LOAN AGREEMENT

THIS LOAN AGREEMENT ("Agreement") is made as of the 29th day of June, 2016 by and among SUMMER ENERGY, LLC, a Texas limited liability company ("Borrower"), SUMMER ENERGY HOLDINGS, INC. , a Nevada Corporation ("Guarantor"), and BLUE WATER CAPITAL FUNDING, LLC , a Florida limited liability company ("Lender").

RECITALS

A.	The Borrower has requested from the Lender an extension of credit in the form of revolving cash advances (the "Loan"), the proceeds of which are to be used to re-finance Borrower's existing debt with a secured lender and for general corporate purposes.

B.	The Lender is willing to agree to provide the Loan to the Borrower on the terms and conditions hereinafter contained;

NOW, THEREFORE , in consideration of the mutual covenants herein contained, the parties hereto agree as follows:

1.   Documents Delivered by Borrower .  To induce the Lender to commit to make the requested Loan, the Borrower shall, on the date hereof, deliver to Lender the following, all of which shall be in form and substance acceptable to the Lender:

1.1

Revolving Promissory Note .  The Borrower's Revolving Promissory Note of even date herewith, in the amount of $5,000,000.00 payable to the Lender (the "Revolving Note");

1.2

Security Agreement .  A Security Agreement ("Security Agreement") in favor of the Lender covering and guarantying Lender a security interest in the collateral described therein ("Collateral");

1.3

Guaranty .  Guaranty of Borrower's obligations hereunder and relating to the indebtedness evidenced by the Revolving Note executed and delivered by Summer Energy Holdings, Inc., a Nevada corporation (the "Guarantor").

1.4

Subordination Agreement .  The Subordination Agreement ("Subordination Agreement") executed and delivered by Lender whereby Lender agrees to subordinate its security interest in the assets of Borrower to DTE Energy Trading, Inc., a Michigan corporation ("DTE Energy") pursuant to that certain Credit Agreement dated April 1, 2014, by and between Borrower and DTE Energy.

1.5

Financing Statement .  UCC‑1 Financing Statement executed by Borrower for filing in such offices as the Lender may deem necessary or desirable relating to the Security Agreement.

1.6

Written Action of Borrower .  A Written Action of the Manager of Borrower in Lieu of a Meeting containing resolutions of Borrower authorizing the Loans.

1.7

Certificate of Status.  A copy of the Borrower's Certificate of Status certified by the Office of the Texas Secretary of State.

1.8

Insurance Certificate .  Certificates of insurance evidencing a policy or policies of insurance covering the Borrower's operations and the Collateral as required by Section 4.2 of this Agreement, such policy to insure against all risks and name the Lender as loss payee on all property policies and as an additional insured as to all liability policies.

1.9

Financial Statements .  Current financial statements of Borrower and Guarantor and in a form and prepared in a manner acceptable to the Lender.

1.10

Searches .  Complete UCC and state and federal tax lien searches from such offices as the Lender may request which confirm that there are no interests which would be prior to the Lender's interest, other than those of DTE Energy.

1.11

Releases .  A release/amendment document pursuant to which any security interest in the Collateral other than the interest of Lender or DTE Energy shall be released.

2.   Commitment of Lender .

2.1

Revolving Loan .  So long as there exists no Event of Default hereunder and no event has occurred which would be an Event of Default with the giving of notice or lapse of time or both, and subject to all other terms and conditions hereof, the Lender shall lend to the Borrower and Borrower may borrow from the Lender for the account of Borrower.  The advances in aggregate outstanding shall not exceed $5,000,000.00.

2.2

Fees .

(a)   Due Diligence Fee .  $10,000.00 due diligence fee which was paid by Borrower to Lender on May 9, 2016.

(b)   Closing Fee .  One percent (1.0%), or $50,000.00), closing fee payable at closing by Borrower, which is defined as the date of funding.

(c)   Minimum Monthly Financing Fee .  Borrower shall pay to Lender a Minimum Monthly Financing Fee as further described in the Revolving Note.

(d)   Late Fees .  Borrower agrees to pay a late payment service charge in an amount equal to three percent (3.0%) of any installment of principal or interest (excluding the final balloon payment) not received by the Lender within ten (10) days after the date due.

2.3

Interest and Payments.  Interest accrued on the Revolving Note shall be payable monthly on or before the tenth day of each month following invoicing and on the same day of each month thereafter.  The interest rate for the Revolving Note shall be 11% per annum.  Interest will accrue on the Revolving Note as stated therein.

2.4

Maturity .  All unpaid principal of the Revolving Note, all interest accrued thereon, and all fees and costs, shall be due and payable on June 30, 2018.

2.5

Computations .  Interest on the Revolving Note and any other compensation payable to Lender thereunder shall be computed on a 365/360 basis; that is, by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.

2.6

Prepayments.   Except as otherwise provided herein or in the Revolving Note, no prepayment premium shall be applicable to any payment of principal pursuant to the Revolving Note.

3.   Representation s and Warranties .   The Borrower represents and warrants that:

3.1

Organization, Qualification and Authorization .  Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Texas; has the power and authority to own its property and to carry on its business as now being conducted; and is duly qualified and licensed to do business, and is in good standing, in every jurisdiction in which the nature of the business in which it is engaged makes such qualification or licensing necessary.

3.2

Validity of Obligations .  Borrower and Guarantor have full power, right and authority to execute and deliver this Agreement, the Revolving Note and all other documents and agreements required to be delivered by Borrower hereunder, as applicable, ("Loan Documents"), to obtain the credit herein provided for, and to perform and observe each and all of the matters and things provided for in the Loan Documents.  The execution and delivery of the Loan Documents and the performance or observance of the terms thereof have been duly authorized by all necessary organizational and member action and do not contravene or violate any provision of law or any provision of Borrower's organizational documents or any covenant, indenture or agreement of or binding upon Borrower, nor require the consent or approval of any governmental entity or agency.

3.3

Title to Assets .  The Borrower has good and marketable title to all of its property and assets reflected in its most recent balance sheet delivered to the Lender, subject to the encumbrances as therein detailed.

3.4

Litigation .  No actions, suits or proceedings are pending or, to Borrower's knowledge, threatened, against or affecting it before any court, governmental or administrative body or agency which might result in any material adverse change in the operations, business property, assets or condition (financial or otherwise) of Borrower, or which would question the validity of this Agreement or of any action taken or to be taken by Borrower pursuant to or in connection with this Agreement.

3.5

No Events of Default .  No Event of Default as hereinafter defined has occurred and is continuing as of the date hereof and no event has occurred and is continuing which would be an Event of Default hereunder were it not for any grace period specified herein or which would become an Event of Default if notice thereof were given to Borrower.

3.6

Financial Condition .  The financial statements of the Borrower heretofore furnished to the Lender, if any, are complete and correct in all material aspects and fairly present the respective financial condition of the Borrower at the date of such statements, and have been prepared in accordance with generally accepted accounting principles, consistently applied.  Since the most recent set of financial statements delivered by the Borrower to the Lender, if any, there have been no material adverse changes in the financial condition of the Borrower.

