**Exhibit 10.3**

 

**THIRD LOAN MODIFICATION AGREEMENT**

 

ThisThird Loan Modification Agreement (this “Loan Modification Agreement’) isentered into as of July 30, 2010, by and among (a) **SILICONVALLEY BANK**, a California corporation with its principal place ofbusiness at 3003 Tasman Drive, Santa Clara, California 95054 and with a loanproduction office located at One Newton Executive Park, Suite 200, 2221Washington Street, Newton, Massachusetts 02462 (“**Bank**”),and (b) **ENERNOC, INC.**, a Delawarecorporation (“**EnerNOC**”), and **ENERNOC SECURITIES CORPORATION**, aMassachusetts corporation (“**EnerNOC Securities**”)(hereinafter, EnerNOC and EnerNOC Securities are jointly and severally,individually and collectively, referred to as “**Borrower**”).

 

1.             DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS.  Among other indebtedness andobligations which may be owing by Borrower to Bank, Borrower is indebted toBank pursuant to a loan arrangement dated as of August 5, 2008, evidenced by,among other documents, a certain Loan and Security Agreement dated as of August5, 2008, between Borrower and Bank, as amended by a certain First LoanModification Agreement dated as of May 29, 2009, between Borrower and Bank, andas further amended by a certain Second Loan Modification Agreement dated as ofApril 23, 2010, between Borrower and Bank (collectively, the “**Loan Agreement**”).  Capitalized terms used but not otherwisedefined herein shall have the same meaning as in the Loan Agreement.

 

2.             DESCRIPTION OF COLLATERAL.  Repayment of the Obligations is secured bythe Collateral as described in the Loan Agreement. The Loan Agreement, togetherwith any other loan documents entered into by Borrower pursuant to whichcollateral security has been or will be granted to Bank, are referred to hereinas the “**Security Documents**”; theSecurity Documents, together with all other documents evidencing or securingthe Obligations, are referred to herein as the “**Existing Loan Documents**”.

 

1.             DESCRIPTION OFCHANGE IN TERMS.

 

A.                                   Modificationsto Loan Agreement.

 

1.                                       The LoanAgreement shall be amended by deleting the following appearing as Section2.5(c) thereof (entitled “Letter of Credit Fee”):

 

“(c)         Letter of Credit Fee.  Bank’s customary fees and expenses for theissuance or renewal of Letters of Credit, including, without limitation, aLetter of Credit Fee of one and one-quarter of one percent (1.25%) per annum ofthe face amount of each Letter of Credit issued (other than the Letter ofCredit # SVBSF005826 issued by Bank in May, 2009, with respect to which a Letterof Credit Fee of one and three-quarters of one percent (1.75%) per annum of theface amount of such Letter of Credit shall apply), upon the issuance, eachanniversary of the issuance, and the renewal of each Letter of Credit by Bank;”

 

and inserting in lieu thereof the following:

 

“(c)         Letter of Credit Fee.  Bank’s customary fees and expenses for theissuance or renewal of Letters of Credit, including, without limitation, aLetter of Credit Fee of one and one-quarter of one percent (1.25%) per annum ofthe face amount of each Letter of Credit issued, upon the issuance, eachanniversary of the issuance, and the renewal of each Letter of Credit by Bank;”

 

2.                                       The LoanAgreement shall be amended by deleting the following, appearing as Section6.7(b) thereof, in its entirety:

 

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“(b)         Tangible Net Worth.  To be tested as of the last day of each ofBorrower’s fiscal quarters, Tangible Net Worth of at least (i) Seventy MillionDollars ($70,000,000.00) as of the quarters ended June 30, 2008, September 30,2008 and December 31, 2008, (ii) Fifty-Five Million Dollars ($55,000,000.00) asof the quarter ended March 31, 2009, (iii) Fifty Million Dollars($50,000,000.00) as of the quarter ended June 30, 2009 through and includingthe quarter ended December 31, 2009, and (iv) One Hundred Million Dollars($100,000,000.00) as of the quarter ended March 31, 2010 and as of the last dayof each quarter thereafter. Notwithstanding the foregoing, the amount required in the prior sentenceshall increase by an amount equal to fifty percent (50.0%) of the grossproceeds received by Borrower from the sale of its equity in financingtransactions or the incurrence of Subordinated Debt after the Effective Date.”

