Document:

The Amendment No. 3 to the Reduct Exclusive License and Distribution Agreement

 Exhibit 10.20 
 Execution Copy 
 AMENDMENT No. 3 
 TO 
 EXCLUSIVE LICENSE AND DISTRIBUTION AGREEMENT 
 This Amendment No. 3 (“Amendment No.3”) to that Exclusive License and
Distribution Agreement entered into as of the 3rd day of August 2006, by and between REDUCT NV, a company organized and existing under the laws of
Belgium, with registered office at Molenborglei 42, 2627 Schelle, Belgium (“Reduct” or the “Company”‘). and GEOSPATIAL MAPPING SYSTEMS, INC., a corporation incorporated under the laws of the State of Delaware,
USA, with registered office at 229 Howes Run Road, Sarver, Pennsylvania USA 16055 (‘Geospatial”), as modified and extended by that Agreement entered into as of the 6th day June, 2007 (the “Extension Agreement”) by and among the Company, Geospatial and, for the limited purposes set forth therein, DELTA NETWORKS LIMITED SA, a
company incorporated under the laws of Luxembourg and the owner of the outstanding capital stock of the Company (“Delta Networks”), and Mark A. Smith (“Smith”), and as modified by Amendment No. 1 entered into
as of December 21, 2007 (“Amendment No. 1”) and Amendment No. 2 (“Amendment No. 2”) entered into as of March 21, 2008 (the “License Agreement”) is entered as of
December 18, 2008 (the “Effective Date”) by and among the Company, Geospatial, Delta Networks and Geospatial Holdings Inc. (“GHI”), a Nevada corporation and owner of the outstanding capital stock of Geospatial.
Any capitalized term used but not defined herein shall have the same meaning as in the License Agreement and the term Agreement used in the License Agreement shall mean License Agreement 
 RECITALS 
 WHEREAS, the parties hereto desire to amend the License Agreement to
provide: (i) that within ten (10) days after the Effective Date of this Amendment No, 3, GHI shall pay to Reduct the amount of eighty eight thousand eight hundred fifteen and fifty eight one hundredths euros (€88,815.58) (the
“Outstanding Invoice”); (ii) that Schedule 3.1 of the License Agreement shall be deleted and replaced with a new payment schedule (the “Payment Schedule”); (iii) that GHI shall pay to Reduct the amount of one million five
hundred thousand euros (€1,500,000) subject to the terms stated in Section 7, by no later than March 15, 2009; (iii) that Delta Networks shall have an option to purchase five hundred thousand (500,000) shares in GHI.; and
(iv) for the terms and conditions on which GHI shall acquire from Delta Networks, subject to the execution of a mutually acceptable definitive purchase agreement, one hundred percent (100%) of the outstanding capital stock of Reduct (the
“Reduct Acquisition”). 
 NOW, THEREFORE the parties hereby agree as follows: 
 1. Payment due Within Ten (10) Days after Effective Date. Within ten (10) days after the Effective Date, the current account of eighty eight thousand
eight hundred fifteen and fifty eight one hundredths euros (€88,815.58) is payable to the Company by Geospatial. 
 2. Replacement of Schedule
3.1 by the Payment Schedule. Schedule 3.1 of the License Agreement is hereby deleted and replaced by the payment schedule as outlined below: 

																												
	 Period
	  	2008	  	2009	  	2010	  	2011	  	2012	  	2013	  	2013+	 
	  	  	 Contract
	  	Paid	  	Amt Owed	  	Contract	  	Contract	  	Contract	  	Contract	  	Contract	  	Contract	 
	 Jan
	  	€	 425,0006	  	 	425,000	  	€	0	  	€	0	  	€	0	  	€	 0	  	€	0	  	€	0	  		
	 Feb
	  	€	 0	  	€	 0	  	€	0	  	€	0	  	€	0	  	€	 0	  	€	0	  	€	 0	  		
	 Mar
	  	€	425,000	  	€	425,000	  	€	0	  	 	1,400,000	  	 	1,962,500	  	€	2,253,125	  	€	 2,557,344	  	€	 2,971,695	  	Previous
Mar. + 15	 
%
	 Apr
	  	€	 0	  	€	0	  	€	0	  	€	0	  	€	 0	  	€	 0	  	€	0	  	€	0	  		
	 May
	  	€	 0	  	€	 0	  	€	0	  	€	 0	  	€	0	  	€	0	  	€	0	  	€	0	  		
	 Jun
	  	€	 0	  	€	0	  	€	0	  	€	1,400.000	  	€	1,962,500	  	€	2,253,125	  	€	2,587,344	  	€	 2,971,695	  	Previous
Jun. +15	 
%
	 Jul
	  	€	625,000	  	€	0	  	€	625,000	  	 	0	  	€	0	  	€	0	  	€	0	  	€	0	  		
	 Aug
	  	€	 0	  	€	0	  	€	0	  	€	0	  	€	 0	  	€	0	  	€	0	  	€	 0	  		
	 Sep
	  	€	 0	  	€	0	  	€	0	  	€	1,400,000	  	€	1,962,500	  	€	2,253,125	  	€	 2,587,344	  	€	 2,971,695	  	Previous
Sep. +15	 
%
	 Oct
	  	€	1,487,500	  	€	 0	  	€	1,487,500	  	€	0	  	€	 0	  	€	 0	  	€	0	  	€	 0	  		
	 Nov
	  	€	 0	  	€	 0	  	€	0	  	€	0	  	€	0	  	€	0	  	€	0	  	€	0	  		
	 Dec
	  	€	1,837,500	  	€	0	  	€	1,837,500	  	€	1,400,000	  	€	1,962,500	  	€	2,253,125	  	€	2,587,344	  	€	 2,971,695	  	Previous
Dec. +15	 
%
	 Total
	  	€	4,800,000	  	€	850,000	  	€	3,950,000	  	€	5,600,000	  	€	7,850,000	  	€	9,012,500	  	€	10,349,375	  	€	11,886,781	  	Previous
Year +15	 
%

