Private Placement Memorandum PPM

Private Placement Memorandum
Convertible Notes
2016 Vasari Energy, Inc. All rights reserved.

CONFIDENTIAL PRIVATE OFFERING MEMORANDUM
Vasari Energy, Inc.

10% Convertible Notes
$1,000,000
Due December 31, 2017
Vasari Energy, Inc., a Delaware corporation and its subsidiaries (collectively, the Company) was established to
design, develop and operate utility-scale electric power plants that produce reliable and clean energy. Our growth strategy
is to own and operate solar and solar energy power plants worldwide. The Company intends to play an active role, as a
long-term owner, in all phases of renewable energy generation, from planning and development through construction and
commercial operation. The Company believes that this involvement will allow us to better ensure, with our experienced
personnel that our projects are well-planned, structured and managed, thus maximizing value creation.
We believe that our competitive strengths advantageously position us to enhance our financial performance, expand
our business and pursue strategic opportunities in independent power markets both domestically and abroad. Our
management team has broad experience in solar project development, transmission line development, meteorology,
engineering, permitting, construction, finance, law, asset management, maintenance and operations. Our strategy is to
establish land control, stakeholder relationships, meteorological programs, community initiatives and develop
transmission solutions in the markets in which we focus and expect to continue to do so in the future.
We are offering up to $1,000,000 in principal amount of our 10% Convertible Notes. You must purchase at least
$10,000 in principal amount of notes. We will sell the notes in denominations of $1,000 on a continuous basis. Notes will
be sold for their principal face amount, $1,000, plus accrued interest from and including the first day of the month in
which a note is purchased, to, but excluding, the date of purchase. There are no limitations on our ability to additional
indebtedness in the form of Vasari notes or otherwise. The Company reserves the right, in its sole discretion, to accept
smaller subscriptions.
The Company will sell Notes until the earlier of December 31, 2016 or the date on which the Offering has been sold
in its entirety. The Company has the right to extend the Offering.
The Notes offered hereby have not been registered under the Securities Act of 1933, as amended (the Act), or
applicable state securities laws, nor has the Securities and Exchange Commission or any state regulatory authority passed
upon the accuracy or adequacy of this Memorandum or endorsed the merits of this Offering. Any representation to the
contrary is unlawful.
The offer and sale of Notes described in this Memorandum have not been registered with the Securities and Exchange
Commission under the Act, in reliance upon exemptions from such registration requirements including the exemptions
provided under Section 4(2) of the Act and Rule 506 thereunder relating to private offerings.
Investing in the Vasari Notes involves certain risks. Before buying any of the Vasari Notes, you should read the risks
referenced under the caption Risk Factors beginning on page ___ of this Memorandum.
______________________________
V ASARI E NERGY
August 10, 2016

No person has been authorized to give any information or make any representations other than those contained
in this Memorandum and, if given or made, such information or representations must not be relied upon.
This Memorandum does not constitute an offer to sell or a solicitation of an offer to buy securities with respect
to any person except those particular persons who satisfy the suitability standards described herein.
Neither the information contained herein, nor any prior, contemporaneous or subsequent communication
should be construed by the prospective investor as legal or tax advice. Each prospective investor should consult his
own legal, tax and financial advisors to ascertain the merits and risks of the Offering prior to subscribing for the Vasari
Notes offered hereby.
Principal Executive Office

Our principal executive office is located at the following address:
Vasari Energy
9844 Research Dr., Suite 200
Irvine, CA 92618
Telephone: 949-529-5933
The Vasari Notes are subject to restrictions on transferability and resale and may not be transferred or resold
except as permitted under the Securities Act of 1933, as amended, and applicable state securities laws, pursuant to
registration or exemption therefrom. Investors should be aware that they will be required to bear the financial risks of
this investment for an indefinite period of time, and the Vasari Notes purchased hereby should be purchased only by
investors who have no need for liquidity in their investment.
No person has been authorized to give any information or make any representations other than those contained
in this Memorandum and, if given or made, such information or representations must not be relied upon.
This Memorandum does not constitute an offer to sell or a solicitation of an offer to buy securities with respect
to any person except those particular persons who satisfy the suitability standards described herein.
Neither the information contained herein, nor any prior, contemporaneous or subsequent communication
should be construed by the prospective investor as legal or tax advice. Each prospective investor should consult his own
legal, tax and financial advisors to ascertain the merits and risks of the Offering prior to subscribing for the Vasari
Notes offered hereby.
NOTICE REGARDING PERSONS RECEIVING AN ELECTRONIC TRANSMISSION OF THIS

PRIVATE OFFERING MEMORANDUM
DISTRIBUTION OF THIS PRIVATE OFFERING MEMORANDUM TO ANY PERSONS (OTHER
THAN THE PERSON RECEIVING THIS ELECTRONIC TRANSMISSION FROM THE COMPANY OR
ANY SELLING GROUP MEMBER REFERRED TO HEREIN AND THEIR RESPECTIVE AGENTS, AND
ANY PERSONS RETAINED TO ADVISE THE PERSON RECEIVING THIS ELECTRONIC
TRANSMISSION FROM THE COMPANY WITH RESPECT THERETO) IS UNAUTHORIZED. ANY
PHOTOCOPYING, DISCLOSURE OR ALTERATION OF THE CONTENTS OF THIS PRIVATE
OFFERING MEMORANDUM, AND ANY FORWARDING OF A COPY OF THIS PRIVATE OFFERING
MEMORANDUM OR ANY PORTION THEREOF BY ELECTRONIC MAIL OR ANY OTHER MEANS TO
ANY PERSONS (OTHER THAN THE PERSON RECEIVING THIS ELECTRONIC TRANSMISSION FROM
THE COMPANY OR A SELLING GROUP MEMBER OR THEIR RESPECTIVE AGENTS, OR ANY
PERSONS RETAINED TO ADVISE THE PERSON RECEIVING THIS ELECTRONIC TRANSMISSION
FROM THE COMPANY WITH RESPECT THERETO), WITHOUT PRIOR CONSENT FROM THE
COMPANY, A SELLING GROUP MEMBER OR AN AGENT OF THE COMPANY OR A SELLING GROUP
MEMBER IS PROHIBITED. BY ACCEPTING DELIVERY OF THIS PRIVATE OFFERING
MEMORANDUM, THE RECIPIENT AGREES TO THE FOREGOING.
NOTICES TO PURCHASERS
THIS OFFERING OF VASARI NOTES (SECURITIES) IS MADE PURSUANT TO RULE 506 OF
REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
SECURITIES ACT). THE SECURITIES MAY BE SOLD ONLY TO ACCREDITED INVESTORS,
WHICH FOR NATURAL PERSONS ARE INVESTORS WHO MEET CERTAIN MINIMUM ANNUAL
INCOME OR NET WORTH THRESHOLDS. THE SECURITIES ARE BEING OFFERED IN RELIANCE
ON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND
ARE NOT REQUIRED TO COMPLY WITH SPECIFIC DISCLOSURE REQUIREMENTS THAT APPLY
TO REGISTRATION UNDER THE SECURITIES ACT. THE U.S. SECURITIES AND EXCHANGE
COMMISSION OR ANY EQUIVALENT STATE OR FOREIGN AGENCIES HAVE NOT PASSED UPON
THE MERITS OF OR GIVEN ITS APPROVAL TO THE SECURITIES, THE TERMS OF THE OFFERING,
OR THE ACCURACY OR COMPLETENESS OF ANY OFFERING MATERIALS. THE SECURITIES ARE
SUBJECT TO LEGAL RESTRICTIONS ON TRANSFER AND RESALE AND INVESTORS SHOULD NOT
ASSUME THEY WILL BE ABLE TO RESELL THEIR SECURITIES. INVESTING IN SECURITIES
INVOLVES RISK, AND INVESTORS SHOULD BE ABLE TO BEAR THE LOSS OF THEIR INVESTMENT.
INVESTMENT IN THE SECURITIES SHOULD BE CONSIDERED HIGHLY SPECULATIVE AND
SUITABLE ONLY FOR PERSONS OF ADEQUATE FINANCIAL MEANS WHO HAVE NO NEED FOR
LIQUIDITY WITH RESPECT TO THIS INVESTMENT. PURCHASERS OF THE SECURITIES SHOULD
HAVE THE FINANCIAL ABILITY AND WILLINGNESS TO ACCEPT THE RISKS (INCLUDING, AMONG
OTHER THINGS, THE RISK OF LOSS OF THEIR ENTIRE INVESTMENT AND THE LACK OF
LIQUIDITY) AND SHOULD CONSULT THEIR FINANCIAL ADVISORS REGARDING THE
APPROPRIATENESS OF MAKING AN INVESTMENT. FURTHERMORE, THE SECURITIES OFFERED
ARE NOT SUBJECT TO THE PROTECTIONS OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED.
THE VASARI NOTES ARE OFFERED SUBJECT TO PRIOR SALE, TO WITHDRAWAL,

CANCELLATION OR MODIFICATION WITHOUT NOTICE. IT IS A CONDITION TO THEIR OFFERING
THAT CERTAIN LEGAL CONDITIONS ARE MET.
NEITHER THE COMPANY, ANY SELLING AGENT NOR ANY BROKER-DEALER IS MAKING
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO ANY OFFEREE OR
PURCHASER OF THE VASARI NOTES OFFERED HEREBY REGARDING THE LEGALITY OF ANY
INVESTMENT THEREIN BY SUCH OFFEREE OR PURCHASER UNDER APPROPRIATE LEGAL
INVESTMENT OR SIMILAR LAWS.
THE VASARI NOTES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE. THE VASARI NOTES
ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
EACH PROSPECTIVE PURCHASER IS ENCOURAGED TO ASK QUESTIONS OF, AND

RECEIVE ANSWERS FROM, MANAGEMENT OF THE COMPANY CONCERNING THE TERMS AND
CONDITIONS OF THIS OFFERING AND TO OBTAIN ANY ADDITIONAL INFORMATION, TO THE
EXTENT THE COMPANY POSSESSES SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT
UNREASONABLE EFFORTS OR EXPENSE, NECESSARY TO VERIFY THE ACCURACY OF THE
INFORMATION CONTAINED IN THIS MEMORANDUM. IF YOU HAVE ANY QUESTIONS
WHATSOEVER REGARDING THIS OFFERING, OR DESIRE ANY ADDITIONAL INFORMATION OR
DOCUMENTS TO VERIFY OR SUPPLEMENT THE INFORMATION CONTAINED IN THIS
MEMORANDUM, PLEASE WRITE OR CALL STEPHEN SMITH AT 949-354-0625.
NOTICE TO RESIDENTS OF ALL U.S. STATES

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL
OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE
ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY
WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
TABLE OF CONTENTS
You should rely only on the information contained in this Private Placement Memorandum
(Memorandum). We have not authorized anyone to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on it. We are not making an
offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume
that the information contained in this Memorandum is accurate as of the date on the front of this
Memorandum only, regardless of the time of delivery of this Memorandum or of any sale of our Notes. Our
business, financial condition, results of operations and prospects may have changed since the date indicated
on the front cover of this Memorandum.
SUMMARY OF THE VASARI NOTES .................................................................................................1

INVESTOR QUALIFICATIONS .................................................................................................................4
HOW TO PURCHASE VASARI NOTES ....................................................................................................7
USE OF PROCEEDS ....................................................................................................................................7
MARKET OVERVIEW ................................................................................................................................9
INDUSTRY AND MARKET DATA ............................................................................................................9
Overview of the Clean Energy Industry ...........................................................................................10
Solar Energy......................................................................................................................................11
Solar Energy Segments .....................................................................................................................12
Key Drivers of solar Energy Growth ................................................................................................12
Advantages of Solar Energy .............................................................................................................14
BUSINESS ...................................................................................................................................................15
General ..............................................................................................................................................15
Development Pipeline .......................................................................................................................15
Strategic Overview............................................................................................................................15
Competitive Strengths .......................................................................................................................16
Sources of Revenue...........................................................................................................................17
Project Financing ..............................................................................................................................18
Our Development Process.................................................................................................................18
Prospecting and Site Selection ..........................................................................................................19
Land Procurement .............................................................................................................................19
Solar Resource Assessment ..............................................................................................................20
Commodity Sales and Management .................................................................................................20
Transmission and Interconnection ....................................................................................................20
Permitting ..........................................................................................................................................20
Engineering Procurement and Construction Oversight ....................................................................21
Support Programs..............................................................................................................................21
Operating and Regulatory Structure .................................................................................................22
Competition.......................................................................................................................................23
Staffing ..............................................................................................................................................24
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION...................................25
DESCRIPTION OF VASARI NOTES ........................................................................................................26
Interest...............................................................................................................................................26
Maturity.............................................................................................................................................26
Conversion to Common Stock ..........................................................................................................26
Eligible Market .................................................................................................................................27
Conversion Price ...............................................................................................................................27
Conversion Ratio ..............................................................................................................................27
Conversion Right ..............................................................................................................................27
Cash or Common Stock ....................................................................................................................27
Subordination ....................................................................................................................................27
Priority ..............................................................................................................................................28
Security .............................................................................................................................................28
Redemption by Us Prior to Maturity ................................................................................................28
Redemption at Request of Holder Prior to Maturity .........................................................................28
Redemption Upon Your Death .........................................................................................................28
Extension After Maturity ..................................................................................................................28
No Restrictions on Additional Debt or Business ..............................................................................28
Restrictions on Transferability ..........................................................................................................29
Place, Method and Time of Payment ................................................................................................29
Events of Default ..............................................................................................................................29
No Protection in the Event of a Change of Control; No Obligation to Repurchase .........................29
Modifications and Amendments .......................................................................................................29
Modifications and Amendments with Consent of Holders ...............................................................30
No Personal Liability of Incorporators, Stockholders, Officers, Directors ......................................31
Reports ..............................................................................................................................................31
Service Charges ................................................................................................................................31
Record of Your Ownership ...............................................................................................................31
Legal and Administrative Proceedings .............................................................................................31
EXECUTIVE OFFICES AND WEBSITE ..................................................................................................32
MANAGEMENT AND BOARD OF DIRECTORS ...................................................................................32
EXECUTIVE COMPENSATION ...............................................................................................................33
Compensation Philosophy and Objectives........................................................................................33
Components of Executive Compensation .........................................................................................34
PRINCIPAL STOCKHOLDERS ................................................................................................................35
DESCRIPTION OF OUR CAPITAL STOCK ............................................................................................36
Restrictions on Transferability ..........................................................................................................36
Limitation on Employee and Officer Liability and Indemnification ................................................36
Amendment of the Certificate of Incorporation................................................................................37
Amendment of Bylaws .....................................................................................................................37
PLAN OF DISTRIBUTION ........................................................................................................................38
Sales Materials ..................................................................................................................................39
Limitation of Offering.......................................................................................................................39
RISK FACTORS AND POTENTIAL CONFLICTS OF INTEREST ........................................................39
Risks Related to the Company ..........................................................................................................39
Risks Related to Our Operations.......................................................................................................44
Risks Related to Our Offering ..........................................................................................................55
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS..............................................60
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS ................................................................61
Characterization of the Vasari Notes ................................................................................................62
Taxation of U.S. Holders ..................................................................................................................63
Considerations For Tax-Exempt Holders Of Vasari Notes ..............................................................65
Non-United States Holders ...............................................................................................................65
State Taxes ........................................................................................................................................68
Exhibit A Form of Convertible Note

Exhibit B Subscription Agreement
SUMMARY OF THE VASARI NOTES
This section summarizes certain of the legal and financial terms of the Vasari Notes that are described
in more detail in Description of the Vasari Notes and is intended to provide selected information regarding
the Company and the Offering and should be read together with, and is qualified in its entirety by, the detailed
information appearing elsewhere in this Memorandum and in the Exhibits (together, the Memorandum).
Each prospective investor is urged to read the entire Memorandum and each of the Exhibits before investing
in the Company.
As used in this Memorandum, references to we, our, the Company and Vasari Energy are to
Vasari Energy and its subsidiaries, unless the context otherwise requires.
Issuer .......................................... Vasari Energy, Inc., a Delaware corporation and its subsidiaries
(collectively, the Company) was established to design, develop and
operate utility-scale electric power plants that produce reliable and
clean energy. Our growth strategy is to own and operate solar and
solar energy power plants worldwide (each a Project and
collectively the Projects) in accordance with this memorandum
(with the Exhibits hereto, the Memorandum).
Securities Offered ...................... We are offering up to $1,000,000 in principal amount of our 10%
Convertible Notes. You must purchase at least $10,000 in principal
amount of notes. We will sell the notes in denominations of $1,000
on a continuous basis. Notes will be sold for their principal face
amount, $1,000, plus accrued interest from and including the first day
of the month in which a note is purchased, to, but excluding, the date
of purchase. There are no limitations on our ability to additional
indebtedness in the form of Vasari Notes or otherwise.
Conversion to Common Stock .... Subject to the terms and restrictions and limitations contained in the
Note, the Holder shall have the right, at such Holder's option, at any
time after confirmation that sufficient shares are authorized for
conversion of Notes, and from time to time, to convert the outstanding
Principal Amount under the Note in whole or in part by delivering to
the Company a fully executed notice of conversion.
Eligible Market ........................... Eligible Market means the OTC Bulletin Board, the OTCQX of OTC
Markets, the Nasdaq Stock Market, the New York Stock Exchange or
the NYSE MKT (f/k/a American Stock Exchange).
Conversion Price ......................... Conversion Price shall equal $3.00 per share.
Conversion Ratio ........................ Conversion Ratio means, at any time, a fraction, of which the
numerator is the entire outstanding Principal Amount of this Note (or
such portion thereof that is being redeemed or repurchased), and of
which the denominator is the Conversion Price as of the date such
ratio is being determined.
Interest payments ........................ Each note will bear interest from its issue date at a fixed rate per year.
We will pay interest only on the notes on January 1st, April 1st, July
1st, and October 1st of each year commencing on the first quarter
1
following the date of issue of a note. Interest will be paid without any
compounding. The notes will bear interest at an annual rate of
10.00%. Interest will accrue from the first day of the month in which
a note is purchased. Interest on the notes will be computed on the basis
of a 360-day year of twelve 30-day months or, in the case of an
incomplete month, the number of days elapsed.
Maturity and Principal Payments. The principal balance of each Note will be paid at maturity. The Notes
mature on December 31, 2017.
Prepayment ................................. We may prepay the outstanding principal balance and accrued and
unpaid interest of any or all of the Vasari Notes in whole or in part at
any time without any penalty or premium.
Renewals ..................................... We may, at our discretion, offer any one or more of the following
renewal options: (1) renewal at the same term length as the original
term length; (2) renewal at a different term length, which we will
specify and will be no greater than four years and no less than one
year; or (3) renewal at various term lengths which you may choose
from and which will be no greater than four years and no less than one
year. Other renewal terms may be offered by us at our discretion. If
you do not respond or if there are no options for renewal offered to
you, then principal and any earned but unpaid interest will be paid to
you.
Redemption by You .................... Subject to our consent in our sole discretion, we may redeem a Note
purchased by you at any time beginning 180 calendar days after the
issuance date, with a 180-day interest penalty. This means that you
will not receive the last 180 days worth of interest and, if the accrued
and unpaid interest is not sufficient to cover the amount of the penalty,
then any remaining amount of the interest penalty shall be deducted
from the principal amount of the Note.
Redemption in the Event of Death Unless the subordination provisions in our credit agreements with
institutions restrict our ability to make the redemption, at the written
request of the executor or administrator of your estate or, if your Note
is jointly held with another investor, at the written request of your
joint investor, we will redeem the Note at any time after death for a
redemption price equal to the principal amount plus earned but unpaid
interest payable on the Note, without any interest penalty. We will
seek to honor any such redemption request as soon as reasonably
possible based on our amount of cash on hand at the time and our then
current cash needs at the time, but generally within one business week
of request.
Redemption by Us ...................... Following the first 180 calendar days after issuance, we may call your
Note for redemption at any time upon 30 to 60 days notice. The
redemption price will be equal to the principal amount plus accrued
and unpaid interest to the date of redemption.
Events of Default ........................ An event of default is generally defined as (1) a default in the payment
of principal or interest on the Vasari Notes that is not cured for 90
2
days, (2) our becoming subject to certain events of bankruptcy or
insolvency, or (3) our failure to comply with provisions of the Vasari
Notes if such failure is not cured or waived within 60 days after receipt
of a specific notice.
Physical Delivery of Vasari Notes The Vasari Notes will be issued in certificated form. If you purchase
a Note, an account showing the principal amount of your Note will be
established in your name on our books and records. Interest accrued
on your Note will also be credited to your account. You will receive
a certificate or other instrument evidencing our indebtedness to you.
Upon purchase of your Note, we will send you a Note certificate,
which describes, among other things, the term, interest rate and
principal amount of your Note.
Plan of Distribution ..................... We will offer the Vasari Notes on a continuous basis. Vasari Notes
will be made available by the Company, by selling agents (the
Selling Agents) and broker-dealers (Broker-Dealers) who are
members of the Financial Regulatory Authority, Inc. (FINRA) that
will assist the Company in the placement of Vasari Notes. Vasari
Notes will be sold on a best efforts basis.
Qualified Investors ..................... The Offering of the Vasari Notes is strictly limited to those investors
who are accredited investors as promulgated in Rule 501 of
Regulation D of the Securities Act 1933, as amended. See Investor
Qualifications.
Governing Law .......................... The Vasari Notes will be governed by, and construed in accordance
with, the laws of the State of Delaware, United States of America.
Form and Denomination ............ The Vasari Notes will be issued in United States dollars in minimum
denominations of $1,000, unless otherwise specified in the applicable
pricing supplement.
Material U.S. Federal Income Tax For the material U.S. federal income tax consequences of the holding,
Considerations ............................ disposition and conversion of the Vasari Notes, see Material U.S.
Federal Income Tax Considerations.
Risk Factors ............................... See Risk Factors beginning on page 43 and other information
included in this Memorandum and any Memorandum supplement for
a discussion of factors you should carefully consider before investing
in the Vasari Notes.
Cash or Common Stock .............. Subject to the terms hereof, the Company shall either (i) pay the
Interest Amount in full in cash on each Payment Date or (ii) issue
shares of Common Stock in satisfaction of such Interest Amount in
accordance with the terms hereof, but not both, at the Companys
option. Prior to each Payment Date the Company shall deliver to all
the holders of Notes a written irrevocable notice electing to pay such
Interest Amount in cash or Common Stock on such Payment
Date. All holders of Notes must be treated equally with respect to
such payment of Interest Amounts.
3
INVESTOR QUALIFICATIONS
The offer and sale of the Notes is being made in reliance upon an exemption from the registration
requirements of the Securities Act of 1933, as amended. Accordingly, distribution of this Memorandum has
been strictly limited to persons who satisfy the requirements and make the representations set forth below
(an Investor). The Company reserves the right, in its sole discretion, to declare any prospective investor
ineligible to purchase Notes based on any information that may become known or available to the Company
concerning the suitability of such prospective investor, for any other reason or for no reason at all.
Investor Suitability Requirements. Investment in the Notes involves a high degree of risk and is
suitable only for persons of substantial financial means who have no need for liquidity in this investment.
Notes will be sold only to an Investor who:
represents in writing that he, she or it is an accredited investor, as defined under Rule 501 of
Regulation D of the Securities Act (a description of the typical criteria for an accredited
investor appears below); and
satisfies the investor suitability requirements established by Vasari Energy and as may be
required under federal or state law.
Investor Representations. Each Investor must also represent in writing that he (or she or it) meets,
among others, ALL of the following requirements:
has received and understands this Memorandum and all exhibits hereto;
is basing his decision to invest on the contents of this Memorandum, all exhibits hereto and
any applicable pricing supplement, and on the advice of his legal counsel, accountants and
financial consultants;
understands that an investment in the Notes involves substantial risks, including those risks set
forth in this Memorandum in the section entitled Risk Factors;
overall commitment to non-liquid investments is, and after his investment in the Notes will be,
reasonable in relation to his net worth and current needs;
has adequate means of providing for his financial requirements, both current and anticipated,
and has no need for liquidity in this investment;
can bear the economic risk of losing his entire investment in the Notes;
has such knowledge and experience in business and financial matters as to be capable of
evaluating the merits and risks of an investment in the Notes; and
is acquiring the Notes for his own account and for investment purposes only and has no
contract, undertaking, agreement or arrangement to sell or otherwise transfer or dispose of any
Notes.
Accredited Investor Requirement. Vasari Energy will only accept subscriptions from Investors
who represent in writing that they are accredited investors, as defined under Regulation D of the
Securities Act. In addition to certain institutional investors, a prospective Investor who meets one of the
following tests should qualify as an accredited investor:
the Investor is a natural person who had individual income in excess of $200,000 in each of the
two most recent years, or joint income with that persons spouse in excess of $300,000 in each
of those years, and has a reasonable expectation of reaching the same income level in the
current year;
4
the Investor is a natural person whose individual net worth, or joint net worth with that persons
spouse, exceeds $1,000,000 at the time of purchase of the Notes (net worth is defined as the
difference between total assets and total liabilities, excluding his primary residence);
the Investor is an entity (including an Individual Retirement Account trust) in which all of the
equity owners are accredited investors;
the Investor is a trust with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Notes, whose purchase is directed by a person who has such
knowledge and experience in financial and business matters that he is capable of evaluating the
merits and risks of an investment in the Notes;
the Investor is a corporation, limited liability company, partnership or other entity with total
assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Notes; or
the Investor is an employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder (ERISA), in which the investment decision is made by a plan fiduciary (as defined
in Section 3(21) of ERISA) which is either a bank, savings and loan association, insurance
company, or registered investment adviser; or the employee benefit plan has total assets in
excess of $5,000,000; or it is a self-directed plan in which investment decisions are made solely
by persons who are accredited investors.
In the case of fiduciary accounts, the net worth and/or income suitability requirements may be
satisfied by the beneficiary of the account, or by the fiduciary if the fiduciary directly or indirectly provides
funds for the purchase of the Notes.
Representations with respect to the foregoing and certain other matters will be made by each
subscriber for Notes in the Subscription Agreement (the Subscription Agreement) in the form attached
as Exhibit B to this Memorandum. The Manager will rely on the accuracy of each Investors representations
set forth in the Subscription Agreement and may require additional evidence that an Investor satisfies the
applicable standards at any time prior to the acceptance of an Investors subscription. An Investor is not
obligated to supply any information so requested by Vasari Energy, but the Company may reject a
subscription from any Investor who fails to supply any information so requested.
IF YOU DO NOT MEET THE REQUIREMENTS DESCRIBED ABOVE, DO NOT READ
FURTHER AND IMMEDIATELY RETURN THIS MEMORANDUM TO THE MANAGER. IN
THE EVENT THAT YOU DO NOT MEET SUCH REQUIREMENTS, THIS MEMORANDUM
SHALL NOT CONSTITUTE (i) AN OFFER TO SELL NOTES TO YOU; OR (ii) A
SOLICITATION FROM YOU OF AN ON OFFER TO PURCHASE NOTES.
The written representations made by Investors in their respective Subscription Agreements will be
reviewed to determine the suitability of each Investor. The Company will have the right, in its sole
discretion, to refuse a subscription for the Notes if Vasari Energy believes that an Investor does not meet
the applicable suitability requirements, if the Notes may otherwise constitute an unsuitable investment for
the Investor, for any other reason or for no reason at all.
In order to assure adherence to the suitability standards described above, requisite suitability
standards must be met as set forth in the Subscription Agreement (including the Subscription Agreement
Signature Page) which is attached as Exhibit B to this Memorandum. The Company and each person selling
the Notes on Vasari Energys behalf are required to (1) make reasonable efforts to assure that each person
purchasing the Notes is suitable in light of such persons age, educational level, knowledge of investments,
financial means and other pertinent factors, and (2) maintain records for at least four years of the
information used to determine that an investment in the Notes is suitable and appropriate for each investor.
5
The Company will rely on the accuracy of each investors representations set forth in the
Subscription Agreement and may require additional evidence that an investor satisfies the applicable
standards at any time prior to the acceptance of an investors subscription. An investor is not obligated to
supply any information so requested by the Company, but the Company may reject a subscription from any
investor who fails to supply any information so requested.
Satisfaction of the suitability requirements by an investor will not necessarily mean that the Notes
are a suitable investment for such investor or that the Company will accept the investor as a subscriber.
Furthermore, the Company, as appropriate, may modify such requirements in its sole discretion.
EACH PROSPECTIVE INVESTOR WILL BE GIVEN AN OPPORTUNITY TO ASK QUESTIONS OF,
AND RECEIVE ANSWERS FROM, MANAGEMENT OF THE COMPANY CONCERNING THE
TERMS AND CONDITIONS OF THIS OFFERING AND TO OBTAIN ANY ADDITIONAL
INFORMATION, TO THE EXTENT THE COMPANY POSSESSES SUCH INFORMATION OR CAN
ACQUIRE IT WITHOUT UNREASONABLE EFFORTS OR EXPENSE, NECESSARY TO VERIFY
THE ACCURACY OF THE INFORMATION CONTAINED IN THIS MEMORANDUM. IF YOU
HAVE ANY QUESTIONS WHATSOEVER REGARDING THIS OFFERING, OR DESIRE ANY
ADDITIONAL INFORMATION OR DOCUMENTS TO VERIFY OR SUPPLEMENT THE
INFORMATION CONTAINED IN THIS MEMORANDUM, PLEASE WRITE OR CALL THE
COMPANY AT THE ADDRESS AND NUMBER LISTED ON THE FRONT OF THIS PRIVATE
OFFERING MEMORANDUM.
Every state and province has its own securities laws commonly known as "Blue
Sky Laws" that can vary from jurisdiction to jurisdiction, including the minimum
suitability requirements for investors in each state. As such, each investor must ensure that
they meet their states minimum suitability requirements before investing in our Offering.
6
HOW TO PURCHASE VASARI NOTES
To purchase the Vasari Notes we are offering pursuant to this Memorandum, you should carefully
read this Memorandum and its Exhibits and then proceed as follows:
1. Review the Subscription Agreement (Subscription Agreement) found under Exhibit C and
any applicable pricing supplement. Complete the information requested, including the total
number of Vasari Notes to be purchased, and execute the signature page. By signing the
Subscription Agreement, you are also acknowledging that you have received and reviewed this
Memorandum and its Exhibits together with a pricing supplement and that you agree to be
bound by the terms of the Subscription Agreement and the Private Offering Memorandum.
2. Make a check payable to Vasari Energy in an amount equal to the total purchase price of the
Vasari Notes for which you are subscribing.
3. Deliver to Vasari Energy, by mail or in person, the following materials (as applicable):
Subscription Agreement
Check for full payment of the purchase price of the Vasari Notes
These documents should be mailed or delivered to the Company:
Vasari Energy
Irvine, California 92618
Attn: Investor Relations
Investors who would like to purchase Vasari Notes via Federal Funds Wire should send the
Subscription Agreement to the address above and request wire instructions from the Company when
submitting the Subscription Agreement.
Upon receipt of the signed Subscription Agreement, verification of the investors investment
qualifications, and acceptance of the investors subscription by the Company (in the Companys sole
discretion), the Company will notify each investor of receipt and acceptance of the subscription.
USE OF PROCEEDS
We will receive cash proceeds in varying amounts from time to time as the Vasari Notes are sold.
Due to our inability to predict with any certainty whatsoever the amount and timing from inflows of (i) the
sale of Vasari Notes, (ii) development fees, (iii) income or capital gains from the sale of permitted
projects to utility companies, tax equity investors or other buyers, and (iv) income from operatizing and
maintaining solar power plants. We cannot provide any specific allocation of proceeds we will use for any
particular purpose. However, we intend to use substantially all of the net offering proceeds as follows, in
the following order of priority:
(1) to make payments on other borrowings from third parties, including other debt and senior debt;
(2) to redeem maturing Vasari Notes and Vasari Notes required to be redeemed by us;
(3) to make interest payments on the Vasari Notes; and
(4) to the extent we have remaining net proceeds and adequate cash on hand, to fund any one or
more of the following activities:
for working capital and other general corporate purposes;
to advance/invest in a wholly owned or majority owned subsidiary doing any or all of any
7
of the above;
to make payments on borrowings from affiliates;
to make loans to or invest in affiliates; and
to redeem Vasari Notes which we have decided to redeem prior to maturity.
There is no minimum number or amount of the Vasari Notes that we must sell to receive and use
the proceeds from the sale of the Vasari Notes, and we cannot assure you that all or any portion of the
Vasari Notes will be sold. In the event that we do not raise sufficient proceeds from our offerings of Vasari
Notes to adequately fund our operations, we could curtail the amount of funds we make available to finance
our growth plans. Please see Risk Factors Risks Related to Our Offering We are substantially reliant
upon the net offering proceeds we receive from the sale of our Vasari Notes to meet our liquidity needs,
Risk Factors Risks Related to Our Offering We can provide no assurance that any Vasari Notes will
be sold or that we will raise sufficient proceeds to carry out our business plans.
8
MARKET OVERVIEW
Solar energy is a growing form of renewable energy with numerous economic and environmental
benefits that make it an attractive complement to, and/or substitute for, traditional forms of electricity
generation. In recent years, the price of PV solar power systems, and accordingly the cost of producing
electricity from such systems, has dropped to levels that are competitive with or even below the retail price
of electricity in many markets. The rapid price decline that PV solar energy has experienced in recent years
opens new possibilities to develop systems in some locations with limited or no financial incentives. The
fact that a PV solar power system requires no fuel provides a unique and valuable hedging benefit to owners
of such systems relative to traditional electricity generation assets. Once installed, PV solar power systems
can function for 25 or more years with relatively less maintenance or oversight, compared to traditional
forms of electricity generation. In addition to these economic benefits, PV solar has several environmental
benefits. For example, PV solar power systems do not generate any greenhouse gas or other emissions and
use no or minimal amounts of water compared to traditional forms of electricity generation. Solar markets
worldwide continue to develop, aided by the above factors as well as demand elasticity resulting from
declining industry average selling prices, both at the module and system level, which make solar power
more affordable to new markets, and we have continued to develop our localized presence and expertise in
such markets.
The solar industry continues to be characterized by intense pricing competition, both at the module
and system levels. In the aggregate, we believe manufacturers of solar modules and cells have, relative to
global demand, significant installed production capacity and the ability for additional capacity expansion.
We believe the solar industry may from time to time experience periods of structural imbalance between
supply and demand (i.e., where production capacity exceeds global demand), and that such periods will put
pressure on pricing. Additionally, intense competition at the systems level can result in an environment in
which pricing falls rapidly, thereby further increasing demand for solar energy solutions but constraining
the ability for project developers; engineering, procurement, and construction (EPC) companies; and
vertically-integrated solar companies to sustain meaningful and consistent profitability.
INDUSTRY AND MARKET DATA