3.7

Licenses .  The Borrower possesses adequate licenses, permits, franchises, patents, copyrights, trademarks and trade names, or rights thereto, to conduct its business substantially as now conducted and as presently proposed to be conducted.

3.8

Taxes .  The Borrower has filed all tax returns required to be filed and either paid all taxes shown thereon to be due, including interest and penalties, which are not being contested in good faith and by appropriate proceedings, or provided adequate reserves for payment thereof, and the Borrower has no information or knowledge of any objections to or claims for additional taxes in respect of federal income or excise profit tax returns for prior years.

3.9

Public Utility Holding Company Act .  The Borrower is not a public utility company within the meaning of the Public Utility Holding Company Act of 1935, as amended, and is engaged solely in the aggregation and marketing of Full Requirements Service in the United States or other activities in which energy-related companies are permitted to engage pursuant to 17 C.F.R. § 250.58.

4.   Affirmative Covenants .   The Borrower covenants and agrees with Lender that so long as any amount remains unpaid on the Revolving Note, Borrower will:

4.1

Maintain Assets .  Maintain and keep its assets, properties and equipment in good repair, working order and condition and from time to time make or cause to be made all needed renewals, replacements and repairs so that at all times Borrower's business can be operated efficiently.

4.2

Insurance .  Insure and keep insured all of its property of an insurable value under all risk policies in an amount reasonably acceptable to the Lender and carry such other property insurance as is usually carried by persons engaged in the same or similar business (and as required by the Security Agreement) all such insurance to name the Lender as loss payee and additional insured and from time to time furnish to Lender upon request appropriate evidence of the carrying of such insurance.

4.3

Financial Information .  Furnish to the Lender:

(a)   Within 30 (thirty) days after the end of each month, a set of, respectively, interim and annual financial statements, including a balance sheet, statement of cash flow, profit and loss statement and related statements, prepared internally by Borrower in accordance with generally accepted accounting principles;

(b)     Within 90 days after the end of each of Borrower's fiscal years a set of, respectively, interim and annual financial statements, including a balance sheet, statement of cash flow, profit and loss statement and related statements, prepared by Borrower and, compiled for annual statement only, by a public accounting firm reasonably acceptable to Lender, in accordance with generally accepted accounting principles;

(c)   Within 90 days after the end of the Guarantor's fiscal year, Guarantor shall provide a financial statement for such year, prepared on a consistent basis and certified by the Guarantor;

(d)   As soon as available and in any event within thirty (30) days after such returns are filed, a copy of the federal and state income tax return of the Borrower and Guarantor (including all schedules and exhibits) or amendments thereto filed for the immediately preceding year;

(e)   Within 10 (ten) days after the end of each month, an accounts receivable aging report in form and substance reasonably acceptable to Lender;

(f)   Within 30 (thirty) days after the end of each month, a Borrowing Base Certificate in substantially the same form as the Certificate attached hereto as Exhibit A .

(g)   Within 30 (thirty) days after the end of each month, a copy of Borrower's bank statements relating to the following accounts at Comerica Bank:  (i) Borrower's Operating Account:  Comerica Bank Account XXXX0866; (ii) Borrower d/b/a Pronto Power's Operating Account:  Comerica Bank Account XXXX7099; (iii) Borrower's Escrow Operating Account:  Comerica Bank Account XXXX2349; and (iv) Borrower's CoCo Account:  Comerica Bank Account XXXX7354.

(h)   Such other information as the Lender may reasonably request from time to time.

4.4

Access to Records .  Permit any person designated by Lender, at Lender's expense upon reasonable prior notice, during regular business hours and without interruption, to visit and inspect any of its properties, corporate books and financial records and to discuss its affairs, finances and accounts with the principal officers of Borrower, all at such reasonable times and as often as Lender may reasonably request.

4.5

Taxes, Assessments and Charges .  Promptly pay over to the appropriate authorities all sums for taxes deducted and withheld from wages as well as the employer's contributions and other governmental charges imposed upon or asserted against Borrower's income, profits, properties and rental charges or otherwise which are or might become a lien charged upon Borrower's properties, unless the same are being contested in good faith by appropriate proceedings and adequate reserves shall have been established on Borrower's books with respect thereto.

4.6

Notification of Changes .  Promptly notify the Lender of:

(a)   Any litigation actually known to Borrower which might materially and adversely affect Borrower and Guarantor or any of their respective properties;

(b)   The occurrence of any Event of Default under this Agreement or any event of which Borrower has knowledge and which, with the passage of time or giving of notice or both, would constitute an Event of Default under this Agreement.

(c)   Any material adverse change in the operations, business, properties, assets or conditions, financial or otherwise, of the Borrower.

4.7

Corporate Existence .  Maintain its corporate existence in compliance with all applicable statutes, laws, rules and regulations.

4.8

Books and Records .  Keep true and accurate books, records and accounts in accordance with sound accounting and bookkeeping practices.

4.9

Reimbursement of Expenses .  Promptly reimburse Lender for any and all reasonable out-of-pocket expenses, and all fees and disbursements, including attorneys' fees incurred in connection with the performance of this Agreement and the instruments and documents related thereto, and all expenses relating to the administration and collection of the Loans to be made hereunder, including reasonable attorneys' fees.

4 .10

Conduct of Business and Maintenance of Existence .  The Borrower will continue to engage in business of the same general type as now conducted by the Borrower and any of its affiliates and will preserve, renew and keep in full force and effect its corporate existence and its rights, privileges and franchises necessary or desirable in the normal conduct of business.

5.   Negative Covenants .   The Borrower hereby covenants and agrees with the Lender that so long as any amount shall remain unpaid on the Revolving Note, Borrower will not:

5.1

Merge, Consolidate or Sell .  Merge or consolidate with or into another entity, or lease or sell all or substantially all of its property and business to any other entity or entities.  Guarantor shall not sell, dispose or transfer any ownership interest in the Borrower in a single or series of transactions without the express consent of the Lender, which consent may be withheld or granted in Lender's sole and absolute discretion.

5.2

Default on Other Obligations .  Default upon or fail to pay, beyond any applicable periods of grace, any of its other debts or obligations as the same mature, unless the same are being contested in good faith by appropriate proceedings and adequate reserves shall have been established on Borrower's books with respect thereto.

5.3

Limitation on Liens and Encumbrances .  Except for the interests of Lender, the Borrower will not at any time create, assume, incur or permit to exist, any mortgage, lien, pledge, charge, security interest or other encumbrance of any kind in respect of the Collateral (except such interests of DTE Energy as described in the Subordination Agreement and such purchase money security interests granted by Borrower as disclosed to and approved by Lender), or any other assets, income or revenues of any character, whether heretofore or hereafter acquired by it.

