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Nevada
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333-144620
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20-2722022
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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800 Bering Drive, Suite 260, Houston, Texas
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77057
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(Address of Principal Executive Offices)
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(Zip Code)
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●
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Aggregators, Brokers, Consultants - often referred to as "ABC's" in the retail power industry;
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Affinity Programs - airline miles, credit card points, and participating gift cards;
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Multifamily Housing Programs - incentivizing property management companies based on referrals to their tenants;
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Referrals - reaching out to individuals connected to the community and providing incentives for sign ups; and
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Charitable Programs - enhancing referral programs and offering customers the chance to donate referral fees to local charitable organizations.
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In-house sales staff focused on small to medium sized commercial sales;
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Face-to-face marketing, including presentations, customer meetings, and business development through newly-formed relationships with consumers (a/k/a cold calling);
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Responding to website inquiries from commercial businesses;
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Identifying opportunities in underserved markets (e.g. South Texas and West Texas); and
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Community Involvement - establishing our brand throughout the community by giving back and volunteering our time and assistance.
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weather conditions;
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seasonality;
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demand for energy commodities and general economic conditions;
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forced or unscheduled plant outages;
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disruption of electricity or gas transmission or transportation infrastructure or other constraints or inefficiencies;
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addition of generating capacity;
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availability of competitively priced alternative energy sources;
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availability and levels of storage and inventory for fuel stocks;
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natural gas, crude oil and refined products, and coal production levels;
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the creditworthiness or bankruptcy or other financial distress of market participants;
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changes in market liquidity;
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natural disasters, wars, embargoes, acts of terrorism and other catastrophic events; and
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federal and state governmental regulation and legislation.
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Plan of Operations
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●
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Results of Operations
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Liquidity and Capital Resources
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Cash Outflow for Capital Assets, Customer Acquisition and Deposit
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Future Financing Needs
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Critical Accounting Policies
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Off-Balance Sheet Arrangements
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Inflation
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The current Texas regulatory structure permits REPs, such as Summer LLC, to procure and sell electricity at unregulated prices and pay local transmission and distribution systems a regulated tariff rate for delivering electricity to their customers. As an REP, we purchase electricity from suppliers at wholesale prices and resell the electricity to commercial and residential end-users in defined geographic areas within the State of Texas. We also provide billing, customer service, collections and remittance services to our residential and commercial customers. We offer our customers competitive electricity rates, flexible payment and pricing choices, simple offers with understandable terms, and responsive customer service.
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We intend to offer retail electricity to commercial and residential customers within designated target markets. The primary commercial target market will be small to medium-sized customers (less than one megawatt of peak usage). We will also selectively pursue larger commercial customers through existing relationships. Residential customers are a secondary target market. We intend to utilize third-party vendors for a majority of outside sales, while building an in-house sales team to both supplement and augment that effort. The broker/agent structure for compensation will be based on recurring commission system with limited one-time payments.
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We will utilize wholesale purchase agreements with wholesale energy suppliers for the procurement of wholesale energy. We will serve as our own qualified scheduling entity for open-market purchases and sales of electricity. Our forecasts for electricity load requirements will be based on our existing aggregate customer base and anticipated weather conditions, as well as forecasted customer acquisition and attrition. We plan to continuously monitor and update our supply positions based on retail demand forecasts and market conditions. Our general policy will be to maintain a balanced supply/demand position to limit commodity risk exposure. We plan to procure fixed-price supply to serve fixed-price load and purchase wholesale supply to approximate retail load forecasts on both a seasonal and daily/hourly basis. At this time, we will not maintain a financial book; rather, we will solely focus on our physical book. A "physical book" represents those commodity contracts needed to supply electricity to our customers. Sometimes, deregulated energy companies use a "financial book" (i.e., additional commodity contracts). The positions in a company's financial book are not used to deliver electricity but are used as a hedge against price fluctuations and other market conditions.
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●
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The Company may need to raise additional equity or debt financing to develop a sales and administrative infrastructure and fund ongoing operations until its operations generate positive cash flows. We cannot provide any assurance that we will be successful in raising additional capital to fully implement our business plan. Further, we cannot provide any assurance, assuming we raise additional funds, that we will achieve profitability or positive cash flow. If we are not able to timely and successfully raise additional capital and/or achieve profitability and positive cash flow, our operating business, financial condition, cash flows and results of operations may be materially and adversely affected.
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||||
Name and
Address of Beneficial Owner (1) |
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Office, If Any
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Title of Class
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Amount and Nature of
Beneficial Ownership (2) |
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Percent of class
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||||
Officers and Directors
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Roderick L. Danielson
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Director, President and Chief Executive Officer
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Common
|
|
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844,586
|
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8.0401
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%
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Jaleea P. George
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Director, Secretary, Treasurer, Chief Financial Officer
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Common
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575,000
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5.4737
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%
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Stuart C. Gaylor
(3)
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Director
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Common
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1,805,556
|
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17.1881
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%
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Andrew J. Priest
(5)
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Director
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Common
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222,222
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2.1155
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%
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Jeffery Mace Meeks
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Director
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Common
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0
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0.0
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%
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Michael D. Vanderhoof
(6)
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Director
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Common
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234,072
|
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2.2283
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%
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James P. Stapleton
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Director
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Common
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0
|
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0.0
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%
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All Executive Officers and Directors as a Group
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|
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3,681,432
|
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35.0455
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%
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Principal Stockholders
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GF Holdings, Ltd.
(3)
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-
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Common
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1,805,556
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17.1881
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%
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Tom M. Davis Family Lands Trust
(4)
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-
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Common
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1,296,481
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12.3419
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%
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Meryl L. Roberts
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-
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Common
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1,250,000
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11.8994
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%
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Paul M. Wyleczuk
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-
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Common
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850,000
|
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8.0916
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%
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James F. Rigell
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-
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Common
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578,766
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5.5096
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%
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(1)
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Unless otherwise indicated, the address of each person or entity is c/o Summer Energy Holdings, Inc., 800 Bering Drive, Suite 260, Houston, Texas 77057.
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(2)
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Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise noted, each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of our common stock.
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(3)
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Stuart Gaylor is the sole manager of GF Holdings GP, LLC, a Texas limited liability company, which is the sole general partner of GF Holdings, Ltd. Mr. Gaylor has voting and dispositive control over securities held by GF Holdings, Ltd. The address of GF Holdings, Ltd. is 7807 Main St., Houston, Texas 77030.
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(4)
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Tom M. Davis is the sole trustee of the Tom M. Davis Family Lands Trust. Mr. Davis has voting and dispositive control over securities held by Tom M. Davis Family Lands Trust.
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(5)
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Andrew Priest is the manager of AJP Management GP, LLC, a Texas limited liability company, which is the sole general partner of Priest Investments, Ltd., a Texas limited partnership. Mr. Priest has voting and dispositive control over securities held by Priest Investments, Ltd.
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(6)
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Includes 151,620 shares of which Mr. Vanderhoof is the record and beneficial owner, 19,483 shares owned of record by his spouse, and 37,969 shares and 25,000 presently exercisable common stock purchase warrants owned of record by Cambria Investment Fund, L.P. Mr. Vanderhoof is a manager of the general partner of Cambria Investment Fund, L.P. Mr. Vanderhoof has disclaimed beneficial ownership of the stocks and warrants held by Cambria Investment Fund, L.P., except to the extent he has a pecuniary interest therein resulting from his position as a principal of Cambria Investment Fund, L.P., and Mr. Vanderhoof has disclaimed beneficial ownership of the stock held by his spouse. The shares of common stock underlying the warrants are deemed to be outstanding shares for the purpose of computing the stockholder's percentage ownership.
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Name
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Age
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Position
|
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Roderick L. Danielson
|
|
53
|
|
Director, President and Chief Executive Officer
|
|
|
|
|
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Jaleea P. George
|
|
50
|
|
Director, Secretary, Treasurer, and Chief Financial Officer
|
|
|
|
|
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Andrew J. Priest
|
|
45
|
|
Director
|
|
|
|
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James P. Stapleton
|
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48
|
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Director
|
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|
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Jefferey Mace Meeks
|
|
46
|
|
Director
|
|
|
|
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Stuart C. Gaylor
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50
|
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Director
|
|
|
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Michael D. Vanderhoof
|
|
52
|
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Director
|
|
|
|
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●
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been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
|
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●
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had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
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●
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been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
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●
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been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
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●
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been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
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|
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●
|
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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||||||||||
Name and
Principal Position |
|
Fiscal
Year |
|
Salary
($) |
|
Bonus ($)
|
|
Stock
Awards ($) |
|
Option
Awards ($) |
|
Non-Equity
Incentive Plan Compensation ($) |
|
Nonqualified
Deferred Compensation Earnings ($) |
|
All Other
Compensation ($) |
|
Total ($)
|
|||||||||
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|
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|
|
|
|
|
|
Rod L.Danielson, President and Chief Executive Officer
(1)(2)
|
|
2011
|
|
$
|
24,000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
24,000
|
|
|
2010
|
|
$
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
Jaleea P. George, Secretary, Treasurer, Chief Financial Officer
(1)(2)
|
|
2011
|
|
$
|
16,923
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
16,923
|
|
|
2010
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
||
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|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Jason T. Haislip
(3)
|
|
2011
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
2010
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
||
|
|
|
|
(1)
|
These individuals became executive officers of the Company effective March 27, 2012.
|
|
|
|
|
(2)
|
These individuals were paid by Summer LLC in their capacity as managing members thereof.
|
|
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|
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(3)
|
Jason Haislip served as secretary of the Company from its inception in March 2005 through January 10, 2008, as treasurer from inception in March 2005 through the present and as president from January 10, 2008 to March 27, 2012. As of March 27, 2012, Mr. Haislip no longer is an executive officer of the Company.
