EXHIBIT 10.19

THIRD LOAN MODIFICATION AND WAIVER AGREEMENT

This Third Loan Modification and Waiver Agreement (this “Loan Modification
Agreement”) is entered into as of March 2, 2012, by and between (i) SILICON
VALLEY BANK, a California corporation, with its principal place of business at
3003 Tasman Drive, Santa Clara, California 95054 and with a loan production
office located at 275 Grove Street, Suite 2-200, Newton, Massachusetts 02466
(“Bank”) and (ii) WORLD ENERGY SOLUTIONS, INC., a Delaware corporation with
offices located at 446 Main Street, Worcester, Massachusetts 01608, and WORLD
ENERGY SECURITIES CORP., a Massachusetts securities corporation with offices
located at 446 Main Street, Worcester, Massachusetts 01608 (individually and
collectively, jointly and severally, “Borrower”).

1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of September 8, 2008,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of September 8, 2008, between Borrower and Bank, as amended by a certain
First Loan Modification Agreement, dated as of September 30, 2009 and as further
amended by a certain Second Loan Modification Agreement, dated as of March 8,
2011 (as amended, the “Loan Agreement”). Capitalized terms used but not
otherwise defined herein shall have the same meaning as in the Loan Agreement.

2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the “Security Documents”).

Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the “Existing
Loan Documents”.

3. DESCRIPTION OF CHANGE IN TERMS.

 

  A. Modifications to Loan Agreement.

 

  1 The Loan Agreement shall be amended by deleting Sections 2.1.2, 2.1.3 and
2.1.4 and inserting the following in lieu thereof:

“2.1.2 [Reserved].

2.1.3 [Reserved].

2.1.4 [Reserved].”

 

  2 The Loan Agreement shall be amended by inserting the following new
Section 2.1.5 immediately following Section 2.1.4 thereof:

“2.1.5 Term Loan 2012.

(a) Availability. Bank shall make one (1) term loan available to Borrower in an
amount up to the Term Loan 2012 Amount on the Third Loan Modification Effective
Date, subject to the satisfaction of the terms and conditions of this Agreement.

(b) Repayment. Commencing on the first day of the month following the month in
which the Funding Date occurs and thereafter on the first day of each successive
calendar month until the Term Loan 2012 is paid in full, Borrower shall make
monthly payments of interest in arrears with respect to the Term Loan 2012.
Commencing on

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December 1, 2012, Borrower shall repay the principal amount of the Term Loan
2012 in thirty-nine (39) equal installments of principal, based on a thirty-nine
(39) month amortization schedule (each payment of principal and/or interest
being a “Term Loan 2012 Payment”). Each Term Loan 2012 Payment shall be payable
on the first day of each month. Borrower’s final Term Loan 2012 Payment, due on
the Term Loan 2012 Maturity Date, shall include all outstanding principal and
accrued and unpaid interest under the Term Loan 2012. Once repaid, the Term Loan
2012 may not be reborrowed.

(c) Prepayment. The Term Loan 2012 may be prepaid, in whole prior to the Term
Loan 2012 Maturity Date by Borrower, effective three (3) Business Days after
written notice of such prepayment is given to Bank. Notwithstanding any such
prepayment, Bank’s lien and security interest in the Collateral shall continue
until Borrower fully satisfies its Obligations (other than inchoate indemnity
obligations). If such prepayment is at Borrower’s election or at Bank’s election
due to the occurrence and continuance of an Event of Default, Borrower shall pay
to Bank, in addition to the payment of any other expenses or fees then-owing, if
such prepayment occurs on or before the first anniversary of the Third Loan
Modification Effective Date, a prepayment premium in an amount equal to one
percent (1.00%) of the principal amount of the Term Loan 2012 then outstanding;
provided that no prepayment premium shall be charged if the Term Loan 2012 is
replaced with a new facility from another division of Silicon Valley Bank. Upon
payment in full of the Obligations (other than inchoate indemnity obligations)
and at such time as Bank’s obligation to make Credit Extensions has terminated,
Bank shall terminate and release its liens and security interests in the
Collateral and all rights therein shall revert to Borrower.”

 

  3 The Loan Agreement shall be amended by deleting the following text appearing
as Section 2.2 thereof:

“2.2 Overadvances. If, at any time the sum of (a) the outstanding amount of any
Advances (including any amounts used for Cash Management Services) plus (b) the
face amount of any outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve, plus (c) the FX
Reserve exceeds the lesser of either the Revolving Line or the Borrowing Base
(such excess amount being an “Overadvance”), Borrower shall pay to Bank in cash
such Overadvance immediately; provided, however, that if such Overadvance
results from Bank’s exercising its right to decrease the percentages of the
Borrowing Base or to adjust the criteria for Eligible Accounts, Borrower shall
have three (3) Business Days from receipt of notice from Bank of such decrease
or adjustment to repay such Overadvance.”

and inserting in lieu thereof the following:

“2.2 Overadvances. If, at any time the sum of the outstanding amount of any
Advances exceeds the lesser of either the Revolving Line or the Borrowing Base
(such excess amount being an “Overadvance”), Borrower shall pay to Bank in cash
such Overadvance immediately; provided, however, that if such Overadvance
results from Bank’s exercising its right to decrease the percentages of the
Borrowing Base or to adjust the criteria for Eligible Accounts, Borrower shall
have three (3) Business Days from receipt of notice from Bank of such decrease
or adjustment to repay such Overadvance.”

