Real Goods Solar, Inc. (Form: 10-Q, Received: 08/19/2014 16:32:27)

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United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-34044

REAL GOODS SOLAR, INC.

(Exact name of registrant as specified in its charter)

COLORADO

26-1851813

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

833 WEST SOUTH BOULDER ROAD

LOUISVILLE, COLORADO 80027-2452

(Address of principal executive offices)

(303) 222-8400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class	Outstanding at August 13, 2014
Class A Common Stock ($.0001 par value)		52,029,063

REAL GOODS SOLAR, INC.

FORM 10-Q

INDEX


PART I. FINANCIAL INFORMATION		4

Item 1.	Financial Statements (Unaudited):	4

	Condensed Consolidated Balance Sheets	5

	Condensed Consolidated Statements of Operations	6

	Condensed Consolidated Statements of Cash Flows	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	29

PART II. OTHER INFORMATION		29

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 6.	Exhibits	30

	SIGNATURES	31

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report may contain forward-looking statements that involve risks and uncertainties. Forward-looking statements provide our current expectations and forecasts about future events, and include statements regarding our future results of operations and financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations. The words “anticipate,” “believe,” “plan,” “estimate,” “expect,” “strive,” “future,” “intend,” “may” and similar expressions as they relate to us are intended to identify such forward-looking statements. Readers are urged not to place undue reliance on these forward looking statements, which speak only as of the date made. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of certain factors set forth in the section entitled “RISK FACTORS” and elsewhere in this report. Risks and uncertainties that could cause actual results to differ include, without limitation, the level of government subsidies and economic incentives for solar energy, the failure to successfully obtain available incentive payments and reimbursements, adverse economic conditions that impact customer spending, adoption of solar energy technologies, pricing, including pricing of conventional energy sources, changing regulatory environment, delayed revenue recognition, seasonal customer demand, adverse weather conditions, changing energy technologies, our geographic concentration, acquisitions, integration of acquired businesses, insufficient internal controls, decreased revenue, insufficient operating funds, indebtedness, loss of key personnel, ability to attract and retain an adequate sales force, litigation, contract disputes, merchandise and solar panel supply problems, construction risks and costs, competition, third party financing costs, customer satisfaction, product liabilities, warranty and service claims, credit risk, non-compliance with NASDAQ continued listing standards, volatile market price of our Class A common stock, security analyst coverage of our Class A common stock, dilution for shareholders upon the future issuance of securities, including the exercise of warrants and options, limited public trading market, anti-take-over provisions in our organizational documents, the significant ownership and voting power of our Class A common stock held by Riverside Renewable Energy Investment LLC (“Riverside”), our historical association with Gaiam, Inc. (“Gaiam”), a future sale of securities by Riverside and other risks and uncertainties included in our filings with the SEC. We caution you that no forward-looking statement is a guarantee of future performance, and you should not place undue reliance on these forward-looking statements which reflect our view only as of the date of this report. We undertake no obligation to update any forward-looking information.

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

Unaudited Interim Condensed Consolidated Financial Statements

We have prepared our unaudited interim condensed consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to these rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, the unaudited interim condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly, in all material respects, our consolidated financial position as of June 30, 2014, the interim results of operations for the three and six months ended June 30, 2014 and 2013, and cash flows for the six months ended June 30, 2014 and 2013. These interim statements have not been audited. The balance sheet as of December 31, 2013 was derived from our audited consolidated financial statements included in our annual report on Form 10-K. The interim condensed consolidated financial statements contained herein should be read in conjunction with our audited financial statements, including the notes thereto, for the year ended December 31, 2013.

REAL GOODS SOLAR, INC.

Condensed Consolidated Balance Sheets


(in thousands, except share and per share data)	June 30, 2014			December 31, 2013
	(Unaudited)
ASSETS
Current assets:
Cash	$	1,684		$	12,449
Accounts receivable, net		22,225			11,926
Costs in excess of billings on uncompleted contracts		8,155			4,556
Inventory, net		9,672			6,715
Deferred costs on uncompleted contracts		3,720			1,421
Other current assets		2,161			1,270

Total current assets		47,617			38,337
Property and equipment, net		3,728			3,084
Intangibles, net		4,194			480
Goodwill		10,963			1,867
Other assets		637			—

Total assets	$	67,139		$	43,768

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	3,000		$	—
Accounts payable		22,853			14,059
Accrued liabilities		6,557			3,611
Billings in excess of costs on uncompleted contracts		1,224			395
Term loan		2,000			2,000
Related party debt		3,150			4,150
Deferred revenue and other current liabilities		1,858			787

Total current liabilities		40,642			25,002
Other liabilities		2,102			446
Common stock warrant liability		13,157			15,071

Total liabilities		55,901			40,519

Commitments and contingencies
Shareholders’ equity:
Class A common stock, $.0001 par value, 150,000,000 shares authorized, 48,957,158 and 36,415,839 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively		5			4
Additional paid-in capital		134,806			92,808
Business acquisition consideration to be transferred		2,173			—
Accumulated deficit		(125,746	)		(89,563	)

Total shareholders’ equity		11,238			3,249

Total liabilities and shareholders’ equity	$	67,139		$	43,768

See accompanying notes.

REAL GOODS SOLAR, INC.

Condensed Consolidated Statements of Operations


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(in thousands, except per share data)	2014			2013			2014			2013
	(unaudited)						(unaudited)
Net revenue	$	35,180		$	20,666		$	57,323		$	37,458
Cost of goods sold		31,317			15,898			50,169			28,099

Gross profit		3,863			4,768			7,154			9,359

Expenses:
Selling and operating		9,272			6,088			17,440			12,317
General and administrative		4,108			1,851			6,864			3,579
Acquisition-related and other costs		134			—			2,435			—
Goodwill and other asset impairments		18,766			—			18,766			—

Total expenses		32,280			7,939			45,505			15,896

Loss from operations		(28,417	)		(3,171	)		(38,351	)		(6,537	)
Interest and other expense, net		(234	)		(427	)		(455	)		(854	)
Change in valuation of warrants		6,082			690			1,415			690

Loss before income taxes		(22,569	)		(2,908	)		(37,391	)		(6,701	)
Income tax benefit		(1,214	)		—			(1,208	)		—

Net loss	$	(21,355	)	$	(2,908	)	$	(36,183	)	$	(6,701	)

Net loss per share:
Basic	$	(0.46	)	$	(0.11	)	$	(0.82	)	$	(0.25	)

Diluted	$	(0.46	)	$	(0.11	)	$	(0.82	)	$	(0.25	)

Weighted-average shares outstanding:
Basic		46,071			27,804			44,334			27,253

Diluted		46,071			27,804			44,334			27,253

See accompanying notes.

REAL GOODS SOLAR, INC.

Condensed Consolidated Statements of Cash Flows


	For the Six Months Ended June 30,
(in thousands except share data)	2014			2013
	(unaudited)
Operating activities
Net loss	$	(36,183	)	$	(6,701	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		459			411
Amortization		1,145			—
Share-based compensation		2,012			208
Goodwill and other asset impairments		18,766			—
Change in valuation of warrants		(1,415	)		(690	)
Deferred tax benefit		(1,214	)		—
Loss on sale of property and equipment		3			—
Deferred interest on related party debt		—			368
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, net		(7,059	)		3,707
Costs in excess of billings on uncompleted contracts		431			2,539
Inventory, net		239			1,014
Deferred costs on uncompleted contracts		(2,046	)		543
Other current assets		(377	)		766
Other assets		471			—
Accounts payable		430			(5,768	)
Accrued liabilities		2,103			(1,350	)
Billings in excess of costs on uncompleted contracts		(2,451	)		(501	)
Deferred revenue and other current liabilities		965			53
Other liabilities		(938	)		—

Net cash used in operating activities		(24,659	)		(5,401	)

Investing activities
Cash from acquired businesses		11,958			—
Purchase of property and equipment		(642	)		(16	)
Proceeds from sale of property and equipment		103			—

Net cash provided by (used in) investing activities		11,419			(16	)

Financing activities
Principal borrowings (payments) on revolving line of credit, net		3,000			(6,498	)
Principal payment on related party debt		(1,000	)		—
Principal payments on debt and capital lease obligations, net		—			(108	)
Exercise of warrants, net of issuance costs		409			—
Exercise of stock options		66			78
Proceeds from the sale of common stock and warrants, net		—			8,414

Net cash provided by financing activities		2,475			1,886

Net change in cash		(10,765	)		(3,531	)
Cash at beginning of period		12,449			10,390

Cash at end of period	$	1,684		$	6,859

Supplemental cash flow information
Income taxes paid	$	6		$	8
Interest paid	$	192		$	278
Non-cash items
Issuance of warrants to purchase 82,627 and 212,535 shares, respectively, in conjunction with bank debt extensions	$	123		$	278
Issuance of 11,354,623 shares of Class A common stock in conjunction with the acquisition of businesses	$	38,371		$	—
Change in common stock warrant liability in conjunction with exercise of 167,262 warrants	$	622		$	—
Issuance of 539,502 shares of Class A common stock in conjunction with purchase transaction and retention bonuses	$	1,911		$	—
Common stock warrant liability recorded in conjunction with equity funding	$	—		$	4,392
Class A common stock issued in conjunction with debt conversion, 62,111 shares	$	—		$	100

See accompanying notes.

Notes to Condensed Consolidated Financial Statements

1. Organization, Nature of Operations, and Principles of Consolidation

Real Goods Solar, Inc. (the “Company” or “RGS”) is a leading residential and commercial solar energy engineering, procurement, and construction firm. The Company incorporated in Colorado on January 29, 2008 under the name Real Goods Solar, Inc. The Company’s initial public offering of common stock occurred on May 7, 2008. On January 15, 2014, the Company began doing business as RGS Energy and changed its ticker symbol to RGSE on February 24, 2014.

The condensed consolidated financial statements include the accounts of RGS and its wholly-owned subsidiaries. The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States, or GAAP. Intercompany transactions and balances have been eliminated. The Company has included the results of operations of acquired companies from the effective date of each acquisition.

Certain prior period amounts have been reclassified to conform to the current period presentation.

Liquidity and Financial Resources Update

The Company has experienced recurring losses in recent years, including $11.3 million for the fiscal year ended December 31, 2013 and losses of $21.4 million and $36.2 million for the three and six months ended June 30, 2014, respectively, including a noncash goodwill and other assets impairment charge of $18.8 million. The Company is evaluating steps to reduce operating losses and return to profitability. In addition, the Company is developing a plan to expand its residential solar installation segment, including the offering of a new lease financing product.

As a result of losses, the Company was in technical default of certain covenants contained in its credit facility with Silicon Valley Bank (“SVB”) as of June 30, 2014. On August 19, 2014, the Company and certain of its subsidiaries entered into a Waiver Agreement with SVB with respect to those defaults. See Note 4. Revolving Line of Credit and Term Loan.

At June 30, 2014, the Company had cash of $1.7 million. Additionally, on July 9, 2014 the Company received approximately $6.4 million, net of related costs, of cash as a result of the private sale of 2,919,301 shares of its Class A common stock and related warrants to purchase additional shares of Class A common stock. We will use the net proceeds for general working capital purposes and to support the launch of our residential leasing platform. As of August 18, 2014, the Company had cash on hand of approximately $5.0 million.

The Company is required to satisfy the financial covenants discussed above, as well as others, as of the end of each fiscal quarter. There can be no assurance that the Company will be able to satisfy these covenants in future fiscal periods. The Company may need to negotiate with SVB to amend the SVB Loan to reset the financial covenants. There can be no assurance that the Company will be successful in doing so or that such amendments will be on favorable terms to the Company. SVB has the ability to call an event of default under the SVB Loan and require the Company to repay all outstanding indebtedness under the SVB Loan or to exercise other rights under the SVB Loan, including collecting default interest, no longer extending credit to the Company, and exercising its rights with respect to the collateral securing the obligations under the SVB Loan. The Company believes that it presently has sufficient funds or the ability to raise future funds, either through a borrowing or the sale of additional equity, to repay the outstanding indebtedness under the SVB Loan. However, no assurance can be given that the Company will be able to raise future funds on terms as favorable as the present SVB credit facility or in an amount sufficient to fund its future growth. In addition, while the Company has been successful in the past in obtaining new financing, there is no assurance that it will be able to raise any new funds in the future. If the Company’s operational initiatives are not successful in significantly reducing its historical loss from operations during the second half of 2014, or if the Company encounters unplanned operational difficulties, it may not have sufficient funds to repay any outstanding borrowings as they come due or to fund its operating cash needs for the next twelve months. These circumstances would require the Company to obtain financing from another source or raise additional capital through debt or equity financing, if available to the Company. There can be no assurance that the Company will successfully obtain new financing.

2. Significant Accounting Policies

The Company made no changes to its significant accounting policies during the three months ended June 30, 2014.

Use of Estimates and Reclassifications

The preparation of the condensed consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

Goodwill and Intangibles

The following table sets forth the changes in goodwill for the period December 31, 2013 through June 30, 2014 by segment.


(in thousands)	Residential Segment		Commercial Segment			Sunetric Segment		Total

Balance at December 31, 2013	$	1,339	$	528		$	—	$	1,867
Adjustment (a)		—		(129	)		—		(129	)
Acquisitions (b)		—		18,096			9,624		27,720
Impairments (c)		—		(18,495	)		—		(18,495	)

Balance at June 30, 2014	$	1,339	$	—		$	9,624	$	10,963

(a)

On May 12, 2014, the terms of the purchase agreement for certain net assets of Syndicated were amended to, among other things, reduce the number of shares of the Company’s Class A common stock given as consideration from 400,000 to 325,140, resulting in a reduction in goodwill of $0.2 million based on the closing market price of the Company’s stock on August 8, 2013, the date immediately prior to when the Company took financial control of the net assets. Additionally, during June 2014, the Company reduced the fair value of tangible assets acquired by $0.1 million due to a change in estimated acquisition date fair value. See Note 11. Business Combinations.

(b)	Represents preliminary estimated goodwill of $18.1 million and $8.4 million related to the acquisitions of Mercury Energy, Inc. (“Mercury”) and Elemental Energy LLC, doing business as Sunetric (“Sunetric”), respectively. See Note 11. Business Combinations.

(c)	On June 30, 2014, the Company completely impaired the Mercury preliminary estimated goodwill of $18.1 million, plus $0.4 million of the Syndicated goodwill related to its commercial operations. See Note 12. Goodwill and Other Asset Impairments.

The following table represents intangibles subject to amortization by major class at June 30, 2014.


(in thousands)	June 30, 2014
Customer-related:
Gross carrying amount	$	4,240
Accumulated amortization		(1,387	)

	$	2,853

Marketing-related:
Gross carrying amount	$	1,370
Accumulated amortization		(29	)

	$	1,341

The amortization periods range from 12 to 120 months. Amortization expense was $0.4 million and zero for the three months ended June 30, 2014 and 2013, respectively, and $0.9 million and zero for the six months ended June 30, 2014 and 2013, respectively. On June 30, 2014, the Company impaired $0.3 million of the customer-related intangibles. See Note 12. Goodwill and Other Asset Impairments. Based on the June 30, 2014 balance of intangibles, the Company estimates the amortization expense for intangibles, which is reported in selling and operating expenses, to be $1.8 million for 2014, $1.5 million for 2015, $0.2 million for each of 2016 and 2017, $0.1 million for 2018, and $0.4 million thereafter.

Common Stock Warrant Liability

The Company accounts for common stock warrants and put options in accordance with applicable accounting guidance provided in Financial Accounting Standards Board (“FASB”) ASC 480, Liabilities – Distinguishing Liabilities from Equity , as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement. Certain of the Company’s warrants are accounted for as liabilities due to provisions either allowing the warrant holder to request redemption, at the intrinsic value of the warrant, upon a change of control and/or providing for an adjustment to the number of shares of the Company’s Class A common stock underlying the warrants and the exercise price in connection with dilutive future funding transactions. The Company classifies these derivative liabilities on the condensed consolidated balance sheets as long term liabilities, which are revalued at each balance sheet date subsequent to their initial issuance. The Company used a Monte Carlo pricing model to value these derivative liabilities. The Monte Carlo pricing model, which is based, in part, upon unobservable inputs for which there is little or no market data, requires the Company to develop its own assumptions. The Company used the following assumptions for its common stock warrants.


	Issuance Date
	June 3, 2013						November 15, 2013						June 6, 2014
	At Issuance ^(a)			June 30, 2014 ^(a)			At Issuance			June 30, 2014			At Issuance			June 30, 2014
Exercise price	$	2.75		$	2.50		$	3.41		$	3.41		$	2.36		$	2.36
Class A common stock closing market price	$	2.70		$	2.98		$	3.40		$	2.98		$	2.35		$	2.98
Risk-free rate (b)		1.03	%		1.22	%		1.54	%		1.57	%		2.18	%		2.10	%
Market price volatility		102.37	%		106.08	%		102.37	%		98.50	%		101.72	%		101.58	%
Expected average term of warrants (years)		5.00			3.93			5.50			4.88			7.00			6.94
Expected dividend yield		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Probability of change in control		15.0	%		15.0	%		15.0	%		15.0	%		15.0	%		15.0	%

(a)

The warrants issued on June 3, 2013 had an original exercise price of $2.75. The warrants contain an anti-dilution provision that requires the Company to adjust the number of shares of the Company’s Class A common stock underlying the warrants and the exercise price in the event a subsequent funding transaction results in dilution of the shares. In conjunction with the November 15, 2013 warrant issuance, the exercise price of the warrants was adjusted to $2.50 and the number of warrants issued increased by 172,111 as a result of the anti-dilution provision.

(b)	The risk-free rate is based on the Daily Treasury Yield Curve Rates, as calculated by the U.S. Department of the Treasury, for borrowings of the same term.

During the three and six months ended June 30, 2014, the Company recorded net noncash decreases to its common stock warrant liability of approximately $6.1 million and $1.4 million, respectively, to reflect changes in the fair values of its outstanding warrants. In the event warrants are exercised or expire without being exercised, the fair value is reduced by the number of warrants exercised or expired multiplied by the fair value of each warrant at the time of exercise or expiration, with a credit to additional paid-in capital. The table below summarizes the Company’s warrant activity for the six months ended June 30, 2014:


(In thousands, except number of warrants)	Original Warrant Issuance Date
	June 3, 2013			November 15, 2013			June 6, 2014		Total
Value of warrants at December 31, 2013	$	3,717		$	11,354		$	—	$	15,071
Value of warrants issued		—			—			123		123
Changes in fair value, net		(194	)		(1,274	)		53		(1,415	)
Value of warrants exercised and reclassified to equity		(622	)		—			—		(622	)

Value of warrants at June 30, 2014	$	2,901		$	10,080		$	176	$	13,157

Warrants outstanding at December 31, 2013		1,655,103			5,015,000			—		6,670,103
Issuances		—			—			82,627		82,627
Exercises		(167,262	)		—			—		(167,262	)

Warrants outstanding at June 30, 2014		1,487,841			5,015,000			82,627		6,585,468

Certain of the warrants also give the holder the right to require the Company to redeem the warrant for the then fair value of the warrant in the event of a change in control (the “Put Option Component”). The Company used 10,000 simulations in the Monte Carlo pricing model to value the warrants and the Put Option Component. If factors change and different assumptions are used, the warrant liability and the change in estimated fair value could be materially different. Changes in the fair value of the warrants are reflected in the condensed consolidated balance sheet as change in fair value of warrant liability, with an offsetting non-cash entry recorded as change in valuation of warrants.

The Company’s Class A common stock closing price as of August 4, 2014 was $2.06. If the closing price of the Company’s Class A common stock on June 30, 2014 was $2.06, and all other inputs into the Monte Carlo model remain the same at June 30, 2014, the fair value of the warrant liability at June 30, 2014 would be $7.6 million, as compared to $13.2 million at June 30, 2014, resulting in the Company recording non-cash change in fair value of approximately $11.5 million and $7.5 million to reflect changes in the fair value of outstanding warrants for the three and six months ended June 30, 2014, respectively.

In a private placement financing transaction, which closed on July 9, 2014, the Company issued warrants to purchase up to 1,313,686 shares of its Class A common stock at an exercise price of $3.19 per share. The warrants are exercisable beginning six months after issuance for a period of five years thereafter. As a result of this transaction, the exercise price of the June 3, 2013 warrants was adjusted to $2.45 and the number of warrants issued increased by 31,859 from 1,487,841 to 1,519,700, due to an anti-dilution provision. See Note 14. Subsequent Events.

Recently Issued Accounting Standards

On May 28, 2014, the FASB issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), which created Topic 606, Revenue From Contracts With Customers (“Topic 606”) and superseded the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance. In addition, ASU 2014-09 superseded the cost guidance in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts, and created new Subtopic 340-40, Other Assets and Deferred Costs—Contracts with Customers. In summary, the core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

The amendments in ASU 2014-09 are effective for the Company on January 1, 2017. The Company is currently assessing the impact of ASU 2014-09 on its consolidated financial statements.

3. Fair Value Measurements

The Company complies with the provisions of FASB ASC No. 820, Fair Value Measurements and Disclosures (“ASC 820”), in measuring fair value and in disclosing fair value measurements at the measurement date. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements required under other accounting pronouncements. FASB ASC No. 820-10-35, Fair Value Measurements and Disclosures- Subsequent Measurement (“ASC 820-10-35”), clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10-35 also requires that a fair value measurement reflect the assumptions market participants would use in pricing an asset or liability based on the best information available. Such assumptions include the risks inherent to a particular valuation technique (such as a pricing model) and/or the risks inherent to the inputs to the model.

ASC 820-10-35 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1 – Level 1 inputs are unadjusted quoted prices in active markets for assets or liabilities identical to those to be reported at fair value. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Level 2 inputs are inputs other than quoted prices included within Level 1. Level 2 inputs are observable either directly or indirectly. These inputs include: (a) Quoted prices for similar assets or liabilities in active markets; (b) Quoted prices for identical or similar assets or liabilities in markets that are not active, such as when there are few transactions for the asset or liability, the prices are not current, price quotations vary substantially over time or in which little information is released publicly; (c) Inputs other than quoted prices that are observable for the asset or liability; and (d) Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Level 3 inputs are unobservable inputs for an asset or liability. These inputs should be used to determine fair value only when observable inputs are not available. Unobservable inputs should be developed based on the best information available in the circumstances, which might include internally generated data and assumptions being used to price the asset or liability.

When determining the fair value measurements for assets or liabilities required or permitted to be recorded at and/or marked to fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. When possible, the Company looks to active and observable markets to price identical assets. When identical assets are not traded in active markets, the Company looks to market observable data for similar assets.

