Document:

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                                                                    Exhibit 10.6

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of the 30th day of
January 2002, by and between TELKONET COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), and J. GREGORY FOWLER (the "Executive").

                               W I T N E S S E T H

WHEREAS, the Company desires to employ the Executive, and the Executive desires
to be employed by the Company, on the terms and subject to the conditions set
forth herein;

NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties hereby agree as follows:

1.       EMPLOYMENT.
         -----------

         The Company hereby employs the Executive as its Chief Executive Officer
         and the Executive hereby accepts such employment, on the terms and
         subject to the conditions hereinafter set forth.

2.       TERM.
         -----

         Subject to the provisions for the termination of this Agreement as
         provided for herein, the term of this Employment Agreement shall
         commence on the date hereof and shall continue through January 30th,
         2005 (the "Base Term") and shall automatically be extended for an
         additional one year (each a "Renewal Year") at the end of the Base Term
         and each Renewal Term unless on or before the sixtieth (60th) day prior
         to the end of the Base Term or a Renewal Term, either party gives to
         the other party written notice of termination of this Employment
         Agreement, in which case this Employment Agreement shall terminate upon
         the completion of the then applicable employment period.

3.       POSITION AND DUTIES.
         --------------------

         (a)      The Executive shall serve as the Chief Executive Officer of
                  the Company. The Executive's exact duties and the scope of his
                  authority without obtaining Board of Director approval shall
                  be set forth in a separate writing, and attached hereto as
                  Exhibit A. The duties and scope of authority may be changed by
                  the Board of Directors from time to time in the exercise of
                  its reasonable business judgment. The Executive shall be
                  entitled to the full protection of applicable indemnification
                  provisions of the certificate of incorporation, bylaws of the
                  Company and the corporate law of Delaware, as the same may be
                  amended from time to time, for his service as a director,
                  officer and employee of the Company or any subsidiary of the
                  Company or for services performed for any fringe benefit
                  program of the Company. Such indemnification shall include all
                  permissive provisions including advancement of payment.

         (b)      The Executive shall have the right to terminate his employment
                  with the Company but such termination shall not be considered
                  a voluntary resignation or termination of such employment or
                  of this Employment Agreement by the Executive but rather a
                  discharge of the Executive by the Company without "cause" (as
                  defined in 6(A)(ii)). This shall apply in the following
                  conditions:

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                  (i)      the Executive is required to relocate from his
                           current residence in Charlotte, NC;

                  (ii)     there occurs a material breach by the Company of any
                           of its obligations under this Employment Agreement
                           (other than those specified in this Section 3(b))
                           that has not been cured in all material respects
                           within ten (10) days after the Executive gives notice
                           thereof to the Company;

                  (iii)    there occurs a "change in control" (as hereinafter
                           defined) of the Company; or

                  (iv)     the Executive has not been paid for a cumulative
                           sixty (60) day period without Executive's written
                           consent in excess of the period of nonpayment for
                           similar Executives.

         (c)      The term "change in control" means the first to occur of the
                  following events:

                  (i)      any person or group of commonly controlled persons
                           who are not currently stockholders, acquires,
                           directly or indirectly, thirty percent (30%) or more
                           of the voting control or value of the equity
                           interests in the Company; or

                  (ii)     the shareholders of the Company approve an agreement
                           to merge or consolidate with another corporation or
                           other entity resulting (whether separately or in
                           connection with a series of transactions) in a change
                           in ownership of twenty percent (20%) or more of the
                           voting control or value of the equity interests in
                           the Company, or an agreement to sell or otherwise
                           dispose of all or substantially all of the Company's
                           assets (including, without limitation, a plan of
                           liquidation or dissolution), or otherwise approve of
                           a fundamental alteration in the nature of the
                           Company's business.

4.       COMPENSATION.
         -------------

         During the term of this Employment Agreement, the Company shall pay or
         provide, as the case may be, to the Executive the compensation and
         other benefits and rights set forth in this Paragraph 4.