 

  4 The Loan Agreement shall be amended by deleting the following text appearing
as Section 2.3(a) thereof:

“(a) Interest Rate; Advances. Subject to Section 2.3(b), (a) the principal
amount of the Revolving Line outstanding due to Advances made in respect of
Eligible Accounts shall accrue interest at a floating per annum rate equal to
the aggregate of the Prime Rate plus two and one-quarter of one percentage point
(2.25%), provided, however, during a Streamline Period, the principal amount of
the Revolving Line outstanding due to Advances made in

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respect of Eligible Accounts shall accrue interest at a floating per annum rate
equal to the aggregate of the Prime Rate plus one and one-quarter percentage
points (1.25%); and (b) the principal amount of the Revolving Line outstanding
due to Advances made in respect of Eligible Retail Backlog Accounts shall accrue
interest at a floating per annum rate equal to the aggregate of the Prime Rate
plus two and three-quarters of one percentage point (2.75%), provided, however,
during a Streamline Period, the principal amount of the Revolving Line
outstanding due to Advances made in respect of Eligible Retail Backlog Accounts
shall accrue interest at a floating per annum rate equal to the aggregate of the
Prime Rate plus two percentage points (2.00%). Interest on any Credit Extension
shall be payable monthly.”

and inserting in lieu thereof the following:

“(a) Interest Rate.

(i) Advances. Subject to Section 2.3(b), (a) the principal amount of the
Revolving Line outstanding due to Advances made in respect of Eligible Accounts
shall accrue interest at a floating per annum rate equal to the aggregate of the
Prime Rate plus two and one-quarter of one percentage point (2.25%), provided,
however, during a Streamline Period, the principal amount of the Revolving Line
outstanding due to Advances made in respect of Eligible Accounts shall accrue
interest at a floating per annum rate equal to the aggregate of the Prime Rate
plus one and one-quarter percentage points (1.25%); and (b) the principal amount
of the Revolving Line outstanding due to Advances made in respect of Eligible
Retail Backlog Accounts shall accrue interest at a floating per annum rate equal
to the aggregate of the Prime Rate plus two and three-quarters of one percentage
point (2.75%), provided, however, during a Streamline Period, the principal
amount of the Revolving Line outstanding due to Advances made in respect of
Eligible Retail Backlog Accounts shall accrue interest at a floating per annum
rate equal to the aggregate of the Prime Rate plus two percentage points
(2.00%). Interest on any Credit Extension shall be payable monthly.

(ii) Term Loan 2012. Subject to Section 2.3(b) the principal amount outstanding
under the Term Loan 2012 shall accrue interest at a floating per annum rate
equal to the Prime Rate plus two and one-quarter of one percentage point
(2.25%), which interest shall be payable monthly on the first day of each
month.”

 

  5 The Loan Agreement shall be amended by deleting the following text appearing
as Section 2.4(b) thereof:

“(b) Letter of Credit Fee. Bank’s customary fees and expenses for the issuance
or renewal of Letters of Credit, upon the issuance or renewal of such Letter of
Credit by Bank;”

and inserting the following in lieu thereof:

“(b) [Reserved];”

 

  6 The Loan Agreement shall be amended by deleting the following text appearing
as Section 3.4 thereof:

“3.4 Procedures for Borrowing. Subject to the prior satisfaction of all other
applicable conditions to the making of an Advance set forth in this Agreement,
to obtain an Advance (other than Advances under Sections 2.1.2, 2.1.3 or 2.1.4),
Borrower shall notify Bank (which notice shall be irrevocable) by electronic
mail, facsimile, or telephone by 3:00 p.m. local Boston time on the Funding Date
of the Advance. Together with such notification, Borrower must promptly deliver
to Bank by electronic mail or facsimile a completed Transaction Report executed
by a Responsible Officer or his or her designee. Bank shall credit Advances to
the Designated Deposit Account. Bank may make Advances under this Agreement
based on instructions from a Responsible Officer or his or her designee or
without instructions if the

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Advances are necessary to meet Obligations which have become due. Bank may rely
on any telephone notice given by a person whom Bank believes in its good faith
business judgment, to be a Responsible Officer or designee.”

and inserting the following in lieu thereof:

“3.4 Procedures for Borrowing; Advances. Subject to the prior satisfaction of
all other applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance, Borrower shall notify Bank (which notice shall
be irrevocable) by electronic mail, facsimile, or telephone by 3:00 p.m. local
Boston time on the Funding Date of the Advance. Together with such notification,
Borrower must promptly deliver to Bank by electronic mail or facsimile a
completed Transaction Report executed by a Responsible Officer or his or her
designee. Bank shall credit Advances to the Designated Deposit Account. Bank may
make Advances under this Agreement based on instructions from a Responsible
Officer or his or her designee or without instructions if the Advances are
necessary to meet Obligations which have become due. Bank may rely on any
telephone notice given by a person whom Bank believes in its good faith business
judgment, to be a Responsible Officer or designee.”