 

and inserting in lieu thereof the following:

 

“(b)         Tangible Net Worth.  To be tested as of the last day of each ofBorrower’s fiscal quarters, Tangible Net Worth of at least (i) Seventy MillionDollars ($70,000,000.00) as of the quarters ended June 30, 2008, September 30,2008 and December 31, 2008, (ii) Fifty-Five Million Dollars ($55,000,000.00) asof the quarter ended March 31, 2009, (iii) Fifty Million Dollars($50,000,000.00) as of the quarter ended June 30, 2009 through and includingthe quarter ended December 31, 2009, (iv) One Hundred Million Dollars($100,000,000.00) as of the quarter ended March 31, 2010, and (v) OneHundred Fifty Million Dollars ($150,000,000.00) as of the quarter ended June30, 2010, and as of the last day of each quarter thereafter.  Notwithstanding the foregoing, the amountrequired in clause (v) of the prior sentence shall increase by an amount equalto fifty percent (50.0%) of the gross proceeds received by Borrower from thesale of its equity in financing transactions or the incurrence of SubordinatedDebt after June 30, 2010.”

 

3.                                       The LoanAgreement shall be amended by deleting the following definition appearing inSection 13.1 thereof:

 

““**RevolvingLine Maturity Date**” is August 5, 2010.”

 

andinserting in lieu thereof the following:

 

““**RevolvingLine Maturity Date**” is February 4, 2011.”

 

4.                                       The LoanAgreement is hereby amended by deleting Exhibit B thereto in itsentirety and substituting the Exhibit B in the form attached as Schedule1 hereto.  All references in the LoanAgreement to the Compliance Certificate shall hereafter be deemed to refer to theExhibit B in the form attached as Schedule 1 hereto.

 

3.             FEES.  Borrower shall pay to Bank a commitment feeequal to Fifty Thousand Dollars ($50,000.00), which fee shall be due on thedate hereof and shall be deemed fully earned as of the date hereof.  Borrower shall also reimburse Bank for alllegal fees and expenses incurred in connection with this amendment to theExisting Loan Documents.

 

4.             PERFECTION CERTIFICATES.  EnerNOChas delivered an updated Perfection Certificate in connection with this LoanModification Agreement (the “**Updated PerfectionCertificate**” ) dated as of July 30, 2010, which 

 

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UpdatedPerfection Certificate shall supersede in all respects that certain PerfectionCertificate dated as of April 23, 2010 delivered by EnerNOC to Bank. Borrower agrees that all references in the Loan Agreement to “PerfectionCertificate” with respect to EnerNOC shall hereinafter be deemed to be areference to the Updated Perfection Certificate.  Borrower hereby ratifies, confirms andreaffirms, all and singular, the terms and disclosures contained in certainPerfection Certificate dated as of August 5, 2008 delivered by EnerNOCSecurities to Bank and acknowledges, confirms and agrees the disclosures andinformation provided to Bank in the Perfection Certificate delivered by EnerNOCSecurities have not changed, as of the date hereof.

 

5.             CONSISTENT CHANGES.  The Existing Loan Documents are herebyamended wherever necessary to reflect the changes described above.

 

6.             RATIFICATION OF LOAN DOCUMENTS.  Borrower hereby ratifies, confirms, andreaffirms all terms and conditions of all security or other collateral grantedto Bank, and confirms that the indebtedness secured thereby includes, withoutlimitation, the Obligations.

 

7.             NO DEFENSES OF BORROWER.  Borrower hereby acknowledges and agrees thatBorrower has no offsets, defenses, claims, or counterclaims against Bank withrespect to the Obligations, or otherwise, and that if Borrower now has, or everdid have, any offsets, defenses, claims, or counterclaims against Bank, whetherknown or unknown, at law or in equity, all of them are hereby expressly WAIVEDand Borrower hereby RELEASES Bank from any liability thereunder.

 

8.             CONTINUING VALIDITY.  Borrower understands and agrees that inmodifying the existing Obligations, Bank is relying upon Borrower’srepresentations, warranties, and agreements, as set forth in the Existing LoanDocuments.  Except as expressly modifiedpursuant to this Loan Modification Agreement, the terms of the Existing LoanDocuments remain unchanged and in full force and effect.  Bank’s agreement to modifications to theexisting Obligations pursuant to this Loan Modification Agreement in no wayshall obligate Bank to make any future modifications to the Obligations.  Nothing in this Loan Modification Agreementshall constitute a satisfaction of the Obligations.  It is the intention of Bank and Borrower toretain as liable parties all makers of Existing Loan Documents, unless theparty is expressly released by Bank in writing. No maker will be released by virtue of this Loan Modification Agreement.

