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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