  

	3.	Amendments to Section 3.1 and Section Prices and Payments of the License Agreement 

 a. Section 3.1 shall be deleted and replaced with the following language: 
 “The payments set forth on Schedule 3.1 are license fees (the “Licence Fees”). Notwithstanding anything in Section 2 of this
Agreement to the contrary, the License Rights and Distribution Rights shall be exclusive within the Territory on the condition that, and only for so long as; (i) Geospatial pays the License Fees set forth in Payment Schedule when due; and
(ii) the Company is not otherwise entitled to terminate the License Rights or Distribution Rights pursuant to any other provision of this Agreement.” 
 b. Section 3.2 shall be deleted and replaced with the following language: 
 (a) The value of orders
placed by Geospatial for standard Company Products, System Accessories, annual maintenance fees and Reduct approved non-standard product developments may be offset against the License Fees paid in the same calendar year. Consultants fees,
operational support fees, taxes and duties, contractual penalties, export charges, travel and accommodation costs and other non-product costs may not be offset against the License Fees. 
  

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 (b) Any License Fee surplus (i.e. that portion of the cumulative License Fee payments within one
calendar year against which no orders for Company Products or System Accessories have been placed) remaining at the end of a calendar year shall not be transferred to the next year. In the event that the order value within one calendar year exceeds
the License Fees paid in that same calendar year, such amounts will be invoiced separately by Reduct, shall not be transferred to the next calendar year and shall be due within thirty days of invoice.” 
 c. Section 3.3 shall be deleted and replaced with the following language: 
 “To the extent not otherwise superseded by the Covenant and the Further Covenant in Clause 8
of the Amendment No.3, the total amount of License Fee for each year will be contractually due at the start of the applicable year, but may be paid pursuant to the schedule set forth in the Payment Schedule. Payments must be received in the bank
account set forth in Section 6.1 of this Agreement on the 15th of the month in which they are due in accordance with the Payment
Schedule.” 
  

	4.	Amendments to Other Sections of the License Agreement. 

 In order to give effect to the new Payment Schedule and terms provided in this Amendment No. 3, the following provisions of the License Agreement are amended as set forth below. 
 a. All references in the License Agreement to “Intercompany Sales” and “Exclusivity fees” are deleted and replaced with the term
“License Fees pursuant to Payment Schedule”. 
 b. Section 6.1 of the License Agreement shall be amended such that the final
sentence which states “The Company shall invoice Geospatial for each shipment when the order is made, and Geospatial shall pay the Company 50% of the amount to be invoiced upon order and 50% in advance of shipment via bank transfer” is
deleted, 
 c. Section 17.2 of the License Agreement shall be deleted and replaced with the following language: 
 “To the extent not otherwise superseded by the Covenant and the Further Covenant in Clause 8 of the Amendment No.3, the expiration or termination of
this Agreement for any reason shall not affect the respective obligations of the Parties which have become fixed by the effective date of such expiration or termination, including but not limited to Geospatial’s obligation to accept delivery of
and pay for all Products ordered by it prior to the effective date of such expiration or termination and/or Geospatial’s obligation as set forth in Amendment No. 3 to pay to the Company the yearly License Fees under the Payment Schedule
due as of start of the applicable year, minus any License Fees paid for that year.” 
 d. Section 24.3 of the License Agreement
shall be deleted and Section 24.4 shall be amended in its second sentence by deleting the words: “, but only so long as necessary until an 

  

 3 

 
arbitrator can be empanelled and adjudicate the need for such relief” and by replacing the last sentence by the words: “The Parties agree that
jurisdiction shall rest exclusively in the courts located in Antwerp, Belgium.” 
 e. Section 1.a of Amendment No. 1 is
amended to read “Geospatial and its engineers shall agree to immediately work with Reduct to design appropriate probes for high pressure applications.” 
 f. Sections 1.b, c and d of Amendment No.1 are hereby deleted. 
 g. Sections 1.b and c of Amendment No.2 are
hereby deleted. 
 h. The Extension Agreement remains in full force and effect. The words ‘Geospatial’ and ‘Geospatial
Corporation’ in its Section 6 are hereby replaced by GHI and GHI shall take all necessary corporate action as described therein or otherwise needed in order to effectuate such share purchase. 
 5. Delta Networks’ option to purchase 500,000 shares in GHI. Delta Networks, at its sole option shall have the right, at any time until October 31,
2013 (the “Option Expiration Date”), to purchase up to five hundred thousand (500,000) shares in GHI (the “Option”) at a price per share of the lower of (i) eighty-five percent (85%) of the
price per share that any stock is sold for in any subsequent round of convertible preferred or common stock financing and (ii) $3.00 (U.S. dollars) and GHI shall take all necessary corporate action to effectuate such share purchase. The Option
shall be exercisable by written notice delivered by Delta Networks to GHI by registered mail or overnight courier at any time until the Option Expiration Date, which notice shall state that Delta Networks intends to exercise its Option and shall
specify the total number of shares in GHI that Delta Networks wishes to purchase. 
 6. Reduct Acquisition. 
 The purchase price for one hundred percent (100%) of the outstanding capital stock of Reduct will be forty million US dollars ($40 million USD) payable as follows:
(a) fifteen million US dollars ($15 million USD) payable in cash at Closing (the “Cash Component”), and (b) twenty five million US dollars ($25 million USD) payable in stock of Geospatial Holdings, Inc. to be issued at
the same value and with the same preferences as the latest round of stock sold by GHI in an offering having an aggregate value of at least twelve million dollars, (the “Stock Component”, collectively with the Cash Component, the
“Purchase Price”). The amount of the Cash Component assumes at the Closing that Reduct will have no cash and no debt reflected on its balance sheet. 
 The Closing will be conditional upon any and all of (i) the Reduct Payment being made, (ii) the payment of the Outstanding Invoice being made, (iii) the payment being made or orders being placed and
prepaid subject to and in accordance with Clause 7, (iv) if applicable, the Order Exception being paid, (v) the Closing occurring by June 15, 2009 (or, subject to Clause 7, by the Extended Closing Date), (vi) the execution of a
definitive purchase agreement, and (vii) Reduct having no accounts receivable reflected on its balance sheet with respect to which either GHI or Geospatial is the payor. 
  

