Investor within 10 calendar
days after the Company's notice has been given to the Investor. In the event the Company also receives written requests for inclusion
of registrable securities in such Registration Statement pursuant to the terms of one or more registration rights agreements that pre-date
this Agreement between the Company and certain stockholders party thereto (each, a “Preferred Agreement”), then the
Company shall include in such Registration Statement a number of shares sufficient to satisfy the requests for inclusion made pursuant
to both this Agreement and any Preferred Agreement. A Piggyback Registration shall not be considered a Demand Registration for purposes
of Section 2. If any Piggyback Registration Statement pursuant to which the Investor has registered the offer and sale of Registrable
Securities is a Registration Statement on Form S-3 or the then appropriate form for an offering to be made on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a "Piggyback Shelf Registration Statement"),
the Investor shall have the right, but not the obligation, to be notified of and to participate in any offering under such Piggyback Shelf
Registration Statement (a "Piggyback Shelf Takedown").

 

(b)               
If a Piggyback Registration or Piggyback Shelf Takedown is initiated as a primary underwritten offering on behalf of the Company
and the managing underwriter advises the Company and the Investor (if the Investor has elected to include Registrable Securities in such
Piggyback Registration or Piggyback Shelf Takedown) in writing that in its reasonable and good faith opinion the number of shares of Common
Stock proposed to be included in such registration or takedown, including all Registrable Securities and all other shares of Common Stock
proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such offering
and/or that the number of shares of Common Stock proposed to be included in any such registration or takedown would adversely affect the
price per share of the Common Stock to be sold in such offering, the Company shall include in such registration or takedown (i) first,
the shares of Common Stock that the Company proposes to sell; (ii) second, the shares of Common Stock requested to be included therein
by the Investor; and (iii) third, the shares of Common Stock requested to be included therein by holders of Common Stock other than holders
of Registrable Securities, allocated among such holders in such manner as they may agree; provided, that in any event the Investor
shall be entitled to register the offer and sale or distribute at least 40% of the securities to be included in any such registration
or takedown.

 

 

    	 	4	 

     

    

 

(c)                
If a Piggyback Registration or Piggyback Shelf Takedown is initiated as an underwritten offering on behalf of a holder of Common
Stock other than the Investor, and the managing underwriter advises the Company in writing that in its reasonable and good faith opinion
the number of share of Common Stock proposed to be included in such registration or takedown, including all Registrable Securities and
all other shares of Common Stock proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which
can be sold in such offering and/or that the number of shares of Common Stock proposed to be included in any such registration or takedown
would adversely affect the price per share of the Common Stock to be sold in such offering, the Company shall include in such registration
or takedown (i) first, the shares of Common Stock requested to be included therein by the holder(s) requesting such registration or takedown
and by the Investor, allocated pro rata among all such holders requesting registration and the Investor on the basis of the number of
shares of Common Stock other than the Registrable Securities (on a fully diluted, as converted basis) and the number of Registrable Securities
or in such manner as they may otherwise agree and (ii) second, the shares of Common Stock requested to be included therein by other holders
of Common Stock, allocated among such holders in such manner as they may agree.

 

(d)               
If any Piggyback Registration or Piggyback Shelf Takedown is initiated as a primary underwritten offering on behalf of the Company,
the Company shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such
offering.

 

(e)                
The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion.

 

4.                 
Registration Procedures. If and whenever the Investor requests that the offer and sale of any Registrable Securities be
registered under the Securities Act or any Registrable Securities be distributed in a Shelf Takedown pursuant to the provisions of this
Agreement, the Company shall use its commercially reasonable best efforts to effect the registration of the offer and sale of such Registrable
Securities under the Securities Act in accordance with the intended method of disposition thereof (the “Plan of Distribution”)
and pursuant thereto the Company shall as soon as practicable and as applicable:

 

(a)                
subject to Section 2(a), Section 2(b) and Section 2(c), prepare and file with the Commission a Registration Statement covering
such Registrable Securities and use its commercially reasonable best efforts to cause such Registration Statement to be declared effective;

 

(b)               
in the case of a Long-Form Registration or a Short-Form Registration, prepare and file with the Commission such amendments, post-effective
amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep
such Registration Statement effective for a period of not less than 60 calendar days, or if earlier, until all of such Registrable Securities
have been disposed of and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities
in accordance with the intended methods of disposition set forth in such Registration Statement;

 

(c)                
at least 10 calendar days before filing such Registration Statement, Prospectus or amendments or supplements thereto with the Commission,
furnish to counsel for the Investor copies of such documents proposed to be filed, which documents shall be subject to the review, comment
and approval of such counsel; provided, that the Company shall not have any obligation to modify any information if the Company
reasonably expects that so doing would cause (i) the Registration Statement to contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Prospectus
to contain an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.

