Document:

WELLS FARGO & COMPANY 8-K

 

Exhibit 4.5

 

[Face of Note]

 

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

 

	
CUSIP NO. 95001HC25

	
FACE AMOUNT: $_________

	
REGISTERED NO. ___

	
 

 

WELLS FARGO FINANCE LLC

 

MEDIUM-TERM NOTE, SERIES A

Fully and Unconditionally Guaranteed by Wells Fargo & Company

 

Principal at Risk Securities Linked to the S&P 500® Index
due November 5, 2025

 

WELLS FARGO FINANCE LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (hereinafter called the “Company,” which term includes any successor corporation under and as defined in the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & Co., or registered assigns, an amount equal to the Maturity Payment Amount (as defined below), in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, on the Stated Maturity Date, unless this Security is automatically called as provided below under “Automatic Call.”  The “Initial Stated Maturity Date” shall be November 5, 2025.  If the Final Calculation Day (as defined below) is not postponed, the Initial Stated Maturity Date will be the “Stated Maturity Date.”  If the Final Calculation Day is postponed, the “Stated Maturity Date” shall be the later of (i) the Initial Stated Maturity Date and (ii) three Business Days (as defined below) after the Final Calculation Day as postponed.  This Security shall not bear any interest. 

 

Any payments on this Security at Maturity will be made against presentation of this Security at the office or agency of the Company maintained for that purpose in the City of Minneapolis, Minnesota and at any other office or agency maintained by the Company for such purpose. 

 

“Face Amount” shall mean, when used with respect to this Security, the amount set forth on the face of this Security as its “Face Amount.”

 

 

 

Automatic Call

 

If the Closing Level (as defined below) of the Index (as defined below) on any of the Call Dates (as defined in the table below) is greater than or equal to the Starting Level (as defined below), this Security will be automatically called, and on the related Call Settlement Date (as defined below) the Holder hereof will receive the Face Amount of this Security plus the Call Premium (as defined in the table below) applicable to the relevant Call Date (together, the “Call Price”).  Unless the Company defaults in the payment of the Call Price, this Security will cease to be outstanding on such Call Settlement Date, and the Holder hereof will have no further rights under this Security after such Call Settlement Date.  The Holder hereof will not receive any notice from the Company in the event this Security is automatically called pursuant to the terms hereof.

 

The Call Dates and the related Call Premiums are as follows:

 

	
Call Date

	
Call Premium

	
 

	
 

	
November 2, 2020

	
5.60% of the Face Amount of this Security

	
November 1, 2021

	
11.20% of the Face Amount of this Security

	
October 31, 2022

	
16.80% of the Face Amount of this Security

	
October 31, 2023

	
22.40% of the Face Amount of this Security

	
October 31, 2024

	
28.00% of the Face Amount of this Security

 

The Call Dates are subject to postponement for non-Trading Days and the occurrence of a Market Disruption Event.  See the definition of “Calculation Days” below.

 

The “Call Settlement Date” for a Call Date shall be three Business Days after such Call Date, as such Call Date may be postponed as provided herein.

 

Payment of the Call Price, if any, will be made in such coin or currency of the United States of America as at the time is legal tender for payment of public and private debts.

 

Determination of Maturity Payment Amount and Certain Definitions

 

If this Security is not automatically called as provided above under “Automatic Call,” the “Maturity Payment Amount” of this Security will equal:

 

	
 

	
●

	
if the Ending Level is greater than or equal to the Starting Level: the Face Amount plus the greater of:

 

	
 

	
(i)

	
the Maturity Date Premium; and

 

	 	(ii)	

 

	
 

	
●

	
if the Ending Level is less than the Starting Level but greater than or equal to the Threshold Level: the Face Amount; or

 

2

 

	
 

	
●

	
if the Ending Level is less than the Threshold Level: the Face Amount minus:

 

 

All calculations with respect to the Maturity Payment Amount or Call Price, as applicable, will be rounded to the nearest one hundred-thousandth, with five one-millionths rounded upward (e.g., 0.000005 would be rounded to 0.00001); and the Maturity Payment Amount or Call Price, as applicable, will be rounded to the nearest cent, with one-half cent rounded upward.

 

“Index” shall mean the S&P 500® Index.

 

The “Pricing Date” shall mean October 28, 2019.

 

The “Starting Level” is 3010.29, the Closing Level of the Index on October 24, 2019.

 

The “Closing Level” of the Index on any Trading Day means the official closing level of the Index reported by the Index Sponsor (as defined below) on such Trading Day, as obtained by the Calculation Agent on such Trading Day from the licensed third-party market data vendor contracted by the Calculation Agent at such time; in particular, taking into account the decimal precision and/or rounding convention employed by such licensed third-party market data vendor on such date, subject to the provisions set forth below under “Market Disruption Events,” “Adjustments to the Index” and “Discontinuance of the Index.”

 

The “Ending Level” will be the Closing Level of the Index on the Final Calculation Day.

 

The “Threshold Level” is 2709.261, which is equal to 90% of the Starting Level.

 

The “Participation Rate” is 100%.

 

The “Final Calculation Day” is October 31, 2025, subject to postponement for non-Trading Days and the occurrence of a Market Disruption Event.  See the definition of “Calculation Days” below.

 

The “Maturity Date Premium” is 33.60% of the Face Amount of this Security.

 

“Business Day” shall mean a day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in New York, New York.

 

A “Trading Day” means a day, as determined by the Calculation Agent, on which (i) the Relevant Stock Exchanges with respect to each security underlying the Index are scheduled to be open for trading for their respective regular trading sessions and (ii) each Related Futures or Options Exchange is scheduled to be open for trading for its regular trading session.

 

3

 

The “Relevant Stock Exchange” for any security underlying the Index means the primary exchange or quotation system on which such security is traded, as determined by the Calculation Agent.

 

The “Related Futures or Options Exchange” for the Index means an exchange or quotation system where trading has a material effect (as determined by the Calculation Agent) on the overall market for futures or options contracts relating to the Index.

 

The “Calculation Days” shall mean each of the Call Dates and the Final Calculation Day.  If any Calculation Day is not a Trading Day, such Calculation Day will be postponed to the next succeeding Trading Day.  A Calculation Day is also subject to postponement due to the occurrence of a Market Disruption Event (as defined below). If a Market Disruption Event occurs or is continuing with respect to the Index on a Calculation Day, such Calculation Day will be postponed to the first succeeding Trading Day on which a Market Disruption Event has not occurred and is not continuing; however, if such first succeeding Trading Day has not occurred as of the eighth Trading Day after the originally scheduled Calculation Day, that eighth Trading Day shall be deemed to be the Calculation Day.  If a Calculation Day has been postponed eight Trading Days after the originally scheduled Calculation Day and a Market Disruption Event occurs or is continuing on such eighth Trading Day, the Calculation Agent will determine the Closing Level of the Index on such eighth Trading Day in accordance with the formula for and method of calculating the Closing Level of the Index last in effect prior to commencement of the Market Disruption Event, using the closing price (or, with respect to any relevant security, if a Market Disruption Event has occurred with respect to such security, its good faith estimate of the value of such security at the Scheduled Closing Time of the Relevant Stock Exchange for such security or, if earlier, the actual closing time of the regular trading session of such Relevant Stock Exchange) on such date of each security included in the Index.  As used herein, “closing price” means, with respect to any security on any date, the Relevant Stock Exchange traded or quoted price of such security as of the Scheduled Closing Time of the Relevant Stock Exchange for such security or, if earlier, the actual closing time of the regular trading session of such Relevant Stock Exchange.

 

“Calculation Agent Agreement” shall mean the Calculation Agent Agreement dated as of May 18, 2018 between the Company and the Calculation Agent, as amended from time to time.

 

“Calculation Agent” shall mean the Person that has entered into the Calculation Agent Agreement with the Company providing for, among other things, the determination of whether this Security will be automatically called on any of the Call Dates, the Call Price, if any, the Ending Level and the Maturity Payment Amount, which term shall, unless the context otherwise requires, include its successors under such Calculation Agent Agreement.  The initial Calculation Agent shall be Wells Fargo Securities, LLC.  Pursuant to the Calculation Agent Agreement, the Company may appoint a different Calculation Agent from time to time after the initial issuance of this Security without the consent of the Holder of this Security and without notifying the Holder of this Security.

 

4

 

Adjustments to the Index

 

If at any time the method of calculating the Index or a Successor Equity Index, or the closing level thereof, is changed in a material respect, or if the Index or a Successor Equity Index is in any other way modified so that such index does not, in the opinion of the Calculation Agent, fairly represent the level of such index had those changes or modifications not been made, then the Calculation Agent will, at the close of business in New York, New York, on each date that the closing level of such index is to be calculated, make such calculations and adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a level of an index comparable to the Index or Successor Equity Index as if those changes or modifications had not been made, and the Calculation Agent will calculate the closing level of the Index or Successor Equity Index with reference to such index, as so adjusted. Accordingly, if the method of calculating the Index or Successor Equity Index is modified so that the level of such index is a fraction or a multiple of what it would have been if it had not been modified (e.g., due to a split or reverse split in such equity index), then the Calculation Agent will adjust the Index or Successor Equity Index in order to arrive at a level of such index as if it had not been modified (e.g., as if the split or reverse split had not occurred).

 

Discontinuance of the Index

 

If the sponsor or publisher of the Index (the “Index Sponsor”) discontinues publication of the Index, and the Index Sponsor or another entity publishes a successor or substitute equity index that the Calculation Agent determines, in its sole discretion, to be comparable to the Index (a “Successor Equity Index”), then, upon the Calculation Agent’s notification of that determination to the Trustee and the Company, the Calculation Agent will substitute the Successor Equity Index as calculated by the Index Sponsor or any other entity and calculate the Ending Level or the Closing Level on any Calculation Day as described above. Upon any selection by the Calculation Agent of a Successor Equity Index, the Company will cause notice to be given to the Holder of this Security.

 

In the event that the Index Sponsor discontinues publication of the Index prior to, and the discontinuance is continuing on, a Calculation Day and the Calculation Agent determines that no Successor Equity Index is available at such time, the Calculation Agent will calculate a substitute Closing Level for the Index in accordance with the formula for and method of calculating the Index last in effect prior to the discontinuance, but using only those securities that comprised the Index immediately prior to that discontinuance.  If a Successor Equity Index is selected or the Calculation Agent calculates a level as a substitute for the Index, the Successor Equity Index or level will be used as a substitute for the Index for all purposes, including the purpose of determining whether a Market Disruption Event exists.

 

If on a Calculation Day the Index Sponsor fails to calculate and announce the level of the Index, the Calculation Agent will calculate a substitute Closing Level of the Index in accordance with the formula for and method of calculating the Index last in effect prior to the failure, but using only those securities that comprised the Index immediately prior to that failure; provided that, if a Market Disruption Event occurs or is continuing on such day, then the provisions set forth above under the definition of “Calculation Day” shall apply in lieu of the foregoing.

 

5

 

Market Disruption Events 

 

A “Market Disruption Event” means any of the following events as determined by the Calculation Agent in its sole discretion:

 

	
 

	
(A)

	
The occurrence or existence of a material suspension of or limitation imposed on trading by the Relevant Stock Exchanges or otherwise relating to securities which then comprise 20% or more of the level of the Index or any Successor Equity Index at any time during the one-hour period that ends at the Close of Trading on that day, whether by reason of movements in price exceeding limits permitted by those Relevant Stock Exchanges or otherwise.

 

	
 

	
(B)

	
The occurrence or existence of a material suspension of or limitation imposed on trading by any Related Futures or Options Exchange or otherwise in futures or options contracts relating to the Index or any Successor Equity Index on any Related Futures or Options Exchange at any time during the one-hour period that ends at the Close of Trading on that day, whether by reason of movements in price exceeding limits permitted by the Related Futures or Options Exchange or otherwise. 

 

	
 

	
(C)

	
The occurrence or existence of any event, other than an early closure, that materially disrupts or impairs the ability of market participants in general to effect transactions in, or obtain market values for, securities that then comprise 20% or more of the level of the Index or any Successor Equity Index on their Relevant Stock Exchanges at any time during the one-hour period that ends at the Close of Trading on that day.

 

	
 

	
(D)

	
The occurrence or existence of any event, other than an early closure, that materially disrupts or impairs the ability of market participants in general to effect transactions in, or obtain market values for, futures or options contracts relating to the Index or any Successor Equity Index on any Related Futures or Options Exchange at any time during the one-hour period that ends at the Close of Trading on that day.

 

	
 

	
(E)

	
The closure on any Exchange Business Day of the Relevant Stock Exchanges on which securities that then comprise 20% or more of the level of the Index or any Successor Equity Index are traded or any Related Futures or Options Exchange prior to its Scheduled Closing Time unless the earlier closing time is announced by the Relevant Stock Exchange or Related Futures or Options Exchange, as applicable, at least one hour prior to the earlier of (1) the actual closing time for the regular trading session on such Relevant Stock Exchange or Related Futures or Options Exchange, as applicable, and (2) the submission deadline for orders to be entered into the Relevant Stock Exchange or Related Futures or Options Exchange, as applicable, system for execution at such actual closing time on that day.

 

6

 

	
 

	
(F)

	
The Relevant Stock Exchange for any security underlying the Index or Successor Equity Index or any Related Futures or Options Exchange fails to open for trading during its regular trading session.

 

For purposes of determining whether a Market Disruption Event has occurred:

 

	
 

	
(1)

	
the relevant percentage contribution of a security to the level of the Index or any Successor Equity Index will be based on a comparison of (x) the portion of the level of such Index attributable to that security and (y) the overall level of the Index or Successor Equity Index, in each case immediately before the occurrence of the Market Disruption Event;

 

	
 

	
(2)

	
the “Close of Trading” on any Trading Day for the Index or any Successor Equity Index means the Scheduled Closing Time of the Relevant Stock Exchanges with respect to the securities underlying the Index or Successor Equity Index on such Trading Day; provided that, if the actual closing time of the regular trading session of any such Relevant Stock Exchange is earlier than its Scheduled Closing Time on such Trading Day, then (x) for purposes of clauses (A) and (C) of the definition of “Market Disruption Event” above, with respect to any security underlying the Index or Successor Equity Index for which such Relevant Stock Exchange is its Relevant Stock Exchange, the “Close of Trading” means such actual closing time and (y) for purposes of clauses (B) and (D) of the definition of “Market Disruption Event” above, with respect to any futures or options contract relating to the Index or Successor Equity Index, the “close of trading” means the latest actual closing time of the regular trading session of any of the Relevant Stock Exchanges, but in no event later than the Scheduled Closing Time of the Relevant Stock Exchanges;

 

	
 

	
(3)

	
the “Scheduled Closing Time” of any Relevant Stock Exchange or Related Futures or Options Exchange on any Trading Day for the Index or any Successor Equity Index means the scheduled weekday closing time of such Relevant Stock Exchange or Related Futures or Options Exchange on such Trading Day, without regard to after hours or any other trading outside the regular trading session hours; and

 

	
 

	
(4)

	
an “Exchange Business Day” means any Trading Day for the Index or any Successor Equity Index on which each Relevant Stock Exchange for the securities underlying the Index or any Successor Equity Index and each Related Futures or Options Exchange are open for trading during their respective regular trading sessions, notwithstanding any such Relevant Stock Exchange or Related Futures or Options Exchange closing prior to its Scheduled Closing Time.

 

Calculation Agent

 

The Calculation Agent will determine whether this Security will be automatically called on any of the Call Dates, the Call Price, if any, the Maturity Payment Amount and the Ending Level.  In addition, the Calculation Agent will (i) determine if adjustments are required to the Closing Level

 

7

 

of the Index under the circumstances described in this Security, (ii) if publication of the Index is discontinued, select a Successor Equity Index or, if no Successor Equity Index is available, determine the Closing Level of the Index under the circumstances described in this Security, and (iii) determine whether a Market Disruption Event or non-Trading Day has occurred. 

 

The Company covenants that, so long as this Security is Outstanding, there shall at all times be a Calculation Agent (which shall be a broker-dealer, bank or other financial institution) with respect to this Security.

 

All determinations made by the Calculation Agent with respect to this Security will be at the sole discretion of the Calculation Agent and, in the absence of manifest error, will be conclusive for all purposes and binding on the Company and the Holder of this Security.

 

Tax Considerations

 

The Company agrees, and by acceptance of a beneficial ownership interest in this Security each Holder of this Security will be deemed to have agreed (in the absence of a statutory, regulatory, administrative or judicial ruling to the contrary), for United States federal income tax purposes to characterize and treat this Security as a prepaid derivative contract that is an “open transaction.”

 

Redemption and Repayment

 

This Security is not subject to repayment at the option of the Holder hereof prior to November 5, 2025.  Except as set forth above under “Automatic Call,” this Security is not subject to redemption prior to November 5, 2025.  This Security is not entitled to any sinking fund.