 

  7 The Loan Agreement shall be amended by inserting the following text
immediately after the last sentence of Section 4.1 thereof:

“Borrower acknowledges that it previously has entered, and/or may in the future
enter, into Bank Services Agreements with Bank. Regardless of the terms of any
Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank
thereunder shall be deemed to be Obligations hereunder and that it is the intent
of Borrower and Bank to have all such Obligations secured by the first priority
perfected security interest in the Collateral granted herein (subject only to
Permitted Liens that expressly have superior priority to Bank’s Lien in this
Agreement).

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are satisfied
in full, and at such time, Bank shall, at Borrower’s sole cost and expense,
terminate its security interest in the Collateral and all rights therein shall
revert to Borrower. In the event (a) all Obligations (other than inchoate
indemnity obligations), except for Bank Services, are satisfied in full, and
(b) this Agreement is terminated, Bank shall terminate the security interest
granted herein upon Borrower providing cash collateral acceptable to Bank in its
good faith business judgment for Bank Services, if any. In the event such Bank
Services consist of outstanding letters of credit, Borrower shall provide to
Bank cash collateral in an amount equal to 105% (110% for letters of credit
denominated in a currency other than Dollars), of the Dollar Equivalent of the
face amount of all such letters of credit plus all interest, fees, and costs due
or to become due in connection therewith (as estimated by Bank in its good faith
business judgment), to secure all of the Obligations relating to such letters of
credit.”

 

  8 The Loan Agreement shall be amended by deleting the following text appearing
as Sections 6.2(a) (i) and (ii) thereof:

“(i) weekly, whenever there are any outstanding Credit Extensions, and upon each
request for a Credit Extension, a Transaction Report;

(ii) whenever there are any outstanding Credit Extensions, within twenty
(20) days after the end of each month, (A) monthly accounts receivable agings,
aged by invoice date, (B) monthly accounts payable agings, aged by invoice date,
and outstanding or held check registers, if any, (C) monthly unbilled accounts
receivable agings (aged by revenue date), Deferred Revenue report and general
ledger, and (D) a schedule of expected collections;”

and inserting the following in lieu thereof:

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“(i) weekly, whenever there are any outstanding Credit Extensions under the
Revolving Line, and upon each request for a Credit Extension under the Revolving
Line, a Transaction Report;

(ii) whenever there are any outstanding Credit Extensions under the Revolving
Line, within twenty (20) days after the end of each month, (A) monthly accounts
receivable agings, aged by invoice date, (B) monthly accounts payable agings,
aged by invoice date, and outstanding or held check registers, if any,
(C) monthly unbilled accounts receivable agings (aged by revenue date), Deferred
Revenue report and general ledger, and (D) a schedule of expected collections;”

 

  9 The Loan Agreement shall be amended by deleting the following text appearing
at the end of Section 6.2(a) thereof:

“Notwithstanding the foregoing, during a Streamline Period, provided no Event of
Default has occurred and is continuing, Borrower shall not be required to
provide Bank with the Transaction Report required pursuant to clause (a)(i)
above; provided, however, that during such Streamline Period, Borrower shall
provide Bank, within twenty (20) days after the end of each month in which there
were any outstanding Credit Extensions, a duly completed Borrowing Base
Certificate signed by a Responsible Officer.”

and inserting the following in lieu thereof:

“Notwithstanding the foregoing, during a Streamline Period, provided no Event of
Default has occurred and is continuing, Borrower shall not be required to
provide Bank with the Transaction Report required pursuant to clause (a)(i)
above; provided, however, that during such Streamline Period, Borrower shall
provide Bank, within twenty (20) days after the end of each month in which there
were any outstanding Credit Extensions under the Revolving Line, a duly
completed Borrowing Base Certificate signed by a Responsible Officer.”

 

  10 The Loan Agreement shall be amended by deleting the following text
appearing as Section 6.9 thereof:

“6.9 Financial Covenants.

Borrower shall maintain at all times, to be tested as of the last day of each
month, unless otherwise noted, on a consolidated basis with respect to Borrower
and its Subsidiaries:

 

  (a) Minimum EBITDA. A minimum EBITDA, measured on a trailing three-month basis
ending as of the date indicated below, in an amount not less than (no greater
loss than) the amounts indicated below:

 

Trailing Three Month Period

Ended

   Minimum EBITDA
(maximum loss)  

January 31, 2011 through and including March 31, 2011

     $1.00   

April 30, 2011 through and including August 31, 2011

     ($250,000 ) 

September 30, 2011 through and including November 31, 2011

     $1.00   

December 31, 2011 and each monthly period ending thereafter

     $250,000”   

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and inserting in lieu thereof the following:

“6.9 Financial Covenants.

