Exhibit 10.1


 


FIRST AMENDMENT TO


LOAN AND SECURITY AGREEMENT


 


This First Amendment to Loan and Security Agreement (the “Amendment”)
is entered into as of February 17, 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 in that certain Loan and Security Agreement dated
as of September 30, 2015 (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. 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


 


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 The defined term “Revolving Maturity Date” is amended to read as
follows:


 


“Revolving Maturity Date” means September 30, 2018, subject to Section 6.9(c).


 


2.2 Section 2.5(b) is amended to read as follows:


 


(b) Renewal Fee. On each anniversary of the Closing Date prior to (but not including)
the Revolving Maturity Date, a renewal fee equal to Ten Thousand Dollars ($10,000), which shall be nonrefundable.


 


2.3 Clauses (b) and (c) of Section 6.9 are amended 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
	March 31, 2016	($636,000)
	June 30, 2016	($32,000)
	September 30, 2016	$291,000
	December 31, 2016	$521,000



 


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


 


 


 






    	 	B-1	 



     

    

 


(c) Future EBITDA. On or before November 30 of each year, Borrowers and Bank
shall agree upon mutually agreeable EBITDA covenant levels for Section 6.9(b) for the next calendar year. It is understood
that EBITDA shall be measured year to date. For example, EBITDA for the first quarter of 2016 shall be EBITDA for the period
January 1, 2016 through and including March 31, 2016 and EBITDA for the second quarter of 2016 shall be EBITDA for the period
January 1, 2016 through and including June 30, 2016. If Bank and Borrowers do not, on or before January 15, 2017, establish a
mutually acceptable EBITDA level in respect of the covenant set forth in Section 6.9(b) for 2017, then the Revolving Maturity
Date shall be February 15, 2017; and if Bank and Borrowers do not, on or before January 15, 2018, establish a mutual
acceptable EBITDA level in respect of such covenant, than the Revolving Maturity Date shall be February 15, 2018.


 


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.


 


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 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]


 


 


 


 






    	 	2	 



     

    

 


 


 


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


 


 


“Borrowers”


 


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


 


 


“Bank”


 


HERITAGE BANK OF COMMERCE


 


By: /s/ Karla Schrader                       


Name: Karla Schrader


Title: VP


 


 


 


 


 






    	 	3