The following tables summarize the basis used to measure certain financial assets and liabilities at fair value on a recurring basis in the condensed consolidated balance sheets:


Balance at June 30, 2014 (in thousands)	Total		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Common stock warrant liability	$	13,157	$	—	$	—	$	13,157

For the Company’s Level 3 measures, which represent common stock warrants, fair value is based on a Monte Carlo pricing model that is based, in part, upon unobservable inputs for which there is little or no market data, requiring the Company to develop its own assumptions (See Note 2. Significant Accounting Policies). The Company used a market approach to valuing these derivative liabilities.

The following table shows the reconciliation from the beginning to the ending balance for the Company’s common stock warrant liability measured at fair value on a recurring basis using significant unobservable inputs (i.e. Level 3) for the six months ended June 30, 2014:


(in thousands)	Fair Value Measurements Using Significant Unobservable Inputs
Fair value of common stock warrant liability at December 31, 2013	$	15,071
Issuance of common stock warrants		123
Exercise of common stock warrants		(622	)
Change in the fair value of common stock warrant liability		(1,415	)

Fair value of common stock warrant liability at June 30, 2014	$	13,157

4. Revolving Line of Credit and Term Loan

Under a loan agreement, as amended (the “SVB Loan”), with SVB, the Company has a revolving line of credit that provides for advances not to exceed $6.5 million based upon a borrowing base availability of 75% of eligible accounts receivable. Borrowings bear interest at the greater of (a) the greater of the bank’s prime rate or 4.00%, plus 4.00%, and (b) 8.00%. The interest rate accruing on borrowings during a Streamline Period (as defined in the SVB Loan) is the greater of (i) the greater of the bank’s prime rate or 4.00%, plus 2.00%, and (ii) 6.00%. The amended maturity date for the SVB Loan is currently January 31, 2015. The line of credit has a facility fee of 0.5% per year of the average daily unused portion of the available line of credit during the applicable calendar quarter. The company may reserve up to $500,000 for stand-by letters of credit under the line of credit. The SVB Loan contains various covenants, including a covenant requiring compliance with a liquidity ratio. The Joinder and Fourth Loan Modification Agreement to the SVB Loan required the Company to pay a final payment fee of $60,000 in cash upon termination or maturity of the revolving line of credit, which was reduced to $40,000 following the Company’s equity funding during June 2013 of $8.4 million in net proceeds. The Company paid the final payment of $40,000 in conjunction with the Fifth Loan Modification Agreement. As of June 30, 2014, the Company had outstanding borrowings under the revolving line of credit of $3.0 million and $3.5 million of available borrowing base.

Also under the Fifth Loan Modification Agreement, SVB agreed to extend to the Company a term loan of up to $2.0 million under the terms of the SVB Loan (the “Term Loan”) in addition to the $6.5 million revolving line of credit. Borrowings under the Term Loan bear interest at (a) the greater of the bank’s prime rate or 4.00%, plus (b) 2.00%. The maturity date for the Term Loan is September 29, 2014. The Company is required to make monthly payments of interest only on the Term Loan and may prepay the Term Loan in whole or in part at any time without penalty. The proceeds of the term loan were required to be used to repay in full the outstanding indebtedness owed to Gaiam. As of June 30, 2014, $2.0 million was outstanding under the Term Loan.

On June 6, 2014, the Company entered into a Joinder and Sixth Loan Modification Agreement (the “Sixth Loan Modification Agreement”) with SVB. The Sixth Loan Modification Agreement extended the maturity date of the SVB Loan to January 31, 2015, added the Company’s new subsidiaries as borrowers to the SVB Loan, and reset certain financial covenants. For the Sixth Loan

Modification Agreement, the Company will pay SVB fully earned modification and extension fees of $80,000 no later than September 30, 2014, plus reimburse SVB for certain expenses. The Company is also required to pay a final payment fee of $150,000 on or before the earlier of: (a) the repayment in full of the Term Loan; (b) January 31, 2015; or (c) the termination of the SVB loan agreement.

Also in connection with the Sixth Loan Modification Agreement, the Company issued to SVB a warrant (“SVB Warrant”), pursuant to which SVB has the right to purchase 82,627 shares of the Company’s Class A common stock at an exercise price of $2.36 per share, subject to adjustment. The SVB Warrant expires June 5, 2021. See Note 2. Common Stock Warrant Liability. The SVB Warrant is recognized as a discount to the SVB Loan and is being amortized as interest expense over the remaining term of the SVB Loan on a straight-line basis, which approximates the interest method. At June 30, 2014, the SVB Loan had unamortized lender fees and discounts of $146,000 and is reported in accrued liabilities on the Company’s condensed consolidated balance sheet.

Borrowings under the SVB Loan are collateralized by a security interest in substantially all of the Company’s assets other than its interests in Alteris Project Financing Company LLC, which currently has no assets.

As of June 30, 2014, the borrowers under the SVB Loan were not in compliance with the covenants under the SVB Loan requiring the Company to comply with the minimum liquidity ratio covenant and the minimum EBITDA financial covenant for the compliance period ended June 30, 2014. On August 19, 2014, the Company and the borrowers under the SVB Loan entered into a Waiver Agreement with SVB pursuant to which SVB waived the Company’s failure to comply with those financial covenants for the quarterly compliance period ended June 30, 2014.

5. Related Party Debt

On April 30, 2014, the Company repaid the $1.0 million Riverside note, plus accrued interest in the amount of $139,000. At June 30, 2014, the Company’s outstanding related party debt consisted of $3.15 million payable to Riverside, with $3.0 million due September 3, 2014 and $150,000 due October 29, 2014. On August 18, 2014, the parties extended the maturity date for the entire $3.15 million of debt to March 31, 2015. The loans bear interest at 10% and are subordinated to the SVB Loan.

Accrued interest on the Company’s related party debt was $0.5 million at June 30, 2014 and is reported in accrued liabilities on the Company’s condensed consolidated balance sheet.

Riverside holds approximately 16.0% of the Company’s outstanding Class A common stock as of June 30, 2014. Pursuant to the terms of a Shareholders Agreement, Riverside has the right to designate a certain number of individuals for appointment or nomination to our Board of Directors, tied to its ownership of the Company’s Class A common stock.

6. Commitments and Contingencies

The Company leases offices and warehouse space through non-cancelable operating leases. One such office space is sublet to a third party. Some of these leases contain escalation clauses, based on increases in property taxes and building operating costs, and renewal options ranging from one month to five years.

The following schedule represents the remaining future minimum payments of all leases as of June 30, 2014:


(in thousands)	Years Ending December 31,
2014	$	654
2015		895
2016		495

	$	2,044

The Company incurred rent expense of $0.3 million during each of the three months ended June 30, 2014 and 2013, and $0.5 million during each of the six months ended June 30, 2014 and 2013.

The Company is subject to risks and uncertainties in the normal course of business, including legal proceedings; governmental regulation, such as the interpretation of tax and labor laws; and the seasonal nature of its business due to weather-related factors. The Company has accrued for probable and estimable costs that may be incurred with respect to identified risks and uncertainties based upon the facts and circumstances currently available. Due to uncertainties in the estimation process, actual costs could vary from the amounts accrued.

7. Shareholders’ Equity

During the six months ended June 30, 2014, the Company issued 57,660 shares of its Class A common stock to employees upon the exercise of stock options and issued 167,262 shares of its Class A common stock pursuant to the exercise of warrants.

On January 14, 2014, the Company issued 7,604,090 shares of its Class A common stock with an estimated fair value of $29.1 million based on the closing market price of $3.83 per share for the Company’s Class A common stock on January 13, 2014 as provisional purchase consideration transferred for Mercury. Of this issuance, 467,249 shares were initially placed into escrow to fund potential indemnification claims and closing working capital true-up adjustments. Also in conjunction with this acquisition of Mercury, the Company placed into escrow another 744,018 shares of its Class A common stock as potential post-acquisition retention compensation to employees of Mercury. At June 30, 2014, 313,236 shares of the provisional purchase consideration transferred and 421,592 shares of the retention compensation remained in escrow. See Note 8. Share-Based Compensation and Note 11. Business Combinations.

On May 12, 2014, the Company issued 325,140 shares of its Class A common stock, with an estimated fair value of $0.7 million based on the closing market price of $2.29 per share for the Company’s Class A common stock on August 8, 2013, under an amendment to the net asset purchase agreement dated August 9, 2013 with Syndicated. Also under the terms of the amendment, the former owner of Syndicated, who became an employee of the Company, was required to assist the Company with the collection by July 11, 2014 of certain accounts receivable related to the Syndicated business in return for up to 74,860 shares of the Company’s Class A common stock. See Note 11. Business Combinations.

On May 14, 2014, the Company issued 3,425,393 shares of its Class A common stock with an estimated fair value of $9.4 million based on the closing market price of $2.75 per share for the Company’s Class A common stock on May 13, 2014 as partial provisional purchase consideration transferred for Sunetric. As additional provisional purchase consideration transferred, the Company reserved another 604,711 shares of its Class A common stock with an estimated fair value of $1.7 million based on the closing market price of $2.75 for the Company’s Class A common stock on May 13, 2014 to fund potential indemnification claims and closing working capital true-up adjustments. At June 30, 2014, these reserved shares, along with provisional estimated contingent consideration of $0.5 million that is potentially payable in shares of the Company’s Class A common stock are reported in business acquisition consideration to be transferred. Also in conjunction with the acquisition of Sunetric, on May 28, 2014, the Company issued 217,076 shares of its Class A common stock with an estimated fair value of $0.5 million based on the closing market price of $2.39 per share for the Company’s Class A common stock on May 27, 2014 in fulfillment of an assumed liability for employee retention bonus obligations through the closing date of the Sunetric acquisition. See Note 11. Business Combinations.

As part of the contingent consideration for the acquisition of Carlson Solar on January 1, 2008, the Company issued seven-year warrants to purchase 30,000 shares of its Class A common stock at an exercise price of $3.20 per share. On November 1, 2007, as part of the contingent consideration for the acquisition of Marin Solar, the Company issued seven-year warrants to purchase 40,000 shares of its Class A common stock at an exercise price of $3.20 per share.

At June 30, 2014, the Company had the following shares of Class A common stock reserved for future issuance:


Stock options outstanding under incentive plans			3,486,210
Stock options outstanding under plans not approved by security holders			300,000
Syndicated – potential bonus compensation			74,860
Sunetric – provisional purchase consideration to be transferred			604,711
Common stock warrants outstanding - derivative liability			6,585,468
Common stock warrants outstanding - equity security			70,000

Total shares reserved for future issuance			11,121,249

8. Share-Based Compensation

During the six months ended June 30, 2014, the Company granted 1,943,000 new stock options and cancelled 437,340 stock options under its 2008 Long-Term Incentive Plan. The new stock options vest at 2% per month for the 50 months beginning with the first day of the eleventh month after date of grant.

On May 12, 2014, the Company extended the exercisability period from July 30, 2014 to March 15, 2015 for 270,000 vested options held by John Schaeffer, a former officer and current director of the Company. As a result, the Company recognized $0.1 million of incremental share-based compensation expense during the three and six months ended June 30, 2014.

In connection with the acquisition of Mercury, the Company is obligated to issue up to 744,018 shares of its Class A common stock in periodic distributions to certain employees upon satisfaction of their continued employment with the Company through October 2014. As a result, during the three months ended June 30, 2014, the Company issued 322,426 of these shares and recorded $1.4 million of estimated earned share-based compensation expense. See Note 7. Shareholders’ Equity.

Total share-based compensation expense recognized was $1.8 million and $0.1 million for the three months ended June 30, 2014 and 2013, respectively, and $2.0 million and $0.2 million for the six months ended June 30, 2014 and 2013, respectively. Share-based compensation expense is reported in general and administrative expenses on the Company’s condensed consolidated statements of operations.

9. Income Taxes

As part of the provisional purchase consideration transferred allocation for the acquisition of Sunetric, the Company recorded preliminary estimated net deferred tax liabilities of $1.2 million. In addition, the Company performed assessments of the realizability of its net deferred tax assets generated during each reporting period, considering all available evidence, both positive and negative. As a result of these assessments, the Company concluded that it was more likely than not that none of its net deferred tax assets would be recoverable through the reversal of temporary differences and near term normal business results. Consequently, as a result of purchase accounting for acquisitions and net losses, during each of the three months ended June 30, 2014 and 2013, the Company decreased its valuation allowance by $0.1 million, and during the six months ended June 30, 2014 and 2013, increased its valuation allowance by $9.9 million and $1.4 million, respectively. The portion of the change in the valuation allowance related to the preliminarily estimated net deferred tax liabilities established as part of the provisional purchase consideration transferred allocation for Sunetric was reported as an income tax benefit of $1.2 million for each of the three and six months ended June 30, 2014. The Company recognized no income tax benefit for losses incurred during the three and six months ended June 30, 2014.

10. Net Loss Per Share

Basic net loss per share excludes any dilutive effects of options or warrants. The Company computes basic net loss per share using the weighted average number of shares of its Class A common stock outstanding during the period. The Company computes diluted net loss per share using the weighted average number of shares of its Class A common stock and common stock equivalents outstanding during the period. The Company excluded common stock equivalents of 10,464,313 million and 2,137,007 for the three months ended June 30, 2014 and 2013, respectively, and 10,013,769 million and 2,304,256 for the six months ended June 30, 2014 and 2013, respectively, from the computation of diluted net loss per share because their effect was antidilutive. The following table sets forth the computation of basic and diluted net loss per share:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share data)	2014			2013			2014			2013
Numerator for basic and diluted net loss per share	$	(21,355	)	$	(2,908	)	$	(36,183	)	$	(6,701	)
Denominator:
Weighted average shares for basic net loss per share		46,071			27,804			44,334			27,253
Effect of dilutive securities:
Weighted average of stock options, restricted stock awards, and warrants		—			—			—			—

Denominators for diluted net loss per share		46,071			27,804			44,334			27,253

Net loss per share – basic	$	(0.46	)	$	(0.11	)	$	(0.82	)	$	(0.25	)

Net loss per share – diluted	$	(0.46	)	$	(0.11	)	$	(0.82	)	$	(0.25	)

11. Business Combinations

Syndicated

On August 9, 2013, the Company purchased certain assets and assumed certain current liabilities of Syndicated. The acquired assets include executed end user customer agreements together with associated solar energy systems in various stages of completion and software systems used by Syndicated to acquire new customers. The Company acquired, at fair value, tangible net assets totaling negative $1.1 million and intangible assets of $2.3 million, which consisted of $0.5 million in backlog and $1.7 million of goodwill. The purchase consideration transferred, as amended on May 12, 2014, was comprised of cash of $0.3 million and 325,140 shares of

the Company’s Class A common stock, with an aggregate fair value of $0.7 million based on the closing price of the Company’s Class A common stock on August 8, 2013. The goodwill associated with this acquisition’s commercial operations was impaired on June 30, 2014. See Note 12. Goodwill and Other Asset Impairments.

Mercury

On January 14, 2014, the Company acquired 100% of the voting equity interests of Mercury through a merger. The provisional purchase consideration transferred was comprised of approximately 7.6 million shares of the Company’s Class A common stock with an estimated fair value of $29.1 million based on the closing price of $3.83 per share for the Company’s Class A common stock on January 13, 2014. The provisional purchase consideration transferred is preliminary and is subject to a working capital true-up adjustment based on the determined final closing balances and other revisions. Excluded from the provisional purchase consideration transferred is estimated acquisition-related costs to date of $2.8 million, which was reported as acquisition-related and other costs in the Company’s consolidated or condensed consolidated statements of operations as follows: $1.2 million for the year ended December 31, 2013; and $(0.6) million and $1.6 million for the three and six months ended June 30, 2014, respectively. The three months ended June 30, 2014 reflects a year to date reduction in estimate of $1.0 million.

The Company believed that the acquisition of Mercury would provide strategic and financial benefits to the Company by positioning RGS as one of the largest U.S. solar installation companies (when measured by number of installed customers); increasing the Company’s financial stability, access to capital, and purchasing power with suppliers; expanding the Company’s existing brand presence in the Northeastern market of the United States; and realizing potential cost savings through centralization of certain functions and the reduction of redundant costs. These qualitative factors have led to the initial recognition of acquired goodwill, which is not expected to be deductible for tax purposes. As of June 30, 2014, these qualitative factors have not been realized by the Company. See Note 12. Goodwill and Other Asset Impairments.

The acquisition of Mercury has been accounted for in accordance with the acquisition method of accounting. The amounts in the table below represent the preliminary allocation of the provisional purchase consideration transferred and are allocated to Mercury’s assets and liabilities based on their estimated fair value as of January 14, 2014. The final determinations of the purchase consideration transferred allocations may be significantly different from the preliminary estimates used in these unaudited condensed consolidated financial statements. Changes to separately identified tangible and intangible assets and liabilities may result in corresponding adjustments to goodwill. The Company is in the process of finalizing third-party valuation studies of these acquired assets and assumed liabilities. The Company believes the separately identifiable intangibles may eventually include only production backlogs. Since the valuation of this intangible has not been finalized, the amortization expense recorded for this intangible was estimated for all periods presented in these unaudited condensed consolidated financial statements.


In thousands	Amount
Assets:
Cash	$	11,773
Accounts receivable		1,817
Costs in excess of billings on uncompleted contracts		2,513
Inventory		1,535
Deferred costs on uncompleted contracts		253
Other current assets		315

Total current assets		18,206
Property and equipment		399
Intangibles (a)		500
Goodwill (a)		18,096
Other assets		554

Total assets acquired	$	37,755

Liabilities:
Accounts payable	$	5,499
Accrued liabilities		733
Billings in excess of costs on uncompleted contracts		1,728
Deferred revenue and other current liabilities		70

Total current liabilities		8,030
Accrued liabilities		601

Total liabilities assumed		8,631

Total provisional purchase consideration transferred	$	29,124

(a)	The preliminary estimated goodwill and intangibles related to this acquisition were completely impaired on June 30, 2014. See Note 12. Goodwill and Other Asset Impairments.

At January 14, 2014, with regards to the acquired accounts receivable, the gross contractual amount receivable was $2.6 million, the estimated fair value was $1.8 million, and the best estimate of the contractual cash flows not expected to be collected was $0.8 million due to estimated uncollectible accounts. The acquired other intangible is comprised of a customer-related intangible, production backlog, of $0.5 million. The fair value was preliminarily estimated using a traditional discounted future cash flow model. This customer-related intangible has a preliminary estimated useful life of 12 months and is being amortized on a straight-line basis.

The Company included Mercury’s financial results in its condensed consolidated financial statements from January 14, 2014. Consequentially, $5.6 million of net revenue and $20.4 million of net losses, including a goodwill and other assets impairment charge of $18.5 million, attributable to Mercury are included in the Company’s condensed consolidated statement of operations.

Sunetric

On May 14, 2014, the Company acquired 100% of the equity interests of Sunetric, pursuant to the terms of a Membership Interest Purchase Agreement entered into on March 26, 2014 and amended on May 14, 2014. The provisional purchase consideration transferred totaled $11.6 million and consisted of approximately 4.0 million unregistered shares of the Company’s Class A common stock with an estimated fair value of $11.1 million based on the closing price of $2.75 per share for the Company’s Class A common stock on May 13, 2014 and $0.5 million of estimated probable contingent consideration. The provisional purchase consideration transferred is subject to a working capital true-up adjustment based on the determined final closing balances. The contingent consideration gives the sellers the potential to earn up to $3.0 million in additional earn-out payments, to be paid in unregistered shares of the Company’s Class A common stock, upon the achievement of certain revenue and income earn-out targets for 2014 and 2015. The total provisional purchase consideration transferred is preliminary and subject to further revisions. Excluded from the provisional purchase consideration transferred is estimated acquisition-related costs to date of $0.8 million, which was reported as acquisition-related and other costs in the Company’s condensed consolidated statements of operations as follows: $0.1 million for three months ended March 31, 2014, and $0.7 million and $0.8 million for the three and six months ended June 30, 2014, respectively.

Sunetric is one of the largest and most experienced solar developers and integrators in Hawaii. As a full-service solar energy firm, they handle every stage of the design, development and installation of photovoltaic systems on Oahu, Maui, Kauai, Molokai, Lanai and the Big Island. The acquisition provides the Company with an immediate entry into a major market that has the highest electricity rates in the U.S. – three times higher than the national average. These high rates provide compelling economics for homeowners and businesses to adopt solar photovoltaic systems. These qualitative factors have led to the recognition of acquired goodwill, which is not expected to be deductible for tax purposes.

The acquisition of Sunetric has been accounted for in accordance with the acquisition method of accounting. The amounts in the table below represent the preliminary allocation of the provisional purchase consideration transferred and are allocated to Sunetric’s assets and liabilities based on their estimated fair value as of May 14, 2014. The final determinations of the purchase consideration transferred allocations may be significantly different from the preliminary estimates used in these unaudited condensed consolidated financial statements. Changes to separately identified tangible and intangible assets and liabilities may result in corresponding adjustments to goodwill. The Company is in the process of finalizing third-party valuation studies of these acquired assets and assumed liabilities. The Company believes the separately identifiable intangibles may eventually include non-compete agreements, production backlogs, and trademarks. Since the valuations of these intangibles have not been finalized, the amortization expense recorded for these intangibles was estimated for all periods presented in these unaudited condensed consolidated financial statements.


In thousands	Amount
Assets:
Cash	$	185
Accounts receivable		1,466
Costs in excess of billings on uncompleted contracts		1,517
Inventory		1,661
Other current assets		199

Total current assets		5,028
Property and equipment		168
Intangibles		4,630
Goodwill		9,624
Other assets		555

Total assets acquired	$	20,005

Liabilities:
Accounts payable	$	2,865
Accrued liabilities		752
Billings in excess of costs on uncompleted contracts		1,552
Deferred revenue and other current liabilities		36

Total current liabilities		5,205
Other liabilities		3,207

Total liabilities assumed		8,412

Total provisional purchase consideration transferred	$	11,593

At May 14, 2014, with regards to the acquired accounts receivable, the gross contractual amount receivable was $1.6 million, the estimated fair value was $1.5 million, and the best estimate of the contractual cash flows not expected to be collected was $0.1 million due to estimated uncollectible accounts.

The estimated acquired intangibles, based on preliminary third-party valuation studies, are comprised of a customer-related intangible, production backlog, of $3.26 million, and marketing-related intangibles, such as trademarks of $1.24 million and a non-compete agreement of $0.13 million, the fair values of which were preliminarily estimated using traditional discounted future cash flow models. The preliminary estimated useful lives assigned to these intangibles are as follows: production backlog – 12 months; trademarks – 120 months; and non-compete agreement – 24 months. The production backlog and non-compete agreement intangibles are amortized on a straight-line basis and the trademarks are amortized as their benefits are realized based on discounted future cash flow analyses.

We included Sunetric’s financial results in our condensed consolidated financial statements from May 14, 2014. Consequentially, $3.1 million of net revenue and $0.2 million of net losses attributable to Sunetric are included in our condensed consolidated statement of operations for the three and six months ended June 30, 2014.