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●
|
the transaction is approved by the board of directors or a majority of the voting power held by disinterested stockholders; or
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●
|
if the consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of common stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever is higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher.
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●
|
Administration.
The board has general administrative authority for the 2012 Plan and may delegate such authority to a committee of two or more members of the board (the board or such committee, the "Administrator"). The board has broad authority under the 2012 Plan including the authority to select Participants (as defined below) and determine awards, establish the terms and conditions of awards, and make certain adjustments to awards.
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●
|
Eligibility.
All employees, members of the board (whether or not employed by the Company or an affiliated company) and service providers are eligible to receive awards under the 2012 Plan. Award recipients are referred to as a "Participants."
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●
|
Types of Awards.
The Administrator may grant stock options, restricted stock or stock appreciation rights to eligible Participants under the 2012 Plan.
|
|
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|
|
●
|
Performance-Based Compensation.
The 2012 Plan is structured to permit awards that satisfy the performance-based compensation requirements of Section 162(m) of the Code so as to enhance deductibility of compensation provided under the 2012 Plan.
|
|
|
|
Exhibit No.
|
|
Description
|
2.1
|
|
Agreement and Plan of Contribution, by and among Castwell Precast Corporation, Summer Energy, LLC and the members of Summer Energy, LLC.
(1)
|
|
|
|
3.1
|
|
Certificate of Amendment to Articles of Incorporation filed with the Nevada Secretary of State effective March 27, 2012 (Articles of Incorporation of the Company are incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form SB-2 filed on July 16, 2007).
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|
3.2
|
|
Amended and Restated Bylaws of the Company.
|
|
|
|
10.1
|
|
Form of Master Power Purchase and Sale Agreement dated as of August 9, 2011 by and between Summer Energy, LLC and BP Energy Company.
|
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|
10.2
|
|
Advisory Agreement by and between Summer Energy, LLC and Cambria Capital, LLC dated November 1, 2011.
|
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10.3
|
|
Warrant to Purchase Units of Membership Interest dated January 17, 2012.
|
|
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|
10.4
|
|
Form of Agreement to Assist with Credit Facility dated November 30, 2011.
|
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|
10.5
|
|
Agreement to Assist with Credit Facility - Rod Danielson, dated December 16, 2011.
|
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|
10.6
|
|
2012 Stock Option and Stock Award Plan.
|
|
|
|
10.7
|
|
Form of Lock Up Agreement.
|
|
|
|
21.1
|
|
Schedule of Subsidiaries.
|
|
|
|
99.1
|
|
Audited balance sheet as of December 31, 2011 and statements of operations, members' equity and cash flow for the period of April 6, 2011 (inception) through December 31, 2011 of Summer Energy, LLC.
|
|
|
|
99.2
|
|
Pro forma balance sheet as of December 31, 2011 and pro forma Statement of Operations for the period ended December 31, 2011 to reflect the acquisition of the business operations of Summer Energy, LLC.
|
|
|
|
99.3
|
|
Press release dated March 30, 2012.
|
|
|
|
|
SUMMER ENERGY HOLDINGS, INC.
|
|
|
|
|
Dated: March 30, 2012
|
By:
|
/s/ Roderick L. Danielson
|
|
|
Roderick L. Danielson
|
|
|
President, Chief Executive Officer and Director
|
|
|
(Principal Executive Officer)
|
|
|
|
ROSS MILLER
|
Secretary of State
|
|
204 North Carson Street Suite 1
|
|
Carson City, Nevada 89701-4520
|
|
(77S) 684-5708
|
|
Website: www.nvsos.gov
|
1. Name of corporation:
|
Castwell Precast Corporation
|
2. The articles have been amended as follows: (provide article numbers, if available)
|
Pursuant to the Certificate of Amendment to Articles of Incorporation of Castwell Precast Corporation, a
copy of which is attached hereto and incorporated herein by reference, the Corporation's Articles of Incorporation have been amended as follows:
|
A.
Article I has been amended to change the name of the Corporation to "Summer Energy Holdings, Inc."
|
B.
Article IV has been amended to increase the authorized number of shares of common stock to 100,000,000 shares, par value $0,001
|
C.
The Articles of Incorporation have been amended to effect a l-for-4 reverse stock split in the issued and outstanding shares of the Corporation's common stock.
|
X
|
|
Signature of Officer
|
|
|
|
The Corporation shall have authority to issue an aggregate of 110,000,000 shares, of which 10,000,000 shares shall be preferred stock, par value $0.001 (the "Preferred Stock"), and 100,000,000 shares shall be common stock, par value $0.001 (the "Common Stock"). The powers, preferences, and rights, and the qualifications, limitations, or restrictions of the shares of stock of each class and series which the Corporation shall be authorized to issue, are as follows:
|
|
|
|
At the close of business on the effective date of this Amendment, the Corporation shall effect a reverse split in its issued and outstanding shares of common stock so that the 4,178,348 shares currently issued and outstanding shall be reverse split, or consolidated, on a 1-for-4 basis and shareholders shall receive one share of the Corporation's post-split common stock, $0.001 par value, for each 4 shares of Common Stock, $0.001 par value, held by them on the effective date of the reverse split. No scrip or fractional shares will be issued in connection with the reverse split and any fractional interests will be rounded up to the nearest whole share. The reverse split will not result in any modification of the rights of stockholders, and will have no effect on the stockholders' equity in the Corporation except for a transfer from stated capital to additional paid-in capital. All shares returned to the Corporation as a result of the reverse split will be canceled and returned to the status of authorized and unissued shares.
|
|
|
|
Dated as of March 15, 2012.
|
|
|
|
|
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Castwell Precast Corporation
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By
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/s/ Jason Haislip
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Jason Haislip, President
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Page
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ARTICLE I OFFICES
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Section 1.01
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Registered Office
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1
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Section 1.02
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Locations of Offices
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1
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ARTICLE II STOCKHOLDERS
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Section 2.01
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Annual Meeting
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1
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Section 2.02
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Special Meetings
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1
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Section 2.03
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Place of Meetings
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1
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Section 2.04
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Notice of Meetings
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1
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Section 2.05
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Waiver of Notice
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1
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Section 2.06
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Fixing Record Date
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2
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Section 2.07
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Voting Lists
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2
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Section 2.08
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Quorum
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2
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Section 2.09
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Vote Required
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2
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Section 2.10
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Voting of Stock
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2
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Section 2.11
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Proxies
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2
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Section 2.12
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Written Consent to Action by Stockholders
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3
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ARTICLE III DIRECTORS
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Section 3.01
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Number, Term, and Qualifications
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3
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Section 3.02
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Vacancies and Newly Created Directorships
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3
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Section 3.03
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General Powers
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4
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Section 3.04
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Regular Meetings
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4
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Section 3.05
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Special Meetings
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4
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Section 3.06
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Meetings by Telephone Conference Call
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4
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Section 3.07
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Notice
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4
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Section 3.08
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Quorum
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4
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Section 3.09
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Manner of Acting
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4
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Section 3.10
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Compensation
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4
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Section 3.11
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Presumption of Assent
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5
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Section 3.12
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Resignations
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5
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Section 3.13
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Written Consent to Action by Directors
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5
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Section 3.14
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Removal
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5
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ARTICLE IV OFFICERS
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Section 4.01
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Number
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5
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Section 4.02
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Election, Term of Office, and Qualifications
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5
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Section 4.03
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Subordinate Officers, Etc.
