Document:

STOCK
      PURCHASE AGREEMENT

     

    THIS
      STOCK PURCHASE AGREEMENT (this “Agreement”),
      dated
      as of May 23, 2007, is made by and between MSTI Holdings, Inc., a Delaware
      corporation (“Seller”),
      and
      Ron Bell, an individual (“Buyer”).

     

    RECITALS

     

    A. Seller
      owns one thousand (1,000) shares of common stock, $.001 par value per share
      (the
“Shares”),
      of
      FXS Holdings, Inc., a Delaware corporation (the “Company”),
      which
      shares constitute, as of the date hereof, all of the issued and outstanding
      capital stock of the Company.

     

    B. Buyer
      holds 3,169,014 shares of common stock, $.001 par value per share, of Seller
      (the “Purchase
      Price Shares”),
      and
      Buyer has agreed to transfer such interest back to Seller for immediate
      cancellation (the “Redemption”).

     

    C. In
      connection with the Redemption, Buyer wishes to acquire from Seller, and Seller
      wishes to transfer to Buyer, the Shares, upon the terms and subject to the
      conditions set forth herein.

     

    Accordingly,
      the parties hereto agree as follows:

     

    1. Purchase
      and Sale of Stock.
      

     

    (a) Purchased
      Shares.
      Subject
      to the terms and conditions provided below, Seller shall sell and transfer
      to
      Buyer and Buyer shall purchase from Seller, on the Closing Date (as defined
      in
      Section 1(c)), all of the Shares.

     

    (b) Purchase
      Price.
      The
      purchase price for the Shares shall be the transfer and delivery by Buyer to
      Seller of the Purchase Price Shares, deliverable as provided in Section
      2(b).

     

    (c) Closing.
      The
      closing of the transactions contemplated in this Agreement (the “Closing”)
      shall
      take place as soon as practicable following the execution of this Agreement.
      The
      date on which the Closing occurs shall be referred to herein as the Closing
      Date
      (the “Closing
      Date”).

     

    2. Closing.

     

    (a) Transfer
      of Shares.
      At the
      Closing, Seller shall deliver to Buyer certificates representing the Shares,
      duly endorsed to Buyer or as directed by Buyer, which delivery shall vest Buyer
      with good and marketable title to all of the issued and outstanding shares
      of
      capital stock of the Company, free and clear of all liens and
      encumbrances.

     

    (b)
      Payment
      of Purchase Price.
      At the
      Closing, Buyer shall deliver to Seller a certificate or certificates
      representing the Purchase Price Shares duly endorsed to Seller, which delivery
      shall vest Seller with good and marketable title to the Purchase Price Shares,
      free and clear of all liens and encumbrances.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3. Representations
      and Warranties of Seller.
      Seller
      represents and warrants to Buyer as of the date hereof as follows:

     

    (a) Corporate
      Authorization; Enforceability.
      The
      execution, delivery and performance by Seller of this Agreement is within the
      corporate powers and has been, duly authorized by all necessary corporate action
      on the part of Seller. This Agreement has been duly executed and delivered
      by
      Seller and constitutes the valid and binding agreement of Seller, enforceable
      against Seller in accordance with its terms, except to the extent that its
      enforceability may be subject to applicable bankruptcy, insolvency,
      reorganization, moratorium and similar Laws affecting the enforcement of
      creditors’ rights generally and by general equitable principles.

     

    (b) Governmental
      Authorization.
      The
      execution, delivery and performance by Seller of this Agreement requires no
      consent, approval, Order, authorization or action by or in respect of, or filing
      with, any Governmental Authority.

     

    (c) Non-Contravention;
      Consents.
      The
      execution, delivery and performance by Seller of this Agreement and the
      consummation of the transactions contemplated hereby do not (i) violate the
      certificate of incorporation or bylaws of Seller or (ii) violate any applicable
      Law or Order.