5.4

Limitation on Distributions .   Except with regard to regular distributions to Guarantor, the Borrower may not make any distributions of cash or property of any kind whatsoever to its members without the prior written consent of the Lender which shall also include salaries, bonuses or other compensation payable to any manager or key employee of the Borrower in amounts in excess of those set forth in Budgets provided to Lender.

5.5

Negative Pledge.    The Borrower shall not, without Lender's prior written consent, which consent may be withheld or granted in Lender's sole and absolute discretion, sell (except inventory in the ordinary course of business), purchase and/or lease any real or personal property, or other assets or equipment with a value in excess of $100,000.

5.6

Transactions with Affiliates .  With the exception of actions in the ordinary course of business with Guarantor, the Borrower will not, directly or indirectly, pay any funds to or for the account of, make any investment in, engage in any transaction with or effect any transaction in connection with any joint enterprise or other joint arrangement with, any Affiliate of the Borrower, except that the Borrower may make payment or provide compensation (including without limitation the establishment of customary employee benefit plans) for personal services rendered by employees and other Persons on terms fair and reasonable in light of the circumstances under which such services were or are to be rendered.  As used herein, the term "Affiliate" shall mean: (i) any Person that directly, or indirectly through one or more intermediaries, controls the Borrower (a "Controlling Person") or (ii) any Person (other than the Borrower) which is controlled by or is under common control with a Controlling Person.  As used herein, the term "control" means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether the ownership of voting securities, by contract or otherwise.  The term "Person" means an individual, corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

5.7

Transactions with Other Persons .  The Borrower shall not enter into any agreement with any Person whereby any of them shall agree to any restriction on the Borrower's right to amend or waive any of the provisions of this Agreement.

5.8

Use of Proceeds .  The proceeds of the Loan will be used by the Borrower solely used to re-finance Borrower's existing debt with a secured lender and for general   corporate purposes.  The Borrower shall not use the proceeds of the Loan for any other purpose.

6.   Defaults.

6.1

Event of Default .  Any one or more of the following events shall constitute an Event of Default:

(a)   Payment .  Borrower shall fail to pay when due, any payments due under the Revolving Note; provided, however, that Borrower shall have fifteen (15) days within which to cure such default; or

(b)   Other Covenants or Agreements Herein .  Borrower shall default in the due performance or observance of any term, covenant or agreement contained in this Agreement or any of the other Loan Documents and such default shall continue for a period of thirty (30) days after written notice thereof shall have been given by Lender to Borrower, or, if such default does not consist of the non-payment of money and cannot reasonably be cured within thirty (30) days, for such longer period of time not exceeding ninety (90) days as may be necessary to cure such default with the exercise of due diligence so long as Borrower is diligently proceeding to cure such default; or

(c)   Insolvency .  Borrower or Guarantor shall (i) become insolvent, (ii) suspend business, (iii) make a general assignment for the benefit of its creditors, (iv) admit in writing its inability to pay its debts generally as they mature, (v) file a petition in bankruptcy or a petition or answer seeking a reorganization, arrangement with creditors or other similar relief under the Federal bankruptcy laws or under any other applicable law of the United States of America or any State thereof, (vi) consent to the appointment of a trustee or receiver for Borrower or for a substantial part of its property, (vii) be adjudicated a bankrupt or fail to cause an involuntary petition in bankruptcy to be dismissed within sixty (60) days after the filing thereof, (viii) take any action for the purpose of effecting or consenting to any of the foregoing, or (ix) have an order, judgment or decree entered appointing a trustee, conservator or receiver for Borrower or for a substantial part of its property, or approving a petition filed against Borrower seeking a reorganization, arrangement with creditors or other similar relief under the Federal bankruptcy laws or under any other applicable law of the United States of America or any State hereof, which order, judgment or decree shall not be vacated or set aside or stayed within sixty (60) days from the date of entry; or

(d)   Representations and Warranties .  If any material representation or warranty contained in this Agreement or any of the other Loan Documents or any letter or certificate furnished or to be furnished to the Lender by the Borrower or Guarantor pursuant to this Agreement proves to be false in any material respect as of the date executed or delivered to Lender; or

(e)   Judgments .  Judgments against Borrower for the payment of money totaling in excess of $25,000.00 shall be outstanding for a period of thirty (30) days without a stay of execution; or

(f)   Net Worth Stop.     Borrower shall maintain a Book Net Worth of at least $3,958,247.69 at all times; or

(g)   Material Adverse Change .  Any material adverse change shall occur in the condition (financial or otherwise) of the Borrower and Guarantor which, in the reasonable opinion of the Lender, materially increases its risk with respect to the Revolving Note; or

6.2

Lender's Right on Default .  Upon the occurrence of an Event of Default, Lender may, at its option and without notice, and subject to the rights of DTE Energy:  (a) accelerate amounts outstanding on the  Revolving Note and demand immediate payment in full without presentment or other demand, protest, notice of dishonor or any other notice of any kind, all of which are expressly waived; (b) foreclose its lien on the Collateral pursuant to the Security Agreement, as applicable, or take such other actions available under the terms of this Agreement and the other Loan Documents; and (c) take such other actions as may otherwise be available in equity or at law.  All remedies of the Lender shall be cumulative.

7.   Miscellaneous.

7.1

Binding Effect .  The parties hereto agree that this Agreement shall be binding upon and inure to the benefit of their respective successors in interest and assigns including any holder of the Revolving Note, provided, however, that Borrower may not assign or transfer its interest hereunder without the prior written consent of the Lender.

7.2

Governing Law .  This Agreement and the rights and obligations of the parties hereunder and under the Revolving Note and any other Loan Documents, shall be construed in accordance with and governed by the laws of the State of Minnesota.  Borrower and Guarantor hereby consent to the jurisdiction of the courts of the State of Minnesota for any actions brought hereon or on the Revolving Note.

7.3

Notices .  Any notices required or contemplated hereunder shall be effective upon the placing thereof in the United States mails, certified mail and with return receipt requested, postage prepaid, and addressed as follows:

  If to Borrower:     SUMMER ENERGY, LLC

800 Bering Drive, Suite 260

Houston, TX 77057-2228

Attn: Jaleea P. George

With a copy to:   Kirton McConkie, PC

60 E. South Temple, Suite 1800

Salt Lake City, Utah 84111

Tel: (801) 328-3600

Fax: (801) 212-2006

Attention: Alexander N. Pearson

Email: apearson@kmclaw.com

If to Lender:         BLUE WATER CAPITAL FUNDING, LLC

9855 West 78 ^th Street

Eden Prairie, MN  55344

Attn:  Jeffrey Reed

7.4

No Waivers .  No failure or delay on the part of Lender in exercising any right, power or privilege hereunder and no course of dealing between Borrower and Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

7.5

Headings .  The headings of various sections of this Agreement have been inserted for reference only and shall not be deemed to be a part of this Agreement.

7.6

Amendment and Waiver .  Neither this Agreement nor any provision hereof may be modified, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.

EXECUTED, as of the year and day first above written.