 

Acceleration

 

If an Event of Default,
as defined in the Indenture, with respect to this Security shall occur and be continuing, the Maturity
Payment Amount (calculated as set forth in the next sentence) of this Security may be declared due and payable in the manner
and with the effect provided in the Indenture.  The amount payable to the Holder hereof upon any
acceleration permitted under the Indenture will be equal to the Maturity
Payment Amount hereof calculated as provided herein as though the date of acceleration was the
Final Calculation Day; provided that if the Closing Level of the Index on the date of acceleration is equal to or greater than
the Starting Level, the amount payable on this Security will be calculated using a Maturity Date Premium that is prorated to the
date of acceleration. 

 

	
 

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature or its duly authorized agent under the Indenture referred

 

8

 

to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

[The remainder of this page has been left intentionally blank]

 

9

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

DATED: 

 

	
 

	
WELLS FARGO FINANCE LLC

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	
Its:
	  

	
 

	
 

	
 

	
 

	
 

	
Attest:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Its:

	
 

 

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION
This is one of the Securities of the 
series designated therein described
in the within-mentioned Indenture.

 

	
CITIBANK, N.A.,

	
 

	
 

	
as Trustee

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
Authorized Signature

	
 

	
 

	
 

	
 

	
 

	
OR

	
 

	
 

	
 

	
 

	
WELLS FARGO BANK, N.A.,

	
 

	
 

	
as Authenticating Agent for the Trustee

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
Authorized Signature

	
 

 

10

 

[Reverse of Note]

 

WELLS FARGO FINANCE LLC

 

MEDIUM-TERM NOTE, SERIES A

Fully and Unconditionally Guaranteed by Wells Fargo & Company

 

Principal at Risk Securities Linked to the S&P 500® Index
due November 5, 2025

 

This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an indenture dated as of April 25, 2018, as amended or supplemented from time to time (herein called the “Indenture”), among the Company, as issuer, Wells Fargo & Company, as guarantor (the “Guarantor”) and Citibank, N.A., as trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered.  This Security is one of the series of the Securities designated as Medium-Term Notes, Series A, of the Company.  The amount payable on the Securities of this series may be determined by reference to the performance of one or more equity-, commodity- or currency-based indices, exchange traded funds, securities, commodities, currencies, statistical measures of economic or financial performance, or a basket comprised of two or more of the foregoing, or any other market measure or may bear interest at a fixed rate or a floating rate.  The Securities of this series may mature at different times, be redeemable at different times or not at all, be repayable at the option of the Holder at different times or not at all and be denominated in different currencies.

 

The Securities are issuable only in registered form without coupons and will be either (a) book-entry securities represented by one or more Global Securities recorded in the book-entry system maintained by the Depositary or (b) certificated securities issued to and registered in the names of, the beneficial owners or their nominees.

 

The Company agrees, to the extent permitted by law, not to voluntarily claim the benefits of any laws concerning usurious rates of interest against a Holder of this Security.

 

Guarantee 

 

The Securities of this series are fully and unconditionally guaranteed by the Guarantor as and to the extent set forth in the Indenture.

 

Modification and Waivers 

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the Guarantor and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the

 

11

 

Company, the Guarantor and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of all series to be affected, acting together as a class.  The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities of all series at the time Outstanding affected by certain provisions of the Indenture, acting together as a class, on behalf of the Holders of all Securities of such series, to waive compliance by the Company or the Guarantor with those provisions of the Indenture.  Certain past defaults under the Indenture and their consequences may be waived under the Indenture by the Holders of a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series.  Solely for the purpose of determining whether any consent, waiver, notice or other action or Act to be taken or given by the Holders of Securities pursuant to the Indenture has been given or taken by the Holders of Outstanding Securities in the requisite aggregate principal amount, the principal amount of this Security will be deemed to be equal to the amount set forth on the face hereof as the “Face Amount” hereof.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

 

Defeasance

 

Section 403 and Article Fifteen of the Indenture and the provisions of clause (ii) of Section 401(1)(B) of the Indenture, relating to defeasance at any time of (a) the entire indebtedness on this Security and (b) certain restrictive covenants, upon compliance by the Company or the Guarantor with certain conditions set forth therein, shall not apply to this Security.  The remaining provisions of Section 401 of the Indenture shall apply to this Security.

 

Authorized Denominations

 

This Security is issuable only in registered form without coupons in denominations of $1,000 or any amount in excess thereof which is an integral multiple of $1,000.

 

Registration of Transfer

 

Upon due presentment for registration of transfer of this Security at the office or agency of the Company in the City of Minneapolis, Minnesota, a new Security or Securities of this series, with the same terms as this Security, in authorized denominations for an equal aggregate Face Amount will be issued to the transferee in exchange herefor, as provided in the Indenture and subject to the limitations provided therein and to the limitations described below, without charge except for any tax or other governmental charge imposed in connection therewith.

 

This Security is exchangeable for definitive Securities in registered form only if (x) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for this Security or if at any time the Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, and a successor depositary is not appointed within 90 days after the Company receives such notice or becomes aware of such ineligibility, (y) the Company in its sole discretion determines that this Security shall be exchangeable for definitive Securities in registered form and notifies the Trustee thereof or (z) an Event of Default with respect

 

12

 

to the Securities represented hereby has occurred and is continuing.  If this Security is exchangeable pursuant to the preceding sentence, it shall be exchangeable for definitive Securities in registered form, having the same date of issuance, Stated Maturity Date and other terms and of authorized denominations aggregating a like amount. 

 

This Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor of the Depositary or a nominee of such successor.  Except as provided above, owners of beneficial interests in this Global Security will not be entitled to receive physical delivery of Securities in definitive form and will not be considered the Holders hereof for any purpose under the Indenture.

 

Prior to due presentment of this Security for registration of transfer, the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Guarantor, the Trustee nor any such agent shall be affected by notice to the contrary.

 

Obligation of the Company Absolute

 

No reference herein to the Indenture and no provision of this Security or the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Maturity Payment Amount or the Call Price, as applicable, at the times, place and rate, and in the coin or currency, herein prescribed, except as otherwise provided in this Security.

 

No Personal Recourse

 

No recourse shall be had for the payment of the Maturity Payment Amount or the Call Price, as applicable, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation or of the Guarantor or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released.

 

Defined Terms

 

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture unless otherwise defined in this Security.

 

Governing Law

 

This Security shall be governed by and construed in accordance with the law of the State of New York, without regard to principles of conflicts of laws.

 

13

 

ABBREVIATIONS

 

The following abbreviations,
when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

	
 

	
 

	
 

	
TEN COM 

	
--

	
as tenants in common

	
 

	
 

	
 

	
TEN ENT

	
--

	
as tenants by the entireties

	
 

	
 

	
 

	
JT TEN

	
--

	
as joint tenants with right

	
 

	
 

	
of survivorship and not

	
 

	
 

	
as tenants in common

 

	
UNIF GIFT MIN ACT

	
--

	
 

	
Custodian

	
 

	
 

	
 

	
(Cust)

	
 

	
(Minor)

 

	
Under Uniform Gifts to Minors Act

	
 

	
 

	
 

	
 

	
 

	
(State)

	
 

 

Additional abbreviations may also be used though not in the above list.

 

FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto

 

	
Please Insert Social Security or

	
 

	
Other Identifying Number of Assignee

	
 

	
 

	
 

	
 

	
 

 

	
 

	
 

	
 

	
(Please print or type name and address including postal zip code of Assignee)

 

14

 

the within Security of WELLS FARGO FINANCE LLC and does hereby irrevocably constitute and appoint __________________ attorney to transfer the said Security on the books of the Company, with full power of substitution in the premises.

 

	
Dated: _________________________

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

NOTICE:  The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.

 

15Exhibit 10.1

 

EXECUTION VERSION

 

STOCK
PURCHASE AGREEMENT

 

THIS STOCK PURCHASE
AGREEMENT (this “Agreement”), dated as of October 24, 2019, is made by and among PERC Water Corporation, a California
corporation (the “Company”), the undersigned shareholders of the Company (collectively, the “Sellers,”
and each, a “Seller”) and Consolidated Water U.S. Holdings, Inc., a Florida corporation (the “Buyer”).

 

RECITALS

 

A       The
Sellers collectively own 689,961 shares of the Company, par value $0.01 per share, constituting 100% of the outstanding capital
stock of the Company.

 

B.       The
Buyer desires to purchase from the Sellers, and the Sellers desire to sell to Buyer, 351,880 shares of Stock of the Company, which
constitute fifty one percent (51%) of all the outstanding capital stock of the Company, subject to the terms and conditions set
forth in this Agreement.

 

NOW, THEREFORE, in
consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE
I

PURCHASE AND SALE

 

Section
1.01       Purchase
of the Purchased Shares. Subject to and upon the terms and conditions of this Agreement, the Buyer shall purchase from
the Sellers and the Sellers shall sell to the Buyer, all of the Sellers’ right, title and interest (including the goodwill
of the Company associated therewith) in and to the number of shares of Stock of the Company as set forth on Schedule A
attached hereto, which shares shall constitute in the aggregate fifty one percent (51%) of all the outstanding capital stock of
the Company immediately prior to the Closing, on a fully diluted basis (collectively, the “Purchased Shares”),
for the consideration specified in Section 1.02 below and in reliance on the parties’ other agreements and representations
herein. A Seller’s “Pre-Closing Pro Rata Share” shall be calculated by dividing the number of shares of
Stock of the Company held by each Seller immediately before the Closing, as set forth on Schedule A, by the total
number of issued and outstanding shares of Stock of the Company immediately before the Closing. A Seller’s “Sold Pro-Rata
Share” shall be calculated by dividing the number of shares of Purchased Shares sold by each Seller to the Buyer at the Closing,
by the total number of Purchased Shares sold by all Sellers to the Buyer. A Seller’s “Post-Closing Pro Rata Share”
shall be calculated by dividing the number of shares of Stock retained by each Seller, if any, immediately after the Closing, by
the total number of shares of Stock retained by the Sellers immediately after the Closing.

 

Section
1.02       Purchase
Price. The purchase price (the “Closing Date Purchase Price”) to be paid by the Buyer to the
Sellers for all of the Purchased Shares shall consist of Four Million Eighty-Eight Thousand Eight Hundred Seventeen Dollars
($4,088,817.00), or approximately $11.6199187 per Purchased Share. The Closing Date Purchase Price shall be paid by Buyer at
Closing to the Sellers in accordance with each Seller’s Sold Pro Rata Share, by certified check or wire transfer of
immediately available funds to the accounts specified on Exhibit A attached hereto. The Closing Date
Purchase Price is subject to adjustment after Closing as set forth in Section 2.04 below.

 

    

     

    

 

ARTICLE
II

THE CLOSING; CLOSING ADJUSTMENT

 

Section
2.01       The
Closing. The closing of the purchase and sale of the Purchased Shares (the “Closing”) shall take place
on the date first written above or at such other time or date as the parties hereto agree. The date of Closing is hereinafter referred
to as the “Closing Date.”

 

Section
2.02       Conditions
to the Buyer’s Obligation to Close. The obligations of the Buyer to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions
to the satisfaction of the Buyer:

 

(a)              
The Sellers shall have delivered Employment Agreements in a form satisfactory to the Buyer (collectively, the “Employment
Agreements”), and Confidentiality, Non-Compete, Non-Solicitation and Invention Assignment Agreements, in a form satisfactory
to the Buyer (collectively, the “Confidentiality Agreements”), each duly executed by each of Steven Owen, Nathan
Owen, Johan Perslow and Robert Nespeca.

 

(b)              
The Sellers and/or the Company, as appropriate, shall have delivered to the Buyer a certificate or certificates representing
the Purchased Shares, accompanied by a stock power or powers duly endorsed to the Buyer.

 

(c)              
The Company shall have delivered to the Buyer certificates of status from the California Secretary of State office,
dated no more than five (5) Business Days prior to the Closing Date.

 

(d)              
Except for Johan Perslow and Nathan Owen, all of the directors of the Company shall have submitted letters of resignation
to the Buyer, with such resignations effective as of the Closing.

 

(e)              
Possession of, or access to, all originals (or copies if the originals are not available) of agreements, instruments,
documents, deeds, books, records, minute books, files and other data and information within the possession of the Company or any
of its Affiliates belonging to the Company, as of the Closing Date, whether in paper or electronic form (collectively, the “Records”);
provided, however, that the Sellers may retain (1) copies of any Records that such Seller is reasonably likely to need for complying
with Laws; and (2) copies of any Records that in the reasonable opinion of the Sellers will be required in connection with the
performance of such Seller’s obligations hereunder.

 

(f)               
All consents waivers and approvals necessary or desirable to effectuate the transactions contemplated herein.

 

(g)              
Consent to Assignment duly and properly executed by Metro Point 13580 Lot Two, a California limited partnership,
with respect to the Lease, in form and substance satisfactory to Buyer.

 

    2

     

    

 

(h)              
Each Seller that shall remain a shareholder of the Company after the Closing, each other shareholder of the Company
that shall remain a shareholder of the Company after the Closing, and the Company shall have executed and delivered to the Buyer
the Shareholders’ Agreement with Buyer in the form attached hereto as Exhibit B (the “Shareholders’
Agreement”).

 

(i)               
The Company shall have executed and delivered the services agreement with Aquilex, Inc. attached hereto as Exhibit C
(the “Services Agreement”).

 

(j)               
Completion of an audit of the Company’s financial statements for the fiscal year ended September 30, 2018 and
the period from October 1, 2018 to June 30, 2019 by Marcum LLP, at the Buyer’s expense.

 

(k)              
The Company shall have the Target Working Capital.

 

(l)               
The Latest Balance Sheet and the Estimated Closing Working Capital Statement shall reflect that the Company had at
the dates of such documents, and at the Closing Date the Company shall have, at least $1,000,000 in Cash. The Sellers shall deliver
to the Buyer a statement setting forth the amount of Cash held by the Company as of the Closing Date.

 

(m)             
Each Seller shall have delivered to the Buyer a duly executed FIRPTA certificate in the form specified by Treasury
Regulations Section 1.1445-2(b)(2).

 

Section
2.03      Conditions
to the Sellers’ Obligation to Close. The obligations of the Sellers to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions
to the satisfaction of the Sellers:

 

(a)              
The Buyer shall pay the Closing Date Purchase Price in immediately available funds to the Sellers in accordance with
their Sold Pro Rata Share.

 

(b)              
The Company shall have delivered the Employment Agreements, the Confidentiality Agreements and the Services Agreement,
each duly executed by the Company.

 

(c)              
The Buyer, each other shareholder of the Company and the Company shall have executed and delivered to the Sellers
the Shareholders’ Agreement.

 

(d)              
All consents waivers and approvals necessary or desirable to effectuate the transactions contemplated herein.

 

(e)              
The bylaws of the Company shall be in such form as are acceptable to the Buyer and the Sellers.

 

Section
2.04       Purchase
Price Adjustment; Final Purchase Price.

 

(a)              
Working Capital. The Company shall have Closing Working Capital of $17,288 (the “Target
Working Capital”). Within 15 days following the Closing Date, Sellers shall prepare and deliver (or cause the Company
to prepare and deliver) to Buyer a statement setting forth its good faith estimate of Closing Working Capital (the “Estimated
Closing Working Capital”), which statement shall contain an estimated balance sheet of the Company as of the Closing
Date (without giving effect to the transactions contemplated herein), a calculation of Estimated Closing Working Capital (the
 “Estimated Closing Working Capital Statement”), and a certificate of the President of the Company that the
Estimated Closing Working Capital Statement was prepared in accordance with GAAP applied using the same accounting methods, practices,
principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that
would be used if such Estimated Closing Working Capital Statement was being prepared as of a fiscal year end.

 

    3

     

    

 

(b)              
Post-Closing Adjustment.

 

(i)                
Within 45 days following the date the Estimated Closing Working Capital Statement is delivered, Buyer shall prepare
and deliver to Seller a statement setting forth its calculation of Closing Working Capital, which statement shall contain an audited
balance sheet of the Company as of the Closing Date (without giving effect to the transactions contemplated herein) and a calculation
of Closing Working Capital (the “Closing Working Capital Statement”). The audited balance sheet shall be audited
by an independent registered public accounting firm selected and compensated by Buyer.

 

(ii)              
The post-closing adjustment shall be an amount equal to the Closing Working Capital minus the Target Working Capital
(the “Post-Closing Adjustment”). If the Post-Closing Adjustment is a positive number, the Buyer shall pay an
amount equal to 51% of the Post Closing Adjustment, paid to each Seller in accordance with such Seller’s Sold Pro Rata Share.
If the Post-Closing Adjustment is a negative number, each Seller shall pay to Buyer an amount equal to 51% of the Post Closing
Adjustment in accordance with such Seller’s Sold Pro Rata Share.

 

(c)              
[Reserved] 

 

(d)              
Payment of Post-Closing Adjustment. Any adjustments to the Purchase Price in accordance with this
Section 2.04 shall be paid to the appropriate party within 10 Business Days after delivery of the Closing Working Capital
Statement.