Unless otherwise indicated, information contained in this Memorandum concerning the solar power
markets, including our market opportunity, is based on information from independent industry analysts,
third party sources and management estimates. Management estimates are derived from publicly-available
information released by independent industry analysts and third party sources, as well as data from our
internal research, and is based on assumptions made by us based on such data and our knowledge of such
industry and markets, which we believe to be reasonable. Certain market data presented in this
Memorandum has been derived from data included in various solar industry publications, surveys and
forecasts. In addition, while we believe the market opportunity information included in this Memorandum
is generally reliable and is based on reasonable assumptions, such data involves risks and uncertainties and
are subject to change based on various factors, including those discussed under the heading Risk Factors.
Unless otherwise specified, we have relied upon the data collected and published by Bloomberg
New Energy Finance (as accessed on June 1, 2016) with respect to all of the data included in this
Memorandum relating to the size of the various solar and wind energy markets, including the expected
growth of our initial target markets over the periods specified herein. Bloomberg New Energy Finance is a
market research firm focused on the energy sector. We have cited 2015 market data instead of 2016 in
circumstances where 2015 is the most recent period for which historical data is available. See Industry and
market data for more information. All references to MW or GWh in this section represent the rated capacity
at standard test conditions of energy generating facilities.
9
Overview of the Clean Energy Industry
Global power generation capacity is forecasted to expand by 47% from 4,739 GW in 2010 to 6,970
GW in 2020. Clean power sources, including solar, wind, hydro-electricity and geothermal, as well as
natural gas, are expected to account for 76% of the new power generation capacity added globally from
2010 to 2020. Solar and wind energy generation are the fastest growing segments of clean energy, with
CAGRs of 31% and 14%, respectively, during this period. Through 2020, an estimated $2.1 trillion of
investment in global renewable power generation capacity is forecasted to be required, which would realize
an average annual investment of approximately $343 billion. We estimate that approximately 35% of these
global renewable energy capacity additions will occur in our initial target markets. The following chart
reflects the historical and projected evolution of cumulative installed generation capacity from various
sources from 2010 to 2020:
Global cumulative power generation capacity (in GW), 20102020
Note: Other represents waste, geothermal and biomass.

Source: Bloomberg New Energy Finance
Within our initial target markets, cumulative generation capacity from renewable energy sources is
expected to grow at a CAGR of 9% from 2014 to 2017, with solar and wind sources expected to grow at a
combined CAGR of 23% during this period.
We expect the renewable generation segment to continue to offer high-growth opportunities driven
by:
increasing demand for power sources due to accelerating industrialization, an expanding
middle class and the need to develop energy grid infrastructure in our initial target markets;
the competitive cost of most clean energy technologies and, most significantly, the ongoing
reduction in the cost of solar and wind energy, which will increase the number of markets in
which grid parity is achieved;
10
transmission and distribution charges and the effects of an aging transmission infrastructure,
which enable renewable energy generation sources located at customer sites, or distributed
generation, to be more competitive with, or cheaper than, grid-supplied electricity;
the replacement of aging and conventional power generation facilities in the face of increasing
industry challenges, such as regulatory barriers, increasing costs of and difficulties in
obtaining and maintaining applicable permits and the decommissioning of certain types of
conventional power generation facilities, such as coal and nuclear facilities;
the ability to couple renewable power generation with other forms of power generation,
creating a hybrid energy solution capable of providing energy on a 24/7 basis while reducing
the average cost of electricity obtained through the system;
the desire of energy consumers to lock in predictable rate long-term pricing of a reliable
energy source;
renewable power generations ability to utilize freely available sources of fuel, avoiding the
risks of price volatility and market disruptions associated with many conventional fuel
sources;
environmental concerns over conventional power generation; and
government policies that encourage development of renewable power, such as national,
provincial, state or local renewable portfolio standard programs, which motivate utilities to
procure electricity supply from renewable resources.
In addition to renewable energy, we expect natural gas to grow as a source of electricity generation
due to its relatively low cost and low environmental impact compared to other fossil fuel sources, such as
coal and oil.
Solar Energy
Solar energy is the fastest growing source of cumulative generation capacity, with a
projected CAGR of 31% from 2010 to 2020. Annual global solar energy installations are expected
to increase from 40 GW in 2013 to 85 GW in 2020. The following chart reflects the actual and
projected growth of annual global solar energy installations from 2010 to 2020:
Global annual solar energy installations (in GW), 20102020

(1) We expect our future markets to include other markets in Asia (except Japan), Africa, Latin America and the Middle East.
(2) Other includes markets in North America, Oceania, Japan and Chile.
11
Annual solar energy installations in our initial target markets are expected to add more than 179
GW between 2014 and 2020, representing a CAGR of 32%.
From 2015 to 2020, 399 GW of aggregate solar energy generation capacity is expected to be
installed globally, requiring total investments of approximately $723 billion. The following chart reflects
the expected total annual investment in global solar energy installations from 2015 to 2020:
Total annual investment in global solar capacity (in billions), 20152020
Solar Energy Segments