BORROWER:

SUMMER ENERGY, LLC,

a Texas limited liability company

By: /s/ Jaleea P. George  

Jaleea P. George __________

Its:   CFO

LENDER:

BLUE WATER CAPITAL FUNDING, LLC

By: /s/ Jeffrey Reed  

Jeffrey Reed

Its: Chief Operating Officer

 

GUARANTOR:

SUMMER ENERGY HOLDINGS, INC.,

a Nevada corporation

By: /s/ Jaleea P. George  

Jaleea P. George  

Its:   CFO

EXHIBIT A

(Borrowing Base Certificate)

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (the " Security Agreement ") is executed as of June 29 , 2016, by Summer Energy, LLC, a Texas limited liability company , whose address is 800 Bering Drive, Suite 260, Houston, Texas 77057-2228 (hereinafter called " Borrower ") to and in favor of Blue Water Capital Funding, LLC , a Florida limited liability company , whose address is 9855 West 78th Street, Suite 300, Eden Prairie, Minnesota 55344 (hereinafter called " Lender ").  Borrower does hereby grant to Lender a security interest in the following described property (hereinafter called " Collateral "):

1.   Collateral .

A.

All equipment of Borrower, whether now owned or hereafter acquired, including, but not limited to, all present and future machinery, fixtures, parts and tools, and goods described in any equipment schedule or list herewith or hereafter furnished to Lender by Borrower (but no such schedule or list need be furnished in order for the security interest granted herein to be valid as to all of Borrower's equipment).

B.

All inventory of Borrower, including but not limited to (i) personal property which are held for sale or lease or are furnished or are to be furnished under a contract of service or which constitute raw materials, work in process or materials used or consumed or to be used or consumed in the Borrower's business, (ii) all inventory, wherever located, evidenced by negotiable and non-negotiable documents of title, warehouse receipts and bills of lading, and (iii) all of the Borrower's rights in, to and under all purchase orders now owned or hereinafter received or acquired by it for goods or services, whether now owned or hereafter acquired and wherever located.

C.

Each and every right of Borrower for the payment of money, whether such right to payment now exists or hereafter arises, whether such right to payment arises out of a sale, lease or other disposition of goods or other property by Borrower, out of a loan by Borrower, out of the overpayment of taxes or other liabilities of Borrower, or otherwise arises under any contract or agreement, whether such right to payment is or is not already earned by performance, and howsoever such right to payment may be evidenced, together with all other rights and interests (including all liens and security interests) which Borrower may at any time have by law or agreement against any account Borrower or other obligor obligated to make any such payment or against any of the property of such account Borrower or other obligor; all including, but not limited to, all present and future debt instruments, chattel paper, loans and obligations receivables, accounts or accounts receivable, tax refunds and accounts, including checking, escrow, deposit, maintenance, earnest money and certificate of deposits.

D.

All general intangibles of Borrower, whether now owned or hereafter acquired, including, but not limited to, applications for patents, copyrights, trademarks, trade secrets, goodwill, trade names, customer lists, permits and franchises, and the right to use Borrower's name.

All substitutions and replacements for and products of any of the foregoing property not constituting consumer goods and together with proceeds of any and all of the foregoing property and, in case of all tangible collateral, together with all accessions and, except in the case of consumer goods, together with all accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed to or used in connection with any such goods.

2.   To secure prompt payment to Lender at the address stated above or such other place as designated in that certain a Revolving Promissory Note of even date herewith, executed by Borrower to and in favor of Lender in the sum of Five Million and no/100 Dollars ($ 5,000,000.00 ) with interest as provided therein, and any and all extensions and renewals thereof, and any and all future advances made by Lender to Borrower at Lender's option, together with all other liabilities of Borrower to Lender (primarily, secondarily, direct, contingent, sole, joint, or several) due or to become due or which may have been heretofore, or may be hereafter, contracted or acquired and the performance by Borrower of all of the terms and conditions of this Security Agreement (hereinafter referred to as " Obligations ").  Lender shall be allowed to file any document, including a UCC Financing Statement, to evidence the security interest granted by this Security Agreement.

BORROWER WARRANTS, REPRESENTS AND AGREES THAT:

1.   Borrower is or will be the owner of the Collateral which shall be acquired after the date hereof, free of all liens, encumbrances and security interests except the security interest hereby created and the security interests in favor of DTE Energy Trading, Inc. as described in the Subordination Agreement.  For the purpose of this Security Agreement, "Subordination Agreement" shall mean and refer to that certain Subordination Agreement executed and delivered by Lender whereby Lender agrees to subordinate its security interest in the assets of Borrower to DTE Energy Trading, Inc., a Michigan corporation pursuant to that certain Credit Agreement dated April 1, 2014, by and between Borrower and DTE Energy Trading, Inc.

2.   The execution, delivery and performance of this Security Agreement and the creation of the security interests provided for herein (i) are within the Borrower's limited liability company power, (ii) have been duly authorized by all necessary limited liability company action, (iii) are not in contravention of any provisions of the Borrower's certificate of formation or limited liability company agreement, (iv) do not violate any law or regulation or any order or decree of any court of government instrumentality applicable to the Borrower, (v) do not conflict with or result in a breach of, or constitute default under, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which the Borrower is a party or by which it or any of its properties are bound, and (vi) do not require the consent or approval of any governmental body, agency or official or other person other than those that have been obtained.  This Security Agreement has been duly executed and delivered by the Borrower and constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforceability of creditors' rights generally and by general provisions of equity (regardless of whether such enforceability is considered a proceeding in equity or at law).

3.   Any and all accounts receivable which are Collateral are genuine and enforceable, and there are no offsets, counterclaims, or defenses to any of them.

4.   Borrower's inventory, books, records, contract rights and other property above specified relating to the Collateral are or will be kept  at the address of the Borrower on the first page of this Security Agreement and Borrower will not, without the prior written consent of Lender, remove or permit the same to be removed from the location or locations set forth above.

5.   Borrower will keep the Collateral insured at all times against loss by fire and/or other hazards concerning which, in the judgment of Lender, insurance protection is reasonably necessary, in a company or companies satisfactory to Lender and in amounts sufficient to protect Lender against loss or damage to said Collateral and will pay the premiums therefor; that such policy or policies of insurance will be delivered to and held by Lender, together with loss payable clauses in favor of Lender as its interest may appear, in form satisfactory to Lender.

6.   No financing statement covering the Collateral, or any part thereof, is on file in any public office in connection with financing granted to Borrower concurrent herewith and the Lender.

7.   Borrower will at any time or times hereafter execute such financing statements and other instruments and perform such acts as Lender may request to establish and maintain a valid security interest in the Collateral, and will pay all costs of filing and recording.

8.   Upon an Event of Default and until Lender shall notify Borrower of the revocation of such power and authority, Borrower will, at its own expense, endeavor to collect, as and when due, any accounts which are Collateral.  Upon the occurrence of an Event of Default (as defined herein) Borrower will, at the Lender's request, deliver all proceeds of such collections to Lender at its request.

