Exhibit
      10.16




**EXECUTION
        COPY**


**EMPLOYMENT
        AGREEMENT**
  **THIS
        AGREEMENT** is by
        and between **TELKONET,
        INC. (“TKO”),** a
        Utah
        corporation with corporate offices located in Germantown, Maryland and **ROBERT
        M. ZIRPOLI** (“Executive”).
 
 **WHEREAS** ,
        TKO is
        acquiring substantially all of the assets of **SMART
        SYSTEMS INTERNATIONAL (“SSI”)** (the
“Acquisition”).
 
 **WHEREAS,** TKO will
        continue to operate the SSI business following the Effective Date (as
        hereinafter defined);
 
 **WHEREAS** ,
        subject
        to the Acquisition being completed (the “Effective Date”), TKO desires to employ
        Executive, and Executive desires to be employed by TKO.
 
 **NOW
        THEREFORE** ,
        TKO
        hereby employs Executive, and Executive hereby accepts employment with TKO
        on
        the following terms and conditions:
 
 **1.**  **Duties** **.**  TKO
        hereby employs Executive in the capacity of Senior Applications Engineer.
        In
        such capacity, Executive shall:
 
 (a)   provide
        technical leadership for research, design and development of hardware and
        software systems and components; plan, coordinate and manage engineering
        activities including scheduling, design, budgeting and implementing projects;
 
 (b)  ensure
        Engineering activities are timely and completed in accordance with established
        quality standards and procedures; develop and implement policies that ensure
        effective completion of tasks and processes; coordinate with related departments
        to maintain schedules and effect necessary changes and revisions;
 
 (c)  ensure
        that safety & compliance regulations are closely adhered to; complete
        related documentation such as patents, specs & whitepapers as required; and
 
 (d)  supports
        the Marketing and Sales area, by providing the following functions:
 ·
              Assures
                  the correct product configuration is proposed, priced and provided
                  to a
                  customer
 ·
              Performs
                  site surveys
 ·
              Creates
                  site specific custom product design
 ·
              Provides
                  customer training
 ·
              Offers
                  Technical customer/product support
 ·
              Provides
                  Trade show support
 
 
 
 **2.**  **Term** **.** The term
        of this Agreement (the “Term”) shall commence on the Effective Date and shall
        continue for a minimum of six (6) months. At the end of that time period,
        an
        assessment will be made regarding the Executive’s continued employment. In the
        event that he is involuntarily terminated (other than for “cause” or engaging in
        any unethical, immoral or unprofessional conduct or violation of a Company
        policy), Telkonet agrees to pay the Executive severance equal to three (3)
        months of current base salary, and continue to provide and pay for health
        insurance coverage for a period of three (3) months following termination
        or
        until such time that the Executive is covered by another group benefits plan,
        whichever occurs first.
 
 
 **3.**  **Extent
        of Services** **.** During
        the Term and any extension thereof, Executive shall devote his full time
        and
        efforts to the performance, to the best of his abilities, of such duties
        and
        responsibilities inherent in the position of Senior Applications Engineer,
        as
        described in Section 1 above, and as the Board of Directors and/or the Officers
        of TKO shall determine, consistent therewith.
 
 **4.**  **Compensation** **.**
 
 (a)  Salary .
        Executive shall be paid One Hundred Thousand Dollars ($100,000.00) per year
        which shall be paid in accordance with TKO’s normal payroll practices, and
        subject to all lawfully required withholding. The base salary may be increased
        annually as determined by the Board of Directors of Telkonet in its sole
        discretion.
 
 (b)  Executive
        Participation in TKO Staff Benefits Plans .
        Following the Effective Date, Executive shall be entitled to participate
        in any
        group health programs and other benefit and incentive plans, which may be
        instituted from time-to-time for TKO employees, and for which Executive
        qualifies under the terms of such plans. All such benefits shall be provided
        on
        the same terms and conditions as generally apply to all other TKO employees
        under these plans and may be modified by TKO from time-to-time.
 
 (c)  Expenses .
        Subject
        to TKO company policy, the Executive shall be reimbursed by TKO for all
        ordinary, reasonable, customary and necessary expenses incurred by him in
        the
        performance of his duties and responsibilities as Senior Applications Engineer.
        Executive agrees to prepare documentation for such expenses as may be necessary
        for TKO to comply with the applicable rules and regulations of the Internal
        Revenue Service.
 
 **5.**  **Vacation** **.** At full
        pay and without any adverse effect to his compensation, provided all other
        terms
        and conditions of this Agreement are satisfied, Executive shall be entitled
        to
        three (3) weeks of vacation for each full calendar year during the term of
        this
        Agreement. Executive agrees to schedule his vacation leave in advance upon
        written notice to the TKO CEO and at a time with minimum disruption to TKO.
        Carryover of vacation days in excess of two weeks is subject to the prior
        approval of the CEO of TKO.
 