 

(d)               
notify the Investor, promptly after the Company receives notice thereof, of the time when such Registration Statement has been
declared effective or a supplement, including a Shelf Supplement, to any Prospectus forming a part of such Registration Statement has
been filed with the Commission;

 

 

    	 	5	 

     

    

 

(e)                
furnish to the Investor such number of copies of the Prospectus included in such Registration Statement (including each preliminary
Prospectus) and any supplement thereto, including a Shelf Supplement (in each case including all exhibits and documents incorporated by
reference therein), and such other documents as the Investor may request in order to facilitate the disposition of the Registrable Securities
owned by the Investor;

 

(f)                 
use its commercially reasonable best efforts to register or qualify such Registrable Securities under such other securities or
"blue sky" laws of such jurisdictions as the Investor requests and do any and all other acts and things which may be necessary
or advisable to enable the Investor to consummate the disposition in such jurisdictions of the Registrable Securities owned by the Investor;
provided, that the Company shall not be required to qualify generally to do business, subject itself to general taxation or consent
to general service of process in any jurisdiction where it would not otherwise be required to do so but for this Section 5(f);

 

(g)               
notify the Investor, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the
happening of any event that would cause the Prospectus included in such Registration Statement to contain an untrue statement of a material
fact or omit any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made,
not misleading, and, at the request of the Investor, the Company shall prepare a supplement or amendment to such Prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not
misleading;

 

(h)               
make available for inspection, upon reasonable notice and during normal business hours, by the Investor, any underwriter participating
in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by the Investor or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records") as shall be reasonably necessary to enable them to exercise their due diligence
responsibly, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Inspector
in connection with such Registration Statement;

 

(i)                 
provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective
date of such registration;

 

(j)                 
use its commercially reasonable best efforts to cause such Registrable Securities to be listed on each securities exchange on which
the Common Stock is then listed or, if the Common Stock is not then listed, on a national securities exchange selected by the Investor
with the Company’s consent;

 

(k)               
in connection with an underwritten offering, enter into such customary agreements (including underwriting and lock-up agreements
in customary form) and take all such other customary actions as the Investor or the managing underwriter of such offering reasonably request
in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, making appropriate officers
of the Company available to participate in "road show" and other customary marketing activities (including one-on-one meetings
with prospective purchasers of the Registrable Securities));

 

(l)                 
otherwise use its commercially reasonable best efforts to comply with all applicable rules and regulations of the Commission and
make available to its shareholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act
and Rule 158 under the Securities Act or any successor rule thereto) no later than 45 calendar days after the end of the 12-month period
beginning with the first day of the Company's first full fiscal quarter after the effective date of such Registration Statement, which
earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files
complete and accurate information on Forms 10-K, 10-Q and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities
Act or any successor rule thereto; and

 

(m)              
furnish to the Investor and each underwriter, if any, with (i) a written legal opinion of the Company's outside counsel, dated
the closing date of the offering, in form and substance as is customarily given in opinions of the Company's counsel to underwriters in
underwritten registered offerings; and (ii) on the date of the applicable Prospectus, on the effective date of any post-effective amendment
to the applicable Registration Statement and at the closing of the offering, dated the respective dates of delivery thereof, a "comfort"
letter signed by the Company's independent certified public accountants in form and substance as is customarily given in accountants'
letters to underwriters in underwritten registered offerings;

 

 

    	 	6	 

     

    

 

(n)               
without limiting Section 5(f), use its commercially reasonable best efforts to cause such Registrable Securities to be registered
with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the
Company to enable the Investor to consummate the disposition of such Registrable Securities in accordance with its intended method of
distribution thereof;

 

(o)               
notify the Investor promptly of any request by the Commission for the amending or supplementing of such Registration Statement
or Prospectus or for additional information;

 

(p)               
advise the Investor, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose
and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment
if such stop order should be issued;

 

(q)               
permit the Investor, in its sole and exclusive judgment, which might be deemed to be an underwriter or a "controlling person"
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) (a "Controlling Person")
of the Company, to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished
to the Company in writing, which in the reasonable judgment of the Investor and its counsel should be included;

 