Solar energy systems can be classified into four segments: (i) utility-scale; (ii) commercial and
industrial, or C&I; (iii) residential; and (iv) off-grid. We are primarily focused on the first two of these
segments. The utility-scale segment represents projects where either the purchaser of the electricity or the
owner of the system is an electric utility. The C&I segment represents commercial firms, industrial
companies, academic institutions, government entities, hospitals, non-profits and all other entities that are
neither a utility nor a residential customer that purchase solar power directly from a generation company or
a solar power plant. The residential segment represents residential homeowners with solar energy
generation capabilities. The off-grid segment specifies projects that serve energy demand that is not
interconnected with the electricity grid.
In the C&I segment, most commercial or industrial firms do not own the solar assets, but rather
sign a PPA with a generation company that owns the assets. Demand for C&I and residential solar is driven
largely by customers desire for contracted long-term energy prices, corporate green initiatives, state and
federal incentives and/or net metering policies.
While solar utility projects compete with other wholesale generation plants, solar energy in the C&I
and residential markets competes with the retail price of electricity. The retail electricity price includes
generation costs, as well as transmission and distribution charges. Solar generating assets can be located at
a customers site, which reduces the customers transmission and distribution charges and allows these
distributed solar generation assets to compete favorably with the retail cost of electricity. By competing
with the retail price of electricity, solar energy is able to reach grid parity and reduce customer electricity
costs.
The vast majority of utility solar projects are structured so that the utility does not own the
generating assets, but rather the utility signs a long-term PPA to buy the electricity from the plant. Demand
for utility PPAs is largely driven by (i) the utilitys need to meet renewables mandates, (ii) energy demand
growth and (iii) the retirement of existing generation assets.
Key Drivers of solar Energy Growth
We believe the following factors have driven, and will continue to drive, the global growth of solar
energy:
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Grid parity. We define grid parity as the point at which renewable energy sources can generate
electricity at a cost, excluding any government incentives or subsidies, equal to or lower than prevailing
retail electricity prices.
The cost of solar energy has undergone a significant decline and is expected to continue to decline
going forward. On a global basis, the average total installation cost of solar energy projects is expected to
decline by more than 66% in the ten-year period ending in 2020. In 2010, the average installation cost per
watt of capacity in the utility market was $3.24 and fell to $1.50 in 2014. By 2020, this number is expected
to fall to $1.09.
Conversely, we expect retail electricity prices to continue to rise primarily due to increasing costs
of conventional sources of energy, required investments in transmission and distribution infrastructure and
increasing regulatory costs for conventional energy sources. We believe accelerating industrialization, an
expanding middle class and the need to develop energy grid infrastructure will continue to drive demand in
our initial target markets for the foreseeable future. Rising retail electricity prices create a significant and
growing market opportunity for lower-cost retail energy. Solar energy may be able to offer C&I customers
clean electricity at a price lower than their current utility rate. Whether solar power generation has achieved
grid parity is dependent upon a number of factors, including the scale of and technology utilized by the
generation project, cost of capital, applicable installation costs and maintenance expenses, local electricity
rates, local meteorological characteristics, transmission fees and taxes. As a result, we evaluate grid parity
on a project-by-project basis at the time such project achieves its COD. None of our projects in our initial
portfolio achieved grid parity at the time of their respective COD. We do, however, believe grid parity has
been reached in certain areas within our target markets where our Sponsor is actively pursuing development
activities. For example, we believe that grid parity has been achieved in certain Indian states, such as
Maharashtra, for certain industrial customers based upon a comparison of energy pricing data provided by
the Government of India and recent pricing contained in PPA offers made by our Sponsor. At this time, we
do not know the specific timing as to when grid parity will be achieved for any new projects we acquire in
our initial target markets.
Movement to distributed generation. Although some locations are more suitable than others, solar
energy systems can generate electricity nearly anywhere. By contrast, hydroelectric power, wind or
geothermal electricity generating systems are site-specific and location is critical. This means power
generated by solar energy systems can sometimes be delivered at a relatively low cost to areas that were
previously difficult to service, have high transmission and distribution charges, or have high load
requirements. Solar power can, in some cases, defer transmission and distribution investments and replace
or significantly reduce the use of expensive and environmentally detrimental on-site power generation
technologies, such as diesel generators.
Distributed solar energy systems provide customers with an alternative to traditional utility energy
suppliers. Distributed resources are smaller in unit size and can be constructed at a customers site,
removing the need for lengthy transmission and distribution lines. By bypassing the traditional utility
suppliers, distributed energy systems delink the customers price of power from external factors such as
volatile commodity prices, costs of the incumbent energy supplier and transmission and distribution
charges. This makes it possible for distributed energy purchasers to buy energy at a predictable and stable
price over a long period of time.
Within our initial target markets, distributed solar energy systems are particularly attractive in
addressing the historical undersupply of energy generation capacity in such markets due to their ease and
speed of installation, reliability, scalability and ability to be located near the end customer.
Solar power generation typically coincides with the times of peak energy demand and the highest
cost of energy. Solar energy systems generate most of their electricity during the afternoon hours, when
the energy from the sun is strongest. This generally corresponds to peak demand hours and the most
expensive energy prices.
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Acceptance and support for solar energy. Solar energy has gained increased acceptance from the
investment community because it: (i) is a reliable and predictable energy output; (ii) has low and predictable
operational and maintenance costs; (iii) is lower risk than other energy sources due to minimal asset
complexity and use of proven technologies; and (iv) does not face commodity risk.
Advantages of Solar Energy
Solar energy has several advantages over conventional energy and other forms of renewable
energy, and these advantages have been increasingly recognized over time:
Environmental Friendliness and Renewability. Solar power is one of the most environmentally
friendly cleanest sources of electricity without air or water emissions, noise, vibrations or any
waste generation.
Peak Energy Generation Ability. Solar power is well-suited to match peak energy needs as
maximum sunlight hours generally correspond to peak demand periods when electricity prices
are at their highest.
Easily Located with End Users. Unlike other renewable resources such as hydroelectric and
wind power, solar power can be utilized anywhere that receives sunlight and directly at the site
where the power will be used. As a result, solar power avoids the expense of, and energy losses
associated with, transmission and distribution of electricity from large-scale electrical plants to
end users.
No Fluctuations in Operating Costs. Unlike fossil and nuclear fuels, solar energy has no fuel
price volatility. Although there is variability in the amount and timing of sunlight over the day,
season and year, a properly sized and configured system can be designed for high reliability
while supplying electricity on a long-term, fixed-cost basis.
Reliability and Durability. Without moving parts or the need for periodic maintenance, solar
power systems are among the most reliable forms of electricity generation. Accelerated aging
tests have shown that solar modules can operate for at least 25 to 30 years without requiring
major maintenance.
Modularity. PV systems are easily modularized and scalable, and therefore can be deployed in
many different sizes and configurations to meet the specific needs of the user. PV modules are
increasingly used to serve as both a power generator and the exterior of a building. Like
architectural glass, PV modules can be installed on the roofs and facades of residential and
commercial buildings.
Increasing Environmental Concerns over Conventional Energy
Increasing environmental concerns over the effect of burning fossil fuels have led to the
implementation of greenhouse gas reduction strategies by many countries through international treaties
such as the Kyoto Protocol and national or regional regulations to reduce air pollution. A significant number
of countries, including the United States, Australia, China and certain members of the European Union,
have adopted and are expected to continue government initiatives to encourage the development of solar
power and other renewable energy sources in order to address these environmental concerns.
14
BUSINESS
General
Vasari Energy, Inc., a Delaware corporation and its subsidiaries (collectively, the Company) was
established to design, develop and operate utility-scale electric power plants that produce reliable and clean
energy. Our growth strategy is to own and operate solar and solar energy power plants worldwide (each a
Project and collectively the Projects) in accordance with this memorandum (with the Exhibits hereto,
the Memorandum). The Company intends to play an active role, as a long-term owner, in all phases of
renewable energy generation, from planning and development through construction and commercial
operation. The Company believes that this involvement will allow us to better ensure, with our experienced
We believe that our competitive strengths advantageously position us to enhance our financial
performance, expand our business and pursue strategic opportunities in independent power markets both
domestically and abroad. Our management team has broad experience in solar project development,
transmission line development, meteorology, engineering, permitting, construction, finance, law, asset
management, maintenance and operations. We have established land control, stakeholder relationships,
meteorological programs, community initiatives and developed transmission solutions in the markets in
which we focus and expect to continue to do so in the future.
Development Pipeline
As of June 1, 2016 our pipeline of potential solar and solar energy Projects up to 200 megawatts
(MW) in California, Arizona, Nevada, and Texas, and with a build out value of approximately $280
million. The Companys business goal is to have approximately 700 MW of operating capacity by the end
of 2020. We estimate the collective value of our projects to be $148 million. Our ability to complete the
Projects in our development pipeline and achieve our targeted capacity is subject to a number of risks and
uncertainties.
Strategic Overview
Vasari Energys business goal is to be one of the leading owners and operators of renewable electric
generating assets in the world. The Company intends to play an active role, as a long-term owner, in all
phases of power generation, from planning and development through construction and commercial
operation. The Company believes that this involvement allows us to better ensure, with our experienced
The Companys strategy focuses on developing new projects in locations where we will have an
established position or otherwise determine that attractive financial performance can be realized. After
completion of a solar energy development project or an acquisition of an existing plant, the Companys
business strategy includes enhancing the value of these assets and expanding plant capacity. We also
recognize that our principal customers are regulated utilities. We therefore strive to understand the
regulatory and economic environment in which the utilities operate so that we may continue to create
mutually beneficial relationships and business dealings.
In making investment decisions, we evaluate potential project returns against our internally
generated rate of return guidelines. We establish these guidelines by identifying a base rate of return and
adjusting the base rate by potential risk factors, such as risks associated with project location and stage of
project development. We endeavor to mitigate these risks by (1) evaluating all projects and the markets in
which they operate, (2) selecting strategic partners with complementary skills and local experience, (3)
structuring investments through subsidiaries, (4) managing up-front development costs, (5) utilizing limited
recourse financing and (6) linking revenue and expense components where appropriate. In response to the
increasing globalization of the independent power market, we intend to organize our operation and
development activities into three geographic regions: (1) Americas, (2) Europe, and (3) Asia. Each region
15
will be served by one or more teams consisting of business development, operations, finance and legal
personnel, and each team is responsible for all our activities within a particular geographic region. Also,
we expect to mobilize personnel from outside a particular region when needed in order to assist in the
development of specified projects.
Our strategy is to develop and operate a portfolio of solar energy Projects in favorable markets.
Our management team has broad experience in solar project development, transmission line development,
meteorology, engineering, permitting, construction, finance, law, asset management, maintenance and
operations. We have established land control, stakeholder relationships, meteorological programs,
community initiatives and developed transmission solutions in the markets in which we focus and expect
to continue to do so in the future.
We continue to engage in prospecting activities, which involve a broad, high-level review of
potential sites that may be suitable for solar energy development. We have built our existing pipeline
through these prospecting activities and will continue to do so in the future with Projects that we believe
meet our investment return standards. We classify our Projects into the following four categories based on
their stage of development: operating/under-construction, advanced, intermediate and early. We have
defined these categories for internal planning purposes, including projecting our future needs for solar
equipment and personnel.
The following are key elements of our strategy:
Successfully execute and capitalize on our pipeline of existing development Projects. Our
goal is to have approximately 700 MW of operating capacity by the end of 2020.
Expand our pipeline of development Projects. We have assembled a team of employees and
experts located in our existing markets who actively search for additional opportunities for
solar development.
Continue to exploit development opportunities through creative transmission solutions.
We have assembled the core internal expertise necessary to develop, build and own significant
transmission assets in order to access and develop solar energy Projects in markets that we
would otherwise be unable to pursue.
Maintain full development and operational control. Our policy is to control the
development, construction and operation of all of our solar energy Projects. We believe
retaining control over our Projects enhances our credibility, allows us to make rapid decisions
and strengthens our relationships with landowners, local communities, regulators and other
stakeholders.
Substantial local presence and community stakeholder involvement in the markets in
which we are active. Our business plan is to open local offices to work cooperatively with the
communities in which our solar energy Projects are located in order to better understand their
unique issues and concerns. We believe that having local offices and coordinating with our
communities allows us to better assess our Projects feasibility and economic viability than
developing our Projects remotely.
Competitive Strengths
We believe that our competitive strengths advantageously position us to enhance our financial
performance, expand our business and pursue strategic opportunities in independent power markets both
domestically and abroad. Our key competitive strengths are summarized below.
Global Presence. Vasari Energys business goal is to be among the largest developers and
independent power producers in the world based on MW generated Our goal is to have
approximately 700 MW of operating capacity by the end of 2020. In assembling and operating
16
this global portfolio, we expect to gain substantial experience and expertise in major U.S. and
foreign power markets and, as a result, enjoy access to a broader range of development and
acquisition opportunities worldwide.
Diversified Asset Portfolio. Our strategy is to diversify our portfolio of power projects and
spread our operations across different regions and market segments, thereby allowing us to
participate in multiple segments of the domestic and international power markets and reducing
the level of risk presented by any particular market.
Disciplined Marketing and Risk Management Activities. We plan to use a disciplined
approach to energy marketing and risk management that will be centered on our merchant
plants and designed primarily to stabilize and enhance the operational and financial
performance of those facilities. These activities will also reduce our exposure to energy price
fluctuations.
Strong and Experienced Project Management Team. We have an experienced project
management team that continues to focus on our core competencies and to draw upon our
significant domestic and international development and operating experience.
Sources of Revenue
Our business plan is to generate revenues from the following sources:
Electricity sales. We intend to sell the power generated by our solar energy Projects either
pursuant to PPAs with local utilities or power companies or directly into the local power grid
at market prices. We will seek to hedge a significant portion of the market component of our
power sales revenue.
Engineering, Procurement and Construction income. The Company expects to generate
revenue from providing EPC services to directly to system owners such as utilities, independent
solar power project developers and commercial, industrial, and government customers. EPC
income will be derived from performing all work for the design and engineering, procurement,
construction, program management, commissioning and start-up of the Balance of Plant and
the procurement, delivery, assembly, erection, installation, commissioning and start-up of the
power system, which work and services will generally include the construction services,
materials, equipment, machinery, tools, labor, transportation, administration and other services
and items required to complete and deliver to the customer a fully integrated and operational
Balance of Plant and the fully assembled, installed, tested and operational power system in
accordance with applicable laws and applicable standards.
Project Management. Project management is required on every project, with the primary
responsibility of managing all aspects of the effort to deliver solar power systems on schedule
and within budget. Vasari Energy expects to manage projects where various contractors and
subcontractors are involved and multiple activities need to be integrated to ensure the success
of the overall project. Project management services include logistics, development of project
execution plans, detailed schedules, cost forecasts, progress tracking and reporting, and the
integration of the engineering, procurement and construction efforts. Project management is
accountable to the customer to deliver the safety, functionality and financial performance
requirements of the solar power system.
O&M Services. Our strategy includes the performance of standard activities associated with
operating and maintaining solar power systems. Solar energy service companies perform such
activities pursuant to the scope of services outlined in the underlying contract. These activities
are considered necessary to optimize system performance and comply with PPAs, other
17
agreements, and regulations. Although the scope of services may vary by contract, O&M
service arrangements generally include 24/7 system monitoring, certain PPA and other
agreement compliance, North American Electric Reliability Corporation compliance, Large
Generator Interconnection Agreement compliance, energy forecasting, performance
engineering analysis, regular performance reporting, turn-key maintenance services including
spare parts and corrective maintenance repair, warranty management, and environmental
services. Operations and maintenance activities can also include routine and outage/turnaround
maintenance services, general maintenance and asset management, and restorative, repair,
predictive and prevention services.
Capital gains. The Company may generate capital gains from projects that are developed by
us and brought to the ready to build stage and sold to a utility company or other financially
qualified buyer that will carry out the construction and commissioning of a Project and from
the sale of an operating power plant.
Project Financing
Our financing strategy is to utilize a combination of bank loans, credit facilities, tax equity
financing, and institutional private equity to purchase solar equipment and construct the Projects.
Each project we develop requires a substantial capital investment. Permanent project financing is
often arranged immediately prior to the construction of a project. With limited exceptions, this debt
financing is for approximately 50% to 80% of each projects costs and is structured on a basis that is non-
recourse to Vasari Energy, Inc. and our other projects. In addition, the collateral security for each projects
financing generally will be limited to the physical assets, contracts and cash flow of that project and the
Companys ownership interests in that project.
In general, we expect that each of our direct or indirect subsidiaries will be organized as a legal
entity separate and apart from the Company and our other subsidiaries. Any asset of any of these
subsidiaries may not be available to satisfy the Companys obligations or those of any of our other
subsidiaries. However, unrestricted cash or other assets that are available for distribution by a subsidiary
may, subject to applicable law and the terms of financing arrangements of these subsidiaries, be advanced,
loaned, paid as dividends or otherwise distributed or contributed to Vasari Energy. The ability to arrange
project financing and the cost of such financing are dependent upon numerous factors, including general
economic and capital market conditions, the credit attributes of a project, conditions in energy markets,
regulatory developments, credit availability from banks or other lenders, investor confidence in the
industry, Vasari Energy and other project participants, the continued success of our other projects, and
provisions of tax and securities laws that are conducive to raising capital.
Our financial exposure in any equity investment is generally limited by contractual arrangement to
the Vasari Energy equity commitment, which is expected to be about 3% to 5% of its share of the aggregate
project cost. In some cases, Vasari Energy may be required to provide additional credit support to projects
in the form of debt service reserves, contingent equity commitments, revenue shortfall support or other
arrangements designed to provide limited support.
The Companys organization structure is designed to maximize the number of solar energy assets
the Company can acquire, develop, own, operate, and finance while limiting dilution to shareholders. The
Company further believes that this organizational structure has the potential to significantly increase its
share value.
Our Development Process
Our development process and activities generally proceed as described below. Some of these tasks
are pursued concurrently and as progress is made towards completion, the Project advances through our
project classification system.
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It may be necessary for us to secure financing or self-fund our solar equipment purchases and
construction costs. We may also enter into tax equity financing transactions to monetize our ITCs, utilize
accelerated tax depreciation benefits and investment tax credits, and refinance any outstanding Project
financings. Our strategy is to carefully review and monitor investment returns during all phases of the
development process to ensure that our Projects continue to meet our investment return standards. We
believe that this will allow us to allocate capital among Projects in an efficient manner to optimize our
overall investment returns.
Prospecting and Site Selection
Prospecting is a comprehensive, high-level review in which we complete initial assessments of
potential sites to locate new Project opportunities. Prospecting represents our earliest stage of Project
development and addresses our core objectives: identification of sites that we believe may be suitable for
development, and rudimentary analysis of site viability for solar energy Projects and completion of a fatal
flaw analysis. Our meteorology, real estate and transmission teams conduct initial desktop or computer-
based reviews of public information, including public solar reports, land records and power transmission
maps and our proprietary data, to identify significant impediments that could result in a Project's failure to
satisfy our investment objectives. We also make initial assessments of potential sites based on a number of
criteria, including topography; solar resource suitability; constructability; access to transmission networks;
site size; land ownership; and environmental, zoning and other local and state laws and regulations,
including state-sponsored RPS programs. We make these assessments taking into account our business
strategy, commercial standards and targeted returns. We also consider the capital cost, size and expansion
opportunities of the proposed site and our view of the relevant electricity and REC markets.
An important part of the prospecting process is an initial environmental screening or environmental
fatal flaw analysis, usually conducted on the basis of publicly available information and sometimes
supplemented with a site visit by a qualified professional, to identify already documented or readily
apparent environmentally sensitive areas, including unique wildlife habitats, wetlands, culturally significant
resources and proximity to wildlife reserves, national parks and scenic areas that are generally not suitable
for commercial development. This may also include a preliminary assessment of a Project's potential to
pose a hazard to aviation safety. Once a site passes this initial review, we begin more detailed site-specific
environmental assessments in connection with our permitting efforts, and establish constraints for solar
equipment siting and civil and site engineering. These typically include detailed mapping of wetlands and
cultural resources, studies to determine use of the site by migratory or sensitive wildlife and mapping of
adjacent residential and other development, all aimed at ensuring that we may safely operate a potential
project without detrimental impact on the local environment.
Our prospecting effort is regionally focused and is characterized by close working relationships
with local permitting authorities, communities and other significant stakeholders. We believe that by
entering into dialogue with these groups early, we are better able to incorporate local concerns into our site
assessment, leading to effective permit applications and expedited completion of our Projects. Our strategy
is to expand our team to include a regional development manager who will lead a team of specialized
employees focused on our Project efforts. We believe our experience and pre-existing knowledge improves
our prospecting ability in these markets. We believe our ability to understand and interpret site-specific
prospecting information has been and will continue to be a key factor in our success in identifying desirable
project sites.
Land Procurement
Land procurement begins as part of the prospecting and site selection process in which we use
publicly available data or prior experience to determine if there are any known impediments to securing the
land. From there, we conduct initial meetings with local landowners, government officials, community
representatives and residents to gauge community support. If these meetings are favorable, we generally
negotiate and enter into land purchase agreements or market-based land leases with landowners to secure
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rights to build on the site. In some instances, we may enter into easements with landowners to obtain access
to the Project site and/or to obtain rights to construct, operate and maintain collection systems and
transmission lines on third-party property pursuant to which we may make a one-time payment to the
landowner for such rights. Land procurement may involve negotiations with single or multiple landowners.
The final step in this process is to obtain insurable title to the land in order to secure our construction
financing.
Solar Resource Assessment
Because an adequate solar resource is a prerequisite for developing an attractive solar energy
project, a solar resource assessment begins at the earliest stage of the development process. Our initial
assessment of the available solar resource, developed during our prospecting activities, is based on a
desktop review of publicly available solar irradiance maps that we augment, where available, with our
own proprietary data. Our meteorological team also prepares computer models to predict solar levels in
support of our meteorological activity.
Commodity Sales and Management
To ensure that a Project meets our investment return objectives and to protect against electricity
price volatility, we intend to carefully review our electricity sale options for each of our development
projects. As part of this review, we assess the appropriateness of entering into a fixed-price PPA and/or a
financial hedge tied to electricity prices to secure project returns and stabilize project revenue streams. The
power sale process begins with our identifying potential counterparties, marketing and bidding and, finally,
negotiating and executing the PPAs. When we can sell our electricity in liquid power markets we analyze
hedging opportunities available to us later in the development process.
Transmission and Interconnection
The availability of transmission infrastructure is critical to a project's feasibility and is initially
ascertained from public sources during our prospecting activities. If existing transmission infrastructure is
available, we will attempt to secure our access upon selecting a potential site for development by discussing
availability with applicable utilities and filing an application with the appropriate ISO or local electric utility
to interconnect with the network. If transmission infrastructure does not exist or is not available, we will
study the feasibility of developing and constructing our own transmission line.
Permitting
Once we have selected a site, we will begin the approval and permitting process with relevant local,
state and federal government agencies. This process includes identifying required permits; holding
preliminary informational meetings with agencies and stakeholder groups; determining the necessary
studies to complete permit applications and conducting such studies; preparing environmental permitting
and disclosure reports; holding public hearings; responding to information requests and seeking project
approval. Preliminary and pre-final design engineering of the solar energy projects is also completed during
this phase, often in an iterative fashion with environmental studies such that adverse impacts are avoided
or minimized. Because the permitting process is costly and time consuming, we carefully review all aspects
of the Project, including our projected investment returns, before committing significant resources to these
efforts.
Local. Permitting at the local level (i.e., the municipal or county level) often consists of obtaining
a special use or conditional use permit under the provisions of the applicable land use ordinance or code.
Obtaining a permit usually depends on the applicant's demonstrating that the Project will conform to
development standards specified under the ordinance to ensure that the Project is compatible with existing
land uses and protective of natural and human environments. We plant to make a concerted effort to build
trust with the community and may enlist local representatives to answer questions and address concerns.
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We also plan to create Project-specific websites to provide the community with readily accessible
information.
State. We may encounter state level permitting requirements in addition to those imposed locally.
These requirements may include comprehensive environmental reviews or may be limited to a specific
regulatory program, or may involve both. State level comprehensive reviews typically take from 6 to
24 months from the date of filing to approval. Additional approvals may be required for specific aspects of
the Project, such as stream or wetland crossings, stormwater management and highway department
authorizations for oversized loads and state road closings.
Federal. Projects may also trigger required approvals at the federal level. For example, a Clean
Water Act Section 404 permit (Section 404 Permit), is required from the U.S. Army Corps of Engineers
(Army Corps) for the discharge of dredged or fill material to waters of the U.S., including certain wetlands
and waterways (e.g., for access road crossings). Additionally, a permit under Section 10 of the Rivers and
Harbors Act of 1899, (Section 10 Permit), is required from the Army Corps for the construction of any
structure in any navigable water of the U.S. or that would affect the course, location, condition or capacity
of any navigable water of the U.S. In certain cases it may be advisable to obtain a Section 10 incidental take
permit from the U.S. Fish and Wildlife Service if there is a potential for risk to endangered or threatened
species. A comprehensive environmental review may be triggered under the National Environmental Policy
Act for projects that involve a federal action such as issuance of a federal permit, or granting of a lease for
lands administered by the Bureau of Land Management.
Engineering Procurement and Construction Oversight
Our policy is to actively manage the design and construction of our solar energy Projects.
Construction consists of solar array installations, substation construction, interconnection work, balance of
plant construction and occasionally construction of long transmission line. We plan to manage solar
equipment installation and use outside contractors with whom we enter into contracts to provide all
necessary management, supervision, labor, materials, tools, engineering, mobilization, testing and
demobilization required to complete construction of the Project. Under these contracts, the subcontractor
prepares the site for construction with clearing and grading activities; installs step-up transformers;
constructs overhead or underground cables that collect the energy produced by the solar system for delivery
to the on-site substation; constructs the on-site substation, as applicable, or modifies an existing substation;
builds roadways in and around the Project and in some cases, constructs operating and maintenance
buildings or, to the extent they are required, transmission or interconnection facilities. Construction of a
typical site takes approximately 9-15 months, with adverse weather conditions causing the largest variation
in estimated completion dates. We will actively supervise and oversee all aspects of construction.
Support Programs
In Europe, renewable energy targets, in conjunction with FiTs, Renewable Obligation Certificates,
and other schemes such as tenders for utility-scale PV solar, have contributed to the growth in PV solar
markets. Renewable energy targets prescribe how much energy consumption must come from renewable
sources, while incentive policies and competitive tender policies are intended to support new supply
development by providing certainty to investors. A 2009 European Union (EU) directive on renewable
energy, which replaced an earlier 2001 directive, sets varying targets for all EU member states in support
of the directives goal of a 20% share of energy from renewable sources in the EU by 2020, and requires
national action plans that establish clear pathways for the development of renewable energy sources.
Tax incentive programs exist in the U.S. at both the federal and state level and can take the form of
investment and production tax credits, accelerated depreciation, and sales and property tax exemptions and
abatements. At the federal level, investment tax credits for business and residential solar systems have gone
through several cycles of enactment and expiration since the 1980s. In December 2015, the U.S. Congress
extended the 30% federal energy investment tax credit (ITC) for both residential and commercial solar
21
installations through December 31, 2019. The credit will step down to 26% in 2020, 22% in 2021, and
remain at 10% permanently beginning in 2022. The ITC has been an important economic driver of solar
installations in the U.S., and its extension is expected to contribute to greater medium-term demand
visibility in the U.S. The positive impact of the ITC has depended to a large degree on the availability of
tax equity for project financing, and any significant reduction in the availability of tax equity in the future
could make it more difficult to develop and construct projects requiring financing. The eventual step-down
of the ITC to 10% underscores the need for the LCOE from solar systems to continue to decline and remain
competitive with other sources of energy generation.
At the federal level, the Environmental Protection Agencys adoption of a final Clean Power Plan
Rule (the Rule) and implementation of the Rule through state plans offered the possibility of increasing
the demand for PV solar generating capacity in certain regions of the U.S. in which PV solar has not
historically received significant state-level policy support. However, the adoption and implementation of
the Rule has been impacted by litigation against the Rule initiated by states and other stakeholders which
has not yet been resolved, and in February 2016, the U.S. Supreme Court stayed implementation of the
Rule while such legal challenges are pending. It is therefore premature to assess what the effects of the Rule
will be on PV solar markets.
The majority of states in the U.S. have enacted legislation adopting Renewable Portfolio Standard
(RPS) mechanisms. Under an RPS, regulated utilities and other load serving entities are required to
procure a specified percentage of their total electricity sales to end-user customers from eligible renewable
resources, such as solar generating facilities, by a specified date. Some programs may further require that
a specified portion of the total percentage of renewable energy must come from solar generating facilities.
RPS legislation and implementing regulations vary significantly from state to state, particularly with respect
to the percentage of renewable energy required to achieve the states RPS, the definition of eligible
renewable energy resources, and the extent to which renewable energy credits (certificates representing the
generation of renewable energy) qualify for RPS compliance. Measured in terms of the volume of
renewable electricity required to meet its RPS mandate, Californias RPS program is the most significant
in the U.S., and the California market for renewable energy has dominated the western U.S. region for the
past several years. First enacted in 2002, Californias RPS statute has been amended several times to
increase the overall percentage requirement as well as to accelerate the target date for program compliance.
Pursuant to amendments enacted by the California Legislature in 2015, the California RPS program now
requires utilities and other obligated load serving entities to procure 50% of their retail electricity demand
from eligible renewable resources by 2030.
Operating and Regulatory Structure
Various U.S. federal, state and local permits are required to construct solar power plants. The
projects in which we develop and construct must conform to all applicable electric reliability, building and
safety, and environmental regulations and codes, which vary from place to place and time to time.
Solar energy projects are also subject to specific governmental safety and economic regulations.
Our projects are often required to comply with numerous U.S. federal, state and local environmental, land
use and health and safety laws and regulations and to obtain numerous governmental permits in connection
with sustainable infrastructure projects, and we may incur significant additional costs to comply with these
requirements.
The sale and distribution of electricity at the retail level is subject to state regulation, and the sale
of electricity at the wholesale level and interstate transmission of electricity is subject to U.S. federal
regulation. While we do not own or operate electric distribution systems or interstate transmission systems,
the terms of our financings can be affected by the tariffs, rules and regulations applicable to such systems,
as well as the prices that the owners of such systems are able to charge. The construction of power
generation projects is typically regulated at the state level, and the operation of these projects also may be
subject to state regulation as utilities. At the U.S. federal level, the ownership, operation, and sale of
22
power generation facilities may be subject to regulation under the Public Utility Regulatory Policies Act,
or PURPA, the FPA and the Public Utility Holding Company Act of 2005, or PUHCA.
Certain of our future projects may be subject to rate regulation by the FERC under the FPA. To the
extent our future projects are subject to rate regulation they will be required to obtain FERC acceptance of
their rate schedules for wholesale sales of energy, capacity and ancillary services. The FERC may revoke
or revise an entitys authorization to make wholesale sales at market-based rates if FERC subsequently
determines that such entity can exercise market power in transmission or generation, creates barriers to
entry or engages in abusive affiliate transactions or market manipulation.
Any market-based rate authority that we obtain will be subject to certain market behavior rules. If
we are deemed to have violated these rules, we will be subject to potential disgorgement of profits
associated with the violation and/or suspension or revocation of our market-based rate authority, as well as
potential criminal and civil penalties. If we were to lose market-based rate authority for a project, we would
be required to obtain the FERCs acceptance of a cost-based rate schedule and could become subject to,
among other things, the burdensome accounting, record keeping and reporting requirements that are
imposed on public utilities with cost-based rate schedules.
In addition, under certain circumstances, we may also be subject to the reliability standards of the
North American Electric Reliability Corporation. If we fail to comply with the mandatory reliability
standards, we could be subject to sanctions, including substantial monetary penalties. In addition, the state
and U.S. federal regulations that govern qualifying facilities and other power sellers may change, and the
effect of these changes on our business cannot be predicted. Sustainable infrastructure projects may require
air emissions permits and other permits, which may be difficult to obtain in certain jurisdictions.
In addition, the operation of, and electrical interconnection for, our clean energy projects are subject
to U.S. federal or state interconnection and U.S. federal reliability standards and rules also set forth in utility
tariffs and to rules and operating procedures established by the applicable Independent System Operator or
other party who operates the transmission system in a particular region. These tariffs, rules and procedures
specify rules, business practices and economic terms to which we are subject and, in many cases, are drafted
by the utilities and approved by the utilities state or FERC. In the United States, these regulations and
policies are being modified and may continue to be modified, which could have an adverse impact on our
existing projects. Customer purchases of, or further investment in the research and development of,
alternative energy sources could be deterred by these regulations and policies, which could result in a
significant reduction in the potential demand for clean energy project development and investments.
Competition
The renewable energy and solar energy sectors are highly competitive and continually evolving as
participants in these sectors strive to distinguish themselves within their markets and compete within the
larger electric power industry. We face intense competition and may continue to result in reduced margins
and loss of market share. Certain of our existing or future competitors may be part of larger corporations
that have greater financial resources and greater brand name recognition than we do and, as a result, may
be better positioned to adapt to changes in the industry or the economy as a whole. Certain competitors may
have direct or indirect access to sovereign capital, which could enable such competitors to operate at
minimal or negative operating margins for sustained periods of time.
In addition, we expect to compete with future entrants into the PV solar industry that offer new
technological solutions. We also face competition from semiconductor manufacturers and semiconductor
equipment manufacturers or their customers that produce PV solar cells, solar modules, or turn-key
production lines. We also face competition from companies that currently offer or are developing other
renewable energy technologies (including wind, hydropower, geothermal, biomass, and tidal technologies)
and other power generation sources that employ conventional fossil fuels.
23
We believe that our primary competitors are the traditional utilities that supply energy to our
potential customers. We compete with these traditional utilities primarily based on price, predictability of
price, and the ease by which customers can switch to electricity generated by our solar energy systems. We
believe that we can compete favorably with traditional utilities based on these factors in the regions we
intend to service.
Our competitors may be significantly larger than we are, have access to greater capital and other
resources and may have other advantages over us. In addition, some of our competitors may have higher
risk tolerances or different risk assessments, which could allow them to consider a wider variety of
investments and establish more relationships than we can.
In the face of this competition, we believe that a significant part of our competitive advantage is
our management teams experience and industry expertise and the fact that the market for opportunities in
sustainable infrastructure projects is underserved by traditional commercial banks and other financial
sources. However, we may not be able to achieve our business goals or expectations due to the competitive
risks that we face. For additional information concerning these competitive risks, see Risk FactorsWe
operate in a competitive market and future competition may impact the terms of the financing we offer.
An increase in the competition for sources of funding could adversely affect the availability and cost of
financing.
We also face intense competition in attracting and retaining qualified employees. Our ability to
continue to compete effectively will depend upon our ability to attract new employees, retain and motivate
our existing employees and to continue to compensate employees competitively.
Staffing
As of August 15, 2016, we employed seven people. We intend to hire several additional business
professionals in the near term in connection with this offering and the implementation of our strategy.
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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma consolidated statements of earnings (i) are presented based on information
currently available, (ii) are intended for informational purposes only, (iii) are not necessarily indicative of
and do not purport to represent our operating results, and (iv) do not reflect all actions that may be
undertaken by management.
Vasari Energy, Inc.