 4 

 7. Closing. The parties hereto agree that the closing of the Reduct Acquisition shall be on or before
June 15, 2009 (the “Closing”); provided, however, that if after expending commercially reasonable efforts, GHI is unable to obtain the financing necessary to achieve the Closing, the Parties agree to extend the date of closing
for three successive three month periods (e.g., September 15, 2009, December 15, 2009) until March 15, 2010 (the “Extended Closing Date”) provided that before each such three month extension period, GHI
shall have paid Reduct one million five hundred thousand euros (€1,500,000) or shall have placed an order for and prepaid the same amount worth of Company Products and/or System Accessories. In any such three month period, should
GHI not have sufficient business to support the payment of the full sum provided in cash, it can pay 50% in cash and 50% with a promissory note with 10% per annum interest, due and payable on or before the Extended Closing Date. If before each
such three months extension period, GHI does not either pay the one million five hundred thousand euros (€1,500,000) on the terms stated above or place an order for and prepay the same amount worth of Company Products and/or System
Accessories or close the Reduct Acquisition on terms set forth herein, the Covenant and Further Covenant shall expire and GHI and Geospatial shall pay such suspended payments due pursuant to the terms of the License Agreement as amended hereby. The
parties acknowledge and agree that beginning immediately after the Effective Date GHI shall use commercially reasonable efforts to raise sufficient monies to consummate the Closing as soon as possible. 
 8. Continuation of GHI Relationship. Delta Networks and Reduct covenant that pending the Closing, provided that the Closing occurs by June 15, 2009 (or,
subject to Clause 7, by the Extended Closing Date), Reduct will continue (except that Reduct shall only act upon an order placed by Geospatial, when payments under the Payment Schedule are made and in case of an order value exceeding the License
Fees paid in that same calendar year, such amounts are invoiced separately and prepaid by Geospatial within thirty days of invoice (the “Order Exception”)) uninterrupted its relationship with GHI and Geospatial as set forth in the License
Agreement and in this Amendment No. 3 (the “Covenant”). Delta and Reduct further covenant, without declaring GHI and/or Geospatial (as the case may be) to be in breach of the License Agreement, to permit GHI and Geospatial to
suspend all payments due to Reduct from Geospatial pursuant to the License Agreement pending the Closing, provided that the Closing occurs by June 15, 2009 (or, subject to Clause 7, by the Extended Closing Date) (the “Further
Covenant”). If the Closing does not occur by June 15, 2009 (or, subject to Clause 7, the Extended Closing Date), and / or no Reduct Payment is made as provided for in Clause 10 hereof, the Covenant and Further Covenant shall
expire and GHI and Geospatial shall pay such suspended payments due pursuant to the terms of the License Agreement as amended hereby and the Parties agree to continue to work in good faith to negotiate and close the Reduct Acquisition on the terms
set forth herein. 
 9. Definitive Agreements. Upon the execution of this Amendment No.3, the parties shall work in good faith to draft and execute
any other definitive agreements necessary to consummate the Reduct Acquisition, which agreements shall contain standard terms, conditions, representations and warranties and other provisions customary and appropriate to the transactions contemplated
hereby (including non-competition provisions, earn out provisions for the principal shareholders of Reduct, and a representation and warranty that at Closing, Reduct will have no cash and no debt on its balance sheet), and will provide that the
Closing shall be subject to certain preconditions, including among other things, satisfactory completion of Reduct due diligence by GHI and satisfactory completion of Geospatial and GHI due diligence by Delta Networks and Reduct. The Parties will
cooperate fully to permit such due diligence as they may reasonably wish to carry out. 
  

 5 

 10. Reduct Payment No later than March 15, 2009 GHI shall make a payment to Reduct in the amount of one
million five hundred thousand euros (€l ,500, 000) on the terms stated in Section 7, above (the “Reduct Payment”). The cash portion of this and future amounts shall be considered a prepayment for an order of Company Products
and/or System Accessories as specified by GHI to Reduct in writing on or after the date of the Reduct Payment. If GHI fails to make the Reduct Payment within such time, the Covenant and Further Covenant shall expire and GHI and Geospatial shall pay
such suspended payments due pursuant to the terms of the License Agreement as amended hereby. 
 11. Board Membership. In connection with the Reduct
Acquisition, substantially contemporaneously with the Closing, GHI shall endeavor to increase the size of its Board of Directors to seven (7) members and shall recommend to its shareholders that they elect Peter Magnus to the GHI Board of
Directors. 
 12.1. Non-Disclosure Obligations. Geospatial and Delta Networks will execute a non-disclosure agreement to regulate the use and
dissemination of confidential information with respect to disclosures to be made under the Reduct Acquisition documentation (the “NDA”) . Each party hereby affirms that the provisions of any earlier confidentiality agreements between
Geospatial and Reduct remain and are in full force and effect. 
 12.2. No Public Announcements. Except as may be required by the Securities Act of
1933, as amended (the “Act”) or the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) or any rules or regulations issued under the Act or the Exchange Act, the parties agree that no party will make public
announcements relating to the existence and contents of this Amendment No3 and the transactions contemplated thereunder, without the prior written approval of the other party. In no event shall a party issue a press release with respect to the
contents of this Amendment No. 3 or the License Agreement without providing the other party an opportunity to review and comment on the same and without obtaining the prior written consent of such other party which consent may not be
unreasonably withheld . 
 13. Disclosure of Information. As of the Effective Date, in return for the Covenant and Further Covenant for the term
agreed herein and extended under the Extended Closing Date, GHI. and Geospatial shall disclose to Reduct all substantial customer contracts and keep Reduct apprised of its efforts in obtaining the financing necessary to achieve the Closing including
where appropriate sharing with Reduct the identity of prospective financing parties; provided, however, that in the event GHI and/or Geospatial shares the identity of such prospective financing parties with Reduct, neither Reduct nor
any of its Affiliates shall contact such financing parties in connection with this Amendment No. 3 or the License Agreement without the prior written consent of GHI. 
 14. Non-Solicitation. From the date of the Reduct Payment and until June 15, 2009 (or, subject to Clause 7, the Extended Closing Date) (the “Non-Solicitation Period”), Delta Networks and its
affiliates, and their respective employees, agents or representatives (collectively, the “Restricted Persons”) shall not directly or indirectly solicit or engage in discussions concerning or negotiations with, or provide any
non-public information to, or otherwise cooperate with, or, 