 

9.             JURISDICTION/VENUE.  Borrower accepts for itself and in connectionwith its properties, unconditionally, the exclusive jurisdiction of any stateor federal court of competent jurisdiction in the Commonwealth  of Massachusetts in any action, suit, orproceeding of any kind against it which arises out of or by reason of this LoanModification Agreement; provided, however, that if for any reason Bank cannotavail itself of the courts of the Commonwealth of Massachusetts, then venue shall lie in Santa Clara County,California.  NOTWITHSTANDING THEFOREGOING,  THE BANK SHALL HAVE THE RIGHTTO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THECOURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR APPROPRIATEIN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTSAGAINST THE BORROWER OR ITS PROPERTY.

 

10.           COUNTERSIGNATURE.  This Loan Modification Agreement shall becomeeffective only when it shall have been executed by Borrower and Bank.

 

[*Signaturepage follows*]

 

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**IN WITNESS WHEREOF**, the parties hereto havecaused this Loan Modification Agreement to be executed as a sealed instrumentunder the laws of the Commonwealth of Massachusetts as of the date abovewritten.

 

 

BORROWER:

 

ENERNOC, INC.

 
| By:                             | /s/  Timothy Weller                    |   |
|---------------------------------|----------------------------------------|--------|
| Name:                           | Timothy  Weller                        |   |
| Title:                          | Chief  Financial Officer and Treasurer |   |
|                            |                                   |   |
|                            |                                   |
| ENERNOC SECURITIES  CORPORATION |                                   |
|                            |                                   |   |
| By:                             | /s/  Timothy Weller                    |   |
| Name:                           | Timothy  Weller                        |   |
| Title:                          | Treasurer                              |   |
|                            |                                   |   |
|                            |                                   |   |
| BANK:                           |                                   |   |
|                            |                                   |   |
| SILICON VALLEY BANK             |                                   |
|                            |                                   |   |
| By:                             | /s/  Robin Gill                        |   |
| Name:                           | Robin  Gill                            |   |
| Title:                          | Vice  President                        |   |

 

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**SCHEDULE 1**

 

**EXHIBIT B**

**COMPLIANCE CERTIFICATE**

 
| TO:   | SILICON  VALLEY BANK                              | Date:  |   |
|-------|---------------------------------------------------|--------|--------|
| FROM: | ENERNOC,  INC. and ENERNOC SECURITIES CORPORATION |   |   |

 

Theundersigned authorized officer of ENERNOC, INC. and ENERNOC SECURITIESCORPORATION (individually and collectively, jointly and severally, “Borrower”)certifies that under the terms and conditions of the Loan and SecurityAgreement between Borrower and Bank (as amended, the “Agreement”), (1) Borroweris in complete compliance for the period ending                              with all required covenants except as noted below, (2) there are no Events ofDefault, (3) all representations and warranties in the Agreement are trueand correct in all material respects on this date except as noted below;provided, however, that such materiality qualifier shall not be applicable toany representations and warranties that already are qualified or modified bymateriality in the text thereof; and provided, further that thoserepresentations and warranties expressly referring to a specific date shall betrue, accurate and complete in all material respects as of such date, (4)Borrower, and each of its Subsidiaries, has timely filed all required taxreturns and reports, and Borrower has timely paid all foreign, federal, stateand local taxes, assessments, deposits and contributions owed by Borrowerexcept as otherwise permitted pursuant to the terms of Section 5.8 of theAgreement, and (5) no Liens have been levied or claims made against Borrower orany of its Subsidiaries relating to unpaid employee payroll or benefits ofwhich Borrower has not previously provided written notification to Bank.  Attached are the required documentssupporting the certification.  Theundersigned certifies that these are prepared in accordance with GAAPconsistently applied from one period to the next except as explained in anaccompanying letter or footnotes.  Theundersigned acknowledges that no borrowings may be requested at any time ordate of determination that Borrower is not in compliance with any of the termsof the Agreement, and that compliance is determined not just at the date thiscertificate is delivered.  Capitalizedterms used but not otherwise defined herein shall have the meanings given themin the Agreement.