         (a)      The Company shall pay to the Executive a base salary payable
                  in accordance with the Company's usual pay practices (and in
                  any event no less frequently than monthly) at the rate of One
                  Hundred Thirty Thousand Dollars ($130,000) per annum, which
                  may be increased (but not decreased) from time to time based
                  upon the performance of the Company and the Executive.
                  Currently, this amount is payable bi-weekly.

         (b)      The Executive shall receive options to purchase 650,000 shares
                  of common stock from the Employee Stock Option plan at the
                  exercise price of $1.00 per share. The first 50,000 shares are
                  immediately vested upon the execution of the Employment
                  Agreement and the remaining 600,000 shares vest ratably at
                  50,000 shares per consecutive calendar quarter from the date
                  of the Employment Agreement.

         (c)      The Company may pay to the Executive bonus compensation for
                  each calendar or fiscal year of the Company, not later than
                  ninety (90) days following the end of each year or the
                  termination of his employment, as the case may be, prorated on
                  a per diem basis for partial calendar or fiscal years. It is
                  acknowledged that these bonuses may be based in part on the
                  Executive's performance and in part on the Company's
                  performance.

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         (d)      During the Base Term of this Agreement and any Renewal Term,
                  the Company shall maintain in full force and effect, and the
                  Executive shall be entitled to participate in, all of the
                  Company's employee benefit plan and arrangements in effect on
                  the date hereof in at least the same manner and capacity as
                  the officers and key management employees of the Company. This
                  does not include life insurance or disability insurance if the
                  cost of coverage is substantially in excess of the average
                  cost for someone of the same age. The Company shall not make
                  any changes in such plans and arrangements which would
                  adversely affect the Executive's rights or benefits
                  thereunder, unless such change occurs pursuant to a program
                  applicable to all officers and key management employees of the
                  Company. The Executive shall be entitled to participate in or
                  receive benefits under any employee benefit plan or
                  arrangement made available by the Company in the future to its
                  officers and key management employees, subject to and on a
                  basis consistent with the terms, conditions and overall
                  administration of such plans and arrangements as long as the
                  cost of coverage is not substantially in excess of the average
                  cost of someone of the same age. Nothing paid to the Executive
                  under any plan or arrangement presently in effect or made
                  available to the Executive in the future shall be deemed to be
                  in lieu of any amounts payable to the Executive pursuant to
                  this Section 4.

         (e)      The Company shall reimburse the Executive or provide him with
                  an expense allowance during the term of this Employment
                  Agreement for travel, entertainment and other expenses
                  reasonable and necessarily incurred by the Executive in
                  connection with the Company's business. The Executive shall
                  furnish such documentation with respect to reimbursements or
                  allowances to be made hereunder as the Company shall
                  reasonably request. Depending on the individual's exact
                  duties, a company owned vehicle may be provided.

         (f)      Upon dissolution or liquidation of the Company, or upon a
                  merger or consolidation in which the Company is not the
                  surviving corporation, all Options awarded to the Executive
                  under the ESOP and not previously exercised and vested shall
                  become fully exercisable and vested no later than the date of
                  such dissolution, merger or consolidation, and the Executive
                  shall have the right, immediately prior to such dissolution or
                  liquidation, or such merger or consolidation, to exercise such
                  Executive's Options in whole or in part, but only to the
                  extent that such Options are otherwise exercisable under the
                  terms of the Plan.

5.       PAYMENT IN THE EVENT OF DISABILITY.
         -----------------------------------

         (a)      In the event of the Executive's "permanent disability" (as
                  hereinafter defined) during the term of this Employment
                  Agreement, for a period of 6 months after determination of a
                  permanent disability years the Company shall pay to the
                  Executive an annual amount equal to the Executive's then
                  effective per annum rate of salary, as determined under
                  Paragraph 4(a). The Company, to the extent prudent, shall
                  insure against disability through an insurance company. Such
                  coverage shall contain a benefit for total, as well as partial
                  and residual, disabilities and shall be in addition to the
                  payment obligation contained in this Paragraph 5(a). The
                  Company shall review and revise the amount of coverage not
                  less than annually in accordance with the prior year's total
                  cash compensation as soon as the amount of cash compensation,
                  including all cash bonuses, can be calculated.