Borrower shall maintain at all times, to be tested as of the last day of each
month, unless otherwise noted, on a consolidated basis with respect to Borrower
and its Subsidiaries:

(a) Minimum Cash and Availability. Commencing February 28, 2012 and at all times
thereafter, maintain unrestricted cash of Borrower at Bank plus unused
Availability Amount of not less than One Million Two Hundred Fifty Thousand
Dollars ($1,250,000);

(b) Minimum Fixed Charge Coverage Ratio. Commencing with the first full fiscal
quarter following the Third Loan Modification Effective Date, achieve, on a
trailing three month basis, measured on the last day of each monthly period, a
Fixed Charge Coverage Ratio of not less than 1.25:1.00.

 

  11 The Loan Agreement shall be amended by deleting the following text
appearing as Section 7.7 thereof:

“7.7 Investments; Distributions. (a) Directly or indirectly make any Investment
other than Permitted Investments, or permit any of its Subsidiaries to do so; or
(b) pay any dividends or make any distribution or payment or redeem, retire or
purchase any capital stock provided that (i) Borrower may convert any of its
convertible securities into other securities pursuant to the terms of such
convertible securities or otherwise in exchange thereof, (ii) Borrower may pay
dividends solely in common stock; and (iii) Borrower may repurchase the stock of
existing and former employees or consultants pursuant to board approved stock
repurchase agreements so long as (X) an Event of Default does not exist at the
time of such repurchase and would not exist after giving effect to such
repurchase, and (Y) such repurchase does not exceed Two Hundred Fifty Thousand
Dollars ($250,000.00) in the aggregate in any fiscal year.”

and inserting in lieu thereof the following:

“7.7 Investments; Distributions. (a) Directly or indirectly make any Investment
other than Permitted Investments, or permit any of its Subsidiaries to do so;
(b) pay any dividends or make any distribution or payment or redeem, retire or
purchase any capital stock provided that (i) Borrower may convert any of its
convertible securities into other securities pursuant to the terms of such
convertible securities or otherwise in exchange thereof, (ii) Borrower may pay
dividends solely in common stock; and (iii) Borrower may repurchase the stock of
existing and former employees or consultants pursuant to board approved stock
repurchase agreements so long as (X) an Event of Default does not exist at the
time of such repurchase and would not exist after giving effect to such
repurchase, and (Y) such repurchase does not exceed Two Hundred Fifty Thousand
Dollars ($250,000.00) in the aggregate in any fiscal year, and (iii) Borrower
may make the GSE Earn-Out Payments so long as (X) an Event of Default does not
exist at the time of such payment and would not exist immediately after giving
effect to such payment and (Y) Borrower provides evidence satisfactory to Bank,
in its sole discretion, that Borrower will remain in compliance with the Minimum
Cash and Availability financial covenant contained in Section 6.9(a) both
immediately after giving effect to such payment and as of the last day of the
month in which such payment is made.”

 

  12 The Loan Agreement shall be amended by deleting the following text
appearing as Section 7.9 thereof:

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“7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar
agreement to which such Subordinated Debt is subject, or (b) amend any provision
in any document relating to the Subordinated Debt which would increase the
amount thereof or adversely affect the subordination thereof to Obligations owed
to Bank.”

and inserting in lieu thereof the following:

“7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar
agreement to which such Subordinated Debt is subject; provided however, Borrower
may make scheduled payments under the NES Note so long as (i) an Event of
Default does not exist at the time of such payment and would not exist
immediately after giving effect to such payment and (ii) Borrower provides
evidence satisfactory to Bank, in its sole discretion, that Borrower will remain
in compliance with the Minimum Cash and Availability financial covenant
contained in Section 6.9(a) both immediately after giving effect to such payment
and as of the last day of the month in which such payment is made, or (b) amend
any provision in any document relating to the Subordinated Debt which would
increase the amount thereof or adversely affect the subordination thereof to
Obligations owed to Bank.”

 

  13 The Loan Agreement shall be amended by deleting the following text
appearing as Section 9.1 thereof:

“(c) demand that Borrower (i) deposits cash with Bank in an amount equal to the
aggregate amount of any Letters of Credit remaining undrawn, as collateral
security for the repayment of any future drawings under such Letters of Credit,
and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in
advance all Letter of Credit fees scheduled to be paid or payable over the
remaining term of any Letters of Credit;

(d) terminate any FX Forward Contracts;”

and inserting in lieu thereof the following:

“(c) demand that Borrower (i) deposits cash with Bank in an amount equal to the
aggregate amount of any letters of credit remaining undrawn, as collateral
security for the repayment of any future drawings under such letters of credit,
and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in
advance all letter of credit fees scheduled to be paid or payable over the
remaining term of any letters of credit;

(d) terminate any foreign exchange forward contracts;”

 

  14 The Loan Agreement shall be amended by deleting the following text
appearing as Section 12.8 thereof:

“12.8 Survival. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been satisfied. The obligation of Borrower in Section 12.3 to
indemnify Bank shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.”

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and inserting in lieu thereof the following:

“12.8 Survival. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been paid in full and satisfied. Without limiting the foregoing,
except as otherwise provided in Section 4.1, the grant of security interest by
Borrower in Section 4.1 shall survive until the termination of all Bank Services
Agreements. The obligation of Borrower in Section 12.3 to indemnify Bank shall
survive until the statute of limitations with respect to such claim or cause of
action shall have run.”

