Clavet Trial Testimony

'1 Worked On. .. Electr1CltY Maine was in the process of being SOld. Before efore we talked about the marina, 5 we had sold ElectriCity Maine, and that was a big process. Whom did you sell it to? We sold it to a publicly traded company out of Texas called Spark, and at that time, we had an operation in Maine, New Hampshire, and Massachusetts. So they bought Electricity Maine. i Not Massachusetts or New Hampshire? Ji They bought all three books of business. I refer to it as Electricity Maine, but there was also ENH Power, which was in New Hampshire, and Provider Power Mass, which was in Massachusetts. So did Spark buy all of your retail electricity business? Spark bought, yes, and they had kept Kevin and I on for a one?year consulting agreement after the sale. So we had that in play as well as our other various businesses that were still operating. And was there an earn?out under your agreement with Spark? Yes The way Spark had structured the deal, there was and then there was a certain amount that i a certain bas 55 1 be earned, and they built a grid and it was based 2 on the price per kilowatt and the number of customers 3 that were retained or grown over a certain period of 4 time, and if you hit milestones, they would look to pay 5 more. It was it was a format I guess that they use 6 quite regularly. 7 SO so many customers at this price, so many customers 8 at that price? 9 A So many customers with a certain profit margin. 10 Okay. And did you and Kevin talk about those 11 milestones? 12 A Yeah. We talked about the milestones. It was a little 13 bit discouraging because, you know, to get anywhere is 14 really with it, you had to sell a lot of electricity at a pretty strong price compared to what the current market was to a fair number of customers using, you know, a method, which for us was mostly direct mail that yielded very few results because the thing about the electricity business and the customers is we already had such a good percentage of customers that mathematically, there are only so many customers to get. So once we have so many trying to get more is incrementally more difficult because it's not a growing pool. It's fixed. So we had at one point, one out of every four homes in Maine. Well, getting anything more a- 973)406?2250 I <2th I Mamet 56 than that was very expensive and very difficult. Spark had given us a budget to go out and market and try to get those new incremental customers, but it was kind of like banging your head against the wall because getting those extra customers -- for example, we do a mailing and expect to get a two percent return, two or three percent return, historically. That's a return on what a direct mail campaign would be, and the returns were dropping to much below that. And then we were trying to get a certain margin, which was fixed at an electricity rate that had been set during times of price spikes in our polar vortex. I don't if you remember that word? And prices were coming down, so it was more difficult to maintain a margin because the new market or the current market had lower rates. So you were trying to get a diminishing pool with diminishing results in a method we had used to get incremental customers in a price that -- a product that was priced pretty high. So we had talked even about -- Kevin and I talked, and Kevin had gone back, I think to Nathan (phonetic) because Spark even with an idea that we had that why would we spend a million of their dollars in marketing to try to get these incremental customers in a futile effort, when maybe instead of spending a million B- ng-w ?up . 57 dollars on marketing, they -- we split it, and they give us half a million, and they can keep the other half because this isn't going to work, but Nathan said that it was the way he had proposed it to his board and gotten it accepted and he couldn't change itlive with what we had. And what were yours and Kevin's respective involvement in pursing that (indiscernible)? Well, we were both MR. ROSENTHAL: Object, Your Honor. I'm not sure what -he relevance is. THE COURT: Mr. Ruprecht? MR. RUPRECHT: Your Honor, Mr. Dean, I expect is going to ome in and say that Mr. Clavet was not at all involved in the .usiness and that THE COURT: In the Electricity Maine buyout or just any of the businesses? MR. RUPRECHT: In their overall business. THE COURT: Okay. I'll allow it briefly. BY MR. RUPRECHT: So briefly. A Briefly, Kevin was managing some of the day?to-day mailing and campaign to try to mail to folks to get customers. I was working with Nathan, the president of Spark, to try to get him into a national contract with mammal58 the to see if we could get a big bunch of customers all at once, which was kind of the onlY chance I thought we had to get any volume of anY 5123' The sale of the hotels, when was that completed? Oh, I forget, but I'm going to think it was '14, '15, maybe '15. Okay, And so would events that happened in '15, when ..-- - . '1f- wand.)- (Misha .mm-uuwmu?m? would those be? When would you pay taxes on those, you and Kevin? Well, we normally get our taxes done by late. You know, we have so many returns. There -- there there are a lot. We don't generally get anything done until October. So October of '16 would be the taxes for 2015? Right. Okay. And were any tax issues that needed to be worked out regarding the sale of those hotels? There were taxes that we're always keeping in mind. There was a tax bill that would be coming that we would prepare for and we would be thinking about tax strategy throughout the year. And overall from the sale of Spark, what was that effect on you and Kevin financially? It was good. I mean, we had you know, we had sold the hotels. We had some cash. We had sold a lot of a-