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         (b)      For purposes of this Employment Agreement, the Executive's
                  "permanent disability" shall be deemed to have occurred after
                  one hundred twenty (120) days in the aggregate during any
                  consecutive twelve (12) month period, or after ninety (90)
                  consecutive days, during which one hundred twenty (120) or
                  ninety (90) days, as the case may be, the Executive, by reason
                  of his physical or mental disability or illness, shall have
                  been unable to substantially discharge his duties under this
                  Employment Agreement. The date of permanent disability shall
                  be such one hundred twentieth (120th) or ninetieth (90th) day,
                  as the case may be. In the event either the Company or the
                  Executive, after receipt of notice of the Executive's
                  permanent disability from the other, dispute that the
                  Executive's permanent disability shall have occurred, the
                  Executive shall promptly submit to a physical examination by
                  the chief of medicine of any major accredited hospital and,
                  unless such physician shall issue his written statement to the
                  effect that in his opinion, based on his diagnosis, the
                  Executive is capable of resuming his employment and devoting
                  his full time and energy to discharging his duties within
                  thirty (30) days after the date of such statement, such
                  permanent disability shall be deemed to have occurred. In lieu
                  of any such examination, a determination by the disability
                  insurance carrier for the Company shall suffice.

6.       TERMINATION.
         ------------

         (A)      The employment of the Executive under this Employment
                  Agreement, and the terms hereof, may be terminated by the
                  Company:

                  (i)      on the death or permanent disability of the Executive
                           (as defined in Paragraph 4(b)), or;

                  (ii)     for cause at any time by action of the Board. For
                           purposes hereof, the term "cause" shall mean:

                           (a)      The Executive's fraud, commission of a
                                    felony or of an act or series of acts which
                                    result in material injury to the business
                                    reputation of the Company, commission of an
                                    act or series of repeated acts of dishonesty
                                    which are materially inimical to the best
                                    interests of the Company, or the Executive's
                                    willful and repeated failure to perform his
                                    lawful duties under this Employment
                                    Agreement, which failure has not been cured
                                    within fifteen (15) days after the Company
                                    gives notice thereof to the Executive,
                                    provided, however, that the Executive shall
                                    not be entitled to any more than two notice
                                    cure opportunities during each fiscal year
                                    of the Company; or

                           (b)      The Executive's material breach of any
                                    material provision of this Employment
                                    Agreement not involving performance of his
                                    duties, which breach has not been cured in
                                    all substantial respects within ten (10)
                                    days after the Company gives notice thereof
                                    to the Executive shall not be entitled to
                                    any more than two weeks notice cure
                                    opportunities during each fiscal year of the
                                    Company.

                  Upon any termination of this Employment Agreement, the
                  Executive shall be deemed to have resigned from all offices
                  held by the Executive in the Company.

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         (B)      In the event of a termination claimed by the Company to be for
                  "cause" pursuant to Paragraph 6(a)(ii), the Executive shall
                  have the right to have the justification for said termination
                  determined forthwith by arbitration. In order to exercise such
                  right, the Executive shall serve on the Company within thirty
                  (30) days after termination a written request for arbitration.
                  The Company immediately shall request the appointment of an
                  arbitrator by the American Arbitration Association and
                  thereafter the question of "cause" shall be determined under
                  the rules of the American Arbitration Association, and the
                  decision of the arbitrator or arbitrators shall be final and
                  binding on both parties. The parties shall use all reasonable
                  efforts to facilitate and expedite the arbitration and shall
                  act to cause the arbitration to be completed as promptly as
                  possible. Expenses of the arbitration shall be borne equally
                  by the parties, unless apportioned otherwise by the
                  arbitrators.