     

    (d) Capitalization.
      As of
      the date hereof, Seller owns the Shares, which shares represent 100% of the
      authorized, issued and outstanding capital stock of the Company. The Shares
      to
      be acquired by Buyer are duly authorized, validly issued, fully-paid,
      non-assessable and free and clear of any Liens.

     

    4. Representations
      and Warranties of Buyer.
      Buyer
      represents and warrants to Seller as of the date hereof as follows:

     

    (a) Enforceability.
      The
      execution, delivery and performance by Buyer of this Agreement are within
      Buyer’s powers. This Agreement has been duly executed and delivered by Buyer and
      constitutes the valid and binding agreement of Buyer, enforceable against Buyer
      in accordance with its terms, except to the extent that its enforceability
      may
      be subject to applicable bankruptcy, insolvency, reorganization, moratorium
      and
      similar laws affecting the enforcement of creditors' rights generally and by
      general equitable principles.

     

    (b) Governmental
      Authorization.
      The
      execution, delivery and performance by Buyer of this Agreement require no
      consent, approval, Order, authorization or action by or in respect of, or filing
      with, any Governmental Authority.

     

    (c) Non-Contravention;
      Consents.
      The
      execution, delivery and performance by Buyer of this Agreement, and the
      consummation of the transactions contemplated hereby do not violate any
      applicable Law or Order.

     

    
      
        
        

      

      
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    (d) Purchase
      for Investment.
      Buyer
      is financially able to bear the economic risks of acquiring an interest in
      the
      Company and the other transactions contemplated hereby, and has no need for
      liquidity in this investment. Buyer has such knowledge and experience in
      financial and business matters in general, and with respect to businesses of
      a
      nature similar to the business of the Company, so as to be capable of evaluating
      the merits and risks of, and making an informed business decision with regard
      to, the acquisition of the Shares. Buyer is acquiring the Shares solely for
      his
      own account and not with a view to or for resale in connection with any
      distribution or public offering thereof, within the meaning of any applicable
      securities laws and regulations, unless such distribution or offering is
      registered under the Securities Act of 1933, as amended (the “Securities
      Act”),
      or an
      exemption from such registration is available. Buyer has (i) received all the
      information he has deemed necessary to make an informed investment decision
      with
      respect to the acquisition of the Shares, (ii) had an opportunity to make such
      investigation as he has desired pertaining to the Company and the acquisition
      of
      an interest therein, and to verify the information which is, and has been,
      made
      available to him and (iii) had the opportunity to ask questions of Seller
      concerning the Company. Buyer acknowledges that Buyer is a director and former
      officer of Seller, and a current director and officer of the Company and, as
      such, has actual knowledge of the business, operations and financial affairs
      of
      the Company. Buyer has received no public solicitation or advertisement with
      respect to the offer or sale of the Shares. Buyer realizes that the Shares
      are
“restricted securities” as that term is defined in Rule 144 promulgated by the
      Securities and Exchange Commission under the Securities Act, the resale of
      the
      Shares is restricted by federal and state securities laws and, accordingly,
      the
      Shares must be held indefinitely unless their resale is subsequently registered
      under the Securities Act or an exemption from such registration is available
      for
      their resale. Buyer understands that any resale of the Shares by him must be
      registered under the Securities Act (and any applicable state securities law)
      or
      be effected in circumstances that, in the opinion of counsel for the Company
      at
      the time, create an exemption or otherwise do not require registration under
      the
      Securities Act (or applicable state securities laws). Buyer acknowledges and
      consents that certificates now or hereafter issued for the Shares will bear
      a
      legend substantially as follows:

     

    THE
      SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER
      ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR
      INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
      EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
      QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO EXEMPTIONS FROM SUCH
      REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE
      SECURITIES ACT, THE EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT
      AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER
      OF
      THESE SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO
      THE
      AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR
      SUCH
      OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL NOT
      VIOLATE THE SECURITIES LAWS.