  

 6 

 
enter into any agreement with or grant any option to do any of the foregoing, with any other person or entity which seeks to acquire, or expresses an
interest in acquiring, all or any substantial part of an equity interest in Reduct or all or any substantial part of the business or assets of Reduct, and Delta Networks shall not enter into a definitive agreement to sell all or a substantial part
of an equity interest in Reduct or all or a substantial part of the business or assets of Reduct during the Non-Solicitation Period, and the Restricted Persons shall refrain from pursuing such further discussions or negotiations with any third
parties during the Non-Solicitation Period, provided that (i) the Outstanding Invoice is paid, (ii) payment is made or a orders are placed and prepaid subject to and in accordance with Clause 7, and (iii) if applicable, payment
of the Order Exception is made. Nothing herein will limit Reduct’s right to engage in any activity, including the disposition of any asset, in the ordinary course of business consistent with past practices. 
 15. Counterparts. This Amendment may be executed in any number of counterparts, and each such counterpart shall for all purposes be deemed an original, and all
such counterparts shall together constitute but one and the same Amendment. 
 16. Effective Date. This Amendment is made effective as of the
Effective Date. 
 IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 3, or caused this Amendment No. 3 to be duly executed by
their respective authorized officers, as of the day and year first above written. 
 Date: December 11, 2008 
  

									
	GEOSPATIAL MAPPING SYSTEMS, Inc.	 		 	GEOSPATIAL HOLDINGS, INC.
					
	By:	 	 /s/ Mark A. Smith
	 		 	By:	 	 /s/ Mark A. Smith

	Name:	 	Mark A. Smith	 		 		 	Mark A. Smith
	Title:	 	CEO	 		 		 	Chief Executive Officer
			
	REDUCT NV	 		 	DELTA NETWORKS LIMITED SA
					
	By:	 	 /s/ Otto Ballintijn
	 		 	By:	 	 /s/ Peter Magnus

		 	Otto Ballintijn	 		 		 	Peter Magnus

  

 7Agreement to Sell and Purchase

 Exhibit 10.32 
 AGREEMENT TO SELL AND PURCHASE 
 THIS
AGREEMENT TO SELL AND PURCHASE (this “Purchase Agreement”) made as of the 14th of September 2007 and effective as of June 30, 2007,
by and between Basin Water, Inc., a Delaware corporation (hereinafter called “Seller”), and VL Capital LLC, a Delaware limited liability company (hereinafter called “Purchaser”). 
 W I T N E S S E T H: 
 WHEREAS, the
Seller and Purchaser previously entered into a binding Equipment Purchase Commitment letter on June 28, 2007 (the “Purchase Letter”), pursuant to which Seller would sell to Purchaser, and Purchaser would purchase from Seller, certain
water treatment units and the right to receive certain fees from clients utilizing such water treatment units; and 
 WHEREAS, the Seller and
Purchaser are entering into this Purchase Agreement to set forth the specific terms and conditions of the sale and purchase of such water treatment units and other property associated therewith, and they intend that this Purchase Agreement shall
supersede and replace the Purchase Letter. 
 NOW, THEREFORE, in consideration of the agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 
 1.
Purchase and Sale. For the consideration hereinafter set forth, but subject to the terms, provisions, covenants and condition herein contained, Seller hereby sells and agrees to convey, and Purchaser hereby purchases and agrees to pay for
those assets described on Exhibit A, which shall hereinafter be described as the “Property.” 
 2. Purchase Price.
The purchase price herein under shall be Five Million Dollars ($4,550,000.00) (hereinafter called the “Purchase Price”). 
 3.
Representations of Purchaser. 
 (a) The Purchaser is a limited liability duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its organization, Delaware, has the power and authority to own its assets and to transact the business in which it is now engaged or proposed to be engaged in, and is duly qualified as a foreign limited liability
company in good standing under the laws of each other jurisdiction in which such qualification is required. 
 (b) The execution, delivery,
and performance by the Purchaser of this Purchase Agreement has been duly authorized by all necessary limited liability company action and do not and will not (1) contravene Purchaser’s certificate of formation, operating agreement or
other organizational documents; (2) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination, or award presently in effect having applicability to Purchaser; (3) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any other agreement, lease, or instrument to which Purchaser is a party or by which it or its properties may be bound or affected; or (4) result in, or require, the
creation or imposition of any lien, upon or with respect to any of the properties now owned or hereafter acquired by Purchaser. 
  