 

(e)              
Tax Treatment and Wiring. All payments pursuant to this Section 2.04 shall (x) be treated
by all parties for tax purposes as adjustments to the Final Purchase Price and (y) be made by certified check or wire transfer
of immediately available funds to the account(s) designated by the Seller or Buyer, as the case may be.

 

ARTICLE
III

PUT AND CALL OPTION

 

Section
3.01       Put
and Call Option.

 

(a)              
Grant of Right. Subject to the terms and conditions of this Agreement, (i) on or after the fifth
anniversary of the Closing Date, each of the Sellers retaining shares of Stock in the Company shall have the right (the “Put
Right”) to cause the Buyer to purchase from such Seller such Seller’s remaining shares of capital stock of the
Company held by such Seller, and (ii) on or after the third anniversary of the Closing Date, the Buyer shall have the right (the
 “Call Right”) to cause each Seller to sell to the Buyer, all of the remaining shares of capital stock of the
Company held by such Seller (collectively, the “Option Shares”) at such time at the Exercise Price (as defined
in Section 3.01(f)(i) hereof).

 

    4

     

    

 

(b)              
Procedures.

 

(i)                
If a Seller desires to exercise the Put Right or the Buyer desires to exercise the Call Right (such party exercises
the right, the “Exercising Party”), the Exercising Party shall deliver to the other party (the “Responding Party”)
a written notice (the “Exercise Notice”) exercising the Put Right or the Call Right, as applicable.

 

(ii)              
Each selling Seller shall, at the closing of any purchase consummated pursuant to this Section 3.01, represent
and warrant to the Buyer that (A) such Seller has full right, title and interest in and to the Option Shares being sold by such
Seller, (B) such Seller has all the necessary power and authority and has taken all necessary action to sell such Option Shares
as contemplated by this Section 3.01, and (C) such Option Shares are free and clear of any and all Liens other than those
arising as a result of or under the terms of this Agreement.

 

(iii)            
Subject to Section 3.01(c) below, the closing of any sale of Option Shares pursuant to this Section 3.01
shall take place no later than 120 Business Days following receipt by the Responding Party of the Exercise Notice, or such other
time period as may be agreed to in writing by the parties hereto. The Responding Party shall give the Exercising Party at least
10 Business Days’ written notice of the date of closing (the “Option Closing Date”).

 

(c)              
Consummation of Sale. The Buyer shall pay the Exercise Price for the Option Shares by certified
check or wire transfer of immediately available funds to the accounts specified in writing by each selling Seller on the Option
Closing Date.

 

(d)              
Cooperation. The Buyer and each selling Seller each shall take all actions as may be reasonably
necessary to consummate the sale contemplated by this Section 3.01, including, without limitation, entering into agreements
and delivering certificates and instruments and consents as may be deemed necessary or appropriate.

 

(e)              
Closing. At the closing of the sale and purchase pursuant to this Section 3.01, each selling
Seller shall deliver to the Buyer a certificate or certificates representing the Option Shares being sold by such Seller, accompanied
by stock powers and all necessary stock transfer taxes paid and stamps affixed, if necessary, against receipt of the portion of
the Exercise Price.

 

(f)               
Exercise Price.

 

(i)               
The purchase price per share at which the Company shall be required to purchase the Option Shares (the “Exercise
Price”) shall be equal to the Fair Market Value of the Option Shares as of the date of the Exercise Notice.

 

    5

     

    

 

(ii)              For
purposes of this Agreement, the term “Fair Market Value” shall mean the fair market value of the Option
Shares as of the date of the Exercise Notice, determined on an enterprise value basis without the application of any
discounts, including discounts for lack of marketability or minority interest. The Fair Market Value shall be determined by a
reputable independent valuation firm with experience in determining the value of companies similar to the Company (a
 “Qualified Valuation Firm”) jointly selected by the Buyer and the Sellers. In the event the Buyer and the
Sellers are unable to agree on the selection of a Qualified Valuation Firm, then the Buyer shall select one Qualified
Valuation Firm (the “Buyer QVF”), the Sellers, jointly, shall select one Qualified Valuation Firm (the
 “Seller QVF”), and the Qualified Valuation Firms so selected shall select a third (the
 “Independent QVF”). Each such Qualified Valuation Firm shall determine the Fair Market Value of the Option
Shares. If the value determined by either the Buyer QVF or by the Seller QVF is not less than 80% or not more than 120% of
the value determined by the Independent QVF, then the average of the Independent QVF value, the Buyer QVF value and the
Seller QVF value shall constitute the final Fair Market Value. If the value determined by either the Buyer QVF or by the
Seller QVF is less than 80% or more than 120% of the value determined by the Independent QVF (each, a “Widely
Varying Value”), then such Widely Varying Value of the Buyer QVF and/or Seller QVF shall be disregarded, and the
average of the Independent QVF value and any non-Widely Varying Value shall constitute the final Fair Market Value. The costs
of the Buyer QVF shall be borne by the Buyer; the costs of the Seller QVF shall be borne by the Sellers; and the costs of the
Independent QVF (or the mutually agreed upon Qualified Valuation Firm, if applicable) shall be shared 50% by the Buyer and
50% the Sellers.

 

ARTICLE
IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents
and warrants to the Buyer that the statements in this ARTICLE IV are correct as of the date of this Agreement except as
set forth in the schedules accompanying this ARTICLE IV (collectively, the “Disclosure Schedules”).

 

Section
4.01       Organization
and Corporate Power and No Contravention.

 

(a)              
The Company is a corporation duly organized, validly existing and in good standing under California law. The Company
has taken all corporate action required to authorize the execution and delivery of this Agreement and each Other Transaction Document
to which it is to be a party at Closing. The Company has duly executed and delivered this Agreement, and, at or before the Closing,
will have duly executed and delivered each Other Transaction Document to which it is a party.

 

(b)               The
Company has all requisite corporate power and authority to own and operate its properties and assets and to carry on the
Business as now conducted. The Company is qualified to do business and is in good standing (or its equivalent) as a foreign
corporation in every jurisdiction in which its ownership of property or the conduct of the Business as now conducted requires
it to qualify, except where the failure to be qualified would not have a material adverse effect, all of which
jurisdictions are set forth on Schedule 4.01(b). The Company has all requisite corporate power and
authority to execute, deliver and perform this Agreement and each Other Transaction Document to which it is to be a party and
to consummate the transactions contemplated herein or therein. This Agreement constitutes, and each Other Transaction
Document to which it is to be a party at Closing will constitute, the Company’s legal, valid and binding obligation,
enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, moratorium,
reorganization, fraudulent transfer or similar laws affecting creditors’ rights generally and to general equitable
principles).

 

    6

     

    

 

(c)              
The execution and delivery of this Agreement and the Other Transaction Documents by the Company and the consummation
of the transactions contemplated hereby and thereby by the Company at the Closing does not, directly or indirectly, (i) violate
any provision of the Organizational Documents of the Company or any resolution adopted by the board of directors or shareholders
of the Company, (ii) except as set forth on Schedule 4.01(c), conflict with, result in the breach of, or constitute
a default under, or require any authorization, consent, approval, exemption or other action by or notice to any third party or
any Governmental Body or under the provisions of any material agreement or instrument to which the Company is a party or by which
the property of the Company is bound or affected, or (iii) to the Knowledge of the Company, violate any laws, regulations, orders
or judgments applicable to the Company.

 

Section
4.02       Subsidiaries.
The Company does not own any equity interests in any other corporation, partnership, limited liability company, joint venture or
other entity.

 

Section
4.03       Organizational
Documents; Books and Records.

 

(a)              
The copies of the Organizational Documents of the Company made available to the Buyer are complete and correct and
represent the presently effective Organizational Documents of the Company. The Company is not in violation of its Organizational
Documents.

 

(b)              
Except as disclosed on Schedule 4.03(b), all minute books and share record books of the Company
have been made available to the Buyer, and are complete and correct in all material respects.

 

Section
4.04       Capitalization.
The Company’s authorized and outstanding capital stock is as set forth on the attached Schedule 4.04. Schedule 4.04
sets forth the names of the holders of record of all shares of the Company’s issued and outstanding stock and the
number of shares held by each such holder. All of the issued and outstanding shares of the Company’s stock is duly
authorized, has been validly issued and is fully paid and non-assessable. Except as set forth on Schedule 4.04,
there are no shares of capital stock or other equity securities of the Company issued, reserved for issuance or outstanding.
All of the issued and outstanding shares of Stock of the Company were issued in compliance with applicable securities laws or
exemptions therefrom and are not subject to any preemptive rights other than those rights conferred by California statutes.
There are no outstanding options, warrants, rights to subscribe to, purchase (or repurchase) rights, conversion rights,
phantom stock rights, stock appreciation rights, redemption rights, calls or commitments made by the Company relating to any
shares of capital stock or other securities issued by the Company containing any equity features, or Contracts by which the
Company is bound to issue additional shares of its capital stock or other equity securities, or options, warrants, rights to
subscribe to, purchase rights, calls or commitments made by the Company relating to any shares of capital stock or other
equity securities of the Company. The Company does not have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or are convertible into or exercisable for securities having the right to vote) on
any matter. The Company is not a party to and there is not any Contract, right of first refusal, right of first offer, proxy,
voting agreement, voting trust, registration rights agreement or stockholders agreement, whether or not the Company is a
party thereto, with respect to the purchase, sale or voting of any shares of capital stock of the Company or any securities
convertible into or exchangeable or exercisable for any shares of capital stock of the Company.

 

    7

     

    

 

Section
4.05       Financial
Statements.

 

(a)              
The attached Schedule 4.05(a) contains true and complete copies of (i) the Company’s audited
balance sheets as of September 30, 2018 and June 30, 2019, and the related statements of income and cash flows for the fiscal year
ended September 30, 2018 and the nine months ended June 30, 2019 (the “Audited Financial Statements”), and (ii)
the Company’s unaudited balance sheet as of September 30, 2019 (the “Latest Balance Sheet”) and the related
statements of income for the three month period ended September 30, 2019 (the “Interim Financial Statements”
and, together with the Audited Financial Statements, the “Financial Statements”). Except as specifically noted
on Schedule 4.05(a), the Interim Financial Statements (including any related notes and Schedules), and, to the
Knowledge of the Company, the Audited Financial Statements, present fairly in all material respects the financial condition and
results of operations of the Company in accordance with GAAP as of the dates and for the periods referred to therein. Except as
set forth on Schedule 4.05(a), all of the Financial Statements have been prepared in accordance with GAAP, applied
on a consistent basis throughout the periods indicated.

 

(b)              
Except as set forth on Schedule 4.05(b), the Company does not have any liabilities or obligations
(together the “Liabilities”) of a type required to be reflected on financial statements prepared in accordance
with GAAP, except for (i) Liabilities disclosed, provided for, reflected in, reserved against or otherwise described in the Latest
Balance Sheet, (ii) Liabilities incurred, accruing or arising after the date of the Latest Balance Sheet in the ordinary course
of business consistent with past practice, and (iii) Liabilities under this Agreement.

 

(c)              
The books and records of the Company has been maintained in accordance with GAAP on a basis consistent with past
periods and throughout the periods involved. The Company (i) makes and keeps accurate books and records and (ii) maintains internal
accounting controls that, to the Knowledge of the Company but without the Company having conducted any Internal Control Study by
any independent firm, provide reasonable assurance that (A) transactions are executed in accordance with management’s authorization,
(B) transactions are recorded as necessary to permit preparation of its consolidated financial statements in accordance with GAAP,
and (C) access to their respective assets is permitted only in accordance with management’s authorization.

 

(d)              
Except as provided on Schedule 4.05(d), the Company does not have any Indebtedness.

 

(e)               Except
as set forth in Schedule 4.05(e), the Company has delivered to Buyer a true, correct and complete aging
schedule of all accounts receivable of the Company, as of the business day prior to Closing. All of the
Company’s accounts receivable (i) represent actual, valid obligations incurred by the respective account debtors owing
to the Company with respect to the Business, (ii) have arisen from bona fide transactions in the ordinary course, (iii) are
adequately reserved and properly stated on the books and records of the Company in accordance with GAAP, (iv) the goods and
services involved have been sold and delivered or performed, as the case may be, to the account obligors, and, no further
goods other than by warranty are required to be provided and no further services other than warranty services are required to
be rendered in order to complete the sales and fully render the services and to entitle collection of the accounts receivable
in full. No such account receivable has been assigned or pledged to any other Person and, except only to the extent fully
reserved against as set forth in the Closing Statement, to the Company’s Knowledge, no defense or set-off to any such
account has been asserted by the account obligor.

 

    8

     

    

 

Section
4.06       Absence
of Certain Developments. Except as set forth on the attached Schedule 4.06 and except as expressly contemplated
by this Agreement, since the date of the Latest Balance Sheet, (i) the Company has not engaged in any material transaction that
was not in the ordinary course of business and consistent with past practice, other than the engagement of counsel and advisors
in connection with the transactions contemplated by this Agreement, (ii) to the Company’s Knowledge, there has not been any
material adverse change in the Company’s or the Business’ sales patterns, pricing policies, accounts receivable or
accounts payable, taken as a whole, and (iii) to the Company’s Knowledge, there has not been any material adverse change
in the relationships between the Company, on the one hand, and any customer, supplier, licensee, lessor, insurer or other Person
with whom the Company has material business relationships, on the other hand. Without limiting the generality of the foregoing,
except as set forth on the attached Schedule 4.06 and except as expressly contemplated by this Agreement, since
the date of the Latest Balance Sheet, the Company has not:

 

(a)           
    issued or sold any of its capital stock or other equity securities, or any options,
warrants, convertible or exchangeable securities, subscriptions, rights, stock appreciation rights, calls or commitments of
any kind with respect to its capital stock or other equity securities, or split, combined or reclassified any shares of its
capital stock or other equity securities;

 

(b)              
(i) increased the base salary, annual bonus or any other form of compensation payable to any of its employees or
directors (except for changes in compensation in the ordinary course of business and consistent with past practice in connection
with promotions or periodic reviews, but only with respect to employees other than officers or directors), (ii) implemented, announced
or committed to any “across-the-board” wage increase for its hourly employees or (iii) adopted or, except as required
by applicable law, amended any Plan;

 

(c)               
entered into any Contract with any labor union;

 

(d)              
planned, announced, implemented or effected any reduction in force, lay off, early retirement program or similar
program applicable generally across the Company’s employee base;

 

(e)               
adopted a plan of liquidation, dissolution, merger, consolidation or other reorganization;

 

(f)               
(i) made any material change in its accounting or tax methods, principles or practices or elections, or (ii) revalued
any assets of the Company, including inventory or accounts receivable write-downs, except as reflected in the Financial Statements;

 

    9

     

    

 

(g)              
accelerated the collection of, or discounted, accounts receivable, delayed the payment of accounts payable or deferred
expenses;

 

(h)              
incurred any Indebtedness;

 

(i)               
created or incurred any Lien on any assets of the Company or otherwise disposed of any assets of the Company in excess
of $25,000 individually or $100,000 in the aggregate, other than sales of obsolete equipment in the ordinary course of business
consistent with past practice and other than sales of inventory in the ordinary course of business;

 

(j)               
made any capital contributions to or equity or debt investments in any Person, other than non-material advances to
vendors and employees in the ordinary course of business consistent with past practice;

 

(k)              
made any acquisition of any assets, properties, capital stock or business of any other Person, whether by merger,
stock or asset purchase or otherwise, other than purchases of fixed assets, inventory, supplies and software/systems upgrades in
the ordinary course of business consistent with past practice;

 

(l)               
sold, licensed, assigned, transferred, abandoned, allowed to lapse or otherwise disposed of any material Intellectual
Property or other intangible assets, except in the ordinary course of business consistent with past practice;

 

(m)             
terminated any Contract that if in existence on the date hereof would have been required to be listed on Schedule 4.06
or (ii) terminated or allowed to expire any Contract pursuant to which the Company leased any asset;

 

(n)              
entered into any Contract outside of Contracts and purchase orders entered into in the ordinary course of business,
to provide services that could reasonably be expected to result in the Company being required to commit in excess of $100,000 for
either working capital or the purchase of assets to fulfill its obligations under such Contract;

 

(o)              
failed to maintain in full force and effect the Insurance Policies;

 

(p)              
made or revoked any material election with regard to Taxes or filed any material amended Tax Returns;

 

(q)              
commenced or settled any criminal or material civil Claim; or

 

(r)               
committed to do any of the foregoing.

 

Section
4.07       Title
to and Conditions of Assets; Real Property.

 

(a)               The
Company has good and marketable title to all of its properties, interests in properties and assets, real and personal, or
with respect to leased properties and assets, valid leasehold or sub-leasehold interests therein, free and clear of all
Liens, except for Permitted Liens. The property and equipment of the Company and all other tangible property that is used in
the operation of its business is in good operating condition and repair, subject to normal wear and tear, are adequate and
suitable in all material respects for the uses to which they are being put and the operation of such businesses.