     

    Buyer
      understands that the Shares are being sold to him pursuant to the exemption
      from
      registration contained in Section 4(1) of the Securities Act and that Seller
      is
      relying upon the representations made herein as one of the bases for claiming
      the Section 4(1) exemption. 

     

    
      
        
        

      

      
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    (e) Liabilities.
      Following the Closing, Seller will have no debts, liabilities or obligations
      relating to the Company or its business or activities, and there are no
      outstanding guaranties, performance or payment bonds, letters of credit or
      other
      contingent contractual obligations that have been undertaken by Seller directly
      or indirectly in relation to the Company or its business and that may survive
      the Closing. 

     

    (f) Title
      to Purchase Price Shares.
      Buyer
      is the sole record and beneficial owner of the Purchase Price Shares. At
      Closing, Buyer will have good and marketable title to the Purchase Price Shares,
      which Purchase Price Shares are, and at the Closing will be, free and clear
      of
      all options, warrants, pledges, claims, liens and encumbrances, and any
      restrictions or limitations prohibiting or restricting transfer to Seller,
      except for restrictions on transfer as contemplated by applicable securities
      laws.

     

    5. Indemnification
      and Release.
      

     

    (a) Indemnification.
      Buyer
      covenants and agrees to indemnify, defend, protect and hold harmless Seller,
      and
      its officers, directors, employees, stockholders, agents, representatives and
      affiliates (collectively, together with Seller, the “Seller
      Indemnified Parties”)
      at all
      times from and after the date of this Agreement from and against all losses,
      liabilities, damages, claims, actions, suits, proceedings, demands, assessments,
      adjustments, costs and expenses (including specifically, but without limitation,
      reasonable attorneys’ fees and expenses of investigation), whether or not
      involving a third party claim and regardless of any negligence of any Seller
      Indemnified Party (collectively, “Losses”),
      incurred by any Seller Indemnified Party as a result of or arising from (i)
      any
      breach of the representations and warranties of Buyer set forth herein or in
      certificates delivered in connection herewith, (ii) any breach or nonfulfillment
      of any covenant or agreement on the part of Buyer under this Agreement, (iii)
      any debt, liability or obligation of the Company, (iv) any debt, liability
      or
      obligation of Seller for actions taken prior to that certain merger by and
      between Seller and Microwave Acquisition Corp., a Delaware corporation (the
      “Merger”),
      (v)
      the conduct and operations of the business of the Company whether before or
      after Closing, (vi) claims asserted against the Company whether before or after
      Closing, or (vii) any federal or state income tax payable by Seller and
      attributable to the transaction contemplated by this Agreement or activities
      prior to the Merger.

     

    (b) Third
      Party Claims.

     

    (i) If
      any
      claim or liability (a “Third-Party
      Claim”)
      should
      be asserted against any of the Seller Indemnified Parties (the “Indemnitee”)
      by a
      third party after the Closing for which Buyer has an indemnification obligation
      under the terms of Section 5(a), then the Indemnitee shall notify Buyer (the
      “Indemnitor”)
      within
      20 days after the Third-Party Claim is asserted by a third party (said
      notification being referred to as a “Claim
      Notice”)
      and
      give the Indemnitor a reasonable opportunity to take part in any examination
      of
      the books and records of the Indemnitee relating to such Third-Party Claim
      and
      to assume the defense of such Third-Party Claim and in connection therewith
      and
      to conduct any proceedings or negotiations relating thereto and necessary or
      appropriate to defend the Indemnitee and/or settle the Third-Party Claim. The
      expenses (including reasonable attorneys’ fees) of all negotiations,
      proceedings, contests, lawsuits or settlements with respect to any Third-Party
      Claim shall be borne by the Indemnitor. If the Indemnitor agrees to assume
      the
      defense of any Third-Party Claim in writing within 20 days after the Claim
      Notice of such Third-Party Claim has been delivered, through counsel reasonably
      satisfactory to Indemnitee, then the Indemnitor shall be entitled to control
      the
      conduct of such defense, and any decision to settle such Third-Party Claim,
      and
      shall be responsible for any expenses of the Indemnitee in connection with
      the
      defense of such Third-Party Claim so long as the Indemnitor continues such
      defense until the final resolution of such Third-Party Claim. The Indemnitor
      shall be responsible for paying all settlements made or judgments entered with
      respect to any Third-Party Claim the defense of which has been assumed by the
      Indemnitor. Except as provided on subsection (b) below, both the Indemnitor
      and
      the Indemnitee must approve any settlement of a Third-Party Claim. A failure
      by
      the Indemnitee to timely give the Claim Notice shall not excuse Indemnitor
      from
      any indemnification liability except only to the extent that the Indemnitor
      is
      materially and adversely prejudiced by such failure.