					
	Purchase/Sale Agreement 7/2007	 	Page-1	 	

 (c) This Purchase Agreement is a legal, valid, and binding obligation of the Purchaser, enforceable
against the Purchaser, in accordance with its terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, and other similar laws affecting creditors’ rights generally. 
 (d) The Purchaser is not a party to any indenture, loan, or credit agreement, or to any lease or other agreement or instrument, or subject to any
organizational document or restriction which could have a material adverse effect on the business, properties, assets, operations, or conditions, financial or otherwise, of the Purchaser, or the ability of the Purchaser to carry out its obligations
under this Purchase Agreement. The Purchaser is not in default in any respect in the performance, observance, or fulfillment of any of the obligations, covenants, or conditions contained in any agreement or instrument material to its business to
which it is a party. 
 (e) There is no pending or threatened action or proceeding against or affecting the Purchaser before any court,
governmental agency, or arbitrator, which may, in any one case or in the aggregate, materially adversely affect the financial condition, operations, properties, or business of the Purchaser or the ability of the Purchaser to perform its obligation
under this Purchase Agreement. 
 (f) Each of the representations and warranties set forth above shall be true and correct in all material
respects as of the Closing Date (as defined below) or Seller may, at its option, either waive such misrepresentation or terminate this Purchase Agreement by written notice thereof to Purchaser, in which event the parties shall have no further right
or obligation hereunder. The term “Purchaser” used in this Section 3 shall, to the extent permitted hereby, include any assignee of Purchaser’s interest under this Purchase Agreement. 
 4. Covenants of Seller. 
 (a) Seller
covenants and agrees with Purchaser that, between the date hereof and the Closing Date: 
 (i) Seller will cause the Property
to be maintained and operated in the same manner as it is presently operated and maintained by Seller. 
 (ii) Seller will
cause to be paid all taxes and assessments heretofore levied or assessed against the Property or any part thereof, including ad valorem taxes for the year 2006, and per diem to the Closing Date for the year 2007. It is understood that Purchaser
shall be responsible for all taxes and assessments levied or assessed against the Property on and after the Closing Date. 
 (iii) Seller will not, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, remove any equipment forming a part of the Property except such as is replaced by Seller by an article or equal
suitability and value, free and clear of any lien or security interest. 
 (b) Seller covenants and agrees with Purchaser that: 

(i) promptly after the Closing Date, it will send to each client (“Client”) under its water services agreements (“Water
Services Agreements”) a written request for consent to assignment (the “Consent to Assignment”) of certain rights under such Client’s Water Services Agreement in accordance with this Purchase Agreement; and 
  

					
	Purchase/Sale Agreement 8/2007	 	Page-2	 	

 (ii) it shall use commercially reasonable efforts to obtain all Consents to Assignments
from the Clients under the Water Services Agreement within ninety (90) days after the Closing Date. 
 5. The Closing. The
Closing (herein called the “Closing”) of this transaction shall take place on September 7, 2007 at 10:00 a.m. Pacific (said date and time herein called the “Closing Date”). At the Closing: 
 (a) Purchaser and Seller shall execute and deliver this Purchase Agreement. 
 (b) Purchaser shall pay or cause to be paid to an escrow account established by the Escrow Agent (as defined below) by cashier’s
check or wire transfer in immediately available funds an amount equal to Five Hundred Thousand Dollars ($500,000.00) and shall be distributed to Seller in accordance with the terms of the Escrow Agreement (as defined below). 
 (c) Purchaser and Seller shall execute and deliver a Term Loan Agreement in the Form attached hereto as Exhibit B (the “Loan
Agreement”), pursuant to which Seller shall lend to Purchase an aggregate principal amount of Four Million Fifty Thousand Dollars ($4,050,000.00) (the “Loan”), which Loan shall be repaid in 72 monthly installments of Fifty Six
Thousand Two Hundred Fifty Dollars ($56,250.00) beginning on April 1, 2008. Monthly Installments shall be reduced by any amount of charges, maintenance payments, Escrow Agent Fees and or other Fees and Costs required to be paid by Borrower
resulting from this agreement or under the Escrow Agreement. 
 (d) Purchaser and Seller shall execute and deliver a Security
Agreement in the form attached hereto as Exhibit C (the “Security Agreement”), pursuant to which Purchaser shall grant to Seller a first priority security interest and lien in all of the Property, so long as any portion of the Loan
or any other Obligations (as defined in the Security Agreement) shall remain outstanding or payable. 
 (e) Purchaser and
Seller shall execute and deliver an Escrow Agreement in the form attached hereto as Exhibit D (the “Escrow Agreement”) with Zions Bank (the “Escrow Agent”), pursuant to which an escrow account shall be established to which
all payments by Seller’s Clients under the Water Service Agreements shall be sent, and from which (i) certain payments designated as the “Standby Fees” shall be distributed to Purchaser and (ii) certain payments designated
as the “Service Fees” shall be distributed to Seller. 
 (f) Risk of loss, title and right of possession of the
Property sold hereunder shall transfer to Purchaser. Seller shall deliver to Purchaser ready access to the Property and all equipment, books, records, instruments, certificates and documents evidencing or pertaining to title to Property; provided
that, Seller shall not be required to deliver to Purchaser any documents, books or records that constitute confidential and proprietary information of Seller. Transfer of title notwithstanding, Seller hereby reserves a security interest in the
Property until all payments required hereunder shall have been made as more particularly set forth in Section 5(c) of this Purchase Agreement. 
 6. Remedies. In the event that Purchaser shall fail to consummate this Purchase Agreement for any reason, except Seller’s default, Seller may (i) terminate this Purchase Agreement by written notice thereof delivered to
Purchaser on or before the Closing Date, (ii) enforce specific performance of this Purchase Agreement, both 

  

					
	Purchase/Sale Agreement 7/2007	 	Page-3	 	

 
Seller and Purchaser agree that damages would be difficult to ascertain and Seller shall be entitled to liquidated damages or (iii) seek any and all damages
permitted by law resulting from Purchaser’s failure to consummate this Purchase Agreement. 
 7. Further Agreements by Purchaser.