(r)                 
cooperate with the Investor to facilitate the timely preparation and delivery of certificates representing the Registrable Securities
to be sold pursuant to such Registration Statement or Rule 144 free of any restrictive legends and representing such number of shares
of Common Stock and registered in such name(s) as the Investor may reasonably request a reasonable period of time prior to sales of Registrable
Securities pursuant to such Registration Statement or Rule 144; provided, that the Company may satisfy its obligations hereunder
without issuing physical stock certificates through the use of The Depository Trust Company's Direct Registration System (the "DTCDRS");

 

(s)                
not later than the effective date of such Registration Statement, provide a CUSIP number for all Registrable Securities and provide
the applicable transfer agent with printed certificates for the Registrable Securities which are in a form eligible for deposit with The
Depository Trust Company; provided, that the Company may satisfy its obligations hereunder without issuing physical stock certificates
through the use of the DTCDRS;

 

(t)                 
take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided, that, to the extent that
any prohibition is applicable to the Company, the Company will take all reasonable action to make any such prohibition inapplicable;

 

(u)               
include in such Registration Statement a Plan of Distribution provided by the Investor or its designated counsel; and

 

(v)               
otherwise use its commercially reasonable best efforts to take all other steps necessary to effect the registration of such Registrable
Securities contemplated hereby.

 

5.                 
Expenses. All expenses (other than Selling Expenses) incurred by the Company in complying with its obligations pursuant
to this Agreement and in connection with the registration and disposition of Registrable Securities shall be paid by the Company, including,
without limitation, all (i) registration and filing fees (including, without limitation, any fees relating to filings required to be made
with, or the listing of any Registrable Securities on, any securities exchange or over-the-counter trading market on which the Registrable
Securities are listed or quoted); (ii) underwriting expenses (other than fees, commissions or discounts); (iii) expenses of any audits
incident to or required by any such registration; (iv) fees and expenses of complying with securities and "blue sky" laws (including,
without limitation, fees and disbursements of counsel for the Company in connection with "blue sky" qualifications or exemptions
of the Registrable Securities); (v) printing expenses; (vi) messenger, telephone and delivery expenses; (vii) fees and expenses of the
Company's counsel and accountants; (viii) Financial Industry Regulatory Authority, Inc. filing fees (if any); and (ix) reasonable fees
and expenses of one counsel for the Investor. In addition, the Company shall be responsible for all of its internal expenses incurred
in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties) and the expense of any annual audits. All Selling Expenses
relating to the offer and sale of Registrable Securities registered under the Securities Act pursuant to this Agreement shall be borne
and paid by the Investor.

 

 

    	 	7	 

     

    

 

6.                 
Indemnification.

 

(a)                
The Company shall indemnify and hold harmless, to the fullest extent permitted by law, the Investor, and the Investor’s officers,
directors, managers, members, partners, shareholders and Affiliates, each underwriter, broker or any other Person acting on behalf of
the Investor and each other Controlling Person, if any, who controls any of the foregoing Persons, against all losses, claims, actions,
damages, liabilities and expenses, joint or several, to which any of the foregoing Persons may become subject under the Securities Act
or otherwise, insofar as such losses, claims, actions, damages, liabilities or expenses arise out of or are based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus
(as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case
of a Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made) not misleading;
and shall reimburse such Persons for any legal or other expenses reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, action, damage or liability, except insofar as the same are caused by or contained in any information
furnished in writing to the Company by the Investor expressly for use therein or by the Investor’s failure to deliver a copy of
the Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act
or any successor rule thereto) or any amendments or supplements thereto (if the same was required by applicable law to be so delivered)
after the Company has furnished the Investor with a sufficient number of copies of the same prior to any written confirmation of the sale
of Registrable Securities. This indemnity shall be in addition to any liability the Company may otherwise have.

 

(b)               
In connection with any registration in which the Investor is participating, the Investor shall furnish to the Company in writing
such information as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the
extent permitted by law, shall indemnify and hold harmless, the Company, each director of the Company, each officer of the Company who
shall sign such Registration Statement, each underwriter, broker or other Person acting on behalf of the Investor and each Controlling
Person who controls any of the foregoing Persons against any losses, claims, actions, damages, liabilities or expenses resulting from
any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus, preliminary Prospectus, free
writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein
(in the case of a Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made)
not misleading, but only to the extent that such untrue statement or omission is contained in any information so furnished in writing
by the Investor; provided, that the obligation to indemnify shall be several, not joint and several, for each holder and shall
not exceed an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by the Investor from
the sale of Registrable Securities pursuant to such Registration Statement. This indemnity shall be in addition to any liability the Investor
may otherwise have.