Pro-Forma Income Statement
All figures are in USD FY16E FY17E FY18E FY189E FY20E

Revenue 8,100,000 24,000,000 36,750,000 46,900,000 53,500,000
General and
Administrative 1,455,000 3,590,000 5,250,000 6,100,000 6,150,000
Gross profit 6,645,000 20,410,000 31,500,000 40,800,000 47,350,000
Total Salaries & Wages 182,250 1,579,500 2,794,500 2,794,500 2,794,500
Professional Fees 20,000 50,000 65,000 75,000 85,000
Training and
development 30,000 31,500 33,075 34,729 36,465
Sales & Marketing
Expenses 63,385 146,721 259,584 259,584 259,584
Insurance 15,000 18,000 21,600 25,920 31,104
Travel 25,000 26,250 27,563 28,941 30,388
Miscellaneous Expenses 54,800 57,540 60,417 63,438 66,610
IT Cost 8,308 21,501 38,040 38,040 38,040
Selling, general and
administrative (SG&A) 550,000 650,000 750,000 865,000 945,000
EBITDA 6,095,000 19,760,000 30,750,000 39,935,000 46,405,000
Depreciation &
Amortization - - - - -
EBIT 6,095,000 19,760,000 30,750,000 39,935,000 46,405,000
Interest Expense - - - - -
Earnings Before Tax 6,095,000 19,760,000 30,750,000 39,935,000 46,405,000
Income Tax
Expenses(Benefits) 257,808 2,900,876 5,193,524 5,188,873 5,183,769
Net Income 5,837,192 16,859,124 25,556,476 34,746,127 41,221,231
Earnings Per Share $0.21 $0.60 $0.91 $1.24 $1.47
No. of shares
Outstanding 28,000,000 28,000,000 28,000,000 28,000,000 28,000,000
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DESCRIPTION OF VASARI NOTES
The following is a summary of the material terms of the Vasari Notes. The Vasari Notes:
are general obligations of the Company and are not guaranteed by any other person or entity;
are not savings accounts, certificates of deposit (CDs) or other deposits and are not insured by
the FDIC or any other governmental agency;
will be secured by, and paid primarily from, the revenue and other assets of the Company, the
composition of which may change over time;
will not have the benefit of a sinking fund for the retirement of principal;
are convertible into common stock of our company; and
will cease to accrue interest after the applicable redemption date under the terms and subject to
the conditions of the Note agreement.
The Vasari Notes are unregistered and issued without coupons. We may change the interest rates
and the maturities of the Vasari Notes as they are offered, provided that no such change shall affect any
Note issued prior to the date of change. We may, at our discretion, limit the maximum amount any investor
or related investors may maintain in outstanding Vasari Notes.
There are no limitations on our ability to additional indebtedness in the form of Vasari notes or
otherwise.
Interest
Each note will bear interest from its issue date at a fixed rate per year. We will pay interest only on
the notes on January 1st, April 1st, July 1st, and October 1st of each year commencing on the first quarter
following the date of issuance of a note. Interest will be paid without any compounding. The notes will bear
interest at an annual rate of 10.00%. Interest will accrue from the first day of the month in which a note is
purchased. Interest on the notes will be computed on the basis of a 360-day year of twelve 30-day months
or, in the case of an incomplete month, the number of days elapsed.
The Company will cause the paying agent for the Vasari Notes, or the Paying Agent (which will
initially be Vasari Energy) to pay any accrued and unpaid interest to the person in whose name the Vasari
Note is registered at the close of business on the regular record date relating to such interest payment date.
If interest is due at maturity but on a day that is not an interest payment date, the Company will pay the
interest to the person entitled to receive the principal amount.
For the purpose of determining the holder at the close of business on a regular record date, the close
of business will mean 2:00 P.M., Pacific Time, on that day. If any interest payment date other than the
maturity date for any Vasari Notes would otherwise be a day that is not a business day, such interest
payment date will be postponed to the next succeeding business day.
Maturity
The Vasari Notes mature on December 31, 2017. Thirty to sixty days prior to redemption, you will
receive a letter describing redemption/renewal options, if any, which will specify action(s) needed by you.
If you do not respond, principal and unpaid interest will be paid to you.
Conversion to Common Stock
Subject to the terms and restrictions and limitations contained in the Note, the Holder shall have
the right, at such Holder's option, at any time after confirmation that sufficient shares are authorized and
from time to time, to convert the outstanding Principal Amount under the Note in whole or in part by
delivering to the Company a fully executed notice of conversion.
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Eligible Market
Eligible Market means the OTC Bulletin Board, the OTCQX of OTC Markets, the Nasdaq Stock
Market, the New York Stock Exchange or the NYSE MKT (f/k/a American Stock Exchange).
Conversion Price
Subject to the terms and restrictions and limitations contained in the Note, the Conversion Price
shall equal $3.00 per share.
Conversion Ratio
Conversion Ratio means, at any time, a fraction, of which the numerator is the entire outstanding
Principal Amount of this Note (or such portion thereof that is being redeemed or repurchased), and of which
the denominator is the Conversion Price as of the date such ratio is being determined.
Conversion Right
Subject to the terms hereof and restrictions and limitations contained the Note, the Holder shall
have the right, at such Holder's option, at any time after confirmation that sufficient shares are authorized
for conversion of Notes and from time to time, to convert the outstanding Principal Amount under the Note
in whole or in part by delivering to the Company a fully executed notice of conversion in the form of
conversion notice attached as Exhibit A to the Note (the Conversion Notice), which may be transmitted
by email or facsimile. Noteholder represents and warrants that noteholder will not submit a Conversion
Notice to the Company without written confirmation from the Company that a sufficient number of
authorized shares are available for conversion of Notes to common stock.
Cash or Common Stock
Subject to the terms hereof, the Company shall either (i) pay the Interest Amount in full in cash on
each Payment Date or (ii) issue shares of Common Stock in satisfaction of such Interest Amount in
accordance with the terms hereof, but not both, at the Companys option. Prior to each Payment Date the
Company shall deliver to all the holders of Notes a written irrevocable notice electing to pay such Interest
Amount in cash or Common Stock on such Payment Date. Such notice shall be delivered at least ten (10)
Trading Days prior to the applicable Payment Date but no more than twenty (20) days prior to such Payment
Date. If such notice is not delivered within the prescribed period set forth in the preceding sentence, then
the Interest Amount shall be paid in cash. If the Company elects to pay any Interest Amount in cash on a
Payment Date, then on such date the Company shall pay to the Holder an amount equal to the Interest
Amount due in satisfaction of such obligation. If the Company elects to pay such Interest Amount in shares
of Common Stock, the number of such shares to be issued for such Payment Date shall be the number
determined by dividing (x) the Interest Amount due, by (y) 90% of the Conversion Price determined as of
the applicable Payment Date. Such shares shall be issued and delivered within business ten (10) Days
following such Payment Date and shall be duly authorized, validly issued, fully paid, non-assessable and
free and clear of all encumbrances, restrictions and legends. If any Holder does not receive the requisite
number of shares of Common Stock in the form required above within such business ten (10) Days, the
Holder shall have the option of either (a) requiring the Company to issue and deliver all or a portion of such
shares or (b) canceling such election to pay in Common Stock (in whole or in part), in which case the
Company shall immediately pay in cash the Interest Amount due hereunder or such portion as the Holder
specifies is to be paid in cash instead of being converted. All holders of Notes must be treated equally with
respect to such payment of Interest Amounts.
Subordination
Our obligation to repay the principal of and make interest payments on the Vasari Notes is
subordinate in right of payment to all senior debt. This means that if we are unable to pay our debts, when
27
due, all of the senior debt would be paid first, before any payment of principal or interest would be made
on the Vasari Notes and related party debt which is equal in priority to the Vasari Notes.
The term senior debt means all of our debt created, incurred, assumed or guaranteed by us, except
debt that by its terms expressly provides that such debt is not senior in right of payment to the Vasari Notes.
Debt is generally any indebtedness, contingent or otherwise, in respect of borrowed money, or evidenced
by Notes, Vasari Notes, debentures or similar instruments or letters of credit and shall include any guarantee
of any such indebtedness. Senior debt includes, without limitation, all of our bank and finance company
debt and any line of credit we may incur in the future. The Vasari Notes are not senior debt. As of August
1, 2016, we had approximately $150,000 of senior debt outstanding.
Priority
The Vasari Notes are subordinate to all of our senior debt and equal to all related party debt. We
may at any time borrow money on a secured or unsecured basis that would have priority over the Vasari
Notes.
Security
Vasari Notes will be our senior unsecured obligations, and will not be secured by any collateral.
Redemption by Us Prior to Maturity
We may redeem any Note, in whole or in part, at any time following the first 180 calendar days
after the date of issuance of the Note for a redemption price equal to the principal amount plus any unpaid
interest thereon to the date of redemption. We will notify Note holders whose Vasari Notes are to be
redeemed not less than 30 nor more than 60 days prior to the date of redemption.
Redemption at Request of Holder Prior to Maturity
At your written request but subject to the subordination provisions and our consent (which may be
withheld in our sole discretion), we will redeem any Note at any time following the first 180 calendar days
after the date of issuance of the Note for a redemption price equal to the principal amount plus unpaid
interest equal to the stated rate of interest minus a penalty in an amount equal to the interest earned over the
last 180 days immediately prior to the redemption date. The penalty will be taken first from any interest
accrued but not yet paid on the Note, and to the extent such accrued and unpaid interest does not cover the
entire penalty amount, the remainder of the penalty amount shall be reduced from the principal amount of
the Note.
Redemption Upon Your Death
At the written request of the executor of your estate or, if your Note is held jointly with another
investor, the surviving joint holder, but subject to the subordination provisions, we will redeem any Note
at any time after death for a redemption price equal to the principal amount plus unpaid interest equal to
the stated rate of interest, without any penalty. We will seek to honor any such redemption request as soon
as reasonably possible based on our cash situation at the time, but generally within 90 days of request.
Extension After Maturity
Unless we offer, and you accept in writing, a renewal option (which we are not required to do), the
maturity of a Note will not be extended from the original maturity date. We will provide you notice of the
maturity date of your Note at least 30 days, but not more than 60 days, prior to the original maturity date.
Our notice may also describe the redemption/renewal options we are then offering and the action(s) you
must take to exercise a redemption or renewal option.
No Restrictions on Additional Debt or Business
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We are not restricted from issuing additional securities or incurring additional debt, including
senior debt or other secured or unsecured obligations or the manner in which we conduct our business.
Restrictions on Transferability
There are substantial restrictions on the transferability of the Vasari Notes in the Companys
Articles of Incorporation and imposed by state and federal securities laws. Before selling or transferring
any Note, an investor must obtain the written consent of the Company and comply with applicable
requirements of federal and state securities laws and regulations, including the financial suitability
requirements of such laws or regulations.
Place, Method and Time of Payment
We will pay principal and interest on the Vasari Notes from our offices, or at such other place as
we may designate for that purpose; provided, however, that if payments are made by check, they will be
mailed to you at your address appearing in the Note register maintained by us. Any payment of principal or
interest that is due on a nonbusiness day will be payable on the next business day immediately following
that nonbusiness day.
Events of Default
An event of default is defined as follows:
a default in payment of principal or interest on the Vasari Notes when due or payable if such
default has not been cured for 90 days;
our becoming subject to certain events of bankruptcy or insolvency; or
our failure to comply with any agreements or covenants in or provisions of the Vasari Notes or
if such failure is not cured or waived within 60 days after we have received notice of such
failure from the majority holders of at least a majority in principal amount of the outstanding
Vasari Notes.
If an event of default occurs and is continuing, the holders of at least a majority in principal amount
of the then-outstanding Vasari Notes may declare the principal of and the accrued interest on all outstanding
Vasari Notes due and payable. If such a declaration is made, we are required to pay the principal of and
interest on all outstanding Vasari Notes immediately, so long as the senior debt has not matured by lapse
of time, acceleration or otherwise.
Holders of a majority of the aggregate principal amount of the Vasari Notes at the time outstanding
may, on behalf of all holders, waive any existing event of default or compliance with any provision of the
Vasari Notes, except a default in payment of principal or interest on the Vasari Notes. In addition, holders
may waive an existing event of default or compliance with any provision of the Vasari Notes, except in
payments of principal or interest on the Vasari Notes, if a majority of the aggregate principal amount of the
Vasari Notes in good faith determines that a waiver or consent is in the best interests of the holders of the
Vasari Notes.
No Protection in the Event of a Change of Control; No Obligation to Repurchase
Unless we indicate otherwise in a Memorandum supplement with respect to a particular series of
Vasari Notes, the Vasari Notes will not contain any provisions that may afford holders of the Vasari Notes
protection in the event the Company undergoes a change of control or in the event of a highly leveraged
transaction (whether or not such transaction results in a change of control of the Company). In particular,
the Company is not obligated to repurchase your Vasari Notes upon a change of control of the Company.
Modifications and Amendments
Modifications and Amendments Without Consent of Holders
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The Company may draft supplemental Memorandum at any time, without the consent of any holder
of Vasari Notes of the relevant series for the purpose of:
conveying, transferring, assigning, mortgaging any property or assets as security for the Vasari
Notes;
curing any ambiguity or correcting or supplementing any provision contained in the
Memorandum, or the Vasari Notes or any supplemental Memorandum, or any pricing
supplement, which may be defective or inconsistent with any other provision contained in the
Memorandum, the Vasari Notes, the relevant supplemental Memorandum or any other
documents in connection with our Vasari Note program, which shall not materially adversely
affect the interests of any holder of the Vasari Notes;
evidencing the succession of another person to us and the assumption by that successor of our
covenants contained in the Memorandum in the Vasari Notes;
adding to the Companys covenants for the benefit of the holders of the Vasari Notes or to
surrender any right or power conferred in the Memorandum on the Company;
adding any additional Events of Default to the Memorandum with respect to any series of
Vasari Notes;
amending restrictions on transferability of Vasari Notes of any series in any manner that does
not materially adversely affect the rights of any holder of Vasari Notes;
providing for the issuance of and establishing the forms and terms and conditions of the Vasari
Notes;
establishing the form of any certifications required to be furnished pursuant to the terms of the
Memorandum or any Vasari Notes;
amending or supplementing any provision contained in the Memorandum or in any Vasari
Notes, provided that such amendment or supplement does not apply to any Vasari Notes of any
series created prior to the date of such supplemental Memorandum and entitled to the benefits
of such provisions; or
making any change to any Vasari Notes to conform the terms thereof to the terms reflected in
any pricing supplement (including this Memorandum), Memorandum supplement, offering
memorandum or similar offering document used in connection with the initial offering or sale
of any Vasari Notes. In the event of a conflict between this Memorandum and the pricing
supplement for a series of Vasari Notes, the terms of such pricing supplement shall control and
shall supersede this Memorandum with respect to such series of Vasari Notes. In addition, you
should read the more detailed information appearing elsewhere in this Memorandum.
Modifications and Amendments with Consent of Holders
The Company may enter into one or more supplemental Memorandum for the purpose of making
any amendment or modification to the Vasari Notes of a series or modifying in any manner the rights of
any holder of Vasari Notes with consent of the holder(s) representing at least a majority in aggregate
principal amount of Vasari Notes affected by the proposed modification at the time outstanding. However,
no such supplemental Memorandum may, without the affirmative consent or affirmative vote of the holder
of each Vasari Note affected thereby:
change the stated maturity of the principal of, or premium, if any, or any installment of interest,
if any, on any such Vasari Note;
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reduce the principal of or any premium on any Vasari Notes or reduce the rate of interest on
any Vasari Notes, or reduce the price payable upon the redemption of any Vasari Note (if
applicable);
change any place of payment in which the principal of, or any premium or interest on, any such
Vasari Note is payable;
impair the right of any holder of such Vasari Notes to institute suit for the enforcement of any
payment on or with respect to such Vasari Notes;
reduce the percentage of the aggregate principal amount of such outstanding Vasari Notes, the
consent of the holders of which is required for any supplemental Memorandum, or the consent
of the holders of which is required for any waiver of defaults thereunder and their consequences
provided for in the Memorandum;
modify any of the provisions of the Memorandum respecting modifications and amendments,
except to increase any percentage specified in the Memorandum or to provide that additional
provisions of the Memorandum cannot be modified or waived without the consent of the holder
of each such outstanding Vasari Note; or
modify in any manner adverse to the interest of any holder of such Vasari Notes the terms and
conditions of the Companys obligations, regarding the due and punctual payment of the
principal of, interest on or any other amounts due with respect to such Vasari Notes.
No Personal Liability of Incorporators, Stockholders, Officers, Directors
The Memorandum provides that no recourse shall be had under any obligation, covenant or
agreement of the Company in any of the Vasari Notes or because of the creation of any indebtedness
represented thereby, against any of the Companys incorporators, stockholders, officers or directors, past,
present or future, or of any predecessor or successor entity thereof under any law, statute or constitutional
provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise.
Each holder, by accepting the Vasari Notes, waives and releases all such liability.
Reports
Security holders will receive annual unaudited financial statements for the Company, generally
within 120 days after the end of each fiscal year; unaudited quarterly reports, generally within 45 days after
the end of the first three quarters of each fiscal year, and such other information as may be reasonably
necessary for the security holders preparation of tax returns.
Service Charges
We reserve the right to assess service charges and fees to issue a replacement interest payment
check, and, in the event we permit transfer or assignment in our discretion, to transfer or assign a Note.
Record of Your Ownership
The Vasari Notes will be issued in certificated form. If you purchase a Note, an account showing
the principal amount of your Note will be established in your name on our books. Interest accrued on your
Note will also be credited to your account. You will receive a certificate or other instrument evidencing our
indebtedness to you. Upon purchase of your Note, we will send you a Note Certificate confirmation which
confirms, among other things, the term, interest rate and principal amount of your Note.
Legal and Administrative Proceedings
We are currently not a party to any material legal or administrative proceedings, and we are not
aware of any material legal or administrative proceedings threatened against us. We may from time to time
become a party to various legal or administrative proceedings arising in the ordinary course of our business.
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EXECUTIVE OFFICES AND WEBSITE
Our principal executive office is located at 9844 Research Dr., Suite 200, Irvine, CA 92618. The
telephone number of the Company is (949) 529-5933. We maintain a website at www.VasariCapital.com.
The information on our website is not part of this Memorandum.
MANAGEMENT AND BOARD OF DIRECTORS

The Company is managed by professionals who have experience in solar system sales and
marketing, installation, energy assessment, customer support, power purchase agreements and lease
agreements, energy project finance, conventional energy, and utility operations. Vasari Energy expects to
add additional senior members who are highly respected executives in the energy industry and who will
also bring additional experience and industry relationships to the Company.
The following table sets forth information with respect to our officers, directors and key employees
as of the date of this Memorandum. The names, ages and positions of each of the executive officers and
Directors of the Company, as well as a description of their business experience and past employment are
as set forth below:
Name Age Position
Michael Megarit 57 Chairman and a Director
Sam Lipman 64 Executive Vice President of Business Development
Stephen Smith 58 Vice President
Sam Lipman. Mr. Lipman's background includes more than 15 years of power generation
experience as a developer, project and sales manager, and consultant for global energy and independent
power producers. Prior to Vasari Energy, Mr. Lipman was director of sales and project development for
Eoplly USA, the US subsidiary to Chinese solar module and cell manufacturing company with over $300
million of annual revenue. As Southwest regional manager for Enfinity Corp, a top 10 global PV solar
developer, Mr. Lipman planned and developed utility-scale and large distributed photovoltaic solar energy
projects throughout the southwestern and western states. As principal with Power Central Associates, Mr.
Lipman served as power generation and renewable energy project consultant to GE Energy, where he
directed the acquisition and development of 13 natural gas and solar sites representing potential output of
4000 MW to 5000 MW.
Michael Megarit. Mr. Megarit has 20 years of experience in domestic and international project
finance and corporate finance was responsible for transactions and advisory work in a wide range of
industries including energy in the U.S. and emerging markets. Mr. Megarit has been with Vasari Energy
since its inception and is responsible for project finance and organization development. Prior to Vasari, Mr.
Megarit was president of AllegisOne, Inc. and chairman of its wholly owned subsidiary, AllegisOne
Securities, Inc., an NASD registered broker dealer and a principal with Madison Investments for 12 years,
an international investment firm specializing in corporate and project finance in emerging markets. While
with Madison, Mr. Megarit advised on and completed transactions in excess of $3 billion and was
responsible for clients with $100 million to $1 billion in annual revenue including financial institutions and
multinational corporations.
Stephen Smith. Mr. Smith has over 30 years experience in the financial services industry
including brokering and sales of stocks, bonds, commodities and private equity investments. Mr. Smiths
career began in New York on Wall Street in 1978 and continued with positions as Vice President of Sales
and Investments for large and small brokerage houses. In 2000 Mr. Smith was Senior VP of Sales for AIG
NY based E Business Group, responsible for clients such as Ford Motor Company, 3M, Coca Cola and
others. For 12 years Mr. Smith was Managing Principal Partner for multiple commercial REIT offerings,
and brokering and sales of large commercial real estate assets both US and abroad.
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EXECUTIVE COMPENSATION
Compensation Philosophy and Objectives
The primary objectives of the Companys executive compensation program are to:
encourage executives to achieve and exceed our short- and long-term strategic and financial
performance targets;
focus on long-term performance by providing a significant amount of an executives
compensation through programs linked to and dependent upon our long-term success;
attract and motivate new executive talent and retain and motivate current executives whose
continued employment is crucial to our success and growth; and
align executives incentives with the creation of stockholder value.
We intend for our programs to support attaining our strategic objectives by aligning the interests of
our executive officers with those of our stockholders through performance-based compensation upon
achievement of operational and financial performance goals and long-term incentive based compensation
tied to overall Company value.
The key principles of our compensation philosophy are to:
Tie incentive compensation to Company performance. We believe that tying a significant
portion of executive compensation to Company performance appropriately rewards executives
for achieving strategic performance objectives and positive financial performance. For each of
our executives, the aggregate target value of annual cash incentives and long-term equity
incentives represent a significantly greater dollar value of compensation than base salary alone.
We employ two primary incentive-based compensation structurescash and equity. Under our
annual cash incentive program, the compensation committee may award an executive an annual
discretionary cash incentive based upon the Companys performance and the executives
individual performance. While incentives are awarded at the compensation committees
discretion, the compensation committee may assess Company performance through
achievement of one or more specified performance metrics, including the Companys
successful completion of predefined corporate initiatives and project milestones, as well as the
executives individual performance and contribution in achieving these goals. The Company
may also make stock option grants to each executive to link a meaningful portion of an
executives compensation to the value of the Companys stock.
Pay competitively. We believe that the base salaries and target total compensation for our
executives should be competitive relative to public and alternative energy and technology
companies. We will typically employ compensation data from various sources, including
compensation surveys conducted by independent compensation consultants, and determine
benchmark levels for each executive individually.
Mix short-term and long-term compensation. We are committed to providing executives
with a mix of pay that is reasonable, appropriately reflects performance, and links pay to
performance without undue risks.
Balance external market competitiveness with internal parity. In setting overall
compensation levels for our executives, we will seek to balance market competitiveness with a
reasonable level of internal parity. We recognize that external market data can never completely
reflect the full extent to which each individual executive demonstrates leadership, makes
strategic decisions and contributes to our business results through the execution of their
responsibilities. We believe that balancing external competitiveness with a reasonable level of
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internal parity helps to promote a culture of peer equality among the executive team and to
recognize the skills and contributions that each executive brings to the organization. In more
practical terms this means that, when evaluating compensation levels for a given executive, in
addition to considering external market compensation data, the compensation committee may
also consider the relative relationship between that executives target pay level and that of other
Company executives.
Promote equity ownership among our executives. We believe that it is important for our
executives to have an equity ownership stake in the Company. Equity ownership effectively
aligns the economic interests of stockholders and executive management. As such, equity
grants are and will continue to be an important component of our executives compensation
packages.
Components of Executive Compensation
Presently the material components of executive compensation are:
base salary;
an annual cash incentive linked to Company and individual performance;
long-term incentives in the form of stock option awards;
other employee benefits; and
for selected executives, additional compensation or other arrangements established via
individual agreements with the Company.
34
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial ownership of our common stock
(after giving effect to the conversion of all outstanding shares of our preferred stock into common stock
effective immediately prior to the completion of this offering) as of August 1, 201.
Except as otherwise noted, the address of each person listed in the table is c/o Vasari Energy, Inc.,
9844 Research Dr., Suite 200, Irvine, CA 92618. The table includes all shares of common stock issuable
within 60 days of August 1, 2016 upon the exercise of options and other rights beneficially owned by the
indicated stockholders on that date. To our knowledge, except under applicable community property laws
or as otherwise indicated, the persons named in the table have sole voting and sole investment control with
respect to all shares beneficially owned. The applicable percentage of ownership for each stockholder is
based on 25,087,000 shares of common stock outstanding as of August 1, 2016, after giving effect to the
conversion of all outstanding shares of our preferred stock into common stock effective immediately prior
to the completion of this offering, together with applicable options and warrants for that stockholder. Shares
of common stock issuable upon exercise of options and warrants and other rights beneficially owned are
deemed outstanding for the purpose of computing the percentage ownership of the person holding these
options and other rights, but are not deemed outstanding for computing the percentage ownership of any
other person.
Prior to Offering After Offering(1)

Number of Shares of Percentage of Number of Shares of Percentage of
Owner Common Stock Common Stock Common Stock Common Stock
Falcon Partners, LLC(2) 18,227,000 83.37% 18,227,000 72.65%
Common Stock(3) 1,606,000 7.35% 1,606,000 6.40%
Employees(4) 110,000 0.50% 3,000,000 11.96%
Series A Preferred(5) 174,000 0.80% 174,000 0.69%
Series B Preferred(6) 1,167,000 5.34% 1,167,000 4.65%
Series C Preferred (7) 400,000 1.83% 400,000 1.59%
Warrants(8) 179,750 0.82% 179,750 0.72%
Notes(9) 0 0.00% 333,333 1.33%
TOTAL(10) 21,863,750 100.00% 25,087,083 100.00%
_________________________
(1) Shares issued and outstanding at the completion of the 10% Convertible Note offering assuming.
(2) Falcon Partners, LLC is a majority shareholder of Vasari Energy, Inc. and is controlled by Michael Megarit.
(3) Outstanding common stock is based on 1,606,000 shares outstanding as of August 1, 2016 and does not include
approximately 7 million shares of common stock available for grant under our equity plans
(4) Includes common stock currently owned by employees and shares of common stock reserved for issuance to
employees as part of one or more employee stock ownership plans.
(5) Assumes 174,000 of Series A Preferred Convertible shares are converted to common stock.
(6) Assumes 1,167,000 of Series B Preferred Convertible shares are converted to common stock.
(7) Assumes 400,000 of Series C Preferred Convertible shares are converted to common stock.
(8) Assumes common stock warrants are exercised to purchase shares of common stock.
(9) Shares issued to 10% Convertible Note holders upon full conversion to common stock.
(10) All figures of issued shares in this table rely on the filing of the Companys Amended and Restated Articles of
Incorporation and authorization of shares. See Description of Our Capital Stock. Some numbers have been
rounded.
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DESCRIPTION OF OUR CAPITAL STOCK
The following is a summary of our capital stock and certain provisions of our certificate of
incorporation and bylaws. This summary is not complete and is qualified in its entirety by the provisions
of our certificate of incorporation and bylaws, each as amended to date. The following is a summary of the
material terms of our amended and restated certificate of incorporation and our amended and restated
bylaws, as each will be in effect upon completion of the offering. To understand them fully, you should
read our amended and restated certificate of incorporation and our amended and restated bylaws.
On June 30, 2010, the holder of a majority of the Corporations voting stock approved an Amended
and Restated Certificate of Incorporation for the Corporation (the Original A&R Certificate of
Incorporation), which, among other things: (i) increased the Corporations authorized common stock from
Ten Thousand (10,000) shares, par value $0.001, to Seventy Million (70,000,000) shares, par value $0.001;
(ii) authorized Thirty Million (30,000,000) shares, no par value, of preferred stock; and (iii) granted the
Directors blank check authority as to the authorized preferred stock, such that the Directors could, from
time to time, divide and establish any or all of the unissued shares of preferred stock into one or more series,
and determine the rights, preferences and limitations of each series, without further approval from the
Corporations shareholders. Despite the approval of a majority of the Corporations voting stock, a
Certificate of Designation setting forth the rights, preferences, privileges and restrictions of the Series A, B
and C Preferred Stock has not been filed with the Delaware Division of Corporations. In order to properly
authorize sufficient shares of common stock and preferred stock the Directors have been presented with the
following documents (i) a Certificate of Validation for Amended and Restated Certificate of Incorporation;
(ii) a Certificate of Validation for Certificate of Designation for 10% Series A Convertible Preferred Stock,
(iii) a Certificate of Validation for Certificate of Designation for Series B Convertible Preferred Stock; and
(iv) a Certificate of Validation for Certificate of Designation for Series C Convertible Preferred Stock.
The New Amended and Restated Certificate of Incorporation, among other things, authorizes: (i)
an increase the number of shares of common stock which the Corporation is authorized to issue to Seventy
Million (70,000,000) shares, par value $0.001, (ii) Thirty Million (30,000,000) shares of preferred stock;
and (iii) blank check authority as to the authorized preferred stock, such that the Directors could, from
time to time, divide and establish any or all of the unissued shares of preferred stock into one or more series,
and determine the rights, preferences and limitations of each series, without further approval from the
Corporations shareholders.
Restrictions on Transferability
There are substantial restrictions on the transferability of the Shares in the Companys Articles and
Bylaws and imposed by state and federal securities laws. Before selling or transferring any Share, an
investor must obtain the written consent of the Company and comply with applicable requirements of
federal and state securities laws and regulations, including the financial suitability requirements of such
laws or regulations.
Appropriate legends setting forth the restrictions on transfer of the Shares will be set out in the
certificates representing Shares or shares of the common stock received upon conversion of Shares.
Limitation on Employee and Officer Liability and Indemnification
The Company may indemnify any person who is or was a director, officer, employee or other agent
(collectively, an agent) of the Company, who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or proceeding, whether civil, criminal, administrative or
investigative (a proceeding) (other than an action by or in the right of the Company to procure a judgment
in its favor) by reason of the fact that the person is or was an agent of the Company, against expenses,
judgments, fines, settlements, and other amounts actually and reasonably incurred, including attorneys
fees, in connection with the proceeding if that person acted in good faith and in a manner the person
36
reasonably believed to be in the best interests of the Company and, in the case of a criminal proceeding,
had no reasonable cause to believe the conduct of the person was unlawful.
The Company will also indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action by or in the right of the Company to procure a
judgment in its favor by reason of the fact that the person is or was an agent of the Company, against
expenses actually and reasonably incurred by that person in connection with the defense or settlement of
the action if the person acted in good faith and in a manner the person believed to be in the best interests of
the Company and its stockholders.
No indemnification will be made:
(1) In respect of any claim, issue or matter as to which the person has been adjudged to be liable
to the Company in the performance of that person's duty to the Company and its stockholders,
unless and only to the extent that the court in which the proceeding is or was pending
determines, upon application, that, in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for expenses and then only to the extent that the
court determines.
(2) Of amounts paid in settling or otherwise disposing of a pending action without court approval.
(3) Of expenses incurred in defending a pending action which is settled or otherwise disposed of
without court approval.
To the extent that an agent of the Company has been successful on the merits in defense of any
proceeding referred to above or in defense of any claim, issue or matter therein, the agent will be
indemnified against expenses actually and reasonably incurred by the agent in connection therewith.
Expenses incurred in defending any proceeding may be advanced by the Company prior to the final
disposition of the proceeding upon receipt of an undertaking by or on behalf of the agent to repay that
amount if it is determined ultimately that the agent is not entitled to be indemnified.
This indemnification is not exclusive of any additional rights to indemnification for breach of duty
to the Company and its stockholders while acting in the capacity of a director or officer of the Company to
the extent the additional rights to indemnification are authorized in the Articles of Incorporation. The
indemnification provided above for acts, omissions or transactions while acting in the capacity of, or while
serving as, a director or officer of the Company but not involving breach of duty to the Company and its
stockholders is not exclusive of any other rights to which those seeking indemnification may be entitled
under any Bylaw, agreement, vote of stockholders or disinterested directors, or otherwise, to the extent the
additional rights to indemnification are authorized in the Articles of Incorporation.
The Company may purchase and maintain insurance on behalf of any agent of the Company against
any liability asserted against or incurred by the agent in that capacity or arising out of the agent's status as
such whether or not the Company would have the power to indemnify the agent against that liability.
Amendment of the Certificate of Incorporation
The Certificate provides that an amendment thereof must first be approved by a majority of the
Board of Directors and (with certain exceptions) thereafter must be approved by the holders of a majority
of the total votes eligible to be cast by holders of Common Stock with respect to such amendment or repeal.
Amendment of Bylaws
The Certificate provides that the Bylaws may be amended or repealed by the Board of Directors or
by the approval of the outstanding shares (as defined in Delaware General Corporation Law); provided, that
a Bylaw amendment specifying or changing a fixed number of directors or the maximum or minimum
number or changing from a fixed to a variable board or vice versa may only be adopted by approval of the
37
outstanding shares (as defined in Delaware General Corporation Law); provided, further that a Bylaw
amendment reducing the fixed number or the minimum number of directors to a number less than five
cannot be adopted if the votes cast against its adoption at a meeting or the shares not consenting in the case
of action by written consent are equal to more than 16 2/3 percent of the outstanding Shares entitled to vote.
PLAN OF DISTRIBUTION
We are offering up to $1,000,000 in aggregate principal amount of the Vasari Notes. We will offer
the Vasari Notes on a continuous basis.
Vasari Notes will be made available by the Company, by selling agents (the Selling Agents) and
broker-dealers (Broker-Dealers) who are members of the Financial Regulatory Authority, Inc.
(FINRA) that will assist the Company in the placement of Vasari Notes. The Broker-Dealers may either
be independent or related entities of the Company. Vasari Notes will be sold on a best efforts basis.
The Company may accept purchases of Vasari Notes net (or partially net) of the Selling
Commissions and Expenses from (1) investors purchasing through a registered investment advisor, and (2)
investors who contacted the Company directly without the assistance of an investment advisor or a Selling
Agent.
The selling agreement (the Selling Agreement) between the Company and the selling agents for
the sale of Vasari Notes may require the Company to indemnify such parties under certain circumstances
stated therein with respect to certain liabilities, including certain civil liabilities under the Act, which may
arise from the use of this Memorandum in connection with the Offering of the Vasari Notes. Insofar as
indemnification for liabilities arising under the Act may be permitted to managers, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised
that, in the opinion of the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is unenforceable. Further limitations on indemnification are
provided in the Selling Agreement for the Offering, a copy of which may be obtained upon written request
of the Company.
Registered Broker-Dealers may sell the Vasari Notes by executing an Agreement with the
Company either before or after the effective date of this Memorandum. As described above, it is expected
that the Agreement will contain cross-indemnity provisions with respect to certain liabilities, including
liabilities under the Act. In addition, Selling Group members may be deemed underwriters as the term is
defined in the Act.
The Company may pay bonuses to its investment relations employees and independent contractors,
but not to its executive officers and directors, for assisting the Company in the placement of the Vasari
Notes.
If you have questions about the suitability of an investment in the Vasari Notes for you, you should
consult with your own investment, tax or other professional financial advisor. Prospective investors will be
required to complete an application prior to investing in the Vasari Notes. We reserve the right to reject any
investment. If we accept an investment, you should not assume that the Vasari Notes are a suitable and
appropriate investment for you.
You will not know at the time of investment whether we will be successful in completing the sale
of any or all of the Vasari Notes. We reserve the right to withdraw or cancel the offering at any time. In the
event of a withdrawal or cancellation, investments received prior to such withdrawal or cancellation will
be irrevocable and will be repaid in accordance with the terms of the Vasari Notes.
The Vasari Notes are not listed on any securities exchange, and there is no established trading
market for the Vasari Notes. We do not expect any trading market to develop for the Vasari Notes.
38
Sales Materials
The Offering is made only by means of this Memorandum and the Exhibits hereto. Except as
described herein, neither the Company nor any other party has authorized the use of other sales materials
in connection with the Offering. The Company may respond to specific questions from Broker-Dealers,
prospective investors and their advisors. No dealer, salesman or other person has been authorized to give
any information or to make any representations other than those contained in this Memorandum and the
Exhibits hereto, and, if given or made, such information or representations must not be relied upon.
Limitation of Offering
The offer and sale of the Vasari Notes offered hereby are made in reliance upon an exemption from
the Act. Accordingly, distribution of this Memorandum has been strictly limited to persons satisfying the
investor suitability requirements described herein, and this Memorandum does not constitute an offer to
sell or a solicitation of an offer to buy with respect to any person not satisfying those qualifications.
RISK FACTORS AND POTENTIAL CONFLICTS OF INTEREST