 (a) Purchaser shall inform Seller of existing and threatened litigation, claims, investigations, administrative proceedings or similar
actions affecting Purchaser or the Property. 
 (b) Purchaser shall maintain fire and other risk insurance, public liability insurance and
such other insurance as Seller may reasonably require with respect to the Property, in form, amounts, coverage and with insurance companies reasonably acceptable to Seller. Any Policy shall name Seller as an additional insured on the
Purchaser’s insurance policy relating to the Property and shall waive any rights of subrogation with respect to Seller in connection with such insurance policies. 
 (c) All risk of loss, damage, or personal injury (or wrongful death) of any person, arising out of the client’s use, maintenance, or operation of the Property shall remain with Purchaser. Seller, at its sole cost
and expense and under Seller’s obligations under the Water Services Agreement with the Client, shall comply with all local, state, or federal laws, codes, or regulations relating to the Property and its use (including environmental and safety
laws, codes, and regulations), and makes no warranty or representation with respect thereto. Seller agrees to indemnify and hold Purchaser harmless from and against, and to reimburse Purchaser with respect to, any and all claims, demands, causes of
action, loss, damage, liabilities, costs, and expenses (including attorneys’ fees and court costs) asserted against or incurred by Seller by reason of or arising out of the operation of the property under the WSA with the client, and the
Purchaser shall reimburse and indemnify to Seller with respect to the ownership of the Property subsequent to the Closing Date. 
 (d) In
addition to the obligations required to be performed hereunder by Purchaser at the Closing, Purchaser agrees to perform such other acts, and to execute, acknowledge, and/or deliver subsequent to the Closing such other instruments, documents, and
other materials, as Seller may reasonably request in order to effectuate the consummation of the transactions contemplated herein. 
 (e)
Purchaser shall comply with and be subject to the terms of the Water Service Agreements with respect to its ownership of the Property, including any option to purchase the Property granted to the Clients under such Water Service Agreements.

 8. Proprietary and Confidential Information. 
 (a) The Property is being sold to Purchaser for its sole and exclusive use. The Property may be sold or resold by Purchaser without the express written consent of Seller so long as (i) all amounts outstanding under
the Loan Agreement have been repaid, (ii) the purchaser of the Property shall agree to be bound by the covenants set forth in Section 8(b) below and (iii) the Water Service Agreement relating to such Property is no longer in effect. 
 (b) The Property contains trade secret and other materials that are proprietary to Seller. Purchaser agrees that it shall not modify, translate, reverse
engineer, decompile, disassemble, create derivative works upon, or copy the Property without Seller’s prior written consent, which Seller may withhold in its sole and absolute discretion. Purchaser further agrees that Purchaser shall not open,
examine, or otherwise investigate or manipulate any portion of the Property that bears the legend “Do Not Open,” or similar legend, without Seller’s prior written consent, which Seller may withhold in its sole an absolute discretion,
and that Purchaser shall not remove any proprietary notices, labels, or marks on any portion of the Property. 

  

					
	Purchase/Sale Agreement 8/2007	 	Page-4	 	

 9. Taxes. Seller shall not be liable for any taxes and governmental charges of any kind
whatsoever, whether present or future, federal, state or municipal, including but not limited to sales, use, excise, gross receipts, gross value, property, or similar taxes, that may at any time be assessed or levied against, or with respect to, the
Purchase Price, or the possession, occupation, and/or ownership of any property, or part thereof, involved in the implementation of this Purchase Agreement (excluding any related to the sites at which the Property is located), or any and all general
or special taxes, fees, assessments, and/or charges made by any governmental body for any improvements made to such property, or part thereof, and/or for any services or activities performed hereunder. Wherever applicable, any tax or taxes will be
added as a separate charge to be paid by Purchaser in addition to the Purchase Price provided herein. If Seller is assessed any such taxes, fees, assessments, or charges, said sums shall be paid by Purchaser within thirty (30) days after receipt of
an invoice therefor from Seller. 
 10. Remarketing Rights and Obligations; Right of First Offer. 
 (a) Seller shall, at any time, have the right to repurchase any or all of the Property from Purchaser at a price equal to the greater of (i) fair market
value of such Property to be purchased (as determined by an accounting firm selected by Seller and Purchaser) and (ii) the sum of the remaining payments due to Seller from Purchaser with respect to such Property in accordance with the terms hereof
and the Loan Agreement. In no event shall the purchase price be greater than the amount payable under the purchase option provided to the client under the Water Service Agreements. 
 (b) To the extent any client under a Water Service Agreement terminates such agreement due to default by Seller under such Water Service Agreement,
Seller shall indemnify Purchaser for any and all payments of Standby Fees that are not paid by the client in question, until such time as the Property relating to such terminated Water Service Agreement has been successfully remarketed.
Notwithstanding the foregoing, Seller shall have no duty to indemnify Purchaser for any unpaid Standby Fees not resulting from Seller’s breach of a Water Service Agreement. Seller shall use commercially reasonable efforts to remarket such
Property relating to the terminated Water Service Agreement. Upon a successful placement of the Property, Seller would be paid 10% of the total proceeds for such placement, whether under a lease or sale of the property. The Parties hereto
acknowledge and agree that Seller’s obligation to remarket the Property under this Section 10 is not a guaranty or warranty that such remarketing will be successful. Notwithstanding the foregoing, the Parties agree that, regardless of whether
the Property is remarketed, the balance of the Purchase Price shall remain due and payable from Purchaser to Seller in accordance with Section 5 hereof. 
 (c) Commencing on the Closing Date and continuing for a period of three (3) years thereafter, Seller shall grant Purchaser a right of first offer (the “Right of First Offer”) with respect to the placement of
any potential leases of Property or financing of the placement of any Property by Seller with current or prospective clients. Pursuant to the Right of First Offer, Seller shall notify Purchaser of a potential lease or financing of Seller’s
Property prior to entering into such lease or financing, disclosing the size of the transaction and the name of the client or prospective client. Purchaser shall have ten (10) days after receipt of such notice to provide an offer with respect to
such lease or financing. To the extent that Purchaser fails to provide an offer with respect to such lease or financing prior to the expiration of the ten-day period, Seller shall have the right to negotiate a lease or financing with respect to such
Property with any other party. Upon Seller reaching an agreement with such other party, Seller shall offer such terms to Purchaser. Purchaser shall have five (5) days after receipt to accept such offer terms. If Purchaser fails to respond in such
time period or rejects the offer, then Seller has the right to enter into the agreement with the other party on the terms presented to Purchaser. To the extent Seller enters into a lease or 

  