         (C)      In the event of termination for any of the reasons set forth
                  in subparagraph (A)(i) or (A)(ii) of this Paragraph 6, or if
                  the Executive terminates his employment, unless as under
                  subparagraph 3b, the Executive shall be entitled to no further
                  compensation or other benefits under this Employment
                  Agreement, except as to that portion of any unpaid salary and
                  other benefits accrued and earned by him hereunder up to and
                  including the effective date of such termination. If the
                  Company terminates the Executive's employment other than
                  pursuant to subparagraph 6(A)(i) or 6(A)(ii) or if the
                  Executive terminates his employment pursuant to subparagraph
                  3(b), all of the compensation and benefits payable to the
                  Executive pursuant to this Employment Agreement shall be paid
                  to the Executive for a period of eighteen (18) months
                  following the date of such termination (the "Severance
                  Period"). For purposes of this Paragraph 6(C), with respect to
                  any benefits payable to the Executive following termination,
                  the Company may elect to (i) pay to the Executive in cash an
                  amount equivalent to the value of the benefits to be paid for
                  the duration of the Severance Period; or (ii) continue to
                  provide benefits to the Executive for the duration of the
                  Severance Period. If there occurs a change of control, or take
                  over, of the Company and the acquiring or controlling entity
                  terminates the Executive, then the Executive shall be paid for
                  a period of thirty-six (36) months following the date of such
                  termination (the "Severance Period"), including all of the
                  compensation and other benefits payable to the Executive
                  pursuant to this Employment Agreement.

7.       NON-COMPETITION AND CONFIDENTIALITY.
         ------------------------------------

         The Executive acknowledges the Company's reliance and expectation of
         the Executive's continued commitment to performance of his duties and
         responsibilities during the term of this Employment Agreement. In light
         of such reliance and expectation on the part of the Company, the
         Executive hereby agrees to be bound by the terms of the Non-Competition
         and Confidentiality Agreement, of even date herewith, a copy of the
         form of which is attached hereto and made a part hereof as Exhibit B.

8.       MISCELLANEOUS.
         --------------

         (a)      The Executive represents and warrants that he is not a party
                  to any agreement, contract or understanding, whether
                  employment or otherwise, which would restrict or prohibit him
                  from undertaking or performing employment in accordance with
                  the terms and conditions of this Employment Agreement.

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         (b)      The provisions of this Employment Agreement are severable and
                  if any one or more provisions may be determined to be illegal
                  or otherwise unenforceable, in whole or in part, the remaining
                  provisions and any partially unenforceable provision, to the
                  extent enforceable in any jurisdiction, nevertheless shall be
                  binding and enforceable.

         (c)      The rights and obligations of the Company under this
                  Employment Agreement shall inure to the benefit of, and shall
                  be binding on, the Company and its successors and assigns, and
                  the rights and obligations (other than obligations to perform
                  services) of the Executive under this Employment Agreement
                  shall inure to the benefit of, and shall be binding upon, the
                  Executive and his heirs, personal representatives and assigns.

         (d)      Any notice to be given under this Employment Agreement shall
                  be personally delivered in writing or shall have been deemed
                  duly given when received after it is posted in the United
                  States mail, postage prepaid, registered or certified, return
                  receipt requested, and if mailed to the Company, shall be
                  addressed to its principal place of business and if mailed to
                  the Executive, shall be addressed to him at his home address
                  last known on the records of the Company, or at such other
                  address or addresses as either the Company or the Executive
                  may hereafter designate in writing to the other. Notice by
                  regular mail postage prepaid, shall be given at the same time
                  the registered certified copy is mailed and shall be
                  sufficient if not returned and the registered or certified
                  copy is returned either refused or because not picked up.

         (e)      The failure of either party to enforce any provision or
                  provisions of this Employment Agreement shall not in any way
                  be construed as a waiver of any such provision or provisions
                  as to any future violations thereof, or prevent that party
                  thereafter from enforcing each and every other provision of
                  this Employment Agreement. The rights granted the parties
                  herein are cumulative and the waiver of any single remedy
                  shall not constitute a waiver of such party's right to assert
                  all other legal remedies available to it under the
                  circumstances.

         (f)      This Employment Agreement supersedes all prior agreements and
                  understandings between the parties and may not be modified or
                  terminated orally. No modification, termination or attempted
                  waiver shall be valid unless in writing and signed by the
                  party against whom the same is sought to be enforced.