The following is supplemental unaudited interim pro forma information for the Mercury and Sunetric acquisitions as if the Company had issued 11.6 million shares of its Class A common stock to acquire these businesses on January 1, 2013. Pro forma net losses reflect, among other adjustments, the following significant adjustments:

Decreased by $665,000 for each of the three and six months ended June 30, 2014 to removed historical amortization expense related to acquired intangibles;

Increased by $33,000 and $1,001,000 for the three months ended June 30, 2014 and 2013, respectively, and $100,000 and $2,002,0000 for the six months ended June 30, 2014 and 2013, respectively, to reflect pro forma amortization expense related to acquired intangibles; and

Decreased by $134,000 and $2,435,000 for the three and six months ended June 30, 2014, to exclude historical nonrecurring acquisition-related costs.

All pro forma adjustments are based on currently available information and upon assumptions that we believe are reasonable in order to reflect, on a supplemental pro forma basis, the impact of these acquisition on our historical financial information.


	Supplemental Pro Forma (Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share data)	2014			2013			2014			2013
Net revenue	$	37,623		$	32,943		$	66,444		$	59,111

Net loss (a)	$	(20,246	)	$	(3,052	)	$	(33,185	)	$	(9,775	)

Net loss per share – basic and diluted	$	(0.42	)	$	(0.08	)	$	(0.69	)	$	(0.25	)

a)	The net loss for the three and six months ended June 30, 2014 includes $18.8 million of goodwill and other asset impairment charges. See Note 12. Goodwill and Other Asset Impairments.

12. Goodwill and Other Asset Impairments

Due to the continuing significant losses generated by, and the forecast for, the Company’s commercial segment, the Company performed impairment analyses of its goodwill and other intangibles. Based on discounted future cash flows valuation analyses, as adjusted by judgmental qualitative factors (level 3 of the fair value hierarchy), the Company determined that all of the Mercury preliminary estimated goodwill and intangibles of $18.1 million and $0.3 million, respectively, plus $0.4 million of the Syndicated goodwill related to its commercial operations were impaired at June 30, 2014. The total noncash impairment charge of $18.8 million was reported in goodwill and other asset impairments on the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2014.

13. Segment Information

During the three months ended June 30, 2014, the Company’s management structure and divisional economic characteristics changed, resulting in the creation of four reportable segments: (1) Residential – the installation of solar systems for homeowners, including lease financing thereof; (2) Commercial – the installation of solar systems for business owners; (3) Sunetric – the installation of solar systems for both homeowners and business owners in Hawaii; and (4) Other – retail store and corporate operations.

Financial information for the Company’s segments and a reconciliation of the total of the reportable segments’ income (loss) from operations (measures of profit or loss) to the Company’s consolidated net loss are as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2014			2013			2014			2013
Net revenue:
Residential	$	15,942		$	10,719		$	29,216		$	21,478
Commercial		15,544			8,761			23,920			14,515
Sunetric		3,071			—			3,071			—
Other		623			1,186			1,116			1,465

Consolidated net revenue		35,180			20,666			57,323			37,458

Income (loss) from operations:
Residential		(2,930	)		(1,332	)		(6,730	)		(2,295	)
Commercial (a)		(21,829	)		52			(24,191	)		(142	)
Sunetric		(184	)		—			(184	)		—
Other		(3,474	)		(1,891	)		(7,246	)		(4,100	)

Consolidated loss from operations		(28,417	)		(3,171	)		(38,351	)		(6,537	)

Reconciliation of consolidated loss from operations to consolidated net loss:
Interest and other expense, net		(234	)		(427	)		(455	)		(854	)
Change in valuation of warrants		6,082			690			1,415			690
Income tax benefit		(1,214	)		—			(1,208	)		—

Net loss	$	(21,355	)	$	(2,908	)	$	(36,183	)	$	(6,701	)

a)	The loss from operations for the commercial segment includes a noncash goodwill and other asset impairment charge of $18.8 million for each of the three and six months ended June 30, 2014. See Note 12. Goodwill and Other Asset Impairments.

The following is a reconciliation of reportable segments’ assets to the Company’s consolidated total assets. The other segment includes certain unallocated corporate amounts.


(in thousands)	June 30, 2014		December 31, 2013
Total assets:
Residential	$	21,951	$	22,853
Commercial		21,342		6,606
Sunetric		19,475		—
Other		4,371		14,309

	$	67,139	$	43,768

The following is a summary of reportable segments’ expenditures for additions to long-lived assets, including those related to the acquisition of businesses.


(in thousands)	June 30, 2014		December 31, 2013
Expenditures for additions to long-lived assets:
Property and equipment:
Residential	$	1,187	$	1,174
Commercial		351		2
Sunetric		155		—
Other		2,035		1,908

Total expenditures for additions to long-lived assets	$	3,728	$	3,084

14. Subsequent Events

The transaction closed on July 9, 2014, with the Company receiving net proceeds of approximately $6.4 million. The Company intends to use the net proceeds for general working capital purposes and to support the launch of its residential leasing platform.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

We recommend users read the following discussion and analysis of our financial condition and results of operations in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this document. This section is designed to provide information that will assist in understanding our condensed consolidated financial statements, changes in certain items in those statements from period to period, the primary factors that caused those changes and how certain accounting principles, policies and estimates affect the condensed consolidated financial statements.

Overview

We are a leading residential and commercial solar energy engineering, procurement and construction firm. We also perform most of our own sales and marketing activities to generate leads and secure projects. We offer turnkey services, including design, procurement, permitting, build-out, grid connection, financing referrals and warranty and customer satisfaction activities. Our solar energy systems use high-quality solar photovoltaic modules. We use proven technologies and techniques to help customers achieve meaningful savings by reducing their utility costs. In addition, we help customers lower their emissions output and reliance upon fossil fuel energy sources.

We, including our predecessors, have more than 35 years of experience in residential solar energy and trace our roots to 1978, when Real Goods Trading Corporation sold the first solar photovoltaic panels in the United States. We have designed and installed more than 19,000 residential and commercial solar systems since our founding. Our focused customer acquisition approach and our efficiency in converting customer leads into sales enable us to have what we believe are competitive customer acquisition costs that we continuously focus on improving.

We continue to expect strong demand for residential solar installations and, accordingly, plan to shift our focus away from commercial and towards the evolving residential market, including lease financing of such installations.

Recent Developments

On July 2, 2014, the Company entered into a definitive agreement to raise approximately $7.0 million from a private placement financing transaction. Under the terms of the agreement, the Company issued units consisting of an aggregate of 2,919,301 shares of its Class A common stock and warrants to purchase up to 1,313,686 additional shares of the Company’s Class A common stock, at a price of $2.40 per unit. The warrants have an exercise price of $3.19 per share and are exercisable beginning six months after issuance for a period of five years thereafter. The transaction closed on July 9, 2014, with the Company receiving net proceeds of approximately $6.4 million. The Company will use the net proceeds for general working capital purposes and to support the launch of its residential leasing platform.

Results of Operations

The following table sets forth certain financial data as a percentage of revenue for the periods indicated:


	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Net revenue		100.0	%		100.0	%		100.0	%		100.0	%
Cost of goods sold		89.0	%		76.9	%		87.5	%		75.0	%

Gross profit		11.0	%		23.1	%		12.5	%		25.0	%

Expenses:
Selling and operating		26.4	%		29.4	%		30.4	%		32.9	%
General and administrative		11.7	%		9.0	%		12.0	%		9.6	%
Acquisition-related and other costs		0.4	%		—	%		4.3	%		—	%
Goodwill and other asset impairments		53.3	%		—	%		32.7	%		—	%

Total expenses		91.8	%		38.4	%		79.4	%		42.5	%

Loss from operations		(80.8	)%		(15.3	)%		(66.9	)%		(17.5	)%
Interest and other expense, net		(0.7	)%		(2.1	)%		(0.8	)%		(2.2	)%
Change in valuation of warrants		17.3	%		3.3	%		2.5	%		1.8	%
Income tax benefit		(3.5	)%		—	%		(2.1	)%		—	%

Net loss		(60.7	)%		(14.1	)%		(63.1	)%		(17.9	)%

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

Net revenue . Net revenue increased $14.5 million, or 70.2%, to $35.2 million during the three months ended June 30, 2014 from $20.7 million during the three months ended June 30, 2013. Net revenue for our residential segment increased $5.2 million, or 48.7%, to $15.9 million during the three months ended June 30, 2014 from $10.7 million during three months ended June 30, 2013. The residential segment increased megawatts installed by 1.3 megawatts, 46%, to 4.2 megawatts during the three months ended June 30, 2014 from 2.9 megawatts during the three months ended June 30, 2013. Net revenue for our commercial segment increased $6.7 million, or 77.4%, to $15.5 million during the three months ended June 30, 2014 from $8.8 million during the three months ended June 30, 2013. The commercial segment increased megawatts installed by 3.7 megawatts, or 136%, to 6.4 megawatts during the three months ended June 30, 2014 from 2.7 megawatts during the three months ended June 30, 2013. Net revenue for our Sunetric segment was $3.1 million and represents the installment of 0.84 megawatts since we acquired it on May 14, 2014.

Gross profit . Gross profit decreased $0.9 million, or 19.0%, to $3.9 million or 11.0% of net revenue during the three months ended June 30, 2014 from $4.8 million or 23.1% of net revenue during the three months ended June 30, 2013. Gross profit for our residential segment increased $0.3 million, or 10.9%, to $3.5 million or 22.0% of net revenue during the three months ended June 30, 2014 from $3.2 million or 29.6% of net revenue during the three months ended June 30, 2013. The decrease in the residential segment’s gross profit margin percentage was due to lower average sales prices and excess construction capacity ahead of anticipated growth. Gross profit for our commercial segment decreased $1.8 million, or 153.4%, to $(0.6) million or (4.1)% of net revenue during the three months ended June 30, 2014 from $1.2 million or 13.6% of net revenue during the three months ended June 30, 2013. The decrease in the commercial segment’s gross profit was primarily the result of competition for projects in the commercial solar EPC market and negative margins arising from installations for a certain large home builder. Gross profit for our Sunetric segment was $0.8 million or 26.3% of net revenue during the period since acquisition.

Selling and operating expenses . Selling and operating expenses increased $3.2 million, or 52.3%, to $9.3 million or 26.4% of net revenue during the three months ended June 30, 2014 from $6.1 million or 29.4% of net revenue during the three months ended June 30, 2013. Selling and operating expenses for our residential segment increased $1.6 million, or 36.7%, to $5.9 million or 37.1% of net revenue during the three months ended June 30, 2014 from $4.3 million or 40.4% of net revenue during the three months ended June 30, 2013. The increase in the residential segment’s selling and operating expenses was attributable to investments in sales and sales support infrastructure. Selling and operating expenses for our commercial segment increased $0.7 million, or 69.3%, to $1.8 million or 11.7% of net revenue during the three months ended June 30, 2014 from $1.1 million or 12.2% of net revenue during the three months ended June 30, 2013. The increase in the commercial segment’s selling and operating expenses was due to the acquisition of Mercury. Selling and operating expenses for our Sunetric segment were $1.0 million or 31.1% of net revenue during the period since acquisition.

General and administrative expenses . General and administrative expenses increased $2.3 million, or 121.9%, to $4.1 million or 11.7% of net revenue during the three months ended June 30, 2014 from $1.9 million or 9.0% of net revenue during the three months ended June 30, 2014. General and administrative expenses for our residential segment increased $0.3 million, or 205.2%, to $0.5

million or 3.3% of net revenue during the three months ended June 30, 2014 from $0.2 million or 1.6% of net revenue during the three months ended June 30, 2013. General and administrative expenses for our commercial segment increased $0.5 million, or 803.0%, to $0.6 million or 3.9% of net revenue during the three months ended June 30, 2014 from $0.1 million or 0.8% of net revenue during the three months ended June 30, 2013. The increase in the commercial segment’s general and administrative expenses was primarily the result of Mercury. General and administrative expenses for our Sunetric segment were $0.04 million or 1.1% of net revenue during the period since acquisition. General and administrative expenses for our other segment increased $1.3 million, or 82.4%, to $2.9 million or 471.4% of net revenue during the three months ended June 30, 2014 from $1.6 million or 135.7% of net revenue during the three months ended June 30, 2013. The increase in the other segment’s general and administrative expenses was primarily due to corporate overhead, such as noncash share-based compensation, related to the acquisition and integration of business acquisitions.

Acquisition-related and other costs . Acquisition-related and other costs were $0.1 million for the three months ended June 30, 2014 and were comprised of acquisition and integration costs of $1.1 million related to Mercury and Sunetric, partially offset by a $1.0 million reduction in estimate for Mercury acquisition-related costs.

Goodwill and other asset impairments. Goodwill and other asset impairments were $18.8 million during the three months ended June 30, 2014 and represent the commercial segment’s noncash impairment at June 30, 2014 of the Mercury preliminary estimated goodwill and intangibles of $18.1 million and $0.4 million, respectively, plus $0.3 million of the Syndicated estimated goodwill related to its commercial operations. These impairments were necessitated by the continuing losses generated by and the forecast for our commercial segment.

Interest and other expense, net . Interest and other expense, net decreased $0.2 million to $0.2 million during the three months ended June 30, 2014 from $0.4 million during the three months ended June 30, 2013. The decrease reflects the gain on sale of an asset that had a carrying value of zero.

Change in valuation of warrants . We recorded noncash income of $6.1 million during the three months ended June 30, 2014 due to fair value adjustments to the carrying value of the common stock warrant liabilities.

Income tax benefit . Income tax benefit was $1.2 million during the three months ended June 30, 2014 and zero during the three months ended June 30, 2013 primarily as a result of changes to tax valuation allowances. The 2014 income tax benefit represents the portion of the change in the tax valuation allowance related to the preliminary estimated net deferred tax liabilities established as part of the provisional purchase consideration transferred allocation for Sunetric.

Net loss. As a result of the above factors, our net loss during the three months ended June 30, 2014 was $21.4 million, or $0.46 per share, as compared to a net loss of $2.9 million, or $0.11 per share, during the three months ended June 30, 2013.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Net revenue . Net revenue increased $19.9 million, or 53.0%, to $57.3 million during the six months ended June 30, 2014 from $37.5 million during the six months ended June 30, 2013. Net revenue for our residential segment increased $7.7 million, or 36.0%, to $29.2 million during the six months ended June 30, 2014 from $21.5 million during six months ended June 30, 2013, primarily due to the completion of the Syndicated production backlog and increased sales territories related to Syndicated, partially offset by lower average sales prices. The residential segment increased megawatts installed by 2.2 megawatts, or 38%, to 7.9 megawatts during the three months ended June 30, 2014 from 5.7 megawatts during the six months ended June 30, 2013. Net revenue for our commercial segment increased $9.4 million, or 64.8%, to $23.9 million during the six months ended June 30, 2014 from $14.5 million during the six months ended June 30, 2013, mostly as a result of the Mercury acquisition. The commercial segment increased megawatts installed by 4.6 megawatts, or 103%, to 9.1 megawatts during the six months ended June 30, 2014 from 4.4 megawatts during the six months ended June 30, 2013. Net revenue for our Sunetric segment was $3.1 million and represents the installment of 0.84 megawatts since we acquired it on May 14, 2014.

Gross profit . Gross profit decreased $2.2 million, or 23.6%, to $7.2 million or 12.5% of net revenue during the six months ended June 30, 2014 from $9.4 million or 25.0% of net revenue during the six months ended June 30, 2013. Gross profit for our residential segment decreased $0.7 million, or 10.2%, to $6.2 million or 21.1% of net revenue during the six months ended June 30, 2014 from $6.9 million or 32.0% of net revenue during the six months ended June 30, 2013. The decrease in the residential segment’s gross profit was due to lower average sales prices, investment in excess construction capacity ahead of anticipated growth, and labor inefficiencies arising from weather delays. Gross profit for our commercial segment decreased $2.2 million, or 107.8%, to $(0.2) million or (0.7)% of net revenue during the six months ended June 30, 2014 from $2.0 million or 14.1% of net revenue during the six months ended June 30, 2013. The decrease in the commercial segment’s gross profit was primarily the result of competitive pricing pressures, negative margins arising from installations for a certain large home builder, and weather delays. Gross profit for our Sunetric segment was $0.8 million or 26.3% of net revenue during the period since acquisition.

Selling and operating expenses . Selling and operating expenses increased $5.1 million, or 41.6%, to $17.4 million or 30.4% of net revenue during the six months ended June 30, 2014 from $12.3 million or 32.9% of net revenue during the six months ended June 30, 2013. Selling and operating expenses for our residential segment increased $3.1 million, or 34.9%, to $11.9 million or 40.6% of net revenue during the six months ended June 30, 2014 from $8.8 million or 41.0% of net revenue during the six months ended June 30, 2013. The increase in the residential segment’s selling and operating expenses was attributable to infrastructure investments in sales and operations. Selling and operating expenses for our commercial segment increased $1.8 million, or 88.9%, to $3.9 million or 16.2% of net revenue during the six months ended June 30, 2014 from $2.1 million or 14.1% of net revenue during the six months ended June 30, 2013. The increase in the commercial segment’s selling and operating expenses was due to the acquisition of Mercury. Selling and operating expenses for our Sunetric segment were $1.0 million or 31.1% of net revenue during the period since acquisition.

General and administrative expenses . General and administrative expenses increased $3.3 million, or 91.8%, to $6.9 million or 12.0% of net revenue during the six months ended June 30, 2014 from $3.6 million or 9.6% of net revenue during the six months ended June 30, 2014. General and administrative expenses for our residential segment increased $0.7 million, or 182.2%, to $1.0 million or 3.5% of net revenue during the six months ended June 30, 2014 from $0.4 million or 1.7% of net revenue during the six months ended June 30, 2013. General and administrative expenses for our commercial segment increased $1.3 million, or 901.4%, to $1.4 million or 5.9% of net revenue during the six months ended June 30, 2014 from $0.1 million or 1.0% of net revenue during the six months ended June 30, 2013. The increase in the commercial segment’s general and administrative expenses was primarily the result of the acquisition of Mercury. General and administrative expenses for our Sunetric segment were $0.04 million or 1.1% of net revenue during the period since acquisition. General and administrative expenses for our other segment increased $1.3 million, or 43.0%, to $4.4 million or 393.7% of net revenue during the six months ended June 30, 2014 from $3.1 or 209.8% of net revenue during the six months ended June 30, 2013. The increase in the other segment’s general and administrative expenses was primarily due to corporate overhead, such as noncash share-based compensation, related to the acquisition and integration of business acquisitions.

Acquisition-related and other costs . Acquisition-related and other costs were $2.4 million for the six months ended June 30, 2014 and were comprised of acquisition and integration costs related to Mercury and Sunetric.

Goodwill and other asset impairments. Goodwill and other asset impairments were $18.8 million during the six months ended June 30, 2014 and represent the commercial segment’s noncash impairment at June 30, 2014 of the Mercury preliminary estimated goodwill and intangibles of $18.1 million and $0.4 million, respectively, plus $0.3 million of the Syndicated estimated goodwill related to its commercial operations. These impairments were necessitated by the continuing losses generated by and the forecast for our commercial segment.

Interest and other expense, net . Interest and other expense, net decreased $0.4 million to $0.5 million during the six months ended June 30, 2014 from $0.9 million during the six months ended June 30, 2013. The decrease reflects the gain on sale of an asset that had a carrying value of zero.

Change in valuation of warrants . We recorded noncash income of $1.4 million during the six months ended June 30, 2014 due to fair value adjustments to the carrying value of the common stock warrant liabilities.

Income tax benefit . Income tax benefit was $1.2 million during the six months ended June 30, 2014 and zero during the six months ended June 30, 2013 primarily as a result of changes to tax valuation allowances. The 2014 income tax benefit represents the portion of the change in the tax valuation allowance related to the preliminary estimated net deferred tax liabilities established as part of the provisional purchase consideration transferred allocation for Sunetric.

Net loss. As a result of the above factors, our net loss during the six months ended June 30, 2014 was $36.2 million, or $0.82 per share, as compared to a net loss of $6.7 million, or $0.25 per share, during the six months ended June 30, 2013.

Seasonality

Our quarterly net revenue and operating results for solar energy system installations are difficult to predict and have, in the past, and may, in the future, fluctuate from quarter to quarter as a result of changes in state, federal, or private utility company subsidies, as well as weather, economic trends and other factors. We have historically experienced seasonality in our solar installation business, with the first quarter representing our slowest installation quarter of the year.

Liquidity and Capital Resources

Our capital needs arise from working capital required to fund operations, including procurement of materials such as photovoltaic panels and invertors, operating and back office infrastructure maintenance, expansion and improvement, and future growth. These

capital requirements depend on numerous factors, including business acquisitions, the ability to attract new solar energy system installation customers, market acceptance of our product offerings, the cost of ongoing upgrades to our product offerings necessary to remain competitive in the marketplace, the level of expenditures for sales and marketing, the level of investment in support systems and facilities and other factors. The timing and amount of these capital requirements are variable and may fluctuate from time to time, as well as varying based on seasonality. We did not have any material commitments for capital expenditures as of June 30, 2014, and we do not presently have any plans for future material capital expenditures.

Several of our wholly owned subsidiaries are parties to a Loan and Security Agreement, dated December 19, 2011, with Silicon Valley Bank (as amended by the First Loan Modification Agreement, dated as of August 28, 2012, the Second Loan Modification and Reinstatement Agreement, dated as of November 13, 2012, the Third Loan Modification Agreement, dated as of March 27, 2013, the Joinder and Fourth Loan Modification Agreement, dated as of September 26, 2013, the Fifth Loan Modification Agreement, dated as of November 5, 2013, and the Joinder and Sixth Loan Modification Agreement, dated as of June 6, 2014, the “Loan Agreement”). As amended, the Loan Agreement provided for a revolving line of credit and a term loan. Currently, the following of our wholly owned subsidiaries are parties to the Loan Agreement: Real Goods Energy Tech, Inc., Real Goods Trading Corporation, Alteris Renewables, Inc., Real Goods Syndicated, Inc., Mercury Energy, Inc., Real Goods Solar, Inc.—Mercury Solar, Elemental Energy, LLC and Sunetric Management LLC.

On June 6, 2014, the parties to the Loan Agreement entered into the Joinder and Sixth Loan Modification Agreement pursuant to which the parties thereto agreed to certain amendments and Mercury Energy, Inc., Real Goods Solar, Inc.—Mercury Solar, Elemental Energy, LLC and Sunetric Management LLC each joined as a party to the Loan Agreement and granted a security interest in substantially all its assets to Silicon Valley Bank. The Joinder and Sixth Loan Modification Agreement extended the maturity date of the Loan Agreement to January 31, 2015, reset financial covenants and made other conforming and administrative amendments to the Loan Agreement, For the Joinder and Sixth Loan Modification Agreement, we will pay Silicon Valley Bank fully earned modification and extension fees of $80,000 no later than September 30, 2014, plus reimburse Silicon Valley Bank for certain expenses.