     

    
      
        
        

      

      
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    (ii) If
      the
      Indemnitor shall not agree to assume the defense of any Third-Party Claim in
      writing within 20 days after the Claim Notice of such Third-Party Claim has
      been
      delivered, or shall fail to continue such defense until the final resolution
      of
      such Third-Party Claim, then the Indemnitee may defend against such Third-Party
      Claim in such manner as it may deem appropriate and the Indemnitee may settle
      such Third-Party Claim, in its sole discretion, on such terms as it may deem
      appropriate. The Indemnitor shall promptly reimburse the Indemnitee for the
      amount of all settlement payments and expenses, legal and otherwise, incurred
      by
      the Indemnitee in connection with the defense or settlement of such Third-Party
      Claim. If no settlement of such Third-Party Claim is made, then the Indemnitor
      shall satisfy any judgment rendered with respect to such Third-Party Claim
      before the Indemnitee is required to do so, and pay all expenses, legal or
      otherwise, incurred by the Indemnitee in the defense against such Third-Party
      Claim.

     

    (c) Non-Third-Party
      Claims.
      Upon
      discovery of any claim for which Buyer has an indemnification obligation under
      the terms of this Section 5 which does not involve a claim by a third party
      against the Indemnitee, the Indemnitee shall give prompt notice to Buyer of
      such
      claim and, in any case, shall give Buyer such notice within 30 days of such
      discovery. A failure by Indemnitee to timely give the foregoing notice to Buyer
      shall not excuse Buyer from any indemnification liability except to the extent
      that Buyer is materially and adversely prejudiced by such failure.

     

    (d) Release.
      Buyer,
      on behalf of itself and its Related Parties, hereby releases and forever
      discharges Seller and its individual, joint or mutual, past and present
      representatives, Affiliates, officers, directors, employees, agents, attorneys,
      stockholders, controlling persons, subsidiaries, successors and assigns
      (individually, a “Releasee”
and
      collectively, “Releasees”)
      from
      any and all claims, demands, proceedings, causes of action, orders, obligations,
      contracts, agreements, debts and liabilities whatsoever, whether known or
      unknown, suspected or unsuspected, both at law and in equity, which Buyer or
      any
      of its Related Parties now have or have ever had against Releasees. Buyer hereby
      irrevocably covenants to refrain from, directly or indirectly, asserting any
      claim or demand, or commencing, instituting or causing to be commenced, any
      proceeding of any kind against any Releasee, based upon any matter released
      hereby. “Related
      Parties”
shall
      mean, with respect to Buyer, (i) any Person that directly or indirectly
      controls, is directly or indirectly controlled by, or is directly or indirectly
      under common control with Buyer, (ii) any Person in which Buyer holds a Material
      Interest or (iii) any Person with respect to which Buyer serves as a general
      partner or a trustee (or in a similar capacity). For purposes of this
      definition, “Material
      Interest”
shall
      mean direct or indirect beneficial ownership (as defined in Rule 13d-3 under
      the
      Securities Exchange Act of 1934, as amended) of voting securities or other
      voting interests representing at least ten percent (10%) of the outstanding
      voting power of a Person or equity securities or other equity interests
      representing at least ten percent (10%) of the outstanding equity securities
      or
      equity interests in a Person.

