Item 1.02Termination of a Material Definitive Agreement
Commercial Lease Agreement; Termination of Sublease
On December 23, 2020, Summer Energy Holdings, Inc., a Nevada corporation (the
"Company"), entered into a Commercial Lease Agreement (the "Lease") with PKY-SAN
Felipe Plaza, L.P., a Delaware limited partnership (the "Landlord"), pursuant to
which the Company will lease approximately 20,073 square feet of space
(the "Premises") located on the 37th floor of 5847 San Felipe, Houston, Texas
77057, for a term beginning on November 1, 2020, and terminating on October 31,
2023 (the "Lease Term"). The Company intends to occupy the Premises as its
corporate headquarters. Pursuant to the Lease, the Company will pay rent of
$15,891.13 per month during the Lease Term. The Company is also responsible for
2.047% of the operating expenses, utilities and taxes. The Lease also contains
customary events of default.
Concurrent with the signing of the Lease, the Sublease Agreement dated October
13, 2017, between the Company and ENSCO International Incorporated, a Delaware
corporation, relating to the Company's sublease of the Premises, as disclosed on
the Company's Current Report on Form 8-K filed with the Commission on October
20, 2017, was terminated.
The foregoing summary of the terms of the Lease is qualified in its entirety by
the actual terms of the Lease, which is attached hereto as Exhibit 10.1 and is
incorporated herein by reference.
Item 1.01Entry into a Material Definitive Agreement
Item 3.02Unregistered Sales of Equity Securities
Amendment and Restatement of Notes
On December 4, 2020, the Company signed a Master Revolving Note (the "Note")
with Comerica Bank (the "Bank") in the amount of up to $9,000,000. The Note
amends, restates, supersedes and replaces (i) that certain Master Revolving Note
originally dated as of December 9, 2017, as amended, in the amount of
$2,900,000, and (ii) that certain Single Payment Note originally dated as of
December 20, 2019, as amended, in the amount of $2,100,000. The Note has a
maturity date of December 1, 2021, with interest thereon at a per annum rate
equal to the "Prime Referenced Rate" plus the "Applicable Margin." The "Prime
Referenced Rate" means, for any day, a per annum interest rate which is equal to
the "Prime Rate" in effect on such day, but in no event and at no time shall the
"Prime Referenced Rate" be less than the sum of the Daily Adjusting LIBOR rate
for such day plus 2.5% per annum. "Prime Rate" means the per annum rate
established by the Bank as its prime rate for its borrowers at any such time.
Pursuant to the Note, the Bank may, by written notice to the Company, declare
the principal of and the accrued interest on all outstanding loans to be
forthwith due and payable upon the occurrence of certain events of default. The
Note defines "default" to include, inter alia, (i) a default in payment when due
of all or any part of any obligation payable by the Company under the Note, (ii)
a default in the observance or performance of certain of the provisions set
forth in the Note, (iii) any representation or warranty made in connection with
the Note proves untrue or incomplete, (iv) the filing or issuance of any levy or
writ of attachment or garnishment or other like judicial process upon the
Company or any guarantor, and (v) any other specified event of default.
Guaranty of the Note has been made by four members of the Company's board of
directors ("Guarantors"). The Company agreed to issue the four Guarantors shares
of the Company's common stock on a monthly basis depending on the outstanding
balance due and owing under the Note for agreeing to act as a Guarantor. As a
condition to the Bank entering into the Note, and as an additional guaranty for
the amounts due and owing under the Note, the Company's President and Chief
Executive Officer, Neil Leibman, entered into a Liquidity Maintenance Agreement
with the Bank whereby Mr. Leibman agreed to maintain a certain level of assets
with the Bank while the Note is outstanding. In consideration for such
additional guaranty, the Company agreed to issue Mr. Leibman 200,000 shares of
the Company's common stock (the "Guaranty Shares"). The Guaranty Shares were
issued in reliance upon an exemption from registration under Section 4(a)(2) of
the Securities Act. The Company's reliance upon Section 4(a)(2) of the
Securities Act was based in part upon the following factors: (a) the issuance of
the securities was in connection with an isolated private transaction which did
not involve any public offering; (b) there were a limited number of
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offerees; (c) there were no subsequent or contemporaneous public offerings of
the securities by the Company; (d) Mr. Leibman made certain representations to
the Company relating to his investment intent, that he was acquiring the
securities for his own account and not for the accounts of others; and (e) the
negotiations for the sale of the securities took place directly between Mr.
Leibman and the Company.
The foregoing summary of the terms of the Note is qualified in its entirety by
the actual terms of the Note, which is attached hereto as Exhibit 10.2 and is
incorporated herein by reference.
Item 1.01Entry into a Material Definitive Agreement
Item 3.02Unregistered Sales of Equity Securities
Item 5.02Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers
Employment Agreement of Jaleea P. George; Issuance of Options
On January 22, 2020, the Company entered into a new employment agreement (the
"George Agreement") with Jaleea P. George to serve as Secretary, Treasurer and
Chief Financial Officer ("CFO") of the Company. Ms. George will continue to
report to the Company's Board of Directors (the "Board") and will have duties
and responsibilities assigned by the Board. The Company may terminate Ms.
