SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT is made as of June 18, 2018 by and among David King
(“Assignor”), Water Now, Inc. (the “Company”), and ____________________
(“Lender”).

 

Recitals

 

Lender has agreed to make a loan to the Company in the principal amount of
$62,500.00 (“Loan”). Lender has required, as a condition precedent to making the
Loan, that Assignor execute and deliver this Security Agreement and Assignor has
agreed to this Security Agreement.

 

Agreements

 

NOW, THEREFORE, in consideration of these premises, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Assignor, the Company and Lender agree as follows:

 

1) DEFINITIONS AND GENERAL RULES OF CONSTRUCTION

 

a) Definitions. In this Agreement, all defined terms are capitalized and have
the meaning given on Exhibit A attached hereto and made a part hereof.

 

b) Accounting Terms. All accounting terms not specifically defined herein shall
have the meanings assigned to them as determined by generally accepted
accounting principles, consistently applied.

 

c) UCC Terms. All terms used in this Agreement that are defined in the Maryland
Uniform Commercial Code shall have the meanings ascribed to them therein, unless
specifically defined otherwise in this Agreement.

 

d) Tense; Gender; Section Headings. In this Agreement, the singular includes the
plural and vice versa. Each reference to any gender also applies to any other
gender. The Section headings are for convenience only and are not part of this
Agreement.

 

2) SECURITY

 

a) Grant of Security Interest. To secure the payment of the Liabilities and the
payment and performance of all of the Company’s obligations under the Promissory
Note, Assignor hereby grants to Lender a security interest in the Collateral.

 

b) Future Advances. The security interest granted by this Agreement secures
future advances.

 

c) Perfection of Security Interest. Assignor authorizes Lender to file financing
statements, financing statement addenda, continuation statements and financing
statement amendments in such form and in such filing offices as Lender may
require to perfect or to preserve, maintain or continue the perfection of the
security interest in the Collateral and its priority. Lender shall pay the costs
of filing any financing statement, financing statement addendum, continuation
statement or termination statement as well as any recordation or transfer tax
required by law to be paid in connection with the filing or recording of any
such document. A carbon, photographic, or other reproduction of this Agreement
is sufficient as a financing statement. Assignor shall not file any amendments,
correction statements or termination statements concerning the Collateral
without the prior written consent of Lender.

 

d) Power of Attorney. Assignor hereby appoints Lender or any officer of Lender
as Assignor’s attorney in fact for purposes of endorsing Assignor’s name on any
such requests to be delivered to other secured parties of Assignor, which power
of attorney is coupled with an interest and irrevocable. 

  

 

3) REPRESENTATIONS AND WARRANTIES

 

a) Representations and Warranties. Assignor, and each Person acting on behalf of
Assignor in executing this Agreement, represents and warrants to Lender as
follows:

 

i)       Reservation of Collateral. Assignor has reserved for issuance to the
Lender the Collateral on the stock transfer records of the Assignor; and

 

ii)       Binding Agreement. This Agreement constitutes the valid and legally
binding obligation of Assignor, enforceable in accordance with its terms.

 

b) Continuing Nature of Representations and Warranties. Assignor hereby
represents, warrants, covenants and agrees that the representations and
warranties made by Assignor in Section 3.1 shall remain true and accurate in all
respects throughout the term of the Loan.

 

4) AFFIRMATIVE COVENANTS

 

Until payment in full of all of all amounts due and owing under the Loan:

 

a) Title to Collateral; Stock Splits. Assignor shall defend its title to the
Collateral against all Persons and, upon request of Lender, shall furnish such
further assurances of title as may be required by Lender. The Collateral shall
be adjusted on the books and records of the Company should the Company undertake
a split of any kind of its common stock, no par value.

 

b) Books, Records, and Inspections. The Company at all times shall maintain
accurate and complete books and records pertaining to the operation, business,
and financial condition of the Company and pertaining to the Collateral; (b) at
all reasonable times and without hindrance or delay, shall permit Lender or any
Person designated by Lender to enter any place of business of the Company or any
other premises where any books, records, and other data concerning the Company
or the Collateral may be kept and to examine, audit, inspect, and make extracts
from and photocopies of any such books, records, and other data; and (c) shall
mark its books and records in a manner satisfactory to Lender so that Lender’s
rights in and to the Collateral will be shown.

 

 

5) DEFAULT AND REMEDIES

 

a) Events of Default. The occurrence of any of the following events shall
constitute an Event of Default under this Agreement:

 

i)       Failure to Pay. The Company fails to pay when due any the Loan, after
giving effect to any applicable notice and/or cure periods.