9.   Borrower will not lien, pledge or take any action or inaction which would cause a material adverse change in  any accounts which are Collateral without the prior written consent of Lender.

10.   At any time after an Event of Default, Lender may, and at the request of Lender Borrower shall, promptly notify any account borrower or obligor of any account, instrument, chattel paper, other right to payment or general intangible constituting Collateral that the same has been assigned to Lender and direct such account borrower or obligor to make all future payments to Lender.

11.   Borrower will at all times keep accurate and complete records of the Collateral and permit Lender to inspect the same, and the Collateral, at all reasonable times.  Borrower will, upon request of Lender, furnish to Lender such reports and statements as Lender may request with respect to the Collateral and the operation of the Property.

12.   Upon the occurrence and continuance of an Event of Default, Lender, in the name and on behalf of the Borrower or, at its option in its own name, may perform or observe such agreements and take any action which Lender may deem necessary or desirable to cure or correct such failure. Upon the occurrence and continuance of an Event of Default, Borrower irrevocably authorizes Lender and grants Lender a limited power of attorney in the name and on behalf of Borrower or, at its option in its own name, to take any action deemed by Lender to be necessary or desirable to establish, perfect, protect or enforce the security interest created by this Security Agreement.

13.   Borrower will keep and maintain the Collateral in good order and repair and will not sell, encumber, offer to sell, transfer, lease or otherwise dispose of the Collateral other than in the ordinary course of its business without the written consent of Lender.

14.   Borrower will advise Lender promptly and in reasonable detail, (i) of any lien, security interest, encumbrance or claim made or asserted against any of the Collateral, other than that of DTE Energy as described in the Subordination Agreement, (ii) of any material change in the composition of the Collateral, and (iii) of the occurrence of any other event which would have a material effect on the aggregate value of the Collateral or on the security interests granted to the Lender in this Security Agreement.

15.   Until the occurrence of an Event of Default, the Borrower shall be entitled to possession of the Collateral.

16.   Borrower shall be in default under this Security Agreement upon the occurrence of an Event of Default under the Loan Agreement, or if any covenant, warranty or representation of this Security Agreement shall prove to be untrue in any material respect.

17.   In the event of an occurrence of an Event of Default:

(a)

Lender shall have the right, at its option and without demand or notice, to declare all or any part of the Obligations immediately due and payable;

(b)

Lender may exercise, in addition to the rights and remedies granted hereby, all of the rights and remedies of a Lender under the Uniform Commercial Code or any other applicable law;

(c)

Lender may effect all necessary insurance, pay the premiums thereon, and may pay any taxes, liens and encumbrances on the Collateral, and any such payments made by Lender with interest at the highest legal rate allowed by law shall be a part of the Obligations;

(d)

Borrower agrees to make the Collateral available to Lender; and

(e)

Borrower agrees to pay all costs and expenses of Lender, including reasonable attorneys' fees, in the collection of any of the Obligations or the enforcement of any of Lender's rights.

(f)

Lender may by judicial process, or without judicial process if it can done without breach of the peace, enter any premises where any of such Collateral is or may be located, and without charge or liability to Lender, seize and remove such Collateral from such premises and have access to and use of the Borrower's books and records relating to such Collateral.

18.   The following terms and conditions shall apply to this Security Agreement:

(a)

If any notification of intended disposition of any of the Collateral is required by law, such notification shall be deemed reasonable and properly given if mailed at least ten (10) days before such disposition, postage prepaid, addressed to Borrower at the address shown herein.

(b)

Waiver of any default hereunder by Lender shall not be a waiver of any other default or of a same default on a later occasion.  No delay or failure by Lender to exercise any right or remedy shall be a waiver of such right or remedy and no single or partial exercise by Lender of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy at any other time.

(c)

This Security Agreement and all rights and obligations hereunder, including matters of construction, validity and performance, shall be governed by the laws of Minnesota, without regard to principles of conflicts of law.  If any part of this Security Agreement shall be adjudged invalid, the remainder shall not thereby be invalidated.

(d)

If more than one party shall sign this Security Agreement, the term "Borrower" shall mean all such parties and each of them and all such parties shall be jointly and severally obligated hereunder.  All rights of Lender shall inure to the benefit of the Lender's successors and assigns, and all obligations of Borrower shall bind Borrower's successors and assigns.

(e)

This Security Agreement contains the entire agreement between the parties, and no oral agreements shall be binding.

17.   The Borrower represents, certifies, warrants and agrees that the Borrower understands all of the provisions of this Security Agreement. The Borrower also agrees that compliance by the Lender with the express provisions of this Security Agreement shall constitute good faith and shall be considered reasonable for all purposes.

LENDER:

BLUE WATER CAPITAL

FUNDING, LLC ,

a Florida limited liability company

By: /s/ Jeffrey Reed  

Jeffrey Reed

Its:  Chief Operating Officer

BORROWER:

SUMMER ENERGY, LLC,

a Texas limited liability company

 

 

GUARANTY

THIS GUARANTY (the " Guaranty ")   is made effective as of June 29 , 2016, by SUMMER ENERGY HOLDINGS, INC. , a Nevada corporation (the   " Guarantor "),   for the benefit of BLUE WATER CAPITAL FUNDING, LLC, a Florida limited liability company (" Lender "),   with reference to the following facts:

A.   Lender has agreed to make a loan (the " Loan ")   to SUMMER ENERGY, LLC , a Texas limited liability company (" Borrower "), as evidenced by that certain Revolving Promissory Note dated of even date herewith in the principal amount of $5,000,000.00 (" Revolving Note "), which Note is secured by, inter alia , that certain Security Agreement, dated June 29, 2016, given by Borrower to Lender (collectively, the " Loan Documents ").

B.   The Loan Documents are hereby made a part of this Guaranty by reference thereto with the same force and effect as if fully set forth herein and, to the best of the Guarantor's knowledge, all representations and warranties made by the Borrower in the Loan Documents are true and correct.  U nless otherwise defined herein, all terms shall have the same meaning given to them in the Loan Documents.

C.   As a condition of the making of the Loan and as additional security for the Loan, Lender has required that Guarantor guarantee the obligations of Borrower under the Revolving Note in accordance with the terms of this Guaranty.

D.   The Guarantor, is the sole member of Borrower, and as a result will derive direct and indirect benefits from the Loan given by Lender to Borrower.

NOW, THEREFORE , in consideration of Lender's agreement to make the Loan and as an inducement to Lender to do so, Guarantor covenants and agrees with Lender, for the benefit of the holder from time to time of the Notes, as follows:

ARTICLE ONE - REPRESENTATIONS AND WARRANTIES

Guarantor makes the following representations and warranties which shall be continuing representations and warranties until this Guaranty expires in accordance with the provisions contained herein:

1.01   Guaranty Authorized and Binding .  The execution, delivery and performance of this Guaranty do not require the consent or approval of any governmental body or other regulatory authority; are not in contravention of, or in conflict with, any law or regulation; and this Guaranty is a valid and legally binding obligation of Guarantor enforceable in accordance with its terms.