 

 

    	 	8	 

     

    

 

(c)                
Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in this
Section 7, such indemnified party shall, if a claim in respect thereof is made against an indemnifying party, give written notice to the
latter of the commencement of such action. The failure of any indemnified party to notify an indemnifying party of any such action shall
not (unless such failure shall have a material adverse effect on the indemnifying party) relieve the indemnifying party from any liability
in respect of such action that it may have to such indemnified party hereunder. In case any such action is brought against an indemnified
party, the indemnifying party shall be entitled to participate in and to assume the defense of the claims in any such action that are
subject or potentially subject to indemnification hereunder, jointly with any other indemnifying party similarly notified to the extent
that it may wish, with counsel reasonably satisfactory to such indemnified party, and after written notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal
or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, that, if (i) any indemnified
party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which
are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have
an effect upon matters beyond the scope of the indemnity provided hereunder, or (ii) such action seeks an injunction or equitable relief
against any indemnified party or involves actual or alleged criminal activity, the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party without such indemnified party's prior written consent (but, without such
consent, shall have the right to participate therein with counsel of its choice) and such indemnifying party shall reimburse such indemnified
party and any Controlling Person of such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified
party which is reasonably related to the matters covered by the indemnity provided hereunder. If the indemnifying party is not entitled
to, or elects not to, assume the defense of a claim, it shall not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party
a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.
In such instance, the conflicting indemnified parties shall have a right to retain one separate counsel, chosen by the Investor, at the
expense of the indemnifying party.

 

(d)               
If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying
such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss,
claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim,
damage, liability or action as well as any other relevant equitable considerations; provided, that the maximum amount of liability
in respect of such contribution shall be limited, in the case of the Investor, to an amount equal to the net proceeds (after underwriting
fees, commissions or discounts) actually received by the Investor from the sale of Registrable Securities effected pursuant to such registration.
The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party, whether the violation of the Securities Act or any other similar federal
or state securities laws or rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any applicable registration, qualification or compliance was perpetrated by the indemnifying party or
the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement
or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation
or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty
or liable of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation.

 

7.                 
Participation in Underwritten Registrations. No Person may participate in any registration hereunder which is underwritten
unless such Person (a) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the
Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided, that the
Investor shall not be required to make any representations or warranties to the Company or the underwriters (other than representations
and warranties regarding the Investor, the Investor’s ownership of its shares of Common Stock to be sold in the offering and the
Investor’s intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters with
respect thereto, except as otherwise provided in Section 7 or as required by the underwriters.

 

 

    	 	9	 

     

    

 

8.                 
Rule 144 Compliance. With a view to making available to the Investor the benefits of Rule 144 and any other rule or regulation
of the Commission that may at any time permit a holder to sell securities of the Company to the public without registration, the Company
shall:

 

(a)                
make and keep public information available, as those terms are understood and defined in Rule 144;

 

(b)               
use commercially reasonable best efforts to file with the Commission in a timely manner all reports and other documents required
of the Company under the Securities Act and the Exchange Act; and

 

(c)                
furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon request, a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company, and such other reports and documents so filed or furnished by the Company as the
Investor may reasonably request in connection with the sale of Registrable Securities without registration.

 

9.                 
Preservation of Rights. The Company shall not (a) grant any registration rights to third parties which are more favorable
than or inconsistent with the rights granted hereunder, or (b) enter into any agreement, take any action, or permit any change to occur,
with respect to its securities that violates or subordinates the rights expressly granted to the Investor Agreement.

 

10.             
Termination. This Agreement shall terminate and be of no further force or effect when there shall no longer be any Registrable
Securities outstanding; provided, that the provisions of Section 6 and Section 7 shall survive any such termination.

 

11.               
Notices. All notices, requests, consents, claims, demands,
waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with
written confirmation of receipt); (b) when received by the addressee if sent by a nationally or internationally recognized overnight courier
(receipt requested); or (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business
hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, Such communications must be
sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice
given in accordance with this Section 12).

 

If to Investor:

 

_________________ 

_________________ 

Attention: ____________ 

E-mail: _______________ 

 

with a copy to (which
shall not constitute notice): 

 

Moses & Singer LLP 

Attention: Francesco Di
Pietro, Esq. 

Allan Grauberd, Esq. 

The Chrysler Building 

405 Lexington Avenue 

New York, New York 10174-1299 

E-mail: fdipietro@mosessinger.com 

agrauberd@mosessinger.com 

 

If to the Company: 

 

Telkonet, Inc. 