     

    
      
        
        

      

      
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    6. Definitions.
      As used
      in this Agreement:

     

    (a) “Affiliate”
means,
      with respect to any Person, any other Person directly or indirectly controlling,
      controlled by or under common control with the first Person. For the purposes
      of
      this definition, “Control,”
when
      used with respect to any Person, means the possession, directly or indirectly,
      of the power to (i) vote 10% or more of the securities having ordinary voting
      power for the election of directors (or comparable positions) of such Person
      or
      (ii) direct or cause the direction of the management and policies of such
      Person, whether through the ownership of voting securities, by contract or
      otherwise, and the terms “Controlling”
and
      “Controlled”
have
      meanings correlative to the foregoing;

     

    (b) “Governmental
      Authority”
means
      any domestic or foreign governmental or regulatory authority;

     

    (c) “Law”
means
      any federal, state or local statute, law, rule, regulation, ordinance, code,
      Permit, license, policy or rule of common law;

     

    (d) “Lien”
means,
      with respect to any property or asset, any mortgage, lien, pledge, charge,
      security interest, encumbrance or other adverse claim of any kind in respect
      of
      such property or asset. For purposes of this Agreement, a Person will be deemed
      to own, subject to a Lien, any property or asset which it has acquired or holds
      subject to the interest of a vendor or lessor under any conditional sale
      agreement, capital lease or other title retention agreement relating to such
      property or asset;

     

    (e) “Order”
means
      any judgment, injunction, judicial or administrative order or
      decree;

     

    (f) “Permit”
means
      any government or regulatory license, authorization, permit, franchise, consent
      or approval; and

     

    (h) “Person”
means
      an individual, corporation, partnership, limited liability company, association,
      trust or other entity or organization, including a government or political
      subdivision or an agency or instrumentality thereof.

     

    7. Miscellaneous.

     

    (a) Counterparts.
      This
      Agreement may be signed in any number of counterparts, each of which will be
      deemed an original but all of which together shall constitute one and the same
      instrument.

     

    
      
        
        

      

      
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    (b) Amendments
      and Waivers.
      

     

    (i) Any
      provision of this Agreement may be amended or waived if, but only if, such
      amendment or waiver is in writing and is signed, in the case of an amendment,
      by
      each party to this Agreement, or in the case of a waiver, by the party against
      whom the waiver is to be effective.

     

    (ii) No
      failure or delay by any party in exercising any right, power or privilege
      hereunder will operate as a waiver thereof nor will any single or partial
      exercise thereof preclude any other or further exercise thereof or the exercise
      of any other right, power or privilege. The rights and remedies herein provided
      will be cumulative and not exclusive of any rights or remedies provided by
      Law.

     

    (c) Successors
      and Assigns.
      The
      provisions of this Agreement will be binding upon and inure to the benefit
      of
      the parties hereto and their respective successors and assigns; provided
      that no
      party may assign, delegate or otherwise transfer (including by operation of
      Law)
      any of its rights or obligations under this Agreement without the consent of
      each other party hereto.

     

    (d) No
      Third Party Beneficiaries.
      This
      Agreement is for the sole benefit of the parties hereto and their permitted
      successors and assigns and nothing herein expressed or implied will give or
      be
      construed to give to any Person, other than the parties hereto, those referenced
      in Section 5 above, and such permitted successors and assigns, any legal or
      equitable rights hereunder.

     

    (e) Governing
      Law.
      This
      Agreement will be governed by, and construed in accordance with, the internal
      substantive law of the State of Delaware.

     

    (f) Headings.
      The
      headings in this Agreement are for convenience of reference only and will not
      control or affect the meaning or construction of any provisions
      hereof.

     

    (g) Entire
      Agreement.
      This
      Agreement constitutes the entire agreement among the parties with respect to
      the
      subject matter of this Agreement. This Agreement supersedes all prior agreements
      and understandings, both oral and written, between the parties with respect
      to
      the subject matter hereof of this Agreement.