As amended, the amount of available credit under the revolving line of credit is $6.5 million, subject to the Borrowing Base (as defined in the Loan Agreement) of 75% of Eligible Accounts (as defined in the Loan Agreement). The interest rate on borrowings under the revolving line of credit is the greater of (a) the greater of the bank’s prime rate or 4.00%, plus 4.00 and (b) 8.00%. The interest rate accruing on borrowings under the revolving line of credit during a Streamline Period (as defined in the Loan Agreement) is the greater of (i) the greater of the bank’s prime rate or 4.00%, plus 2.00%, and (ii) 6.00%.

Under the Fifth Loan Modification Agreement, Silicon Valley Bank agreed to extend to the borrowers a term loan of up to $2.0 million under the terms of the Loan Agreement in addition to the $6.5 million revolving line of credit. The term loan matures on September 29, 2014. The borrowers are required to make monthly payments of interest only with respect to the term loan with the aggregate principal balance of the term loan, together with any accrued but unpaid interest, due and payable on the maturity date. The borrowers may prepay the term loan in whole or in part at any time without penalty. Borrowings under the term loan bear interest at (a) the greater of the bank’s prime rate or 4.00%, plus (b) 2.00% (or 10.00% during an event of default). The borrowers are obligated to pay to Silicon Valley Bank a final payment fee of $150,000 on or before the term loan maturity date. In addition, at any time when (a) the borrowers’ unrestricted cash at Silicon Valley Bank, less (b) all outstanding obligations of borrowers owed to Silicon Valley Bank, is less than $2.0 million, the borrowers’ availability under the revolving line of credit will be reduced by an amount equal to the outstanding principal balance of the term loan.

As of June 30, 2014, the borrowers under the Silicon Valley Bank Loan Agreement were not in compliance with the covenants under the Silicon Valley Bank Loan Agreement requiring the Company to comply with the minimum liquidity ratio covenant and the minimum EBITDA financial covenant for the compliance period ended June 30, 2014. On August 19, 2014, the Company and the borrowers under the Silicon Valley Bank Loan Agreement entered into a Waiver Agreement with Silicon Valley Bank pursuant to which Silicon Valley Bank waived the Company’s failure to comply with those financial covenants for the quarterly compliance period ended June 30, 2014.

We have also received loans from Riverside. Riverside loaned us $3.0 million on May 4, 2012 and $150,000 on June 20, 2012. The maturity dates for both of these loans have been extended to March 31, 2015. The loans bear interest at a rate of 10%. As of June 30, 2014, we owed $3.8 million to Riverside on these loans, including $0.7 million of accrued interest. We have not paid any interest or principal on Riverside’s loan. On April 30, 2014, we repaid in full the principal amount plus accrued interest, totaling $1.1 million, on another loan from Riverside extended to us under the Loan Commitment, dated as of November 13, 2012. Riverside owns approximately 16% of our Class A common stock. Pursuant to the terms of a Shareholders Agreement, Riverside has the right to designate a certain number of individuals for appointment or nomination to our board of directors, tied to its ownership of our Class A common stock.

At June 30, 2014, there was approximately $3.5 million of available borrowing capacity under our revolving line of credit with Silicon Valley Bank. We also had $7.0 million of net working capital, including $1.7 million of cash. We continue to pursue operational improvements to reduce our operating cash requirements. Operational initiatives to reduce costs include productivity enhancements and process improvements within support functions, greater project level control over working capital deployed, and higher levels of labor utilization. While there can be no assurances, we believe that our existing capital resources along with cost savings associated with operational improvements will be sufficient to fund our continuing operations, execute on our business plan and meet our current debt repayment obligations until June 30, 2015. However, no assurance can be given that we will achieve those objectives. Further, our projected cash needs may change as a result of unforeseen operational difficulties or other factors.

On July 9, 2014, we closed a private placement of equity securities in which we issued units consisting of an aggregate of 2,919,301 shares of our Class A common stock and warrants to purchase up to 1,313,686 additional shares of our Class A common stock for net proceeds of approximately $6.4 million. We will use the net proceeds for general working capital purposes and to support the launch of our residential leasing platform. As of August 18, 2014, the Company had cash on hand of approximately $5.0 million.

We are required to satisfy the financial covenants discussed above, as well as others, as of the end of each fiscal quarter. There can be no assurance that we will be able to satisfy these covenants in future fiscal periods. We may need to negotiate with SVB to amend the SVB Loan to reset the financial covenants. There can be no assurance that we will be successful in doing so or that such amendments will be on favorable terms to us. SVB has the ability to call an event of default under the SVB Loan and require us to repay all outstanding indebtedness under the SVB Loan or to exercise other rights under the SVB Loan, including collecting default interest, no longer extending credit to us, and exercising its rights with respect to the collateral securing the obligations under the SVB Loan. We believe that we presently have sufficient funds or the ability to raise future funds, either through a borrowing or the sale of additional equity, to repay the outstanding indebtedness under the SVB Loan. However, no assurance can be given that we will be able to raise future funds on terms as favorable as the present SVB credit facility or in an amount sufficient to fund our future growth. In addition, while we have been successful in the past in obtaining new financing, there is no assurance that we will be able to raise any new funds in the future. If our operational initiatives are not successful in significantly reducing our historical loss from operations during the second half of 2014, or if we encounter unplanned operational difficulties, we may not have sufficient funds to repay any outstanding borrowings as they come due or to fund our operating cash needs for the next twelve months. These circumstances would require us to obtain financing from another source or raise additional capital through debt or equity financing, if available to us. There can be no assurance that we will successfully obtain new financing.

Cash Flows

The following table summarizes our primary sources (uses) of cash during the periods presented:


	Six Months Ended June 30,
(in thousands)	2014			2013
Net cash provided by (used in):
Operating activities	$	(24,659	)	$	(5,401	)
Investing activities		11,419			(16	)
Financing activities		2,475			1,886

Net change in cash	$	(10,765	)	$	(3,531	)

Operating activities . Our operating activities used net cash of $24.7 million and $5.4 million during the six months ended June 30, 2014 and 2013, respectively. Our net cash used in operating activities during the six months ended June 30, 2014 was primarily due to our net loss, as adjusted by noncash items, of $16.4 million, increased accounts receivable and deferred costs on uncompleted contracts of $7.1 million and $2.0 million, respectively, and decreased billings in excess of costs on uncompleted contracts of $2.5 million, partially offset by increased accounts payable and accrued liabilities of $2.5 million and decreased other assets and costs in excess of billings on uncompleted contracts of $0.5 million and $0.4 million, respectively. Net cash used in operating activities includes approximately $2.2 million related to the payment of acquired Sunetric liabilities. Our net cash used in operating activities during the six months ended June 30, 2013 was primarily due to decreased accounts payable and accrued liabilities of $7.1 million and our net loss as adjusted by noncash items of $6.4 million, partially offset by decreased accounts receivable and costs in excess of billings on uncompleted contracts of $3.7 million and $2.5 million, respectively, and decreased other current assets and inventory of $1.3 million and $1.0 million, respectively.

Investing activities . Our investing activities provided net cash of $11.4 million and $16,000 during the six months ended June 30, 2014 and 2013, respectively. Our net cash provided by investing activities during the six months ended June 30, 2014 was primarily the result of cash of $12.0 million from acquired businesses, partially offset by $0.6 million for the acquisition of property and equipment. Our net cash used in investing activities during the six months ended June 30, 2013 was for the acquisition of property and equipment.

Financing activities. Our financing activities provided net cash of $2.5 million and $1.9 million during the six months ended June 30, 2014 and 2013, respectively. Our net cash provided by financing activities during the six months ended June 30, 2014 reflected net borrowings on our revolving line of credit of $3.0 million and proceeds from the exercise of warrants and options of $0.5 million, partially offset by the repayment of related party debt of $1.0 million. Our net cash provided by financing activities during the six months ended June 30, 2013 reflected the net proceeds from the issuance of common stock of $8.4 million, partially offset by net payments on our revolving line of credit of $6.5 million and on other debt and capital lease obligations of $0.1 million.

Non-GAAP Measure — Adjusted EBITDA

Adjusted EBITDA is not a financial measure calculated and presented in accordance with GAAP and should not be considered as an alternative to net income or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. We define Adjusted EBITDA as net income or loss before income taxes, change in valuation of warrants, interest and other expenses, goodwill and other asset impairments, acquisition-related and other costs (including integration costs), share-based compensation, and depreciation and amortization. Other companies (including competitors) may define Adjusted EBITDA differently. We present Adjusted EBITDA because we believe it is an important supplemental measure of performance that is commonly used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. We also use this information internally for forecasting and budgeting. It may not be indicative of our historical results nor is it intended to be predictive of potential future results. Investors should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. The table below reconciles our Net loss to Adjusted EBITDA for each indicated period:


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(in thousands)	2014			2013			2014			2013
	(unaudited)						(unaudited)
Net loss	$	(21,355	)	$	(2,908	)	$	(36,183	)	$	(6,701	)
Exclude:
Income tax benefit		(1,214	)		—			(1,208	)		—
Change in valuation of warrants		(6,082	)		(690	)		(1,415	)		(690	)
Interest and other expense		234			427			455			854
Goodwill and other asset impairments		18,766			—			18,766			—
Acquisition-related and other costs		134			—			2,435			—
Share-based compensation		1,809			80			2,012			208
Depreciation and amortization		825			221			1,605			411

Adjusted EBITDA	$	(6,883	)	$	(2,870	)	$	(13,533	)	$	(5,918	)

Off-Balance Sheet Arrangements

We do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as special purpose entities or variable interest entities, which have been established for the purpose of facilitating off-balance sheet arrangements or other limited purposes.

Risk Factors

We caution that there are risks and uncertainties that could cause our actual results to be materially different from those indicated by forward-looking statements that, from time-to-time, we make in filings with the Securities and Exchange Commission, news releases, reports, proxy statements, registration statements and other written communications as well as oral forward-looking statements made by our representatives, from time to time. These risks and uncertainties include, but are not limited to, those risks listed in our Annual Report on Form 10-K for the year ended December 31, 2013. Except for the historical information contained herein, the matters discussed in this analysis are forward-looking statements that involve risk and uncertainties, including, but not limited to, general economic and business conditions, competition, pricing, brand reputation, consumer trends, and other factors which are often beyond our control. We do not undertake any obligation to update forward-looking statements except as required by law.

Investing in our securities involves significant risks. You should carefully read the risk factors in the section entitled “RISK FACTORS” in our Annual Report on Form 10-K for the year ended December 31, 2013, which is on file with the SEC. Before making an investment decision, you should carefully consider these risks as well as other information we include or incorporate by reference in this prospectus and any prospectus supplement. The risks and uncertainties we have described are not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business operations. We do not undertake any obligation to update forward-looking statements except as required by law.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) at the end of the period covered by this report. Based on such evaluation, our management concluded that, at the end of such period, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

No changes in our internal control over financial reporting occurred during the three and six months ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

From time to time, we are involved in legal proceedings that we consider to be in the normal course of business. We do not believe that any of these proceedings will have a material adverse effect on our business.

We have been notified by one of our commercial customers that the customer is claiming certain liquidated damages under the terms of their agreement with us and, in connection with that claim, is withholding certain receivables payments. We are in the process of analyzing these claims and working through the dispute resolution process with the customer. There is currently no active litigation with respect to this matter.

Item 1A.

Risk Factors

There have been no material changes from the risk factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

On May 12, 2014, we issued 325,140 shares of our Class A common stock to Syndicated Solar, Inc. pursuant to the terms of the Asset Purchase Agreement, dated as of August 9, 2013, by and among us, Real Goods Syndicated, Inc., two Syndicated Solar, Inc. entities and Justin Pentelute, the owner of Syndicated Solar, Inc., as previously disclosed in our Quarterly Report on Form 10-Q filed on May 15, 2014.

On May 14, 2014, we issued 3,425,393 shares of our Class A common stock to the sellers under the Membership Interest Purchase Agreement, dated as of March 26, 2013, as amended, by and among us, Elemental Energy LLC doing business as Sunetric, and the owners of Elemental Energy LLC, Sean Mullen, Beth-Ann Mullen, and Alexander Tiller, as previously disclosed in our Current Report on Form 8-K filed on May 16, 2014.

On June 6, 2014, we issued a warrant to Silicon Valley Bank pursuant to the terms of the Joinder and Sixth Loan Modification Agreement, dated as of June 6, 2014, by and among several of our wholly-owned subsidiaries and Silicon Valley Bank, as previously disclosed in our Current Report on Form 8-K filed on June 11, 2014. The warrant is exercisable into 82,627 shares of our Class A common stock at an exercise price of $2.36 per share, subject to adjustment, and expires June 5, 2021. The issuance of the warrant was not a “public offering” as defined in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and met the requirements to qualify for exemption under Regulation D promulgated under the Securities Act. We issued the warrant to one of our creditors as part consideration for entering into an amendment of an existing agreement. Silicon Valley Bank represented in writing, among other things, that it acquired the warrant for its own account for investment purposes and that it was an accredited investor. A legend was placed on the warrant certificate, and will be placed on the stock certificates for the shares of our Class A common stock issuable upon exercise of the warrant, stating that the securities have not been registered under the Securities Act and cannot be sold or otherwise transferred without registration or an exemption therefrom.

Item 6.

Exhibits

Exhibits.


Exhibit No.		Description

2.1†*		First Amendment to Membership Purchase Agreement, dated May 14, 2014, by and among Real Goods Solar, Inc., Elemental Energy LLC, Sean Mullen, Beth-Ann Mullen, and Alexander Tiller (incorporated by reference to Exhibit 2.2 to Real Goods Solar, Inc.’s Current Report on Form 8-K filed May 16, 2014 (No. 001-34044)

4.1*		Warrant to Purchase Stock, dated June 6, 2014, issued by Real Goods Solar, Inc. to Silicon Valley Bank

10.1*		Settlement and Release Agreement, dated May 12, 2014, by and among Real Goods Solar, Inc., Real Goods Syndicated, Inc., Syndicated Solar, Inc. (Delaware), Syndicated Solar, In. (California) and Justin Pentelute

10.2*		Joinder and Sixth Loan Modification Agreement, dated June 6, 2014, among Real Goods Energy Tech, Inc., Real Goods Trading Corporation, Alteris Renewables, Inc., Real Goods Syndicated, Inc., Mercury Energy, Inc., Real Goods Solar, Inc. - Mercury Solar, Elemental Energy, LLC, Sunetric Management LLC and Silicon Valley Bank

10.3*		Intellectual Property Security Agreement, dated June 6, 2014, among Mercury Energy, Inc., Real Goods Solar, Inc. - Mercury Solar, Elemental Energy, LLC, Sunetric Management LLC and Silicon Valley Bank

10.4*		Second Amended and Restated Unconditional Guaranty, dated June 6, 2014, between Real Goods Solar, Inc. and Silicon Valley Bank

10.5*		Second Amended and Restated Security Agreement, dated June 6, 2014, between Real Goods Solar, Inc. and Silicon Valley Bank

31.1*		Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2*		Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

32.1**		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase.

101.DEF		XBRL Taxonomy Extension Definition Linkbase.

101.LAB		XBRL Taxonomy Extension Label Linkbase.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase.

*	Filed herewith

**	Furnished herewith

†	This exhibit excludes schedules and exhibits pursuant to Item 601(b)(2) of Regulation S-K, which the registrant agrees to furnish supplementally to the Securities and Exchange Commission upon request by the Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.


	Real Goods Solar, Inc.
	(Registrant)

Date: August 19, 2014	By:	/s/ Dennis Lacey
		Dennis Lacey
		Chief Executive Officer (authorized officer)

Date: August 19, 2014	By:	/s/ Anthony DiPaolo
		Anthony DiPaolo
		Chief Financial Officer
		(principal financial and accounting officer)

EXHIBIT INDEX


Exhibit No.		Description

2.1†*		First Amendment to Membership Purchase Agreement, dated May 14, 2014, by and among Real Goods Solar, Inc., Elemental Energy LLC, Sean Mullen, Beth-Ann Mullen, and Alexander Tiller (incorporated by reference to Exhibit 2.2 to Real Goods Solar, Inc.’s Current Report on Form 8-K filed May 16, 2014 (No. 001-34044)

4.1*		Warrant to Purchase Stock, dated June 6, 2014, issued by Real Goods Solar, Inc. to Silicon Valley Bank

10.1*		Settlement and Release Agreement, dated May 12, 2014, by and among Real Goods Solar, Inc., Real Goods Syndicated, Inc., Syndicated Solar, Inc. (Delaware), Syndicated Solar, In. (California) and Justin Pentelute

10.2*		Joinder and Sixth Loan Modification Agreement, dated June 6, 2014, among Real Goods Energy Tech, Inc., Real Goods Trading Corporation, Alteris Renewables, Inc., Real Goods Syndicated, Inc., Mercury Energy, Inc., Real Goods Solar, Inc. - Mercury Solar, Elemental Energy, LLC, Sunetric Management LLC and Silicon Valley Bank

10.3*		Intellectual Property Security Agreement, dated June 6, 2014, among Mercury Energy, Inc., Real Goods Solar, Inc. - Mercury Solar, Elemental Energy, LLC, Sunetric Management LLC and Silicon Valley Bank

10.4*		Second Amended and Restated Unconditional Guaranty, dated June 6, 2014, between Real Goods Solar, Inc. and Silicon Valley Bank

10.5*		Second Amended and Restated Security Agreement, dated June 6, 2014, between Real Goods Solar, Inc. and Silicon Valley Bank

31.1*		Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2*		Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

32.1**		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase.

101.DEF		XBRL Taxonomy Extension Definition Linkbase.

101.LAB		XBRL Taxonomy Extension Label Linkbase.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase.

*	Filed herewith

**	Furnished herewith

†	This exhibit excludes schedules and exhibits pursuant to Item 601(b)(2) of Regulation S-K, which the registrant agrees to furnish supplementally to the Securities and Exchange Commission upon request by the Commission.

Exhibit 4.1

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

WARRANT TO PURCHASE STOCK

Company: Real Goods Solar, Inc., a Colorado corporation

Number of Shares: 82,627, subject to adjustment

Type/Series of Stock: Class A Common Stock, $0.0001 par value per share

Warrant Price: $2.36 per Share, subject to adjustment

Issue Date: June 6, 2014

Expiration Date: June 5, 2021 See also Section 5.1(b).


Credit Facility:		This Warrant to Purchase Stock (“ Warrant ”) is issued pursuant to that certain Joinder and Sixth Loan Modification Agreement, of even date herewith, to that certain Loan and Security Agreement dated December 19, 2011, among Silicon Valley Bank, the Company as Secured Guarantor and the subsidiaries of the Company named therein, as amended (collectively, and as may be further amended and/or modified and in effect from time to time, the “ Loan Agreement ”).

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK (together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, “ Holder ”) is entitled to purchase the number of fully paid and non-assessable shares (the “ Shares ”) of the above-stated Type/Series of Stock (the “ Class ”) of the above-named company (the “ Company ”) at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant. Reference is made to Section 5.4 of this Warrant whereby Silicon Valley Bank shall transfer this Warrant to its parent company, SVB Financial Group.

SECTION 1. EXERCISE .

1.1 Method of Exercise . Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

1.2 Cashless Exercise . On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:


	X = Y(A-B)/A

where:

	X =	the number of Shares to be issued to the Holder;

	Y =	the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

	A =	the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; and

	B =	the Warrant Price.

1.3 Fair Market Value . If shares of the Class are then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “ Trading Market ”), the fair market value of a Share shall be the closing price or last sale price of a share of the Class reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company. If shares of the Class are not then traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.

1.4 Delivery of Certificate and New Warrant . Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.

1.5 Replacement of Warrant . On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

1.6 Treatment of Warrant Upon Acquisition of Company .

(a) Acquisition. For the purpose of this Warrant, “ Acquisition ” means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization (or, if such Company stockholders beneficially own a majority of the outstanding voting power of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power.

(b) Treatment of Warrant at Acquisition . In the event of an Acquisition in which the consideration to be received by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “ Cash/Public Acquisition ”), either (i) Holder shall exercise this Warrant pursuant to Section 1.1 and/or 1.2 and such exercise will be deemed effective immediately prior to and contingent upon the consummation of such Acquisition or (ii) if Holder elects not to exercise the Warrant, this Warrant will expire immediately prior to the consummation of such Acquisition.

(c) The Company shall provide Holder with written notice of its request relating to the Cash/Public Acquisition (together with such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such contemplated Cash/Public Acquisition giving rise to such notice), which is to be delivered to Holder not less than seven (7) Business Days prior to the closing of the proposed Cash/Public Acquisition. In the event the Company does not provide such notice, then if, immediately prior to the Cash/Public Acquisition, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon such exercise to the Holder and Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as the date thereof.

(d) Upon the closing of any Acquisition other than a Cash/Public Acquisition, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

(e) As used in this Warrant, “ Marketable Securities ” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise or convert this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition.

SECTION 2. ADJUSTMENTS TO THE SHARES AND WARRANT PRICE .

2.1 Stock Dividends, Splits, Etc . If the Company declares or pays a dividend or distribution on the outstanding shares of the Class payable in additional shares of the Class or other

securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If the Company subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

2.2 Reclassification, Exchange, Combinations or Substitution . Upon any event whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations substitutions, replacements or other similar events.

2.3 No Fractional Share . No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.

2.4 Notice/Certificate as to Adjustments . Upon each adjustment of the Warrant Price, Class and/or number of Shares, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Shares and facts upon which such adjustment is based. The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such adjustment.

2.5 Special Adjustment for Private Financing . In the event that, on or before the first anniversary of Issue Date hereof, the Company consummates a sale and issuance for cash of shares of the Class or of any other class or series of its capital stock to one or more investor purchasers in a transaction not registered under the Act (excluding: (i) sales and issuances to employees, officers, directors and consultants of the Company or any affiliate thereof pursuant to a stock grant to such persons or the exercise by such persons of stock purchase options, which grants or options were granted under an equity incentive plan approved by the Company’s Board of Directors, and (ii) issuances by the Company as payment of the purchase or acquisition price in a merger or acquisition involving the Company) at an effective price per share (the “ Financing Price ”) less than the Warrant Price in effect on and as of the date of such consummation, the Warrant Price shall automatically be adjusted to equal the Financing Price, subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.

2.6 Exchange Cap . Notwithstanding anything herein to the contrary, the Company shall not issue any Shares upon the exercise of this Warrant if the issuance of such Shares would exceed the aggregate number of shares of the Class which the Company may issue upon exercise of this Warrant without breaching the Company’s obligations under Nasdaq Listing Rule 5635(d) (the number of Shares which may be issued without violating such Rule, the “ Exchange Cap ”), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its shareholders as required by such Rule for issuances of Shares in excess of the Exchange Cap, or (B) obtains a written opinion from outside counsel to the Company that such shareholder approval is not required, which opinion shall be reasonably satisfactory to Holder.