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5
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Section 4.04
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Resignations
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6
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Section 4.05
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Removal
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6
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Section 4.06
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Vacancies and Newly Created Offices
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6
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Section 4.07
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The Chairman of the Board
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6
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Section 4.08
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The Chief Executive Officer
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6
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Section 4.09
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The President
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6
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Section 4.10
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The Chief Financial Officer
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7
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Section 4.11
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The Vice Presidents
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7
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Section 4.12
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The Secretary
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7
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Section 4.13
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The Treasurer
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8
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Section 4.14
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Salaries
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8
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Section 4.15
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Surety Bonds
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8
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ARTICLE V EXECUTION OF INSTRUMENTS, BORROWING OF MONEY, AND DEPOSIT OF CORPORATE FUNDS
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Section 5.01
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Execution of Instruments
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9
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Section 5.02
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Loans
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9
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Section 5.03
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Deposits
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9
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Section 5.04
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Checks, Drafts, Etc.
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9
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Section 5.05
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Bonds and Debentures
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9
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Section 5.06
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Sale, Transfer, Etc. of Securities
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9
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Section 5.07
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Proxies
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9
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ARTICLE VI CAPITAL SHARES
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Section 6.01
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Stock Certificates
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10
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Section 6.02
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Transfer of Stock
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10
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Section 6.03
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Regulations
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10
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Section 6.04
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Maintenance of Stock Ledger at Principal Place of Business
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10
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Section 6.05
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Transfer Agents and Registrars
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10
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Section 6.06
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Closing of Transfer Books and Fixing of Record Date
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10
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Section 6.07
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Lost or Destroyed Certificates
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11
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ARTICLE VII EXECUTIVE COMMITTEE AND OTHER COMMITTEES
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Section 7.01
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How Constituted
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11
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Section 7.02
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Powers
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11
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Section 7.03
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Proceedings
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11
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Section 7.04
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Quorum and Manner of Acting
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11
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Section 7.05
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Resignations
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12
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Section 7.06
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Removal
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12
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Section 7.07
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Vacancies
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12
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Section 7.08
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Compensation
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12
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ARTICLE VIII INDEMNIFICATION, INSURANCE, AND OFFICER AND DIRECTOR CONTRACTS
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Section 8.01
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Indemnification: Third Party Actions
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12
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Section 8.02
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Indemnification: Corporate Actions
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12
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Section 8.03
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Determination
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13
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Section 8.04
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Advances
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13
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Section 8.05
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Scope of Indemnification
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13
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Section 8.06
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Insurance
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13
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Section 8.07
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Officer and Director Contracts
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13
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ARTICLE IX FISCAL YEAR
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14
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ARTICLE X DIVIDENDS
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14
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ARTICLE XI AMENDMENTS
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14
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CERTIFICATE OF SECRETARY
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14
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(a) If no chief executive officer has been appointed, he or she shall preside at all stockholders' meetings;
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(b) He or she shall preside at all meetings of the board of directors; and
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(c) He or she shall be a member of the executive committee, if any.
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(a) He or she shall, subject to the direction of the board of directors, have general charge of the business, affairs, and property of the corporation and general supervision over its officers, employees, and agents;
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(b) If no chairman of the board has been chosen, or if such officer is absent or disabled, he or she shall preside at meetings of the board of directors;
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(c) He or she shall preside at meetings of the stockholders;
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(d) He or she shall be a member of the executive committee, if any;
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(e) He or she shall be empowered to sign certificates representing stock of the corporation, the issuance of which shall have been authorized by the board of directors; and
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(f) He or she shall have all power and shall perform all duties normally incident to the office of a chief executive officer, and shall exercise such other powers and perform such other duties as from time to time may be assigned to him or her by the board of directors.
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(a) He or she shall have such powers and shall perform such duties as may from time to time be assigned to him or her by the chief executive officer, if there is such an officer, or by the board of directors;
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(b) If no chief executive officer has been chosen, or if such officer is absent or disabled, he or she shall preside at meetings of the stockholders;
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(c) If no chief executive officer has been chosen, he or she shall preside at meetings of the directors if no chairman of the board has been chosen or if such chairman is absent or disabled; and
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(d) If no chief executive officer has been chosen, he or she shall be empowered to sign certificates representing stock of the corporation, the issuance of which shall have been authorized by the board of directors.
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(a) He or she shall keep or cause to be kept a record of all of the proceedings of the meetings of the stockholders and of the board of directors in books provided for that purpose;
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(b) He or she shall cause all notices to be duly given in accordance with the provisions of these bylaws and as required by statute;
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(c) He or she shall be the custodian of the records and of the seal of the corporation, and shall cause such seal (or a facsimile thereof) to be affixed to all certificates representing stock of the corporation prior to the issuance thereof and to all instruments, the execution of which on behalf of the corporation under its seal shall have been duly authorized in accordance with these bylaws, and when so affixed, he may attest the same;
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(d) He or she shall assume that the books, reports, statements, certificates, and other documents and records required by statute are properly kept and filed;
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(e) He or she shall have charge of the stock ledger and books of the corporation and cause such books to be kept in such manner as to show at any time the amount of the stock of the corporation of each class issued and outstanding, the manner in which and the time when such stock was paid for, the names alphabetically arranged and the addresses of the holders of record thereof, the amount of stock held by each holder and time when each became such holder of record; and he or she shall exhibit at all reasonable times to any director, on application, the original or duplicate stock ledger. He or she shall cause the stock ledger referred to in section 6.04 hereof to be kept and exhibited at the principal office of the corporation, or at such other place as the board of directors shall determine, in the manner and for the purpose provided in such section;
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(f) He or she shall be empowered to sign certificates representing stock of the corporation, the issuance of which shall have been authorized by the board of directors; and
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(g) He or she shall perform in general all duties incident to the office of secretary and such other duties as are given to him or her by these bylaws or as from time to time may be assigned to him or her by the board of directors, the chief executive officer, or the president.
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(a) He or she shall have charge and supervision over and be responsible for the monies, securities, receipts, and disbursements of the corporation;
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(b) He or she shall cause the monies and other valuable effects of the corporation to be deposited in the name and to the credit of the corporation in such banks or trust companies or with such banks or other depositories as shall be selected in accordance with section 5.03 hereof;
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(c) He or she shall cause the monies of the corporation to be disbursed by checks or drafts (signed as provided in section 5.04 hereof) drawn on the authorized depositories of the corporation, and cause to be taken and preserved property vouchers for all monies disbursed;
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(d) He or she shall render to the board of directors or the chief executive officer, or the chief financial officer or the president, whenever requested, a statement of the financial condition of the corporation and of all of his transactions as treasurer, and render a full financial report at the annual meeting of the stockholders, if called upon to do so;
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(e) He or she shall cause to be kept correct books of account of all the business and transactions of the corporation and exhibit such books to any directors on request during business hours;
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(f) He or she shall be empowered from time to time to require from all officers or agents of the corporation reports or statements giving such information as he may desire with respect to any and all financial transactions of the corporation; and
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(g) He or she shall perform in general all duties incident to the office of treasurer and such other duties as are given to him or her by these bylaws or as from time to time may be assigned to him or her by the board of directors, the chief executive officer, the chief financial officer or the president.
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(a) The board of directors shall have power to close the stock ledgers of the corporation for a period of not to exceed sixty (60) days preceding the date of any meeting of stockholders, or the date for payment of any dividend, or the date for the allotment of rights, or capital stock shall go into effect, or a date in connection with obtaining the consent of stockholders for any purpose.
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(b) In lieu of closing the stock ledgers as aforesaid, the board of directors may fix in advance a date, not exceeding sixty (60) days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining any such consent, as a record date for the determination of the stockholders entitled to a notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent.
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(c) If the stock ledgers shall be closed or a record date set for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for, or such record date shall be, at least ten days immediately preceding such meeting.
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(a) does not exclude any other rights to which a person seeking indemnification or advancement of expenses, including corporate personnel other than directors or officers, may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise for either an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a court pursuant to section 8.02 or for the advancement of expenses made pursuant to section 8.04, may not be made to or on behalf of any director or officer if a final adjudication establishes that his acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action; and
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(b) continues for a person who has ceased to be a director, officer, employee, or agent and inures to the benefit of the heirs, executors, and administrators of such a person.
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Summer Energy Holdings, Inc.
