Exhibit 10.1

 

SECOND AMENDMENT

TO LOAN AND SECURITY AGREEMENT

 

This Second Amendment to Loan and Security Agreement (the “Amendment”) is
entered into as of October 27, 2016 by and among HERITAGE BANK OF COMMERCE
(“Bank”), TELKONET, INC. and ETHOSTREAM LLC (“Borrowers,” and each, a
"Borrower").

 

RECITALS

 

A.               Borrowers and Bank are parties to that certain Loan and
Security Agreement dated as of September 30, 2015, as amended by the First
Amendment, dated as of February 17, 2016 (as the same may from time to time be
further amended, modified, supplemented or restated, the " Agreement").

 

B.               Borrowers have asked to amend the Agreement to modify certain
terms. Bank is willing to do so, on the terms and conditions and in reliance
upon the representations and warranties set forth in this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, the parties agree as follows:

 

1.         Definitions. Capitalized terms used but not defined in this Amendment
shall have the meanings given to them in the Agreement.

 

2.         Amendments to Agreement.

 

2.1 Section 2.4 is amended and restated to read as follows:

 

2.4       Crediting Payments. Any wire transfer of funds, check, or other item
of payment received by Bank shall be immediately applied to conditionally reduce
Obligations, but shall not be considered a payme nt on account unless such
payment is of immediately available federal funds or unles s and until such
check or other item of payment is honored when presented for payment.
Notwithstanding anything to the contrary contained herein , any wire transfer or
payment received by Bank after 12:00 noon Pacific Time shall be deemed to have
been received by Bank as of the opening of business on the immediately following
Business Day. Whenever any payment to Bank under the Loan Documents would
otherwise be due (except by reason of acceleration) on a date that is not a
Business Day, such payment shall instead be due on the next Business Day, and
additional fees or interest , as the case may be, shall accrue and be payable
for the period of such extension.

 

2.2 Section 6.9(b) is amended and restated to read as follows:

 

(b) 2016 EBITDA. Borrowers shall achieve a year-to-date EBITDA of at least the
levels set forth below for the fiscal quarter periods indicated:

 

Fiscal Quarter Ending Minimum Required YTD EBITDA September 30, 2016
$(1,013,000) December 31, 2016 $(1,337,000)

 

3.                The Agreement , as amended hereby, shall be and remain in full
force and effect in accordance with its respective terms and hereby is ratified
and confirmed in all respects. Except as expressly set forth herein, the
execution, delivery, and performance of this Amendment shall not operate as a
waiver of, or as an amendment of, any right, power, or remedy of Bank under the
Agreement, as in effect prior to the date hereof. Borrowers ratify and reaffirm
the continuing effectiveness of all agreements entered into in connection with
the Agreement.

 

 

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4.                Borrowers represent and warrant that the representations and
warranties contained in the Agreement are true and correct as of the date of
this Amendment , and that no Event of Default has occurred and is continuing.

 

5.                This Amendment may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one instrument.

 

6.                As a condition to the effectiveness of this Amendment, Bank
shall have received, in form and substance satisfactory to Bank, the following:

 

(a)             this Amendment, duly executed by Borrowers;

 

(b)            payment of a modification fee of $1,500 and all Bank Expenses
incurred through the date of this Amendment; and

 

(c)             such other documents, and completion of such other matters, as
Bank may reasonably deem necessary or appropriate.

 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

 

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IN WITNESS WHEREOF , the undersigned have executed this Amendment as of the
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

 

 

 

 

 

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