20800 Swenson Drive, Suite 175 

Waukesha, Wisconsin 53186 

Attention: Jason L. Tienor 

E-mail: jtienor@telkonet.com 

 

 

    	 	10	 

     

    

 

with a copy to (which shall not constitute notice): 

 

Husch Blackwell LLP 

511 North Broadway, Suite 1100 

Milwaukee, WI 53202 

Attention: Kate Bechen 

E-mail: kate.bechen@huschblackwell.com 

	 

12.             
Entire Agreement. This Agreement, together with the Purchase Agreement and any related exhibits and schedules thereto, constitutes
the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all
prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. Notwithstanding the
foregoing, in the event of any conflict between the terms and provisions of this Agreement and those of the Purchase Agreement, the terms
and conditions of this Agreement shall control.

 

13.             
Successor and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. The Company may assign this Agreement at any time in connection with a sale or acquisition
of the Company, whether by merger, consolidation, sale of all or substantially all of the Company’s assets, or similar transaction,
without the consent of the Investor; provided, that the successor or acquiring Person agrees in writing to assume all of the Company’s
rights and obligations under this Agreement. Investor may assign its rights hereunder to any purchaser or transferee of Registrable Securities;
provided, that such purchaser or transferee shall, as a condition to the effectiveness of such assignment, be required to execute
a counterpart to this Agreement agreeing to be treated as an Investor whereupon such purchaser or transferee shall have the benefits of,
and shall be subject to the restrictions contained in, this Agreement as if such purchaser or transferee was originally included in the
definition of an Investor herein and had originally been a party hereto.

 

14.             
No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors
and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable
right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

 

15.             
Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

16.             
Amendment, Modification and Waiver. The provisions of this Agreement may only be amended, modified, supplemented or waived
with the prior written consent of the parties hereto. No waiver by any party shall operate or be construed as a waiver in respect of any
failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring
before or after that waiver. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any right,
remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.

 

17.             
Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable
such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable,
the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely
as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated
to the greatest extent possible.

 

18.               
Remedies. The Investor, in addition to being entitled
to exercise all rights granted by law, including recovery of damages, shall be entitled to specific performance of its rights under this
Agreement. The Company acknowledges that monetary damages would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Agreement and the Company hereby agrees to waive the defense in any action for specific performance that
a remedy at law would be adequate.

 

19.               
Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions
contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of New York, without regard
to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of New York, and
except that the Utah Revised Business Corporation Act shall control to the extent such necessarily applies to any aspect of this Agreement.

 

 

    	 	11	 

     

    

 

20.               
Submission to Jurisdiction. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement brought by any other party or its successors or assigns shall be brought and determined in the United States
District Court located in the Borough of Manhattan (unless the United States District Court located in the Borough of Manhattan shall
decline to accept jurisdiction over a particular matter, in which case, in any state court of the State of New York within the Borough
of Manhattan in the City of New York), and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid
courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising
out of or relating to this Agreement and the transactions contemplated hereby. Each of the parties agrees not to commence any action,
suit or proceeding relating thereto except in the courts described above in New York, other than actions in any court of competent jurisdiction
to enforce any judgment, decree or award rendered by any such court in New York as described herein. Each of the parties further agrees
that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service
is insufficient. In the event of any litigation before a court of competent jurisdiction relating to a dispute with respect to this Agreement,
the non-prevailing party in such litigation shall reimburse the prevailing party’s reasonable and documented costs and expenses
(including reasonable and documented attorney’s fees and any costs of investigation or preparation) incurred in connection with
such litigation, including any appeal therefrom. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to
assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in New
York as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from
any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought
in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper, or (iii) this Agreement, or the subject
matter hereof, may not be enforced in or by such courts.

 

21.               
WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

22.             
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of
which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other
means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

23.             
Further Assurances. Each of the parties to this Agreement shall, and shall cause their affiliates to, execute and deliver
such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry
out the provisions hereof and to give effect to the transactions contemplated hereby.

 

[signature page follows]

 

 

    	 	12	 

     

    

 

 

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

 

	 	TELKONET, INC. 
	 	
     

    By: /s/ Jason L. Tienor                  

     

    Name: Jason L. Tienor                  

     

    Title: Chief Executive Officer       

     

     

    VDA GROUP S.P.A.

     

    By: /s/ Piercarlo Gramaglia            

     

    Name: Piercarlo Gramaglia             

     

    Title: Chief Executive Officer         

     

	 	 
	 	 

 

 

  

 

 

 

Signature Page to Registration Rights Agreement

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