 

  15 The Loan Agreement shall be amended by deleting the following definition
appearing in Section 13.1thereof:

“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the
Borrowing Base minus (b) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit plus an amount equal to the
Letter of Credit Reserves), minus (c) the FX Reserve, and minus (d) the
outstanding principal balance of any Advances (including any amounts used for
Cash Management Services).

“Credit Extension” is any Advance, Letter of Credit, FX Forward Contract, amount
utilized for Cash Management Services, or any other extension of credit by Bank
for Borrower’s benefit.

“Loan Documents” are, collectively, this Agreement, the Perfection Certificate,
the Subordination Agreement, if any, any note, or notes or guaranties executed
by Borrower, or any other present or future agreement executed by Borrower, if
any, and/or for the benefit of Bank in connection with this Agreement, each as
amended, restated, or otherwise modified.

“Prime Rate” is the greater of (i) four percent (4.00%) per annum and
(ii) Bank’s most recently announced “prime rate,” even if it is not Bank’s
lowest rate.

“Reserves” means, as of any date of determination, such amounts as Bank may from
time to time establish and revise in good faith reducing the amount of Advances,
Letters of Credit and other financial accommodations which would otherwise be
available to Borrower under the lending formulas: (a) to reflect events,
conditions, contingencies or risks which, as determined by Bank in good faith,
do or may affect (i) the Collateral or any other property which is security for
the Obligations or its value (including without limitation any increase in
delinquencies of Accounts), (ii) the assets or business of Borrower or any
guarantor, or (iii) the security interests and other rights of Bank in the
Collateral (including the enforceability, perfection and priority thereof); or
(b) to reflect Bank’s good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower or any guarantor to Bank is or
may have been incomplete, inaccurate or misleading in any material respect; or
(c) in respect of any state of facts which Bank determines in good faith
constitutes an Event of Default or may, with notice or passage of time or both,
constitute an Event of Default.

“Revolving Line” is an Advance or Advances in an aggregate amount of up to Three
Million Dollars ($3,000,000.00) outstanding at any time.

“Revolving Maturity Date” is March 6, 2012.

and inserting in lieu thereof the following:

“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the
Borrowing Base minus (b) the outstanding principal balance of any Advances.

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“Credit Extension” is any Advance, Term Loan 2012, or any other extension of
credit by Bank for Borrower’s benefit.

“Loan Documents” are, collectively, this Agreement, any Bank Services
Agreements, the Perfection Certificate, the Subordination Agreement, if any, any
note, or notes or guaranties executed by Borrower, or any other present or
future agreement executed by Borrower, if any, and/or for the benefit of Bank in
connection with this Agreement and/or Bank Services, all as amended, restated,
or otherwise modified.”

“Prime Rate” means the rate of interest published in the “Money Rates” section
of The Wall Street Journal, Eastern Edition as the “United States Prime Rate.”
In the event that The Wall Street Journal, Eastern Edition is not published or
such rate does not appear in The Wall Street Journal, Eastern Edition, the Prime
Rate shall be determined by Bank until such time as the Prime Rate becomes
available in accordance with past practices.

“Reserves” means, as of any date of determination, such amounts as Bank may from
time to time establish and revise in good faith reducing the amount of Advances,
letters of credit and other financial accommodations which would otherwise be
available to Borrower under the lending formulas: (a) to reflect events,
conditions, contingencies or risks which, as determined by Bank in good faith,
do or may affect (i) the Collateral or any other property which is security for
the Obligations or its value (including without limitation any increase in
delinquencies of Accounts), (ii) the assets or business of Borrower or any
guarantor, or (iii) the security interests and other rights of Bank in the
Collateral (including the enforceability, perfection and priority thereof); or
(b) to reflect Bank’s good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower or any guarantor to Bank is or
may have been incomplete, inaccurate or misleading in any material respect; or
(c) in respect of any state of facts which Bank determines in good faith
constitutes an Event of Default or may, with notice or passage of time or both,
constitute an Event of Default.

“Revolving Line” is an Advance or Advances in an aggregate amount of up to Two
Million Five Hundred Thousand Dollars ($2,500,000.00) outstanding at any time.

“Revolving Maturity Date” is March 15, 2013.

 

  16 The Loan Agreement shall be amended by inserting the following definitions
in Section 13.1 thereof each in their appropriate alphabetical position:

““Bank Services” are any products, credit services, and/or financial
accommodations previously, now, or hereafter provided to Borrower or any of its
Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any
letters of credit, cash management services (including, without limitation,
merchant services, direct deposit of payroll, business credit cards, and check
cashing services), interest rate swap arrangements, and foreign exchange
services as any such products or services may be identified in Bank’s various
agreements related thereto (each, a “Bank Services Agreement”).

“Fixed Charge Coverage Ratio” is, for any period of measurement, (i) Borrower’s
EBITDA for such period minus the sum of all taxes actually paid in cash minus
unfinanced Capital Expenditures divided by (ii) Borrower’s Fixed Charges.