 

ii)       Failure to Perform. Assignor fails to observe or perform any covenant
or agreement contained in this Agreement and fails to cure the same within ten
(10) days following written notice from Lender.

 

b) Remedies of Lender. Upon the occurrence of any Event of Default, in addition
to all other rights and remedies available to Lender under applicable law,
Lender shall have the following rights and remedies:

 

i)       Sale of Collateral. Lender shall have all of the rights and remedies of
a secured party under the Texas Uniform Commercial Code and other applicable
laws. Upon demand by Lender, Assignor shall assemble the Collateral and make it
available to Lender at a place designated by Lender which is mutually convenient
to both parties. Lender or its agents may enter upon Assignor premises to take
possession of the Collateral, to remove it, to render it unusable, or to sell or
otherwise dispose of it, all without judicial process or proceedings. Lender
shall have no obligation to clean up or otherwise to prepare the Collateral for
sale. Any written notice of the sale, disposition, or other intended action by
Lender with respect to the Collateral which is required by applicable laws and
is sent by certified mail, postage prepaid, to Assignor at the address of
Assignor, or such other address of Assignor which may from time to time be shown
on Lender’s records, at least 10 calendar 

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days prior to such sale, disposition, or other action, shall constitute
reasonable notice to Assignor. Lender, without adversely affecting the
commercial reasonableness of any sale of the Collateral, (a) may comply with any
applicable state or federal law requirements in connection with a disposition of
the Collateral, and (b) may refuse to give or may disclaim any warranties of
title or the like. Any proceeds of sale or other disposition of the Collateral
shall be applied by Lender to the payment of Liquidation Costs and Expense
Payments, and any balance of such proceeds will be applied by Lender to the
payment of the remaining Liabilities, whether or not then due, in such order and
manner of application as Lender may from time to time in its sole discretion
determine. If the sale or other disposition of the Collateral fails to satisfy
fully the Liabilities, Assignor shall remain liable to Lender for any
deficiency. If Lender sells any of the Collateral on credit, Assignor shall be
credited only with payments actually made by the purchaser, received by Lender
and applied to the indebtedness of the Company. If the Company defaults in
making payments to Lender, then Lender may resell the Collateral and apply the
proceeds of such resale to the Liabilities in accordance with this paragraph.

 

ii)       Set-Off. Lender may set-off any amounts in any account or represented
by any certificate with Lender only in the name of the Company.

 

iii)       Other Remedies. Lender may pursue such other remedies, including
actions for specific performance and damages, or permitted by law, which Lender
may deem appropriate, it being specifically understood and agreed that any
remedies may be exercised in the alternative or cumulatively in the sole
discretion of Lender.

 

iv)       Liquidation Costs. The Company shall reimburse and pay to Lender upon
demand all Liquidation Costs, including without limitation reasonable attorneys’
fees and expenses, advanced, incurred by, or on behalf of Lender in collecting
and enforcing the Liabilities. All Liquidation Costs shall bear interest payable
by the Company to Lender upon demand from the date advanced or incurred until
paid in full at a per annum rate of interest equal the default rate of interest
described in the Note.

 

v)       No Waiver, Etc. No failure or delay by Lender to insist upon the strict
performance of any term, condition, covenant, or agreement of this Agreement, or
to exercise any right, power, or remedy consequent upon a breach thereof, shall
constitute a waiver of any such term, condition, covenant, or agreement or of
any such breach, or preclude Lender from exercising any such right, power, or
remedy at any later time or times. By accepting payment after the due date of
any amount payable under this Agreement, Lender shall not be deemed to waive the
right either to require prompt payment when due of all other amounts payable
under this Agreement or to declare an Event of Default for failure to effect
such prompt payment of any such other amount.

 

6) MISCELLANEOUS

 

a) Notices. All notices, demands, requests and other communications required
under this Agreement shall be in writing and shall be deemed to have been
properly given if sent by hand delivery, Federal Express (or similar overnight
courier service), or by United States certified mail (return receipt requested),
postage prepaid, addressed to the party for whom it is intended at its address
hereinafter set forth:

 

If to Assignor and Company to: David King

                                                  Attn: dking@waternowinc.com

 

 

 

If to Lender to:                    _____________________

_____________________

Attn: ___________________

 

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 Notice shall be deemed given as of the date of hand delivery, as of the date
specified for delivery if by overnight courier service or as of 2 days after the
date of mailing, as the case may be.

 

b) Liability of Lender. Lender, by the acceptance and performance of this
Agreement, does not assume any liability, and Assignor hereby releases Lender
and Lender’s agents, employees and attorneys from any such liability, and no
claim shall be made by Assignor upon Lender or such employees or agents for or
on account of any matter or thing.