         (g)      This Employment Agreement (other than the statutory rights or
                  indemnification which shall be under Delaware law) shall be
                  governed by and construed according to the laws of the State
                  of Maryland without giving effect to applicable conflicts of
                  law provisions.

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

TELKONET COMMUNICATIONS, INC.

By:    /s/ Robert P. Crabb
       ---------------------------
Name:  Robert P. Crabb
Title: Secretary

/s/ J. Gregory Fowler J.
------------------------------
GREGORY FOWLER<PAGE>

                                                                    Exhibit 10.7

THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of the 15th, day of
February 2002, by and between TELKONET COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), and David S.Yaney, Ph.D. (the "Executive").

                              W I T N E S S E T H:

WHEREAS, the Company desires to employ the Executive, and the Executive desires
to be employed by the Company, on the terms and subject to the conditions set
forth herein;

NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties hereby agree as follows:

1. EMPLOYMENT.

     The Company hereby employs the Executive as its Chief Technology Officer
     and the Executive hereby accepts such employment, on the terms and subject
     to the conditions hereinafter set forth.

2. TERM.

     Subject to the provisions for the termination of this Agreement as provided
     for herein, the term of this Employment Agreement shall commence on the
     date hereof and shall continue through February 15th, 2005 (the "Base
     Term") and shall automatically be extended for an additional one year (each
     a "Renewal Year") at the end of the Base Term and each Renewal Term unless
     on or before the sixtieth (60th) day prior to the end of the Base Term or a
     Renewal Term, either party gives to the other party written notice of
     termination of this Employment Agreement, in which case this Employment
     Agreement shall terminate upon the completion of the then applicable
     employment period.

3. POSITION AND DUTIES.

    (a) The Executive shall serve as the Chief Technology Officer of the
        Company. The Executive's exact duties and the scope of his authority
        without obtaining Board of Director approval shall be set forth in a
        separate writing, and attached hereto as Exhibit A. The Board of
        Directors from time to time in the exercise of its reasonable business
        judgment may change the duties and scope of authority. The Executive
        shall be entitled to the full protection of applicable indemnification
        provisions of the certificate of incorporation, bylaws of the Company
        and the corporate law of Delaware, as the same may be amended from time
        to time, for his service as a director, officer and employee of the
        Company or any subsidiary of the Company or for services performed for
        any fringe benefit program of the Company. Such indemnification shall
        include all permissive provisions including advancement of payment.
<PAGE>

    (b) The Executive shall have the right to terminate his employment with the
        Company but such termination shall not be considered a voluntary
        resignation or termination of such employment or of this Employment
        Agreement by the Executive but rather a discharge of the Executive by
        the Company without "cause" (as defined in 6(A)(ii)). This shall apply
        in the following conditions:

        (i) the Executive is required relocate from his current residence in
            Gaithersburg, Maryland;

        (ii)there occurs a material breach by the Company of any of its
            obligations under this Employment Agreement (other than those
            specified in this Section 3(b)) that has not been cured in all
            material respects within ten (10) days after the Executive gives
            notice thereof to the Company;

        (iii)there occurs a "change in control" (as hereinafter defined) of the
            Company; or

        (iv) the Executive has not been paid for a cumulative sixty (60) day
            period without Executive's written consent in excess of the period
            of non-payment for similar Executives.

    (c) The term "change in control" means the first to occur of the following
        events:

        (i) any person or group of commonly controlled persons who are not
            currently stockholders, acquires, directly or indirectly, thirty
            percent (30%) or more of the voting control or value of the equity
            interests in the Company; or

        (ii)the shareholders of the Company approve an agreement to merge or
            consolidate with another corporation or other entity resulting
            (whether separately or in connection with a series of transactions)
            in a change in ownership of twenty percent (20%) or more of the
            voting control or value of the equity interests in the Company, or
            an agreement to sell or otherwise dispose of all or substantially
            all of the Company's assets (including, without limitation, a plan
            of liquidation or dissolution), or otherwise approve of a
            fundamental alteration in the nature of the Company's business.