 

    10

     

    

 

(b)              
Schedule 4.07 identifies all real property owned, leased or subleased by the Company (the “Real
Property”). The Real Property is all of the real property necessary for the conduct of the business of the Company as
presently conducted. Neither the Sellers nor any of their Affiliates, including the Company, has leased or otherwise granted to
any Person the rights to use or occupy any owned Real Property or any portion thereof. There are no outstanding options to purchase
such owned Real Property or any portion thereof or interest therein. The Company does not have an option to acquire any real property.
The Company’s interest in any lease or sublease with respect to such Real Property is not subject to any Lien, except Permitted
Liens. Each lease agreement to which the Company is a party regarding Real Property is a valid and binding obligation of the Company,
as applicable, and is in full force and effect and is enforceable against the Company and, to the Knowledge of the Company, against
the other parties thereto, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting creditors’ rights and to general principles of equity. The Company is not in or, alleged
to be in, breach or default under any of such lease agreements. There are no Contracts to which the Company is a party granting
to any Person the right of use or occupancy of any such leased Real Property, and there are no parties (other than the Company)
occupying any of such leased Real Property. The Company’s occupation, possession and use of the Real Property has not been
disturbed and no claim has been asserted or threatened adverse to the rights of the Company to the continued occupation, possession
and use of any of the Real Property. The Real Property is supplied with all utilities adequate to serve such Real Property for
the Business’ current use thereof.

 

Section
4.08       Tax
Matters. Except as set forth on the attached Schedule 4.08:

 

(a)              
The Company has properly prepared and duly and timely filed (taking into account any applicable extensions) all Tax
Returns required to be filed by it with the appropriate Governmental Body in all jurisdictions in which any such Tax Returns were
required to be filed. Each such Tax Return has been prepared in compliance in all material respects with all applicable laws, and
all such Tax Returns are accurate, complete and correct in all material respects. All Taxes payable by or on behalf of the Company,
regardless of whether shown on such Tax Returns, have been fully and timely paid. The Company has made available to the Buyer correct
and complete copies of all Tax Returns of the Company for taxable periods ending on or after December 31, 2015, and all examination
reports, and statements of deficiencies assessed against or agreed to by the Company issued since January 1, 2016. The Company
has complied in all material respects with all applicable laws and regulations relating to the payment and withholding of Taxes
and has duly and timely withheld and paid over to the appropriate Governmental Bodies all Taxes required to have been withheld
and paid in connection with any amounts paid to any employee, independent contractor, creditor, stockholder or other third party.

 

(b)               The
Company is not the beneficiary of any extension of time within which to file any Tax Return, which Tax Return has since not
been filed. No agreement, waiver or other document or arrangement extending or having the effect of extending the period for
assessment or collection of Taxes (including any applicable statute of limitation) has been executed or filed with
any Governmental Body by or on behalf of the Company. No power of attorney with respect to any Tax matter is currently in
force.

 

    11

     

    

 

(c)              
No Tax Return concerning or relating to the Company or with respect to the Company’s income, operations, assets
or activities for any taxable period or portion thereof since December 31, 2016 has been audited or examined by a Governmental
Body. There is no Tax Proceeding pending or, to the Company’s Knowledge, threatened against or with respect to the Company.
All deficiencies asserted or assessments made as a result of any audits or examinations by any Governmental Body of the Tax Returns
of or covering or including the Company have been fully paid. No claim has been made by a Governmental Body in a jurisdiction where
Tax Returns concerning or relating to the Company or with respect to the Company’s income, operations, assets or activities
have not been filed that it is or may be subject to taxation by that jurisdiction. No issue has been raised by any Governmental
Body in any prior audit or examination which, by application of the same or similar principles, could reasonably be expected to
result in a proposed deficiency for any subsequent taxable period.

 

(d)              
The Company is not a party to or bound by any Tax allocation, Tax indemnity, Tax sharing or similar agreement or
arrangement.

 

(e)              
Neither the Company, nor any Person on behalf of the Company, has (1) agreed to or is required to make any adjustments
pursuant to Section 481(a) of the Code or any similar provision of state, local or foreign law by reason of a change in accounting
method initiated by the Company or has any Knowledge that a Governmental Body has proposed any such adjustment or change in accounting
method, or has any application pending with any Governmental Body requesting permission for any changes in accounting methods that
relate to the business or operations of the Company or (2) executed or entered into a closing agreement pursuant to Section 7121
of the Code or any predecessor provision thereof or any similar provision of state, local or foreign law with respect to the Company.
The Company is not required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date as a result of any installment sale or open transaction disposition on
or prior to the Closing Date or prepaid amount received on or prior to the Closing Date.

 

(f)               
The Company is not a member of an affiliated group of corporations within the meaning of Section 1504 of the
Code or has not filed or been included in a combined, consolidated or unitary income Tax Return with another Person. The Company
has no liability for the Taxes of any Person under Treasury Regulation § 1.1502-6 (or any similar provision of state, local,
or foreign law), or as a transferee or successor, by Contract or otherwise. The Company does not own any interest in any Person
that is treated as a partnership for U.S. federal income Tax purposes or would be treated as a pass-through or disregarded entity
for any Tax purpose.

 

(g)              
There are no Liens for Taxes on the assets of the Company, except for Liens for Taxes not yet due and payable.

 

(h)               The
Company has disclosed on its Tax Returns all positions taken therein that could reasonably be expected to give rise to a
substantial understatement of federal income Tax within the meaning of Section 6662 of the Code. The Company is not and
has not been a party to any “reportable transaction” as defined in Treasury Regulation § 1.6011-4.

 

    12

     

    

 

(i)                
None of the Sellers is a foreign person within the meaning of Section 1445 of the Code or any other laws requiring
withholding of amounts paid to foreign persons. The transactions contemplated herein are not subject to Tax withholding provisions
under the Code or any other applicable Law.

 

(j)                
None of the assets of the Company is (1) required to be or are being depreciated under the alternative depreciation
system of Section 168(g)(2) of the Code, (2) subject to Section 168(f) of the Code, or (3) property that the Company
will be required to treat as “tax exempt use property” within the meaning of Section 168(h)(1) of the Code. The
Company has not issued any “industrial development bonds” as contemplated in the Internal Revenue Code of 1954, as
amended prior to the enactment of the Code, or “private activity bonds” within the meaning of Section 141 of the
Code or other tax exempt financings to acquire or lease assets of the Company.

 

Section
4.09       Contracts
and Commitments.

 

(a)              
Except as set forth on the attached Schedule 4.09(a), the Company is not a party to any, whether
written or oral:

 

(i)                
collective bargaining Contract with any labor union;

 

(ii)               
bonus, pension, profit sharing, retirement or other form of deferred compensation plan, or stock purchase, stock
option or similar plan, other than as set forth on Schedule 4.12;

 

(iii)               Contract for the employment of any officer, individual employee or other person on a full-time or consulting basis
providing for base compensation in excess of $35,000 per annum;

 

(iv)               Contract providing for severance payments in excess of $25,000;

 

(v)                Contract evidencing, securing or otherwise relating to Indebtedness or to mortgaging, pledging or otherwise placing
a Lien on any portion of the assets of the Company;

 

(vi)              
guaranty of any Indebtedness;

 

(vii)              Contract under which it is lessee of, or holds or operates, any real or tangible personal property owned by any other
Person;

 

(viii)             Contract under which it is lessor of or permits any third-party to hold or operate any tangible property, real or
personal;

 

(ix)               Contract
in excess of $100,000 with any (x) Major Customer to provide goods, services, or products or (y) Major Supplier to purchase goods,
services, or products;

 

    13

     

    

 

(x)               
Contract which prohibits the Company from freely engaging in business anywhere in the world;

 

(xi)              
Contract containing a standstill or similar agreement pursuant to which the Company has agreed not to acquire assets
or securities of any other party;

 

(xii)             
Contract providing for the indemnification by the Company of any Person, except for any such Contract that (x) is
not material to the Company and (y) was entered into in the ordinary course of business consistent with past practice;

 

(xiii)            
Contract that contains a put, call or similar right pursuant to which the Company could be required to purchase or
sell, as applicable, any equity interests of any Person or assets that have a fair market value or purchase price of more than
$50,000;

 

(xiv)            
Contract with any Person (other than purchase orders entered into in the ordinary course of business) that is reasonably
likely to require either (x) annual payments to or from the Company of more than $100,000 or (y) aggregate payments to or from
the Company of more than $100,000;

 

(xv)             
Contracts creating any partnership or joint venture or similar arrangement involving the sharing of profits or losses;

 

(xvi)             Contracts
containing exclusivity or “most-favored-nations” provisions;

 

(xvii)            any agreement (including confidentiality, non-compete, non-solicitation and restrictive covenant agreements) that
purports to limit the Company’s (or, to the Company’s Knowledge, any of its employees’ or independent contractors’)
freedom to compete and engage in business freely in any line of business or in any geographic area; or

 

(xviii)           Contracts
with any Related Party.

 

Except as identified
on Schedule 4.09(a) with respect to limitations imposed by confidentiality commitments under applicable law,
true and complete copies of each written Contract listed on Schedule 4.09(a) have been made available to the
Buyer (including all modifications, amendments and supplements thereto).

 

(b)               Except
as identified on Schedule 4.09(b), each of the Contracts is a valid and binding obligation of the Company,
and, to the Knowledge of the Company, is valid, binding, and enforceable against the other parties thereto, enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium and similar
Laws relating to or affecting creditors’ rights and general principles of equity. Except as set forth on Schedule 4.09(b),
(i) the Company has performed all of its material obligations required to be performed as of the date of this Agreement
under, and is not in material default under (or, to the Company’s Knowledge, is not alleged to be in breach of or
default under) each Contract, (ii) to the Knowledge of the Company, no other party to any Contracts is in material default
thereunder, and (iii) to the Company’s Knowledge, no event has occurred which with notice or lapse of time would
constitute a breach or default in any material respect by the Company or by any such other party thereto, or permit
termination, modification or acceleration, under such Contract. There has been no termination or notice of default received
by the Company or, to the Knowledge of the Company, any threatened termination or notice of default under any Contract,
except as listed on Schedule 4.09(b).

 

    14

     

    

 

(c)              
Except as otherwise set forth on Schedule 4.09(c), the Company is not a party to or bound by any
Contract or Contracts the terms of which were arrived at by or otherwise reflect less-than-arm’s-length negotiations or bargaining.
Except as set forth on Schedule 4.09(c), no Affiliate of the Company is a party to any Contract relating to
the Business. Each Contract of the Company relates solely to the Business (and not to any other business in which the Company or
the Sellers or any of their Affiliates may be engaged).

 

Section
4.10       Intellectual
Property. Schedule 4.10 sets forth a list of all Intellectual Property (other than items falling
within clause (v) and (vii) of the definition of Intellectual Property and “off-the-shelf” commercially available
Software) owned or licensed by the Company and used in and material to the conduct of the Business. The Company’s
rights in the Intellectual Property owned by or licensed to it constitute all the rights in Intellectual Property required
for the operation of the Business as presently conducted in the last five (5) years. No claim or allegation has been asserted
or, to the Knowledge of the Company, threatened by any third party that the use or exploitation by the Company of any
Intellectual Property infringes, misappropriates or violates the Intellectual Property of any third-party. To the
Company’s Knowledge, the operation of the Business does not infringe, misappropriate or violate any Intellectual
Property of third parties. No action before any Governmental Body has been instituted, settled or, to the Company’s
Knowledge, threatened that alleges any such infringement, violation or misappropriation, and none of the Intellectual
Property is subject to any outstanding order or decree of any Governmental Body directed specifically at the Company. The
Company has not made any indemnification payments to any Person for or against any infringement with respect to any
intangible rights. To the Company’s Knowledge, no third party is infringing or misappropriating any
Intellectual Property of the Company. The Company has taken commercially reasonable steps to protect the confidentiality of
the Company’s trade secrets. Schedule 4.10 lists all material licenses and sublicenses whereby the
Company is granted rights, interests and authority, whether on an exclusive or non-exclusive basis, as licensee with respect
to any Intellectual Property that is used in or necessary for the Business. The Company has made available to Buyer true and
complete copies of all such agreements or the forms thereof other than with respect to off the shelf software and programs.
To the Company’s Knowledge, all such agreements are valid, binding and enforceable between the Company and the other
parties, and the Company and, to the Company’s Knowledge, the other parties are in full compliance with the terms and
conditions of such agreements. Except as set forth on Schedule 4.10, no interest in the Company’s
Intellectual Property has been assigned, transferred, licensed or sublicensed by the Company or the Sellers to any Person
other than in the ordinary course of the Company’s business. Except as disclosed on Schedule 4.10,
(i) neither the Company nor any Person acting on the Company’s behalf has disclosed, delivered or licensed to any
Person, agreed to disclose, deliver or license to any Person, or permitted the disclosure or delivery to any escrow agent or
other Person of, any source code owned by the Company and included in any Products (“Company Source
Code”), and (ii) to the Company’s Knowledge, no event has occurred, and no circumstance or condition exists,
that (with or without notice or lapse of time or both) will, or would reasonably be expected to, result in the disclosure or
delivery by or on behalf of the Company of any Company Source Code. Schedule 4.10 lists all Products that
are or contains open source software or software that is distributed under a licensing or distribution model that requires,
as a condition of use, modification and/or distribution of such software (or other software incorporated into, derived from
or distributed with such software) that the software be disclosed or distributed in source code form, be licensed for the
purpose of making derivative works, or be redistributable at no or minimal charge (including but not limited to the GNU
General Public License) that (i) the Company licenses to a third party in connection with the Business; (ii) the Company
provides on a software-as-a-service or similar basis in connection with the Business; or (iii) is otherwise incorporated
into, combined with, or distributed in conjunction with any Products in connection with the Business (collectively,
 “Incorporated Open Source Software”) and identifies the software and the type of license or distribution
model governing its use. The Company’s use and/or distribution of each component of Incorporated Open Source Software
with or in any Products complies with all material provisions of the applicable license agreement, and in no case does such
use or distribution give rise under such license agreement to any obligation to disclose or distribute any Company
Source Code in source code form, to license any such Company Source Code or other Intellectual Property owned by the Company
for the purpose of making derivative works, or to distribute any such Company Source Code owned by the Company without
charge.

 

    15

     

    

 

Section
4.11       Litigation.
Except as set forth in Schedule 4.11, there are no civil, criminal or administrative causes of action, hearings,
arbitrations, audits, or other proceedings pending or, to the Knowledge of the Company, threatened against the Company, at law
or in equity, before or by any Governmental Body. Except as set forth in Schedule 4.11, the Company is not subject
to any outstanding judgment, order or decree of any Governmental Body directed specifically at the Company. No Governmental Body
has indicated in any writing received by the Company any intention to conduct any audit, investigation or other review with respect
to the Company, other than audits, investigations or reviews that have been favorably resolved in the Company’s favor and
concluded without any liability to the Company. Schedule 4.11 sets forth a true and correct listing of all material
actions, suits, claims or proceedings before any Governmental Body against the Company that were pending, settled or adjudicated
in the last seven (7) years.

 

Section
4.12       Employee
Benefit Plans.

 

(a)              
Schedule 4.12 lists each “employee benefit plan” (as defined in Section 3(3)
of ERISA), and each other employment, incentive (equity or otherwise), severance, option, deferred compensation, retention, change
in control, fringe benefit, or other compensatory agreement, policy, plan, manual or arrangement provided or maintained by the
Company or any ERISA Affiliate to, with or for the benefit of any current or former employee, director or consultant of the Company
or any of their respective dependents or beneficiaries, including without limitation, the Company’s Section 125 Cafeteria
Plan and 401(k) Plan (each, a “Plan”). Each Plan which is intended to meet the requirements of a “qualified
plan” under Section 401(a) of the Code is so qualified, and the Company has no Knowledge of any facts or circumstances
that could reasonably be expected to jeopardize the qualification of such Plan. Each trust maintained in connection with each such
qualified Plan is exempt from taxation. The Plans comply in form and in operation in all material respects with their terms and
the requirements of all applicable laws and regulations. Schedule 4.12 also lists all vacation and sick leave
policies and all medical, dental, disability and life insurance policies maintained by the Company.

 

    16

     

    

 

(b)              
With respect to each Plan, the Company has made available to the Buyer true and complete copies of the following
documents, as applicable: (i) all plan documents of each Plan; (ii) all funding and administrative arrangement documents including
trust agreements, insurance contracts, custodial agreements, investment manager agreements and service agreements; (iii) the most
recently filed Form 5500; (iv) the summary Plan description and each summary of material modification; and (v) the most recent
financial statement. In the case of any material unwritten Plan or other benefit program or agreement, a written description of
such has been furnished to Buyer. All amendments required to bring any Plan into conformity with any applicable provisions of
ERISA and the Code have been duly adopted.