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By:
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/s/ Jaleea George
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Jaleea George, Secretary
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Master Power
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Purchase & Sale
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Agreement
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COVER SHEET
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1
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GENERAL TERMS AND CONDITIONS
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6
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ARTICLE ONE:
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GENERAL DEFINITIONS
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6
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ARTICLE TWO:
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TRANSACTION TERMS AND CONDITIONS
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11
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2.1
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Transactions
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11
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2.2
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Governing Terms
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11
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2.3
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Confirmation
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11
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2.4
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Additional Confirmation Terms
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12
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2.5
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Recording
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12
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ARTICLE THREE:
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OBLIGATIONS AND DELIVERIES
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12
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3.1
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Seller's and Buyer's Obligations
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12
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3.2
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Transmission and Scheduling
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12
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3.3
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Force Majeure
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13
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ARTICLE FOUR:
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REMEDIES FOR FAILURE TO DELIVER/RECEIVE
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13
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4.1
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Seller Failure
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13
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4.2
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Buyer Failure
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13
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ARTICLE FIVE:
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EVENTS OF DEFAULT; REMEDIES
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13
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5.1
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Events of Default
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13
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5.2
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Declaration of an Early Termination Date and Calculation of Settlement Amounts
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15
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5.3
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Net Out of Settlement Amounts
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15
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5.4
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Notice of Payment of Termination Payment
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15
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5.5
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Disputes With Respect to Termination Payment
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15
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5.6
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Closeout Setoffs
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16
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5.7
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Suspension of Performance
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16
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ARTICLE SIX:
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PAYMENT AND NETTING
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16
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6.1
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Billing Period
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16
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6.2
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Timeliness of Payment
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17
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6.3
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Disputes and Adjustments of Invoices
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17
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6.4
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Netting of Payments
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17
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6.5
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Payment Obligation Absent Netting
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17
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6.6
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Security
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18
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6.7
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Payment for Options
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18
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6.8
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Transaction Netting
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18
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ARTICLE SEVEN:
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LIMITATIONS
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18
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7.1
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Limitation of Remedies, Liability and Damages
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18
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ARTICLE EIGHT:
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CREDIT AND COLLATERAL REQUIREMENTS
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19
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8.1
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Party A Credit Protection
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19
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8.2
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Party B Credit Protection
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21
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8.3
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Grant of Security Interest/Remedies
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22
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ARTICLE NINE:
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GOVERNMENTAL CHARGES
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23
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9.1
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Cooperation
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23
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9.2
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Governmental Charges
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23
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ARTICLE TEN:
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MISCELLANEOUS
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23
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10.1
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Term of Master Agreement
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23
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10.2
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Representations and Warranties
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23
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10.3
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Title and Risk of Loss
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25
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10.4
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Indemnity
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25
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10.5
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Assignment
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25
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10.6
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Governing Law
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25
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10.7
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Notices
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26
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10.8
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General
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26
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10.9
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Audit
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26
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10.10
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Forward Contract
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27
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10.11
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Confidentiality
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27
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SCHEDULE M: GOVERNMENTAL ENTITY OR PUBLIC POWER SYSTEMS
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28
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SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS
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32
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EXHIBIT A: CONFIRMATION LETTER
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39
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Name ("_________________" or "Party A")
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Name ("Counterparty" or "Party B")
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||||||||
All Notices:
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All Notices:
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||||||
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||||||
Street:
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Street:
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||||||
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City:
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Zip:
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City:
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Zip:
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|||||
Attn: Contract Administration
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Attn: Contract Administration
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||||||||
Phone:
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Phone:
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||||||
Facsimile:
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Facsimile:
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||||||
Duns:
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Duns:
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||||||
Federal Tax ID Number:
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Federal Tax ID Number:
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||||||
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|||||||
Invoices:
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Invoices:
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||||||
Attn:
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Attn:
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||||||
Phone:
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Phone:
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||||||
Facsimile:
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Facsimile:
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||||||
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||||||
Scheduling:
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Scheduling:
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||||||
Attn:
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Attn:
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||||||
Phone:
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Phone:
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||||||
Facsimile:
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Facsimile:
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||||||
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||||||
Payments:
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Payments:
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||||||
Attn:
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Attn:
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||||||
Phone:
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Phone:
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||||||
Facsimile:
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Facsimile:
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||||||
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||||||
Wire Transfer:
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Wire Transfer:
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||||||||
BNK:
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BNK:
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||||||
ABA:
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ABA:
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||||||
ACCT:
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ACCT:
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||||||
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||||||
Credit and Collections:
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Credit and Collections:
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||||||||
Attn:
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Attn:
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||||||
Phone:
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Phone:
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||||||
Facsimile:
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Facsimile:
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||||||
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||||||
With additional Notices of an Event of Default or Potential Event of Default to:
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With additional Notices of an Event of Default or Potential Event of Default to:
|
||||||||
Attn:
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Attn:
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||||||
Phone:
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Phone:
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||||||
Facsimile:
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Facsimile:
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Party A Tariff
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Tariff
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Dated
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Docket Number
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Party B Tariff
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Tariff
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Dated
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Docket Number
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If applicable, complete the following:
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Party B Collateral Threshold: $__________; provided, however, that Party B's Collateral Threshold shall be zero if an Event of Default or Potential Event of Default with respect to Party B has occurred and is continuing.
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Party B Independent Amount: $ _______________
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Party B Rounding Amount: $ _______________
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(d) Downgrade Event:
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o
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Not Applicable
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o
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Applicable
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If applicable, complete the following:
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o
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It shall be a Downgrade Event for Party B if Party B's Credit Rating falls below __________ from S&P or __________ from Moody's or if Party B is not rated by either S&P or Moody's
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o
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Other: ____________________________________
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Specify: ____________________________________
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(e) Guarantor for Party B: _____________________________
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Guarantee Amount:
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8.2
Party B Credit Protection
:
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(a) Financial Information:
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o
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Option A
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o
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Option B Specify: ___________________
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o
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Option C Specify: ___________________
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(b) Credit Assurances:
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o
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Not Applicable
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o
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Applicable
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(c) Collateral Threshold:
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o
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Not Applicable
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o
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Applicable
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If applicable, complete the following:
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Party A Collateral Threshold: $__________; provided, however, that Party A's Collateral Threshold shall be zero if an Event of Default or Potential Event of Default with respect to Party A has occurred and is continuing.
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Party A Independent Amount: $ _________________
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Party A Rounding Amount: $ _________________
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(d) Downgrade Event:
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o
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Not Applicable
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o
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Applicable
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If applicable, complete the following:
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o
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It shall be a Downgrade Event for Party A if Party A's Credit Rating falls below __________ from S&P or __________ from Moody's or if Party A is not rated by either S&P or Moody's
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o
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Other:
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Specify: ____________________________________________
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(e) Guarantor for Party A: _____________________________________
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Guarantee Amount: __________________________________
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Article 10
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Confidentiality
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o
Confidentiality Applicable
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If not checked, inapplicable.
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Schedule M
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o
Party A is a Governmental Entity or Public Power System
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o
Party B is a Governmental Entity or Public Power System
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o
Add Section 3.6. If not checked, inapplicable
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o
Add Section 8.6. If not checked, inapplicable
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Other Changes
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Specify, if any: ___________________________________
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Party A Name
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Party B Name
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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(a)
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the failure to make, when due, any payment required pursuant to this Agreement if such failure is not remedied within three (3) Business Days after written notice;
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(b)
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any representation or warranty made by such Party herein is false or misleading in any material respect when made or when deemed made or repeated;
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(c)
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the failure to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default, and except for such Party's obligations to deliver or receive the Product, the exclusive remedy for which is provided in Article Four) if such failure is not remedied within three (3) Business Days after written notice;
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(d)
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such Party becomes Bankrupt;
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(e)
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the failure of such Party to satisfy the creditworthiness/collateral requirements agreed to pursuant to Article Eight hereof;
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(f)
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such Party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer, the resulting, surviving or transferee entity fails to assume all the obligations of such Party under this Agreement to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other Party;
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(g)
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if the applicable cross default section in the Cover Sheet is indicated for such Party, the occurrence and continuation of (i) a default, event of default or other similar condition or event in respect of such Party or any other party specified in the Cover Sheet for such Party under one or more agreements or instruments, individually or collectively, relating to indebtedness for borrowed money in an aggregate amount of not less than the applicable Cross Default Amount (as specified in the Cover Sheet), which results in such indebtedness becoming, or becoming capable at such time of being declared, immediately due and payable or (ii) a default by such Party or any other party specified in the Cover Sheet for such Party in making on the due date therefor one or more payments, individually or collectively, in an aggregate amount of not less than the applicable Cross Default Amount (as specified in the Cover Sheet);
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(h)
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with respect to such Party's Guarantor, if any:
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(i)
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if any representation or warranty made by a Guarantor in connection with this Agreement is false or misleading in any material respect when made or when deemed made or repeated;
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(ii)
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the failure of a Guarantor to make any payment required or to perform any other material covenant or obligation in any guaranty made in connection with this Agreement and such failure shall not be remedied within three (3) Business Days after written notice;
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(iii)
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a Guarantor becomes Bankrupt;
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(iv)
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the failure of a Guarantor's guaranty to be in full force and effect for purposes of this Agreement (other than in accordance with its terms) prior to the satisfaction of all obligations of such Party under each Transaction to which such guaranty shall relate without the written consent of the other Party; or
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(v)
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a Guarantor shall repudiate, disaffirm, disclaim, or reject, in whole or in part, or challenge the validity of any guaranty.