					
	Purchase/Sale Agreement 7/2007	 	Page-5	 	

 
financing with any party other than Purchaser without complying with the terms of this Section 10(c) or despite the fact that Purchaser was willing to
enter into the agreement on the terms agreed upon with the other party, Seller shall pay to Purchaser 0.25% of the total value of the lease or financing which Seller enters into with a third party. 
 11. Representations and Warranties. Seller represent and warrants that it has good, legal and equitable title in the Property subject to this
Agreement, and that there is no outstanding liens or encumbrances, either recorded or unrecorded, which can or will affect either the transfer of the ownership of the Property subject to this Agreement, or Purchasers ownership of the Property
Subject to this Agreement. Seller specifically warrants and represents that all existing recorded or unrecorded liens or encumbrances have been released and paid in full. Except as specifically set forth herein or in any of the instruments attached
as exhibits hereto, no person acting on behalf of Seller is authorized to make, and by the execution hereof Purchaser hereby acknowledges that no person has made any representation, agreement, statement, warranty, guaranty or promise regarding the
Property, or the transaction contemplated herein, or regarding leases or the zoning, construction, physical condition or other status of the Property, and no representation, warranty, agreement, statement, guaranty or promise, if any, made by any
person acting on behalf of Seller which is not contained herein shall be valid or binding upon Seller. Purchaser acknowledges and agrees that the sale provided for herein is made without any warranty by Seller as to the nature or quality of the
Property; or the development potential of the Property. EXCEPT AS SET FORTH IN THIS PURCHASE AGREEMENT, SELLER IS SELLING THE PROPERTY “AS IS.” SELLER MAKES NO REPRESENTATION OR WARRANTY AS TO THE PROPERTY, WHETHER EXPRESS OR IMPLIED,
INCLUDING WARRANTIES OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. SELLER REPRESENTS THAT THERE ARE NO INFRINGEMENTS OF THIRD PARTY RIGHTS. ALL SUCH WARRANTIES ARE EXPRESSLY ACKNOWLEDGED NOTWITHSTANDING THE GENERALITY OF THE FOREGOING,
SELLER WARRANTS THAT THEY ARE THE OWNERS OF THE PROPERTY THAT IS THE SUBJECT OF THE AGREEMENT, AND WILL NOT SUBSTITUTE OR REPLACE THE PROPERTY, UNLESS WITH PROPERTY WHICH IS SUBSTANTIALLY SIMILAR TO OR IDENTICAL WITH THE PROPERTY. 
 12. Miscellaneous Provisions. 
 (a)
Further Assurances. At any time and from time to time after the date hereof, each Party agrees to take such actions and to execute and deliver such documents as the other Party may reasonably request to effectuate the purposes of this
Purchase Agreement. 
 (b) Assignment. Purchaser shall not assign any of its rights, interests, or obligations under this Purchase
Agreement without the prior written consent of Seller. Subject to the foregoing restriction, this Purchase Agreement and all provisions hereof shall be binding upon, and inure to the benefit of, the Parties hereto and their respective heirs,
successors, legal representatives, and assigns. 
 (c) Amendment. Except as otherwise provided in this Purchase Agreement, neither
this Purchase Agreement nor any provision hereof may be waived, modified, amended, discharged, or terminated except by an instrument in writing signed by both Parties, and then only to the extent set forth in such writing. 
 (d) Entire Agreement. This Purchase Agreement and the agreements provided for herein constitute the entire understanding between the Parties with
respect to the matters set forth herein, and they supercede all prior or contemporaneous understandings or agreements between the Parties with respect to the subject matter hereof, whether oral or written, including the Purchase Letter. 

(e) Notices. Any notice, approval, consent, waiver, or other communication required or permitted to 

  

					
	Purchase/Sale Agreement 8/2007	 	Page-6	 	

 
be given or to be served upon either Party in connection with this Purchase Agreement shall be in writing. Such notice shall be personally served, sent by
facsimile, sent prepaid by registered or certified mail with return receipt requested, or sent by reputable overnight delivery service, such as Federal Express, and shall be deemed given: (a) if personally served, when delivered to the Party to whom
such notice is addressed; (b) if given by facsimile, when sent, provided that the confirmation sheet from sending fax machine confirms that the total number of pages were successfully transmitted; (c) if given by prepaid or certified mail with
return receipt requested, on the date of execution of the return receipt; or (d) if sent by reputable overnight delivery service, such as Federal Express, when received. Such notices shall be addressed to the Party to whom such notice is to be given
at the Party’s address set forth below or as such Party shall otherwise direct in writing to the other Party delivered or sent in accordance with this Section. 
 If to Seller: 
 Basin Water, Inc. 
 8731 Prestige Court 
 Rancho Cucamonga, CA
91730 
 Attn: Chief Financial Officer 
 Fax No.: (909) 481-6801 
 If to Purchaser: 
 Lloyd Ward 
 VL Capital LLC 
 5644 LBJ Freeway, Ste. 201 
 Dallas, TX 75240 
 Fax No.: [                    ] 
 (f) Governing Law. This Purchase Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of
California, without giving effect to any choice of law or conflicts of laws rule or principle that would result in the application of any other laws. 
 (g) Cumulative Rights; Waiver. The rights created under this Purchase Agreement, or by law or equity, shall be cumulative and may be exercised at any time and from time to time. No failure by either Party to
exercise, and no delay in exercising any rights, shall be construed or deemed to be a waiver thereof or of any other right under this Purchase Agreement, nor shall any single or partial exercise by any Party preclude any other or future exercise
thereof or the exercise of any other right. Any waiver of any provision or of any breach of any provision of this Purchase Agreement must be in writing, and any waiver by any Party of any breach of any provision of this Purchase Agreement shall not
operate as or be construed to be a waiver of any other breach of that provision or of any breach of any other provision of this Purchase Agreement. The failure of any Party to insist upon strict adherence to any term of this Purchase Agreement on
one or more occasions shall not be considered or construed or deemed a waiver of any provision or any breach of any provision of this Purchase Agreement or deprive that Party of the right thereafter to insist upon strict adherence to that term or
provision or any other term or provision of this Purchase Agreement. 
 (h) Liberal Construction. This Purchase Agreement constitutes
a fully negotiated agreement among commercially sophisticated Parties, each assisted by legal counsel, and the terms of this Purchase Agreement shall not be construed or interpreted for or against any Party hereto because that Party or its legal
representative drafted or prepared such provision. 
  