 

(c)              
With respect to the Plans, (i) all required contributions by the Company have been timely made, (ii) there are no
civil, criminal or administrative causes of action, hearings, arbitrations, audits or other proceedings pending or, to the Knowledge
of the Company, threatened, other than routine claims for benefits, (iii) there have been no “prohibited transactions”
(as that term is defined in Section 406 of ERISA or Section 4975 of the Code) and (iv) all material reports, returns
and similar documents required to be filed by the Company with any Governmental Body or distributed to any Plan participant have
been timely filed or distributed.

 

(d)              
Neither the Company, nor any of its ERISA Affiliates, contributes to, has ever contributed to or has ever incurred
any liability with respect to any “multiemployer plan” (as defined in Section 3(37) of ERISA).

 

(e)              
The execution and delivery of this Agreement and performance of the transactions contemplated hereby will not (i)
constitute an event under any Plan or Contract that will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect
to any current or former employee of the Company, or (ii) result in the triggering or imposition or any restrictions or limitations
on the right of the Company to amend or terminate any Plan.

 

(f)               
None of the Plans, if administered in accordance with their terms, would result in the imposition of interest or
an additional tax on any participant thereunder pursuant to Section 409A.

 

(g)              
Except as required by COBRA, no Plan provides post-termination group health or other welfare benefits to any current
or former employee, director or consultant (or any of their dependents or beneficiaries).

 

Section
4.13      Insurance.
The attached Schedule 4.13 sets forth each insurance policy (including fire, commercial liability,
products liability, professional liability, construction all-risks, workers’ compensation and vehicular) maintained by
the Company on the Business and its properties, assets, products or personnel (the “Insurance Policies”),
including, with respect to each Insurance Policy, the name of the insurer, the policy effective dates, the annual premiums,
the limits and the deductibles. To the Company’s Knowledge, such policies are sufficient for compliance by the Company
with all applicable Contracts of the Company, applicable material governmental permits, and applicable Laws. Each of the
Insurance Policies is valid and binding and in full force and effect. All premiums due thereunder have been paid when due,
and the Company has not received any notice of cancellation or termination or intent to cancel any Insurance Policy. The
Insurance Policies will not terminate or lapse by reason of the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby. The Company is not in default with respect to any provision contained in any
Insurance Policy and has not failed to give any notice or present any applicable claim under any insurance policy in due and
timely fashion. To the Company’s Knowledge, the Company has complied in all material respects with all requirements to
purchase insurance under any Contract or law applicable to the Company. None of the insurance carriers have provided notice
to the Company (i) of an intention to cancel any such policy or to materially increase any insurance premiums (including
workers’ compensation premiums), or (ii) that any insurance required to be listed on Schedule 4.13
will not be available in the future on substantially the same terms as currently in effect.

 

    17

     

    

 

Section
4.14       Environmental
Compliance.

 

(a)              
Except as set forth in Schedule 4.14(a), to the Company’s Knowledge, the Company is, and
for the five (5) years prior to the date hereof has been at all times, in compliance in all material respects with all Environmental
Laws applicable to its operations.

 

(b)              
Except as set forth in Schedule 4.14(b), to the Company’s Knowledge, the Company has not
received in the five (5) years prior to the date hereof a written notice or other communication from any Governmental Body regarding
any actual or alleged violation of or liability or investigatory, corrective or remedial obligation under Environmental Laws.

 

(c)              
Except as set forth in Schedule 4.14(c), (i) neither the Company nor any Affiliate of the Company
has at any time Released, nor to the Company’s Knowledge has it at any time allowed or arranged for any third party to Release,
Hazardous Substances to, at or upon: (a) any location other than a site lawfully permitted to receive such Hazardous Substances;
(b) any parcel of real property owned, used or leased at any time, including without limitation the Real Property, by the Company,
except in compliance with applicable Environmental Laws; or (c) any site which, pursuant to the Comprehensive Environmental Response,
Compensation, and Liabilities Act of 1980, as amended (CERCLA) or any similar state or other Law, has been placed on the National
Priorities List or its equivalent under any state or other Law, or as to which the Environmental Protection Agency or any relevant
state agency or other Governmental Body has notified the Company (or any Affiliate of the Company) that it has proposed or is proposing
to place on the National Priorities List or such equivalent; and (ii) there has not occurred while occupied by the Company, nor
is there presently occurring, a Release, or, to the Knowledge of the Company, any threatened Release of any Hazardous Substance
on, into or directly beneath the surface of any Real Property. Schedule 4.14(c) also sets forth the Hazardous
Substances presently used on the Real Property.

 

(d)              
To the Company’s Knowledge, the Company has obtained and is in compliance with all permits, licenses and authorizations
required under Environmental Laws for the operation of the Business as presently conducted, including all environmental, health
and safety governmental permits necessary for the Company’s operation of the Real Property as is presently conducted.

 

    18

     

    

 

(e)              
The Company has delivered or made available to the Buyer true and complete copies of all environmental reports,
studies, analyses, tests, audits, assessments or monitoring undertaken by the Company, or its agents or representatives, relating
to or affecting the Real Property, the Business or the Company.

 

Section
4.15       Permits;
Compliance with Laws.

 

(a)              
To the Company’s Knowledge, the Company holds and is in compliance, in all material respects, with all permits,
certificates, licenses, approvals, registrations and authorizations required by it under all applicable Laws and regulations in
connection with the conduct of the Business as presently conducted (collectively, “Permits”), except for those
Permits the failure of which to hold could not, individually or in the aggregate, reasonably be expected to adversely affect in
any material respect the Company’s ability to conduct the Business as presently conducted. Schedule 4.15(a)
sets forth all material Permits held by the Company. No loss or expiration of any such Permit is pending or, to the Knowledge of
the Company, threatened or reasonably foreseeable, other than expiration in accordance with the terms thereof of Permits that may
be renewed in the ordinary course of business without lapsing.

 

(b)              
To the Company’s Knowledge, the Company is, and for the five (5) years prior to the date hereof has been, in
compliance with all applicable Laws, including all applicable export-control, trade and economic sanctions Laws, the U.S. State
Department’s International Traffic in Arms Regulations, U.S. Commerce Department’s Export Administration Regulations,
and Laws maintained by the U.S. Treasury Department’s Office of Foreign Assets Control, except for any noncompliance which
could not, individually or in the aggregate, reasonably be expected to adversely affect the Company’s ability to conduct
the Business as presently conducted. The Company has not, in the five (5) years preceding the date hereof, received any written
notice from any Governmental Body alleging that the Company is in violation of any Law or regulation applicable to the conduct
of the Business. No product sold or service provided by the Company during the last five (5) years has been sold directly or, to
the Company’s Knowledge, indirectly by the Company to, or performed directly or, to the Company’s Knowledge, indirectly
by the Company on behalf of, Cuba, Iran, Sudan, Syria or North Korea.

 

(c)              
To the Company’s Knowledge, neither the Company nor any director, officer, employee or other Person acting
on behalf of the Company, (i) has engaged, directly or indirectly, in any violation of the Foreign Corrupt Practices Act, or any
other applicable anti-bribery or anti-corruption Law (collectively, the “Anti-Corruption Laws”), or any anti-boycott,
anti-terrorism, or arms-control Laws or sanctions programs, or (ii) has ever been the subject of any bribery, money laundering
or anti-kick-back proceeding by any Governmental Body. The Company has not conducted business with any restricted party identified
in writing by the U.S. government as a Person with whom or with which conducting business would constitute a violation by the Company
of U.S. Law. Without limiting the foregoing, (1) neither the Company nor any of its directors, officers, employees or other Persons
acting on its behalf, has, directly or indirectly, taken any action, or failed to act, in a manner that would be a violation of
any Anti-Corruption Laws; and (2) none of the officers, directors, or employees of the Company are Government Officials. Except
as set forth on Schedule 4.15(c), during the last five (5) years, the Company has not performed any service
or sold any product to customers in Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Sudan, Syria, United Arab Emirates, or the
Republic of Yemen.

 

    19

     

    

 

Section
4.16        [Intentionally
Deleted].

 

Section
4.17       Broker
Fees. Neither the Company, nor any Person acting on its behalf, has paid or become obligated to pay any fee or commission
to any broker, finder, investment banker or similar intermediary for or on account of the transactions contemplated by this Agreement.

 

Section
4.18       Labor
and Employment Matters.

 

(a)              
To the Company’s Knowledge, except as set forth on Schedule 4.18(a), the Company is, and
for the two (2) years prior to the date hereof has been, in compliance in all material respects with all applicable Laws and regulations
respecting employment and employment practices, including provisions relating to overtime pay, wages and hours, equal opportunity,
collective bargaining, nondiscrimination, harassment, immigration, occupational health and safety, and the payment of social security
and other payroll Taxes. Except as described in Schedule 4.18(a) hereto, the Company has not instituted any
 “freeze” of, or delayed or deferred the grant of, any cost-of-living or other salary adjustments for any of its employees
since January 1, 2015, and no such freezes or temporary salary adjustments instituted prior to January 1, 2015 are currently in
effect. To the Knowledge of the Company, there are no organizing activities or collective bargaining arrangements that could affect
the Company pending or under discussion with any labor organization or group of employees of the Company, and to the Knowledge
of the Company no such activities have occurred in the five (5) years preceding the date hereof. In the five (5) years preceding
the date hereof, there has not been any labor strike, slowdown or work stoppage by any employees of the Company. There are no pending
or, to the Knowledge of the Company, threatened charges of unfair labor practices, employment discrimination or other wrongful
action before any Governmental Body with respect to any aspect of employment of any person by the Company employed or formerly
employed by the Company. Except as set forth on Schedule 4.18(a), the Company has not received, within the past
five (5) years, any written notification of any grievances, complaints or charges that have been filed against the Company under
any dispute resolution procedure (including any proceedings under any dispute resolution procedure under any collective bargaining
agreement) that have not been dismissed. The Company has not received written notice of pending or threatened changes of employment
status with respect to (including resignation of) the current senior management or key supervisory personnel of the Company. Except
as set forth in Schedule 4.18, the Company has not classified an individual as an “independent contractor”
or of similar status who, according to a Plan or Contract or applicable Law, should have been classified as an employee or of similar
status. The Company has no “leased employees” within the meaning of Section 414(n) of the Code.

 

(b)              
The Company has delivered to Buyer a complete and accurate list of the following information for each employee, director,
officer or manager of the Company, including each employee on leave of absence or layoff status: name; job title (including whether
full or part time); current compensation paid or payable and any change in compensation since January 1, 2015; immigration status;
a description of the fringe benefits provided to such employee as of the date of this Agreement; tenure with the Company; and service
credited for purposes of vesting and eligibility to participate under the Plans.

 

(c)               No
director or officer of the Company and, to the Knowledge of the Company, no other Company employee is a party to, or is
otherwise bound by, any agreement or arrangement, including any confidentiality, non-competition, or proprietary
rights agreement, between such employee, director or officer and any other Person (“Proprietary Rights
Agreement”) that in any way adversely affects or will affect (i) the performance of his duties as an employee,
director or officer of the Company, or (ii) the ability of the Company to conduct its Business.

 

    20

     

    

 

(d)              
Except as set forth on Schedule 4.18(d), all employees of the Company are employed by the Company
on an “at will” basis.

 

(e)              
Except as set forth in Schedule 4.18(e), as of the Effective Date, all compensation, including
wages, commissions and employment taxes, social security payments and similar governmental payments, payable to (or for the benefit
of) employees, independent contractors or consultants of the Company for services performed on or prior to the Effective Date have
been paid in full.

 

(f)               
Schedule 4.18(f) sets forth all consulting arrangements between the Company and any Person. The
Company is in compliance in all material respects with all laws applicable to such consulting arrangements.

 

(g)              
Except as set forth on Schedule 4.18(g), each employee of the Company is properly classified with
respect to eligibility for minimum wage and overtime under the FLSA and similar applicable state laws. To the Company’s Knowledge,
all employees of the Company who reside and/or work in the United States are residing and/or working in the United States (i) free
of any restrictions or limitations on their ability to accept employment lawfully in the United States and (ii) in compliance with
all applicable Laws, rules and regulations relating to immigration and naturalization, including but not limited to, the Immigration
Act of 1997, as amended, and the Labor Condition Application requirements and regulations of the U.S. Department of Labor. Except
as set forth on Schedule 4.18(g), no action, suit, proceeding, hearing, charge, complaint or claim has been
filed or commenced against the Company or, to the Company’s Knowledge, threatened, by or on behalf of any employees, that
(a) alleges any failure so to comply or (b) seeks removal, exclusion or other restrictions on (i) such employee’s ability
to reside and/or accept employment lawfully in the United States and/or (ii) the Company’s continued ability to sponsor employees
for immigration benefits and, to the Company’s Knowledge, there is no reasonable basis for any of the foregoing. To the Company’s
Knowledge, there is no reasonable basis to believe that any employee will not be able to continue to so reside and/or accept employment
lawfully in the United States in accordance with all such Laws, rules and regulations. The Company and its personnel maintain all
security clearances which are necessary for the Company’s operation of the Business.

 

Section
4.19       Related
Party Transactions.

 

(a)              
Except as set forth on the attached Schedule 4.19(a), no Related Party (i) has any interest in
any property (real, personal, or mixed and whether tangible or intangible) used in or pertaining to the Business, or (ii) owns,
of record or as a beneficial owner, an equity interest or any other financial interest in a Person that has business dealings or
a material financial interest in any transaction with the Company.

 

    21

     

    

 

 

(b)         
Except as set forth on the attached Schedule 4.19(b), the Company is not indebted, directly or
indirectly, to any Related Party in any amount whatsoever, other than for salaries for services rendered or reimbursable business
expenses or obligations owed under Company employee benefit plans, nor is any Related Party indebted to the Company, except for
advances made to employees of the Company in the ordinary course of business for reimbursable business expenses anticipated to
be incurred by such obligor.

 

(c)          
Effective as of the Closing, all Contracts with Related Parties set forth on Schedule 4.19(c)
will be terminated and the Company will be fully released of all of their obligations under such Contracts, without any additional
cost, obligation, liability or loss to the Company. The Company has delivered or made available to the Buyer written evidence of
such terminations and releases.

 

Section
4.20        Customers
and Suppliers.

 

(a)         
Except as limited by confidentiality commitments under applicable law, Schedule 4.20(a) sets forth
a list of the ten (10) largest customers of the Company for the years ended December 31, 2017 and 2018 and the six months ended
June 30, 2019 (collectively, the “Major Customers”) showing the total sales made by the Company to each such
Major Customer during each such period. To the Knowledge of the Company, no Major Customer has notified the Company or threatened
to materially decrease or limit its purchase of products or receipt of services from the Company. Since December 31, 2017, other
than as disclosed on Schedule 4.20(a), no termination, cancellation or material limitation of, or any material
modification or change in, the business relationship with the Company has occurred or, to the Knowledge of the Company, has been
threatened by any Major Customer. Except as set forth on Schedule 4.20(a), the Company has not received any
pre-payments, advances or advanced payments from any Major Customer. Except as set forth on Schedule 4.20(a),
no Major Customer has a right to receive any rebate, allowance, cash incentive payment or other back-end payment or to receive
any discount for early payment. Schedule 4.20(a) sets forth a true, correct and complete list of all material
customer complaints received in writing or otherwise documented by the Company (or any Affiliate of the Company or the Sellers
with respect to the Business) during each of the 2017 and 2018 fiscal years and during fiscal year 2018 to date, including, the
date such complaint was received by the Company, the customer name, a description of the complaint including the date of the complaint
and a description of the resolution of each complaint.

 

(b)         
Schedule 4.20(b) sets forth a list of the ten (10) largest suppliers (of goods, services, equipment
or otherwise) of the Company for the years ended December 31, 2017 and 2018 and the six months ended June 30, 2019 (collectively,
the “Major Suppliers”) showing the total purchases made by the Company from each such Major Supplier during
each such period. To the Company’s Knowledge, no Major Supplier has threatened to materially decrease or limit its sale of
assets to the Company. Since December 31, 2017, other than as disclosed on Schedule 4.20(b), no termination,
cancellation or material limitation of, or any material modification or change in, the business relationship with the Company has
occurred or, to the Knowledge of the Company, has been threatened by any Major Supplier. Schedule 4.20(b) sets
forth a true, correct and complete list of all material complaints from Major Suppliers received in writing or otherwise documented
by the Company (or Sellers or any Affiliate thereof) during each of the 2016, 2017, and 2018 fiscal years and during fiscal year
2018 to date.

 

    22

     

    

 

Section
4.21        
Inventories. The Company has delivered, or made available, to Buyer a true, correct and complete list
of all Inventories of the Company as of June 30, 2019.

 

Section
4.22       Computer
System. All computer hardware and software and related materials used by the Company, including all such computer hardware,
software and related materials (herein collectively referred to as the “Computer System”) are owned or licensed
by the Company (and not any other Affiliate thereof) and are in good working order and condition, subject to normal wear and tear
and, in the case of software, with no assurance of being error or virus free. The Computer System has the performance capabilities,
processing capacity, resources, characteristics and functions necessary to the conduct of the business and operations of the Company.
To the Company’s Knowledge, the use of the Computer System by the Company (including any software modifications) has not
violated or infringed upon the rights of any third parties. The Company uses commercially reasonable efforts to maintain Computer
System back-up and recovery capabilities to help ensure that a system problem does not impact customer facing capabilities or revenue
streams. The Company uses commercially reasonable efforts to maintain Computer System and network security controls that help safeguard
such Computer System against the risk of business disruption arising from virus attacks, unauthorized activities of any employee
or contractor of the Company, hackers or any other Person.