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(a)
|
the Party obligated to deliver the greater amount of Energy will deliver the difference between the total amount it is obligated to deliver and the total amount to be delivered to it under the Offsetting Transactions, and
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(b)
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the Party owing the greater aggregate payment will pay the net difference owed between the Parties.
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(i)
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it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation;
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(ii)
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it has all regulatory authorizations necessary for it to legally perform its obligations under this Master Agreement and each Transaction (including any Confirmation accepted in accordance with Section 2.3);
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(iii)
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the execution, delivery and performance of this Master Agreement and each Transaction (including any Confirmation accepted in accordance with Section 2.3) are within its powers, have been duly authorized by all necessary action and do not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or any law, rule, regulation, order or the like applicable to it;
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(iv)
|
this Master Agreement, each Transaction (including any Confirmation accepted in accordance with Section 2.3), and each other document executed and delivered in accordance with this Master Agreement constitutes its legally valid and binding obligation enforceable against it in accordance with its terms; subject to any Equitable Defenses.
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(v)
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it is not Bankrupt and there are no proceedings pending or being contemplated by it or, to its knowledge, threatened against it which would result in it being or becoming Bankrupt;
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(vi)
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there is not pending or, to its knowledge, threatened against it or any of its Affiliates any legal proceedings that could materially adversely affect its ability to perform its obligations under this Master Agreement and each Transaction (including any Confirmation accepted in accordance with Section 2.3);
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(vii)
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no Event of Default or Potential Event of Default with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Master Agreement and each Transaction (including any Confirmation accepted in accordance with Section 2.3);
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(viii)
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it is acting for its own account, has made its own independent decision to enter into this Master Agreement and each Transaction (including any Confirmation accepted in accordance with Section 2.3) and as to whether this Master Agreement and each such Transaction (including any Confirmation accepted in accordance with Section 2.3) is appropriate or proper for it based upon its own judgment, is not relying upon the advice or recommendations of the other Party in so doing, and is capable of assessing the merits of and understanding, and understands and accepts, the terms, conditions and risks of this Master Agreement and each Transaction (including any Confirmation accepted in accordance with Section 2.3);
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(ix)
|
it is a "forward contract merchant" within the meaning of the United States Bankruptcy Code;
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(x)
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it has entered into this Master Agreement and each Transaction (including any Confirmation accepted in accordance with Section 2.3) in connection with the conduct of its business and it has the capacity or ability to make or take delivery of all Products referred to in the Transaction to which it is a Party;
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(xi)
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with respect to each Transaction (including any Confirmation accepted in accordance with Section 2.3) involving the purchase or sale of a Product or an Option, it is a producer, processor, commercial user or merchant handling the Product, and it is entering into such Transaction for purposes related to its business as such; and
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(xii)
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the material economic terms of each Transaction are subject to individual negotiation by the Parties.
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"Act" means ______________________________.
[1]
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"Governmental Entity or Public Power System" means a municipality, county, governmental board, public power authority, public utility district, joint action agency, or other similar political subdivision or public entity of the United States, one or more States or territories or any combination thereof.
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"Special Fund" means a fund or account of the Governmental Entity or Public Power System set aside and or pledged to satisfy the Public Power System's obligations hereunder out of which amounts shall be paid to satisfy all of the Public Power System's obligations under this Master Agreement for the entire Delivery Period.
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B. The following sentence shall be added to the end of the definition of "Force Majeure" in Article One.
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If the Claiming Party is a Governmental Entity or Public Power System, Force Majeure does not include any action taken by the Governmental Entity or Public Power System in its governmental capacity.
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C. The Parties agree to add the following representations and warranties to Section 10.2:
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Further and with respect to a Party that is a Governmental Entity or Public Power System, such Governmental Entity or Public Power System represents and warrants to the other Party continuing throughout the term of this Master Agreement, with respect to this Master Agreement and each Transaction, as follows: (i) all acts necessary to the valid execution, delivery and performance of this Master Agreement, including without limitation, competitive bidding, public notice, election, referendum, prior appropriation or other required procedures has or will be taken and performed as required under the Act and the Public Power System's ordinances, bylaws or other regulations, (ii) all persons making up the governing body of Governmental Entity or Public Power System are the duly elected or appointed incumbents in their positions and hold such positions in good standing in accordance with the Act and other applicable law, (iii) entry into and performance of this Master Agreement by Governmental Entity or Public Power System are for a proper public purpose within the meaning of the Act and all other relevant constitutional, organic or other governing documents and applicable law, (iv) the term of this Master Agreement does not extend beyond any applicable limitation imposed by the Act or other relevant constitutional, organic or other governing documents and applicable law, (v) the Public Power System's obligations to make payments hereunder are unsubordinated obligations and such payments are (a) operating and maintenance costs (or similar designation) which enjoy first priority of payment at all times under any and all bond ordinances or indentures to which it is a party, the Act and all other relevant constitutional, organic or other governing documents and applicable law or (b) otherwise not subject to any prior claim under any and all bond ordinances or indentures to which it is a party, the Act and all other relevant constitutional, organic or other governing documents and applicable law and are available without limitation or deduction to satisfy all Governmental Entity or Public Power System' obligations hereunder and under each Transaction or (c) are to be made solely from a Special Fund, (vi) entry into and performance of this Master Agreement and each Transaction by the Governmental Entity or Public Power System will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any obligation of Governmental Entity or Public Power System otherwise entitled to such exclusion, and (vii) obligations to make payments hereunder do not constitute any kind of indebtedness of Governmental Entity or Public Power System or create any kind of lien on, or security interest in, any property or revenues of Governmental Entity or Public Power System which, in either case, is proscribed by any provision of the Act or any other relevant constitutional, organic or other governing documents and applicable law, any order or judgment of any court or other agency of government applicable to it or its assets, or any contractual restriction binding on or affecting it or any of its assets.
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D. The Parties agree to add the following sections to Article Three:
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Section 3.4
Public Power System's Deliveries
. On the Effective Date and as a condition to the obligations of the other Party under this Agreement, Governmental Entity or Public Power System shall provide the other Party hereto (i) certified copies of all ordinances, resolutions, public notices and other documents evidencing the necessary authorizations with respect to the execution, delivery and performance by Governmental Entity or Public Power System of this Master Agreement and (ii) an opinion of counsel for Governmental Entity or Public Power System, in form and substance reasonably satisfactory to the Other Party, regarding the validity, binding effect and enforceability of this Master Agreement against Governmental Entity or Public Power System in respect of the Act and all other relevant constitutional organic or other governing documents and applicable law.
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Section 3.5
No Immunity Claim
. Governmental Entity or Public Power System warrants and covenants that with respect to its contractual obligations hereunder and performance thereof, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (a) suit, (b) jurisdiction of court (including a court located outside the jurisdiction of its organization), (c) relief by way of injunction, order for specific performance or recovery of property, (d) attachment of assets, or (e) execution or enforcement of any judgment.
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E. If the appropriate box is checked on the Cover Sheet, as an alternative to selecting one of the options under Section 8.3, the Parties agree to add the following section to Article Three:
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Section 3.6
Governmental Entity or Public Power System Security
. With respect to each Transaction, Governmental Entity or Public Power System shall either (i) have created and set aside a Special Fund or (ii) upon execution of this Master Agreement and prior to the commencement of each subsequent fiscal year of Governmental Entity or Public Power System during any Delivery Period, have obtained all necessary budgetary approvals and certifications for payment of all of its obligations under this Master Agreement for such fiscal year; any breach of this provision shall be deemed to have arisen during a fiscal period of Governmental Entity or Public Power System for which budgetary approval or certification of its obligations under this Master Agreement is in effect and, notwithstanding anything to the contrary in Article Four, an Early Termination Date shall automatically and without further notice occur hereunder as of such date wherein Governmental Entity or Public Power System shall be treated as the Defaulting Party. Governmental Entity or Public Power System shall have allocated to the Special Fund or its general funds a revenue base that is adequate to cover Public Power System's payment obligations hereunder throughout the entire Delivery Period.
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F. If the appropriate box is checked on the Cover Sheet, the Parties agree to add the following section to Article Eight:
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Section 8.4
Governmental Security
. As security for payment and performance of Public Power System's obligations hereunder, Public Power System hereby pledges, sets over, assigns and grants to the other Party a security interest in all of Public Power System's right, title and interest in and to [specify collateral].
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G. The Parties agree to add the following sentence at the end of Section 10.6 - Governing Law:
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NOTWITHSTANDING THE FOREGOING, IN RESPECT OF THE APPLICABILITY OF THE ACT AS HEREIN PROVIDED, THE LAWS OF THE STATE OF _____________
[2]
SHALL APPLY.