“Fixed Charges” are, for any period of measurement, the sum of Borrower’s
(i) Interest Expense, plus (ii) any required or optional principal payments on
outstanding Indebtedness owed to Bank (including, without limitation, principal
amortization and prepayments of the Term Loan 2012, but specifically excluding
(A) payments of principal on the Revolving Line and (B) GSE Earn-Out Payments
permitted to be paid pursuant to Section 7.7 herein and scheduled payments under
the NES Note permitted to be paid pursuant to Section 7.9 herein and paid during
such period.

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“GSE Earn-Out Payments” are the regularly scheduled earn-out payments as and
when due and payable in accordance with the terms of Section 1.8 of that certain
Asset Purchase Agreement by and among World Energy Solutions, Inc. and GSE
Consulting, Inc., entered into as of October 31, 2011.

“NES Note” is that certain Promissory Note, dated October 13, 2011, made by
World Energy Solutions Inc. in favor of Northeast Energy Solutions, LLC in the
original principal amount equal to Three Million Dollars ($3,000,000).

“Term Loan 2012” is a loan made by Bank pursuant to the terms of Section 2.1.5
hereof.

“Term Loan 2012 Amount” is an aggregate amount equal to Two Million Five Hundred
Thousand Dollars ($2,500,000).

“Term Loan 2012 Maturity Date” is the earliest of (a) February 1, 2016 or
(b) the occurrence of an Event of Default.

“Term Loan 2012 Payment” is defined in Section 2.1.5(b).

“Third Loan Modification Effective Date” is March 2, 2012.

 

  17 The Loan Agreement shall be amended by deleting the following definition
appearing in Section 13.1thereof:

“Cash Management Services” is defined in Section 2.1.4.

“Cash Management Services Sublimit” is defined in Section 2.1.4.

“FX Business Day” is any day when (a) Bank’s Foreign Exchange Department is
conducting its normal business and (b) the Foreign Currency being purchased or
sold by Borrower is available to Bank from the entity from which Bank shall buy
or sell such Foreign Currency.

“FX Forward Contract” is defined in Section 2.1.3.

“FX Reserve” is defined in Section 2.1.3.

“Letter of Credit” means a standby letter of credit issued by Bank or another
institution based upon an application, guarantee, indemnity or similar agreement
on the part of Bank as set forth in Section 2.1.2.

“Letter of Credit Application” is defined in Section 2.1.2(a).

“Letter of Credit Reserve” has the meaning set forth in Section 2.1.2(d).

 

  18 The Loan Agreement shall be amended by deleting the following text
appearing in the definition of “Permitted Indebtedness” in Section 13.1 thereof:

“(c) Subordinated Debt, if any;”

and inserting in lieu thereof the following:

“(c) Subordinated Debt, including, without limitation, Indebtedness owed to
Northeast Energy Solutions, LLC pursuant to the NES Note;”

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  19 The Loan Agreement shall be amended by inserting the following text to
appear as clause (i) in the definition of “Permitted Indebtedness” in
Section 13.1 thereof:

“(i) the GSE Earn-Out Payments”

 

  20 The Compliance Certificate appearing as Exhibit B to the Loan Agreement is
hereby replaced with the Compliance Certificate attached as Exhibit A hereto.

 

4. ACKNOWLEDGMENT OF DEFAULTS; WAIVER.

 

  A. Borrower acknowledges that it is currently in default of the Loan Agreement
as a result of Borrower’s failure to comply with the minimum EBITDA financial
covenant set forth in former Section 6.9(a) thereof for the compliance periods
ended November 30, 2011 and December 31, 2011 (the “Prior Defaults”). In
addition, Borrower has notified Bank that Borrower anticipates that it will be
in default under the Loan Agreement for failing to comply with the minimum
EBITDA financial covenant set forth in former Section 6.9(a) thereof for the
compliance period ending January 31, 2012 (the “Anticipated Default”), and
together with the Prior Defaults, the “Existing Defaults”).

 

  B. Subject to the execution and delivery of this Loan Modification Agreement
and delivery and/or satisfaction of all of the Conditions Precedent described in
Section 5 below, Bank hereby waives Borrower’s Existing Defaults for the monthly
compliance period indicated above. Bank’s waiver of such Existing Defaults shall
apply only to the foregoing specific compliance period. The Borrower hereby
acknowledges and agrees that, except as specifically provided herein, nothing in
this Section or anywhere in this Loan Modification Agreement shall be deemed or
otherwise construed as a waiver by the Bank of any of its rights and remedies
pursuant to the Existing Loan Documents, applicable law or otherwise.