1.02   No Conflict . The execution and delivery of this Guaranty are not, and the performance of this Guaranty will not be, in contravention of, or in conflict with, any agreement, indenture or undertaking to which Guarantor is a party or by which Guarantor or Guarantor's property is or may be bound or affected and do not, and will not cause any security interest, lien or other encumbrance to be created or imposed upon any such property.

1.03   Solvency . The execution and delivery of this Guaranty will not (i) render Guarantor insolvent under generally accepted accounting principles nor render Guarantor Insolvent (as defined below), (ii) leave Guarantor with remaining assets which constitute unreasonably small capital given the nature of Guarantor's business, or (iii) result in the incurrence of Debts beyond Guarantor's ability to pay them when and as they mature. For the purposes of this Section, "Insolvent" means that the present fair saleable value of assets is less than the amount that will be required to pay the probable liability on existing Debts as they become absolute and matured. For the purposes of this Section, "Debts" includes any legal liability for indebtedness, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent.

1.04   Financial or Other Benefit or Advantage . Guarantor hereby acknowledges and warrants that Guarantor has derived or expects to derive a financial or other benefit or advantage from the Loan and from each and every renewal, extension, release of collateral or other relinquishment of legal rights made or granted or to be made or granted by Lender to Borrower in connection with the Loan.

1.05   Bankruptcy .  There are no: (i) bankruptcy proceedings involving Guarantor and none is contemplated; (ii) unsatisfied judgments of record against Guarantor; or   (iii) tax liens filed against Guarantor.

1.06   Other Obligations .  Guarantor is not: (i) in default in the payment or performance of any of Guarantor's obligations in connection with borrowed money or any other major obligation; or (ii) in default under any other material contract or agreement to which Guarantor is a party.

ARTICLE TWO - AGREEMENTS

2.01   Guaranty . Guarantor hereby unconditionally and irrevocably guarantees the due and punctual payment of the principal due under the Revolving Note up to the amount of Five Million and 00/100 Dollars ($5,000,00.00), plus interest, late fees, reasonable attorneys' fees and costs (and all renewals, extensions, modifications and rearrangements thereof (the "Guaranteed Obligations") and whether or not the Guaranteed Obligations are valid and enforceable against the Borrower, whenever the Guaranteed Obligations become due, whether on demand, at maturity or by reason of acceleration, or at the time the Borrower or the Guarantor shall become the subject of any bankruptcy or insolvency proceeding. This is a guaranty of payment and not of collection only.

2.02   Obligations Absolute . The obligations of Guarantor hereunder shall remain in full force and effect without regard to, and shall not be affected or impaired by the following, any of which may occur or be taken without the consent of, or notice to, Guarantor, nor shall any of the following give Guarantor any recourse or right of action against Lender:

(a)   Any express or implied amendment, modification, renewal, addition, supplement, extension (including, without limitation, extensions beyond the original term) or acceleration of or to any of the Loan Documents;

(b)   Any exercise or non-exercise by Lender of any right or privilege under this Guaranty or any of the Loan Documents;

(c)   Any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Guarantor or Borrower, or any guarantor (which term shall include any other party at any time directly or contingently liable for any of the Borrower's obligations under the Loan Documents or any affiliate of Borrower), or any action taken with respect to this Guaranty by any trustee or receiver, or by any court, in any such proceeding, whether or not Guarantor shall have had notice or knowledge of any of the foregoing;

(d)   Any release or discharge of the Borrower from its liability under any of the Loan Documents or any release or discharge of any endorser or guarantor or of any other party at any time directly or contingently liable for the Guaranteed Obligations or any compromise or settlement by Lender of any of its claims against any of them;

(e)   Any subordination, compromise, release (by operation of law or otherwise), discharge, compound, collection, or liquidation of any or all of the Collateral or otherwise in any manner, or any substitution with respect thereto;

(f)   Any assignment or other transfer of this Guaranty in whole or in part or of any of the Loan Documents;

(g)   Any acceptance of partial performance of the Guaranteed Obligations;

(h)   Any consent to the transfer of, or actual transfer of, the Collateral which is not in conformity with such agreements or otherwise;

(i)   Any bid or purchase at any sale of the Collateral, or any portion thereof;

(j)   Any taking and/or acceptance of any additional guarantees, collateral or security; and

(k)   Any failure to perfect or to continue the perfection of any security.

2.03   Waivers . Guarantor unconditionally waives any defense to the enforcement of this Guaranty, including, without limitation:

(a)   All presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance of this Guaranty;

(b)   Any right to require Lender to proceed against Borrower or any guarantor at any time or to proceed against or exhaust any security held by Lender at any time or to pursue any other remedy whatsoever at any time;

(c)   The defense of any statute of limitations affecting the liability of Guarantor hereunder, the liability of Borrower or any guarantor under the Loan Documents, or the enforcement hereof; to the extent permitted by law;

(d)   Any defense arising by reason of any invalidity or unenforceability of any of the Loan Documents or any disability of Borrower or any guarantor or of any manner in which Lender has exercised its rights and remedies under the Loan Documents, or by any cessation from any cause whatsoever of the liability of Borrower or any guarantor;

(e)   Any defense based upon an election of remedies by Lender, including, without limitation, any election to proceed by judicial or nonjudicial foreclosure of any security, whether real property or personal property security, or by deed in lieu thereof; and whether or not every aspect of any foreclosure sale is commercially reasonable, or any election of remedies, including but not limited to remedies relating to real property or personal property security, which destroys or otherwise impairs the subrogation rights of Guarantor or the rights of Guarantor to proceed against Borrower or any other guarantor for reimbursement, or both;

(f)   Any duty of Lender to advise Guarantor of any information known to Lender regarding the financial condition of Borrower and all other circumstances affecting Borrower's ability to perform its obligations to Lender, it being agreed that Guarantor assumes the responsibility for being and keeping informed regarding such condition or any such circumstances; and

(g)   Any rights of subrogation, reimbursement, exoneration, contribution and indemnity, and any rights or claims of any kind or nature against Borrower which arise out of or are caused by this Guaranty, and any rights to enforce any remedy which Lender now has or may hereafter have against Borrower and any benefit of; and any right to participate in, any security now or hereafter held by Lender, until all of the Guaranteed Obligations have been fully paid and performed.

2.04   Subrogation . Guarantor understands that the exercise by Lender of certain rights and remedies may affect or eliminate Guarantor's right of subrogation against Borrower or any guarantor and that Guarantor may therefore incur partially or totally nonreimbursable liability hereunder. Nevertheless, Guarantor hereby authorizes and empowers Lender, its successors, endorsees and/or assigns, to exercise in its or their sole discretion, any rights and remedies, or any combination thereof; which may then be available, it being the purpose and intent of Guarantor that the obligations hereunder shall be absolute, continuing, independent and unconditional under any and all circumstances.