SECTION 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY .

3.1 Representations and Covenants . The Company represents and warrants to, and agrees with, the Holder as follows:

(a) All Shares which may be issued upon the exercise of this Warrant shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.

(b) The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class and other securities as will be sufficient to permit the exercise in full of this Warrant.

3.2 Notice of Certain Events . If the Company proposes at any time to:

(a) declare any dividend or distribution upon the outstanding shares of the Class, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;

(b) offer for subscription or sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights);

(c) effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Class; or

(d) effect an Acquisition or to liquidate, dissolve or wind up;

then, in connection with each such event, the Company shall give Holder notice thereof at the same time and in the same manner as given to holders of the outstanding shares of the Class.

SECTION 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER.

The Holder represents and warrants to the Company as follows:

4.1 Purchase for Own Account. This Warrant and the Shares to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.

4.2 Disclosure of Information. Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

4.3 Investment Experience. Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

4.4 Accredited Investor Status. Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

4.5 The Act. Holder understands that this Warrant and the Shares issuable upon exercise hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisions of Rule 144 promulgated under the Act.

4.6 No Voting Rights . Holder, as a Holder of this Warrant, will not have any voting rights until the exercise of this Warrant.

SECTION 5. MISCELLANEOUS.

5.1 Term; Automatic Cashless Exercise Upon Expiration .

(a) Term . Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, Pacific time, on the Expiration Date and shall be void thereafter.

(b) Automatic Cashless Exercise upon Expiration . In the event that, upon the Expiration Date, the fair market value of one Share as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares issued upon such exercise to Holder.

5.2 Legends . Each certificate evidencing Shares shall be imprinted with a legend in substantially the following form:

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO SILICON VALLEY BANK DATED JUNE 6, 2014, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

5.3 Compliance with Securities Laws on Transfer . This Warrant and the Shares issued upon exercise of this Warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to SVB Financial Group (Silicon Valley Bank’s parent company) or any other affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act. Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act.

5.4 Transfer Procedure. After receipt by Silicon Valley Bank of the executed Warrant, Silicon Valley Bank will transfer all of this Warrant to its parent company, SVB Financial Group. By its acceptance of this Warrant, SVB Financial Group hereby makes to the Company each of the representations and warranties set forth in Section 4 hereof and agrees to be bound by all of the terms and conditions of this Warrant as if the original Holder hereof. Subject to the provisions of Section 5.3 and upon providing the Company with written notice, SVB Financial Group and any subsequent Holder may transfer all or part of this Warrant or the Shares issued upon exercise of this Warrant to any transferee, provided, however, in connection with any such transfer, SVB Financial Group or any subsequent Holder will give the Company notice of the portion of the Warrant and/or Shares being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable); and provided further, that any subsequent transferee other than SVB Financial Group shall agree in writing with the Company to be bound by all of the terms and conditions of this Warrant.

5.5 Notices . All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3 ^rd ) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or

Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5. All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

SVB Financial Group

Attn: Treasury Department

3003 Tasman Drive, HC 215

Santa Clara, CA 95054

Telephone: (408) 654-7400

Facsimile: (408) 988-8317

Email address: derivatives@svb.com

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

Real Goods Solar, Inc.

Attn: Chief Financial Officer

833 W. South Boulder Road

Louisville, CO 80027-2452

Telephone: (303) 222-8400

Facsimile:

Email:

5.6 Waiver . This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

5.7 Attorneys’ Fees . In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

5.8 Counterparts; Facsimile/Electronic Signatures . This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement. Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

5.9 Governing Law . This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.

5.10 Headings . The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

5.11 Business Days . “ Business Day ” is any day that is not a Saturday, Sunday or a day on which Silicon Valley Bank is closed.

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.


“COMPANY”

REAL GOODS SOLAR, INC.

By:		/s/ Anthony DiPaolo

Name:		Anthony M. Dipaolo

Title:		Chief Financial Officer

“HOLDER”

SILICON VALLEY BANK

By:		/s/ Elisa Sun

Name:		Elisa Sun
		(Print)
Title:		Vice President

APPENDIX 1

NOTICE OF EXERCISE

1. The undersigned Holder hereby exercises its right to purchase shares of the Common Stock of (the “ Company ”) in accordance with the attached Warrant To Purchase Stock, and tenders payment of the aggregate Warrant Price for such shares as follows:

[ ]

check in the amount of $ payable to order of the Company enclosed herewith

[ ]

Wire transfer of immediately available funds to the Company’s account

[ ]

Cashless Exercise pursuant to Section 1.2 of the Warrant

[ ]

Other [Describe]

2. Please issue a certificate or certificates representing the Shares in the name specified below:



Holder’s Name




(Address)

3. By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Stock as of the date hereof.


HOLDER:



By:

Name:

Title:

(Date):

Schedule 1

Exhibit 10.1

SETTLEMENT AND RELEASE AGREEMENT

T HIS S ETTLEMENT AND R ELEASE A GREEMENT (this “ Agreement ”) is made and entered into this 12th day of May, 2014 (the “ Effective Date ”) by and among (i) SYNDICATED SOLAR, INC., a Delaware corporation, and SYNDICATED SOLAR, INC. d/b/a Syndicated Solar Construction, a California corporation (each a “ Seller ” and collectively, “ Seller ”), (ii) JUSTIN PENTELUTE, an individual resident of the State of Colorado (“ Owner ”), (iii) REAL GOODS SYNDICATED, INC., a Delaware corporation (“ Buyer ”), and (iv) REAL GOODS SOLAR, INC., a Colorado corporation (“ Parent ”). Seller, Owner, Buyer and Parent are individually referred to here in a “ Party ” and collectively as the “ Parties ”.

RECITALS

A. Seller, Owner, Buyer and Parent are parties to an Asset Purchase Agreement dated as of August 9, 2013 (the “ Purchase Agreement ”). Capitalized terms used herein, but not otherwise defined herein shall have the meanings set forth in the Purchase Agreement.

B. In addition, Owner accepted an employment offer letter with the Parent dated as of August 9, 2013 (the “ Offer Letter ”).

C. Certain disputes have arisen between the Parties with respect to (i) certain potential breaches of the representations and warranties made by Seller and Owner in the Purchase Agreement (the “ Asserted Breaches ”), (ii) potential indemnification claims related to those Asserted Breaches, and (iii) the amount of the Purchase Price payable to the Seller.

D. The Parties desire to enter into this Agreement in order to settle the Dispute (as defined below) and all claims, and disagreements that any Party has or may have against the other Party with respect to the Dispute (collectively, the “ Claims ”).

N OW , T HEREFORE , in consideration of the mutual promises and undertakings set forth below, the sufficiency of which is acknowledged by the Parties, the Parties agree as follows:

AGREEMENT

1. Integration of Recitals. The foregoing Recitals form an integral and substantive part of this Agreement as if restated in full herein.

2. Dispute . As used herein, “ Dispute ” means all disagreements between the Parties regarding the Asserted Breaches, the Purchase Price due and payable to the Seller now or in the future, and any amounts due and owing to the Owner pursuant to the terms of the Offer Letter.

3. Settlement . In consideration of the agreements provided herein, including, without limitation, the release, covenant not to sue, confidentiality and non-disparagement provisions, and reaffirmation of certain covenants, the Parties hereby agree as follows:

a. Within five (5) Business Days following the Effective Date, Parent will issue to Seller 325,140 shares of the Closing Stock Purchase Price (the “ Initial Share Payment ”).

b. To the extent the entire Outstanding AR Amount is collected on or before the date which is sixty (60) calendar days following the Effective Date (the “ Delivery Date ”), Parent will issue to Seller an additional 74,860 shares of the Closing Stock Purchase Price (the “ Additional Share Payment ”) in the manner described below. If less than 100% of the Outstanding AR Amount is collected by the Delivery Date, Parent will issue to Seller a portion of the Additional Share Payment equal to the portion of the Outstanding AR Amount collected on or before the Delivery Date. Any Additional Share Payment will be issued to Seller as follows: (i) 50% of any Additional Share Payment will be issued to Seller within five (5) Business Days following the Delivery Date and (ii) the remaining 50% of the Additional Share Payment will be issued within five (5) Business Days following the collection of the Ameren rebates described on Exhibit A hereto. It is further acknowledged and understood that no Additional Share Amount and no additional Closing Stock Purchase Price shall become due and payable to Seller with respect to any Outstanding AR Amount which is collected following the Delivery Date. For purposes hereof “ Outstanding AR Amount ” means all of the outstanding accounts receivable set forth on Exhibit A hereto.

c. The Initial Share Payment, and if earned, the Additional Share Payment, shall serve as payment in full of any and all Purchase Price due to Seller now or in the future pursuant to the terms of the Purchase Agreement including, without limitation, any Earnout Payment, and the earnout provisions of the Purchase Agreement set forth in Section 3.03 of the Purchase Agreement are hereby terminated and of no further force or effect.

d. Owner and Seller acknowledge and agree that to the extent any checks, wire payments or other income with respect to any accounts receivable of Parent or any of its subsidiaries, including, without limitation, those of Buyer which were purchased from Seller, are paid or otherwise delivered to Seller or Owner, Seller and Owner shall promptly take such actions necessary to return any such checks or amount to Parent.

4. Release .

a. As of the Effective Date, in consideration of the mutual promises and covenants contained in this Agreement, Buyer and Parent hereby fully releases, remises, acquits, and forever discharges Seller and Owner and their past and present agents, officers, directors, shareholders, affiliates, and all of their successors, and assigns, and all of their subsidiaries and other affiliated companies and their respective shareholders, officers, directors, agents, employees, legal representatives, successors and assigns, and all of Seller and Owner’s respective properties, interests and assets of any and every kind and character whatsoever and wheresoever situated from any and all Claims existing as of the Effective Date, whether in law or in equity or otherwise. It being acknowledged and agreed that the rights and obligations imposed upon or accruing to Buyer and/or Parent pursuant to this Agreement are not released or discharged. Each of Parent and Buyer further expressly understands and agrees that by signing this Agreement it and all of its respective past and present agents, legal representatives, successors, officers, directors, shareholders, employees, employers, partners, and assigns will be forever bound by the Agreement’s terms, and that no rescission, modification or release from its terms will be made for any mistake.

b. As of the Effective Date, in consideration of the mutual promises and covenants contained in this Agreement, each of Seller and Owner hereby fully releases, remises, acquits, and forever discharges Parent and Buyer and their past and present agents, officers, directors, shareholders, employees, and all of their successors, and assigns, and all of their subsidiaries and other affiliated companies and their respective shareholders, officers, directors, agents, employees, legal representatives, successors and assigns, and all of Parent and Buyer’s respective properties, interests and assets of any and every kind and character whatsoever and wheresoever situated, from any and all Claims, together with all other claims arising out of any acts, omissions, transactions, transfers, happenings, violations, promises, facts or situations which occurred or existed at any time before the Effective Date, including, without limitation, any and all claims related to Owner’s employment with Parent, or the operation of Parent and its subsidiaries, whether known or unknown, in law or in equity or otherwise. It being acknowledged and agreed that the rights and obligations imposed upon or accruing to Seller and/or Owner pursuant to this Agreement are not released or discharged. Each of Seller and Owner further expressly understands and agrees that by signing this Agreement it and all of its respective past and present heirs, estate, agents, legal representatives, successors, officers, directors, shareholders, employees, employers, partners, and assigns will be forever bound by the Agreement’s terms, and that no rescission, modification or release from its terms will be made for any mistake.

5. Covenant Not to Sue; Confidentiality; Non-Disparagement . Each Party agrees, on behalf of itself, and, its officers and directors:

a. Not to file or cause to be filed, at any time after the Effective Date, any charge, claim, action, complaint, lawsuit, or other legal, equitable or administrative proceeding (collectively, “ Filings ”), with any federal, state, local, public or private agency, insurers or other authority against the other Party with respect to the Claims, and to immediately dismiss with prejudice any such Filing filed on or prior to the Effective Date with respect to the Claims.

b. To keep the terms of this Agreement as well as the facts and circumstances giving rise to this Agreement completely confidential and not to disclose the same to any third party without the prior express written consent of the other Party, except as expressly contemplated herein or as may be required by law or a court of competent jurisdiction, it being acknowledged and agreed that any reporting or disclosure obligations of Parent under the securities laws, shall not require any approval by Seller or Owner.

c. Not, in the case of Owner, to individually, or in the case of Seller, Parent and Buyer, not permit it’s respective officers or directors to, make, or cause or encourage others to make, any statements, written or verbal, that defame, disparage or in any way criticize the personal or business reputation, practices, or conduct of the other Party. For purposes of this paragraph, a disparaging statement is any communication which, if publicized to another, would cause or tend to cause the recipient of the communication to question the business condition, integrity, competence, or good character of the person or entity to which the communication relates. Each Party agrees that this prohibition includes, but is not limited to, statements made on any type of social networking site posts, consumer review Internet sites, or to the news media, industry analysts, customers, vendors, or employees (past and present).

6. Representations and Warranties . Each Party represents and warrants to the other Party as of the Effective Date as follows:

a. Organization . Such Party has all requisite power and authority to enter into this Agreement and to perform its obligations hereunder.

b. Authority; Warranty of Authority . This Agreement has been duly executed and delivered by such Party and constitutes a legal, valid and binding obligation of such Party, enforceable against them in accordance with its terms. Each Party warrants that the trustees, officers, and/or corporate agents executing this Agreement have full and unconditional authority to legally bind such Party to the terms of this Agreement.

c. No Actions Pending . Such Party hereby expressly warrants and represents that it has not filed, at any time prior to the Effective Date, as applicable, any charge, claims, action, complaint, lawsuit or other legal, equitable or administrative proceeding, with any federal, state, local, public or private agency, insurers or other authority against the other Party.

d. Investigation of Facts . Each Party represents and warrants that it has made such investigation of the facts pertaining to this Agreement and all matters pertaining thereto as such Party deemed necessary.

e. Warranty of Non-Assignment . Each Party warrants and represents that it has not assigned or transferred, nor purported to assign or transfer, to any person or any entity any of the Claims.

7. No Admission of Liability . Nothing in this Agreement, including the fact that it was entered into, shall constitute or be construed in any way as an admission on behalf of either Party as to such Party’s liability or the validity of any of the Claims, nor shall it be admissible in any court, administrative agency or tribunal for any Party, with the exception of a proceeding to enforce or interpret the terms of this Agreement. Each Party understands that this Agreement is in full accord and satisfaction of the Claims. Each Party further understands that the other Party expressly denies any liability whatsoever, and the Parties have consented to the settlement signified by this Agreement to avoid the time and expense of further dispute between the Parties.

8. Certain Acknowledgments and Agreements . Each of the Parties hereby acknowledge and agree as follows:

a. Seller and Owner hereby acknowledge and agree that except as expressly set forth herein, the terms of the Purchase Agreement remain in full force and effect and that nothing herein shall otherwise modify or waive Seller and Owner’s non-competition and non-solicitation covenants set forth in Section 6.06 of the Purchase Agreement.

b. No press release or other public announcement concerning this Agreement or the transactions contemplated hereby shall be made without advance approval thereof of the Parties, except as may be required by law, it being acknowledged and agreed that any reporting or disclosure obligations of Parent under the securities laws, shall not require any approval by Seller or Owner.

9. Complete Agreement . This Agreement shall constitute the entire agreement with respect to the Dispute and there are no other agreements, between the Parties with respect to the Dispute except as expressly set forth in this Agreement. Each Party acknowledges that in executing this Agreement that it has relied solely on its own judgment, belief and knowledge, and except for representations expressly set forth herein, it has not been influenced by any other representation or statement of the other Party.

10. Survival . All representations, warranties, covenants and agreements made in this Agreement shall survive the execution hereof and any investigation made by or on behalf of the other parties prior to or after such date.

11. Binding Effect . Except as may specifically be provided in this Agreement to the contrary, the terms and conditions contained in this Agreement shall inure to the benefit of, and be binding upon the Parties, their agents, legal representatives, successors, past and present agents, officers, directors, shareholders, employees, employers, partners, attorneys, insurers, and assigns.

12. Amendment . No modification or amendment of this Agreement shall be valid unless in writing and signed by the Parties.

13. Severability . In the event that any portion of this Agreement is held to be unenforceable, the unenforceable portion of the Agreement will be deleted and the rest of the Agreement will remain in full force and effect.

14. Governing Law . This Agreement shall be construed and interpreted in accordance with and governed by the internal laws of the State of Colorado.

15. Venue . Each Party hereby expressly agrees that any action to interpret, construe, or enforce this Agreement shall be brought in the District Court in and for the City and County of Denver, Colorado, and each Party hereby expressly waives any objections or defenses to such action based upon improper venue or lack of personal or subject matter jurisdiction.

16. Notices . All notices, demands, requests, consents and other communications provided for in this Agreement will be given in writing, or by any telecommunication device capable of creating a written record (including facsimile), and addressed to the Party to be notified as follows:


If to Seller or Owner:		621 Smoky Hills Lane Erie, CO 80516 Attention: Justin Pentelute Facsimile: E-mail: plexityllc@gmail.com

If to Buyer or Parent:		Real Goods Solar, Inc. 833 W. South Boulder Road Louisville, Colorado 80027-2452 Attention: Kam Mofid Telephone: (303) 222-8302 E-Mail: kam.mofid@realgoods.com

with a copy to:

Brownstein Hyatt Farber Schreck, LLP

410 Seventeenth Street, Suite 2200

Denver, Colorado 80202-4432

Attention: Kristin Macdonald

Email: kmacdonald@bhfs.com

17. Actions for Breach . Each Party shall have a right to bring an action to enforce any of the Agreement’s terms or provisions. Each Party further acknowledges that a breach or threatened breach of Sections 5, hereof would give rise to irreparable harm for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by a Party of any such obligations, the other Party shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

18. Headings Descriptive . The headings of the several sections of this Agreement are intended for convenience only and shall not in any way affect the meaning or construction of any of this Agreement.

19. No Party Deemed the Drafter . This Agreement is the result of negotiations between Parent and Buyer on the one hand and Seller and Owner on the other hand. This Agreement therefore shall not be construed against any particular Party because of the involvement of that Party or its counsel in its preparation.

20. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same Agreement as of the Effective Date. This Agreement may be executed via facsimile or other electronic transmission.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered as of the Effective Date.


Seller:

SYNDICATED SOLAR, INC.,
a Delaware corporation

By		/s/ Justin Pentelute
Name:		Justin Pentelute
Title:		Chief Executive Officer

SYNDICATED SOLAR, INC.,
a California corporation

By		/s/ Justin Pentelute
Name:		Justin Pentelute
Title:		President

Owner:

/s/ Justin Pentelute
Justin Pentelute

Buyer:

REAL GOODS SYNDICATED, INC.,
a Delaware corporation

By		/s/ Anthony DiPaolo
Name:		Anthony DiPaolo
Title:		Chief Financial Officer

Parent:

REAL GOODS SOLAR, INC.,
a Colorado corporation

By		/s/ Anthony DiPaolo
Name:		Anthony DiPaolo
Title:		Chief Financial Officer

Exhibit A

Outstanding AR Amount

Means the amounts listed below, payable per the original contract with customer, less the Ameren Rebate Amounts described below where they were to be floated by EPC/Developer.

Missouri Small Commercial Aging as of March 31, 2014


SFDC Project Name	Total Aged		31-60		61-90		91-120		120+		Per contract, Ameren rebate that is floated			Collected as of May 9, 2014			Collection Obligation
White Auto Body 6134		98,457.00		—		—		—		98,457.00					(27,648.49	)		70,808.51
White Auto Body 8300 (Main)		97,985.00		—		—		97,985.00		—					(27,648.49	)		70,336.51
White Auto Body 8306		97,985.00		—		—		—		97,985.00					(27,648.49	)		70,336.51
White Auto Body 6133		80,043.00		—		—		—		80,043.00					(27,648.49	)		52,394.51
White Auto Body Rear		32,150.00		—		—		32,150.00		—					(27,648.49	)		4,501.51
Scott Properties 1065 Executive		81,423.00		—		81,423.00		—		—		(49,500.00	)					31,923.00
Scott Properties 11500 Olive		81,418.00		—		81,418.00		—		—		(49,500.00	)					31,918.00
Scott Properties 777 New Ballas		81,417.00		—		81,417.00		—		—		(49,500.00	)					31,917.00
Hy-C Company C (Fire Chief Industries LLC)		73,250.00		—		73,250.00		—		—		(49,500.00	)					23,750.00
Hy-C Company C		73,250.00		—		73,250.00		—		—		(49,500.00	)					23,750.00

Total	$	797,378.00	$	—	$	390,758.00	$	130,135.00	$	276,485.00	$	(247,500.00	)	$	(138,242.45	)	$	411,635.55

Exhibit 10.2

JOINDER AND SIXTH LOAN MODIFICATION AGREEMENT

This Joinder and Sixth Loan Modification Agreement (this “ Loan Modification Agreement ”) is entered into as of June 6, 2014 (the “ Sixth Loan Modification Effective Date ”), by and among (i) SILICON VALLEY BANK , a California corporation with a loan production office located at 2400 Hanover Street, Palo Alto, California 94304 (“ Bank ”), (ii) REAL GOODS ENERGY TECH, INC. , a Colorado corporation (“ Real Goods Energy ”), REAL GOODS TRADING CORPORATION , a California corporation (“ Real Goods Trading ”), ALTERIS RENEWABLES, INC ., a Delaware corporation (“ Alteris ”) and REAL GOODS SYNDICATED, INC., a Delaware corporation (“ Syndicated ”, and together with Real Goods Energy, Real Goods Trading and Alteris, individually and collectively, jointly and severally, the “ Borrower ”), and (iii) MERCURY ENERGY, INC. , a Delaware corporation (“ Mercury ”), REAL GOODS SOLAR, INC. - MERCURY SOLAR , a New York corporation (“ Mercury Solar ”) ELEMENTAL ENERGY, LLC , a Hawaii limited liability company ( Elemental ”), and SUNETRIC MANAGEMENT LLC , a Delaware limited liability company (“ Sunetric ”, and together with Mercury, Mercury Solar and Elemental, individually and collectively, jointly and severally, the “ New 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 December 19, 2011, evidenced by, among other documents, a certain Loan and Security Agreement, dated as of December 19, 2011, as amended by a certain First Loan Modification Agreement, dated as of August 28, 2012, as further amended by a certain Second Loan Modification and Reinstatement Agreement, dated as of November 13, 2012 as further amended by a certain Third Loan Modification Agreement, dated as of March 27, 2013, as further amended by a certain Joinder and Fourth Loan Modification Agreement, dated as of September 26, 2013 and as further amended by a certain Fifth Loan Modification Agreement, dated as of November 5, 2013 (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 (i) the Collateral as described in the Loan Agreement, (ii) that certain Security Agreement, dated as of December 19, 2011, between the Secured Guarantor and Bank (as amended, the “ Security Agreement ”), and (ii) the “Intellectual Property Collateral”, as such term is defined in each certain IP Agreement (together with any other collateral security granted to Bank, the “ Security Documents ”).