5. CONDITIONS PRECEDENT. Borrower hereby agrees that the following documents
shall be delivered to the Bank prior to or concurrently with the execution of
this Loan Modification Agreement, each in form and substance satisfactory to the
Bank (collectively, the “Conditions Precedent”):

 

  A. copies, certified by a duly authorized officer of Borrower, to be true and
complete as of the date hereof, of each of (i) the governing documents of
Borrower as in effect on the date hereof (but only to the extent modified since
last delivered to the Bank), (ii) the resolutions of Borrower authorizing the
execution and delivery of this Loan Modification Agreement, the other documents
executed in connection herewith and Borrower’s performance of all of the
transactions contemplated hereby (but only to the extent required since last
delivered to Bank), and (iii) an incumbency certificate giving the name and
bearing a specimen signature of each individual who shall be so authorized on
behalf of Borrower (but only to the extent any signatories have changed since
such incumbency certificate was last delivered to Bank);

 

  B. a good standing certificate of Borrower certified by the Secretary of State
of the applicable state of incorporation or organization of Borrower, together
with a certificate of foreign qualification from the appropriate authority in
each jurisdiction in which Borrower is so qualified, in each case dated as of a
date no earlier than thirty (30) days prior to the date hereof;

 

  C. an Acknowledgment and Reaffirmation of Subordination Agreement, executed by
Northeast Energy Solutions, LLC;

 

  D. updated Perfection Certificates executed by Borrower;

 

  E. updated evidence of insurance (Acord 27 or 28 naming Bank as loss payee and
Acord 25 (including excess/umbrella liability) naming Bank as additional
insured);

--------------------------------------------------------------------------------

  F. certified copies, dated as of a recent date, of updated financing statement
searches, as Bank shall request, accompanied by written evidence (including any
UCC termination statements) that the Liens indicated in any such updated
financing statements either constitute Permitted Liens or have been or, in
connection with any Credit Extension, will be terminated or released ;

 

  G. a legal opinion of Borrower’s counsel as to authority and enforceability,
dated as of the date hereof; and

 

  H. such other documents as Bank may reasonably request.

6. FEES. Borrower shall pay to Bank a fee equal to Seventeen Thousand Five
Hundred Dollars ($17,500), which fee shall be due on the date hereof and shall
be deemed fully earned as of the date hereof. Borrower shall also reimburse Bank
for all legal fees and expenses incurred in connection with this amendment to
the Existing Loan Documents.

7. RATIFICATION OF NEGATIVE PLEDGE. Borrower hereby ratifies, confirms and
reaffirms, all and singular, the terms and conditions of a certain negative
pledge arrangement with respect to Borrower’s intellectual property, between
Borrower and Bank, and Borrower acknowledges, confirms and agrees that said
negative pledge arrangement remains in full force and effect.

8. ADDITIONAL COVENANTS: RATIFICATION OF PERFECTION CERTIFICATE. Borrower shall
not, without providing the Bank with thirty (30) days prior written notice:
(i) relocate its principal executive office or add any new offices or business
locations or keep any Collateral, in excess of Ten Thousand Dollars ($10,000.00)
in any additional locations, or (ii) change its jurisdiction of organization, or
(iii) change its organizational structure or type, (iv) change its legal name,
or (v) change any organizational number (if any) assigned by its jurisdiction of
organization. In addition, the Borrower hereby certifies that no Collateral in
excess of Ten Thousand Dollars ($10,000.00) is in the possession of any third
party bailee (such as at a warehouse). In the event that Borrower, after the
date hereof, intends to store or otherwise deliver the Collateral in excess of
Ten Thousand Dollars ($10,000.00) to such a bailee, then Borrower shall first
receive, the prior written consent of Bank and such bailee must acknowledge in
writing that the bailee is holding such Collateral for the benefit of Bank.
Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms
and disclosures contained in a certain Perfection Certificate dated as of the
date hereof, and acknowledges, confirms and agrees the disclosures and
information above Borrower provided to Bank in the Perfection Certificate has
not changed.

9. AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file UCC financing
statements without notice to Borrower, with all appropriate jurisdictions, as
Bank deems appropriate, in order to further perfect or protect Bank’s interest
in the Collateral, including a notice that any disposition of the Collateral, by
either the Borrower or any other Person, shall be deemed to violate the rights
of the Bank under the Code.

10. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

11. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.

12. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.

13. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank’s agreement to modifications to the existing Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.

--------------------------------------------------------------------------------

14. RIGHT OF SET-OFF. In consideration of Bank’s agreement to enter into this
Loan Modification Agreement, Borrower hereby reaffirms and hereby grants to
Bank, a lien, security interest and right of set off as security for all
Obligations to Bank, whether now existing or hereafter arising upon and against
all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of Silicon Valley Bank (including a Bank subsidiary) or in transit to
any of them. At any time after the occurrence and during the continuance of an
Event of Default, without demand or notice, Bank may set off the same or any
part thereof and apply the same to any liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other collateral securing
the loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

15. CONFIDENTIALITY. Bank may use confidential information for the development
of databases, reporting purposes, and market analysis, so long as such
confidential information is aggregated and anonymized prior to distribution
unless otherwise expressly permitted by Borrower. The provisions of the
immediately preceding sentence shall survive the termination of the Loan
Agreement.

16. JURISDICTION/VENUE. Section 11 of the Loan Agreement is hereby incorporated
by reference in its entirety.

17. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank.

[The remainder of this page is intentionally left blank]

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This Loan Modification Agreement is executed as a sealed instrument under the
laws of the Commonwealth of Massachusetts as of the date first written above.