2.05   Additional Waivers . No Guarantor shall be released or discharged, either in whole or in part, by  Lender's failure or delay to (i) perfect or continue the perfection of any lien or security interest in any collateral which secures the obligations of the Borrower or Guarantor, or (ii) protect the property covered by such lien or security interest.

2.06   Independent and Separate Obligations . The obligation of Guarantor hereunder is independent of the obligation of Borrower and, in the event of any default hereunder, a separate action or actions may be brought and prosecuted against Guarantor whether or not Guarantor is the alter ego of Borrower and whether or not Borrower is joined therein or a separate action or actions are brought against Borrower. Lender's rights hereunder shall not be exhausted until all of the Guaranteed Obligations have been fully paid and performed.

2.07   Bankruptcy No Discharge; Repayments . So long as any of the Guaranteed Obligations guaranteed hereunder shall be owing to Lender, Guarantor shall not, without the prior written consent of Lender, commence or join with any other party in commencing any bankruptcy, reorganization or insolvency proceedings of or against Borrower. Guarantor understands and acknowledges that by virtue of this Guaranty, it has specifically assumed any and all risks of a bankruptcy or reorganization case or proceeding with respect to Borrower. As an example and not in any way of limitation, a subsequent modification of the Guaranteed Obligations in any reorganization case concerning Borrower shall not affect the obligation of Guarantor to pay and perform the Guaranteed Obligations in accordance with their respective original terms. If claim is ever made upon Lender for repayment of the obligations under the Loan Documents and Lender repays all or any part of said amount, then, notwithstanding any revocation or termination of this Guaranty or the cancellation of the Revolving Note or any other instrument evidencing the Loan, Guarantor shall be and remain jointly and severally liable to Lender for the amount so repaid to the same extent as if such amount had never originally been received by Lender.

ARTICLE THREE - MISCELLANEOUS

3.01   Expenses . In addition to the Guaranteed Obligations, Guarantor agrees to pay all costs and expenses, including reasonable attorneys' fees, which may be incurred by Lender in any effort to collect or enforce any of the Loan Documents or the obligations of Guarantor hereunder, whether or not any lawsuit is filed including, without limitation, all costs and reasonable attorneys' fees incurred by Lender in any bankruptcy proceeding (including, without limitation, any action for relief from the automatic stay of any bankruptcy proceeding, whether or not Lender prevails therein) and in any judicial or nonjudicial foreclosure action. Such amounts shall bear interest until paid at a rate equal to the Interest Rate, as defined in the Revolving Note.

3.02   Amendments; Successors . Neither this instrument nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. All of the terms of this instrument shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, personal representatives, successors and assigns. In the event of the death of any individual person included in the term "Guarantor," this Guaranty shall be enforceable as a claim against that individual's estate or otherwise against the representatives of the individual's estate, the individual's heirs-at-law, the devisees and beneficiaries of the individual's total estate and each of them. The term "Borrower" shall mean both the named Borrower and any other person or entity at any time assuming or otherwise becoming primarily liable on all or any part of the obligations set forth in the Loan Documents. No delay or failure by Lender to exercise any remedy against Borrower or Guarantor will be construed as a waiver of that right or remedy. All remedies of Lender are cumulative and may be exercised singly, simultaneously, consecutively and in any order. In the event that the provisions of this Guaranty are claimed or held to be inconsistent with any other instrument evidencing or securing the Loan, or the obligations of Guarantor, the terms of this Guaranty shall remain fully valid and effective.  When the context in which the words are used in this Guaranty indicates that such is the intent, words in the singular number shall include the plural and vice-versa. All references to "Guarantor" shall be interpreted to include Guarantor. If any one or more of the provisions of this Guaranty should be determined to be illegal or unenforceable, all other provisions shall remain effective. Guarantor shall not have the right to assign any of its rights or obligations under this Guaranty.

3.03   Governing Law . This Guaranty shall be governed by and be construed pursuant to the laws of the State of Minnesota applicable to contracts made and performed in the State of Minnesota without reference to any conflict or choice of law rules that would otherwise apply. Any suit, action or proceeding arising out of or in connection with this Agreement may be brought in any state or federal court in Hennepin County, Minnesota, as Lender elects, and the parties hereto irrevocably submit and consent to the jurisdiction of each such court and agree that any summons, complaint, writ, judgment or other notice or service or legal process may be sufficiently served upon it in connection with any such suit, action or proceeding, if sent to the last known address of the applicable party in accordance with the provisions of Section 3.07 hereof. The submission to said jurisdiction shall not (and shall not be construed so as to) limit the right of the Lender to take proceedings against the Guarantor, in whatsoever jurisdictions shall be appropriate nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not.

THE LENDER BY ITS ACCEPTANCE HEREOF AND THE GUARANTOR HEREBY VOLUNTARILY, KNOWINGLY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING UNDER THIS GUARANTY OR CONCERNING THE GUARANTEED OBLIGATIONS AND/OR ANY COLLATERAL CONTEMPLATED THEREBY, REGARDLESS OF WHETHER SUCH ACTION OR PROCEEDING CONCERNS ANY CONTRACTUAL OR TORTIOUS OR OTHER CLAIM.  THE GUARANTOR ACKNOWLEDGES THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT TO THE LENDER IN EXTENDING THE TO THE BORROWER, THAT THE LENDER WOULD NOT HAVE EXTENDED THE LOAN WITHOUT THIS JURY TRIAL WAIVER, AND THAT THE GUARANTOR HAS BEEN REPRESENTED BY AN ATTORNEY OR HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY IN CONNECTION WITH THIS JURY TRIAL WAIVER AND UNDERSTANDS THE LEGAL EFFECT OF THIS WAIVER.

3.04   Assignability by Lender . Lender may, at any time and from time to time, assign, conditionally or otherwise, all of the rights of Lender under the Revolving Note and under this Guaranty, whereupon the assignee shall succeed to all rights of Lender hereunder to the extent that such rights may be assigned to it. Lender, or each successor holder of the Revolving Note, may give written notice to Guarantor of any such assignment, but any failure to give, or delay in giving, such notice shall not affect the validity or enforceability of any such assignment.

3.05   Demands . Each demand by Lender for performance or payment hereunder shall be in writing and shall be made in the manner set forth in Section 3.07 below. A dated statement signed by an officer of Lender setting forth the amount of indebtedness at the time owing to Lender by Borrower under the Loan Documents shall be presumptive evidence thereof (subject to rebuttal) as between Guarantor and Lender in any legal proceedings against Guarantor in connection with this Guaranty.

3.06   Term . The obligations of Guarantor under this Guaranty shall continue in full force and effect until the obligations under the Loan Documents shall have been fully paid and performed.