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i. If the Firm Transmission purchased by Buyer within the Receiving Transmission Provider's transmission system from the Designated Interface ceases to be available to Buyer for any reason, or if Seller is unable to deliver the Product at the Designated Interface for any reason except Buyer's non-performance, then at Seller's choice from among the following, Seller shall: (a) to the extent Firm Transmission is available to Buyer from an ADI on a day-ahead basis, require Buyer to purchase such Firm Transmission from such ADI, and schedule and deliver the affected portion of the Product to such ADI on the basis of Buyer's purchase of Firm Transmission, or (b) require Buyer to purchase non-firm transmission, and schedule and deliver the affected portion of the Product on the basis of Buyer's purchase of non-firm transmission from the Designated Interface or an ADI designated by Seller, or (c) to the extent firm transmission is available on an hourly basis, require Buyer to purchase firm transmission, and schedule and deliver the affected portion of the Product on the basis of Buyer's purchase of such hourly firm transmission from the Designated Interface or an ADI designated by Seller.
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ii. If the Available Transmission utilized by Buyer as required by Seller pursuant to Section 3A(i) ceases to be available to Buyer for any reason, then Seller shall again have those alternatives stated in Section 3A(i) in order to satisfy its obligations.
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iii. Seller's obligation to schedule and deliver the Product at an ADI is subject to Buyer's obligation referenced in Section 4B to cooperate reasonably therewith. If Buyer and Seller cannot complete the scheduling and/or delivery at an ADI, then Buyer shall be deemed to have satisfied its receipt obligations to Seller and Seller shall be deemed to have failed its delivery obligations to Buyer, and Seller shall be liable to Buyer for amounts determined pursuant to Article Four.
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iv. In each instance in which Buyer and Seller must make alternative scheduling arrangements for delivery at the Designated Interface or an ADI pursuant to Sections 3A(i) or (ii), and Firm Transmission had been purchased by both Seller and Buyer into and within the Receiving Transmission Provider's transmission system as to the scheduled delivery which could not be completed as a result of the interruption or curtailment of such Firm Transmission, Buyer and Seller shall bear their respective transmission expenses and/or associated congestion charges incurred in connection with efforts to complete delivery by such alternative scheduling and delivery arrangements. In any instance except as set forth in the immediately preceding sentence, Buyer and Seller must make alternative scheduling arrangements for delivery at the Designated Interface or an ADI under Sections 3A(i) or (ii), Seller shall be responsible for any additional transmission purchases and/or associated congestion charges incurred by Buyer in connection with such alternative scheduling arrangements.
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A.
Seller's Responsibilities
. Seller shall be responsible for transmission required to deliver the Product to the Designated Interface or ADI, as the case may be. It is expressly agreed that Seller is not required to utilize Firm Transmission for its delivery obligations hereunder, and Seller shall bear the risk of utilizing non-firm transmission. If Seller's scheduled delivery to Buyer is interrupted as a result of Buyer's attempted transmission of the Product beyond the Receiving Transmission Provider's system border, then Seller will be deemed to have satisfied its delivery obligations to Buyer, Buyer shall be deemed to have failed to receive the Product and Buyer shall be liable to Seller for damages pursuant to Article Four.
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B.
Buyer's Responsibilities
. Buyer shall be responsible for transmission required to receive and transmit the Product at and from the Designated Interface or ADI, as the case may be, and except as specifically provided in Section 3A and 3B, shall be responsible for any costs associated with transmission therefrom. If Seller is attempting to complete the designation of an ADI as a result of Seller's rights and obligations hereunder, Buyer shall co-operate reasonably with Seller in order to effect such alternate designation.
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A. If Seller is not the Source Seller, then Seller shall notify Buyer of the Designated Interface promptly after Seller is notified thereof by the Other Seller with whom Seller has a contractual relationship, but in no event may such designation of the Designated Interface be later than the prescheduling deadline pertaining to the Transaction between Buyer and Seller pursuant to Section 1.
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B. If Buyer is not the Sink Buyer, then Buyer shall notify the Other Buyer with whom Buyer has a contractual relationship of the Designated Interface promptly after Seller notifies Buyer thereof, with the intent being that the party bearing actual responsibility to secure transmission shall have up to 30 minutes after receipt of the Designated Interface to submit its Timely Request for Firm Transmission.
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C. Seller and Buyer each agree that any other communications or actions required to be given or made in connection with this "Into Product" (including without limitation, information relating to an ADI) shall be made or taken promptly after receipt of the relevant information from the Other Sellers and Other Buyers, as the case may be.
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D. Seller and Buyer each agree that in certain Transactions time is of the essence and it may be desirable to provide necessary information to Other Sellers and Other Buyers in order to complete the scheduling and delivery of the Product. Accordingly, Seller and Buyer agree that each has the right, but not the obligation, to provide information at its own risk to Other Sellers and Other Buyers, as the case may be, in order to effect the prescheduling, scheduling and delivery of the Product
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Seller:
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Buyer:
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Product:
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||||
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|
||||
o
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Into _________________, Seller's Daily Choice
|
|||||
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|
|||||
o
|
Firm (LD)
|
|||||
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|
|||||
o
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Firm (No Force Majeure)
|
|||||
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|
|||||
o
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System Firm
|
|||||
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|
|||||
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(Specify System:
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)
|
|||
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|
|||
o
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Unit Firm
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|||
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|
|||
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(Specify Unit(s):
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)
|
|||
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|||
o
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Other
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|
|||
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|
|||||
o
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Transmission Contingency (If not marked, no transmission contingency)
|
|||||
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|||||
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o
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FT-Contract Path Contingency
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o
Seller
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o
Buyer
|
||
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||
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o
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FT-Delivery Point Contingency
|
o
Seller
|
o
Buyer
|
||
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||
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o
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Transmission Contingent
|
o
Seller
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o
Buyer
|
||
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||
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o
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Other transmission contingency
|
||||
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|
||||
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(Specify:
|
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)
|
|||
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|
|||||
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Contract Quantity:
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Delivery Point:
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Contract Price:
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Energy Price:
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Other Charges:
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Delivery Period:
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Special Conditions:
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Scheduling:
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Option Buyer:
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Option Seller:
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Type of Option:
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Strike Price:
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Premium:
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Exercise Period:
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||
[Party A]
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[Party B]
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Name:
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Name:
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Title:
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Title:
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Phone No:
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Phone No:
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Fax:
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Fax:
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If to Cambria:
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|
Cambria Capital, LLC
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488 East Winchester
Street, Ste 200
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Salt Lake City, UT 84107
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Phone: 801.320.9606; Fax: 801.320.9610
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If to the Company:
Summer Energy 800 Bering Drive Suite 260 Houston, Texas 77057 Phone: 713-375-2791; Fax: 866-777-9189 |
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Very truly yours,
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CAMBRIA CAPITAL, LLC
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By:
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Joel M Vanderhoof
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Executive Vice President
of Sales
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By:
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/s/ Rod Danielson
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Rod
Danielson, Chief Executive Officer
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No. 01
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January 17, 2012
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If to the Company:
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||||
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Summer Energy, LLC
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800 Bering Drive, Suite 260
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Houston, Texas 77057
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Attention: Rod Danielson, Managing Member
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Facsimile: 866-777-9189
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With a copy (which does not constitute notice) to:
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Kirton | McConkie
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||||
50 E. South Temple
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Salt Lake City, UT 84111
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||||
Attention: Alexander N. Pearson, Esq.
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Facsimile: (801) 212-2006
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SUMMER ENERGY, LLC
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By:
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/s/ Rod Danielson
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Name: Rod Danielson
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Title: Managing Member
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Name
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Address
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Federal Tax ID or Social Security No.
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Signature
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Signature of Spouse/Partner (if applicable)
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Individual or Entity Name (and Title, if applicable)
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Name (please print)
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Address
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Address
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Federal Identification or Social Security No.
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Federal Identification or Social Security No.
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Assignee
:
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Note: The signature must correspond with the name of the Warrantholder as written on the first page of the Warrant in every particular, without alteration or enlargement or any change whatever, unless the Warrant has been assigned.
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COMPANY:
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Summer Energy, LLC
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800 Bering Drive, Suite 260
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Houston, Texas 77057
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Attn: Rod Danielson
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Assisting Party:
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See address provided in the preamble to this Agreement
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Company:
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SUMMER ENERGY, LLC
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a Texas limited liability company
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By:
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/s/ Rod Danielson
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Name:
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Rod Danielson
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Title:
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Managing Member
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ASSISTING PARTY:
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[Signature]
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[printed name]
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Danielson:
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30,758 Units
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DeHay:
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120,757 Units
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COMPANY:
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Summer Energy, LLC
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800 Bering Drive, Suite 260
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Houston, Texas 77057
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By:
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/s/ Jalleea George
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Name:
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Jaleea George
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Title:
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Managing Member
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DANIELSON:
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DEHAY:
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/s/ Rod Danielson
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/s/ Wallace DeHay, Jr.