 

Section
4.23         Absence
of Certain Business Practices. To the Company’s Knowledge, neither the Company nor any Affiliate or agent of any
of the Company, or any other Person acting on behalf of or associated with the Company, acting alone or together, has (a) received,
directly or indirectly, any rebates, payments, commissions, promotional allowances or any other economic benefits, regardless of
their nature or type, from any customer, supplier, employee or agent of any customer or supplier; or (b) directly or indirectly
given or agreed to give any money, gift or similar benefit to any customer, supplier, employee or agent of any customer or supplier,
any official or employee of any government (domestic or foreign), or any political party or candidate for office (domestic or foreign),
or other Person who was, is or may be in a position to help or hinder the business of the Company (or assist the Company in connection
with any actual or proposed transaction), in each case which is unethical, not at arms-length or in violation of law applicable
to the Company.

 

Section
4.24        Names.
All names under which (i) the Company does business, and has during the past five (5) years done business, and (ii) the Business
operates, and has during the past five (5) years operated, are specified on Schedule 4.24.

 

Section
4.25        List
of Accounts. Schedule 4.25 contains a list of all bank and securities accounts, and all safe deposit
boxes, maintained by the Company and a listing of the persons authorized to draw thereon or make withdrawals therefrom or, in the
case of safe deposit boxes, with access thereto.

 

Section
4.26        Schedules.
Disclosure of any fact or item in any paragraph or section of the Schedules shall, should the existence of the fact or item or
its contents be relevant to any other paragraph or section, be deemed to be disclosed with respect to that other paragraph or section
whether or not a specific cross reference appears, but only to the extent that it is reasonably apparent on its face that such
fact or item applies to such other paragraph or section.

 

    23

     

    

 

ARTICLE
V

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 

Each Seller hereby
represents and warrants (severally with respect to himself, herself or itself, as the case may be, and not jointly and severally
with others) to the Buyer as of the date of this Agreement as follows:

 

Section
5.01        Authority.
Such Seller has all requisite legal capacity, power and authority to execute and deliver this Agreement and to perform such Seller’s
obligations hereunder.

 

Section
5.02         Binding
Obligations. This Agreement and the Other Transaction Documents to which such Seller is a party have been duly executed
and delivered by such Seller and constitute valid and binding agreements of such Seller, enforceable in accordance with their respective
terms, except as their enforceability may be limited by bankruptcy, insolvency, moratorium or other laws relating to or affecting
creditors’ rights generally and the exercise of judicial discretion in accordance with general equitable principles, and
except to the extent that rights to indemnification or contribution may be prohibited by public policy or Federal securities laws.

 

Section
5.03       Purchased
Shares. Such Seller has full right, power and authority to sell, transfer, assign and deliver the Purchased Shares. Such
Seller is the sole registered and beneficial owner of the Purchased Shares and has good and valid title to such Purchased Shares,
free and clear of all Liens (other than restrictions on transfer imposed by the Securities Act or state securities laws). Such
Seller is not a party to any voting trust agreement or other contract, agreement, arrangement, commitment, plan or understanding
restricting or otherwise relating to voting, dividend or other rights with respect to the Purchased Shares.

 

Section
5.04        No
Contravention. The execution, delivery and performance by such Seller of this Agreement and the Other Transaction Documents
to which such Seller is a party, the consummation by such Seller of the transactions contemplated hereby and thereby to be performed
by such Seller and the compliance with the provisions hereof and thereof by such Seller do not (a) conflict with, result in the
breach of, or constitute a default under, or require any authorization, consent, approval, exemption or other action by or notice
to any third party or Governmental Body, under the provisions of any agreement or other instrument to which such Seller is a party
or by which the property of such Seller is bound or affected, or (b) violate any laws, regulations, orders or judgments applicable
to such Seller.

 

Section
5.05        No
Claims. There is no claim pending or, to the actual knowledge of such Seller, threatened against such Seller, or such Seller’s
properties or assets, that if adversely determined, individually or in the aggregate, could reasonably be expected to materially
impair such Seller’s ability to consummate the transactions contemplated by this Agreement.

 

Section
5.06       Brokers
or Finders. Such Seller has not incurred, directly or indirectly, any liability for brokerage or finders’ fees or
agents’ commissions or any similar charges in connection with this Agreement, the Other Transaction Documents or any transaction
contemplated hereby or thereby.

 

    24

     

    

 

ARTICLE
VI

REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

The Buyer hereby represents
and warrants to the Sellers as follows:

 

Section
6.01       Organization
and Standing. The Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the
State of Florida, with full right, power and authority to enter into and perform and do all things contemplated under this Agreement
and the Other Transaction Documents to which it is a party necessary to give effect to the provisions of this Agreement and such
Other Transaction Documents.

 

Section
6.02       Authorization
and Binding Obligations. The execution, delivery and performance by the Buyer of this Agreement and the Other Transaction
Documents to which the Buyer is a party have been duly and validly authorized by all necessary action, including approval of the
entire transaction by the requisite vote of the Board of Directors of the Buyer. This Agreement and the Other Transaction Documents
to which the Buyer is a party have been duly executed and delivered by the Buyer, as the case may be, and constitute valid and
binding agreements of the Buyer, enforceable in accordance with their respective terms, except as their enforceability may be limited
by bankruptcy, insolvency, moratorium or other laws relating to or affecting creditors’ rights generally and the exercise
of judicial discretion in accordance with general equitable principles, and except to the extent that rights to indemnification
or contribution may be prohibited by public policy or Federal securities laws.

 

Section
6.03        No
Contravention. The execution, delivery and performance of this Agreement and the Other Transaction Documents to which the
Buyer is a party, the consummation of the transactions contemplated hereby and thereby and the compliance with the provisions hereof
and thereof by the Buyer do not (a) violate any provision of the Articles of Incorporation or bylaws of the Buyer, (b) conflict
with, result in the breach of, or constitute a default under, or require any authorization, consent, approval, exemption or other
action by or notice to any third party or Government Body, under the provisions of any agreement or other instrument to which the
Buyer is a party or by which the property of the Buyer is bound or affected that has not been obtained, or (c) violate any Laws,
regulations, orders or judgments applicable to the Buyer.

 

Section
6.04        Securities
Act Matters. The Buyer is purchasing the Purchased Shares for its own account, for investment only and not with a view
to, or any present intention of, effecting a distribution of such Purchased Shares or any part thereof. The Buyer acknowledges
that the Purchased Shares have not been registered under the Securities Act or the securities laws of any state or other jurisdiction
and cannot be disposed of unless they are subsequently registered under the Securities Act and any applicable state laws or an
exemption from such registration is available. The Buyer is an “accredited investor” within the meaning of Regulation
D under the Securities Act. The Buyer (i) is offering to purchase and purchasing the Purchased Shares after having made an investigation
of the business, finances and prospects of the Company, (ii) has been furnished information and materials relating to the business,
finances and operation of the Company in response to its inquiries; (iii) has been given an opportunity to make any further inquiries
desired of the Seller, management and any other personnel of the Company and has received responses to such inquiries that it deems
satisfactory, and (iv) understands that it must bear the economic risk of the investment represented by the purchase of the Purchased
Shares for an indefinite period.

 

    25

     

    

 

Section
6.05         Brokers
or Finders. The Buyer has not incurred, directly or indirectly, any liability for brokerage or finders’ fees or
agents’ commissions or any similar charges in connection with this Agreement, the Other Transaction Documents or any transaction
contemplated hereby or thereby.

 

Section
6.06         Wholly-Owned
Subsidiary. The Buyer is a wholly-owned subsidiary of Parent.

 

ARTICLE
VII

COVENANTS OF THE PARTIES

 

Section
7.01       Release.
Effective as of the Closing, each Seller, for himself, herself or itself, as applicable, and for such Seller’s heirs, successors
and assigns, does hereby release and forever discharge the Company and its successors of and from any and all claims, actions,
causes of action, demands, suits, covenants, agreements, representations, obligations, costs, liabilities, expenses, losses and
debts of any nature whatsoever, both at law and in equity, relating to any matter, claim or right, whether presently known or unknown,
which any of them now have, ever had or may have against such released parties arising from or relating to any facts or events
occurring at or prior to the Closing; provided, however, that such release and discharge under this Section 7.01 (a) shall
not apply to, affect or diminish the rights of such Seller under this Agreement or under any of the Other Transaction Documents,
(b) shall not release or discharge the obligations of the Buyer or the Company under this Agreement or under any of the Other Transaction
Documents, (c) shall not release or discharge any employee compensation or benefits accruing in the ordinary course, (d) shall
not release or diminish any rights of such Seller to indemnification by the Company under applicable law or the Company’s
Organizational Documents associated with such Seller’s service as an employee, officer or director of the any Company, or
(e) shall not release or diminish any claim or action to enforce the Seller’s rights regarding items (a) through (d) of this
Section 7.01.

 

Section
7.02       Confidentiality.
As of the Closing and at all times after the Closing, each Seller hereby agrees to retain in confidence, and not use for his
benefit or the benefit of others, all confidential and proprietary information of the Company, including without limitation,
(a) customer and supplier information, including lists of names and addresses of customers of the Company, (b) business plans
and strategies, compensation plans, compensation information, sales plans and strategies, pricing and other terms applicable
to transactions between existing and prospective customers, suppliers or business associates, (c) market research and
databases, sources of leads and methods of obtaining new business, and methods of purchasing, marketing, selling, performing
and pricing products and services employed by the Company, (d) information concerning the configuration and architecture,
technical data, networks, methods, practices, standards and capacities of the Company’s information systems, software
and other intellectual property, (e) information identified as confidential or proprietary in internal documents of the
Company, and (f) all information that is or would be a trade secret or other proprietary intellectual property of the Company
(the “Confidential Information”), and hereby agrees to not disclose such
Confidential Information to anyone other than the other parties hereto, except with the express written consent of Buyer,
except as required by applicable law or except in connection with disputes over the terms of, or to enforce such
party’s rights with respect to the Company or rights under, this Agreement, or any Other Transaction Document; provided, however,
that the Sellers may disclose relevant Confidential Information to such party’s attorney, accountant or other
representative, so long as such party advises that such information shall be kept confidential, such party hereby agreeing to
be responsible for any breach of this covenant by such attorney, accountant or other representative; and provided
further that the term “Confidential Information” shall not
include any information which (a) becomes publicly known through no wrongful act of any party as a result of being readily
ascertainable from public or published information, or trade sources or (b) is received from a third party not under an
obligation to keep such information confidential. Each Seller acknowledges that the success of the Company after the Closing
Date depends upon the continued preservation of the confidentiality of certain information possessed by such Seller, that the
preservation of the confidentiality of such information by such Seller is an essential premise of the bargain between the
parties, and that Buyer would be unwilling to enter into this Agreement in the absence of this Section 7.02.

 

    26

     

    

 

Section
7.03         Non-Competition;
Non-Solicitation; Standstill.

 

(a)          
In furtherance of the sale of the Company to the Buyer hereunder by virtue of the transactions contemplated hereby
and to more effectively protect the value of the business so sold, each Seller covenants and agrees that beginning on the Closing
until three years from and after the Closing Date (such period, the “Restricted Period”), such Seller shall
not, (1) , other than pursuant to this Section 7.03(a), directly or indirectly, as an owner, principal, partner, member,
shareholder, independent contractor, employee, consultant, joint venturer, investor, licensor, lender or in any other capacity,
alone, or in association with any other person, engage anywhere in the world where the Business has been conducted (the “Territory”)
in any activity competitive with the Business as conducted on September 1, 2019 (“Competitive Activity”), whereby
a “Competitive Activity” shall be deemed to include the construction of water treatment infrastructure or the
operation, maintenance or management of water treatment infrastructure, but shall not be deemed to include any other activity conducted
in the past, present, or future by (A) Pacific Advanced Civil Engineering, Inc., a California corporation (B) Pacific Aquascape
Inc., a California corporation, (C) Pacific Aquascape International Inc., a Utah corporation, and (D) H2O Investments (PEARL) LLC,
a California limited liability company; (2) be employed by or serve as an employee, agent, lender, investor, holder of equity or
debt securities, representative, officer, director of, or as an advisor or consultant to, any Person which engages, plans to engage
or is considering engaging in any Competitive Activity within the Territory, or (3) utilize his special knowledge of the Business
and his relationships with customers, suppliers and others, or assist any other Person, to compete with, prevent the Company from
obtaining, or divert business away from the Company in any facet of the Business as conducted September 1, 2019. Notwithstanding
anything to the contrary contained herein, solely for purposes of this Section 7.03(a), the “Restricted Period”
for Robert Nespeca shall mean the longer of (X) 18 months from the Closing Date and (Y) the “Term” (as such term is
defined in the Employment Agreement of even date herewith between the Company and Mr. Nespeca); provided that in no event shall
such Restricted Period exceed three years from the Closing Date.

 

(i)              
If any Seller (such Seller, the “Competing Seller”) shall propose to engage in any activity/opportunity
that would constitute a Competitive Activity prohibited by Section 7.03(a)(1), such Competing Seller shall first notify
the Company of the proposed activity/opportunity. Such notification shall be made by a written notice (the “Notice of
Proposed Activity”) delivered to the Company, setting forth the material facts regarding the activity/opportunity in
sufficient specificity to identify the activity/opportunity and to allow the Company to evaluate the activity/opportunity to determine
whether to pursue the activity/opportunity itself. If the Company does not notify the Competing Seller of the Company’s
decision to pursue the activity/opportunity identified in the Notice of Proposed Activity within five (5) Business Days after
the Company shall have received the Notice of Proposed Activity, then the Competing Seller shall have the right, following expiration
of such fifth (5th) Business Day after the Company shall have received the Notice of Proposed Activity, to engage in
the activity/opportunity identified in the Notice of Proposed Activity.

 

    27

     

    

 

(ii)             
The covenants in this Section 7.03(a) shall not (i) be breached as a result of the beneficial ownership by
the Sellers of (A) less than one percent (1%) of any class of publicly traded equity or debt securities of a Person engaged in
any Competitive Activity, provided that the Sellers do not control such Person, or (B) any passive investment in any Person
who, after the date of acquisition of such interest, commences any Competitive Activity, provided that neither Sellers nor
any of their Affiliates or family (including spouses, children, spouses of children and grandchildren)), individually or collectively
beneficially own more than five percent (5%) of such Person and no designee of the Sellers serves as a director or officer, or
in any similar capacity, of such Person, or (ii) be breached by virtue of such Seller’s employment with the Company or any
subsidiary of the Company or continued ownership of equity in the Company.

 

(b)         
Without the prior consent of Buyer and other than on behalf of the Company or any subsidiary of the Company, each
Seller agrees that such Seller shall not, for a period of five (5) years from the Closing Date, directly or indirectly, for himself,
herself or itself, as applicable, or for any other Person, (i) call on or solicit any of the employees of the Company or its Affiliates
(or any Person who had been such an employee in the preceding six (6) months) for purposes of entering into employment, consulting
or other business arrangements with such Persons in a manner that would induce such Person to modify, limit, or terminate such
Person’s relationship with the Company or its Affiliates or for any Competitive Activity, (ii) call on or solicit any of
the actual or targeted prospective customers or clients of the Company for the purposes of engaging in any Competitive Activity,
nor shall the Sellers make known the names and addresses of such customers or clients or any information relating in any manner
to the Sellers’ trade or business relationships with such customers or clients as they directly pertain to the Business,
(iii) hire any Person who was employed or engaged as a consultant by the Company in the preceding six (6) months prior to the Closing
Date. Section 7.03(b)(iii) shall not restrict such Seller during the Restricted Period from engaging professionals that
have provided accounting, tax or legal advice to the Company.

 

(c)         
The restrictive covenants set forth in this Section 7.03 (the “Restrictive Covenants”)
have been separately bargained for to protect the business, including goodwill, being retained by the Company and to ensure that
the Company shall continue to have the full benefit of the value thereof. Each Seller recognizes and acknowledges that the business
and markets of the Company are international in scope, and that the Buyer is investing substantial sums in purchasing the Purchased
Shares and in consideration for the Restrictive Covenants, that such covenants and the territory, time limitation and scope of
restrictions set forth in this Section 7.03 are necessary in order to protect and maintain the legitimate business interests
of the Company and are reasonable in all respects, and that the Buyer would not consummate the transactions contemplated hereby
but for such agreements. Each Seller agrees that any reduction to the territory, time limitation or scope of restrictions set
forth herein would seriously undermine the efficacy of this Section 7.03 and the protections that it is intended to provide.
Each Seller acknowledges and agrees that the covenants contained in this Section 7.03 are essential elements of this Agreement
and that, but for these covenants Buyer would not have agreed to purchase the Company. Each Seller further expressly agrees and
acknowledges that (a) the confidentiality, non-solicitation and non-competition covenants contained in this Section 7.03
(i) are supported by adequate consideration as a result of the benefit received by the through the sale of the Purchased Shares,
(ii) are necessary for the protection of the Buyer’s legitimate business interests, including the Company’s trade
secrets, goodwill and relationships with customers and suppliers and (iii) are not unduly restrictive of any rights of such Seller,
and (b) in entering into and negotiating this Agreement and the terms hereof, there has been no disparity in bargaining power
between the parties and the Sellers has been represented by counsel and fully understands the terms hereof.