					
	Purchase/Sale Agreement 7/2007	 	Page-7	 	

 (i) Severability. If any provision of this Purchase Agreement is invalid, illegal, or
unenforceable, such provision shall be deemed to be severed or deleted from this Purchase Agreement and the balance of this Purchase Agreement shall remain in full force and effect notwithstanding such invalidity, illegality, or unenforceability.

 (j) Good Faith and Fair Dealing. The Parties hereto acknowledge and agree that the performances required by the provisions of this
Purchase Agreement shall be undertaken in good faith, and with each of the Parties dealing fairly with each other. 
 (k) No Third Party
Beneficiaries. Subject to Section 12(b) above, this Purchase Agreement does not create, and shall not be construed to create, any rights enforceable by any person, partnership, corporation, joint venture, limited liability company or other form
of organization or association of any kind that is not a Party to this Purchase Agreement, except to the extent that Seller’s rights may be enforced by a parent company thereof or a subsidiary thereto. 
 (l) Counterparts; Facsimile Execution. This Purchase Agreement may be executed in counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon, provided such signature page is attached to any other
counterpart identical thereto except for having an additional signature page executed by any other Party. Each Party agrees that each other Party may rely upon the facsimile signature of any Party on this Purchase Agreement as constituting a duly
authorized, irrevocable, actual, current delivery of this Purchase Agreement as fully as if this Purchase Agreement contained the original ink signature of the Party supplying a facsimile signature. 
 (m) Disputes. 
 (i) Mediation.
Any dispute or controversy arising out of, under, or in connection with, or in relation to, this Purchase Agreement and/or any amendments thereto, or the breach thereof, which is not resolved informally by prior mutual agreement of the Parties
hereto, shall be submitted to non-binding mediation. Each Party shall pay the fees of its own attorneys and all other expenses connected with presenting its case. Other costs of the mediation, including the mediator fee, the cost of any record or
transcripts of the mediation, and all other fees and costs, shall be borne by equally by the parties. If the matter has not been resolved pursuant to the aforesaid mediation procedure within thirty (30) days of the commencement of such procedure, or
such other period as the parties agree, either Party may seek relief in any court of competent jurisdiction pursuant to California Code of Civil Procedure §1281.8 or any similar statute of an applicable jurisdiction. 
 (ii) Attorneys Fees. If mediation is waived and/or modified in writing by the Parties hereto pursuant to Section 12(m)(i) above, and any Party to
this Purchase Agreement reasonably retains counsel for the purpose of enforcing any provision of this Purchase Agreement, including without limitation the institution of any action or proceeding to enforce any provision of this Purchase Agreement,
or to recover damages if otherwise available hereunder, or to obtain injunctive or other relief by reason of any alleged breach of any provision of this Purchase Agreement, or for a declaration based on a demonstrated necessity of such Party’s
rights or obligations under this Purchase Agreement, or for any other judicial or equitable remedy, then if the matter is settled by judicial or quasi judicial determination, the prevailing Party shall be entitled in addition to such other relief as
may be granted, to be reimbursed by the losing Party for all costs and expenses incurred, including without limitation all attorneys’ fees and costs for services rendered to the prevailing party and any attorneys’ fees and costs incurred
in enforcing any judgment or order entered. The prevailing Party shall be determined by the court in the initial or any subsequent proceeding. 
  

					
	Purchase/Sale Agreement 8/2007	 	Page-8	 	

 (n) Venue. Venue for any mediation, action or proceeding brought pursuant to Section 12(m) above
shall be before a state or federal court, tribunal, or magistrate located in the County of San Diego, State of California. 
 (o) Force
Majeure. If any performance (other than the payment of money due hereunder) of this Purchase Agreement is prevented, delayed, or made impracticable due to extended drought, flood, fire, earthquake, or other natural disaster, strike, lock out,
unavailability of necessary materials, electrical power or fuel, civil rioting, terrorist attack, war or military conflict, inability to obtain all necessary permits or approvals (including any and all environmental approvals), or if the cost of
complying with environmental requirements renders this transaction economically impractical (collectively a “Force Majeure Event”), then such performance (except for the payment of money due hereunder) of this Purchase Agreement shall be
excused for the period of prevention, delay, or impracticability resulting from the Force Majeure Event. 
 (p) Relationship. Seller
is an independent contractor and the relationship between the Parties shall be limited to performance of this Purchase Agreement in accordance with its terms. Neither Party shall have any responsibility with respect to the services to be provided or
contractual benefits assumed by the other Party. Nothing in this Purchase Agreement shall be deemed to constitute either Party a partner, agent or legal representative of the other Party. No liability or benefits, such as workers’ compensation,
pension rights or liabilities, other provisions or liabilities arising out of or related to a contract for hire or employer/employee relationship, shall arise or accrue to any Party’s agent or employee as a result of this Purchase Agreement or
its performance. 
 [Signature Page follows] 
  

					
	Purchase/Sale Agreement 7/2007	 	Page-9	 	

 IN WITNESS WHEREOF, this Purchase Agreement is executed in multiple originals by Seller and Purchaser as of the date
first above written. 
  

			
	SELLER:
	
	Basin Water, Inc.
	
	 /s/ Thomas C. Tekulve

	Name:	 	Thomas C. Tekulve
	Title:	 	Chief Financial Officer
		 	

  

			
	PURCHASER:
	
	VL Capital LLC
	
	 /s/ Lloyd Ward

	Name:	 	Lloyd Ward
	Title:	 	Manager

  

					
	Purchase/Sale Agreement 8/2007	 	Page-10

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