Document:

Exhibit 10.16

 

THIRD AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

 

This
Third Amendment to Loan and Security Agreement is entered into as of January 25, 2017 (the "Amendment"), by and among
TELKONET, INC. and ETHOSTREAM LLC (together, "Borrowers" and each, a "Borrower"), and HERITAGE BANK OF COMMERCE
("Bank").

 

RECITALS

 

Borrowers
and Bank are parties to that certain Loan and Security Agreement dated as of September 30, 2014 and as amended from time to time,
including pursuant to that certain First Amendment to Loan and Security Agreement dated as of February 17, 2016 and that certain
Second Amendment to Loan and Security Agreement dated as of October 27, 2016 (collectively, the "Agreement"). Borrowers
have requested, and Bank has agreed, to waive certain Events of Default under the Agreement, as set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, the parties agree as follows:

 

1.            Section 6.3(b) of the Agreement is amended and restated in its entirety to read as follows:

 

(b)       within
five (5) days of the 15th day and last day of each month, aged listing of accounts payable and a customer deposit listing;

 

2.            Section 6.3(i) of the Agreement is amended and restated in its entirety to read as follows:

 

(i)       within
fifteen (15) days after the last day of each month, bank statement's listing the balances and activity in Borrowers' Wells Fargo
Accounts;

 

3.            Section 6.3(j) of the Agreement is amended and restated in its entirety to read as follows: 

 

(j)        within fifteen (15)
days after the last day of each month, an inventory report and a list of Offsite Inventory.

 

4.            The following is added as new subsection (1) to the end of Section 6.3 of the Agreement:

 

(1)       within
fifteen (15) days of the end of each calendar quarter, a deferred revenue schedule.

 

5.            Section 6.9(b) of the Agreement is amended and restated in its entirety to read as follows:

 

(b)       EBITDA.
Measured as of the end of each fiscal quarter, Borrowers shall achieve a year-to-date EBITDA of at least seventy percent (70%)
of its projected EBITDA set forth in Borrower's board approved financial projections delivered to Bank in accordance with Section
6.3(f)), which amounts, for the quarters listed below, are set forth below:

 

	Fiscal Quarter Ending	Projected Year-to-Date

EBITDA	70% of Projected

Year-to-Date EBITDA
	March 31, 2017	$34,599	$24,219
	June 30, 2017	$169,044	$118,331
	September 30, 2017	$380,618	$266,432
	December 31, 2017	$527,804	$369,463

 

 

 

 

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Notwithstanding the foregoing,
if Borrowers deviate from its projected EBITDA by an amount that is less than $100,000, Borrowers shall be deemed in compliance
with this Section 6.9(b).

 

6.            Borrower represents and warrants 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.

 

7.            Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. 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. Borrower ratifies and reaffirms the continuing effectiveness of all agreements
entered into in connection with the Agreement.

 

8.            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. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a ".pdf" format data file, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or ".pdf'
signature page were an original hereof.

 

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

 

(a)       the original signed Amendment and all other Loan Documents being executed in connection herewith, duly executed by Borrower;

 

(b)       payment of an amount equal to 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.

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

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IN WITNESS WHEREOF, the undersigned have executed this Amendment
as of the first date above written.

 

	 	TELKONET, INC.
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Jason L. Tienor
	 	 	 	 
	 	Name:	Jason L. Tienor
	 	 	 	 
	 	Title:	CEO
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	ETHOSTREAM LLC
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Jason L. Tienor
	 	 	 	 
	 	Name:	Jason L. Tienor
	 	 	 	 
	 	Title:	CEO
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	HERITAGE BANK OF COMMERCE
	 	 	 	 
	 	 	 	 
	 	By:	 
	 	 	 	 
	 	Name:	 
	 	 	 	 
	 	Title:	 

 

 

 

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EXHIBIT D

COMPLIANCE CERTIFICATE

 

	TO:	HERITAGE BANK OF COMMERCE
	FROM:	TELKONET, INC. and ETHOSTREAM LLC

 

The undersigned
authorized officer of Telkonet, Inc., on behalf of all Borrowers, hereby certifies that in accordance with the terms and
conditions of the Loan and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in
complete compliance for the period ending _______________ with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and correct as of the date hereof. Attached
herewith are the required documents supporting the above certification. The Officer further certifies that these are prepared
in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.

