Exhibit 10.1
SECOND AMENDMENT
TO LOAN ANDSECURITYAGREEMENT
ThisSecondAmendment to Loan and SecurityAgreement (the “Amendment”) is entered intoas of October 27, 2016 byandamong HERITAGEBANKOF COMMERCE(“Bank”),TELKONET,INC.and ETHOSTREAM LLC(“Borrowers,”andeach,a"Borrower").
RECITALS
A. Borrowers and Bank are parties to thatcertainLoanand Security Agreementdated asof September 30,2015,asamended by theFirst Amendment,datedas ofFebruary 17, 2016(asthesamemay from time to time be furtheramended,modified,supplemented orrestated, the"Agreement").
B. Borrowers haveasked to amendthe Agreement to modify certain terms.Bank iswilling todoso, onthe terms andconditions andin reliance upontherepresentationsandwarrantiessetforth in this Amendment.
AGREEMENT
NOW,THEREFORE,theparties agreeasfollows:
1. Definitions.Capitalizedtermsused but not defined in thisAmendment shallhavethemeaningsgiventothemin theAgreement.
2. AmendmentstoAgreement.
2.1Section 2.4isamendedand restated to read as follows:
2.4 Crediting Payments.Anywire transfer offunds,check, or otheritemof paymentreceived by Bankshallbe immediatelyappliedtoconditionallyreduce Obligations,butshallnot beconsidereda payme nton accountunlesssuchpayment is of immediatelyavailable federalfundsorunlessanduntilsuch checkorotheritemofpayment is honoredwhenpresentedforpayment.Notwithstanding anythingto thecontrary containedherein,anywiretransfer or payment received by Bank after 12:00 noon PacificTime shallbedeemedto have been received by Bankasof the openingofbusinessonthe immediatelyfollowingBusiness Day.Wheneveranypayment to Bank under the Loan Documentswould otherwisebe due (except by reasonof acceleration) on adate that is not a Business Day,suchpaymentshallinstead bedue onthe nextBusinessDay,andadditionalfees or interest,asthecasemay be,shallaccrue and be payable for the periodof such extension.
2.2Section6.9(b) isamended and restatedto read asfollows:
(b)2016 EBITDA.Borrowersshall achieveayear-to-date EBITDA of atleast the levelsset forthbelow for the fiscal quarter periods indicated:
| FiscalQuarter Ending | Minimum Required YTDEBITDA |
| September30,2016 | $(1,013,000) |
| December31,2016 | $(1,337,000) |
3. The Agreement,as amendedhereby,shallbe and remain in fullforce and effectinaccordance withits respective termsandhereby is ratified andconfirmedin all respects.Except asexpresslysetforth herein,the execution,delivery, and performance of thisAmendment shallnotoperate asawaiver of, orasanamendmentof, anyright,power,orremedy of Bank under the Agreement,as in effect prior to the date hereof. Borrowers ratify andreaffirmthecontinuingeffectiveness of allagreements entered into inconnection withthe Agreement.
4. Borrowersrepresentand warrantthat the representationsand warrantiescontained in theAgreement aretrueand correct as ofthedate ofthisAmendment,andthatno Event of Defaulthasoccurredand iscontinuing.
5. This Amendment maybe executedin twoor more counterparts, each of which shall be deemed an original,butall of which together shall constitute oneinstrument.
6. Asa conditionto the effectivenessofthis Amendment,Bank shallhavereceived,inform and substance satisfactorytoBank,thefollowing:
(a) this Amendment,duly executedby Borrowers;
(b) paymentof amodificationfee of $1,500 and all Bank Expensesincurred through the dateof this Amendment; and
(c) such otherdocuments,and completionofsuch othermatters,asBank mayreasonablydeem necessaryor appropriate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF,the undersigned haveexecutedthisAmendment as ofthe first date above written.
“Borrowers”
TELKONET, INC.
By:/s/ Jason Tienor
Name: Jason Tienor
Title: CEO
ETHOSTREAM LLC
By:/s/ Jason Tienor
Its: CEO
By:/s/ Jason Tienor
Name: Jason Tienor
Title: CEO
“Bank”
HERITAGE BANK OF COMMERCE
By:/s/ Mike Hanson
Name: Mike Hanson
Title: Sup & Manager