     

    (h) Severability.
      If any
      provision of this Agreement or the application of any such provision to any
      Person or circumstance is held invalid, illegal or unenforceable in any respect
      by a court of competent jurisdiction, the remainder of the provisions of this
      Agreement (or the application of such provision in other jurisdictions or to
      Persons or circumstances other than those to which it was held invalid, illegal
      or unenforceable) will in no way be affected, impaired or invalidated, and
      to
      the extent permitted by applicable Law, any such provision will be restricted
      in
      applicability or reformed to the minimum extent required for such provision
      to
      be enforceable. This provision will be interpreted and enforced to give effect
      to the original written intent of the parties prior to the determination of
      such
      invalidity or unenforceability.

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
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    [SIGNATURE
      PAGE TO STOCK PURCHASE AGREEMENT]

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed and delivered, effective as of the date first above
      written.

    
      	 	 	 
	 	 
	 	
              MSTI
                HOLDINGS, INC.

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Frank T. Matarazzo
	 	
              

              Name:
                Frank T. Matarazzo

              
                Title:
                  Chief Executive Officer

              

            
	 	 
	 	
            
	 	
              /s/
                Ron Bell

            
	 	
              

              Ron
                BellEMPLOYMENT
      AGREEMENT

    

    THIS
      AGREEMENT
      is by
      and between MICROWAVE
      SATELLITE TECHNOLOGIES, INC.,
      a New
      Jersey corporation with corporate offices located in Hawthorne, New Jersey
      (“MST”) and FRANK
      T. MATARAZZO
      (“Executive”).

     

    WHEREAS,
      MST is
      being acquired by Telkonet, Inc. (the “Acquisition”); and

     

    WHEREAS,
      prior
      to the Acquisition, MST was a corporation owned by Executive; and

     

    WHEREAS,
      subject
      to the Acquisition being completed (the “Effective Date”), MST desires to employ
      Executive, and Executive desires to be employed by MST;

     

    NOW
      THEREFORE,
      MST
      hereby employs Executive, and Executive hereby accepts employment with MST
      on
      the following terms and conditions:

     

    1. Duties. 
      MST
      hereby employs Executive in the capacity of President and Chief Executive
      Officer. In such capacity, Executive shall perform the duties of a president
      and
      chief executive officer in a professional, supervisory and managerial nature
      solely for the benefit of MST and pertaining to the business and affairs of
      MST
      as determined by the Board of Directors and/or the Executive Committee of MST.
      Executive shall report directly to Telkonet, Inc.’s Chief Executive Officer (the
“Telkonet CEO”). Executive’s duties and responsibilities shall also include, but
      not be limited to, the following:

     

    (a) Serve
      as
      the chief executive officer of MST’s operations and provide leadership for MST’s
      activities;

     

    (b) Oversee
      all MDU and, after a transition period as determined by the Telkonet CEO, all
      the hotel and motel operations of MST and Telkonet, Inc. In conjunction with
      the
      2006 planning process, the Executive and the Telkonet CEO and/or his designees
      will define the geographic boundaries and managed solution offerings to be
      the
      Executive’s responsibility;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) Hire,
      compensate, discipline and terminate MST staff within the approved budget,
      establish job descriptions, duties and responsibilities of all MST staff in
      accordance with MST Bylaws, and the policies and procedures of MST, perform
      regular evaluations of all MST staff, determine the level of compensation of
      such staff on the basis of such evaluations, within the approved budget and
      in
      accordance with the policies of MST and have primary responsibility for the
      day-to-day operations of MST;

     

    (d) Alert
      and
      advise the Board of Directors and/or the Executive Committee about reasonably
      significant matters needing their attention and action;

     

    (e) Serve
      as
      the representative of MST in activities related to its objectives and
      policies;

     