 

Please indicate compliance
status by circling Yes/No under "Complies" column.

 

	Reporting Covenant	Required	Complies
	Borrower prepared financial statements	Quarterly within 45 days	Yes     No
	Compliance Certificate	Quarterly within 45 days	Yes     No
	Wells Fargo bank statements	Monthly within 15 days	Yes     No
	AIR & A/P Agings	Within 5 days of 15th and last day of each month	Yes     No
	Customer deposit listing	Within 5 days of 15th and last day of each month	Yes     No
	Borrowing base certificate	Within 5 days of 15th and last day of each month	Yes     No
	Inventory report	Monthly within 15 days	Yes     No
	Offsite Inventory listing	Monthly within 15 days	Yes     No
	Deferred revenue schedule	Quarterly within 15 days	Yes     No
	Annual financial statements (CPA Audited)	FYE within 120 days	Yes     No
	Annual financial projections and budget	Annual within 30 days before FYE	Yes     No
	Federal Tax Returns	Annual, within 15 days of filing	Yes     No
	10K and 10Q	(as applicable)	Yes     No
	A/R Audit	Initial and semi-annual	Yes     No
	IP Notices	As required under Section 6.10	Yes     No

 

 

	Financial Covenant	Required	Actual	Complies
	Minimum Asset Coverage Ratio (Monthly) 	1.25: 1.00	____:1.00	Yes     No
	Minimum YTD EBITDA (Negative deviation from board approved financial projections not to
exceed 30% or $100,000; quarterly)	 	$__________	Yes     No

 

 

	Comments Regarding Exceptions: See Attached.	 	BANK USE
    ONLY
	 	 	 	 	 	 	 
	Sincerely,	 	Received by:	 	 
	 	 	 	 	 	AUTHORIZED SIGNER
	 	 	Date:	 	 	 	 
	SIGNATURE	 	 	 	 	 	 
		 	Verified:	 	 	 
	 	 	 	 	AUTHORIZED SIGNER
	TITLE	 	Date:	 	 	 	 
	 	 	 	 	 	 	 
		 	Compliance Status  	Yes       No     
	DATE	 	 	 

 

 

 

 

    	 	4Exhibit 10.17

 

FOURTH AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

 

This Fourth Amendment
to Loan and Security Agreement is entered into as of March 29, 2017 (the "Amendment"), by and among TELKONET, INC. and
ETHOSTREAM LLC (together, "Borrowers" and each, a "Borrower"), and HERITAGE BANK OF COMMERCE ("Bank").

 

RECITALS

 

Borrowers and Bank
are parties to that certain Loan and Security Agreement dated as of September 30, 2014 and as amended from time to time, including
pursuant to that certain First Amendment to Loan and Security Agreement dated as of February 17, 2016, that certain Second Amendment
to Loan and Security Agreement dated as of October 27, 2016 and that certain Third Amendment to Loan and Security Agreement dated
as of January 25, 2017 (collectively, the "Agreement"). Following the sale of certain assets of Ethostream, LLC (to which
Bank has separately provided its consent), Borrowers have requested, and Bank has agreed, to amend the Agreement in accordance
with the terms set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, the parties agree as follows:

 

1.            Section
6.9(b) of the Agreement is amended and restated in its entirety to read as follows:

 

(b)       EBITDA.
Measured as of the end of each fiscal quarter, the maximum year-to-date EBITDA loss for Telkonet, Inc. shall not exceed the amounts
set forth below:

 

	Fiscal Quarter Ending	Year-to-Date EBITDA Loss
	March 31, 2017	($845,000)
	June 30, 2017	($1,486,000)
	September 30, 2017	($2,023,000)
	December 3I, 2017	($2,651,000)

 

Notwithstanding the foregoing,
if Telkonet, Inc. deviates from its projected EB1TDA by an amount that is less than $100,000, Borrowers shall be deemed in compliance
with this Section 6.9(b).