4. COMPENSATION.

    During the term of this Employment Agreement the Company shall pay or
    provide, as the case may be, to the Executive the compensation and other
    benefits and rights set forth in this Paragraph 4.

    (a) The Company shall pay to the Executive a base salary payable in
        accordance with the Company's usual pay practices (and in any event no
        less frequently than monthly) at the rate of One Hundred Thirty Thousand
        Dollars ($130,000.00) per annum, which may be increased (but not
        decreased) from time to time based upon the performance of the Company
        and the Executive. Currently, this amount is payable bi-weekly.

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<PAGE>

    (b) The Executive shall receive options to purchase 300,000 shares of common
        stock from the Employee Stock Option plan at the exercise price of $1.00
        per share. The 300,000 shares vest ratably at 25,000 shares per
        consecutive calendar quarter from the date of the Employment Agreement.

    (c) The Company may pay to the Executive bonus compensation for each
        calendar or fiscal year of the Company, not later than ninety (90) days
        following the end of each year or the termination of his employment, as
        the case may be, prorated on a per diem basis for partial calendar or
        fiscal years. It is acknowledged that these bonuses may be based in part
        on the Executive's performance and in part on the Company's performance.

    (d) During the Base Term of this Agreement and any Renewal Term, the Company
        shall maintain in full force and effect, and the Executive shall be
        entitled to participate in, all of the Company's employee benefit plan
        and arrangements in effect on the date hereof in at least the same
        manner and capacity as the officers and key management employees of the
        Company. This does not include life insurance or disability insurance if
        the cost of coverage is substantially in excess of the average cost for
        someone of the same age. The Company shall not make any changes in such
        plans and arrangements which would adversely affect the Executive's
        rights or benefits thereunder, unless such change occurs pursuant to a
        program applicable to all officers and key management employees of the
        Company. The Executive shall be entitled to participate in or receive
        benefits under any employee benefit plan or arrangement made available
        by the Company in the future to its officers and key management
        employees, subject to and on a basis consistent with the terms,
        conditions and overall administration of such plans and arrangements as
        long as the cost of coverage is not substantially in excess of the
        average cost of someone of the same age. Nothing paid to the Executive
        under any plan or arrangement presently in effect or made available to
        the Executive in the future shall be deemed to be in lieu of any amounts
        payable to the Executive pursuant to this Section 4.

    (e) The Company shall reimburse the Executive or provide him with an expense
        allowance during the term of this Employment Agreement for travel,
        entertainment and other expenses reasonably and necessarily incurred by
        the Executive in connection with the Company's business. The Executive
        shall furnish such documentation with respect to reimbursements or
        allowances to be made hereunder as the Company shall reasonably request.
        Depending on the individual's exact duties, a company owned vehicle may
        be provided.

    (f) Upon dissolution or liquidation of the Company, or upon a merger or
        consolidation in which the Company is not the surviving corporation, all
        Options awarded to the Executive under the ESOP and not previously
        exercised and vested shall become fully exercisable and vested no later
        than the date of such dissolution, merger or consolidation, and the
        Executive shall have the right, immediately prior to such dissolution or

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<PAGE>

        liquidation, or such merger or consolidation, to exercise such
        Executive's Options in whole or in part, but only to the extent that
        such Options are otherwise exercisable under the terms of the Plan.

5. PAYMENT IN THE EVENT OF DISABILITY.

    (a) In the event of the Executive's "permanent disability" (as hereinafter
        defined) during the term of this Employment Agreement, for a period of 6
        months after determination of a permanent disability years the Company
        shall pay to the Executive an annual amount equal to the Executive's
        then effective per annum rate of salary, as determined under Paragraph
        4(a). The Company, to the extent prudent, shall insure against
        disability through an insurance company. Such coverage shall contain a
        benefit for total, as well as partial and residual, disabilities and
        shall be in addition to the payment obligation contained in this
        Paragraph 5 (a). The Company shall review and revise the amount of
        coverage not less than annually in accordance with the prior year's
        total cash compensation as soon as the amount of cash compensation,
        including all cash bonuses, can be calculated.