 

**Pleaseindicate compliance status by circling Yes/No under “Complies” column.**

 
| **Reporting  Covenant**                                                                          | ** ** | **Required**                                             | ** ** | **Complies**      |
|--------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|-------------------|
| ** **                                                                                       | ** ** | ** **                                               | ** ** | ** **        |
| Quarterly  Financial Statements on Form 10-Q                                                     |       | Quarterly  within 45 days                                |       | Yes  No |
| Monthly  Compliance Certificate                                                                  |       | Monthly  within 45 days                                  |       | Yes  No |
| Annual  financial statements (CPA Audited) on 10-K together with an unqualified  audited opinion |       | FYE  within 90 days                                      |       | Yes  No |
| 8-K,  10-Q and 10-K filings                                                                      |       | Within  5 days after SEC filing                          |       | Yes  No |
| A/R  and A/P agings and statement of account balances                                            |       | As  requested by Bank (not more frequently than monthly) |       | Yes  No |
| Board  projections                                                                               |       | 60  days after FYE                                       |       | Yes  No |

 

**Contractsentered into during month by Borrower restricting grant of security interest toBank pursuant to**

**Section5.2of the Agreement:**

 
| **Financial  Covenant**         | ** ** | **Required**                                                                           | ** ** | **Actual**                                                                            | ** ** | **Complies**      |
|---------------------------------|------------|----------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------|------------|-------------------|
| ** **                      | ** ** | ** **                                                                             | ** ** | ** **                                                                            | ** ** | ** **        |
| Quick  Ratio (monthly)          |       | 2:0  : 1.0                                                                             |       |      :  1.0                                                  |       | Yes  No |
| Tangible  Net Worth (quarterly) |       | $              * |       | $               |       | Yes  No |

 

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*Asset forth in Section 6.7(b) of the Loan and Security Agreement.

 

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The following financial covenant analyses and information set forth inSchedule 1 attached hereto are true and accurate as of the date of thisCertificate.

 

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

 

 

 
| ENERNOC,  INC.                  |   | **BANK  USE ONLY**                                                                                                        |
|---------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|
| ENERNOC  SECURITIES CORPORATION |   |                                                                                                                      |
|                            |   | Received  by:                                                                                                             |   |
| By:                             |   |                                                                                                                      | AUTHORIZED SIGNER |
| Name:                           |   |                                                                                                                      | Date: |   |
| Title:                          |   |                                                                                                                      | Verified: |   |
|                            |   | AUTHORIZED SIGNER                                                                                                         |
|                            |   | Date:                                                                                                                     |   |
|                            |   | Compliance  Status:              Yes   No |
|                                 |        |                                                                                                                           |  |  |  |  |  |

 

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**Schedule 1 to ComplianceCertificate**

**Financial Covenants of Borrower**

 
| Dated: |   |   |
|--------|--------|--------|

 

Inthe event of a conflict between this Schedule and the Loan Agreement, the termsof the Loan Agreement shall control.

 

I.              **QUICK RATIO** (Section6.7(a))

 

Required:               2.00: 1.00

 

Actual:                                                                :1.00

 
| A.     |   | Aggregate  value of the unrestricted cash of Borrower                                                                                                                                                                                                                                                                                                                                                                       |   | $      |   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
| B.     |   | Aggregate  value of the net accounts receivable of Borrower plus unbilled amounts on  Borrower’s balance sheet that are contractually owing to Borrower from PJM  and that are payable within the next twelve (12) months in an amount not to  exceed the lesser of (i) Thirty Five Million Dollars ($35,000,000.00) and  (ii) sixty percent (60%) of Borrower’s unrestricted cash plus net accounts  receivable. |   | $      |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
| C.     |   | Marketable  securities that are immediately available for sale (but specifically  excluding any auction rate securities other than an amount equal to fifty  percent (50.0%) of the value of the Permitted Auction Rate Securities up to  One Million Four Hundred Fifty Thousand Dollars ($1,450,000.00))                                                                                                                  |   | $      |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
| D.     |   | Quick  Assets (the sum of lines A, B and C)                                                                                                                                                                                                                                                                                                                                                                                 |   | $      |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
| E.     |   | Aggregate  value of obligations and liabilities of Borrower to Bank, including Letters  of Credit                                                                                                                                                                                                                                                                                                                           |   | $      |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
| F.     |   | Quick  Ratio (line D divided by line E)                                                                                                                                                                                                                                                                                                                                                                                     |   | $      |   |

 

Isline F equal to or greater than 2:00: 1.00?

 
| o  No,  not in compliance |   | o  Yes,  in compliance |
|-------------------------------------|--------|----------------------------------|

 

II.            **TANGIBLE NET WORTH** (Section6.7(b))

 

Required:               $                                  (see Section 6.7(b))

 

Actual:                                                         $

 

IsTangible Net Worth at least$                                    (see Section 6.7(b))?

 
| o  No,  not in compliance |   | o  Yes,  in compliance |
|-------------------------------------|--------|----------------------------------|

 

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