    (f) Direct
      the coordination of the activities of MST committees and projects;

     

    (g) Oversee,
      under the direction of the Board of Directors and with the assistance of MST’s
      outside certified public accountant (the “MST Accountant”), the custody and use
      of all funds, securities, property and, generally, all assets of MST and the
      deposit of the funds of MST;

     

    (h) Oversee
      the preparation of a proposed annual budget of MST;

     

    (i) Oversee
      the receipt and disbursement of MST funds in accordance with the adopted budget
      of MST;

     

    (j) Supervise
      the sales, installation and support of all MST subscriber acquisition
      activities;

     

    (k) Oversee,
      develop and expand all aspects of MST’s business, sales and production
      operations;

     

    (l) Present
      an annual financial report to the Board of Directors;

     

    
      
        
        

      

      
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    (m) Present
      to the Board of Directors an annual report of all activities of
      MST;

     

    (n) Negotiate,
      evaluate and execute all contracts, agreements and commitments arising in the
      ordinary course of MST’s business for and on behalf of MST, consistent with the
      duties and responsibilities set forth above;

     

    (o) Make
      expenditures consistent with the approved budget of MST; and

     

    (p) Implement
      all Board directives and perform all such other duties that may be assigned
      from
      time-to-time by the Board of Directors in its discretion.

     

    2. Term.
      The term
      of this Agreement (the “Term”) shall commence on the Effective Date and shall
      expire on December 31, 2008, unless terminated as provided in Section 6 or
      extended by the written mutual consent of the parties.

     

    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 President and Chief Executive
      Officer, as described in Section 1 above, and as the Board of Directors and/or
      the Officers of MST shall determine, consistent therewith.

     

    4. Compensation. 

     

    (a) Salary.
      Executive shall be paid Two Hundred Fifty Thousand Dollars ($250,000.00) on
      an
      annualized basis in accordance with MST’s normal payroll practices, and subject
      to all lawfully required withholding.

     

    (b) Executive
      Participation in MST 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 MST employees, and for which Executive
      qualifies under the terms of such plans and which shall include, but not be
      limited to, the benefits described on Exhibit A hereto.. All such benefits
      shall
      be provided on the same terms and conditions as generally apply to all other
      MST
      employees under these plans and may be modified by MST from
      time-to-time.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (c) Expenses.
      Subject
      to approval by the Telkonet CEO, Executive shall be reimbursed by MST for all
      ordinary, reasonable, customary and necessary expenses incurred by him in the
      performance of his duties and responsibilities as President. Executive agrees
      to
      prepare documentation for such expenses as may be necessary for MST to comply
      with the applicable rules and regulations of the Internal Revenue Service.
      MST
      will provide an auto for the Executive’s business use.

     

    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 Telkonet CEO and at a time with minimum disruption to
      MST.
      Carryover of vacation days in excess of one week is subject to the prior
      approval of the CEO of Telkonet.

     

    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 MST;

     

    (b) The
      death
      of Executive;

     

    (c) The
      mutual consent of Executive and MST;

     

    (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 MST, 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 MST, 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 MST. 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.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (e) any
      material breach by MST of any provision of this Agreement.

     