Investors should be aware that Notes are speculative and involve a high degree of risk.
Investors should carefully read this Memorandum prior to making an investment and should be able
to bear the complete loss of their investment.
Each prospective investor should consider carefully, among other risks, the following risks, and
should consult with his own legal, tax and financial advisors with respect thereto.
As used in this Memorandum, references to we, our, the Company and Vasari Energy are
to Vasari Energy, Inc. and its subsidiaries, collectively, unless the context otherwise requires.
Risks Related to the Company
An investment in the Company is speculative.
The Company cannot assure that investors in the Company will realize any return on their
investment or that they will not lose their entire investment in the Company. For this reason, each
prospective subscriber for the Notes should carefully read this Memorandum and all Exhibits to this
Memorandum. All such persons or entities should consult with their attorney or business advisor prior
to making an investment.
Financial projections are highly speculative.
Any financial projections included in this Memorandum and all other materials or documents
supplied by us should be considered speculative and are qualified in their entirety by the assumptions,
information and risks disclosed therein and in this Memorandum. The financial projections have not been
prepared based upon certified public accounting standards and have not been reviewed by an independent
accountant. The assumptions and facts upon which such projections are based are subject to variations that
may arise as future events actually occur. The financial projections included herein are based on
assumptions made by us regarding future events. There is no assurance that actual events will correspond
with these assumptions. Actual results for any period may or may not approximate such financial
projections. Potential investors are advised to consult with their tax and business advisors concerning the
validity and reasonableness of the factual, accounting and tax assumptions. Neither we nor any other person
or entity makes any representation or warranty as to the future profitability of an investment in our Notes.
39
Servicing our debt requires a significant amount of cash, and we may not have sufficient cash
flow from our business to pay our substantial debt and may be forced to take other actions to satisfy
our obligations under our indebtedness, which may not be successful.
Our business may not generate cash flow from operations in the future sufficient to service our
debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be
required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional
equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness
will depend on the capital markets and our financial condition at such time. We may not be able to engage
in any of these activities or engage in these activities on desirable terms, which could result in a default on
our debt obligations.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may
be forced to reduce or delay capital expenditures, sell assets or operations, seek additional debt or equity
capital or restructure or refinance our indebtedness, including the Vasari Notes. We cannot assure you that
we would be able to take any of these actions, that these actions would be successful and permit us to meet
our scheduled debt service obligations or that these actions would be permitted under the terms of our
existing or future debt agreements, including the Vasari Notes. In the absence of such operating results and
resources, we could face substantial liquidity problems and might be required to dispose of material assets
or operations to meet our debt service and other obligations.
If we cannot make scheduled payments on our debt, we will be in default and, as a result:
our debt holders could declare all outstanding principal and interest to be due and payable, and
we may not be able to make payments on the Vasari Notes or our other indebtedness;
our lenders would be entitled to exercise all rights and remedies available to them under the
applicable loan documents or applicable laws; and
we could be forced into bankruptcy or liquidation, which could result in holders of the Vasari
Notes losing their investment.
The Companys common stock and the Shares lack liquidity and marketability.
Each investor will be required to represent that he is acquiring the Notes for investment and not
with a view to distribution or resale, that such investor understands that none of the Notes or the Companys
Common Stock are freely transferable and, in any event, that such investor must bear the economic risk of
investment in the Notes for an indefinite period of time because: (1) none of the Notes or the Companys
Common Stock have been registered under the Act; and (2) none of the Notes or the Companys Common
Stock may be sold unless they are subsequently registered or an exemption from such registration is
available and such investor complies with the other applicable provisions of the Companys organizational
documents. There will be no market for the Notes or any portion thereof, and investors cannot expect to be
able to liquidate their investment in case of an emergency. Furthermore, the Company cannot assure
investors that a public trading market will develop for the Companys Common Stock.
Our private placement memorandum and subscription agreement contains provisions that
require individual arbitration of any disputes arising out of or relating in any way to our offering of
the Notes, including those under the federal securities laws of the United States.
Our subscription agreement provides that, unless our Board of Directors otherwise agrees in
writing, any claims, suits, actions or proceedings arising out of or relating in any way to our private
placement memorandum, subscription agreement or any interest in Vasari Energy, regardless of whether
such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common
law, statutory, equitable, legal or other grounds, or are derivative or direct claims, will be finally settled by
40
arbitration conducted by three arbitrators (or, in the event the amount of quantified claims and /or estimated
monetary value of other claims contained in the applicable request for arbitration is less than $3.0 million,
by a sole arbitrator) in Wilmington, Delaware in accordance with the Rules of Arbitration of the
International Chamber of Commerce (including the rules relating to costs and fees) existing on the date of
our subscription agreement except to the extent those rules are inconsistent with the terms of the arbitration
provisions of our subscription agreement, and that such arbitration will be the exclusive manner pursuant
to which any such claim, suit, action or proceeding may be resolved. Our subscription agreement expressly
provides that the disputes subject to arbitration include, without limitation, any claims, suits or actions
under or to interpret, apply or enforce:
the provisions of our subscription agreement (including without limitation the validity, scope
or enforceability of the arbitration provisions of our subscription agreement or the arbitrability
of any such claim, suit, action or proceeding);
the duties, obligations or liabilities of us to our shareholders or our Board of Directors, or of
our shareholders or Vasari Energy to us;
the rights or powers of, or restrictions on, us, our shareholders or our Board of Directors;
any provision of the Delaware General Corporation Law or other similar applicable statutes;
any other instrument, document, agreement or certificate contemplated either by any provision
of the Delaware General Corporation Law relating to us or by our private placement
memorandum together with all exhibits; and
the federal securities laws of the United States or the securities or antifraud laws of any
international, national, state, provincial, territorial, local or other governmental or regulatory
authority, including, in each case, the applicable rules and regulations promulgated thereunder.
Unless our Board of Directors and the relevant named party or parties otherwise mutually agree in
writing:
the arbitrator(s) may award declaratory or injunctive relief only in favor of the individual party
seeking relief and only to the extent necessary to provide relief warranted by that partys
individual claim;
you may bring claims only in your individual capacity, and not as a plaintiff, class
representative or class member, or as a private attorney general, in any purported class or
representative proceeding; and
the arbitrator(s) may not consolidate more than one persons claims, and may not otherwise
preside over any form of a representative or class or consolidated proceeding.
By purchasing Notes, you will have agreed and consented to the provisions set forth in our private
placement memorandum and subscription agreement, including the provisions regarding individual
arbitration of disputes. As a result, shareholders will not be able to bring any action or claim arising out of
or relating in any way to the private placement memorandum, subscription agreement or the Notes,
including those under the federal securities laws of the United States, in court or as part of any purported
class or representative proceeding.
We are a development stage company with no operating history and, accordingly, you will
have no basis upon which to evaluate our ability to achieve our business objective.
We are a recently incorporated development stage company with no operating results to date. The
Companys business is subject to the risks inherent in the establishment and development of a new business
enterprise. Because the Company was only recently formed and has engaged in little operations as of the
41
date of this Memorandum, the Company cannot provide prospective investors with the type of information
that would be available from a company with a more substantial history of operations. The Company cannot
assure investors that it will ever operate profitably.
We will be subject to the significant influence of our current stockholders after this Offering,
and their interests may not always coincide with those of our other stockholders.
Falcon Partners, LLC, and entities affiliated with it will, in the aggregate, beneficially own a
majority of our outstanding Common Stock following the completion of this Offering. Michael Megarit is
currently a majority member of Falcon Partners, LLC and is a Director of our Company. Falcon Partners,
LLC and Michael Megarit will be able to significantly influence all matters requiring approval by our
stockholders, including the election of directors and the approval of mergers or other business combination
transactions. Because the interests of Falcon Partners, LLC (and Michael Megarit) may not always coincide
with those of our other stockholders, such stockholder may influence or cause us to take actions with which
our other stockholders disagree.
We have broad discretion to use the Offering proceeds, and we may not use these proceeds in
a way with which our stockholders agree.
The net proceeds of this Offering are not allocated for specific uses other than to generally further
our business along with other general corporate purposes. Our management can spend most of the proceeds
from this Offering in ways with which our stockholders may not agree.
This Memorandum contains forward-looking statements that are based on our current
expectations, estimates and projections but are not guarantees of future performance and are subject
to risks and uncertainties.
This Memorandum contains forward-looking statements. These forward-looking statements are not
historical facts, but rather are based on current expectations, estimates and projections about our industry,
our beliefs and our assumptions. Words such as anticipates, expects, intends, plans, believes,
seeks, and estimates, and variations of these words and similar expressions, are intended to identify
forward-looking statements. These statements are not guarantees of future performance and are subject to
risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and
could cause actual results to differ materially from those expressed or forecasted in the forward-looking
statements. These risks and uncertainties include those described in Risk Factors and elsewhere in this
Memorandum. Readers are cautioned not to place undue reliance on these forward-looking statements,
which reflect our managements view only as of the date of this Memorandum. Except as required by law,
we undertake no obligation to update any forward-looking statement, whether as a result of new
information, future events or otherwise.
Registration exemption.
The offering of the Notes pursuant to this Memorandum (the Offering) is being made in reliance
upon the so-called private placement exemption from registration provided by Sections 4(2) and 4(6) of the
Securities Act, by Regulation D adopted thereunder and the exemptions from registration provided by the
laws of certain states in which it is made. Reliance on these exemptions does not, however, constitute a
representation or guaranty that such exemptions are indeed available. The Company may seek to qualify,
register or otherwise obtain authorization for the Offering in certain other states if appropriate. If for any
reason the Offering is deemed to be non-private (and if no other exemption from registration is available) and
the Offering is not registered with the applicable federal or state authorities, the sale of Notes will be deemed
to have been made in violation of the applicable laws requiring registration.
The Company may not be able to obtain financing required to maintain and grow its business.
The Company will need additional funding to execute on its business plan. However, there can be
no assurance that the Company will be successful in obtaining such funding on acceptable terms or at all.
42
Additional financing will increase risks of an investment in the Company. For example, outside debt
financing will constrain the Companys cash flow, and additional equity financing will dilute current
investors, including investors who purchase Notes in this Offering.
Unspecified use of proceeds.
The Company has not specified the use of proceeds and purchasers of Notes will not have an
opportunity prior to investing to evaluate any solar system sales opportunities or the relevant economic,
financial and other information regarding such operations and, accordingly, will be entirely dependent upon
the judgment and ability of the Company and managing the capital of the Company.
In the long term, we intend to expand our international activities, which will subject us to a
number of risks.
Our long-term strategic plans include international expansion, in Europe, Asia and Latin America.
We intend to sell, design, install, and maintain solar systems in international locations. Risks inherent to
international operations include the following:
Inability to work successfully with third parties having local expertise to co-develop
international projects;
Multiple, conflicting and changing laws and regulations, including export and import
restrictions, tax laws and regulations, environmental regulations, labor laws and other
government requirements, approvals, permits and licenses and difficulties in enforcing
agreements in foreign legal systems;
Changes in general economic and political conditions in the countries in which we operate,
including changes in government incentives relating to power generation;
Political and economic instability, including wars, acts of terrorism, political unrest, boycotts,
curtailments of trade and other business restrictions;
Difficulties and costs in recruiting and retaining individuals skilled in international business
operations;
International business practices that may conflict with U.S. customs or legal requirements;
Financial risks, such as longer sales and payment cycles and greater difficulty collecting
accounts receivable and fluctuations in currency exchange rates relative to the U.S. dollar; and
Inability to obtain, maintain or enforce intellectual property rights.
Doing business in foreign markets requires us to be able to respond to rapid changes in market,
legal, and political conditions in these countries. The success of our business will depend, in part, on our
ability to succeed in differing legal, regulatory, economic, social and political environments. We may not
be able to develop and implement policies and strategies that will be effective in each location where we
do business.
You may experience dilution of your ownership interests due to the future issuance of
additional shares of our common stock.
We are in a capital intensive business and we do not have sufficient funds to finance the growth of
our business or to support our projected capital expenditures. As a result, we will require additional funds
from further financings, including tax equity financing transactions or sales of common or preferred stock,
or other securities that are convertible into or exercisable for our common or preferred stock, to complete
the development of new projects, fund project equity and pay the general and administrative costs of our
business. We may also issue such securities in connection with hiring or retaining employees and
consultants (including stock options issued under our equity incentive plans), as payment to providers of
goods and services, in connection with future acquisitions or for other business purposes. Our Board of
43
Directors may at any time authorize the issuance of additional common or preferred stock without common
stockholder approval, subject only to the total number of authorized common and preferred shares set forth
in our articles of incorporation. The preferences and rights of any preferred stock we issue will be as
determined by our Board of Directors. The terms of equity securities issued by us in future transactions
may be more favorable to new investors, and may include dividend and/or liquidation preferences, superior
voting rights and the issuance of warrants or other derivative securities, which may have a further dilutive
effect. Any such future issuances of such additional shares of common stock or preferred stock or other
securities may be at a price (have an exercise price) below the price you paid for your Notes.
Risks Related to Our Operations
Existing electric utility industry regulations, and changes to regulations, may present
technical, regulatory and economic barriers to the purchase and use of solar energy systems that may
significantly reduce demand for our solar energy systems.
Federal, state and local government regulations and policies concerning the electric utility industry,
and internal policies and regulations promulgated by electric utilities, heavily influence the market for
electricity generation products and services. These regulations and policies often relate to electricity pricing
and the interconnection of customer-owned electricity generation. In the United States, governments and
utilities continuously modify these regulations and policies. These regulations and policies could deter
customers from purchasing renewable energy, including solar energy systems. This could result in a
significant reduction in the potential demand for our solar energy systems. For example, utilities commonly
charge fees to larger, industrial customers for disconnecting from the electric grid or for having the capacity
to use power from the electric grid for back-up purposes. These fees could increase our customers cost to
use our systems and make them less desirable, thereby harming our business, prospects, financial condition
and results of operations. In addition, depending on the region, electricity generated by solar energy systems
competes most effectively with expensive peak-hour electricity from the electric grid, rather than the less
expensive average price of electricity. Modifications to the utilities peak hour pricing policies or rate
design, such as to a flat rate, would require us to lower the price of our solar energy systems to compete
with the price of electricity from the electric grid.
In addition, any changes to government or internal utility regulations and policies that favor electric
utilities could reduce our competitiveness and cause a significant reduction in demand for our products and
services. For example, certain jurisdictions have proposed assessing fees on customers purchasing energy
from solar energy systems or imposing a new charge that would disproportionately impact solar energy
system customers who utilize net metering, either of which would increase the cost of energy to those
customers and could reduce demand for our solar energy systems. Any similar government or utility
policies adopted in the future could reduce demand for our products and services and adversely impact our
growth.
Our business will depend on the availability of rebates, tax credits and other financial
incentives. The expiration, elimination or reduction of these rebates, credits and incentives would
adversely impact our business.
U.S. federal, state and local government bodies provide incentives to end users, distributors, system
integrators and manufacturers of solar energy systems to promote solar electricity in the form of rebates,
tax credits and other financial incentives such as system performance payments and payments for renewable
energy credits associated with renewable energy generation. We rely on these governmental rebates, tax
credits and other financial incentives to lower our cost of capital and to incent fund investors to invest in
our funds. These incentives enable us to lower the price we charge customers for energy and for our solar
energy systems. However, these incentives may expire on a particular date, end when the allocated funding
is exhausted, or be reduced or terminated as solar energy adoption rates increase. These reductions or
terminations often occur without warning.
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The federal government currently offers a 30% investment tax credit under Section 48(a)(3) of the
Internal Revenue Code, or the Federal ITC, for the installation of certain solar power facilities until
December 31, 2016. This credit is due to adjust to 10% in 2017. Solar energy systems that began
construction prior to the end of 2011 were eligible to receive a 30% federal cash grant paid by the U.S.
Treasury Department under section 1603 of the American Recovery and Reinvestment Act of 2009, or
the U.S. Treasury grant, in lieu of the Federal ITC. Pursuant to the Budget Control Act of 2011, U.S.
Treasury grants are subject to sequestration beginning in 2013. Specifically, U.S. Treasury grants made on
or after March 1, 2013 through September 30, 2013 will be reduced by 8.7%, regardless of when the U.S.
Treasury received the application. In addition, applicable authorities may adjust or decrease incentives from
time to time or include provisions for minimum domestic content requirements or other requirements to
qualify for these incentives.
Reductions in, or eliminations or expirations of, governmental incentives could adversely impact
our results of operations and ability to compete in our industry by increasing our cost of capital, causing us
to increase the prices of our energy and solar energy systems, and reducing the size of our addressable
market. In addition, this would adversely impact our ability to attract investment partners and our ability to
offer attractive financing to prospective customers.
We need to enter into additional substantial financing arrangements to facilitate our
customers access to our solar energy systems, and if this financing is not available to us on acceptable
terms, if and when needed, our ability to continue to grow our business would be materially adversely
impacted.
Our future success depends on our ability to raise capital from third-party fund investors to help
finance the deployment of our commercial solar energy systems. In particular, our strategy is to seek to
reduce the cost of capital through these arrangements to improve our margins or to offset future reductions
in government incentives and to maintain the price competitiveness of our solar energy systems. If we are
unable to establish new financing funds when needed, or upon desirable terms, to enable our customers
access to our solar energy systems with little or no upfront cost, we may be unable to finance installation
of our customers systems, or our cost of capital could increase, either of which would have a material
adverse effect on our business, financial condition and results of operations. We plan to raise capital
sufficient to finance installation of our customers solar energy systems from a number of financial
institutions and other large companies. The contract terms in certain of our financing fund documents may
condition our ability to draw on financing commitments from the fund investors, including if an event
occurs that could reasonably be expected to have a material adverse effect on the fund or in one case on us.
If we do not satisfy such condition due to events related to our business or a specific financing fund or
developments in our industry, and as a result we are unable to draw on existing commitments, it could have
a material adverse effect on our business, liquidity, financial condition and prospects.
Solar energy has yet to achieve broad market acceptance and depends on continued support in the
form of performance-based incentives, rebates, tax credits and other incentives from federal, state and
foreign governments. If this support diminishes, our ability to obtain external financing on acceptable terms,
or at all, could be materially adversely affected. In addition, we will face competition for these investor
funds. If we are unable to continue to offer a competitive investment profile, we may lose access to these
funds or they may only be available on less favorable terms than our competitors. Our current financing
sources may be inadequate to support the anticipated growth in our business plans. Our inability to secure
financing could lead to cancelled projects and could impair our ability to accept new projects and customers.
In addition, our borrowing costs could increase, which would have a material adverse effect on our business,
financial condition and results of operations.
A material drop in the retail price of utility-generated electricity or electricity from other
sources would harm our business, financial condition and results of operations.
45
We believe that a customers decision to buy renewable energy from us will be primarily driven by
their desire to pay less for electricity. The customers decision may also be affected by the cost of other
renewable energy sources. Decreases in the retail prices of electricity from the utilities or from other
renewable energy sources would harm our ability to offer competitive pricing and could harm our business.
The price of electricity from utilities could decrease as a result of:
the construction of a significant number of new power generation plants, including nuclear,
coal, natural gas or renewable energy technologies;
the construction of additional electric transmission and distribution lines;
a reduction in the price of natural gas as a result of new drilling techniques or a relaxation of
associated regulatory standards;
the energy conservation technologies and public initiatives to reduce electricity consumption;
and
development of new renewable energy technologies that provide less expensive energy.
A reduction in utility electricity prices would make the purchase of our solar energy systems or the
purchase of energy under our lease and power purchase agreements less economically attractive. In
addition, a shift in the timing of peak rates for utility generated electricity to a time of day when solar energy
generation is less efficient could make our solar energy system offerings less competitive and reduce
demand for our products and services. If the retail price of energy available from utilities were to decrease
due to any of these reasons, or others, we would be at a competitive disadvantage, we may be unable to
attract new customers and our growth would be limited.
A material drop in the retail price of utility-generated electricity would particularly adversely
impact our ability to attract commercial customers.
Commercial customers comprise a significant and growing portion of our business, and the
commercial market for energy is particularly sensitive to price changes. Typically, commercial customers
pay less for energy from utilities than residential customers. Because the price we expect to charge
commercial customers is only slightly lower than their current retail rate, any decline in the retail rate of
energy for commercial entities could have a significant impact on our ability to attract commercial
customers. We may be unable to offer solar energy systems for the commercial market that produce
electricity at rates that are competitive with the price of retail electricity on a non-subsidized basis. If this
were to occur, we would be at a competitive disadvantage to other energy providers and may be unable to
attract new commercial customers, and our business would be harmed.
Rising interest rates could adversely impact our business.
Changes in interest rates could have an adverse impact on our business by increasing our cost of
capital. For example:
rising interest rates would increase our cost of capital; and
rising interest rates may negatively impact our ability to secure financing on favorable terms
to facilitate our customers purchase of our solar energy systems or energy generated by our
solar energy systems.
We expect the majority of our cash flows will be from solar energy systems under lease and power
purchase agreements that we will monetize under various financing fund structures. One of the components
of this monetization is the present value of the payment streams from the customers who enter into these
leases and power purchase agreements. If the rate of return required by the fund investor rises as a result of
a rise in interest rates, it will reduce the present value of the customer payment stream and consequently
46
reduce the total value derived from this monetization. Rising interest rates could harm our business and
financial condition.
We are not currently regulated as a utility under applicable law, but we may be subject to
regulation as a utility in the future.
We believe that Federal law and most state laws will not regulate us as a utility. As a result, we do
not expect to be subject to the various federal and state standards, restrictions and regulatory requirements
applicable to U.S. utilities. In the United States, we obtain federal and state regulatory exemptions by
establishing Qualifying Facility status with the Federal Energy Regulatory Commission for all of our
qualifying solar energy projects. In Canada, we also are generally subject to the regulations of the relevant
energy regulatory agencies applicable to all producers of electricity under the relevant feed-in tariff
regulations (including the feed-in tariff rates), however we are not currently subject to regulation as a utility.
Our business strategy includes the continued development of larger solar energy systems in the future for
our commercial and government customers, which has the potential to impact our regulatory position. Any
local, state, federal or foreign regulations could place significant restrictions on our ability to operate our
business and execute our business plan by prohibiting or otherwise restricting our sale of electricity. If we
were subject to the same state, federal or foreign regulatory authorities as utilities in the United States or if
new regulatory bodies were established to oversee our business in the United States or in foreign markets,
then our operating costs would materially increase.
A failure to hire and retain a sufficient number of employees in key functions would constrain
our growth and our ability to timely complete our customers projects.
To support our growth, we need to hire, train, deploy, manage and retain a substantial number of
skilled employees. In particular, we need to continue to expand and optimize our sales infrastructure to
grow our customer base and our business, and we plan to expand our direct sales force. Identifying and
recruiting qualified personnel and training them requires significant time, expense and attention. It can take
several months before a new salesperson is fully trained and productive. If we are unable to hire, develop
and retain talented sales personnel or if new direct sales personnel are unable to achieve desired productivity
levels in a reasonable period of time, we may not be able to realize the expected benefits of this investment
or grow our business.
To complete future customer projects and to grow our customer base, we need to hire a large
number of installers in the relevant markets. Competition for qualified personnel in our industry is
increasing, particularly for skilled installers and other personnel involved in the installation of solar energy
systems and delivery of energy products and services. We will also compete with the homebuilding and
construction industries for skilled labor. As these industries recover and seek to hire additional workers,
our cost of labor may increase. The unionization of our labor force could also increase our labor costs.
Shortages of skilled labor could significantly delay a project or otherwise increase our costs. Because our
profit on a particular installation is based in part on assumptions as to the cost of such project, cost overruns,
delays or other execution issues may cause us to not achieve our expected margins or cover our costs for
that project. In addition, because we are headquartered in Orange County, we compete for a limited pool of
technical and engineering resources that requires us to pay wages that are competitive with relatively high
regional standards for employees in these fields.
If we cannot meet our hiring, retention and efficiency goals, we may be unable to complete our
customers projects on time, in an acceptable manner or at all. Any significant failures in this regard would
materially impair our growth, reputation, business and financial results. If we are required to pay higher
compensation than we anticipate, these greater expenses may also adversely impact our financial results
and the growth of our business.
It is difficult to evaluate our business and prospects due to our limited operating history.
47
We are focused primarily on the sales, financing, engineering, installation and monitoring of solar
energy systems for commercial and government customers. We may be unsuccessful in significantly
broadening our customer base through installation of solar energy systems within our current markets or in
new markets we may enter. Additionally, we cannot assure you that we will be successful in generating
substantial revenue from our energy efficiency products and services or from any additional energy-related
products and services we may introduce in the future. Our limited operating history, combined with the
rapidly evolving and competitive nature of our industry, may not provide an adequate basis for you to
evaluate our operating and financing results and business prospects. In addition, we only have limited
insight into emerging trends that may adversely impact our business, prospects and operating results. As a
result, our limited operating history may impair our ability to accurately forecast our future performance.
We face competition from both traditional energy companies and renewable energy
companies.
The solar energy and renewable energy industries are both highly competitive and continually
evolving as participants strive to distinguish themselves within their markets and compete with large
utilities. We believe that our primary competitors are the traditional utilities that supply energy to our
potential customers. We compete with these utilities primarily based on price, predictability of price, and
the ease by which customers can switch to electricity generated by our solar energy systems. If we cannot
offer compelling value to our customers based on these factors, then our business will not grow. Utilities
generally have substantially greater financial, technical, operational and other resources than we do. As a
result of their greater size, these competitors may be able to devote more resources to the research,
development, promotion and sale of their products or respond more quickly to evolving industry standards
and changes in market conditions than we can. Utilities could also offer other value-added products or
services that could help them to compete with us even if the cost of electricity they offer is higher than ours.
In addition, a majority of utilities sources of electricity is non-solar, which may allow utilities to sell
electricity more cheaply than electricity generated by our solar energy systems.
We also compete with solar companies in the downstream value chain of solar energy. For example,
we face competition from purely finance driven organizations which then subcontract out the installation
of solar energy systems, from installation businesses that seek financing from external parties, from large
construction companies and utilities, and increasingly from sophisticated electrical and roofing companies.
Some of these competitors specialize in either the residential or commercial solar energy markets, and some
may provide energy at lower costs than we can. Many of our competitors also have significant brand name
recognition and have extensive knowledge of our target markets. For us to remain competitive, we must
distinguish ourselves from our competitors by offering an integrated approach that successfully competes
with each level of products and services offered by our competitors at various points in the value chain. If
our competitors develop an integrated approach similar to ours including sales, financing, engineering,
installation, monitoring and efficiency services, this will reduce our marketplace differentiation.
We will also face competition in the energy efficiency market and we expect to face competition
in additional markets as we introduce energy-related products and services. As the solar industry grows and
evolves, we will also face new competitors who are not currently in the market. Our failure to adapt to
changing market conditions and to compete successfully with existing or new competitors will limit our
growth and will have a material adverse effect on our business and prospects.
Our five-year plan to build more than $1 billion in solar energy projects for U.S. military buildings
across the country that we anticipate will involve a significant investment in resources and project
management over time and will require additional financing funds to support the project. These larger
projects create concentrated operating and financial risks. The effect of recognizing revenue or other
financial measures on the sale of a larger project, or the failure to recognize revenue or other financial
measures as anticipated in a given reporting period because a project is not yet completed under applicable
accounting rules by period end, may materially impact our quarterly or annual financial results. In addition,
48
if construction, warranty or operational issues arise on a larger project, or if the timing of such projects
unexpectedly shifts for other reasons, such issues could have a material impact on our financial results. If
we are unable to successfully manage these significant projects in multiple markets, including our related
internal processes and external construction management, or if we are unable to continue to attract such
significant customers and projects in the future, our financial results would be harmed.
We will depend on a limited number of suppliers of solar panels and other system components
to adequately meet anticipated demand for our solar energy systems. Any shortage, delay or
component price change from these suppliers could result in sales and installation delays,
cancellations and loss of market share.
We intend to purchase solar panels, inverters and other system components from a limited number
of suppliers, making us susceptible to quality issues, shortages and price changes. If we fail to develop,
maintain and expand our relationships with these or other suppliers, we may be unable to adequately meet
anticipated demand for our solar energy systems, or we may only be able to offer our systems at higher
costs or after delays. If one or more of the suppliers that we rely upon to meet anticipated demand ceases
or reduces production, we may be unable to quickly identify alternate suppliers or to qualify alternative
products on commercially reasonable terms, and we may be unable to satisfy this demand. In particular,
there are a limited number of inverter suppliers. Once we design a system for use with a particular inverter,
if that type of inverter is not readily available at an anticipated price, we may incur additional delay and
expense to redesign the system. There have also been periods of industry-wide shortage of key components,
including solar panels, in times of rapid industry growth. The manufacturing infrastructure for some of
these components has a long lead time, requires significant capital investment and relies on the continued
availability of key commodity materials, potentially resulting in an inability to meet demand for these
components. Any decline in the exchange rate of the U.S. dollar compared to the functional currency of our
component suppliers could increase our component prices. In addition, the U.S. government has imposed
tariffs on solar cells manufactured in China. Based on determinations by the U.S. government, the
applicable anti-dumping and countervailing tariff rates range from approximately 8%-255%. Such anti-
dumping and countervailing tariffs are subject to annual review and can be increased if deemed necessary.
We plan to purchase solar panels containing cells manufactured outside of China, and therefore may not
materially impacted by the tariffs. However, if in the future we purchase solar panels containing cells
manufactured in China, our purchase price would reflect the tariff penalties mentioned above. Any of these
shortages, delays or price changes could limit our growth, cause cancellations or adversely affect our
profitability, and result in loss of market share and damage to our brand.
Our operating results may fluctuate from quarter to quarter, which could make our future
performance difficult to predict and could cause our operating results for a particular period to fall
below expectations.
Our quarterly operating results are difficult to predict and may fluctuate significantly in the future.
We could experience seasonal and quarterly fluctuations. However, given that we are an early-stage
company operating in a rapidly growing industry, those fluctuations may be masked by potential growth
rates and thus may not be readily apparent from our operating results.
In addition to the other risks described in this Risk Factors section, the following factors could
cause our operating results to fluctuate:
the expiration or initiation of any rebates or incentives;
significant fluctuations in customer demand for our products and services;
our ability to complete installations in a timely manner due to market conditions resulting in
inconsistently available financing;
our ability to continue to expand our operations, and the amount and timing of expenditures
49
related to this expansion;
actual or anticipated changes in our growth rate relative to our competitors;
announcements by us or our competitors of significant acquisitions, strategic partnerships,
joint ventures or capital-raising
activities or commitments;
changes in our pricing policies or terms or those of our competitors, including utilities; and
actual or anticipated developments in our competitors businesses or the competitive
landscape.
Our financial results may be harmed now that the cost of solar panels has stabilized and could
increase in the future.
The declining cost of solar panels and the raw materials necessary to manufacture them is a key
driver in the pricing of our solar energy systems and customer adoption of this form of renewable energy.
Now that solar panel and raw materials prices have stabilized and could increase in the future, our growth
potential could be limited and our financial results could suffer. In addition, we plan to purchase a
significant portion of the solar panels used in our solar energy systems from manufacturers based in China,
some of whom benefit from favorable foreign regulatory regimes and governmental support, including
subsidies. If this support were to decrease or be eliminated, or if tariffs imposed by the U.S. government
were to increase the prices of these solar panels, our ability to purchase these products on competitive terms
or to access specialized technologies from those countries could be restricted. Any of those events could
harm our financial results by requiring us to pay higher prices or to purchase solar panels or other system
components from alternative, higher-priced sources. In addition, the U.S. government has imposed tariffs
on solar cells manufactured in China. These tariffs will increase the price of solar panels containing these
Chinese-manufactured cells, which may harm our financial results in the event we purchase such panels.
We plan to act as the licensed general contractor for our projects and are subject to risks
associated with construction, cost overruns, delays, regulatory compliance and other contingencies,
any of which could have a material adverse effect on our business and results of operations.
We intend to act as licensed contractor in every community we service, and we to be responsible
for every customer installation. For our commercial projects, we plan to be the general contractor and
construction manager, and we will rely on licensed subcontractors to install these commercial systems. We
may be liable to customers for any damage we cause to their facility, belongings or property during the
installation of our systems. For example, could penetrate our customers roofs during the installation
process and may incur liability for the failure to adequately weatherproof such penetrations following the
completion of construction. In addition, shortages of skilled subcontractor labor for our commercial projects
could significantly delay a project or otherwise increase our costs. Because our profit on a particular
installation is based in part on assumptions as to the cost of such project, cost overruns, delays or other
execution issues may cause us to not achieve our expected margins or cover our costs for that project.
In addition, the installation of solar energy systems and the evaluation and modification of buildings
as part of our energy efficiency business is subject to oversight and regulation in accordance with national,
state and local laws and ordinances relating to building codes, safety, environmental protection, utility
interconnection and metering, and related matters. It is difficult and costly to track the requirements of
every individual authority having jurisdiction over our installations and to design solar energy systems to
comply with these varying standards. Any new government regulations or utility policies pertaining to our
systems may result in significant additional expenses to us and our customers and, as a result, could cause
a significant reduction in demand for our systems.
50
Compliance with occupational safety and health requirements and best practices can be costly, and
noncompliance with such requirements may result in potentially significant monetary penalties, operational
delays and adverse publicity.
The installation of solar energy systems requires our employees to work at heights with complicated
and potentially dangerous electrical systems. The evaluation and modification of buildings as part of our
energy efficiency business requires our employees to work in locations that may contain potentially
dangerous levels of asbestos, lead or mold. We also intend to maintain a fleet of vehicles that our employees
use in the course of their work. There is substantial risk of serious injury or death if proper safety procedures
are not followed. Our operations are subject to regulation under the U.S. Occupational Safety and Health
Act, or OSHA, and equivalent state laws. Changes to OSHA requirements, or stricter interpretation or
enforcement of existing laws or regulations, could result in increased costs. If we fail to comply with
applicable OSHA regulations, even if no work-related serious injury or death occurs, we may be subject to
civil or criminal enforcement and be required to pay substantial penalties, incur significant capital
expenditures, or suspend or limit operations.
Problems with product quality or performance may cause us to incur warranty expenses and
performance guarantee expenses, may lower the residual value of our solar energy systems and may
damage our market reputation and cause our financial results to decline.
Our customers will require long term solar energy system warranties. Customers who buy energy
from us under leases or power purchase agreements will be covered by warranties equal to the length of the
term of these agreementstypically 20 years. Depending on the state where they live, customers who
purchase our solar energy systems for cash will be covered by a warranty up to 10 years in duration. We
plan to also make extended warranties available at an additional cost to customers who purchase our solar
energy systems for cash. In addition, we expect to provide a pass-through of the inverter and panel
manufacturers warranties to our customers, which generally range from 5 to 25 years. One of these third-
party manufacturers could cease operations and no longer honor these warranties, instead leaving us to
fulfill these potential obligations to our customers.
Product liability claims against us could result in adverse publicity and potentially significant
monetary damages.
If one of our solar energy systems or other products injured someone we would be exposed to
product liability claims. Because solar energy systems and many of our other current and anticipated
products are electricity producing devices, it is possible that consumers could be injured by our products,
whether by product malfunctions, defects, improper installation or other causes. We will rely on general
liability insurance to cover product liability claims and may not obtain separate product liability insurance.
Any product liability claim we face could be expensive to defend and divert managements attention. The
successful assertion of product liability claims against us could result in potentially significant monetary
damages that could require us to make significant payments, as well as subject us to adverse publicity,
damage our reputation and competitive position. Also, any product liability claims and any adverse
outcomes may subject us to adverse publicity, damage our reputation and competitive position and
adversely affect sales of our systems and other products.
If we fail to manage our future growth effectively, we may be unable to execute our business
plan, maintain high levels of customer service or adequately address competitive challenges.
We intend to expand our business significantly within key markets and in a number of new locations
in the future. This growth may place a significant strain on our management, operational and financial
infrastructure. In particular, we will be required to expand, train and manage a growing employee base. Our
management will also be required to maintain and expand our relationships with customers, suppliers and
other third-parties and attract new customers and suppliers, as well as to manage multiple geographic
locations.
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In addition, our planned operations, personnel, systems and procedures might be inadequate to
support our future growth and may require us to make additional unanticipated investment in our
infrastructure. Our success and ability to further scale our business will depend, in part, on our ability to
manage these changes in a cost-effective and efficient manner. If we cannot manage our growth, we may
be unable to take advantage of market opportunities, execute our business strategies or respond to
competitive pressures. This could also result in declines in quality or customer satisfaction, increased costs,
difficulties in introducing new products and services or other operational difficulties. Any failure to
effectively manage growth could adversely impact our business and reputation.
Our growth depends in part on the success of our strategic relationships with third parties.
A key component of our growth strategy is to develop or expand our strategic relationships with
third parties. For example, we plan to invest resources in establishing relationships with industry leaders,
such as trusted retailers and commercial builders, to generate new customers. Identifying partners and
negotiating relationships with them requires significant time and resources. If we are unsuccessful in
establishing or maintaining our relationships with these third parties, our ability to grow our business could
be impaired. Even if we are able to establish these relationships, we may not be able to execute on our goal
of leveraging these relationships to meaningfully expand our business and customer base. This would limit
our growth potential and our opportunities to generate significant additional revenue or cash receipts.
The loss of one or more members of our senior management or key employees may adversely
affect our ability to implement our strategy.
We depend on our experienced management team, and the loss of one or more key executives could
have a negative impact on our business. In particular, we are dependent on the services of our chief
executive officer and founder, Michael Megarit. We also depend on our ability to retain and motivate key
employees and attract qualified new employees. Neither our chief executive officer nor our key employees
are bound by employment agreements for any specific term, and we may be unable to replace key members
of our management team and key employees in the event we lose their services. Integrating new employees
into our management team could prove disruptive to our operations, require substantial resources and
management attention and ultimately prove unsuccessful. An inability to attract and retain sufficient
managerial personnel who have critical industry experience and relationships could limit or delay our
strategic efforts, which could have a material adverse effect on our business, financial condition and results
of operations.
The production and installation of solar energy systems depends heavily on suitable
meteorological conditions. If meteorological conditions are unexpectedly unfavorable, the electricity
production from our solar energy systems may be substantially below our expectations and our
ability to timely deploy new systems may be adversely impacted.
The energy produced and revenue and cash receipts generated by a solar energy system depend on
suitable solar and weather conditions, both of which are beyond our control. Furthermore, components of
our systems, such as panels and inverters, could be damaged by severe weather, such as hailstorms or
tornadoes. In these circumstances, we generally would be obligated to bear the expense of repairing the
damaged solar energy systems that we own. Sustained unfavorable weather also could unexpectedly delay
our installation of solar energy systems, leading to increased expenses and decreased revenue and cash
receipts in the relevant periods. Weather patterns could change, making it harder to predict the average
annual amount of sunlight striking each location where we install. This could make our solar energy systems
less economical overall or make individual systems less economical. Any of these events or conditions
could harm our business, financial condition and results of operations.
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We do not intend to pay dividends for the foreseeable future.
We have never declared or paid any dividends on our common stock. We intend to retain any
earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash
dividends in the future.
Dispute Resolution.
Our subscription agreement will provide that the Corporation, the Board of Directors, each of the
shareholders, each person in whose name any interest in the Corporation is registered, each other person
who acquires an interest in any equity interest in Vasari Energy (the Corporation) and each other person
who is bound by the private placement memorandum, all exhibits thereto and the subscription agreement
(collectively, the Consenting Parties and each a Consenting Party) (1) irrevocably agrees that, unless
the Board of Directors shall otherwise agree in writing, any claims, suits, actions or proceedings arising out
of or relating in any way to the subscription agreement or any interest in the Corporation (including, without
limitation, any claims, suits or actions under or to interpret, apply or enforce (A) the provisions of the
private placement memorandum and subscription agreement, including without limitation the validity,
scope or enforceability of the arbitration provisions thereof or the arbitrability of any Dispute (as defined
below), (B) the duties, obligations or liabilities of the Corporation to the shareholders or the Board of
Directors, or of shareholders or the Board of Directors to the Corporation, or among the shareholders and
the Board of Directors, (C) the rights or powers of, or restrictions on, the Corporation, the shareholders or
the Board of Directors, (D) any provision of Delaware General Corporation Law or other similar applicable
statutes, (E) any other instrument, document, agreement or certificate contemplated either by any provision
of Delaware General Corporation Law relating to the Corporation or by our subscription agreement, or (F)
the federal securities laws of the United States or the securities or antifraud laws of any international,
national, state, provincial, territorial, local or other governmental or regulatory authority, including, in each
case, the applicable rules and regulations promulgated thereunder (regardless of whether such Disputes (x)
sound in contract, tort, fraud or otherwise, (y) are based on common law, statutory, equitable, legal or other
grounds, or (z) are derivative or direct claims)) (a Dispute), shall be finally settled by arbitration
conducted by three arbitrators (or, in the event the amount of quantified claims and/or estimated monetary
value of other claims contained in the applicable request for arbitration is less than $3.0 million, by a sole
arbitrator) in Wilmington, Delaware in accordance with the Rules of Arbitration of the International
Chamber of Commerce (including the rules relating to costs and fees) existing on the date of our
subscription agreement except to the extent those rules are inconsistent with the terms of the arbitration
provisions of our subscription agreement, and that such arbitration shall be the exclusive manner pursuant
to which any Dispute shall be resolved; (2) agrees that the subscription agreement involves commerce and
is governed by the Federal Arbitration Act and any applicable treaties governing the recognition and
enforcement of international arbitration agreements and awards; (3) agrees to take all steps necessary or
advisable, including the execution of documents to be filed with the International Court of Arbitration in
order to properly submit any Dispute for arbitration pursuant to the arbitration provisions of the subscription
agreement; (4) irrevocably waives, to the fullest extent permitted by law, any objection it may have or
hereafter have to the submission of any Dispute for arbitration pursuant to the arbitration provisions of the
subscription agreement and any right to lay claim to jurisdiction in any venue; (5) agrees that (A) the
arbitrator(s) shall be U.S. lawyers, U.S. law professors and/or retired U.S. judges and all arbitrators,
including the president of the arbitral tribunal, may be U.S. nationals and (B) the arbitrator(s) shall conduct
the proceedings in the English language; (6) agrees that except as required by law (including any disclosure
requirement to which the Corporation may be subject under any securities law, rule or regulation or
applicable securities exchange rule or requirement) or as may be reasonably required in connection with
ancillary judicial proceedings to compel arbitration, to obtain temporary or preliminary judicial relief in aid
of arbitration, or to confirm or challenge an arbitration award, the arbitration proceedings, including any
hearings, shall be confidential, and the parties shall not disclose any awards, any materials in the
proceedings created for the purpose of the arbitration, or any documents produced by another party in the
53
proceedings not otherwise in the public domain; (7) irrevocably agrees that, unless the Board of Directors
and the relevant named party or parties shall otherwise mutually agree in writing, (A) the arbitrator(s) may
award declaratory or injunctive relief only in favor of the individual party seeking relief and only to the
extent necessary to provide relief warranted by that partys individual claim, (B) such consenting party may
bring claims only in its individual capacity, and not as a plaintiff, class representative or class member, or
as a private attorney general in any purported class or representative proceeding, and (C) the arbitrator(s)
may not consolidate more than one persons claims, and may not otherwise preside over any form of a
representative or class or consolidated proceeding; and (8) agrees that if a Dispute that would be arbitrable
under the subscription agreement if brought against a Consenting Party is brought against an employee,
officer, director or agent of such Consenting Party or its affiliates (other than Disputes brought by the
employer or principal of any such employee, officer, director or agent) for alleged actions or omissions of
such employee, officer, director or agent undertaken as an employee, officer, director or agent of such
Consenting Party or its affiliates, such employee, officer, director or agent shall be entitled to invoke the
arbitration provision of the subscription agreement. Notwithstanding the provisions of the subscription
agreement concerning severability, each provision of the arbitration provisions of the subscription
agreement shall be deemed material, and shall not be severable and the arbitration provisions of the
subscription agreement shall be enforced only in their entirety.
Notwithstanding the arbitration provisions in the subscription agreement, any Consenting Party
may bring an action or special proceeding for the purpose of compelling a party to arbitrate, seeking
temporary or preliminary relief in aid of an arbitration, or enforcing an arbitration award and, for this
purpose, each Consenting Party (1) irrevocably agrees that, unless the Board of Directors consents in
writing to the selection of an alternative forum, any such action or special proceeding shall be exclusively
brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter
jurisdiction thereof, any other court located in the State of Delaware with subject matter jurisdiction; (2)
irrevocably submits to the exclusive jurisdiction of such courts in connection with any such action or special
proceeding; (3) irrevocably agrees not to, and waives any right to, assert in any such action or special
proceeding that (A) it is not personally subject to the jurisdiction of such courts or any other court to which
proceedings in such courts may be appealed, (B) such action or special proceeding is brought in an
inconvenient forum, or (C) the venue of such action or special proceeding is improper; (iv) expressly waives
any requirement for the posting of a bond by a party bringing such action or special proceeding; (5) consents
to process being served in any such action or special proceeding by mailing, certified mail, return receipt
requested, a copy thereof to such party at the address in effect for notices hereunder, and agrees that such
service shall constitute good and sufficient service of process and notice thereof; provided that nothing in
clause (5) hereof shall affect or limit any right to serve process in any other manner permitted by law; (6)
irrevocably waives any and all right to trial by jury in any such claim, suit, action or proceeding; and (7)
agrees that proof shall not be required that monetary damages for breach of the provisions of the
subscription agreement would be difficult to calculate and that remedies at law would be inadequate.
If the arbitrator(s) or any court or tribunal of competent jurisdiction shall refuse to enforce the
arbitration provisions of the subscription agreement in their entirety or shall determine that any Dispute is
not subject to arbitration as contemplated thereby, then, and only then, shall the following alternative
provisions of the subscription agreement concerning exclusive Delaware jurisdiction be applicable.
Pursuant to such provisions concerning exclusive Delaware jurisdiction, each Consenting Party, to the
fullest extent permitted by law, (1) irrevocably agrees that, unless the Board of Directors consents in writing
to the selection of an alternative forum, any claims, suits, actions or proceedings arising out of or relating
in any way to our subscription agreement shall be exclusively brought in the Court of Chancery of the State
of Delaware or, if such court does not have subject matter jurisdiction thereof, any other court in the State
of Delaware with subject matter jurisdiction; (2) irrevocably submits to the exclusive jurisdiction of such
courts in connection with any such claim, suit, action or proceeding; (3) irrevocably agrees not to, and
waives any right to, assert in any such claim, suit, action or proceeding that (A) it is not personally subject
to the jurisdiction of such courts or any other court to which proceedings in such courts may be appealed,
54
(B) such claim, suit, action or proceeding is brought in an inconvenient forum, or (C) the venue of such
claim, suit, action or proceeding is improper; (4) expressly waives any requirement for the posting of a
bond by a party bringing such claim, suit, action or proceeding; (5) consents to process being served in any
such claim, suit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to
such party at the address in effect for notices under our subscription agreement, and agrees that such service
shall constitute good and sufficient service of process and notice thereof; provided, that nothing in clause
(5) hereof shall affect or limit any right to serve process in any other manner permitted by law; (6)
irrevocably waives any and all right to trial by jury in any such claim, suit, action or proceeding; and (7)
agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement
would be difficult to calculate and that remedies at law would be inadequate.
Risks Related to the Vasari Notes
The Vasari Notes may not be a suitable investment for you.
The Vasari Notes may not be a suitable investment for you and we advise you to consult your
investment, tax and other professional financial advisors prior to deciding whether to invest in the Vasari
Notes. The characteristics of the Vasari Notes, including the maturity and interest rate, may not satisfy your
investment objectives. The Vasari Notes may not be a suitable investment for you based on your ability to
withstand a loss of interest or principal or other aspects of your financial situation, including your income,
partners equity, financial needs, investment risk profile, return objectives, investment experience and other
factors. Before deciding whether to purchase Vasari Notes, you should consider your investment allocation
with respect to the amount of your contemplated investment in the Vasari Notes in relation to your other
investment holdings and the diversity of those holdings.
The Vasari Notes are risky and speculative investments and the value of the Vasari Notes is
dependent on our future operations.
The payment of interest and principal will depend in large part on our ability to successfully operate
our business and effectively manage our financial condition, as well as conditions generally in the industry
we operate. As a result, your right to receive payments on the Vasari Notes will be subject to risks associated
with the results of our general operations.
Risks Related to Our Offering
Registration exemption.
The offering of the Vasari Notes pursuant to this Memorandum (the Offering) is being made in
reliance upon the so-called private placement exemption from registration provided by Sections 4(2)
and 4(6) of the Securities Act, by Regulation D adopted thereunder and the exemptions from registration
provided by the laws of certain states in which it is made. Reliance on these exemptions does not, however,
constitute a representation or guaranty that such exemptions are indeed available. The Company may seek
to qualify, register or otherwise obtain authorization for the Offering in certain other states if appropriate.
If for any reason the Offering is deemed to be non-private (and if no other exemption from registration is
available) and the Offering is not registered with the applicable federal or state authorities, the sale of
Vasari Notes will be deemed to have been made in violation of the applicable laws requiring registration.
We may be substantially reliant upon the net offering proceeds we receive from the sale of
our Vasari Notes to meet our liquidity needs.
We may be substantially reliant upon the net offering proceeds we receive from the sale of our
Vasari Notes in order to meet our liquidity needs. We intend to use these proceeds to fund redemption
obligations, make interest payments and to fund our other working capital needs to the extent that other
sources of liquidity from our operations are inadequate. However, these other sources of liquidity are
subject to risks. We may not be able to attract new investors, have sufficient loan repayments, or have
sufficient borrowing capacity when we need additional funds to repay principal and interest on your Vasari
55
Notes or redeem your Vasari Notes. If any of these things occur, our liquidity and capital needs may be
severely and negatively affected and we may be forced to sell off our loan receivables and other operating
assets, or we might be forced to cease our operations.
We can provide no assurance that any Vasari Notes will be sold or that we will raise
sufficient proceeds to carry out our business plans.
We are conducting this offering of Vasari Notes ourselves without any underwriter or placement
agent. We have no experience in conducting a Vasari Notes offering or any other securities offering.
Although we intend to sell an undetermined principal amount of the Vasari Notes, there is no minimum
amount of proceeds that must be received from the sale of the Vasari Notes in order to accept proceeds
from Vasari Notes actually sold. Accordingly, we can provide no assurance about the total principal
amount of Vasari Notes that will be sold. Therefore, we cannot assure you that we will raise sufficient
proceeds to carry out our business plans.
Our Vasari Notes are not insured or guaranteed by any third party, so you are dependent
upon our ability to manage our business and generate adequate cash flows.
Our Vasari Notes are not insured or guaranteed by the Federal Deposit Insurance Corporation
(FDIC), any governmental agency or any other public or private entity as are certificates of deposit or
other accounts offered by banks, savings and loan associations or credit unions. You are dependent upon
our ability to effectively manage our business to generate sufficient cash flow, including cash flow from
our financing activities, for the repayment of principal at maturity and the ongoing payment of interest
on the Vasari Notes. If these sources are inadequate, you could lose your entire investment.
Payment on the Vasari Notes is subordinate to the payment of all outstanding present and
future senior debt, and we are not limited the amount of senior debt we may incur.
The Vasari Notes are subordinate and junior to any and all of our senior debt and equal to any
and all currently outstanding affiliate debt. There are no restrictions regarding the amount of senior debt
or other indebtedness that we may incur. Upon the maturity of our senior debt, by lapse of time,
acceleration or otherwise, the holders of our senior debt have first right to receive payment, in full, prior
to any payments being made to you as a Note holder or to holders of our affiliate debt which may be
equal to the Vasari Notes. Therefore, you would only be repaid in full if the senior debt is satisfied first
and, following satisfaction of the senior debt, there is an amount sufficient to fully satisfy all amounts
owed under both the Vasari Notes and the related party Vasari Notes. The Vasari Notes are not senior
debt. As of August 1, 2016, we had approximately $150,000 of senior debt outstanding.
There is no early warning on your debt if our Company performs poorly. Only interest
and principal payment defaults on our debt or similar debt can trigger a default on your debt
prior to a bankruptcy.
There are limited financial or performance covenants to be maintained under the Vasari Notes
and. Therefore, there is no early warning of a possible default by us. Only (i) the non-payment of
interest and/or principal on the Vasari Notes by us, (ii) our bankruptcy or insolvency, or (iii) a failure to
comply with provisions of the Vasari Notes (if such failure is not cured or waived within 60 days after
receipt of a specific notice) could cause a default to occur.
There is no sinking fund to ensure repayment of the Vasari Notes at maturity, so you are
totally reliant upon our ability to generate adequate cash flows.
We do not contribute funds to a separate account, commonly known as a sinking fund, to repay
the Vasari Notes upon maturity. Because funds are not set aside periodically for the repayment of the
Vasari Notes over their respective terms, you must rely on our combined consolidated cash flows from
operations, investing and financing activities and other sources of financing for repayment, such as funds
from the sale of the Vasari Notes, loan repayments and other borrowings. To the extent cash flow from
56
operations and other sources are not sufficient to repay the Vasari Notes, you may lose all or a part of
your investment.
Our management has broad discretion over the use of proceeds from this offering.
Our management has significant flexibility in applying the net proceeds that we receive from this
offering. Although we intend to use the net proceeds we receive from this offering for general corporate
purposes, we have not yet finalized all of our anticipated expenditures and therefore cannot provide
definitive estimates of the exact amounts to be used for each of the purposes, and therefore, our management
will have significant discretion in the allocation of the net proceeds we expect to receive from this offering.
The net proceeds of this offering may be used in a manner that does not generate favorable returns.
The Company is not required to make an offer to repurchase your Vasari Notes upon a
change of control of the Company, and there are no other types of investor protections upon a change
of control.
The Company is not required to repurchase your Vasari Notes upon a change of control of the
Company, nor does this Memorandum contain any other types of protections in the event of a change of
control. The Company could engage in many types of transactions, such as mergers, change of control
transactions, acquisitions, refinancings or certain recapitalizations, which could substantially affect its
capital structure, its management, its capital stock and the market value of the Vasari Notes.
Our existing and future secured creditors will have a prior claim on our assets to the extent
of the value of the assets securing their indebtedness.
The Vasari Notes will be our senior unsecured obligations and will be effectively subordinated to
any of our existing and future secured debt, to the extent of the lesser of the value of the assets securing
such debt and the obligations secured thereby. See Description of Material Indebtedness for more
information.
Holders of Vasari Notes will participate ratably with all holders of our unsecured indebtedness that
is deemed to be of the same class as Vasari Notes, and potentially with all of our other general creditors,
based upon the respective amounts owed to each holder or creditor. In any of the foregoing events, we
cannot assure you that there will be sufficient assets to pay amounts due on the Vasari Notes. As a result,
holders of Vasari Notes may receive less, ratably, than holders of secured indebtedness.
We are not planning to engage an underwriter or other agent to underwrite, place or facilitate
the distribution of the Vasari Notes.
We are not planning to engage an underwriter or other agent to facilitate the distribution of the
Vasari Notes. As a result, holders of Vasari Notes will not have the benefit of any third party due diligence
or other types of gatekeeper actions typically taken by an underwriter in an underwritten public offering,
including the receipt by the underwriters of comfort letters by the issuers accountants and legal opinions
from outside counsel. The lack of an underwriter may make any offering of Vasari Notes riskier than if we
were to engage an underwriter or similar agent that would undertake the types of procedures and
documentation that are customary for offerings distributed in an underwritten or firm commitment fashion.
Once you submit a subscription agreement, you may not revoke it following the day in which
you place your order.
Purchase orders for Vasari Notes will generally be processed on the business day following the
submission of the order, and you are only permitted to cancel orders prior to 11:59 P.M. (Pacific Time) on
the day your order is placed (or, if the order is placed on a Friday, prior to 11:59 P.M. (Pacific Time) on the
immediately following Sunday). Therefore, even if circumstances arise after your purchase order has been
processed that make you want to reduce the amount of Vasari Notes you originally agreed to purchase, you
may nonetheless be bound.
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We reserve the right to reject any purchase orders for Vasari Notes.
We reserve the right, in our sole discretion, to reject, in whole or in part, any purchase order for
Vasari Notes:
that we determine to be unlawful, ineligible, manipulative or mistaken;
where the prospective investor does not have sufficient funds in its investor account to settle a
purchase order;
for any failure by a prospective investor to comply with the requirements of our Memorandum
and Company; or
for any other reason we may determine or for no reason.
We reserve the right to reject any purchase order in order to allow us to comply with all applicable
laws and regulations. Other conditions for valid purchase orders, including eligibility of prospective
investors, may vary depending on the type of investor or the terms of a particular series of Vasari Notes.
As a result of these varying requirements, a purchase order for one particular investor may be rejected while
an identical purchase order from a different investor may be accepted.
Submitting subscription agreements through broker-dealers may require prospective
investors to comply with additional procedures required by their broker-dealer.
Prospective investors may choose to submit purchase orders with respect to any offering of Vasari
Notes through their own broker-dealer. Different brokerage firms may have different deadlines for
accepting instructions from their customers. Accordingly, you should consult the brokerage firm through
which you wish to submit a purchase order with respect to such deadlines. Subscription agreements that are
submitted indirectly through other persons rather than directly through the Company may be subject to
additional risks or delays arising from such other persons systems or operations, or delays or failures in
communications, including delays caused by Internet usage.
We may incur substantially more debt in the future.
The Company and its subsidiaries may incur substantial additional debt in the future. Neither the
Company nor its subsidiaries will be restricted from incurring additional debt, securing existing or future
debt, or recapitalizing debt, any of which actions could have the effect of diminishing the Companys ability
to make payments on the Vasari Notes when due.
Our key personnel may leave which could disrupt our operations and harm our business.
Our future success depends upon the continued service of our executive officers and other key
personnel. None of our officers or key employees is bound by an employment agreement for any specific
term. If we lost the services of one or more of our key employees, or if one or more of our executive officers
or employees decided to join a competitor or otherwise compete directly or indirectly with us, our business
could be harmed. We cannot assure you that we will be able to successfully retain our key personnel or, in
the event we were to lose the services of any key personnel, to replace these personnel. If one or more
members of our management team were unable or unwilling to continue in their present positions, our
operations could be disrupted and our business could be harmed.
The Company may not be able to obtain financing required to maintain and grow its business.
The Company will need additional funding to execute on its business plan. However, there can be
no assurance that the Company will be successful in obtaining such funding on acceptable terms or at all.
Additional financing will increase risks of an investment in the Company. For example, outside debt
financing will constrain the Companys cash flow, and additional equity financing will dilute current
investors, including investors who purchase Vasari Notes in this Offering.
58
We have broad discretion to use the Offering proceeds, and we may not use these proceeds in
a way with which our Note holders agree.
The net proceeds of this Offering are not allocated for specific uses other than to generally further
our business along with other general corporate purposes. Our management can spend most of the proceeds
from this Offering in ways with which our Note holders may not agree.
In the long term, we intend to expand our international activities, which will subject us to a
number of risks.
Our long-term strategic plans include international expansion, in Europe, Asia and Latin America.
We intend to sell, design, install, and maintain solar systems in international locations. Risks inherent to
international operations include the following:
Inability to work successfully with third parties having local expertise to develop international
projects;
Multiple, conflicting and changing laws and regulations, including export and import
restrictions, tax laws and regulations, environmental regulations, labor laws and other
government requirements, approvals, permits and licenses and difficulties in enforcing
agreements in foreign legal systems;
Changes in general economic and political conditions in the countries in which we operate,
including changes in government incentives relating to power generation;
Political and economic instability, including wars, acts of terrorism, political unrest, boycotts,
curtailments of trade and other business restrictions;
Difficulties and costs in recruiting and retaining individuals skilled in international business
operations;
International business practices that may conflict with U.S. customs or legal requirements;
Financial risks, such as longer sales and payment cycles and greater difficulty collecting
accounts receivable and fluctuations in currency exchange rates relative to the U.S. dollar; and
Inability to obtain, maintain or enforce intellectual property rights.
Doing business in foreign markets requires us to be able to respond to rapid changes in market,
legal, and political conditions in these countries. The success of our business will depend, in part, on our
ability to succeed in differing legal, regulatory, economic, social and political environments. We may not
be able to develop and implement policies and strategies that will be effective in each location where we
do business.
Market fluctuations could adversely affect our businesses in many ways.
As an investment banking firm, our businesses are materially affected by conditions in the financial
markets and economic conditions generally, both in the United States and elsewhere around the world. The
solar energy market and equity and debt markets in the United States and elsewhere have achieved record
or near record levels, and this favorable business environment will not continue indefinitely. In the event
of a market downturn, our businesses could be adversely affected in many ways, including those described
below. Our revenues are likely to decline in such circumstances and, if we were unable to reduce expenses
at the same pace, our profit margins would erode. Even in the absence of a market downturn, the Firm is
exposed to substantial risk of loss due to market volatility.
59
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Private Offering Memorandum contains forward-looking statements within the meaning of
the Securities Exchange Act of 1934 (the Exchange Act) and the Securities Act of 1933, which are subject
to inherent risks, uncertainties, and assumptions that are difficult to predict. All statements in this
Memorandum, other than statements of historical fact, are forward-looking statements. These forward-
looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. The forward-looking statements include statements, among other things, concerning: our
business strategy, including anticipated trends and developments in and management plans for our business
and the markets in which we operate; future financial results, operating results, revenues, gross margin,
operating expenses, projected costs, and capital expenditures; sales and marketing initiatives; and
competition. In some cases, you can identify these statements by forward-looking words, such as
estimate, expect, anticipate, project, plan, intend, seek, believe, forecast, foresee,
likely, may, should, goal, target, might, will, could, predict, continue, and the
negative or plural of these words, and other comparable terminology. Forward-looking statements are only
predictions based on our current expectations and our projections about future events. All forward-looking
statements included in this Memorandum based upon information available to us as of the filing date of this
Memorandum. You should not place undue reliance on these forward-looking statements. We undertake no
obligation to update any of these forward-looking statements for any reason. These forward-looking
statements involve known and unknown risks, uncertainties, and other factors that may cause our actual
results, levels of activity, performance, or achievements to differ materially from those expressed or implied
by these statements, including, but not limited to:
our expectations regarding the worldwide demand for electricity and the market for renewable
energy;
our expectations regarding our ability to finance large scale renewable energy projects;
our beliefs regarding the importance of environmentally friendly power generation;
our beliefs regarding the acceleration of adoption of renewable energy technologies;
our expectations regarding advancements in our technologies and cost savings from such
advancements;
our beliefs regarding our ability to successfully implement our strategies;
our beliefs regarding our abilities to secure sufficient funds to meet our cash needs for our
operations; and
our future business development, results of operations and financial condition and use of the
proceeds of this offering;
the state of government legislation, regulation and policies that support energy efficiency,
renewable energy and sustainable infrastructure projects and that enhance the economic feasibility
of energy efficiency, renewable energy and sustainable infrastructure projects and the general
market demands for such projects;
market trends in our industry, energy markets, commodity prices, interest rates, the debt and
lending markets or the general economy;
our business and investment strategy;
our relationships with originators, investors, market intermediaries and professional advisers;
competition from other providers of financing;
60
our or any other companies projected operating results;
actions and initiatives of the U.S. federal, state and local government and changes to U.S. federal,
state and local government policies and the execution and impact of these actions, initiatives and
policies;
the state of the U.S. economy generally or in specific geographic regions, states or municipalities;
our ability to obtain and maintain financing arrangements on favorable terms, including
securitizations;
general volatility of the securities markets in which we participate;
our investment and underwriting process;
interest rate and maturity mismatches between our assets and any borrowings used to fund such
assets;
changes in interest rates and the market value of our target assets;
changes in commodity prices;
impact of and changes in governmental regulations, tax law and rates, accounting guidance and
similar matters;
our ability to maintain our exception from registration under the 1940 Act;
availability of opportunities to originate energy efficiency, renewable energy and sustainable
infrastructure projects; and
availability of qualified personnel.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