BORROWER:

 

WORLD ENERGY SOLUTIONS, INC. By   /s/ James Parslow Name:   James Parslow Title:
  Chief Financial Officer

 

WORLD ENERGY SECURITIES CORP. By   /s/ James Parslow Name:   James Parslow
Title:   Chief Financial Officer

BANK:

 

SILICON VALLEY BANK By   /s/ Darren Gastrock Name:   Darren Gastrock Title:  
Relationship Manager

[Signature page to Third Loan Modification and Waiver Agreement]

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Exhibit A

EXHIBIT B

COMPLIANCE CERTIFICATE

 

TO:  

FROM: 

 

SILICONVALLEY BANK

WORLDENERGY SOLUTIONS, INC.

ANDWORLD ENERGY SECURITIES CORP.

   Date:                                                                      

The undersigned authorized officers of World Energy Solutions, Inc., and World
Energy Securities Corp. (individually and collectively, jointly and severally,
“Borrower”), solely in their capacities as officers of their respective
entities, certify that under the terms and conditions of the Loan and Security
Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in
complete compliance for the period ending                  with all required
covenants except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries, if any, relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to Bank. Attached are
the required documents supporting the certification. The undersigned solely in
their capacities as officers of their respective entities, certify that these
are prepared in accordance with GAAP consistently applied from one period to the
next except as explained in an accompanying letter or footnotes. The undersigned
solely in their capacities as officers of their respective entities, acknowledge
that no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.
Capitalized terms used but not otherwise defined herein shall have the meanings
given them in the Agreement.

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

 

Reporting Covenant

  

Required

  

Complies

 

Monthly financial statements with Compliance Certificate

   Monthly within 30 days      Yes No   

Annual financial statement (CPA Audited) + CC

   FYE within 90 days      Yes No   

10-Q, 10-K and 8-K

   Within 5 days after filing with SEC      Yes No   

A/R & A/P Agings, Deferred Revenue report, and schedule of expected collections

  

Monthly within 20 days when there

are outstanding Credit Extensions

under the Revolving Line

     Yes No   

Borrowing Base Certificate

  

Monthly within 20 Days

during Streamline Period

     Yes No   

Transaction Report

  

Weekly when not Streamline Period

when there are outstanding Credit Extensions under the Revolving Line and upon
each request for a Credit Extension under the Revolving Line

     Yes No   

Board-approved projections

   Within 30 days of approval      Yes No   

 

Financial Covenant

   Required      Actual      Complies  

Minimum Cash and Availability

   $ 1,250,000       $ ________         Yes No   

Minimum Fixed Charge Coverage Ratio

     1.25:1.00         _____:1.00         Yes No   

 

1

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The following financial covenant analyses and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)

 

 

 

 

 

 

WORLD ENERGY SOLUTIONS, INC.     BANK USE ONLY By:          Received by:     

Name:

          AUTHORIZED SIGNER Title:          Date:      WORLD ENERGY SECURITIES
CORP.     Verified:            AUTHORIZED SIGNER By:          Date:      Name:  
           Title:          Compliance Status:   Yes    No

 

2

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Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

Dated:                         

 

I. Minimum Cash and Availability (Section 6.9(a))

Required: Minimum Cash and Availability Commencing February 28, 2012 and at all
times thereafter, maintain unrestricted cash of Borrower at Bank plus unused
Availability Amount of not less than One Million Two Hundred Fifty Thousand
Dollars ($1,250,000);

Actual:

 

A.    Aggregate value of the unrestricted cash of Borrower at Bank    $
                    B.    Unused Availability Amount    $                     C.
   Total (line A plus line B)    $                    

Is line C equal to or greater than $1,250,000?

 

                     No, not in compliance

                        Yes, in compliance

 

3

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II. Minimum Fixed Charge Coverage Ratio (Section 6.9(b))

Required: Minimum Fixed Charge Coverage Ratio. Commencing with the first full
fiscal quarter following the Third Loan Modification Effective Date, achieve, on
a trailing three month basis, measured on the last day of each monthly period, a
Fixed Charge Coverage Ratio of not less than 1.25:1.00.

Actual: All amounts measured on a trailing three month basis, ending as of the
date of measurement.

 

A.    EBITDA    $                     B.    Taxes actually paid in cash    $
                    C.    Unfinanced Capital Expenditures    $                 
   D.    Interest Expense    $                     E.    The sum of required or
optional principal payments on outstanding Indebtedness at Bank (including,
without limitation, principal amortization and prepayments of the Term Loan 2012
but specifically excluding (A) payments of principal on the Revolving Line and
(B) GSE Earn-Out Payments permitted to be paid pursuant to Section 7.7 of the
Loan Agreement and scheduled payments under the NES Note permitted to be paid
pursuant to Section 7.9 of the Loan Agreement    $                     F.   
FIXED CHARGE COVERAGE RATIO ((line A minus line B minus line C) divided by (line
D plus line E))      ____:1.00   

Is line G greater than or equal to 1.25:1.00?

 

                     No, not in compliance

                        Yes, in compliance