Exhibit 10.1


 





ELEVENTH AMENDMENT


TO


LOAN AND SECURITY AGREEMENT


 


This Eleventh Amendment
to Loan and Security Agreement is entered into as of November 6, 2019 (the “Amendment”), by and among TELKONET, INC.
(“Borrower”) and HERITAGE BANK OF COMMERCE (“Bank”), and is effective as of September 30, 2019.


 


RECITALS


 


Borrower 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, that certain Third Amendment to Loan and Security Agreement dated as
of January 25, 2017, that certain Fourth Amendment to Loan and Security Agreement dated as of March 29, 2017, that certain Fifth
Amendment to Loan and Security Agreement dated as of August 29, 2017, that certain Sixth Amendment to Loan and Security Agreement
dated as of October 23, 2017, that certain Seventh Amendment to Loan and Security Agreement dated as of February 2, 2018, that
certain Eighth Amendment to Loan and Security Agreement dated as of April 5, 2018, that certain Ninth Amendment to Loan and Security
Agreement dated as of November 7, 2018 and that certain Tenth Amendment to Loan and Security Agreement dated as of January 29,
2019 (collectively, the “Agreement”).


 


AGREEMENT


 


NOW, THEREFORE, the parties agree as follows:


 





	 	1.	The following definition set forth in Section 1.1 of the Agreement is amended and restated in its entirety to read as follows:
	 	 	 
	 	 	“Revolving Maturity
Date” means September 30, 2021, subject to Bank’s annual review of Borrower to occur on or around September 30, 2020,
which results shall be satisfactory to Bank.
	 	 	 
	 	2.	Section 6.9 of the Agreement is amended and restated in its entirety to read as follows:



 


	 	 	6.9	Financial Covenants.
	 	 	 	 
	 	 	(a)          Asset Coverage Ratio. Borrowers shall maintain a minimum ratio of unrestricted cash maintained at Bank plus all Eligible Accounts to all Obligations owing to Bank of at least 1.50 to l .00, measured on a monthly basis.
	 	 	 
	 	 	(b)          Minimum Cash at Bank. Borrowers shall maintain at least $2,000,000 in unrestricted cash in its accounts maintained at Bank
at all times, and also measured monthly.



 





	 	4.	Exhibit D to the Agreement is replaced in its entirety with the Exhibit D attached hereto.



 


 


 






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5.            
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.


 


6.            
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.


 


7.           
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.


 


8.            
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, duly executed by Borrower;
	 	 	 	 
	 	 	(b)	corporate resolutions and incumbency certificate, duly executed by Borrower;
	 	 	 	 
	 	 	(c)	payment of the renewal facility fee of $10,000 that is due on September 30, 2019 pursuant to Section 2.5(b) of the Agreement,
plus all Bank Expenses incurred through the date of this Amendment; and
	 	 	 	 
	 	 	(d)	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/ Richard E. Mushrush	 
	 	Name: Richard E. Mushrush	 
	 	Title:   CFO	 
	 	 	 
	 	 	 
	 	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.



 


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
	A/R & 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)	1.50 : 1.00	____: 1.00	Yes	No
	Minimum Unrestricted Cash at Bank at all times	≥
$2,000,000	$_______________	Yes	No


 





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