The following is a general discussion of the material U.S. federal income tax considerations relating
to the initial purchase, ownership and disposition of the Vasari Notes by U.S. and non-U.S. holders. This
discussion is a summary only and is not a complete analysis of all the potential tax considerations relating
to the purchase, ownership and disposition of the Vasari Notes. We have based this summary on the U.S.
federal income tax laws in effect as of the date of this Memorandum. However, these laws may change with
possible retroactive effect. In addition, we have not obtained, nor do we intend to obtain, a ruling from the
IRS or an opinion of counsel with respect to any tax consequences of purchasing, owning or disposing of
Vasari Notes. Thus, the IRS could challenge one or more of the tax consequences or matters described in
this Memorandum.
This discussion is limited to purchasers of Vasari Notes who acquire the Vasari Notes from us in
the initial offering and hold the Vasari Notes as capital assets for federal income tax purposes. This
discussion does not address all possible tax consequences that may be applicable to you in light of your
specific circumstances. For instance, this discussion does not address the alternative minimum tax
provisions of the Internal Revenue Code of 1986, or the Code, or special rules applicable to some
categories of investors, like some financial institutions, insurance companies, tax-exempt organizations,
dealers in securities, real estate investment trusts, regulated investment companies, or persons who hold
Vasari Notes as part of a hedge, conversion or constructive sale transaction, straddle or other risk reduction
transaction, that may be subject to special rules. This discussion also does not address the tax consequences
arising under the laws of any foreign, state or local jurisdiction or U.S. estate and gift tax law as applicable
to U.S. holders.
61
If you are considering the purchase of a Note, you should consult your own tax advisors as to the
particular tax consequences to you of acquiring, holding or otherwise disposing of the Vasari Notes,
including the effect and applicability of state, local or foreign tax laws.
As used in this discussion, the term U.S. holder means a holder of a Note that is:
for United States federal income tax purposes, a citizen or resident of the United States;
a corporation, partnership or other entity created or organized in or under the laws of the United
States or of any political subdivision thereof or other entity characterized as a corporation or
partnership for federal income tax purposes;
an estate, the income of which is subject to United States federal income taxation regardless of
its source; or
a trust, the administration of which is subject to the primary supervision of a court within the
United States and which has one or more United States persons with authority to control all
substantial decisions, or if the trust was in existence on August 20, 1996, and has elected to
continue to be treated as a United States trust.
For the purposes of this discussion, a non-U.S. holder means any holder other than a U.S. holder.
Characterization of the Vasari Notes
The federal income tax consequences of owning Vasari Notes are dependent upon the
characterization of the Vasari Notes as debt of Vasari Energy for federal income tax purposes, rather than
as equity interests in Vasari Energy or a partnership among the holders of the Vasari Notes and Vasari
Energy Vasari Energy believes that the Vasari Notes have been structured in a manner that will allow the
Vasari Notes to be characterized as debt of Vasari Energy for federal income tax purposes. However, this
is only Vasari Energys belief, and no ruling from the service or an opinion of counsel has been sought in
this regard. Thus, the IRS could successfully challenge this characterization.
In the event the Vasari Notes are treated as equity interests in Vasari Energy, the Vasari Notes
would be deemed to be ownership interests in a taxable corporation for federal tax purposes. Similarly, if
the Vasari Notes were deemed to be equity interests in a partnership among the holders of Vasari Notes and
Vasari Energy, the holders likely would be deemed to own interests in a publicly traded partnership taxable
as a corporation since the safe harbors to the application of the publicly traded partnership rules likely
would not be available.
In either event, adverse tax consequences would result to holders. For example, payments of interest
and principal on the Vasari Notes would be treated as corporate distributions and dividends to the extent
Vasari Energy has current or accumulated earnings and profits. The entire amount of any dividends would
be taxable to holders of the Vasari Notes as ordinary income. Distributions and dividends are not deductible
by corporations and publicly traded partnerships taxable as corporations. Thus, payments on the Vasari
Notes would not be deductible by Vasari Energy if the Vasari Notes were deemed to be equity interests. In
most cases, if the Vasari Notes were deemed to be equity interests, Vasari Energy would have less available
cash to make payment on the Vasari Notes.
In addition to the above, treatment of the Vasari Notes as equity interests could have other adverse
effects on some holders. For example, income to non-U.S. holders could (1) be subject to federal income
tax withholding, (2) constitute unrelated business taxable income to some tax-exempt entities, including
pension funds and some retirement accounts, and (3) cause the timing and amount of income that accrues
to holders of Vasari Notes to be different from that described below.
Because of these potential adverse effects, you are urged to consult your own tax advisors as to the
tax consequences that may apply to your particular situation in the event the Vasari Notes are re-
62
characterized as equity interests and as to the likelihood the Vasari Notes could be so re-characterized. The
remainder of this discussion assumes that the Vasari Notes are characterized as debt of Vasari Energy.
Taxation of U.S. Holders
Stated Interest. Under general federal income tax principles, you must include stated interest in
income in accordance with your method of tax accounting. Accordingly, if you are using the accrual method
of tax accounting, you must include stated interest in income as it accrues. If you are using the cash method
of tax accounting, you must include stated interest in income as it is actually or constructively received.
Payments of interest to taxable holders of Vasari Notes will constitute portfolio and not passive
activity income for the purposes of the passive loss limitations of the Code. Accordingly, income arising
from payment on the Vasari Notes will not be subject to reduction by losses from passive activities of a
holder.
Income attributable to interest payments on the Vasari Notes may be offset by investment expense
deductions, subject to the limitation that individual investors may only deduct miscellaneous itemized
deductions, including investment expenses, to the extent these deductions exceed 2% of the investors
adjusted gross income. If you pay accrued interest when you purchase your Note, you may deduct the
accrued interest from the amount of the first interest payment that you receive when calculating your interest
income. See - Note Premium and Market Discount below for the impact this treatment has on the issue
price of the Vasari Notes purchased.
Original Issue Discount. For Vasari Notes we sell to you at 100% of their face amount, we do not
expect that those Vasari Notes will be issued with original issue discount since the issue price of the Vasari
Notes will equal the stated redemption price at maturity. We may sell Vasari Notes at a discount to their
face amount. For Vasari Notes we sell to you at a discount to their face amount, those Vasari Notes will be
issued with original issue discount since the issue price of the Vasari Notes will be less than the stated
redemption price at maturity. If a Note is deemed to be issued with original issue discount, the accrual of
interest income by its holder will be subject to the rules discussed below.
Original issue discount is defined generally as the excess of a debt instruments stated redemption
price at maturity over its issue price, subject to a statutorily-defined DE MINIMIS exception, which is
generally one-quarter of 1% of the debt instruments stated redemption price at maturity multiplied by the
number of complete years to maturity from its issue date. The stated redemption price at maturity of a
debt instrument is generally the sum of the debt instruments stated principal amount plus all other payments
required, other than payments of qualified stated interest. Generally, qualified stated interest consists
of interest that is unconditionally payable in cash or in property at least annually at a single fixed rate. The
issue price of a debt instrument that is part of an issue of which a substantial part is sold for money is
generally the purchase price of the debt instrument.
We believe that interest on the Vasari Notes will be characterized as qualified stated interest for
the purposes of calculating original issue discount. However, it may not be so treated. In the event interest
on the Vasari Notes is not treated as qualified stated interest, the Vasari Notes could be deemed to be
issued with original issue discount, or more original issue discount than anticipated, in which case the
timing and amounts of income you realize could be affected.
If the Vasari Notes are deemed to be issued with more original issue discount than the statutorily-
defined DE MINIMIS amount discussed above, then you, regardless of your method of accounting, would
be required to include in gross income, on a constant yield to maturity basis, the sum of the daily portions
of original issue discount for the period during the taxable year you held the Vasari Notes even though you
may not receive a cash payment representing the original issue discount in that year. Any amount of original
issue discount included in income would increase your tax basis in the Note.
63
Note Premium And Market Discount. The issue price for Vasari Notes issued directly to you by
us under this Memorandum will have an issue price of $1,000 or less, which is equal to or less than the face
amount of the Note. In the event the Vasari Notes have an issue price or are acquired for a price in excess
of the face amount of the Vasari Notes, the Vasari Notes would be deemed to be issued with or acquired
with Note premium. However, the amount of accrued interest you pay will not be included as part of the
issue price or the price paid to acquire the Vasari Notes. Vasari Notes acquired by a holder after the date of
original issue for a price that is less than the face amount of the Note will have market discount.
If the Vasari Notes have Note premium, you may be able to elect to deduct the Note premium using
a constant yield method over the remaining term of the Vasari Notes as amortizable Note premium under
Section 171 of the Code, provided that the Vasari Notes are held as a capital asset. Except as provided in
Treasury Department regulations, amortizable Note premium will be treated as an offset to interest income
on the Vasari Notes rather than as a separate deduction item. An election under Section 171 of the Code
generally is binding once made and applies to all obligations owned or subsequently acquired by the
taxpayer.
The market discount provisions of the Code generally provide that, subject to a statutorily-defined
DE MINIMIS exception, if you acquire a debt instrument at a market discount and thereafter recognize
gain on a disposition of the debt instrument, including a gift, the lesser of the gain or the portion of the
market discount that accrued while the debt instrument was held by you will be treated as ordinary interest
income at the time of the disposition. For this purpose, an acquisition at a market discount includes an
acquisition, other than an acquisition at original issuance, resulting in a basis in the debt instrument below
the debt instruments stated redemption price at maturity. If you acquire a debt instrument at a market
discount, and do not elect to include the market discount in income on a current basis, as discussed below,
you may be required to defer a portion of any interest incurred or maintained to purchase or carry the debt
instrument until you dispose of the debt instrument in a taxable transaction.
You may elect to have market discount accrue on a constant interest rate basis, as opposed to a
straight-line basis. The current inclusion election, once made, applies to all market discount obligations
acquired by you on or after the first day of the first taxable year to which the election applies and may not
be revoked without the consent of the IRS. If you elect to include market discount in income in accordance
with the preceding sentence, the above rules with respect to the recognition of ordinary income on a sale or
select other dispositions of a Note and the deferral of interest deduction on indebtedness related to the Note
will not apply.
The Vasari Notes provide that they may be redeemed, in whole or in part, before maturity. If some
or all of the Vasari Notes are redeemed, each holder of a Note acquired at a market discount would be
required to treat the principal payment as ordinary interest income to the extent of any accrued market
discount on the Vasari Notes.
Disposition Of Vasari Notes. In general, you will recognize gain or loss upon the sale, exchange,
redemption or other taxable disposition of a Note measured by the difference between (1) the amount of
cash and the fair market value of property received, excluding any portion of the payment that is attributable
to accrued interest on the Vasari Notes, and (2) your adjusted basis in the Note as increased by any original
issue discount or market discount previously included in income and decreased by any cash payments
received, other than payments constituting qualified stated interest, and any amortizable Note premium
deducted over the term of the Note. Subject to the market discount rules discussed above, any of this gain
or loss generally will be long-term capital gain or loss, provided that the Note was a capital asset in the
hands of the holder and was held for more than one year. Non-corporate taxpayers generally are subject to
a maximum federal income tax rate of 20% on net long-term capital gains.
The terms of the Vasari Notes may be modified upon the consent of a specified percentage of
holders and, in some instances, without consent of the holders. In addition, the Vasari Notes may be
assumed upon the occurrence of specific transactions involving Vasari Energy The modification or
64
assumption of a Note could, in some instances, give rise to a deemed exchange of a Note for a new debt
instrument for federal income tax purposes. If an exchange is deemed to occur by reason of a modification
or assumption, you could realize gain or loss.
Considerations For Tax-Exempt Holders Of Vasari Notes
Holders of Vasari Notes that are tax-exempt entities, including charitable corporations, pension,
profit sharing or stock bonus plans, keogh plans, individual retirement accounts and some other employee
benefit plans are subject to federal income tax on unrelated business taxable income. For example, net
income derived from the conduct of a trade or business regularly carried on by a tax-exempt entity or by a
partnership in which it is partner is treated as unrelated business taxable income.
A $1,000 special deduction is allowed in determining the amount of unrelated business taxable
income subject to tax. Tax-exempt entities taxed on their unrelated business taxable income are also subject
to the alternative minimum tax for items of tax preference which enter into the computation of unrelated
business taxable income.
In general, interest income does not constitute unrelated business taxable income. Note however,
that under the debt-financed property rules, if tax-exempt holders of Vasari Notes finance the acquisition
or holding of Vasari Notes with debt, interest on the Vasari Notes will be taxable as unrelated business
taxable income. The Vasari Notes will be treated as debt-financed property if the debt was incurred to
acquire the Vasari Notes or debt was incurred after the acquisition of the Vasari Notes so long as the debt
would not have been incurred but for the acquisition and, at the time of the acquisition, the incurrence of
the debt was foreseeable.
Tax-exempt persons who are members of a partnership will be deemed engaged in the trade or
business of the partnership. Thus, income from the partnership will be treated as unrelated business taxable
income. In addition, income from publicly traded partnerships is no longer excluded from the definition of
unrelated business taxable income. Thus, if the Vasari Notes are deemed to be equity interests in a
partnership; interest payments on the Vasari Notes could be treated as unrelated business taxable income.
Investors who are tax-exempt entities are urged to consult their tax advisors with respect to the application
of the foregoing provisions to their particular situations.
Non-United States Holders
The following discussion is a summary of the principal U.S. federal income consequences resulting
from the ownership of the Vasari Notes by non-U.S. holders. However, application of the U.S. federal
income tax rules associated with non-U.S. holders is complex and factually sensitive. Thus, if you could be
considered to be a non-U.S. holder, you are urged to consult your own tax advisors with respect to the
application of the federal income tax rules for your particular situation.
A non-United States holder generally will not be subject to United States federal withholding tax
with respect to payments of principal and interest (including original issue discount) on Vasari Notes,
provided that (i) the holder does not actually or constructively own 10 percent or more of the total combined
voting power of all classes of our stock entitled to vote, (ii) the holder is not for United States federal income
tax purposes a controlled foreign corporation related to us through stock ownership, (iii) the beneficial
owner of the Note certifies to us or our agent under penalties of perjury as to its status as a non-United
States holder and complies with applicable identification procedures and (iv) the payment is not a payment
of contingent interest (generally a payment based on or determined by reference to income, profits, cash
flow, sales, dividends or other comparable attributes of the obligor or a party related to the obligor).
Special rules apply to partnerships, estates and trusts and, in certain circumstances, certifications
as to foreign status and other matters may be required to be provided by partners and beneficiaries thereof.
A non-United States holder of a Note generally will not be subject to United States federal income
tax on any gain realized upon the sale, retirement or other disposition of a Note, unless the holder is an
65
individual who is present in the United States for 183 days or more during the taxable year of sale,
retirement or other disposition and certain other conditions are met. If a non-United States holder of a Note
is engaged in a trade or business in the United States and income or gain from the Note is effectively
connected with the conduct of such trade or business, the non-United States holder will be exempt from
withholding tax if appropriate certification has been provided, but will generally be subject to regular
United States income tax on such income and gain in the same manner as if it were a United States holder.
In addition, if such non-United States holder is a foreign corporation, it may be subject to a branch profits
tax equal to 30 percent (or possible lower rate under an applicable tax treaty) of its effectively connected
earnings and profits for the taxable year, subject to adjustments.
A Note held by an individual who is a non-United States holder at the time of death will not be
subject to United States federal estate tax upon such individuals death if at the time of death (i) such holder
does not actually or constructively own 10 percent or more of the total combined voting power of all classes
of our stock entitled to vote, (ii) payments with respect to the Note would not have been effectively
connected with a United States trade or business of such individual and (iii) payments with respect to the
Note would not be considered to be a payment of contingent interest as described above.
Backup withholding and information reporting will generally not apply to payments of principal
and interest made to a non-United States holder by us on a Note with respect to which the holder has
provided the required certification, described above, under penalties of perjury of its non-United States
holder status or has otherwise established an exemption. Interest payments to non-United States holders
will be subject to information reporting on Form 1042-S. Payments on the sale, exchange or other
disposition of a Note by a non-United States holder effected outside the United States to or through a foreign
office of a broker will not be subject to backup withholding. However, if such broker is a United States
person, a controlled foreign corporation for United States tax purposes, a foreign person 50 percent or more
of whose gross income is derived from its conduct of a United States trade or business for a specified three-
year period, a foreign partnership engaged in a United States trade or business or in which United States
persons hold more than 50 percent of the income or capital interests, or certain United States branches of
foreign banks or insurance companies, information reporting will be required unless the beneficial owner
has provided certain required information or documentation to the broker to establish its non-United States
status or otherwise establishes an exemption. Payments to or through the United States office of a broker
will be subject to backup withholding and information reporting unless the holder certifies under penalties
of perjury to its non-United States holder status or otherwise establishes an exemption.
Non-United States holders should consult their tax advisors regarding the application of United
States federal income tax laws, including information reporting and backup withholding, to their particular
situations.
Payments of interest to non-U.S. Holders. Subject to the discussion below under Backup
Withholding and Information Reporting, payments of interest, including any accruals of original issue
discount, received by a non-U.S. holder generally will not be subject to United States federal withholding
tax, provided that (1) the non-U.S. holder does not actually or constructively own 10% or more of the total
combined voting power of all classes of voting stock of Vasari Energy, (2) the non-U.S. holder is not a
controlled foreign corporation that is related to Vasari Energy, actually or constructively, through stock
ownership, (3) the beneficial owner of the Note complies with the certification requirements, including
delivery of a statement, signed by the holder under penalties of perjury, certifying that the holder is a foreign
person and provides its name and address, or (4) the non-U.S. holder is entitled to the benefits of an income
tax treaty under which the interest is exempt from United States withholding tax and the non-U.S. holder
complies with the reporting requirements. This exemption does not apply to market discount. If a Note is
held through a securities clearing organization or other specified financial institutions (an Intermediary),
the Intermediary may provide the relevant signed statement; in that case, however, unless the Intermediary
is a qualified intermediary as defined under the Code, the signed statement provided by the Intermediary
66
must be accompanied by a copy of a valid Form W-8BEN provided by the non-U.S. beneficial holder of
the Note.
Payments of interest not exempt from United States federal withholding tax as described above will
be subject to a withholding tax at the rate of 30%, subject to reduction under an applicable income tax
treaty. Payments of interest on a Note to a non-U.S. holder generally will not be subject to United States
federal income tax, as opposed to withholding tax, unless the income is effectively connected with the
conduct by the non-U.S. holder of a trade or business in the United States. You should consult your own
tax advisor to determine the effects of the application of the United States federal withholding tax to your
particular situation.
Disposition of the Vasari Notes by non-U.S. Holders. Subject to the discussion below under
Backup Withholding and Information Reporting, a non-U.S. holder generally will not be subject to United
States federal income tax, and generally no tax will be withheld, with respect to gains realized on the
disposition of a Note, unless (1) the gain is effectively connected with a United States trade or business
conducted by the non-U.S. holder or (2) the non-U.S. holder is an individual who is present in the United
States for 183 or more days during the taxable year of the disposition and other requirements are satisfied.
Non-U.S. Holders subject to U.S. Income taxation. If interest and other payments received by a
non-U.S. holder with respect to the Vasari Notes, including proceeds from the disposition of the Vasari
Notes, are effectively connected with the conduct by the non-U.S. holder of a trade or business within the
United States, or the non-U.S. holder is otherwise subject to United States federal income taxation on a net
basis with respect to the holders ownership of the Vasari Notes, or are individuals that have by operation
of law become residents in the United States for federal income tax purposes, the non-U.S. holder generally
will be subject to the rules described above applicable to U.S. holders of Vasari Notes, subject to any
modification provided under an applicable income tax treaty. These non-U.S. holders may also be subject
to the branch profits tax, if the holder is a corporation.
Backup Withholding and Information Reporting. Non-corporate U.S. holders may be subject
to backup withholding at a rate of 30% on payments of principal, premium and interest on, and the proceeds
of the disposition of, the Vasari Notes. In general, backup withholding will be imposed only if the U.S.
holder (1) fails to furnish its taxpayer identification number (TIN), which, for an individual, would be his
or her Social Security number, (2) furnishes an incorrect TIN, (3) is notified by the IRS that it has failed to
report payments of interest or dividends, or (4) under some circumstances, fails to certify, under penalty of
perjury, that it has furnished a correct TIN and has been notified by the IRS that it is subject to backup
withholding tax for failure to report interest or dividend payments. In addition, the payments of principal
and interest to U.S. holders generally will be subject to information reporting. You should consult your tax
advisors regarding your qualification for exemption from backup withholding and the procedure for
obtaining an exemption, if applicable.
Backup withholding generally will not apply to payments made to a non-U.S. holder of a Note who
provides the certification that it is a non-U.S. holder, and the payor does not have actual knowledge that a
certificate is false, or otherwise establishes an exemption from backup withholding. Payments by a United
States office of a broker of the proceeds of a disposition of the Vasari Notes generally will be subject to
backup withholding at a rate of 31% unless the non-U.S. holder certifies it is a non-U.S. holder under
penalties of perjury or otherwise establishes an exemption. In addition, if a foreign office of a foreign
custodian, foreign nominee or other foreign agent of the beneficial owner, or if a foreign office of a foreign
broker pays the proceeds of the sale of a Note to the seller, backup withholding and information reporting
will not apply provided that the nominee, custodian, agent or broker is not a United States related person,
or a person which derives more than 50% of its gross income for some periods from the conduct of a trade
or business in the United States or is a controlled foreign corporation. The payment by a foreign office of a
broker that is a United States person or a United States related person of the proceeds of the sale of Vasari
Notes will not be subject to backup withholding, but will be subject to information reporting unless the
67
broker has documentary evidence in its records that the beneficial owner is not a United States person for
purposes of the backup withholding and information reporting requirements and other conditions are met,
or the beneficial owner otherwise establishes an exemption.
The amount of any backup withholding imposed on a payment to a holder of a Note will be allowed
as a credit against the holders United States federal income tax liability and may entitle the holder to a
refund, provided that the required information is furnished to the IRS.
State Taxes
We make no representations regarding the tax consequences of the purchase, ownership or
disposition of the Vasari Notes under the tax laws of any state. You should consult your own tax advisors
regarding these state tax consequences.
68
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
EXHIBIT A
FORM OF NOTE
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR

INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. WITHOUT
SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED EXCEPT UPON DELIVERY TO THE ISSUER OF AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED FOR SUCH
TRANSFER OR THE SUBMISSION TO THE ISSUER OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE
IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.
NAME OF NOTEHOLDER:
NOTE AMOUNT (USD) $:
NOTE DATE:
MATURITY DATE:
FOR VALUE RECEIVED, Vasari Energy, Inc. (the Issuer), hereby promises to pay to the order of
the above referenced Noteholder (the Noteholder), the above referenced principal sum (the Note Amount)
in the manner described below. This Note (Note) is referred to in and is executed and delivered in connection
with that certain Subscription Agreement of even date herewith by and between the Issuer and Noteholder (the
Subscription Agreement) which is incorporated herein by reference for all purposes. Additional rights and
obligations of the Issuer and Noteholder are set forth in the Subscription Agreement.
1. REPAYMENT/ MATURITY DATE: The deposit date of Noteholders funds into the
designated account under the control of the Issuer shall be referred to as the Note Date. Unless such date is
extended by mutual consent the outstanding principal amount of the Note shall be due and payable to Noteholder
on or before December 31, 2017.
2. INTEREST: The Note will bear interest from its issue date at a fixed rate per year. We will
pay interest only on the notes on January 1st, April 1st, July 1st, and October 1st of each year commencing on
the first quarter following the date of issue of a note. Interest will be paid without any compounding. The notes
will bear interest at an annual rate of 10.00%. Interest will accrue from the first day of the month in which a
note is purchased. Interest on the notes will be computed on the basis of a 360-day year of twelve 30-day months
or, in the case of an incomplete month, the number of days elapsed.
3. SECURITY GRANT & COLLATERAL: The Issuer does not grant to Note holder a security
interest in any of its assets (hereinafter referred to as Collateral), including but not limited to bank accounts,
leases, production, equipment, etc., as security for the payment and performance of this Note.
4. ACCEPTED CURRENCY: All payments hereunder must be made in United States
Currency.
1

