On April 27, 2021, Telkonet, Inc. entered into an unsecured promissory note, dated as of April 26, 2021(the PPP Loan2), with Heritage Bank of Commerce under a second draw of the Paycheck Protection Program (the PPP) administered by the United States Small Business Administration (SBA) and authorized by the Keeping American Workers Employed and Paid Act, which is part of the Coronavirus Aid, Relief, and Economic Security Act, enacted on March 27, 2020. The principal amount of the PPP Loan2 is $913,062.50, bears interest of 1.0% per annum and has a maturity date of five years from the date the proceeds are disbursed. The proceeds of the PPP Loan2 were disbursed on April 27, 2021. No payments of principal or interest are required until after the Payment Deferral Period (as defined in the Note), but interest accrues during this period. After this period, monthly payments of principal and interest are required and continue until maturity with respect to any portion of the PPP Loan2 not forgiven, as discussed below. The PPP Loan2 may be prepaid, in full or in part, at any time prior to maturity with no prepayment penalties. The Note contains events of default and other provisions customary for a loan of this type. Under the terms of the PPP, the Company can apply for, and be granted, forgiveness for all or a portion of the PPP Loan2. Such forgiveness will be determined, subject to limitations and ongoing rulemaking by the SBA, based on the use of loan proceeds for eligible purposes, including payroll costs, mortgage interest, rent, utility costs and the maintenance of employee and compensation levels. At least 60% of such loan proceeds must be used for eligible payroll costs. The amount of loan forgiveness will be reduced if the Company terminates employees or reduces salaries during the Covered Period.