Hereinafter, the Loan Agreement, together with all other documents executed in connection therewith evidencing, securing or otherwise relating to the Obligations shall be referred to as the “ Existing Loan Documents ”.

3. JOINDER AND ASSUMPTION . New Borrower has been purchased by or through Secured Guarantor or a direct or indirect Subsidiary of Secured Guarantor, and each is a direct or indirect Subsidiary of Secured Guarantor. New Borrower hereby joins the Loan Agreement and each of the other appropriate Existing Loan Documents, and agrees to comply with and be bound by all of the terms, conditions and covenants of the Loan Agreement and each of the other appropriate Existing Loan Documents, as if New Borrower were originally named a “Borrower” and/or a “Debtor” therein. Without limiting the generality of the preceding sentence, New Borrower hereby assumes and agrees to pay and perform when due all present and future indebtedness, liabilities and obligations of Borrower under the Loan Agreement, including, without limitation, the Obligations. From and after the date hereof, all references in the Existing Loan Documents to “Borrower” and/or “Debtor” shall be deemed to refer to and include New Borrower. Further, all present and future Obligations of Borrower shall be deemed to refer to all present and future Obligations of New Borrower. New Borrower acknowledges that the Obligations are due and owing to Bank from Borrower including, without limitation, New Borrower, without any defense, offset or counterclaim of any kind or nature whatsoever as of the date hereof.

4. GRANT OF SECURITY INTEREST . To secure the payment and performance of all of the Obligations, New Borrower hereby grants to Bank a continuing lien upon and security interest in all of New Borrower’s now existing or hereafter arising rights and interest in the Collateral, whether now owned or existing or hereafter created, acquired, or arising, and wherever located, including, without limitation, all of New Borrower’s assets listed on Exhibit A to the Loan Agreement and all of New Borrower’s books and records relating to the foregoing and any

and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing. New Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that may have superior priority to Bank’s Lien under the Loan Agreement). If New Borrower shall acquire a commercial tort claim, such New Borrower shall promptly notify Bank in a writing signed by such New Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank. New Borrower further covenants and agrees that by its execution hereof it shall provide all such information, complete all such forms, and take all such actions, and enter into all such agreements, in form and substance reasonably satisfactory to Bank that are reasonably deemed necessary by Bank in order to grant and continue a valid, first perfected security interest to Bank in the Collateral. New Borrower hereby authorizes Bank to file financing statements, without notice to any Borrower, with all appropriate jurisdictions in order to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral, by either any Borrower or any other Person, may be deemed to violate the rights of Bank under the Code. Such financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in Bank’s discretion.

5. SUBROGATION AND SIMILAR RIGHTS . Borrower (in each case including, without limitation, New Borrower) waives any suretyship defenses available to it under the Code or any other applicable law. Borrower waives any right to require Bank to: (i) proceed against any other Borrower or any other Person; (ii) proceed against or exhaust any security; or (iii) pursue any other remedy. Bank may exercise or not exercise any right or remedy it has against any Borrower or any security it holds (including the right to foreclose by judicial or non-judicial sale) without affecting any Borrower’s liability. Notwithstanding any other provision of this Loan Modification Agreement, the Loan Agreement, or any other Loan Documents, Borrower irrevocably waives all rights that it may have at law or in equity (including, without limitation, any law subrogating such Borrower to the rights of Bank under the Loan Agreement), to seek contribution, indemnification or any other form of reimbursement from any other Borrower or any other Person now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by any Borrower with respect to the Obligations in connection with the Loan Agreement or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result of any payment made by any Borrower with respect to the Obligations in connection with the Loan Agreement or otherwise. Any agreement providing for indemnification, reimbursement or any other arrangement prohibited under this section shall be null and void. If any payment is made to any Borrower in contravention of this section, such Borrower shall hold such payment in trust for Bank and such payment shall be promptly delivered to Bank for application to the Obligations, whether matured or unmatured. Any Borrower may, acting singly, request Credit Extensions under the Loan Agreement. Each Borrower hereby appoints the other as agent for the other for all purposes under the Loan Agreement, including with respect to requesting Credit Extensions thereunder. Each Borrower shall be jointly and severally obligated to repay all Credit Extensions made under the Loan Agreement or any other Loan Documents, regardless of which Borrower actually received said Credit Extension, as if each Borrower directly received all Credit Extensions.

6. REPRESENTATIONS AND WARRANTIES . Except as described in the revised Perfection Certificate delivered in connection herewith, Borrower hereby represents and warrants to Bank that all representations and warranties in the Loan Documents made on the part of any Borrower are true and correct on the date hereof with respect to New Borrower, with the same force and effect as if New Borrower were originally named as “Borrower” in the Loan Documents. In addition, Borrower and New Borrower hereby represent and warrant to Bank that this Loan Modification Agreement has been duly executed and delivered by Borrower and New Borrower, and constitutes their legal, valid and binding obligation, enforceable against each in accordance with its terms. Hereafter, each reference to “Borrower” and/or “Debtor”) in any Loan Document shall be deemed to reference both Borrower and New Borrower.

7. DESCRIPTION OF CHANGE IN TERMS .

Modifications to Loan Agreement.

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

“(i) Advances . From the fourth Loan Modification Date through and including the earlier to occur of (x) the closing of the Mercury Acquisition and (y) January 31, 2014, subject to subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the greater of (i) the Prime Rate plus four percentage points (4.00%) and (ii) eight percent (8.00%); provided that during a Streamline Period, the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the greater of (i) the Prime Rate plus two percentage points (2.00%) and (y) six percent (6.00%), which interest shall in any event be payable monthly, in arrears, in accordance with Section 2.3(g) below

From and after the earlier to occur of (x) the closing of the Mercury Acquisition and (y) January 31, 2014, subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the greater of (i) the Prime Rate plus four percentage points (4.00%) and (ii) eight percent (8.00%); provided that during a Streamline Period, the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the greater of (i) the Prime Rate plus two percentage points (2.00%) and (ii) six percent (6.00%), which interest shall in any event be payable monthly, in arrears, in accordance with Section 2.3(g) below.”

and inserting in lieu thereof the following:

“(i) Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the greater of (i) the Prime Rate plus four percentage points (4.00%) and (ii) eight percent (8.00%); provided that during a Streamline Period, the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the greater of (i) the Prime Rate plus two percentage points (2.00%) and (ii) six percent (6.00%), which interest shall in any event be payable monthly, in arrears, in accordance with Section 2.3(g) below.”

The Loan Agreement shall be amended by deleting the following text appearing as Section 6.3(c) thereof:

“(c) Collection of Accounts . Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred and is continuing. Borrower shall cause all payments on, and proceeds of, Accounts (including, without limitation, Accounts of the Real Goods Borrowers) to be deposited directly by the applicable Account Debtor into a lockbox account, or such other “blocked account” as Bank may specify, pursuant to a blocked account agreement in form and substance satisfactory to Bank in its sole discretion. Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately deliver all payments on and proceeds of Accounts (including, without limitation, Accounts of the Real Goods Borrowers) to an account maintained with Bank to be applied (i) prior to an Event of Default, to the Revolving Line pursuant to the terms of Section 2.5(b) hereof, and (ii) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided , that during a Streamline Period, such payments and proceeds shall be transferred to an operating account of Borrower maintained at Bank.”

and inserting in lieu thereof the following:

“(c) Collection of Accounts . Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred and is continuing. Borrower shall cause all payments on, and proceeds of, Accounts (including, without limitation, Accounts of the Real Goods Borrowers) to be deposited directly by the applicable Account Debtor into a lockbox account, or such other “blocked account” as Bank may specify, pursuant to a blocked account agreement in form and substance satisfactory to Bank in its sole discretion Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately deliver all payments on and proceeds of Accounts (including, without limitation, Accounts of the Real Goods Borrowers) to an account maintained with Bank to be applied (i) prior to an Event of Default, to the Revolving Line pursuant to the terms of Section 2.5(b) hereof, and (ii) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided , that during a Streamline Period, such payments and proceeds shall be transferred to an operating account of Borrower maintained at Bank. Notwithstanding anything herein to the contrary, the parties acknowledge that, until June 30, 2014, New Borrowers shall be permitted to maintain such New Borrower’s deposit accounts for the deposit of payments on, and proceeds of, Accounts of the New Borrowers notwithstanding the fact that the New Borrowers have not yet obtained Control Agreements for such deposit accounts.”

The Loan Agreement shall be amended by deleting the following text appearing as Section 6.8 thereof:

“ 6.8

Operating Accounts.

(b) Provide Bank five (5) days prior-written notice before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior-written consent of Bank. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such.”

and inserting in lieu thereof the following:

“ 6.8

Operating Accounts.

(a) Maintain its and its Subsidiaries’ (other than Finco or any Subsidiary of Finco, for which this Section 6.8(a) shall be inapplicable), primary depository accounts, operating accounts and securities accounts with Bank and Bank’s affiliates with all excess funds maintained at or invested through Bank or an affiliate of Bank; provided that , so long as each New Borrower complies with Section 6.8(b), each New Borrower shall be permitted to maintain cash in its existing deposit accounts.

(b) Provide Bank five (5) days prior-written notice before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s

Affiliates. For each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior-written consent of Bank. The provisions of the previous sentence shall not apply to (i) deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such, or (ii) anytime before June 30, 2014, deposit accounts of the New Borrowers.”

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

“ 6.9

Financial Covenants.

Maintain at all times, subject to periodic reporting as described below, on a consolidated basis with respect to Borrower, unless otherwise indicated:

(a) Liquidity Ratio . (I) from the Fourth Loan Modification Effective Date through and including the earlier of (x) the occurrence of the Mercury Acquisition and (y) January 31, 2014, maintain (A) the sum of (i) Qualified Cash plus (ii) Borrower’s Eligible Accounts divided by (B) the sum of (i) the total outstanding Obligations of Borrower owed to Bank plus (ii) the total outstanding Subordinated Debt of Borrower, expressed as a ratio, of at least 1.50:1.00; and (II) thereafter, maintain (A) the sum of (i) Qualified Cash plus (ii) Borrower’s Eligible Accounts divided by (B) the sum of (i) the total outstanding Obligations of Borrower owed to Bank plus (ii) the total outstanding Subordinated Debt of Borrower, expressed as a ratio, of at least 1.75:1.00.

(b) EBITDA . Achieve EBITDA (loss no worse than), measured quarterly, on a trailing six month basis (unless otherwise indicated below), of the following amounts for as of each period ending as of the date indicated below:


Quarterly Period Ending (measured on a trailing six month basis, unless otherwise indicated)		Minimum EBITDA (loss no worse than)

September 30, 2013 (measured on a trailing three month basis)	($	1,500,000	)

December 31, 2013	($	1,000,000	)

March 31, 2014	$	1,000,000

June 30, 2014	$	1,000,000

September 30, 2014	$	3,000,000

; provided , that nothing in the foregoing financial covenants shall be deemed to be an extension of the Revolving Line Maturity Date.”

and inserting in lieu thereof the following:

“ 6.9

Financial Covenants.

Maintain at all times, subject to periodic reporting as described below, on a consolidated basis with respect to Borrower, unless otherwise indicated:

(a) Liquidity Ratio . Maintain (A) the sum of (i) Qualified Cash plus (ii) Borrower’s Eligible Accounts divided by (B) the sum of (i) the total outstanding Obligations of Borrower owed to Bank plus (ii) the total outstanding Subordinated Debt of Borrower, expressed as a ratio, of at least 1.75:1.00.

(b) EBITDA . Achieve EBITDA (loss no worse than), measured quarterly, on a trailing six month basis (unless otherwise indicated below), on a consolidated basis with respect to Borrower EXCLUDING Elemental EBITDA, of the following amounts for as of each period ending as of the date indicated below:


Quarterly Period Ending (measured on a trailing six month basis, unless otherwise indicated)		Minimum EBITDA (loss no worse than)

June 30, 2014 (measured on a trailing three month basis)	($	6,000,000	)

September 30, 2014	($	8,000,000	)

December 31, 2014	($	4,000,000	)

; provided , that nothing in the foregoing financial covenants shall be deemed to be an extension of the Revolving Line Maturity Date.

(c) Elemental EBITDA . Achieve Elemental EBITDA (loss no worse than), measured quarterly, on a trailing three month basis, on a consolidated basis with respect to Elemental and Sunetric, of the following amounts for as of each period ending as of the date indicated below:


Quarterly Period Ending (measured on a trailing three month basis)	Minimum Elemental EBITDA (loss no worse than)

June 30, 2014	($	250,000	)

September 30, 2014, and each quarterly period ending thereafter	$	1.00

; provided , that nothing in the foregoing financial covenants shall be deemed to be an extension of the Revolving Line Maturity Date.”

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

“Real Goods Energy Tech, Inc.

833 West South Boulder Road

Louisville, CO 80027

Attention: Erik Zech

E-mail: erik.zech@realgoods.com ”

and inserting in lieu thereof the following:

“Real Goods Energy Tech, Inc.

833 West South Boulder Road

Louisville, CO 80027

Attention: Anthony M. Dipaolo

E-mail: Tony.Dipaolo@rgsenergy.com”

The Loan Agreement shall be amended by deleting the following clause (u) appearing in the definition of “Eligible Accounts” in Section 13.1 thereof:

“(u) Accounts owing from an Account Debtor with respect to which Borrower has received Deferred Revenue (but only to the extent of such Deferred Revenue); provided that, Accounts that are otherwise Eligible Accounts that contain Deferred Revenue related to milestone billings or percentage of completion based contracts shall not be excluded herefrom;”

and inserting in lieu thereof the following:

“(u) Accounts owing from an Account Debtor with respect to which Borrower has received Deferred Revenue (but only to the extent of such Deferred Revenue); provided that , Accounts that are otherwise Eligible Accounts that contain Deferred Revenue related to milestone billings, percentage of completion based contracts or prepaid maintenance shall not be excluded herefrom;”

The Loan Agreement shall be amended by deleting the following definitions from Section 13.1 thereof:

Net Income: (i) interest income; (ii) income tax credits (to the extent not netted from income tax expense); and (iii) all extraordinary gains and all other non-cash items of income for such period.

“ Guaranty ” is any present or future agreement pursuant to which any Guarantor agrees to guaranty the Obligations of Borrower to Bank, including without limitation, that certain Amended and Restated Unconditional Guaranty dated as of the Fourth Loan Modification Effective Date, by Secured Guarantor in favor of Bank.

“ IP Agreement ” is that certain Intellectual Property Security Agreement executed and delivered by Borrower to Bank dated as of the Fourth Loan Modification Effective Date.

“ Revolving Line Maturity Date ” is September 29, 2014.

“ Security Agreement ” is that certain Security Agreement date the date hereof by and between Secured Guarantor and Bank.

“ Streamline Period ” is, on and after the Fourth Loan Modification Effective Date, provided no Default or Event of Default has occurred and is continuing, the period (X) beginning on the first (1st) day in which Borrower has, for each consecutive day in two (2) consecutive monthly periods, maintained a Liquidity Ratio, as determined by Bank, in its sole discretion, in an amount at all times greater than or equal to (i) from the Fourth Loan Modification Effective Date through and including the earlier of (I) the occurrence of the Mercury Acquisition and (II) January 31, 2014, 1.75:1.00; and (ii) thereafter, 2.00:1.00 (the “ Streamline Threshold ”); and (ii) ending on the earlier to occur of (A) the occurrence of a Default or an Event of Default; and (B) the first day thereafter in which Borrower fails to maintain the Streamline Threshold, as determined by Bank, in its sole discretion. Upon the termination of a Streamline Period, Borrower must maintain the Streamline Threshold each consecutive day for two (2) consecutive monthly periods, as determined by Bank, in its sole discretion, prior to entering into a subsequent Streamline Period.

“ Term Loan Reserve ” is (a) during a Term Loan Reserve Period, the outstanding principal balance of the Term Loan; and (b) at all other times, Zero Dollars ($0.00).

and inserting in lieu thereof the following:

“ EBITDA ” shall mean, with respect to Borrower, on a consolidated basis, for any period of measurement, in each case determined in accordance with GAAP: (a) Net Income; plus (b) the following, in each case to the extent deducted from the calculation of Net Income: (i) Interest Expense; (ii) income tax expense; (iii) depreciation expense and amortization expense; (iv) non-cash stock compensation expense; (v) for the trailing three month period ending September 30, 2013, up to Two Hundred Fifty Thousand Dollars ($250,000) of one-time, non-recurring cash transaction expenses actually incurred in connection with the Syndicated Acquisition and/or the Mercury Acquisition; (vi) for the trailing six month period ending December 31, 2013, up to One Million Two Hundred Fifty Thousand Dollars ($1,250,000) of one-time, non-recurring cash transaction expenses actually incurred in connection with the Syndicated Acquisition and/or the Mercury Acquisition and (vii) for the trailing three month period ending June 30, 2014, up to Seven Hundred Fifty Thousand Dollars ($750,000) of one-time, non-recurring cash transaction expenses actually incurred subsequent to March 31, 2014 in connection with acquisitions which were closed prior to the date of the Sixth Loan Modification Effective Date; minus (c) the following, to the extent included in the calculation of Net Income: (i) interest income; (ii) income tax credits (to the extent not netted from income tax expense); and (iii) all extraordinary gains and all other non-cash items of income for such period.

“ Guaranty ” is any present or future agreement pursuant to which any Guarantor agrees to guaranty the Obligations of Borrower to Bank, including, without limitation, that certain Second Amended and Restated Unconditional Guaranty dated as of the Sixth Loan Modification Effective Date, by Secured Guarantor in favor of Bank.

“ IP Agreement ” is each of (i) that certain Intellectual Property Security Agreement executed and delivered by certain of the Borrower to Bank dated as of the Fourth Loan Modification Effective Date and (ii) that certain Intellectual Property Security Agreement executed and delivered by certain of the Borrower to Bank dated as of the Sixth Loan Modification Effective Date.

“ Revolving Line Maturity Date ” is January 31, 2015.

“ Security Agreement ” is any present or future agreement pursuant to which any Person agrees to grant Bank a lien on such Person’s assets as security for the repayment of the Obligations of Borrower owed to Bank, including, without limitation, that certain Second Amended and Restated Unconditional Guaranty dated as of the Sixth Loan Modification Effective Date, by Secured Guarantor in favor of Bank.

“ Streamline Period ” is, on and after the Sixth Loan Modification Effective Date, provided no Default or Event of Default has occurred and is continuing, the period (X) beginning on the first (1st) day in which Borrower has, for each consecutive day in two (2) consecutive monthly periods, maintained a Liquidity Ratio, as determined by Bank, in its sole discretion, in an amount at all times greater than or equal to 2.00:1.00 (the “ Streamline Threshold ”); and (ii) ending on the earlier to occur of (A) the occurrence of a Default or an Event of Default; and (B) the first day thereafter in which Borrower fails to maintain the Streamline Threshold, as determined by Bank, in its sole discretion. Upon the termination of a Streamline Period, Borrower must maintain the Streamline Threshold each consecutive day for two (2) consecutive monthly periods, as determined by Bank, in its sole discretion, prior to entering into a subsequent Streamline Period.

“ Term Loan Reserve ” is (i) commencing on the Sixth Loan Modification Effective Date through and including the occurrence of the Equity Event 2014, the outstanding principal balance of the Term Loan; and (ii) thereafter, (a) during a Term Loan Reserve Period, the outstanding principal balance of the Term Loan; and (b) at all other times, Zero Dollars ($0.00).

The Loan Agreement shall be amended by inserting the following new definitions in Section 13.1 thereof, each in its applicable alphabetical order:

“ Elemental ” is ELEMENTAL ENERGY, LLC , a Hawaii limited liability company.

“ Elemental EBITDA ” shall mean, with respect to Elemental and Sunetric only, on a consolidated basis, for any period of measurement, in each case determined in accordance with GAAP: (a) Net Income; plus (b) the following, in each case to the extent deducted from the calculation of Net Income: (i) Interest Expense; (ii) income tax expense; (iii) depreciation expense and amortization expense; (iv) non-cash stock compensation expense; minus (c) the following, to the extent included in the calculation of Net Income: (i) interest income; (ii) income tax credits (to the extent not netted from income tax expense); and (iii) all extraordinary gains and all other non-cash items of income for such period.

“ Equity Event 2014 ” is evidence satisfactory to Bank, in its reasonable discretion, that borrower has received net proceeds from the contribution by Secured Guarantor of proceeds from the sale of additional equity shares of Secured Guarantor, of at least Ten Million Dollars ($10,000,000).

“ Sixth Loan Modification Effective Date ” is June 6, 2014.

“ Sunetric ” is SUNETRIC MANAGEMENT LLC , a Delaware limited liability company.

The Compliance Certificate attached as Exhibit B to the Loan Agreement is hereby deleted in its entirety and is replaced with Exhibit A attached hereto.

8. 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 ”):

Bank shall have received copies, certified by a duly authorized officer of each Borrower (including, without limitation, New Borrower), to be true and complete as of the date hereof, of each of (i) the governing documents of each Borrower (including, without limitation, New Borrower) as in effect on the date hereof, (ii) the resolutions of each Borrower (including, without limitation, New Borrower) authorizing the execution and delivery of this Loan Modification Agreement, the other documents executed in connection herewith and each Borrower’s performance of all of the transactions contemplated hereby, and (iii) an incumbency certificate giving the name and bearing a specimen signature of each individual who shall be so authorized on behalf of each Borrower (including, without limitation, New Borrower);

executed copies of the Joinder and Sixth Loan Modification Agreement, the IP Security Agreement of New Borrower (together with such Intellectual Property search results as Bank shall require), the Guaranty, the Security Agreement and the Warrant;

a good standing certificate of each Borrower (including, without limitation, New Borrower), certified by the Secretary of State of the state of incorporation of each respective Borrower (including, without limitation, New Borrower), together with a certificate of foreign qualification from the Secretary of State (or comparable governmental entity) of each state in which each Borrower (including, without limitation, New Borrower) is qualified to transact business as a foreign entity, if any, in each case dated as of a date no earlier than thirty (30) days prior to the date hereof;

certified copies, dated as of a recent date, of financing statement and other lien searches of each Borrower (including, without limitation, New Borrower), as Bank may request and which shall be obtained by Bank, accompanied by written evidence (including any UCC termination statements) that the Liens revealed in any such searched either (i) will be terminated prior to or in connection with the Loan Modification Agreement, or (ii) in the sole discretion of Bank, will constitute Permitted Liens;

a filed copy, which shall be filed by Bank, acknowledged by the appropriate filing office in the State of Delaware, of a UCC Financing Statement, naming New Borrower as “Debtor” and Bank as “Secured Party”;

a completed Perfection Certificate executed by each New Borrower, together with the duly executed original signatures thereto;

updated evidence of insurance; and

such other documents as Bank may reasonably request.