5. DEFAULT AND ACCELERATION: Issuer shall be in default under this Note upon any of
the following: (a) Issuer dissolves, terminates its existence, or declares insolvency (b) Issuer files for relief
under bankruptcy laws or any other laws for the benefit of creditors or (c) an involuntary petition is filed against
Issuer under any bankruptcy laws (unless such petition is dismissed within 30 days). Upon the occurrence of
any default Noteholder may declare the unpaid principal of the Note and all accrued interest on this Note
immediately due pursuant to applicable law. In the event the Note shall be in default and given to an attorney
for collection or enforcement, or if suit is brought for collection or enforcement, or if it is collected or enforced
through probate, bankruptcy, or other judicial proceeding, then Issuer shall pay Noteholder all costs of
collection and enforcement, including reasonable attorney fees.
6. BINDING EFFECT: The covenants and conditions contained in this Note shall apply to and
bind the Issuer and its successors and permitted assigns.
7. CUMULATIVE RIGHTS: The parties rights under this Note are cumulative, and shall not
be construed as exclusive of each other unless otherwise required by law.
8. WAIVER: The failure of the Note holder to enforce any part of this Note shall not be deemed
a waiver or limitation of the Noteholders right to subsequently enforce and compel strict compliance with every
provision of this Note. Furthermore, no waiver by Noteholder of any default shall operate as a waiver of any
other default or the same default on a future occasion.
9. SEVERABILITY: If any part or parts of this Note shall be held unenforceable for any reason,
the remainder of this Note shall continue in full force and effect. If any provision of this Note is deemed invalid
or unenforceable by any court of competent jurisdiction, and if limiting such provision would make the
provision valid, then such provision shall be deemed to be construed as so limited.
10. NOTICE: Any notice required or otherwise given pursuant to this Note shall be in writing and
mailed certified return receipt requested, postage prepaid, or delivered by overnight delivery service, addressed
as follows:
NOTEHOLDER ISSUER:
Vasari Energy, Inc.
Irvine, CA 92618
Either party may change such addresses from time to time by providing notice as set forth above.
11. GOVERNING LAW / VENUE: This Note shall be governed by and construed in accordance
with the laws of the State of Delaware. Exclusive venue for dispute resolution shall be in the courts of the State
of Delaware.
[signatures on following page]
2

ISSUER: NOTEHOLDER
VASARI ENERGY, INC.
By: __________________________________ By: __________________________________
Name: ________________________________ Name: ________________________________
Title: _________________________________ Title: _________________________________
3

EXHIBIT B
VASARI ENERGY, INC.
SUBSCRIPTION AGREEMENT AND INVESTOR REPRESENTATION LETTER

Vasari Energy, Inc. (the Company) shall use its best efforts to keep the information provided
in the answers to this Subscription Agreement strictly confidential. The Company may present this
Subscription Agreement and the answers contained in it to such parties as they deem advisable if
compelled by law or called upon to establish the availability under any federal or state securities laws of
an exemption from registration of the private placement or if the contents thereof are relevant to any
issue in any action or proceeding to which the Company is a party or by which either is or may be bound.
Vasari Energy, Inc.

Irvine, CA 92618
Gentlemen:
1. SUBSCRIPTION
(a) The undersigned hereby subscribes for and agrees to purchase ________ 10% Convertible
Notes (the Notes) to be issued by the Company for a purchase price of $1,000.00 per Note ($10,000)
minimum), for a total purchase price of $_____________ (the Subscription Price), subject to the terms,
conditions, acknowledgments, representations and warranties stated herein and in the Confidential Private
Placement Memorandum relating to the offer of up to $1,000,00 of Notes, dated August 1, 2016 (with all
Exhibits thereto, the Memorandum). Simultaneously with the execution and delivery hereof, the
undersigned tenders herewith a check payable to the order of VASARI ENERGY representing the
Subscription Price for the Notes purchased hereby.
(b) The Company has the right to reject this subscription, in whole or in part. If this subscription
or any part thereof is rejected, the Company shall promptly return the subscription funds relating to the
rejected portion.
(c) The undersigned acknowledges that any delivery of information relating to the Notes prior to
the determination by the Company of the undersigneds suitability as an investor shall not constitute an
offer of securities until such determination of suitability shall be made.
2. REPRESENTATIONS AND WARRANTIES AND COVENANTS
The undersigned hereby acknowledges, represents and warrants to, and agrees with, the Company
as follows:
B-1
(a) The undersigned is acquiring the Notes for the undersigneds own account, for investment
purposes only, and not with a view to or for or in connection with the resale, public distribution or
fractionalization thereof, in whole or in part.
Initial Here
(b) The undersigned meets the suitability standards for an investor set forth in the Memorandum
and described below.
Initial Here
(c) The undersigned understands that this Offering has not been registered with the Securities and
Exchange Commission in reliance on exemptions specified in the Securities Act of 1933, as amended, (the
Act) including the exemptions described in Section 4(2) of the Act and Rule 506 promulgated under the
Act, which reliance is based in part upon the undersigneds representations set forth herein. The
undersigned understands that the Notes subscribed for herein, the Notes and the Companys common stock
have not been registered under applicable federal or state securities laws in any state, and unless registered,
none of the Notes or the Companys common stock may be re-offered for sale or resold except in a
transaction or as a security exempt under those laws. The undersigned represents that the undersigned has
adequate means of providing for the undersigneds current needs and possible personal contingencies, and
that the undersigned has no need for liquidity of this investment. It is understood that all documents, records
and books pertaining to this investment have been made available for inspection by the undersigneds
attorney or the undersigned and the undersigneds representatives, and that the books and records of the
Company shall be available upon reasonable notice, for inspection by investors at reasonable hours at its
principal place of business.
Initial Here
(d) The undersigned has:
(1) received and carefully read the Memorandum and understands and has evaluated the risks
of a purchase of the Notes, including the risks set forth in the Memorandum, and has relied solely (except
as indicated in paragraphs (2) and (3) below) on the information contained in the Memorandum.
(2) been given the opportunity to ask questions of, and receive answers from, the Company
concerning the Company and the Offering and other matters pertaining to this investment, and to obtain
any additional information necessary to verify the accuracy of the information contained in the
Memorandum or otherwise provided, and has not been furnished any other offering literature or
Memorandum except as mentioned herein or in the Memorandum.
(3) been furnished with all additional documents and information requested by the
undersigned.
(4) determined that the Notes are a suitable investment and that the undersigned can bear a
complete loss of the investment.
Initial Here
(e) The undersigned is aware that no resale market exists for the Notes or any portion thereof,
thereby requiring this investment to be maintained indefinitely. The undersigned shall not sell or otherwise
B-2
transfer any of the Notes or the Companys common stock without registration under the Act or an
exemption therefrom. The Company is under no obligation to register the Shares or the Companys
common stock or to assist in complying with any exemption from registration. Sales or transfers of the
Shares or the Companys common stock are further restricted as set forth in the Memorandum.
Initial Here
(f) The certificates representing the Shares and common stock shall bear a legend in substantially
the following form:
The securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended. These securities have been acquired for investment and may not
be offered, sold, transferred, pledged or otherwise disposed of without an effective registration
statement under that Act and under any applicable state securities laws unless prior to such
disposition the issuer is furnished with an opinion of counsel, in form and substance satisfactory to
the issuer, that the proposed transaction shall be exempt from such registration.
(g) If the undersigned is a corporation, partnership, trust or other entity, it (1) is authorized and
qualified to invest in the Notes and the Company, and the person signing this Agreement on behalf of such
entity has been duly authorized to do so, and (2) was not formed for the specific purpose of investing in the
Company nor did or shall the shareholders, partners or grantors, as the case may be, of the undersigned
entity contribute additional capital for the specific purpose of purchasing the Notes.
Initial Here
(h) No representation not contained in the Memorandum has been made to the undersigned by the
Company, the Selling Agent or any officer, employee, agent or affiliate of either of them.
Initial Here
(i) Any information the undersigned provided to the Company with respect to the undersigneds
financial position and business experience is correct and complete as of the date of this Agreement, and if
there should be any material change in such information prior to the issuance of the Notes, the undersigned
shall immediately provide such revised and corrected information to the Company.
Initial Here
(j) There are risks associated with investing in the Notes, including but not limited to those
described in the Memorandum.
Initial Here
(k) The undersigned understands that in the event this Subscription is not accepted, then the funds
transmitted herewith shall be returned to the undersigned, and this Subscription Agreement shall be
terminated and of no further force or effect.
Initial Here
(l) The undersigned hereby covenants and agrees that any dispute, controversy or other claim
arising under, out of or relating to this Subscription Agreement or any of the transactions contemplated
hereby, or any amendment, or interpretation hereof or thereof, shall be determined and settled in binding
B-3
arbitration in the Orange County, California, in accordance with Title 9 of the California Civil Code and
the Code of Civil Procedure, including specifically California Code of Civil Procedure Sections 1283.05
and 1283.1, and with the rules and procedures of The American Arbitration Association. The prevailing
party shall be entitled to an award of its reasonable costs and expenses, including, but not limited to,
reasonable attorneys fees, in addition to any other available remedies. Any award rendered therein shall
be final and binding on each and all of the parties thereto and their personal representatives, and judgment
may be entered thereon in any court of competent jurisdiction.
Initial Here
(m) The undersigneds investment in the Notes does not exceed ten percent (10%) of his net
worth.
Initial Here
3. INDEMNITY
The undersigned agrees to indemnify and hold harmless the Company, the Selling Agent and their
affiliates, and each person, if any, who controls or is controlled by any thereof, within the meaning of
Section 15 of the Act, against any and all loss, liability, claim, damage and expense whatsoever (including,
but not limited to, any and all expenses reasonably incurred in investigating, preparing or defending against
any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false
representation or warranty or breach or failure by the undersigned to comply with any covenant or
agreement made by the undersigned herein or in any other document furnished by the undersigned in
connection with this transaction. This indemnification includes, but is not limited to, any damages, losses,
liabilities, costs and expenses (including reasonably attorneys fees and costs) incurred by the Company,
its officers, directors, employees, agents, affiliates or advisors, defending against any alleged violation of
federal or state securities laws which is based upon or related to any untruth or inaccuracy of any of the
representations, warranties or agreements contained herein or in any other documents the undersigned has
furnished in connection with this transaction.
4. MISCELLANEOUS
(a) Neither this Agreement nor any provisions hereof shall be modified, discharged or terminated
except by an instrument in writing signed by the party against whom any waiver, change, discharge or
termination is sought.
(b) Any notice, demand or other communication which any party hereto may be required, or may
elect, to give to anyone interested hereunder shall be sufficiently given if (1) deposited, postage prepaid, in
the United States mail, registered or certified mail, return receipt requested, addressed to such address as
may be given herein, or (2) delivered personally at such address.
(c) Except as otherwise provided herein, this Agreement shall bind and benefit the parties hereto
and their heirs, executors, administrators, successors, legal representatives and permitted assigns. If the
undersigned is more than one person, the obligations of the undersigned shall be joint and several, and the
agreements, representations, warranties and acknowledgments herein contained shall be deemed to be made
by and be binding upon each such person and his heirs, executors, administrators and successors.
(d) This instrument contains the entire agreement of the parties, and there are no representations,
covenants or other agreements except as stated or referred to herein.
B-4
(e) This Agreement is not transferable or assignable by the undersigned.
(f) This Agreement shall be governed by and construed in accordance with the laws of the State
of California applicable to contracts made and to be performed entirely within such state, without regard to
its choice of law provisions.
(g) All pronouns herein and any variations thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural, as the identity of the parties hereto may require.
(h) This Agreement may be executed through the use of separate signature pages or in any number
of counterparts, and each of such counterparts shall, for all purposes, constitute one agreement binding on
all the parties, notwithstanding that all parties are not signatories to the same counterpart.
(i) All capitalized terms used herein and not defined herein shall have the meanings ascribed to
them in the Memorandum.
SIGNATURE PAGE
____________ Notes x $1,000.00 per Note = $___________________

Type of Ownership for entities (check one):
Individual Corporation
Joint Tenants with Right of Tenants by the
Survivorship Entireties
Revocable (Grantor) Trust Partnership

Tenants-in-Common Limited Liability Company
Community Property Individual Retirement
Account
Section 501(c)(3)
Organization
Employee Benefit
Plan
Irrevocable Trust
Other (explain below:)
B-5
The undersigned meets the standards of an investor set forth in the Memorandum because the
undersigned is (please initial all appropriate spaces):
______________(a) A natural person whose individual net worth, or joint net worth along with such
persons spouse, as of the date hereof exceeds $1 million;
_______________(b) A natural person who had individual income in excess of $200,000 in each of
the two most recent years or a joint income with such persons spouse in excess of $300,000 in each of those
years, and has a reasonable expectation of achieving the same income level in the current year;
_______________(c) Any trust, with total assets in excess of $5 million, not formed for the specific
purpose of acquiring the Notes, whose purchase is directed by a sophisticated person who has such knowledge
and experience in financial and business matters that he is capable of evaluating the merits and risks of the
Interests;
_______________(d) A bank (as defined in Section 3(a)(2) of the Act), or any savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of
1934; an insurance company as defined in Section 2(13) of the Act; an investment company registered under
the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of
the Investment Company Act; a Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established
and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5 million; an employee
benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (ERISA), if the
investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank,
savings and loan association, insurance company, or registered investment advisor, or if the employee benefit
plan has total assets in excess of $5 million or if a self-directed plan, with investment decisions made solely by
persons that are Accredited Investors;
_______________(e) A private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940;
_______________(f) An organization described in Section 501(c)(3) of the Internal Revenue
Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose
of acquiring the Interest(s), with total assets in excess of $5 million;
_______________(g) A Manager or executive officer of the Company; or
_______________(h) An entity in which all of the equity owners satisfy one or more of the above
paragraphs.
The following information should be provided by the person making the investment decision
whether on his or her own behalf or on behalf of an entity:
Name of individual making the investment decision:
Name(s) as it (they) will appear on account:
B-6
Investor Social Security or Tax I.D. Number(s):
(If Notes are to be held in Joint Tenancy, both Social Security Numbers are required.)
Country of Citizenship:
A. With respect to the individual or the primary account beneficiary, or grantor, if the investor is a
revocable grantor trust:
Date of Birth:
Home Address:
(Street address only)
City: State: Zip:
E-mail address:
Telephone Number:( ) Telephone Number to
call if there are questions on the information provided on this Subscription Agreement (if
different):( )
Investor Mailing Address (Please check one): ( ) Home
( ) Business
( ) Other
Mailing Address:
City: State: Zip:
Please indicate to whom distributions should be sent, if not to the mailing address set forth
above:
Distribution Address:
Name:
Mailing Address:
City: State: Zip:
Account Number (if applicable):
Employment Information:
Occupation:
Title or position:
Employer Name:
Employer Address:
City: State: Zip:
B-7
Employers telephone number: ( )
Nature of employers business and dates employed (if term of employment is less than one
year, provide the name, address and telephone number of your prior employer and dates employed):
B. To be answered only if the investor is a Trust:

Name of Trustee(s) signing on behalf of the Trust:
Trustees Address:
City: State: Zip:
Trustees telephone number: ( )
Names of any other Trustees:
Date Trust was formed: State:

Is the Trust revocable? Yes No
(Please attach a copy of the Trust Agreement or other evidence authorizing the
Trustee of the Trust to make an investment of this type and authorizing the Trustee of the
Trust to execute the documents to purchase the Notes.)
C. To be answered only if the investor is a corporation:
Date of incorporation: State of incorporation:
Name and Title of Authorized Officer(s):
Principal business of the corporation:

Telephone number: ( )
(Please attach a copy of a properly certified corporate resolution and bylaw provision
authorizing the corporation to make an investment of this type and the officer whose name
appears on the Subscription Agreement to execute the documents to purchase the Notes.)
D. To be answered only if the investor is a Partnership:
Year formed: State of formation:
Number of partners:
Name of General Partner(s) signing on behalf of the Partnership:
B-8
Partnerships telephone number: ( )
Names of any other General Partners:
Are there any Limited Partners? Yes No

Principal business of the Partnership:
(Please attach a copy of the Partnership Agreement or such portion thereof
authorizing the Partnership to make an investment of this type and authorizing the General
Partner whose name appears on the Subscription Agreement to execute the documents to
purchase the Notes.)
E. To be answered only if the investor is an entity not listed in B through D above:
Type of entity:
Year formed: State of formation:
Principals:
Name of representative(s) signing on behalf of the entity:
Principal purpose of the entity:

Entitys telephone number: (__ )
(Please attach evidence of the entitys existence and evidence authorizing the entity to make
an investment of this type and authorizing the representative whose name appears on the
Subscription Agreement to execute the documents to purchase the Notes.)
The undersigned has read and executed this Subscription Agreement on this ____ day of
_________, 2016.
X X
Signature of Subscriber Signature of Joint Subscriber, if any
Print Name of Subscriber (and title, if applicable) Print Name of Joint Subscriber, if any
ACCEPTANCE BY THE COMPANY: _______________________________________

Name and Title ____________________________
Date of Acceptance: ___________________ , 2016
B-9
PLEASE MAKE CHECKS PAYABLE TO VASARI ENERGY.
Return Subscription Agreement to:
Vasari Energy, Inc.

9844 Research Drive, Suite 200
Irvine, CA 92618
WIRE TRANSFER INSTRUCTIONS
Vasari Energy, Inc.

9844 Research Drive, Suite 200
Irvine, CA 92618
Account number: 001020566941

Routing Number: 026009593
Bank of America
500 Newport Center Dr.
Newport Beach, CA 92660
B-10
www.vasarienergy.com

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Private Placement Memorandum

2016 Vasari Energy, Inc. All rights reserved.

Vasari Energy, Inc.

August 10, 2016

Principal Executive Office

NOTICE REGARDING PERSONS RECEIVING AN ELECTRONIC TRANSMISSION OF THIS

THE VASARI NOTES ARE OFFERED SUBJECT TO PRIOR SALE, TO WITHDRAWAL,

EACH PROSPECTIVE PURCHASER IS ENCOURAGED TO ASK QUESTIONS OF, AND

NOTICE TO RESIDENTS OF ALL U.S. STATES

SUMMARY OF THE VASARI NOTES .................................................................................................1

Exhibit A Form of Convertible Note

INDUSTRY AND MARKET DATA

Global cumulative power generation capacity (in GW), 20102020

Note: Other represents waste, geothermal and biomass.

Global annual solar energy installations (in GW), 20102020

Source: Bloomberg New Energy Finance

Total annual investment in global solar capacity (in billions), 20152020

Source: Bloomberg New Energy Finance

Solar Energy Segments

Vasari Energy, Inc.

All figures are in USD FY16E FY17E FY18E FY189E FY20E

MANAGEMENT AND BOARD OF DIRECTORS

Prior to Offering After Offering(1)

RISK FACTORS AND POTENTIAL CONFLICTS OF INTEREST

We may incur substantially more debt in the future.

MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR

NOTE AMOUNT (USD) $:

VASARI ENERGY, INC.

By: __________________________________ By: __________________________________

Name: ________________________________ Name: ________________________________

Title: _________________________________ Title: _________________________________

SUBSCRIPTION AGREEMENT AND INVESTOR REPRESENTATION LETTER

Vasari Energy, Inc.

2. REPRESENTATIONS AND WARRANTIES AND COVENANTS

____________ Notes x $1,000.00 per Note = $___________________

Revocable (Grantor) Trust Partnership

B. To be answered only if the investor is a Trust:

Date Trust was formed: State:

Principal business of the corporation:

Names of any other General Partners:

Are there any Limited Partners? Yes No

Principal purpose of the entity:

ACCEPTANCE BY THE COMPANY: _______________________________________

Date of Acceptance: ___________________ , 2016

Return Subscription Agreement to:

Vasari Energy, Inc.

WIRE TRANSFER INSTRUCTIONS

Vasari Energy, Inc.

Account number: 001020566941

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By: By:

Name: Name:

Title: _ Title: _

Notes x $1,000.00 per Note = $_______