3.07   Notices . All notices and demands hereunder shall be deemed to have been duly given if personally delivered or mailed by United States registered or certified mail, with return receipt requested, postage prepaid to the parties at the following addresses (or at such other addresses as shall be given by written notice by any party to the others) and shall be deemed complete upon any such mailing:

3.08   Complete Agreement . This Guaranty supersedes any prior negotiations, discussions or communications between Guarantor and Lender and constitutes the entire agreement between Lender and Guarantor with respect to the Guaranteed Obligations. This Guaranty may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same Guaranty.

3.09   Obligation Absolute .  This Guaranty and the obligations of Guarantor hereunder shall be effective upon delivery to the Guarantor, without further act, condition or acceptance by the Lender, shall be binding upon the Guarantor and the heirs, representatives, successors and assigns of the Guarantor, and shall inure to the benefit of the Lender and its participants, successors and assigns.  The Guarantor further waives notice of Lender's acceptance hereof.

3.10   Headings .  The captions and headings to the sections and paragraphs of this Guaranty are for convenience only and shall not be deemed part of the text of the respective sections or paragraphs and shall not vary, by implication or otherwise, any of the provisions of this Guaranty.

[SIGNATURE PAGE FOLLOWS.]

IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of the date first above written.

GUARANTOR:

SUMMER ENERGY HOLDINGS, INC.,

a Nevada corporation

By:  /s/ Jaleea P. George  

Its:  CFO

REVOLVING PROMISSORY NOTE

 

$5,000,000.00	Houston, Texas
	June 29 , 2016

 

FOR VALUE RECEIVED , Summer Energy, LLC, a Texas limited liability company, at 800 Bering Drive, Suite 260, Houston, Texas 77057-2228 ("Borrower"), hereby promises to pay to the order of Blue Water Capital Funding, LLC, a Florida limited liability company at 9855 West 78 ^th Street, Suite 300, Eden Prairie, Minnesota 55344 ("Lender"), the principal sum of Five Million and no/100 Dollars ($5,000,000.00), together with interest on the unpaid Principal Balance at the rate of 11% per annum in accordance with the following terms and conditions:

1.

Interest.   Interest shall be computed on the actual number of days elapsed in a three hundred sixty (360) day year.

2.

Payments.  Borrower shall pay monthly installments of accrued interest only, with the first such payment due on August 10, 2016, and continuing thereafter on the same day of each successive month until the Maturity Date.

3.

The maturity of this   Note is June 30, 2018 (the "Maturity Date"), at which time all principal then outstanding and accrued interest will be due.  The outstanding principal balance of this Note may be prepaid at any time at the option of Borrower, in whole or in part, with no prepayment penalty or premium except as otherwise provided for herein.  No partial prepayment shall postpone the due date of any monthly payments or reduce the amount of any monthly payment, unless the Lender agrees otherwise, in advance, in writing.

4.

Security.   This Note is secured by that certain: (i) Guaranty of even date herewith given by Summer Energy Holdings, Inc., a Nevada corporation (" Guarantor "); and (ii) Security Agreement, dated June 29 , 2016 given by Borrower to Lender (collectively, the " Loan Documents ").

5.

Revolving Line of Credit.  Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions of this Note, provided that amounts advanced, plus amounts committed but not yet advanced, under this Note shall at no time exceed eighty percent (80%) of Borrower's accounts less the amounts owed to DTE Energy Trading, Inc. as provided for in Borrower's Borrowing Base Certificate. The unpaid principal balance of this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less the amount of principal payments made hereon by or for any Borrower, which principal balance may be endorsed hereon from time to time by the holder.

6.

Minimum Monthly Financing Fee.  " A Minimum Monthly Financing Fee" will be imposed for the duration of the term in the amount of $22,500 per full calendar month.  In the event of full repayment of the Revolving  Note and termination of the facility, including a request by Borrower for termination of the UCC Financing Statements, at any time prior to the Maturity, for any reason, Borrower shall pay a prepayment fee to Lender equal to the Minimum Monthly Financing Fee multiplied by the number of calendar months (whole or fractional) from the earlier date of full repayment, request for termination of the UCC Financing Statements or termination to and including the date of Maturity.  The prepayment fee calculated pursuant to this paragraph is due upon receipt of an invoice tendered to Borrower for the same.  Lender will not terminate or release any security interest in its favor until such invoice is paid in full.

7.

Events of Default.   The occurrence of any of the following shall constitute an " Event of Default ":

a.

If any scheduled installment of principal or interest, including but not limited to any balloon payment, is not paid when due, provided, however, that Borrower shall have fifteen (15) days within which to cure such default

b.

The voluntary or involuntary commencement of any bankruptcy or insolvency action or proceeding by or against Borrower under federal or state law; the voluntary or involuntary application for or consent to the appointment of a receiver, trustee, liquidator or custodian for Borrower or a substantial part of Borrower's property; the inability of Borrower, or the admission, in writing of Borrower, of Borrower's inability to pay its   debts generally as they mature.

c.

The failure of Borrower to comply with any provision of the Loan Documents.

8.

Rights of Lender upon Default.   Upon the occurrence or existence of any Event of Default and at any time thereafter during the continuance of such Event of Default, the Lender may:

a.

Declare, without further notice, the principal balance and all accrued interest thereon immediately due and payable without presentment, demand, protest or any other notice of any kind.  The failure to exercise such right or option at any time shall not constitute a waiver of the same at any subsequent time.

b.

Exercise any other right, power or remedy granted to Lender by this Note, the Loan Documents or pursuant to applicable law.

c.

Borrower shall also pay any and all reasonable costs, attorneys' fees and any and all other costs and expenses incurred in the preparation, execution, collection, protection, defense, preservation, or enforcement of this Note or any endorsement of this Note or in any litigation arising out of the transactions of which this Note or any endorsement of this Note is a part, or any other documents, including but not limited to this Note and the Loan Documents referenced herein.

9.

Waiver.   Borrower hereby expressly waives presentment, demand, and protest of any other kind of notice.

10.

Amendment.   Any term of this Note may be amended or waived only with the written consent of both Borrower and Lender.

11.

Successor and Assigns.   The terms and conditions of this Note shall inure to the benefit and be binding on the respective successors and assigns of the parties.

12.

Governing Law.   This Note shall be governed by and interpreted in accordance with the laws of the State of Minnesota.

13.

Usury.   All agreements herein are expressly limited so that in no contingency or event whatsoever shall the amount paid or agreed to be paid to the Lender for the use, forbearance or detention of the money to be advanced hereunder exceed the highest lawful rate permissible under applicable usury laws.  If from any circumstances whatsoever fulfillment of any provision hereof at the time performance of such provisions shall be due shall involve transcending the limit of validity prescribed by law which a court of competent jurisdiction may deem applicable hereto, then the obligation to be fulfilled shall be reduced to the limit of such validity and if from any circumstance the Lender shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance due hereunder and not to the payment of interest.

IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly executed this Note the day and year first above written.

[SIGNATURE PAGE TO FOLLOW]

 

SUMMER ENERGY, LLC,

a Texas limited liability company

By: /s/ Jaleea P. George  

        Jaleea P. George  

Its:  CFO