    (b) For purposes of this Employment Agreement, the Executive's "permanent
        disability" shall be deemed to have occurred after one hundred twenty
        (120) days in the aggregate during any consecutive twelve (12) month
        period, or after ninety (90) consecutive days, during which one hundred
        twenty (120) or ninety (90) days, as the case may be, the Executive, by
        reason of his physical or mental disability or illness, shall have been
        unable to substantially discharge his duties under this Employment
        Agreement. The date of permanent disability shall be such one hundred
        twentieth (120th) or ninetieth (90th) day, as the case may be. In the
        event either the Company or the Executive, after receipt of notice of
        the Executive's permanent disability from the other, dispute that the
        Executive's permanent disability shall have occurred, the Executive
        shall promptly submit to a physical examination by the chief of medicine
        of any major accredited hospital and, unless such physician shall issue
        his written statement to the effect that in his opinion, based on his
        diagnosis, the Executive is capable of resuming his employment and
        devoting his full time and energy to discharging his duties within
        thirty (30) days after the date of such statement, such permanent
        disability shall be deemed to have occurred. In lieu of any such
        examination, a determination by the disability insurance carrier for the
        Company shall suffice.

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<PAGE>

6. TERMINATION.

    (A) The employment of the Executive under this Employment Agreement, and the
        terms hereof, may be terminated by the Company:

        (i) on the death or permanent disability of the Executive (as defined in
            Paragraph 4(b), or

        (ii) for cause at any time by action of the Board. For purposes hereof,
            the term "cause" shall mean:

                  (a) The Executive's fraud, commission of a felony or of an act
                      or series of acts which result in material injury to the
                      business reputation of the Company, commission of an act
                      or series of repeated acts of dishonesty which are
                      materially inimical to the best interests of the Company,
                      or the Executive's willful and repeated failure to perform
                      his lawful duties under this Employment Agreement, which
                      failure has not been cured within fifteen (15) days after
                      the Company gives notice thereof to the Executive,
                      provided, however, that the Executive shall not be
                      entitled to any more than two notice cure opportunities
                      during each fiscal year of the Company; or

                  (b) The Executive's material breach of any material provision
                      of this Employment Agreement not involving performance of
                      his duties, which breach has not been cured in all
                      substantial respects within ten (10) days after the
                      Company gives notice thereof to the Executive. (Provided,
                      however, that Executive shall not be entitled to any more
                      than two weeks notice cure opportunities during each
                      fiscal year of the Company.

     Upon any termination of this Employment Agreement, the Executive shall be
deemed to have resigned from all offices held by the Executive in the Company.

    (B) In the event of a termination claimed by the Company to be for "cause"
        pursuant to Paragraph 6 (a)(ii), the Executive shall have the right to
        have the justification for said termination determined forthwith by
        arbitration. In order to exercise such right, the Executive shall serve
        on the Company within thirty (30) days after termination a written
        request for arbitration. The Company immediately shall request the
        appointment of an arbitrator by the American Arbitration Association and
        thereafter the question of "cause" shall be determined under the rules
        of the American Arbitration Association, and the decision of the
        arbitrator or arbitrators shall be final and binding on both parties.
        The parties shall use all reasonable efforts to facilitate and expedite
        the arbitration and shall act to cause the arbitration to be completed
        as promptly as possible. Expenses of the arbitration shall be borne
        equally by the parties, unless apportioned otherwise by the arbitrators.