 

    28

     

    

 

(d)         
If a Seller breaches, or threatens to commit a breach of, any of the provisions of this Section 7.03, the
Buyer shall have, in addition to, and not in lieu of, any other rights and remedies available to it under law or in equity, the
right to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, without having to prove actual
damages or post a bond, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable
injury to the Company and that money damages would not provide an adequate remedy.

 

(e)         
In addition to the remedies the Company may seek and obtain pursuant to Section 7.03(d) hereof, the Restricted
Period for the Sellers shall be extended by any and all periods during which the Sellers shall be found by a final non-appealable
judgment of a court possessing personal jurisdiction over him to have been in violation of the Restrictive Covenants.

 

(f)         
Whenever possible, each provision of this Section 7.03 shall be interpreted in such manner as to be effective
and valid under applicable law but if any provision of this Section 7.03 shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Section 7.03. If any provision of this Section 7.03 shall, for
any reason, be judged by any court of competent jurisdiction to be invalid or unenforceable, such judgment shall not affect, impair
or invalidate the remainder of this Section 7.03 but shall be confined in its operation to the provision of this Section
7.03 directly involved in the controversy in which such judgment shall have been rendered. In the event that the provisions
of this Section 7.03 should ever be deemed to exceed the time or geographic limitations permitted by applicable law, then
such provision shall be reformed to the maximum time or geographic limitations permitted by applicable Law.

 

Section
7.04         Tax
Matters.

 

(a)         
[Reserved].

 

(b)         
[Reserved].

 

(c)         
The Buyer, the Company and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of Tax Returns and any Tax Proceeding. Such cooperation shall include the retention and (upon
the other party’s request) the provision of records and information which are reasonably relevant to any such Tax Proceeding
and making employees available on a mutually convenient basis to provide additional information and explanation of any material
provided hereunder. The Buyer, the Company and the Sellers agree to retain all books and records with respect to Tax matters pertinent
to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations
of the respective taxable periods, and to abide by all record retention agreements entered into with any Governmental Body.

 

    29

     

    

 

(d)         
[Reserved].

 

Section
7.05       Employee
Transition Matters. The Buyer agrees to, or will cause the Company to, continue to employ after Closing, all of the employees
of the Company employed immediately prior to the Closing Date (such employees are collectively referred to as “Transitioned
Employees”). Subject to the Employment Agreements, each such Transitioned Employee shall be employed after the
Closing at the same salary levels and vacation time-off received by the Transitioned Employee immediately prior to the Closing
Date. Notwithstanding the above in this Section 7.05, but subject, however, to the Employment Agreements with the applicable
Seller, nothing in this Agreement limits the rights of the Company to terminate the employment of any Transitioned Employee at
any time after Closing or to eliminate or change the conditions of employment of a Transitioned Employee at any time after the
one-year anniversary of the Closing Date, including the amendment or termination of any benefit plans, for any reason that the
Company may, in its sole discretion, unilaterally determine and implement. Subject to the terms of the Employment Agreements with
the applicable Seller, nothing in this Section 7.05 creates or is intended to create any rights in third parties or third
party beneficiaries, including, without limitation, any rights to be employed or respecting the terms, conditions and duration
of employment.

 

Section
7.06        Independent
Investigation. Buyer has completed its independent investigation of the Company and has informed the Sellers in writing
of all items that Buyer has identified which may conflict with or are not in compliance with the representations and warranties
of the Sellers and the Company in this Agreement. Buyer confirms that the Sellers have made available to Buyer and its representatives
the opportunity to ask questions of the officers and management employees of the Company and to acquire such additional information
about the business and financial condition of the Company as Buyer has requested, and all such information has been received.

 

ARTICLE
VIII

INDEMNIFICATION

 

Section
8.01        Survival.
All representations, warranties and covenants or other agreements made by the parties herein (and in any closing certificate delivered
pursuant hereto) shall survive the Closing and continue in full force and effect until the date that is 18 months from the Closing
Date, except (i) for the representations and warranties set forth in Section 4.01(a) (Valid Corporate Existence and Authorization),
Section 4.04 (Capitalization), Section 4.08 (Tax Matters), Section 4.17 (Broker Fees), Section 5.01
(Authority), Section 5.03 (Purchased Shares), Section 5.06 (Brokers or Finders), Section 6.01 (Organization
and Standing), Section 6.02 (Authorization and Binding Obligations), Section 6.03 (No Contravention) and Section
6.05 (Brokers or Finders) (the “Fundamental Representations”), which
shall survive until the latter of (a) the expiration of the applicable statutes of limitations and (b) 24 months from the Closing
Date, and (ii) as to any matters with respect to which a bona fide written claim shall have been made or action at law or in equity
shall have been commenced before such date, in which event survival shall continue (but only with respect to, and to the extent
of, such claim). Any claims or matters made or brought with respect to such representations, warranties and covenants and other
agreements (including any closing certificate delivered pursuant hereto) after the expiration of such provision as set forth above
in this Section 8.01 shall be deemed barred under this ARTICLE VIII.

 

    30

     

    

 

Section
8.02         Indemnification
by the Sellers. Subject to the other terms of this ARTICLE VIII, after Closing,

 

(a)          
Each Seller, severally in accordance with such Seller’s Sold Pro Rata Share, hereby agrees to indemnify and
hold harmless the Buyer (hereinafter the “Buyer Indemnified Person”) from and against any and all losses, costs,
damages, penalties, fines, liabilities and expenses (including without limitation all reasonable legal or other professional fees
and expenses) arising from claims, demands, causes of action, injunctions, judgments, orders or rulings (collectively, “Damages”)
incurred or sustained by the Buyer Indemnified Person as a result of any breach of any representation or warranty by the Company
contained in ARTICLE VI herein or in any closing certificate delivered by the Company regarding ARTICLE VI; and

 

(b)         
Each Seller, severally, hereby agrees to indemnify and hold harmless the Buyer Indemnified Person from and against
any and all Damages incurred or sustained by Buyer Indemnified Person as a result of (i) any breach by such Seller of any representation
or warranty contained in ARTICLE V herein or in any closing certificate delivered by such Seller regarding ARTICLE V,
or (ii) any breach by such Seller of an Other Transaction Document to which such Seller is a party, or (iii) any breach by such
Seller of a covenant or agreement of such Seller under this Agreement.

 

Section
8.03        Indemnification
by the Buyer. After Closing, the Buyer hereby agrees to indemnify and hold harmless the Sellers from and against any and
all Damages incurred or sustained by the Sellers as a result of:

 

(a)         
any breach of any representation or warranty by the Buyer contained herein, in any Other Transaction Document to
which the Buyer is a party or in any certificate delivered by the Buyer hereunder or thereunder; or

 

(b)         
a breach by the Buyer of any covenant or other agreement contained herein or in any Other Transaction Document to
which or the Buyer is a party.

 

Section
8.04         Limitations
on Indemnification.

 

(a)          
The obligations of the Sellers pursuant to the provisions of Section 8.02 are subject to the following additional
limitations:

 

(i)              
The Sellers shall not be liable to the Buyer Indemnified Person under Section 8.02(a)(i) until, and only
to the extent, Damages incurred or sustained by the Buyer Indemnified Person regarding the matters covered by such Section
8.02(a)(i) exceed an amount equal to $100,000 in the aggregate (the “Basket”), in which event Sellers shall
be required to pay or be liable for all such Damages from the first dollar, provided that the Basket shall not apply to Fundamental
Representations or for any claims arising from fraud;

 

    31

     

    

 

(ii)             
the aggregate liability of the Sellers under Section 8.02(a) and Section 8.02(b)(i) shall be limited
to an aggregate amount equal to seventy-five percent (75%) of the Final Purchase Price (the “Cap”), except that
the Cap shall be increased to an aggregate amount equal to one hundred percent (100%) of the Final Purchase Price to the extent
of Damages by a Company or a Seller breach of Fundamental Representations, and except further that the Cap shall not apply to limit
the extent of Damages for any claims arising from fraud.

 

(b)         
From and after the Closing, each Seller shall not have, and hereby releases, any right of contribution, indemnification
or other recourse against the Company under applicable law, the Organizational Documents of the Company or any other agreement
with respect to any valid claim for indemnification hereunder by the Buyer Indemnified Person where the matter at issue is such
Seller’s liability under this ARTICLE VIII.

 

Section
8.05        Procedure
for Indemnification. The procedure to be followed in connection with any claim for indemnification by Buyer Indemnified
Person under Section 8.02 or by the Sellers under Section 8.03 (an “Indemnity
Claim”) is set forth below:

 

(a)         
A Person that may be entitled to indemnification pursuant to Section 8.02 or Section 8.03 (the “Indemnified
Party”) shall promptly give written notice (a “Notice of Claim”) to the party liable for such indemnification
(the “Indemnifying Party”). A Notice of Claim shall set forth (A) a description, in reasonable detail, of the
facts and circumstances with respect to the subject matter of such Indemnity Claim or potential Indemnity Claim, and (B) the anticipated
total amount of the Indemnity Claim (including any costs or expenses which have been or may be reasonably incurred in connection
therewith). The Indemnified Party’s failure to give prompt notice shall not constitute a defense (in whole or in part) to
any Indemnity Claim by the Indemnified Party against the Indemnifying Party, except and only to the extent that such failure shall
have caused or increased such liability or adversely affected the ability of the Indemnifying Party to defend against or reduce
its liability.

 

(b)         
If the Indemnifying Party shall reject any Damages as to which a Notice of Claim is sent by the Indemnified Party,
the Indemnifying Party shall give written notice of such rejection to the Indemnified Party within thirty (30) days after the date
of receipt of the Notice of Claim. If no rejection is provided by the Indemnifying Party within such thirty (30) day period, the
Indemnifying Party shall pay to the Indemnified Party within thirty (30) days the Damages set forth in such Notice of Claim.

 

    32

     

    

 

(c)          
If any Indemnified Party receives notice of the assertion or commencement of any action made or brought by any Person
who is not a party to this Agreement or an Affiliate of a party to this Agreement or a representative of the foregoing (a “Third
Party Claim”) against the Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification
under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice, but in any event
not later than thirty (30) days after receipt of the notice of the Third Party Claim. The failure to give prompt written notice
shall not, however, relieve the Indemnifying Party of its indemnification obligations, unless the Indemnifying Party was prejudiced
thereby, and then only to the extent of such prejudice. The notice by the Indemnified Party shall describe the Third Party Claim
in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if
reasonably practicable, of the loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall forthwith
have the option to assume the Good Faith Defense (as defined below) of such Third Party Claim at its own expense, provided, that
the Indemnified Party may retain its own counsel at the Indemnified Party’s expense. The Indemnified Party may elect at
any time to assume the defense of the Third Party Claim upon written notice to the Indemnifying Party, which assumption shall
be at the expense of the Indemnified Party unless the Indemnifying Party has not assumed the Good Faith Defense, and the Indemnified
Party may settle or compromise such defense with the consent of the Indemnifying Party which consent shall not be unreasonably
withheld or delayed. By virtue of the Indemnifying Party’s assumption of the Good Faith Defense of a Third Party Claim,
the parties shall be deemed to have agreed as follows: (x) all claims made pursuant to such Third Party Claim are completely within
the scope of and subject to indemnification and will be the sole and exclusive liability and responsibility of the Indemnifying
Party subject to the limits and terms of this ARTICLE VIII; (y) no compromise or settlement of such claims or action may
be effected by the Indemnifying Party without the Indemnified Party’s consent which consent shall not be unreasonably withheld
or delayed; and (z) the Indemnified Party will have no liability or adverse consequence with respect to any compromise or settlement
of such claims or action effected without the Indemnified Party’s consent which consent shall not be unreasonably withheld
or delayed. For purposes hereof, “Good Faith Defense” means legal defense conducted by reputable counsel of
good standing, which consent shall not be unreasonably withheld or delayed. If a Good Faith Defense is not commenced within thirty
business days following receipt of notice of the Third Party Claim from the Indemnified Party (or such shorter period, if any,
during which a defense must be commenced in order for the defendant to preserve its rights), the Indemnifying Party shall be deemed
to have waived its option to assume the Good Faith Defense with respect thereto. The parties shall provide such cooperation and
such access to their books, records and properties as any party shall reasonably request with respect to such matter; and the
parties hereto agree to cooperate with each other in all reasonable respects in order to help ensure the proper and adequate defense
thereof and in furtherance of seeking a mutually acceptable solution. With regard to Third Party Claims for which indemnification
is due and owing hereunder, such indemnification shall be paid by the Indemnifying Party upon the earliest to occur of: (a) the
entry of a judgment of a court of competent jurisdiction against the Indemnified Party and the expiration of any applicable appeal
period; (b) the entry of an nonappealable judgment of a court of competent jurisdiction against the Indemnified Party; or (c)
a settlement of the Third Party Claim with the mutual written consent of Buyer and the Sellers.

 

(d)         
Notwithstanding anything contained herein to the contrary, for purposes of determining the amount of any Damages
that are the subject matter of an indemnification obligation under this ARTICLE VIII (but not for purposes of determining
whether a qualifying breach shall have occurred under Section 8.02 or Section 8.03), each representation and warranty
in this Agreement and the schedules and exhibits hereto shall be read without regard and without giving effect to any Materiality
Qualifier contained in such representation or warranty which has the effect of making such representation and warranty less likely
to be breached (as if such word or words were deleted from such representation or warranty). As used in this paragraph (d), “Materiality
Qualifier” means any reference or qualification to a set of facts using the term “material,” “in all
material respects,” “material adverse effect” or any similar phrase.

 

    33

     

    

 

Section
8.06        Tax
Treatment of Indemnification Payments. The Sellers and the Buyer agree to treat any payment made pursuant to this ARTICLE
VIII as an adjustment to the Final Purchase Price for U.S. federal, state and local income Tax purposes.

 

Section
8.07        Additional
General Limitations. Except to the extent that Damages arise in a Third Party Claim for which indemnification is due, the
Indemnified Party shall not seek, nor be entitled to, consequential, punitive, exemplary or special damages (including damages
for any lost profits) in any claim for indemnification or recovery pursuant to this ARTICLE VIII. Any claim for Damages
payable under this ARTICLE VIII shall be (i) net of any insurance proceeds actually received by such Indemnified Party with
respect to such Damages (after deducting the amounts of policy deductibles, self-insured retentions and any out of pocket costs
and expenses incurred in connection with the recovery of such proceeds), and (ii) calculated on an “After-Tax Basis”,
which shall mean, with respect to the event giving rise to such Damages (the “Indemnified Event”),
Damages shall be determined after taking into account, to the extent not previously taken into account in computing the amount
of the such Damages, all reductions in federal, state, local and foreign Taxes (including estimated Taxes) realized by the Indemnified
Party for all affected taxable years and periods as a result of the Indemnified Event. All calculations regarding such reductions
shall be made at the time of the relevant indemnification payment using reasonable assumptions and present value concepts as reasonably
agreed to by Buyer and Sellers. In addition, Sellers shall have no liability or obligation under this ARTICLE VIII for any
Damages from any claim or matter for which the Closing Working Capital reflects an accrual or other applicable adjustment.

 

Section
8.08        Exclusive
Remedy. Except with respect to any equitable remedy to which the Buyer Indemnified Person shall be entitled for a breach
by a Seller of any of Section 7.02 or Section 7.03 hereof and except with respect
to the Other Transaction Documents, the remedies and causes of action provided in this ARTICLE VIII shall be the exclusive
remedies and causes of action of the parties hereto after the Closing in connection with the terms of, and the transactions contemplated
by, this Agreement, including without limitation any breach or non-performance of any representation, warranty, covenant or agreement
contained herein or in any closing certificate delivered pursuant hereto; and, to the extent allowed by applicable law, each indemnified
party does hereby waive any and all such other statutory, common law and contractual rights and remedies with respect to the subject
matter of this Agreement.