 
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 **6.**  **Termination** **.** This
        Agreement shall terminate in accordance with Section 2 of this Agreement,
        or
        upon the first to occur of any of the following events:
 
 (a)  The
        bankruptcy or dissolution of TKO;
 
 (b)  The
        death
        of Executive;
 
 (c)  The
        mutual consent of Executive and TKO;
 
 (d)  “Cause”
        exists for termination. For purposes of this Agreement, “cause” shall include,
        but not be limited to, the following: (1) theft, fraud, embezzlement, dishonesty
        or other similar behavior by Executive; (2) any material breach by Executive
        of
        any provision of this Agreement; (3) any habitual neglect of duty or misconduct
        of Executive in discharging any of his duties and responsibilities under
        this
        Agreement; (4) any conduct of Executive which is detrimental to or embarrassing
        to TKO, including, but not limited to, Executive being indicated or convicted
        of
        a felony or any offense involving moral turpitude; or (5) any default of
        Executive’s obligations hereunder, or any failure or refusal of Executive to
        comply with the policies, rules and regulations of TKO, which default, failure
        or refusal is not cured within a reasonable time (but not to exceed thirty
        (30)
        days) after written notification thereof to Executive by TKO. If cause exists
        for termination, Executive shall be entitled to no further compensation,
        except
        for accrued leave and vacation and except as may be required by applicable
        law.
 
 **7.**  **Surrender
        of Books and Papers** **.** Upon
        termination of this Agreement (irrespective of the time, manner, or cause
        of
        termination, be it for cause or otherwise), Executive shall immediately
        surrender to TKO all books, records, or other written papers or documents
        entrusted to him or which he has otherwise acquired pertaining to TKO and
        all
        other TKO property in Executive’s possession, custody or control.
 
 **8.**  **Inventions
        and Patents** **.** Executive agrees that Executive will promptly from time-to-time fully inform
        and
        disclose to TKO any and all ideas, concepts, copyrights, copyrightable material,
        developments, inventions, designs, improvements and discoveries of whatever
        nature that Executive may have or produce during the term of Executive’s
        employment under this Agreement that pertain or relate to the then current
        business of TKO (the “Creations”), whether conceived by Executive alone or with
        others and whether or not conceived during regular working hours. All Creations
        shall be the exclusive property of TKO and shall be “works made for hire” as
        defined in 17 U.S.C. §101, and TKO shall own all rights in and to the Creations
        throughout the world, without payment of royalty or other consideration to
        Executive or anyone claiming through Executive. Executive hereby transfers
        and
        assigns to TKO (or its designee) all right, title and interest in and to
        every
        Creation. Executive shall assist TKO in obtaining patents or copyrights on
        all
        such inventions, designs, improvements and discoveries being patentable or
        copyrightable by Executive or TKO and shall execute all documents and do
        all
        things necessary to obtain letters of patent or copyright, vest the TKO with
        full and exclusive title thereto, and protect the same against infringement
        by
        others, and such assistance shall be given by Executive, if needed, after
        termination of this Agreement for whatever cause or reason. Executive hereby
        represents and warrants that Executive has no current or future obligation
        with
        respect to the assignment or disclosure of any or all developments, inventions,
        designs, improvements and discoveries of whatever nature to any previous
        Employer, entity or other person and that Executive does not claim any rights
        or
        interest in or to any previous unpatented or uncopyrighted developments,
        inventions, designs, improvements or discoveries.
 
 3
 **9.**  **Trade
        Secrets, Non-Competition and Non-Solicitation** **.**
 
 (a)  Trade
        Secrets .
        Contemporaneous with the execution of this Agreement and during the term
        of
        employment under this Agreement, TKO shall deliver to Executive or permit
        Executive to have access to and become familiar with various confidential
        information and trade secrets of SSI and TKO, including without limitation,
        data, production methods, customer lists, product format or developments,
        other
        information concerning the business of SSI and TKO, and other unique processes,
        procedures, services and products of SSI and TKO, which are regularly used
        in
        the operation of the business of the SSI and TKO (collectively, the
“Confidential Information”). Executive shall not disclose any of the
        Confidential Information that he receives from TKO or their clients and
        customers in the course of his employment with TKO, directly or indirectly,
        nor
        use it in any way, either during the term of this Agreement or at any time
        thereafter, except as required in the course of employment with TKO Executive
        further acknowledges and agrees that Executive owes SSI and TKO a fiduciary
        duty
        to preserve and protect all Confidential Information from unauthorized
        disclosure or unauthorized use. All files, records, documents, drawings,
        graphics, processes, specifications, equipment and similar items relating
        to the
        business of SSI and/or TKO, whether prepared by Executive or otherwise coming
        into Executive’s possession in the course of his employment with TKO, shall
        remain the exclusive property of TKO and shall not be removed from the premises
        of SSI and/or TKO without the prior written consent of TKO unless removed
        in
        relation to the performance of Executive’s duties under this Agreement. Any such
        files, records, documents, drawings, graphics, specifications, equipment
        and
        similar items, and any and all copies of such materials which have been removed
        from the premises of SSI and/or TKO, shall be returned by Executive to TKO.
        Executive further acknowledges that the covenants of Executive herein are
        intended to include the protection of the confidential information of SSI's
        and
        TKO’s customers and clients, that come into the possession of Executive as a
        result of his employment with TKO, and that such customers and clients of
        TKO
        shall be entitled to rely on and enforce these covenants against Executive
        for
        their own benefit.
 