 

c) Survival of Agreements. All agreements, covenants, representations, and
warranties of Assignor made in this Agreement shall survive the making of the
advances under this Agreement.

 

d) Successors. This Agreement shall be binding upon and inure to the benefit of
Assignor, its successors, and those assigns approved in writing by Lender, and
upon and to Lender, its successors and assigns.

 

e) Applicable Law. This Agreement is made, executed, and delivered in the State
of Texas, and Texas law shall govern its interpretation, performance, and
enforcement.

 

f) Assignment not Effective. Any attempted assignment or transfer of Assignor’s’
rights under this Agreement without the prior written consent of Lender shall be
void.

 

g) Obligations of Assignors. Assignor’s obligations and representations under
this Agreement shall be in addition to all obligations, covenants, and
representations made by or on behalf of Assignor in all other documents
delivered in connection with the Loan and the transactions contemplated hereby.

 

h) No Oral Modification. Neither this Agreement nor any term, condition,
representation, warranty, covenant, or agreement set forth in this Agreement may
be changed, waived, discharged, or terminated orally but only by an instrument
in writing by the party against whom such change, waiver, discharge, or
termination is sought.

 

i) Severability. If any provision or part of any provision of this Agreement
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or part thereof had never been
contained herein, but only to the extent of its invalidity, illegality, or
unenforceability.

 

j) Time. Time is of the essence of all of Assignor’s obligations under this
Agreement. 

 

7) CONSENTS AND WAIVERS

 

a) Consent to Jurisdiction. Assignor and the Company consent to the nonexclusive
jurisdiction of any and all state and federal courts in the State of Texas with
jurisdiction over Assignor and the Company. Assignor and the Company agree that
any controversy arising under or in relation to this Agreement shall be
litigated exclusively in the State of Texas. The state and federal courts and
authorities with jurisdiction in the State of Texas shall have nonexclusive
jurisdiction over all controversies which may arise under or in relation to this
Agreement. Assignor and the Company irrevocably consent to service,
jurisdiction, and venue of such courts for any litigation arising from this
Agreement, and waive any other venue to which it might be entitled by virtue of
domicile, habitual residence or otherwise.

 

b) Jury Trial Waiver. Assignor, the Company and Lender hereby waive trial by
jury in any action or proceeding to which Assignor, the Company or Lender may be
parties, arising out of or in any way pertaining to this Agreement. It is agreed
and understood that this waiver constitutes a waiver of trial by jury of all
claims against all parties to such actions or proceedings, including claims
against parties who are not parties to this Agreement. This waiver is knowingly,
willingly and voluntarily made by Assignor, the Company and Assignor and the
Company hereby represent that no representations of fact or opinion have been
made by any individual to induce this waiver of trial by jury or to in any way
modify or nullify its effect. Assignor and the Company further represent that it
has been represented in the signing of this Agreement and in the making of this
waiver by independent legal counsel, selected of its own free will, and that it
has had the opportunity to discuss this waiver with counsel.

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IN WITNESS WHEREOF, Assignor, the Company and Lender have caused this Agreement
to be executed as of the date first above written.

 

  ASSIGNOR:                                                   By:   Name:  David
King                   LENDER:

 

 

 

 

 

By:
Name:

          COMPANY:       WATER NOW, INC.   a Texas corporation    
                                        By:          Name:  David King  
       Title: CEO   

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Definitions

 

 

Agreement means this Security Agreement, including all schedules and exhibits
hereto, as it may be amended, restated, extended, consolidated or increased from
time to time.

 

Assignor means David King in his individual capacity.

 

Collateral means 100,000 shares of Assignor’s common stock, no par value.

 

Event of Default means any of those events described in Section 5.1 of this
Agreement.

 

Liabilities means the obligation of Water Now, Inc. to pay all amounts owed
under the Note.

 

Lien means any mortgage, deed of trust, pledge, security interest, assignment,
encumbrance, lien, or charge of any kind, including without limitation any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing statement under
the Uniform Commercial Code of any jurisdiction.

 

Liquidation Costs means all expenses, charges, costs, and fees (including
without limitation attorneys’ fees and expenses) of any nature whatsoever paid
or incurred by or on behalf of Lender in connection with the collection or
enforcement of any of the Liabilities.

 

Loan means the loan in the principal amount of $62,500 made by Lender to Water
Now, Inc.

 

Note means that certain Convertible Promissory Note by and between Lender and
Water Now, Inc. dated as of June 18, 2018.

 

Person means an individual, an estate, a trust, a corporation, a partnership, a
limited liability company, a government or governmental agency or
instrumentality and any other legal entity.

 

 

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