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[Signature]
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[Signature]
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[Address]
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[Address]
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Date: March
27, 2012
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_________________________________
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[Insert
Name]
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||
Entity
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State of
Incorporation/Organization
|
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Percentage
of Ownership
|
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Castwell Precast, Inc.
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Utah
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100
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%
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Summer Energy, LLC
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Texas
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100
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%
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ASSETS
|
|
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Current assets
|
|
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Cash and cash equivalents $1,751,911
|
|
|
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Restricted cash
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605
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Accounts receivable - other
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972
|
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Prepaid and other current assets
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13,075
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Total current assets
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|
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1,766,563
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Property and equipment, net
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2,126
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Certificate of deposit - restricted
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500,669
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Deferred financing costs, net
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194,444
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TOTAL ASSETS
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$
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2,463,802
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LIABILITIES AND MEMBERS' EQUITY
|
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Current liabilities
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Accounts payable
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$
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16,962
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Accrued expenses
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200,000
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Total current liabilities
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216,962
|
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Commitments
|
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MEMBERS' EQUITY-
including subscription receivable of $52,000 and deficit accumulated during the development stage of $326,185
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2,246,840
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TOTAL LIABILITIES AND MEMBERS' EQUITY
|
|
$
|
2,463,802
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|
|
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GROSS REVENUE
|
|
$
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-
|
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COST OF GOODS SOLD
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|
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-
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GROSS PROFIT
|
|
|
-
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OPERATING EXPENSES
|
|
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General and Administrative
|
|
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(321,468
|
)
|
|
|
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OTHER INCOME (EXPENSE)
|
|
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Financing costs
|
|
|
(5,556
|
)
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Interest income
|
|
|
839
|
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Other income (expense)
|
|
|
(4,717
|
)
|
|
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NET LOSS
|
|
$
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(326,185
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)
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BASIC AND DILUTED LOSS PER UNIT
|
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$
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(0.06
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)
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WEIGHTED AVERAGE NUMBER OF UNTIS
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5,650,820
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|||||
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Units
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Managing
Members |
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Members
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Subscription
Receivable |
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Total
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|||||
BALANCE - April 6, 2011
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|
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-
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$
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-
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$
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-
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$
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-
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$
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-
|
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Issuance of member units for cash
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|
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9,396,109
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169,168
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2,405,332
|
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(52,000
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)
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|
2,522,500
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Issuance of member units and warrants for services
|
|
|
151,515
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|
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10,150
|
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|
40,375
|
|
|
|
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|
50,525
|
|
NET LOSS
|
|
|
-
|
|
|
(68,272
|
)
|
|
(257,913
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)
|
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-
|
|
|
(326,185
|
)
|
BALANCE - December 31, 2011
|
|
|
9,547,624
|
|
$
|
111,046
|
|
$
|
2,187,794
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$
|
(52,000
|
)
|
$
|
2,246,840
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
Net loss
|
|
$
|
(326,185
|
)
|
Adjustments to reconcile net loss to net cash
|
|
|
|
|
used by operating activities
|
|
|
|
|
Depreciation
|
|
|
61
|
|
Interest earned
|
|
|
(669
|
)
|
Amortization of deferred financing costs
|
|
|
5,556
|
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Issuance of member units for credit facility
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|
|
50,000
|
|
Issuance of warrants for services
|
|
|
525
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Prepaid assets
|
|
|
(14,047
|
)
|
Deferred financing costs
|
|
|
(200,000
|
)
|
Accounts payable
|
|
|
16,962
|
|
Accrued expenses
|
|
|
200,000
|
|
Net cash used for operating activities
|
|
|
(267,797
|
)
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
Purchase of restricted cash (605)
|
|
|
|
|
Purchase of certificate of deposit - restricted
|
|
|
(500,000
|
)
|
Purchase of property and equipment
|
|
|
(2,187
|
)
|
Net Cash used for investing activities
|
|
|
(502,792
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
Issuance of member units for cash
|
|
|
2,522,500
|
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NET INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
1,751,911
|
|
CASH AND CASH EQUIVALENTS - INCEPTION
|
|
|
-
|
|
CASH AND CASH EQUIVALENTS - DECEMBER 31, 2011
|
|
$
|
1,751,911
|
|
CASH PAID FOR INTEREST
|
|
$
|
-
|
|
CASH PAID FOR TAXES
|
|
$
|
-
|
|
NON CASH TRANSACTION:
|
|
|
|
|
Subscription receivable
|
|
$
|
52,000
|
|
|
|
NOTE 1 -
|
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
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|
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Nature of Business
|
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Summer Energy, LLC (the Company) was formed as a Texas limited liability company on April 6, 2011. The Company was formed to operate as a retail provider of electricity in the state of Texas. The Company is governed by its Amended and Restated Limited Liability Company Agreement (the Agreement) dated July 31, 2011. At December 31, 2011, members' equity included capital contributions from the initial members of the Company.
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The Agreement provides that no member shall be liable for the debts or any other obligations or liabilities of the Company. Members are not required to restore a deficit balance in their respective capital accounts, lend additional funds or contribute additional capital to the Company. If members unanimously determine that additional capital is necessary, such contributions shall be made in proportion to the percentage interests then held by each member.
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|
|
Accounting Method and Revenue and Cost Recognition
|
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The Company prepares its financial statements on the accrual basis of accounting in conformance with U.S. generally accepted accounting principles.
|
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|
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Revenue is recognized upon delivery of electricity to the customer's meter. This method is commonly referred to as the flow method. The flow method of revenue relies upon Electric Reliability Council of Texas (ERCOT) settlement statements to determine the estimated revenue for a given month. Supply delivered to customers for the month, measured on a daily basis, provides the basis for revenues. Electric services not billed by mouth-end are accrued based upon estimated deliveries to customers as tracked and recorded by ERCOT multiplied by the Company's average billing rate per kilowatt hour ("kWh") in effect at the time. Direct energy costs are recorded when the electricity is delivered.
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|
|
|
Basic and Diluted Earnings (Loss) Per Unit
|
|
|
|
Basic earnings (loss) per member unit is computed by dividing net earnings (loss) applicable to members by the weighted-average number of member units outstanding during the period. Diluted earnings (loss) per member unit is determined using the weighted-average number of member units outstanding during the period, adjusted for the dilutive effect of member unit equivalents, using the treasury method, consisting of units that might be issued upon exercise of member unit equivalents. In periods where losses are reported, the weighted-average number of member units outstanding excludes member unit equivalents, because their inclusion would be anti-dilutive.
|
|
|
NOTE 1 -
|
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
|
|
Use of Estimates
|
|
|
|
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
|
|
|
|
Concentration of Credit Risk
|
|
|
|
The Company maintains its cash in demand deposit accounts or "noninterest-bearing transaction accounts" which, at times, may exceed federally insured limits. The Company's management periodically assesses the financial stability of these banks. The Company has not experienced any losses on such accounts.
|
|
|
|
Cash and Cash Equivalents
|
|
|
|
For purposes of the statement of cash flows, the Company considers all short-term investments and debt instruments with an original maturity of three months or less to be cash equivalents.
|
|
|
|
Restricted cash represents a certificate of deposit in the amount $500,669, including interest earned, to secure a stand-by letter of credit for the benefit of the Public Utility Commission of Texas as well as a lockbox account controlled by a lender with a balance of $605 at December 31, 2011. The letter of credit expires in February 2014 and the certificate of deposit matures in February 2014.
|
|
|
|
Income Taxes
|
|
|
|
The Company does not incur income taxes; instead, its earnings are included in the members' personal income tax returns and taxed depending on their personal tax situations. The financial statements, therefore, do not include a provision for income taxes. The Company prepares a calendar year informational tax return.
|
|
|
NOTE 1 -
|
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
|
|
Recent Pronouncements
|
|
|
|
In June 2011, the Financial Accounting Standards Board ("FASB") issued guidance requiring changes to the presentation of comprehensive income which requires entities to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The option to present components of other comprehensive income as part of the statement of changes in stockholders' equity, which is not the method of presentation used by the Company, will no longer be permitted, as the Company has no comprehensive income. These changes will have no impact on the calculation and presentation of earnings per share. These changes, with retrospective application, become effective for the Company for interim and annual periods beginning in fiscal year 2013, with early adoption allowed. Other than the change in presentation, these changes will not have an impact on the consolidated financial statements.
|
|
|
|
In May 2011, the FASB issued additional guidance on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The updated guidance is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The adoption of this guidance is not expected to have a material impact on our consolidated financial position, results of operations and cash flows.