    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 MST all books, records, or other written papers or documents
      entrusted to him or which he has otherwise acquired pertaining to MST and all
      other MST 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 MST 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 MST (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 MST and shall be “works made for hire” as
      defined in 17 U.S.C. §101, and MST 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 MST (or its designee) all right, title and interest in and to every
      Creation. Executive shall assist MST in obtaining patents or copyrights on
      all
      such inventions, designs, improvements and discoveries being patentable or
      copyrightable by Executive or MST and shall execute all documents and do all
      things necessary to obtain letters of patent or copyright, vest the MST 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.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    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, MST shall deliver to Executive or permit
      Executive to have access to and become familiar with various confidential
      information and trade secrets of MST and Telkonet, Inc., including without
      limitation, data, production methods, customer lists, product format or
      developments, other information concerning the business of MST and Telkonet,
      Inc., and other unique processes, procedures, services and products of MST
      and
      Telkonet, Inc., which are regularly used in the operation of the business of
      the
      MST and Telkonet, Inc. (collectively, the “Confidential Information”). Executive
      shall not disclose any of the Confidential Information that he receives from
      MST, Telkonet, Inc. or their clients and customers in the course of his
      employment with MST, 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 MST. Executive further acknowledges and agrees
      that Executive owes MST and Telkonet, Inc., 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 MST
      and/or Telkonet, Inc., whether prepared by Executive or otherwise coming into
      Executive’s possession in the course of his employment with MST, shall remain
      the exclusive property of MST and Telkonet, Inc. and shall not be removed from
      the premises of MST and/or Telkonet, Inc. without the prior written consent
      of
      MST and/or Telkonet, Inc. 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 MST and/or
      Telkonet, Inc., shall be returned by Executive to MST. Executive further
      acknowledges that the covenants of Executive herein are intended to include
      the
      protection of the confidential information of MST's and Telkonet, Inc.’s
      customers and clients, that come into the possession of Executive as a result
      of
      his employment with MST, and that such customers and clients of MST shall be
      entitled to rely on and enforce these covenants against Executive for their
      own
      benefit.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (b) Non-Competition.
      Executive acknowledges that he will be provided with and have access to the
      Confidential Information, the unauthorized use or disclosure of which would
      cause irreparable injury to MST, that MST’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 MST. In consideration for MST’s disclosure of Confidential
      Information to Executive, Executive’s access to the Confidential Information,
      and the salary paid to executive by MST hereunder, Executive agrees that during
      Executive’s employment with MST under this Agreement and for one (1) year after
      the termination of Executive’s employment and regardless whether such
      termination is with or without cause, Executive shall not, directly or
      indirectly, either as an executive, employee, employer, consultant, agent,
      principal, partner, stockholder, corporate officer, director, advisor or in
      any
      other individual or representative capacity, engage or participate in any
      business that is in competition in any manner whatsoever with the Restricted
      Business (as defined herein) in New York City and any Major Metropolitan areas
      MST has committed and deployed, or undertaken significant development of, its
      managed solution. “Restricted Business” means (1) any business conducted by MST
      at any time prior to, or during Executive’s employment pursuant to this
      Agreement, and (2) any other related or similar business conducted by MST or
      Telkonet, Inc. during Executive’s employment with MST under this Agreement. The
      restrictions of this Section 9(b) shall not apply to the design, construction
      or
      maintenance of satellite business television networks.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (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 MST. 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.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (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
      MST or Telkonet, Inc. for the purpose of causing them to leave the employment
      of
      MST or Telkonet, Inc. or take employment with any business that is in
      competition in any manner whatsoever with the business of MST or Telkonet,
      Inc.

     

    (e) Injunctive
      Relief; Extension of Restrictive Period.
      In the
      event of a breach of any of the covenants by Executive or MST 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 MST 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
      MST.

     

    (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.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (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 New Jersey.

     

    (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
      MST, to the then Chair of the Board at the Chair’s last recorded address on the
      records of MST, with a copy to the general counsel for MST.

     

    (2) If
      to
      Executive, to: Frank Matarazzo _______________, New Jersey ______.

     

    IN
      WITNESS WHEREOF,
      MST and
      Executive have executed this Agreement as of the Effective Date.

    
      	 	 	 	 
	
              MICROWAVE SATELLITE

              TECHNOLOGIES,
                INC. 

            	 	 	EXECUTIVE
	
               

               

            	 	 	 
	By: 
              /s/ Ronald Pickett 	 	 	By: 
              /s/ Frank T. Matarazzo
	
              
                
Ronald
                Pickett 

              Chairman
                of the Board

            	 	 	
              
                
Frank
                T.
                Matarazzo

            

    

     

    
      
        
        

      

      
        10

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