George's employment under the George Agreement without cause at any time on
thirty days' advance written notice, at which time Ms. George would receive
severance pay for six (6) months. Ms. George was originally appointed to the
position of Secretary, Treasurer and CFO in March 2012. By agreement of the
parties, the George Agreement is effective as of January 1, 2021, has a term of
one (1) year, and provides for an annual base salary of $200,000 for the term of
the George Agreement. Ms. George will also receive the customary employee
benefits paid by the Company. Concurrent with the execution of the George
Agreement, Ms. George was granted an option to purchase 50,000 shares of the
Company's common stock with an exercise price of $1.50 per share, subject to
adjustment based on the price per share quoted on the OTC Markets on the date of
grant (the "George Signing Option"), which vested immediately upon the grant
thereof. Ms. George is also eligible to receive additional options to purchase
shares of the Company's common stock if certain Company performance metrics are
achieved each calendar quarter throughout the term of the George Agreement (the
"George Quarterly Options," and together with the George Signing Option, the
"George Options"). The George Quarterly Options, when and if granted, will have
an exercise price equal to the greater of (i) the fair market value of a share
of the Company's common stock on the date of grant and (ii) $1.50 per share.
The George Options will be granted independent of, and not pursuant to, the
Company's 2018 Stock Option and Stock Award Plan, or any other stock option and
stock award plan.
The George Signing Option was issued in reliance upon an exemption from
registration under Section 4(a)(2) of the Securities Act. The Company's
reliance upon Section 4(a)(2) of the Securities Act was based in part upon the
following factors: (a) the issuance of the securities was in connection with an
isolated private transaction which did not involve any public offering; (b)
there were a limited number of offerees; (c) there were no subsequent or
contemporaneous public offerings of the securities by the Company; (d) Ms.
George made certain representations to the Company relating to her investment
intent, that she was acquiring the securities for her own account and not for
the accounts of others; and (e) the negotiations for the sale of the securities
took place directly between Ms. George and the Company.
Employment Agreement of Neil M. Leibman; Issuance of Options
On January 22, 2020, the Company entered into a new employment agreement (the
"Leibman Agreement") with Neil M. Leibman to serve as President and Chief
Executive Officer ("CEO") of the Company. Mr. Leibman will continue to report
to the Company's Board and will have duties and responsibilities assigned by
the Board. The Company may terminate Mr. Leibman's employment under the Leibman
Agreement without cause at any time on thirty days' advance written notice, at
which time Mr. Leibman would receive severance pay for six (6) months. By
agreement of the parties, the Leibman Agreement is effective as of January 1,
2021, has a term of one (1) year, and provides for an annual base salary of
$250,000 for the term of the Leibman Agreement. Mr. Leibman will also receive
the customary employee benefits paid by the Company. Concurrent with the
execution of the Leibman Agreement, Mr. Leibman was granted an option to
purchase 75,000 shares of the Company's common stock with a strike price of
$1.50 per share, subject to adjustment based on the price per share quoted on
the OTC Markets on the date of grant (the "Leibman Signing Option"), which
vested immediately upon the grant thereof. Mr. Leibman is also eligible to
receive additional options to purchase shares of the Company's common stock if
certain Company performance
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metrics are achieved each calendar quarter throughout the term of the Leibman
Agreement (the "Leibman Quarterly Options," and together with the Leibman
Signing Option, the "Leibman Options"). The Leibman Quarterly Options, when and
if granted, will have an exercise price equal to the greater of (i) the fair
market value of a share of the Company's common stock on the date of grant and
(ii) $1.50 per share. The Leibman Options will be granted independent of, and
not pursuant to, the Company's 2018 Stock Option and Stock Award Plan, or any
other stock option and stock award plan.
The Leibman Signing Option was issued in reliance upon an exemption from
registration under Section 4(a)(2) of the Securities Act. The Company's
reliance upon Section 4(a)(2) of the Securities Act was based in part upon the
following factors: (a) the issuance of the securities was in connection with an
isolated private transaction which did not involve any public offering; (b)
there were a limited number of offerees; (c) there were no subsequent or
contemporaneous public offerings of the securities by the Company; (d) Mr.
Leibman made certain representations to the Company relating to his investment
intent, that he was acquiring the securities for his own account and not for the
accounts of others; and (e) the negotiations for the sale of the securities took
place directly between Mr. Leibman and the Company.
The foregoing summary of the terms of the George Agreement and the Leibman
Agreement are qualified in their entirety to the actual terms of the employment
agreements, which are attached hereto as Exhibits 10.3 and 10.4, respectively,
and are incorporated herein by reference.
Item 9.01Financial Statements and Exhibits
(d) Exhibits
Exhibit No.Exhibit
10.1 Commercial Lease Agreement
10.2 Master Revolving Note
10.3 Jaleea P. George Employment Agreement *
10.4 Neil M. Leibman Employment Agreement *
* Portions of this exhibit have been redacted pursuant to Item 601(b)(10) of
Regulation S-K. The Company agrees to furnish supplementally an unredacted copy
of the exhibit to the SEC upon request.
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SUMMER ENERGY HOLDINGS, INC. 