|
|
|
|
In December 2010, the FASB issued ASU 2010 - 28 "Intangibles - Goodwill and Other (ASC Topic 350)", which amended its existing guidance for goodwill and other intangible assets. This authoritative guidance modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if there are qualitative factors indicating that it is more likely than not that a goodwill impairment exists. The qualitative factors are consistent with the existing guidance which requires goodwill of a reporting unit to be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This authoritative guidance becomes effective for the Company in fiscal year 2012. The implementation of this authoritative guidance is not expected to have a material impact on our consolidated financial position, results of operations and cash flows.
|
|
|
NOTE 1 -
|
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
|
|
Recent Pronouncements
(Continued)
|
|
|
|
In September 2011, the FASB issued ASU 2011-08, "Testing Goodwill for Impairment". The amendments under ASU 2011-08 will allow entities to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments include a number of events and circumstances for entities to consider in conducting the qualitative assessment. Entities will have the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step quantitative goodwill impairment test. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 (fiscal 2012 for the Company), and early adoption is permitted. Adoption of ASU 2011-08 is not expected to have a material impact on the Company's financial statements.
|
|
|
NOTE 2 -
|
DEVELOPMENT STAGE OPERATIONS
|
|
|
|
The Company is in the development stage. On September 29, 2011, the Public Utility Commission of Texas (PUCT) granted the Company certification as a Retail Electric Provider (REP) for the geographic area of the Electric Reliability Council of Texas (ERCOT). Through December 31, 2011, management's focus has been on licensing requirements, power purchase and supply negotiations, administrative functions, and raising capital. During February 2012, the Company will begin providing retail electric services in the state of Texas.
|
|
|
NOTE 3
-
|
CAPITALIZATION OF THE COMPANY
|
|
|
|
In connection with the formation and capitalization of the Company, 100,000,000 member units were authorized and 9,547,624 units were issued at an average price of $0.27 per unit in exchange for cash contributions and in exchange for agreements to assist with credit facility which is included in general and administrative expenses as of December 31, 2011.
|
|
|
NOTE 4 -
|
LETTER OF CREDIT
|
|
|
|
During 2011, the Company secured an irrevocable stand-by letter of credit in the amount of $500,000 with a financial institution for the benefit of the PUCT. The letter of credit, which expires on February 1, 2014, is backed by a $500,000 certificate of deposit with a financial institution.
|
|
|
NOTE 5 -
|
OPERATING LEASE COMMITMENTS
|
|
|
|
The Company assumed an operating lease for office space on November 1, 2011, under a non-cancellable lease obligation which expires on August 31, 2012, and provides an extension option until August 31, 2015.
|
|
|
|
The Company assumed an operating lease for office equipment on December 5, 2011, under non-cancellable lease obligation which expires on May 31, 2012.
|
|
|
|
Future minimum commitments including extension options under all non-cancellable operating lease obligations are as follows:
|
|
Contractual Obligations
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
Total
|
|
|||||
|
Operating Leases
|
|
$
|
127,636
|
|
$
|
127,636
|
|
$
|
127,636
|
|
$
|
85,091
|
|
$
|
467,999
|
|
|
Lease expense was $21,570 for the period from April 1, 2011 to December 31, 2011.
|
|
|
NOTE 6 -
|
ASSISTANCE IN OBTAINING CREDIT FACILITY
|
|
|
|
During 2011, the Company entered into a three year agreement with two members to assist in obtaining a credit facility in the total principal amount of $500,000. On November 30, 2011, the Company agreed to a cash payment of $200,000 to the assisting parties or the assisting parties may elect to receive 1,515,152 member units in the Company as compensation. The members agreed to make the assistance available to the Company within 10 business days and provide a guaranty to the financial institution. The Company recorded a deferred financing cost that is being amortized over the life of the assistance to obtain a credit facility agreement.
|
|
|
|
During 2011, certain members, one of which is also an officer of the Company, provided a guarantee to a financial institution that allowed the Company to obtain a merchant services account. These members also posted a $50,000 certificate of deposit with the financial institution as security for their personal guarantees. In exchange, the members were granted 151,515 member units of the Company, which were valued at $50,000 on the date of grant and recorded in general and administrative expenses.
|
|
|
NOTE 7 -
|
COMMITMENT WARRANTS
|
|
|
|
During 2011, the Company entered into an advisory agreement with Cambria Capital, LLC ("Cambria") with respect to certain financial advisory, investment banking and related matters. As compensation for these services, the Company granted Cambria a retainer warrant ("Warrant") allowing Cambria the right to purchase 400,000 units. The Warrant has an exercise price of $0.60 per unit and the term of the Warrant will be 5 years and is fully assignable. The 400,000 warrants granted to Cambria for advisory services were estimated to have a fair value of approximately $525 using the Black Scholes option pricing model based on the following assumptions: expected dividend yield 0%, expected volatility 17%, risk-free interest rate 0.90%, and expected life of 5 years.
|
|
|
NOTE 8 -
|
WHOLESALE POWER PURCHASE AGREEMENT
|
|
|
|
The Company's wholesale power purchase agreement provides, in addition to certain collateral calls, that the Company will provide additional credit to cover mark to market risk in connection with the purchase and sale of long term power. A mark to market credit risk occurs when the price of power purchased is greater than the current market price. While the Company believes it has purchased its current power at the lowest prices, should a collateral call occur, this could limit the Company's working capital and potentially cause liquidation of power positions should the Company fail to meet the collateral call.
|
|
|
NOTE - 9
|
SUBSEQUENT EVENTS
|
|
|
|
On February 6, 2012, an application for an amendment to the Company's Retail Electric Provider Certification was submitted to the PUCT which sought prior approval of a transaction by and between the Company and Castwell Precast Corporation ("Castwell"), a publicly traded Nevada corporation. The application for amendment was requested to reflect a change in ownership in contemplation of a merger with Castwell. On February 27, 2012, the application to amend the Company's Retail Electric Provider Certification was approved.
|
|
|
|
The transaction is a corporate reorganization pursuant to which the Company's members will contribute all of their units of membership interest in the Company to Castwell in exchange for shares of Castwell common stock and the Company will become a wholly-owned subsidiary of Castwell. At that point, Castwell, as the Company's parent, will be owned by Castwell's current owners plus the Company's current owners. Because Castwell is a US Securities and Exchange Commission (SEC) registrant, the purchase and sale of ownership interest in the Company will be subject to federal securities laws and the regulations of the SEC.
|
|
|
NOTE - 9
|
SUBSEQUENT EVENTS (CONTINUED)
|
|
|
|
The Company will continue business as a Texas limited liability corporation under new ownership and there will be no changes to the Company's day-to-day operations. The Company's financial position will not be adversely impacted by this transaction.
|
|
|
|
On January 27, 2012, an irrevocable standby letter of credit in the amount of $50,000 was secured with a financial institution for the benefit of a wholesale energy provider. The letter of credit is guaranteed by two members who entered into a three year agreement with the Company to assist in obtaining credit facilities.
|
|
|
|
On February 7, 2012, the Company entered into a cancellable one year agent services agreement with QSE, Inc. that is automatically renewable in successive one year periods unless cancelled by either party. For a monthly fee, QSE, Inc. will provide consulting and operational services related to the Company performing as a Qualified Scheduling Entity (QSE) as defined by ERCOT. The Company's financial position will not be adversely impacted by this transaction.
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Period Ended December 31, 2011 Summer LLC
|
|
Year Ended December 31, 2011 Castwell
|
|
Total
|
|
Pro forma
Adjustments (See Notes)
|
|
Pro forma
|
|
|||||
Revenues
|
|
$
|
|
|
$
|
|
|
$
|
-
|
|
$
|
|
|
$
|
-
|
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
Gross Profits
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
General and administrative expenses
|
|
|
321,468
|
|
|
51,330
|
|
|
372,798
|
|
|
(51,330
|
)
|
|
321,468
|
|
Operating loss
|
|
|
(321,468
|
)
|
|
(51,330
|
)
|
|
(372,798
|
)
|
|
51,330
|
|
|
(321,468
|
)
|
Financing costs, net
|
|
|
(4,717
|
)
|
|
|
|
|
(4,717
|
)
|
|
|
|
|
(4,717
|
)
|
Net loss before income taxes
|
|
|
(326,185
|
)
|
|
(51,330
|
)
|
|
(377,515
|
)
|
|
51,330
|
|
|
(326,185
|
)
|
Income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Net loss
|
|
$
|
(326,185
|
)
|
$
|
(51,330
|
)
|
$
|
(377,515
|
)
|
$
|
51,330
|
|
$
|
(326,185
|
)
|
Loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share/unit
|
|
$
|
(0.06
|
)
|
|
(0.01
|
)
|
|
(0.07
|
)
|
|
0.04
|
|
|
(0.03
|
)
|
Basic and diluted weighted average shares/units outstanding
|
|
|
5,650,820
|
|
|
4,077,708
|
|
|
9,728,528
|
|
|
751,183
|
|
|
10,479,711
|
|