 (b)  Non-Competition .
        Executive acknowledges that he will be provided with and have access to the
        Confidential Information, the authorized use or disclosure of which would
        cause
        irreparable injury to TKO, that TKO’s willingness to enter into this Agreement
        is based in material part on Executive’s agreement to the provisions of this
        Section 9(b) and that Executive’s breach of the provisions of this Section would
        materially and irreparably damage TKO. In consideration for TKO’s disclosure of
        Confidential Information to Executive, Executive’s access to the Confidential
        Information, and the salary paid to Executive by TKO hereunder, Executive
        agrees
        that during the term and for a period of three (3) months following termination
        of the Employment (the "Noncompetition Period"), he will not (a) Participate
        In
        (as hereinafter defined) any other business or organization which at any
        time
        during the Noncompetition Period be engaged in the same business as or in
        competition with TKO within Continental USA; (b) directly or indirectly solicit
        for business any person or enterprise that at any time during the one (1)
        year
        period preceding the date of termination of the Employment who was a customer
        of
        TKO; or (c) directly or indirectly employ any person who, at any time during
        the
        one (1) year period preceding the date of termination pursuant to the terms
        of
        the Employment Contract was, or during the Noncompetition Period is, an employee
        of TKO.
 
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 (c)  Reasonableness
        of Restrictions .
        Executive acknowledges that the restrictions set forth in Section
        9(b) of this
        Agreement are reasonable in scope and necessary for the protection of the
        business and goodwill of TKO. Executive agrees that should any portion of
        the
        covenants in Section
        9 be
        unenforceable because of the scope thereof or the period covered thereby
        or
        otherwise, the covenant shall be deemed to be reduced and limited to enable
        it
        to be enforced to the maximum extent permissible under the laws and public
        policies applied in the jurisdiction in which enforcement is
        sought.
 
 (d)  Soliciting
        Executives .
        Executive shall not during the term of this Agreement or for a period of
        one (1)
        year after termination of Executive’s employment hereunder for any reason,
        whether by resignation, discharge or otherwise, either directly or indirectly,
        employ, enter into agreement with, or solicit the employment of, Executives
        of
        TKO for the purpose of causing them to leave the employment of TKO or take
        employment with any business that is in competition in any manner whatsoever
        with the business of TKO.
 
 (e)  Injunctive
        Relief; Extension of Restrictive Period .
        In the
        event of a breach of any of the covenants by Executive or TKO contained in
        this
        Agreement, it is understood that damages will be difficult to ascertain,
        and
        either party may petition a court of law or equity for injunctive relief
        in
        addition to any other relief which Executive or TKO may have under the law,
        including but not limited to reasonable attorneys’ fees.
 
 **10.**  **Miscellaneous** **.**
 
 (a)  This
        Agreement shall be binding upon the parties and their respective heirs,
        executors, administrators, successors and assigns. Executive shall not assign
        any part of his rights under this Agreement without the prior written consent
        of
        TKO.
 
 (b)  This
        Agreement contains the entire agreement and understanding between the parties
        and supersedes any and all prior understandings and agreements between the
        parties regarding Executive’s employment.
 
 (c)  No
        modification hereof shall be binding unless made in writing and signed by
        the
        party against whom enforcement is sought. No waiver of any provisions of
        this
        Agreement shall be valid unless the same is in writing and signed by the
        party
        against whom it is sought to be enforced, unless it can be shown through
        custom,
        usage or course of action.
 
 (d)  This
        Agreement is executed in, and it is the intention of the parties hereto that
        it
        shall be governed by, the laws of the State of Maryland, without regard to
        applicable conflict of laws provisions.
 
 5
 (e)  The
        provisions of this Agreement shall be deemed to be severable, and the invalidity
        or unenforceability of any provision shall not affect the validity or
        enforceability of the other provisions hereof.
 
 (f)  Any
        notice or communication permitted or required by this Agreement shall be
        in
        writing and shall become effective upon personal service, or service by wire
        transmission, which has been acknowledged by the other party as being received,
        or two (2) days after its mailing by certified mail, return receipt requested,
        postage prepaid addressed as follows:
 
 (1)
              If
                  to TKO, to:
  Lorna
        M.
        Kleinrock, PHR
 Vice
        President
 Human
        Resources
 Telkonet,
        Inc.
 20374
        Seneca Meadows Parkway
 Germantown,
        Maryland 20876
 
 (2)
              If
                  to Executive, to:
 
 Mr.
        Robert M. Zirpoli
 3271
        S.
        Highland Drive, #715
 Las
        Vegas, NV 89109
 
 **IN
        WITNESS WHEREOF** ,
        TKO and
        Executive have executed this Agreement as of the Effective Date.


**TELKONET,
                  INC.**
                
                
                By:
                  ___________________________
                Name:
                Title:
              By:
                    /s/ Robert M. Zirpoli
                  Robert
                    M. Zirpoli
     6