                                       5
<PAGE>

    (C) In the event of termination for any of the reasons set forth in
        subparagraph (A)(i) or (A)(ii) of this Paragraph 6, or if the Executive
        terminates his employment, unless as under subparagraph 3b, the
        Executive shall be entitled to no further compensation or other benefits
        under this Employment Agreement, except as to that portion of any unpaid
        salary and other benefits accrued and earned by him hereunder up to and
        including the effective date of such termination. If the Company
        terminates the Executive's employment other than pursuant to
        subparagraph 6(A)(i) or 6(A)(ii) or if the Executive terminates his
        employment pursuant to subparagraph 3(b), all of the compensation and
        benefits payable to the Executive pursuant to this Employment Agreement
        shall be paid to the Executive for a period of eighteen (18) months
        following the date of such termination (the "Severance Period"). For
        purposes of this Paragraph 6(C), with respect to any benefits payable to
        the Executive following termination, the Company may elect to (i) pay to
        the Executive in cash an amount equivalent to the value of the benefits
        to be paid for the duration of the Severance Period; or (ii) continue to
        provide benefits to the Executive for the duration of the Severance
        Period. If there occurs a change of control, or take over, of the
        Company and the acquiring or controlling entity terminates the
        Executive, then the Executive shall be paid for a period of thirty-six
        (36) months following the date of such termination (the "Severance
        Period"), including all of the compensation and other benefits payable
        to the Executive pursuant to this Employment Agreement.

7.   NON-COMPETITION AND CONFIDENTIALITY. The Executive acknowledges the
     Company's reliance and expectation of the Executive's continued commitment
     to performance of his duties and responsibilities during the term of this
     Employment Agreement. In light of such reliance and expectation on the part
     of the Company, the Executive hereby agrees to be bound by the terms of the
     Non-competition and Confidentiality Agreement, of even date herewith, a
     copy of the form of which is attached hereto and made a part hereof as
     EXHIBIT B.

8.   MISCELLANEOUS.

     (a) The Executive represents and warrants that he is not a party to any
         agreement, contract or understanding, whether employment or otherwise,
         which would restrict or prohibit him from undertaking or performing
         employment in accordance with the terms and conditions of this
         Employment Agreement.

     (b) The provisions of this Employment Agreement are severable and if any
         one or more provisions may be determined to be illegal or otherwise
         unenforceable, in whole or in part, the remaining provisions and any
         partially unenforceable provision, to the extent enforceable in any
         jurisdiction, nevertheless shall be binding and enforceable.

     (c) The rights and obligations of the Company under this Employment
         Agreement shall inure to the benefit of, and shall be binding on, the
         Company and its successors and assigns, and the rights and obligations
         (other than obligations to perform services) of the Executive under
         this Employment Agreement shall inure to the benefit of, and shall be
         binding upon, the Executive and his heirs, personal representatives and
         assigns.

                                       6
<PAGE>

     (d) Any notice to be given under this Employment Agreement shall be
         personally delivered in writing or shall have been deemed duly given
         when received after it is posted in the United States mail, postage
         prepaid, registered or certified, return receipt requested, and if
         mailed to the Company, shall be addressed to its principal place of
         business and if mailed to the Executive, shall be addressed to him at
         his home address last known on the records of the Company, or at such
         other address or addresses as either the Company or the Executive may
         hereafter designate in writing to the other. Notice by regular mail
         postage prepaid, shall be given at the same time the registered
         certified copy is mailed and shall be sufficient if not returned and
         the registered or certified copy is returned either refused or because
         not picked up.

     (e) The failure of either party to enforce any provision or provisions of
         this Employment Agreement shall not in any way be construed as a waiver
         of any such provision or provisions as to any future violations
         thereof, or prevent that party thereafter from enforcing each and every
         other provision of this Employment Agreement. The rights granted the
         parties herein are cumulative and the waiver of any single remedy shall
         not constitute a waiver of such party's right to assert all other legal
         remedies available to it under the circumstances.

     (f) This Employment Agreement supersedes all prior agreements and
         understandings between the parties and may not be modified or
         terminated orally. No modification, termination or attempted waiver
         shall be valid unless in writing and signed by the party against whom
         the same is sought to be enforced.

     (g) This Employment Agreement (other than the statutory rights or
         indemnification which shall be under Delaware law) shall be governed by
         and construed according to the laws of the State of Maryland without
         giving effect to applicable conflicts of law provisions.

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

TELKONET COMMUNICATIONS, INC.

By:________________________________
Name:______________________________
Title:_____________________________

___________________________________
David S.Yaney, Ph.D.

                                       7

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