 

2.            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,

 

3.            Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. 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. Each Borrower ratifies and reaffirms the continuing effectiveness of all
agreements entered into in connection with the Agreement.

 

4.            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. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a ".pdf' format data file, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or ".pdf'
signature page were an original hereof.

 

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

 

 

 

 

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(a)       the original signed Amendment and all other Loan Documents being executed in connection herewith, duly executed by Borrowers;

 

(b)       payment of an amendment fee in the amount of $5,000 plus 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.

 

 

 

[SIGNATURE PAGE FOLLOWS}

 

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the undersigned have executed this Amendment
as of the first date above written.

 

	 	TELKONET, INC.
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Jason L. Tienor
	 	 	 	 
	 	Name:	Jason L. Tienor
	 	 	 	 
	 	Title:	CEO
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	ETHOSTREAM LLC
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Jason L. Tienor
	 	 	 	 
	 	Name:	Jason L. Tienor
	 	 	 	 
	 	Title:	CEO
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	HERITAGE BANK OF COMMERCE
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Karla Schrader
	 	 	 	 
	 	Name:	Karla Schrader
	 	 	 	 
	 	Title:	VP

 

 

 

 

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EXHIBIT D

COMPLIANCE CERTIFICATE

 

	TO:	HERITAGE BANK OF COMMERCE
	FROM:	TELKONET, INC. and ETHOSTREAM LLC

 

The undersigned authorized
officer of Telkonet, Inc., on behalf of all Borrowers, hereby certifies that in accordance with the terms and conditions of the
Loan and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in complete compliance for
the period ending ____________ with all required covenants except as noted below and (ii) all representations and warranties
of Borrower stated in the Agreement are true and correct as of the date hereof. Attached herewith are the required documents supporting
the above certification. The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes.

 

Please indicate compliance
status by circling Yes/No under "Complies" column.

 

	Reporting Covenant	Required	Complies
	Borrower prepared financial statements	Quarterly within 45 days	Yes     No
	Compliance Certificate	Quarterly within 45 days	Yes     No
	Wells Fargo bank statements	Monthly within 15 days	Yes     No
	AIR & A/P Agings	Within 5 days of 15th and last day of each month	Yes     No
	Customer deposit listing	Within 5 days of 15th and last day of each month	Yes     No
	Borrowing base certificate	Within 5 days of 15th and last day of each month	Yes     No
	Inventory report	Monthly within 15 days	Yes     No
	Offsite Inventory listing	Monthly within 15 days	Yes     No
	Deferred revenue schedule	Quarterly within 15 days	Yes     No
	Annual financial statements (CPA Audited)	FYE within 120 days	Yes     No
	Annual financial projections and budget	Annual within 30 days before FYE	Yes     No
	Federal Tax Returns	Annual, within 15 days of filing	Yes     No
	10K and 10Q	(as applicable)	Yes     No
	A/R Audit	Initial and semi-annual	Yes     No
	IP Notices	As required under Section 6.10	Yes     No

 

	Financial Covenant	Required	Actual	Complies
	Minimum Asset Coverage Ratio (Monthly) 	1.25: 1.00	____:1.00	Yes     No
	Telkonet, Inc. YTD EBITDA Loss as of	 	 	 
	March 31, 2017	($845,000)	$__________	Yes     No
	June 30, 2017	($1,486,000) 	$__________	Yes     No
	September 30, 2017	($2,023,000) 	$__________	Yes     No
	December 31, 2017	($2,651,000)	$__________	Yes     No

 

	Comments Regarding Exceptions: See Attached.	 	BANK USE
    ONLY
	 	 	 	 	 	 	 
	Sincerely,	 	Received by:	 	 
	 	 	 	 	 	AUTHORIZED SIGNER
	 	 	Date:	 	 	 	 
	SIGNATURE	 	 	 	 	 	 
		 	Verified:	 	 	 
	 	 	 	 	AUTHORIZED SIGNER
	TITLE	 	Date:	 	 	 	 
	 	 	 	 	 	 	 
		 	Compliance Status  	Yes       No     
	DATE	 	 	 

 

 

 

 

 

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