9. CONDITION SUBSEQUENT . Borrower hereby agrees to deliver to the Bank within thirty (30) days after the execution of this Loan Modification Agreement, each in form and substance satisfactory to the Bank, Control Agreements from each of (i) Bank of Hawaii, with respect to Elemental and/or Sunetric; and (ii) CitiBank, with respect to Mercury Solar (but only to the extent each such account is NOT an account used exclusively for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees).

10. FEES . Borrower shall pay to Bank (i) a fully earned modification fee equal to Sixty Thousand Dollars ($60,000) and (ii) a fully earned pro-rated extension fee equal to Twenty Thousand Dollars ($20,000), which fees

shall be due on the earliest to occur of (a) September 30, 2014, (b) the occurrence of the Equity Event 2014, or (c) the termination of the Loan Agreement. Borrower shall also reimburse Bank for all legal fees and expenses incurred in connection with the Existing Loan Documents and this Loan Modification Agreement.

11. FINAL PAYMENT FEE . In addition to the fees and expenses described above, on the earlier to occur of (i) repayment in full of the Term Loan; (ii) January 31, 2015 or (iii) the termination of the Loan Agreement, when Bank has been repaid in full and Bank has no further commitment to make any Credit Extensions to Borrower, Borrower shall pay to Bank a final payment fee equal to One Hundred Fifty Thousand Dollars ($150,000) (the “ Final Payment Fee ”), which final payment fee shall be fully earned and non-refundable when paid. Such Final Payment Fee is in lieu of and replaces any other “final payment fee” described in any prior loan modification agreement or in any other Loan Document.

12. ADDITIONAL COVENANTS: RATIFICATION OF PERFECTION CERTIFICATE . Borrower hereby certifies that, other than as disclosed in the Perfection Certificate, no Collateral with a value greater than Ten Thousand Dollars ($10,000) in the aggregate 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 with a value in excess of Ten Thousand Dollars ($10,000) in the aggregate 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. Except as supplemented through the Sixth Loan Modification Effective Date and with respect to the Perfection Certificate of New Borrower, dated as of the Sixth Loan Modification Effective Date, Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate, dated as of December 19, 2011, as supplemented through the Sixth Loan Modification Effective Date, and acknowledges, confirms and agrees the disclosures and information above Borrower provided to Bank in such Perfection Certificate remains true and correct in all material respects as of the date hereof.

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

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

15. 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.

16. 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 modify the Existing Loan Documents 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.

17. JURISDICTION/VENUE . Section 11 of the Loan Agreement is hereby incorporated by reference.

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

[Signature page follows.]

This Loan Modification Agreement is executed as of the date first written above.


REAL GOODS ENERGY TECH, INC.		REAL GOODS SYNDICATED, INC.

By:	/s/ Anthony DiPaolo	By:	/s/ Anthony DiPaolo
Name:	Anthony M. Dipaolo	Name:	Anthony M. Dipaolo
Title:	Chief Financial Officer	Title:	Chief Financial Officer

REAL GOODS ENERGY TRADING CORPORATION		ALTERIS RENEWABLES, INC.

By:	/s/ Anthony DiPaolo	By:	/s/ Anthony DiPaolo
Name:	Anthony M. Dipaolo	Name:	Anthony M. Dipaolo
Title:	Chief Financial Officer	Title:	Chief Financial Officer

MERCURY ENERGY, INC.		ELEMENTAL ENERGY, LLC

By:	/s/ Anthony DiPaolo	By:	/s/ Anthony DiPaolo
Name:	Anthony M. Dipaolo	Name:	Anthony M. Dipaolo
Title:	Chief Financial Officer	Title:	Chief Financial Officer

REAL GOODS SOLAR, INC. - MERCURY SOLAR		SUNETRIC MANAGEMENT LLC

By:	/s/ Anthony DiPaolo	By:	/s/ Anthony DiPaolo
Name:	Anthony M. Dipaolo	Name:	Anthony M. Dipaolo
Title:	Chief Financial Officer	Title:	Chief Financial Officer

BANK:


SILICON VALLEY BANK

By		/s/ Elisa Sun
Name:		Elisa Sun
Title:		Vice President

Exhibit A to Sixth Loan Modification Agreement

EXHIBIT B

COMPLIANCE CERTIFICATE


TO:	SILICON VALLEY BANK	Date:
FROM:	REAL GOODS ENERGY TECH, INC. ET. AL.

The undersigned authorized officer of REAL GOODS ENERGY TECH, INC., et al. (the “ Borrower ”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (as amended, 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 certifies 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 acknowledges 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
10-Q, 10-K and 8-K	Within 5 days after filing with SEC	Yes No
Annual Audited Financial Statements	FYE within 120 days
A/R & A/P Agings	Monthly within 20 days	Yes No
Transaction Reports	Weekly and with each request for a Credit Extension (Monthly within 20 days during a Streamline Period)	Yes No
Projections	Within 20 days of board approval (no later than 60 days after FYE)	Yes No
Deferred Revenue Report, Schedule of Assets with respect to 3 ^rd party construction and financing arrangements (including performance bonds and bank statements For non-SVB bank accounts)	Monthly within 30 days	Yes No
Electronic viewing access to Wells Fargo Account	Ongoing	Yes No

The following Intellectual Property was registered after the Effective Date (if no registrations, state “None”)


Financial Covenants	Required		Actual		Complies/Streamline

Maintain at all times (unless otherwise indicated), measured as indicated below:
Liquidity Ratio (monthly)		1.75:1.00		:1.00	Yes No
EBITDA (measured quarterly) – net of Elemental EBITDA		*	$		Yes No
Elemental EBITDA (measured quarterly)		**	$		Yes No
Streamline Period (Liquidity Ratio)		2.00:1.00		:1.00	Yes No

*	See Section 6.9(b) of the Loan and Security Agreement

**	See Section 6.9(c) of the Loan and Security Agreement

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.”)


REAL GOODS ENERGY TECH, INC., et al.

By:
Name:
Title:


BANK USE ONLY

Received by:
		AUTHORIZED SIGNER



Date:



Verified:
		AUTHORIZED SIGNER



Date:



Compliance Status:	Yes	No

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

Dated:

I.	Liquidity Ratio (Section 6.9(a))

Required: Maintain (A) the sum of (i) Qualified Cash plus (ii) Borrower’s Eligible Accounts divided by (B) the sum of (i) the total outstanding Obligations of Borrower owed to Bank plus (ii) the total outstanding Subordinated Debt of Borrower, expressed as a ratio, of at least 1.75:1.00.

Actual:



A.	Qualified Cash	$

B.	Eligible Accounts	$

C.	Total Outstanding Obligations of Borrower owed to Bank	$

D.	Total outstanding Subordinated Debt	$

E.	Liquidity Ratio ( (i) the sum of line A plus line B divided by (ii) the sum of line C plus line D, expressed as a ratio)	:1.00

Is line E equal to or greater than 1.75:1:00?


No, not in compliance		Yes, in compliance

Is line E equal to or greater than 2.00:1:00?


No, Streamline Period NOT in Effect		Yes, Streamline Period in Effect

II.	EBITDA. (Section 6.9(b).

Required: Achieve EBITDA (loss no worse than), measured quarterly, on a trailing six month basis (unless otherwise indicated below), on a consolidated basis with respect to Borrower EXCLUDING Elemental EBITDA, of the following amounts for as of each period ending as of the date indicated below:


Quarterly Period Ending (measured on a trailing six month basis, unless otherwise indicated)	Minimum EBITDA (loss no worse than)

June 30, 2014 (measured on a trailing three month basis)	($	6,000,000	)

September 30, 2014	($	8,000,000	)

December 31, 2014	($	4,000,000	)

; provided , that nothing in the foregoing financial covenants shall be deemed to be an extension of the Revolving Line Maturity Date.

Actual: All amounts measured as indicated above and determined on a consolidated basis (excluding Elemental and Sunetric) in accordance with GAAP:



A.	Net Income		$

B.	Plus the following, in each case to the extent deducted from the calculation of Net Income

	1.	Interest Expense	$

	2.	income tax expense	$

	3.	depreciation expense and amortization expense	$

	4.	non-cash stock compensation expense	$

	5.	for the trailing three month period ending September 30, 2013, up to Two Hundred Fifty Thousand Dollars ($250,000) of one-time, non-recurring cash transaction expenses actually incurred in connection with the Syndicated Acquisition and/or the Mercury Acquisition		N/A

	6.	for the trailing six month period ending December 31, 2013, up to One Million Two Hundred Fifty Thousand Dollars ($1,250,000) of one-time, non-recurring cash transaction expenses actually incurred in connection with the Syndicated Acquisition and/or the Mercury Acquisition		N/A

	7.	for the trailing three-month period ending June 30, 2014, up to Seven Hundred Fifty Thousand Dollars ($750,000) of one-time, non-recurring cash transaction expenses actually incurred subsequent to March 31, 2014 in connection with acquisitions which were closed prior to the date of the Sixth Loan Modification Effective Date	$

	8.	The sum of lines B.1 through B.7	$



C.	Minus the following, to the extent included in the calculation of Net Income

	1.	interest income	$

	2.	income tax credits (to the extent not netted from income tax expense)	$

	3.	all extraordinary gains and all other non-cash items of income for such period	$

	4.	The sum of lines C.1 through C.3	$

D.	EBITDA (line A plus line B.8 minus line C.4)		$

Is line D equal to or greater than (loss no worse than $[ ]?


No, not in compliance		Yes, in compliance

III.

Elemental EBITDA (Section 6.9(c))

Required: Achieve Elemental EBITDA (loss no worse than), measured quarterly, on a trailing three month basis, on a consolidated basis with respect to Elemental and Sunetric, of the following amounts for as of each period ending as of the date indicated below:


Quarterly Period Ending (measured on a trailing three month basis)	Minimum Elemental EBITDA (loss no worse than)

June 30, 2014	($	250,000	)

September 30, 2014, and each quarterly period ending thereafter	$	1.00

; provided , that nothing in the foregoing financial covenants shall be deemed to be an extension of the Revolving Line Maturity Date.

Actual: All amounts measured on a consolidated basis with respect to Elemental and Senetric only in accordance with GAAP:



A.	Net Income		$

B.	Plus the following, in each case to the extent deducted from the calculation of Net Income

	1.	Interest Expense	$

	2.	income tax expense	$

	3.	depreciation expense and amortization expense	$

	4.	non-cash stock compensation expense	$

	5.	The sum of lines B.1 through B.4	$

C.	Minus the following, to the extent included in the calculation of Net Income

	1.	interest income	$

	2.	income tax credits (to the extent not netted from income tax expense)	$

	3.	all extraordinary gains and all other non-cash items of income for such period	$

	4.	The sum of lines C.1 through C.3	$

D.	EBITDA (line A plus line B.5 minus line C.4)		$

Exhibit 10.3

INTELLECTUAL PROPERTY SECURITY AGREEMENT

This Intellectual Property Security Agreement (this “ Agreement ”) is entered into as of June 6, 2014 by and among SILICON VALLEY BANK (“ Bank ”) and MERCURY ENERGY, INC. , a Delaware corporation (“ Mercury ”), REAL GOODS SOLAR, INC. - MERCURY SOLAR , a New York corporation (“ Mercury Solar ”) and ELEMENTAL ENERGY, LLC , a Hawaii limited liability company ( Elemental ”) and SUNETRIC MANAGEMENT LLC , a Delaware limited liability company (“ Sunetric ”, and together with Mercury, Mercury Solar and Elemental, individually and collectively, jointly and severally, the “ Grantor ”).

RECITALS

A. Bank has agreed to continue to make certain advances of money and to extend certain financial accommodations to, among others, Grantor (the “ Loans ”) in the amounts and manner set forth in that certain Loan and Security Agreement, dated as of December 19, 2011, as amended by a certain First Loan Modification Agreement, dated as of August 28, 2012, as further amended by a certain Second Loan Modification and Reinstatement Agreement, dated as of November 13, 2012, as further amended by a certain Third Loan Modification Agreement, dated as of March 27, 2013, as further amended by a certain Joinder and Fourth Loan Modification Agreement, dated as of September 26, 2013, as further amended by a certain Fifth Loan Modification Agreement, dated as of November 5, 2013 and as further amended by a certain Joinder and Sixth Loan Modification Agreement, dated as of the date hereof (as the same may be further amended, modified or supplemented from time to time, the “ Loan Agreement ”; capitalized terms used herein are used as defined in the Loan Agreement). Bank is willing to make the Loans to Grantor, but only upon the condition, among others, that Grantor shall grant to Bank a security interest in certain Copyrights, Trademarks, Patents, and Mask Works (as each term is described below) to secure the obligations of Grantor under the Loan Agreement.

B. Pursuant to the terms of the Loan Agreement, Grantor has granted to Bank a security interest in all of Grantor’s right, title and interest, whether presently existing or hereafter acquired, in, to and under all of the Collateral.

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound, as collateral security for the prompt and complete payment when due of its obligations under the Loan Agreement, Grantor hereby represents, warrants, covenants and agrees as follows:

AGREEMENT

To secure its obligations under the Loan Agreement, Grantor grants and pledges to Bank a security interest in all of Grantor’s right, title and interest in, to and under its intellectual property (all of which shall collectively be called the “ Intellectual Property Collateral ”), including, without limitation, the following:

1. Any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held, including without limitation those set forth on Exhibit A attached hereto (collectively, the “ Copyrights ”);

2. Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or hereafter existing, created, acquired or held;

3. Any and all design rights that may be available to Grantor now or hereafter existing, created, acquired or held;

4. All patents, patent applications and like protections including, without limitation, improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same, including without limitation the patents and patent applications set forth on Exhibit B attached hereto (collectively, the “ Patents ”);

5. Any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Grantor connected with and symbolized by such trademarks, including without limitation those set forth on Exhibit C attached hereto (collectively, the “ Trademarks ”). Bank acknowledges that Mercury and Mercury Solar have advised Bank that they may stop maintaining those Trademarks that, as of the date of this Agreement, are set forth on Exhibit C . Mercury and Mercury Solar represent and warrant to Bank that such Trademarks are not material to the operation of such entity’s business;

6. All mask works or similar rights available for the protection of semiconductor chips, now owned or hereafter acquired, including, without limitation those set forth on Exhibit D attached hereto (collectively, the “ Mask Works ”);

7. Any and all claims for damages by way of past, present and future infringements of any of the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above;

8. All licenses or other rights to use any of the Copyrights, Patents, Trademarks, or Mask Works and all license fees and royalties arising from such use to the extent permitted by such license or rights;

9. All amendments, extensions, renewals and extensions of any of the Copyrights, Trademarks, Patents, or Mask Works; and

10. All proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing.

This security interest is granted in conjunction with the security interest granted to Bank under the Loan Agreement. The rights and remedies of Bank with respect to the security interest granted hereby are in addition to those set forth in the Loan Agreement and the other Loan Documents, and those which are now or hereafter available to Bank as a matter of law or equity. Each right, power and remedy of Bank provided for herein or in the Loan Agreement or any of the Loan Documents, or now or hereafter existing at law or in equity shall be cumulative and concurrent and shall be in addition to every right, power or remedy provided for herein and the exercise by Bank of any one or more of the rights, powers or remedies provided for in this Agreement, the Loan Agreement or any of the other Loan Documents, or now or hereafter existing at law or in equity, shall not preclude the simultaneous or later exercise by any person, including Bank, of any or all other rights, powers or remedies.

[Signature page follows.]

IN WITNESS WHEREOF, the parties have caused this Intellectual Property Security Agreement to be duly executed by its officers thereunto duly authorized as of the first date written above.


		GRANTOR:

Address of Grantor:

c/o Real Goods Energy Tech, Inc. 833 West South Boulder Road Louisville, CO 80027 Attention: Tony Dipaolo FAX: (303) 223-8375 E-mail: Tony.Dipaolo@rgsenergy.com

MERCURY ENERGY, INC.		ELEMENTAL ENERGY, LLC

By:	/s/ Anthony DiPaolo	By:	/s/ Anthony DiPaolo
Name:	Anthony M. Dipaolo	Name:	Anthony M. Dipaolo
Title:	Chief Financial Officer	Title:	Chief Financial Officer

REAL GOODS SOLAR, INC. – MERCURY SOLAR		SUNETRIC MANAGEMENT LLC

By:	/s/ Anthony DiPaolo	By:	/s/ Anthony DiPaolo
Name:	Anthony M. Dipaolo	Name:	Anthony M. Dipaolo
Title:	Chief Financial Officer	Title:	Chief Financial Officer

		BANK:

Address of Bank:		SILICON VALLEY BANK

Silicon Valley Bank		By:	/s/ Elisa Sun
2400 Hanover Street		Name:	Elisa Sun
Palo Alto, CA 94304		Title:	Vice President
Attn: Ms. Elisa Sun
Fax: (650) 856-7879
Email: esun@svb.com

EXHIBIT A

Copyrights

None

EXHIBIT B

Patents

None

EXHIBIT C

Trademarks


Description	Registration/ Application Number	Registration/ Application Date	Registrant	Liens Recorded in the U.S. Trademark Office
GET CLOSER TO THE SUN	3461927/ 77331503	7/8/08; 11/16/07	Mercury Solar Systems, Inc.
MERCURY SOLAR SYSTEMS AND Design	3634401/ 77575533	6/9/09; 9/22/08	Mercury Solar Systems, Inc.
MERCURY SOLAR SYSTEMS	3438873/ 77061603	6/3/08; 12/11/06	Mercury Solar Systems, Inc.

ELEMENTAL			Elemental Energy, LLC

SUNTECH			Elemental Energy, LLC

EXHIBIT D

Mask Works

None

Exhibit 10.4

SECOND AMENDED AND RESTATED UNCONDITIONAL GUARANTY

This continuing SECOND AMENDED AND RESTATED UNCONDITIONAL GUARANTY (“ Guaranty ”) is entered into as of June 6, 2014, by REAL GOODS SOLAR, INC. , a Colorado corporation with offices located at 833 West South Boulder Road, Louisville, Colorado 80027 (“ Guarantor ”), in favor of 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 555 Mission St., Suite 900, San Francisco, California 94105 (“ Bank ”). This Guaranty amends and restates in its entirety that certain Amended and Restated Unconditional Guaranty, executed by Guarantor in favor of Bank, dated as of September 26, 2013.

R ECITALS

A. Concurrently herewith, (i) Bank and (ii) REAL GOODS ENERGY TECH, INC. , a Colorado corporation (“ Real Goods Energy ”), REAL GOODS TRADING CORPORATION , a California corporation (“ Real Goods Trading ”), ALTERIS RENEWABLES, INC ., a Delaware corporation (“ Alteris ”), REAL GOODS SYNDICATED INC. , a Delaware corporation (“ Syndicated ”), MERCURY ENERGY, INC. , a Delaware corporation (“ Mercury ”), REAL GOODS SOLAR, INC. - MERCURY SOLAR , a New York corporation (“ Mercury Solar ”), ELEMENTAL ENERGY, LLC , a Hawaii limited liability company ( Elemental ”), and SUNETRIC MANAGEMENT LLC , a Delaware limited liability company (“ Sunetric ”, and together with Real Goods Energy, Real Goods Trading, Alteris, Syndicated, Mercury, Mercury Solar and Elemental, individually and collectively, jointly and severally, the “ Borrower ”), are entering into that certain Joinder and Sixth Loan Modification Agreement (the “S ixth Loan Modification ”), which modifies a certain Loan and Security Agreement, dated as of December 19, 2011, as amended by a certain First Loan Modification Agreement, dated as of August 28, 2012, as further amended by a certain Second Loan Modification and Reinstatement Agreement, dated as of November 13, 2012, as further amended by a certain Third Loan Modification Agreement, dated as of March 27, 2013, as further amended by a certain Joinder and Fourth Loan Modification Agreement, dated as of September 26, 2013 and as further amended by a certain Fifth Loan Modification Agreement, dated as of November 5, 2013 in each case by and among (i) Bank and (ii) Borrower (as further amended by the Sixth Loan Modification and as the same may be further amended, restated, or otherwise modified from time to time, the “ Loan Agreement ”) pursuant to which Bank has agreed to make certain advances of money and to extend certain financial accommodations to Borrower (collectively, the “ Loans ”), subject to the terms and conditions set forth therein. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Loan Agreement.

B. In consideration of the agreement of Bank to continue to make the Loans to Borrower under the Loan Agreement, Guarantor is willing to guaranty the full payment and performance by Borrower of all of its obligations thereunder and under the other Loan Documents, all as further set forth herein.

C. Guarantor is the direct or indirect corporate parent of Borrower and will obtain substantial direct and indirect benefit from the Loans made by Bank to Borrower under the Loan Agreement.

N OW , T HEREFORE , to induce Bank to enter into the Loan Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, Guarantor hereby represents, warrants, covenants and agrees as follows:

Section 1. Guaranty.

1.1 Unconditional Guaranty of Payment. In consideration of the foregoing, Guarantor hereby irrevocably, absolutely and unconditionally guarantees to Bank the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of all Obligations. Guarantor agrees that it shall execute such other documents or agreements and take such action as Bank shall reasonably request to effect the purposes of this Guaranty.

1.2 Separate Obligations. These obligations are independent of Borrower’s obligations and separate actions may be brought against Guarantor (whether action is brought against Borrower or whether Borrower is joined in the action).

Section 2. Representations and Warranties.

Guarantor hereby represents and warrants that:

(a) Guarantor (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado; (ii) is duly qualified to do business and is in good standing in every jurisdiction where the nature of its business requires it to be so qualified (except where the failure to so qualify would not have a material adverse effect on Guarantor’s condition, financial or otherwise, or on Guarantor’s ability to pay or perform the obligations hereunder); and (iii) has all requisite power and authority to execute and deliver this Guaranty and each Loan Document executed and delivered by Guarantor pursuant to the Loan Agreement or this Guaranty and to perform its obligations thereunder and hereunder.

(b) The execution, delivery and performance by Guarantor of this Guaranty (i) are within Guarantor’s powers and have been duly authorized by all necessary action; (ii) do not contravene Guarantor’s charter documents or any law or any contractual restriction binding on or affecting Guarantor or by which Guarantor’s property may be affected; (iii) do not require any authorization or approval or other action by, or any notice to or filing with, any governmental authority or any other Person under any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Guarantor is a party or by which Guarantor or any of its property is bound, except such as have been obtained or made; and (iv) do not result in the imposition or creation of any Lien upon any property of Guarantor, other than the Lien created pursuant to that certain Security Agreement executed in connection herewith by Guarantor in favor of Bank.

(c) This Guaranty is a valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as the enforceability thereof may be subject to or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally.

(d) There is no action, suit or proceeding affecting Guarantor pending or threatened before any court, arbitrator, or governmental authority, domestic or foreign, which may have a material adverse effect on the ability of Guarantor to perform its obligations under this Guaranty.

