Exhibit 10.1


 


THIRTEENTH AMENDMENT


TO


LOAN AND SECURITY AGREEMENT


 


This Thirteenth Amendment
to Loan and Security Agreement is entered into as of December 13, 2021 (the “Amendment”), by and among TELKONET, INC. (“Borrower”)
and HERITAGE BANK OF COMMERCE (“Bank”).


 


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, that certain
Tenth Amendment to Loan and Security Agreement dated as of January 29, 2019, that certain Eleventh Amendment to Loan and Security Agreement
dated as of November 6, 2019 and that certain Twelfth Amendment to Loan and Security Agreement dated as of September 30, 2021 (collectively,
the “Agreement”). The parties desire to amend the Agreement in accordance with the terms set forth herein.


 


AGREEMENT


 


NOW, THEREFORE, the parties agree as follows:


 


1.               
The following definitions set forth in Section 1.1 of the Agreement are amended and restated in their entirety to read as follows:


 


“Revolving Line” means a credit extension of
up to One Million Dollars ($1,000,000). “Revolving Maturity Date” means March 31, 2022.


 


2.               
Section 6.9(b) of the Agreement is amended and restated in its entirety to read as follows:


 


(b)       Minimum
Cash at Bank. Borrowers shall maintain at least $1,000,000 in unrestricted cash in its accounts maintained at Bank at all times, and also
measured monthly.


 


3.               
Exhibit D to the Agreement is replaced in its entirety with the Exhibit D attached hereto.


 


4.               
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.


 


5.              
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.


 


 


 


 






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6.               
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.


 


7.               
As
a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:


 


(a)                
this original signed Amendment, duly executed by Borrower;


 


(b)               
payment of a pro-rated facility fee in the amount of $1,250 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/ 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	≥ $1,000,000	$
______________	Yes	No



  


	
    Comments Regarding Exceptions: See Attached.

     

     

    Sincerely,

     

     

     

    _____________________________________

    SIGNATURE

     
	 	
    BANK USE ONLY

    Received by:____________________________________

    AUTHORIZED SIGNER

    Date:__________________________________________

    Verified: _______________________________________

    AUTHORIZED SIGNER

    Date:__________________________________________

    Compliance Status                                      Yes    No

	_____________________________________

                                TITLE

                                 
_____________________________________	 
	DATE	 	 


 


 


 






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