(e) Guarantor’s obligations hereunder are not subject to any offset or defense against Bank or Borrower of any kind.

(f) The financial statements of Guarantor, copies of which have previously been furnished to Bank, fairly present the financial position and results of operations for Guarantor for the dates and periods purported to be covered thereby, all in accordance with GAAP, and there has been no material adverse change in the financial position or operations of Guarantor since the date of such financial statements.

(g) To ensure the legality, validity, enforceability or admissibility into evidence of this Guaranty in each of the jurisdictions in which Guarantor is incorporated or organized and any jurisdiction in which Guarantor conducts business, it is not necessary that (i) this Guaranty be filed or recorded with any court or other authority in such jurisdiction, (ii) any other filings, notices, authorizations, approvals be obtained or other actions taken, or (iii) any stamp or similar tax be paid on or with respect to this Guaranty, or, if any of the foregoing actions are necessary, they have been duly taken.

(h) Neither Guarantor nor its property has any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under applicable law.

(i) The incurrence of Guarantor’s obligations under this Guaranty will not cause Guarantor to (i) become insolvent; (ii) be left with unreasonably small capital for any business or transaction in which Guarantor is presently engaged or plans to be engaged; or (iii) be unable to pay its debts as such debts mature.

(j) Guarantor covenants, warrants, and represents to Bank that all representations and warranties contained in this Guaranty shall be true at the time of Guarantor’s execution of this Guaranty, and shall continue to be true so long as this Guaranty remains in effect. Guarantor expressly agrees that any misrepresentation or breach of any warranty whatsoever contained in this Guaranty shall be deemed material.

Section 3. General Waivers . Guarantor waives:

(a) Any right to require Bank to (i) proceed against Borrower or any other person; (ii) proceed against or exhaust any security or (iii) pursue any other remedy. Bank may exercise or not exercise any right or remedy it has against Borrower or any security it holds (including the right to foreclose by judicial or nonjudicial sale) without affecting Guarantor’s liability hereunder.

(b) Any defenses from disability or other defense of Borrower or from the cessation of Borrowers liabilities.

(d) Any defense from the absence, impairment or loss of any right of reimbursement or subrogation or any other rights against Borrower. Until Borrower’s obligations to Bank have been paid and the Borrower’s financing arrangements have been terminated, Guarantor has no right of subrogation or reimbursement or other rights against Borrower.

(e) Any right to enforce any remedy that Bank has against Borrower.

(f) Any rights to participate in any security held by Bank.

(g) Any demands for performance, notices of nonperformance or of new or additional indebtedness incurred by Borrower to Bank. Guarantor is responsible for being and keeping itself informed of Borrower’s financial condition.

(h) The benefit of any act or omission by Bank which directly or indirectly results in or aids the discharge of Borrower from any of the Obligations by operation of law or otherwise.

Section 4. Real Property Security Waiver . Guarantor acknowledges that, to the extent Guarantor has or may have rights of subrogation or reimbursement against Borrower for claims arising out of this Guaranty, those rights may be impaired or destroyed if Bank elects to proceed against any real property security of Borrower by non-judicial foreclosure. That impairment or destruction could, under certain judicial cases and based on equitable principles of estoppel, give rise to a defense by Guarantor against its obligations under this Guaranty. Guarantor waives that defense and any others arising from Bank’s election to pursue non-judicial foreclosure. Without limiting the generality of the foregoing, Guarantor waives the benefits, if any, of any statutory or common law rule that may permit a subordinating creditor to assert any defenses of a surety or guarantor, or that may give the subordinating creditor the right to require a senior creditor to marshal assets, and Guarantor agrees that it shall not assert any such defenses or rights.

Section 5. Reinstatement . Notwithstanding any provision of the Loan Agreement to the contrary, the liability of Guarantor hereunder shall be reinstated and revived and the rights of Bank shall continue if and to the extent that for any reason any payment by or on behalf of Guarantor or Borrower is rescinded or must be otherwise restored by Bank, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid. The determination as to whether any such payment must be rescinded or restored shall be made by Bank in its sole discretion; provided , however , that if Bank chooses to contest any such matter at the request of Guarantor, Guarantor agrees to indemnify and hold harmless Bank from all costs and expenses (including, without limitation, reasonable attorneys’ fees) of

such litigation. To the extent any payment is rescinded or restored, Guarantor’s obligations hereunder shall be revived in full force and effect without reduction or discharge for that payment.

Section 6. No Waiver; Amendments . No failure on the part of Bank to exercise, no delay in exercising and no course of dealing with respect to, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. This Guaranty may not be amended or modified except by written agreement between Guarantor and Bank, and no consent or waiver hereunder shall be valid unless in writing and signed by Bank.

Section 7. Compromise and Settlement . No compromise, settlement, release, renewal, extension, indulgence, change in, waiver or modification of any of the Obligations or the release or discharge of Borrower from the performance of any of the Obligations shall release or discharge Guarantor from this Guaranty or the performance of the obligations hereunder.

Section 8. Notice . Any notice or other communication herein required or permitted to be given shall be in writing and may be delivered in person or sent by facsimile transmission, overnight courier, or by United States mail, registered or certified, return receipt requested, postage prepaid and addressed as follows:


If to Guarantor:		Real Goods Solar, Inc.
		833 West South Boulder Road,
		Louisville, CO 80027
		Attention: Anthony M. Dipaolo
		Fax: (303) 223-8375
		E-mail: Tony.Dipaolo@realgoods.com

If to Bank:		Silicon Valley Bank
		2400 Hanover Street
		Palo Alto, CA 94304
		Attn: Ms. Elisa Sun
		Fax: (650) 856-7879
		Email: esun@svb.com

with a copy to:		Riemer & Braunstein LLP
		Three Center Plaza
		Boston, Massachusetts 02108
		Attn: Charles W. Stavros, Esquire
		Fax: (617) 880-3456
		Email: cstavros@riemerlaw.com

or at such other address as may be substituted by notice given as herein provided. Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered or sent by facsimile transmission or three (3) Business Days after the same shall have been deposited in the United States mail. If sent by overnight courier service, the date of delivery shall be deemed to be the next Business Day after deposited with such service.

Section 9. Entire Agreement . This Guaranty constitutes and contains the entire agreement of the parties and supersedes any and all prior and contemporaneous agreements, negotiations, correspondence, understandings and communications between Guarantor and Bank, whether written or oral, respecting the subject matter hereof.

Section 10. Severability . If any provision of this Guaranty is held to be unenforceable under applicable law for any reason, it shall be adjusted, if possible, rather than voided in order to achieve the intent of Guarantor and Bank to the extent possible. In any event, all other provisions of this Guaranty shall be deemed valid and enforceable to the full extent possible under applicable law.

Section 11. Subordination of Indebtedness . Any indebtedness or other obligation of Borrower now or hereafter held by or owing to Guarantor is hereby subordinated in time and right of payment to all obligations of Borrower to Bank, except as such indebtedness or other obligation is expressly permitted to be paid under the Loan Agreement; and such indebtedness of Borrower to Guarantor is assigned to Bank as security for this Guaranty, and if Bank so requests shall be collected, enforced and received by Guarantor in trust for Bank and to be paid over to Bank on account of the Obligations of Borrower to Bank, but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty. Any notes now or hereafter evidencing such indebtedness of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Bank.

Section 12. Payment of Expenses . Guarantor shall pay, promptly on demand, all Expenses incurred by Bank in defending and/or enforcing this Guaranty. For purposes hereof, “Expenses” shall mean costs and expenses (including reasonable fees and disbursements of any law firm or other external counsel and the allocated cost of internal legal services and all disbursements of internal counsel) for defending and/or enforcing this Guaranty (including those incurred in connection with appeals or proceedings by or against any Guarantor under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief).

Section 13. Assignment; Governing Law . This Guaranty shall be binding upon and inure to the benefit of Guarantor and Bank and their respective successors and assigns, except that Guarantor shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of Bank, which may be granted or withheld in Bank’s sole discretion. Any such purported assignment by Guarantor without Bank’s written consent shall be void. This Guaranty shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles thereof regarding conflict of laws.

Section 14. JURISDICTION. Guarantor hereby irrevocably agrees that any legal action or proceeding with respect to this Guaranty or any of the agreements, documents or instruments delivered in connection herewith may be brought in the STATE AND FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK AS BANK MAY ELECT (PROVIDED THAT GUARANTOR ACKNOWLEDGES THAT ANY APPEALS FROM

THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE STATE OF NEW YORK), and, by execution and delivery hereof, Guarantor accepts and consents to, generally and unconditionally, the jurisdiction of the aforesaid courts and agrees that such jurisdiction shall be exclusive, unless waived by Bank in writing, with respect to any action or proceeding brought by Guarantor against Bank. Nothing herein shall limit the right of Bank to bring proceedings against Guarantor in the courts of any other jurisdiction. Guarantor hereby waives, to the full extent permitted by law, any right to stay or to dismiss any action or proceeding brought before said courts on the basis of forum non conveniens.

Section 15. WAIVER OF JURY TRIAL . EACH OF BANK AND GUARANTOR HEREBY WAIVES, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND ANY RELATED INSTRUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.

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[Signature Page to Second Amended and Restated Unconditional Guaranty]

Exhibit 10.5

SECOND AMENDED AND RESTATED SECURITY AGREEMENT

This SECOND AMENDED AND RESTATED SECURITY AGREEMENT (this “ Security Agreement ”) is entered into as of June 6, 2014, by and between 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 2400 Hanover Street, Palo Alto, California 94304 (“ Bank ”) and REAL GOODS SOLAR, INC . , a Colorado corporation with offices located at 833 West South Boulder Road, Louisville, Colorado 80027 (“ Debtor ”). This Security Agreement amends and restates in its entirety a certain Amended and Restated Security Agreement, dated as of September 26, 2013, by and between Bank and Debtor.

RECITALS

Debtor has executed and delivered a certain Second Amended and Restated Unconditional Guaranty, guaranteeing the prompt repayment of obligations and liabilities of REAL GOODS ENERGY TECH, INC. , a Colorado corporation (“ Real Goods Energy ”), REAL GOODS TRADING CORPORATION , a California corporation (“ Real Goods Trading ”), ALTERIS RENEWABLES, INC ., a Delaware corporation (“ Alteris ”), REAL GOODS SYNDICATED INC. , a Delaware corporation (“ Syndicated ”), MERCURY ENERGY, INC. , a Delaware corporation (“ Mercury ”), REAL GOODS SOLAR, INC. - MERCURY SOLAR , a New York corporation (“ Mercury Solar ”), ELEMENTAL ENERGY, LLC , a Hawaii limited liability company ( Elemental ”), and SUNETRIC MANAGEMENT LLC , a Delaware limited liability company (“ Sunetric ”, and together with Real Goods Energy, Real Goods Trading, Alteris, Syndicated, Mercury, Mercury Solar and Elemental, individually and collectively, jointly and severally, the “ Borrower ”), to the Bank, dated as of the date hereof (as may be amended, restated or otherwise modified from time to time, the “ Guaranty ”). Bank has agreed to continue to lend money to Borrower, pursuant to that certain Joinder and Sixth Loan Modification Agreement (the “ Sixth Loan Modification ”), which modifies a certain Loan and Security Agreement, dated as of December 19, 2011, as amended by a certain First Loan Modification Agreement, dated as of August 28, 2012, as further amended by a certain Second Loan Modification and Reinstatement Agreement, dated as of November 13, 2012, as further amended by a certain Third Loan Modification Agreement, dated as of March 27, 2013, as further amended by a certain Joinder and Fourth Loan Modification Agreement, dated as of September 26, 2013 and as further amended by a certain Fifth Loan Modification Agreement, dated as of November 5, 2013 in each case by and among (i) Bank and (ii) Borrower (as further amended by the Sixth Loan Modification and as the same may be further amended, restated, or otherwise modified from time to time, the “ Loan Agreement ”) but only upon the condition that Debtor execute and deliver this Security Agreement to secure the payment and performance of the obligations and liabilities of Debtor under the Guaranty (the “ Liabilities ”) in accordance with the terms of this Security Agreement.

AGREEMENT

The parties agree as follows:

1. CREATION OF SECURITY INTEREST

1.1 Grant of Security Interest . Debtor hereby grants to Bank, to secure the payment and performance in full of the Liabilities, a continuing security interest in, and pledges to Bank, the property described in Exhibit A attached hereto (the “ Collateral ”), wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof. Debtor represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral, except as otherwise permitted in Section 7.1 of the Loan Agreement and the definition of “Permitted Liens” therein.

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Liabilities are terminated and repaid in full in cash (other than inchoate indemnity obligations). Upon payment in full in cash of the Liabilities (other than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit Extensions has terminated, the Bank’s Liens shall automatically be released and all rights therein shall revert to Debtor, and Bank shall, at Debtor’s sole cost and expense, and Bank shall permit the filing of UCC termination statements and all other Lien release agreements reasonably requested by Debtor, in each case at the sole cost and expense of Debtor.

1.2 Financing Statements . This Agreement constitutes an authenticated record which authorizes Bank to file such financing statements as Bank determines appropriate. Such financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in Bank’s discretion. Without limiting the generality of the foregoing, Debtor hereby expressly authorizes Bank to file financing statements without notice to Debtor, with all appropriate jurisdictions, as Bank in its sole discretion deems appropriate from time to time, in order to perfect, protect, or vest more securely Bank’s security interest in the Collateral.

1.3 Delivery of Additional Documentation Required . Debtor shall from time to time execute and deliver to Bank, at the request of Bank, all financing statements and other documents that Bank may reasonably request, in form and substance reasonably satisfactory to Bank, to perfect and continue Bank’s security interest in the Collateral.

2. REPRESENTATIONS AND WARRANTIES.

2.1 Debtor hereby makes the representations and warranties set forth in Section 5 of the Loan Agreement (which representations and warranties are incorporated by reference herein) with references to “Borrower” therein being deemed references to “Debtor.”

3. EVENTS OF DEFAULT

The following shall constitute an event of default by Debtor under this Agreement (an “ Event of Default ”):

3.1 Guaranty; Loan Documents . If an Event of Default (as defined therein) occurs under the Loan Agreement, the Guaranty or any of the other Loan Documents.

4. BANK’S RIGHTS AND REMEDIES

4.1 Rights and Remedies . Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Debtor:

(a) declare all Liabilities immediately due and payable (but if an Event of Default described in Section 8.5 of the Loan Agreement occurs, all Liabilities are immediately due and payable without any action by Bank);

(b) stop advancing money or extending credit for Borrower’s benefit under the Loan Agreement or under any other agreement between Borrower and Bank;

(c) for any Letters of Credit, demand that Debtor (i) deposit cash with Bank in an amount equal to 105% (110% if such Letters of Credit are denominated in a currency other than Dollars) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit remaining undrawn 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, as collateral security for the repayment of any future drawings under such Letters of Credit, and Debtor 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; provided , however , if an Event of Default described in Section 8.5 of the Loan Agreement occurs, the obligation of Debtor to cash collateralize all Letters of Credit remaining undrawn shall automatically become effective without any action by Bank;

(d) settle or adjust disputes and claims directly with Account Debtors for amounts, on terms and in any order that Bank considers advisable and notify any Person owing Debtor money of Bank’s security interest in such funds and verify the amount of such account. Debtor shall collect all payments in trust for Bank and, if requested by Bank, immediately deliver the payments to Bank in the form received from the Account Debtor, with proper endorsements for deposit;

(e) make any payments and do any acts it considers necessary or reasonable to protect its security interest in the Collateral. Debtor shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Debtor grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies;

(f) apply to the Liabilities any (i) balances and deposits of Debtor it holds, or (ii) any amount held by Bank owing to or for the credit or the account of Debtor;

(g) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Debtor’s labels, patents, copyrights, mask works, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section 4.1, Debtor’s rights under all licenses and all franchise agreements inure to Bank’s benefit;

(h) place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any control agreement or similar agreements providing control of any Collateral;

(i) demand and receive possession of Debtor’s books and records including ledgers, federal and state tax returns, records regarding Debtor’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information (“ Debtor’s Books ”); and

(j) exercise all rights and remedies available to Bank under the Code, the Loan Documents or at law or equity, including all remedies provided under any applicable law (including disposal of the Collateral pursuant to the terms thereof).

4.2 Remedies Cumulative . Bank’s rights and remedies under this Agreement, the Guaranty, the Loan Documents, and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Debtor’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it.

4.3 Demand; Protest . Debtor waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Bank on which Debtor may in any way be liable.

5. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

The laws of the State of New York shall apply to this Security Agreement. DEBTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS SECURITY AGREEMENT. NOTWITHSTANDING THE FOREGOING, BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST DEBTOR OR ITS PROPERTY IN THE COURTS OR ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK’S RIGHT AGAINST DEBTOR OR ITS PROPERTY.

DEBTOR AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS SECURITY AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

6. GENERAL PROVISIONS

6.1 Successors and Assigns . This Security Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided , however , that neither this Security Agreement nor any rights hereunder may be assigned by Debtor without Bank’s prior written consent, which consent may be granted or withheld in Bank’s sole discretion. Bank shall have the right without the consent of or notice to Debtor to sell, transfer, negotiate, or grant participations in all or any part of, or any interest in Bank’s obligations, rights and benefits hereunder.

6.2 Indemnification . Debtor shall defend, indemnify and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Security Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank as a result of or in any way arising out of, following, or consequential to transactions between Bank and Debtor whether under this Security Agreement or otherwise (including without limitation reasonable attorneys’ fees and expenses), except for losses caused by Bank’s gross negligence or willful misconduct.

6.3 Right of Set-Off . Debtor hereby grants to Bank, a lien, security interest and right of setoff as security for all Liabilities 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 Bank 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 Debtor 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 LIABILITIES, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF DEBTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

6.4 Time of Essence . Time is of the essence for the performance of all obligations set forth in this Security Agreement.

6.5 Severability of Provisions . Each provision of this Security Agreement shall be severable from every other provision of this Security Agreement for the purpose of determining the legal enforceability of any specific provision.

6.6 Amendments in Writing, Integration . This Security Agreement cannot be changed or terminated orally. This Security Agreement and the other Loan Documents represent the entire agreement about his subject matter and supersede prior negotiations or agreements.

6.7 Counterparts . This Security Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Security Agreement.

6.8 Survival . All covenants, representations and warranties made in this Security Agreement shall continue in full force and effect so long as any liabilities and obligations under the Guaranty and this Security

Agreement remain outstanding. The obligations of Debtor to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in this Security Agreement shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run.

6.9 Amendment of Loan Documents . Debtor authorizes Bank, without notice or demand and without affecting its liability hereunder, from time to time to (a) renew, extend, or otherwise change the terms of the Loan Documents or any part thereof; (b) take and hold security for the payment of the Loan Documents, and exchange, enforce, waive and release any such security; and (c) apply such security and direct the order or manner of sale thereof as Bank in its sole discretion may determine.

6.10 Debtor Waivers . Debtor waives any right to require Bank to (a) proceed against Borrower, Debtor, any other guarantor or any other person; (b) proceed against or exhaust any security held from Borrower or Debtor; (c) marshal any assets of Borrower or Debtor; or (d) pursue any other remedy in Bank’s power whatsoever. Bank may, at its election, exercise or decline or fail to exercise any right or remedy it may have against Borrower or Debtor or any security held by Bank, including without limitation the right to foreclose upon any such security by judicial or nonjudicial sale, without affecting or impairing in any way the liability of Debtor hereunder. Debtor waives any defense arising by reason of any disability or other defense of Borrower or Debtor or by reason of the cessation from any cause whatsoever of the liability of Borrower or Debtor. Debtor waives any setoff, defense or counterclaim that Borrower or Debtor may have against Bank. Debtor waives any defense arising out of the absence, impairment or loss of any right of reimbursement or subrogation or any other rights against Borrower or Debtor. Debtor shall have no right of subrogation or reimbursement, contribution or other rights against Borrower, and, Debtor waives any right to enforce any remedy that Bank now has or may hereafter have against Borrower. Debtor waives all rights to participate in any security now or hereafter held by Bank. Debtor waives all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance of this Security Agreement and of the existence, creation, or incurring of new or additional indebtedness. Debtor assumes the responsibility for being and keeping itself informed of the financial condition of Borrower and of all other circumstances bearing upon the risk of nonpayment of any indebtedness or nonperformance of any obligation of Borrower, warrants to Bank that it will keep so informed, and agrees that absent a request for particular information by Debtor, Bank shall have no duty to advise Debtor of information known to Bank regarding such condition or any such circumstances.

6.11 Insolvency . If Borrower becomes insolvent or is adjudicated bankrupt or files a petition for reorganization, arrangement, composition or similar relief under any present or future provision of the United States Bankruptcy Code, or if such a petition is filed against Borrower, and in any such proceeding some or all of any indebtedness or obligations under the Loan Documents are terminated or rejected or any obligation of Borrower is modified or abrogated, or if Borrower’s obligations are otherwise avoided for insolvency, bankruptcy or any similar reason, Debtor agrees that Debtor’s liability hereunder shall not thereby be affected or modified and such liability shall continue in full force and effect as if no such action or proceeding had occurred. This Security Agreement shall continue to be effective or be reinstated, as the case may be, if any payment must be returned by Bank upon the insolvency, bankruptcy or reorganization of Borrower or Debtor, any other person, or otherwise, as though such payment had not been made.

7. DEFINITIONS . Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement, with references to “Borrower” therein being deemed references to “Debtor”, as applicable.

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IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be executed as of the date first above written.


(“ Debtor ”)

REAL GOODS SOLAR, INC.

By:		/s/ Anthony DiPaolo
Name:		Anthony M. Dipaolo
Title:		Chief Financial Officer

(“ Bank ”)

SILICON VALLEY BANK

By:		/s/ Elisa Sun
Name:		Elisa Sun
Title:		Vice President

[Signature Page to Second Amended and Restated Guarantor Security Agreement]

Exhibit A – Collateral

The Collateral consists of all of Debtor’s right, title and interest in and to the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles, commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and

all Debtor’s books and records relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

Exhibit 31.1

CERTIFICATION

I, Dennis Lacey, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Real Goods Solar, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 19, 2014

/s/ Dennis Lacey

Dennis Lacey

Chief Executive Officer

(principal executive officer)

Exhibit 31.2

CERTIFICATION

I, Anthony DiPaolo, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Real Goods Solar, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 19, 2014

/s/ Anthony DiPaolo

Anthony DiPaolo

Chief Financial Officer

(principal financial officer)

Exhibit 32.1

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Real Goods Solar, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2014, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Dennis Lacey, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)

The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 19, 2014

/s/ Dennis Lacey

Dennis Lacey

Chief Executive Officer

(principal executive officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Real Goods Solar, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2014, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony DiPaolo, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)

The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 19, 2014

/s/ Anthony DiPaolo

Anthony DiPaolo

Chief Financial Officer

(principal financial officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company