 

Section
8.09         Knowledge
and Insurance. The right of an Indemnified Party to indemnification pursuant to this ARTICLE VIII will not be affected
by any investigation conducted or knowledge acquired (or capable of being acquired) by such Indemnified Party, at any time, whether
before or after the execution and delivery of this Agreement, with respect to the accuracy of any representation or warranty,
performance of or compliance with any covenant or agreement referred to herein, so long as such Indemnified Party has complied
with all requirements hereunder to provide notice of any such knowledge under Section 7.06. Notwithstanding any provision of this
Agreement or any other agreement between the parties to the contrary, in no event shall Sellers have any obligation hereunder
or otherwise, to indemnify and hold Buyer harmless from and against any Damages suffered or incurred directly or indirectly, as
a result of or arising from any breach of any representation or warranty of the Sellers or the Company under this Agreement, or
any breach by the Sellers or the Company of any of its covenants or other agreements set for in this Agreement, if and to the
extent all or any part of such Damages are covered by insurance maintained by Buyer or the Company (and in each such case, the
insured under such policy must first make good faith and diligent efforts to promptly claim and recover against the applicable
insurer for any such matters).

 

    34

     

    

 

Section
8.10        No
Reliance. The Buyer has not relied on the Sellers with respect to any matter in connection with the evaluation of the Company
other than the representations and warranties of the Sellers and the Company specifically set forth in ARTICLES ARTICLE IV
and ARTICLE V hereof and the Schedules thereto, and the Buyer acknowledges that the Sellers are making no representations
or warranties, express or implied, of any nature whatever with respect to the Company other than the representations and warranties
of specifically set forth in ARTICLES ARTICLE IV and ARTICLE V and the Schedules thereto.

 

ARTICLE
IX

DEFINITIONS

 

Section
9.01       Definitions.
For purposes hereof, the following terms when used herein shall have the respective meanings set forth below:

 

“Action”
means any action, lawsuit, arbitration, government audit, government notice of violation, proceeding, litigation or government
investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

 

“Affiliate”
of any particular Person means (1) any Person, other than an individual, owning directly, or indirectly controlling, at least fifty
percent (50%) of the stock entitled to vote for election of directors of the subject Person, (2) any Person, other than an individual,
owned or directly controlled by the subject Person through ownership of at least fifty percent (50%) of the stock entitled to vote
for election of directors or any other entity actually controlled by the subject Person, or (3) any Person (other than the subject
Person) owned or directly controlled by the Person mentioned in (1) above, through ownership of at least fifty percent (50%) of
the stock entitled to vote for election of directors.

 

“Agreement”
has the meaning set forth in the preamble.

 

“Anti-Corruption
Laws” has the meaning set forth in Section 4.15(c).

 

“Audited Financial
Statements” has the meaning set forth in Section 4.05(a).

 

“Basket”
has the meaning set forth in Section 8.04(a)(i).

 

“Business”
means the businesses operated by the Company as of the Closing Date.

 

“Business
Day” means any day other than a Saturday, Sunday, or a day on which the Federal Reserve Bank of San Francisco is closed.

 

“Buyer”
has the meaning set forth in the preamble.

 

    35

     

    

 

“Buyer Indemnified
Person” has the meaning set forth in Section 8.02(a).

 

“Buyer QVF”
has the meaning set forth in Section 3.01(f)(ii).

 

“Call Right” has the
meaning set forth in Section 3.01(a).

 

“Cap”
has the meaning set forth in Section 8.04(a)(ii).

 

“Cash”
means unrestricted cash.

 

“Closing”
has the meaning set forth in Section 2.01.

 

“Closing Date”
has the meaning set forth in Section 2.01.

 

“Closing Working
Capital” means Current Assets less Current Liabilities, determined as of the close of business on the Closing Date.

 

“Closing Working
Capital Statement” has the meaning set forth in Section 2.04(b)(i).

 

“Closing Date
Purchase Price” has the meaning set forth in Section 1.02.

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Company”
has the meaning set forth in the preamble.

 

“Company Source
Code” has the meaning set forth in Section 4.10.

 

“Competing
Seller” has the meaning set forth in Section 7.03(a)(1).

 

“Competitive
Activity” has the meaning set forth in Section 7.03(a).

 

“Computer
System” has the meaning set forth in Section 4.23.

 

“Confidential
Information” has the meaning set forth in Section 7.02.

 

“Confidentiality
Agreement” has the meaning set forth in Section 2.02(a).

 

“Contract”
means any agreement, contract, lease, deed, license, instrument, note, indenture, obligation, or other legally binding commitment
of a Person entered into with a third party, whether written or oral, to which such Person is bound or to which such Person’s
assets or properties are subject and any amendments or supplements thereto.

 

“Current Assets”
means the current assets of the Company as of the Closing Date determined in accordance with and based upon GAAP, excluding
(i) amounts owed by any Seller and any accrued interest thereon, (ii) equipment and accumulated depreciation, (iii) office and
computer equipment and accumulated depreciation, (iv) leasehold improvements and accumulated depreciation, and (vi) building and
accumulated depreciation.

 

    36

     

    

 

“Current Liabilities”
means the current liabilities of the Company as of the Closing Date determined in accordance with and based upon GAAP, including
accruals for accounts payable and credit card obligations, but excluding estimated transaction expenses.

 

“Damages”
has the meaning set forth in Section 8.02(a).

 

“Disclosure
Schedules” has the meaning set forth in ARTICLE V.

 

“Dollars”
means the lawful currency of the United States of America.

 

“Employment
Agreement” has the meaning set forth in Section 2.02(a).

 

“Encumbrance” means
any lien, pledge, mortgage, deed of trust, restriction, security interest, charge, claim, easement, encroachment, condition, equitable
interest, option, right of way, right of first refusal or other similar encumbrance.

 

“Environmental
Laws” means any applicable Law, and any order from any Government Body or binding agreement with any Governmental Body:
(a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, or
the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence
of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation,
discharge, transportation, processing, production, disposal or remediation of any Hazardous Substances. The term “Environmental
Law” includes the following (including their implementing regulations and any state analogs): the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
 §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976,
as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution
Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances
Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments
of 1990, 42 U.S.C. §§ 7401 et seq.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate”
means a corporation or other person, firm or entity which, together with the Company, would be deemed to be a single employer within
the meaning of Section 414(b), (c), (m) or (o) of the Code.

 

“Estimated
Closing Working Capital” has the meaning set forth in Section 2.04(a).

 

“Estimated
Closing Working Capital Statement” has the meaning set forth in Section 2.04(a).

 

“Exercise Price” has
the meaning set forth in Section 3.01(f)(i).

 

“Exercising Party” has
the meaning set forth in Section 3.01(b).

 

    37

     

    

 

“Fair Market Value” has
the meaning set forth in Section 3.01(f)(i).

 

“Financial
Statements” has the meaning set forth in Section 4.05(a).

 

“Fundamental
Representations” has the meaning set forth in Section 8.01.

 

“GAAP”
means United States generally accepted accounting principles.

 

“Good Faith
Defense” has the meaning set forth in Section 8.05(a).

 

“Governmental
Body” means any (a) federal, state, local, municipal, foreign, or other government, or (b) governmental or quasi-governmental
authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization
or regulatory body, and any court, arbitrator, or other similar governmental or quasi-governmental tribunal).

 

“Government
Official” means any (i) officer or employee of a Governmental Body or instrumentality thereof (including any state-owned
or state-controlled enterprise) or of a public international organization, (ii) candidate for political office or official of any
political party, (iii) person acting for or on behalf of any Governmental Body or instrumentality thereof.

 

“Governmental
Order” means any order, writ, judgment, injunction, decree, stipulation, determination, decision, ruling, memorandum
of understanding or award entered, issued made or rendered by or with any Governmental Body.

 

“Hazardous
Substances” means any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral
or gas, in each case, whether naturally occurring or manmade, that is toxic, ignitable, reactive, corrosive, radioactive or caustic
(including, petroleum, its derivatives, by-products and other hydrocarbons, poly-chlorinated bi-phenyls and asbestos), or regulated
or defined as a hazardous substance, contaminant, toxic substance, toxic pollutant, hazardous waste, special waste, or pollutant
pursuant to Environmental Laws.

 

“Incorporated
Open Source Software” has the meaning set forth in Section 4.10.

 

“Indebtedness”
means, as of any particular time, without duplication (i) the amount of all obligations for borrowed money, (ii) all liabilities
evidenced by bonds, debentures, promissory notes, or other similar instruments or debt securities, (iii) all obligations, contingent
or otherwise, in respect of any letters of credit or similar instruments (in each case to the extent drawn), (iv) all guarantees
of the obligations of another Person with respect to any of the foregoing, (v) all obligations for or assumed as the deferred purchase
price of property or services, and all interest thereon and fees and other expenses related thereto excluding open materials commitments
(vi) all liabilities related to any unfunded or underfunded employee pension plan within the meaning of Section 3(2) of ERISA,
and all interest thereon and fees and other expenses related thereto, and (vii) severance or other amounts payable to any employee
terminated at or prior to Closing and all interest thereon and fees and other expenses related thereto; provided, however, Indebtedness
shall in no event include any item that is accounted for in Closing Working Capital.

 

    38

     

    

 

“Indemnified
Event” has the meaning set forth in Section 8.07.

 

“Indemnified
Party” has the meaning set forth in Section 8.05(a).

 

“Indemnifying
Party” has the meaning set forth in Section 8.05(a).

 

“Indemnity
Claim” has the meaning set forth in Section 8.05.

 

“Independent QVF” has
the meaning set forth in Section 3.01(f)(ii).

 

“Insurance
Policies” has the meaning set forth in Section 4.13.

 

“Intellectual
Property” means all of the following, including such of the following that is owned by the Company and in which the Company
holds exclusive or non-exclusive rights or interests granted by license from other Persons, including the Sellers: (i) domestic
and foreign patents, patent applications and patent or invention disclosures; (ii) registered and unregistered trademarks, registered
and unregistered service marks, trade dress, trade names, brand names, corporate names, Internet domain names and other identifiers
of source or goodwill, together with all goodwill associated with each of the foregoing; (iii) registered and unregistered copyrights;
(iv) Software; (v) trade secrets, know-how, quality control, methods, processes and other confidential and proprietary information;
(vi) registrations and applications for any of the foregoing; and (vii) and other similar know-how or intangible properties that
are used by the Company for ownership, management or operation and the conduct of the Business.

 

“Interim Financial
Statements” has the meaning set forth in Section 4.05(a).

 

“Inventory”
means all goods, merchandise and other personal property owned and held for sale by the Company, and all raw materials, works-in-process,
materials and supplies of every nature owned by the Company which contribute to the finished products of the Company in the ordinary
course of its business.

 

“Knowledge”
or any similar phrase with respect to the knowledge of the Buyer shall mean the knowledge of any executive officer or director
of the Buyer, and an individual shall be deemed to have “knowledge” of a particular fact, circumstance or other matter
if: (i) such person is actually aware of such fact, circumstance or matter or (ii) an individual could have obtained such fact,
circumstance or matter through a reasonable inquiry concerning the truth or existence of such fact, circumstance or other matter.

 

“Knowledge
of the Company” or the “Company’s Knowledge” or any similar phrase with respect to the Knowledge
of the Company shall mean the knowledge of any executive officer or director of the Company, including the Sellers, and an individual
shall be deemed to have “knowledge” of a particular fact, circumstance or other matter if: (i) such person is actually
aware of such fact, circumstance or matter or (ii) an individual could have obtained such fact, circumstance or matter through
a reasonable inquiry and was alerted or otherwise had an obligation to make such inquiry concerning the truth or existence of such
fact, circumstance or other matter.

 

“Latest Balance
Sheet” has the meaning set forth in Section 4.05(a).

 

    39

     

    

 

“Law”
means any law, rule, regulation, ordinance, judgment, injunction, order, decree, administrative requirement, or other restriction
of any Governmental Body, as enacted or promulgated and in effect on or prior to the Closing Date.

 

“Lease”
means that certain Commercial Office Building Lease dated as of August 17, 2007, by and between Metro Point 13580 Lot Two, a California
limited partnership, and Pacific Environmental Resources Corp., an Arizona corporation, as amended by Amendment No. 1 to Office
Building Lease dated as of March 9, 2012 by and between Metro Point 13580 Lot Two and Pacific Environmental Resources Corp., as
assigned by Pacific Environmental Resources Corp. to the Company pursuant to that certain Assignment of Lease dated March 14, 2012
by and among Metro Point 13580 Lot Two, Pacific Environmental Resources Corp., as assignor, and the Company, as assignee, and as
further amended by that certain Amendment No. 2 to Office Building Lease dated as of February 11, 2016 by and between Metro Point
13580 Lot Two and the Company, covering the premises described therein and located at 959 South Coast Drive, Suite 315, Costa Mesa,
CA 92626

 

“Liabilities”
has the meaning set forth in Section 4.05(b).

 

“Lien”
means any lien (statutory or other), Encumbrance, security interest, purchase option, easement, encroachment of real property,
right of first refusal, pledge, charging order, mortgage, deed of trust or other similar encumbrance or claim.

 

“Major Customers”
has the meaning set forth in Section 4.20(a).

 

“Major Suppliers”
has the meaning set forth in Section 4.20(b).

 

“Materiality
Qualifier” has the meaning set forth in Section 8.05(d).

 

“Notice of
Claim” has the meaning set forth in Section 8.05(a).

 

“Notice of
Proposed Activity” has the meaning set forth in Section 7.03(a)(1).

 

“Organizational
Documents” means the Articles of Incorporation and bylaws (or equivalent governing instruments required or contemplated
by applicable Law), as currently in force and effect, of the Company.

 

“Option Closing Date”
has the meaning set forth in Section 3.01(b)(iii).

 

“Option Shares” has the
meaning set forth in Section 3.01(a).

 

“Other Transaction
Documents” means the Employment Agreement, the Confidentiality Agreement, the Shareholders’ Agreement and the Services
Agreement.

 

“Parent”
means Consolidated Water Co. Ltd.

 

“Permits”
has the meaning set forth in Section 4.15(a).

 

    40

     

    

 

“Permitted
Liens” means (i) Liens securing liabilities which are reflected or reserved against in the Latest Balance Sheet to the
extent so reflected or reserved; (ii) Liens for Taxes not yet due and payable or which are being contested in good faith and by
appropriate proceedings; (iii) mechanic’s, materialmen’s and similar Liens securing obligations not yet delinquent;
(iv) purchase money Liens and Liens securing rental payments under capital lease arrangements; and (v) (A) zoning, building codes
and other land use laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed
by any Governmental Body and (B) easements, covenants, conditions, restrictions and other similar matters of record affecting
title to real property which, in the case of subclauses (A) and (B) of this clause (v), are not violated
by the current use or occupancy of such real property or the operation of the Business.

 

“Person”
means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization or a Governmental Body.

 

“Plan”
has the meaning set forth in Section 4.12(a).

 

“Post-Closing
Adjustment” has the meaning set forth in Section 2.04(b)(ii).

 

“Post-Closing
Pro Rata Share” has the meaning set forth in Section 1.01.

 

“Pre-Closing
Pro Rata Share” has the meaning set forth in Section 1.01.

 

“Product”
means each product, process, application or service manufactured, licensed, distributed, performed, or sold by the Company (or
any Affiliate thereof with respect to the Business) within the past five (5) years and any other products in which the Company
(or any Affiliate thereof with respect to the Business) has or had any proprietary rights within the past five (5) years.

 

“Proprietary
Rights Agreement” has the meaning set forth in Section 4.18(c).

 

“Purchased
Shares” has the meaning set forth in Section 1.01.

 

“Put Right” has the meaning
set forth in Section 3.01(a).

 

“Qualified Valuation Firm”
has the meaning set forth in Section 3.01(f)(ii).

 

“Real Property”
has the meaning set forth in Section 4.07(b).

 

“Records”
has the meaning set forth in Section 2.02(e).

 

“Related
Party” means (i) any Seller or any officer or director of the Company, (ii) any spouse, former spouse, child (natural
or adopted), parent, parent of a spouse, sibling or grandchild of any of the Persons listed in clause (i) above, (iii) any Affiliate
of any of the Persons listed in clause (i) or (ii) above (other than the Company), (iv) any corporation or organization of which
such Person listed in clause (i) or (ii) above is an officer or partner or is directly or indirectly the beneficial owner of 10%
or more of any class of equity securities, other than of the Company, and (v) any trust or other estate in which any of the Persons
listed in clause (i) or (ii) above has a substantial beneficial interest or as to which such Person serves as trustee or in a
similar fiduciary capacity, other than of the Company.

  

    41

     

    

 

 

“Release” means any
manner of spilling, leaking, dumping, discharging, releasing, migrating or emitting, as any of such terms may further be defined
in any Environmental Law, into or through any medium including ground water, surface water, land, soil or air.

 

“Responding Party” has
the meaning set forth in Section 3.01(b).

 

“Restricted
Period” has the meaning set forth in Section 7.03(a).

 

“Restrictive
Covenants” has the meaning set forth in Section 7.03(c).

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Seller”
has the meaning set forth in the preamble.

 

“Seller QVF” has the
meaning set forth in Section 3.01(f)(ii).

 

“Services
Agreement” has the meaning set forth in Section 2.02(i).

 

“Shares”
has the meaning set forth in the recitals.

 

“Shareholders’
Agreement” has the meaning set forth in Section 2.02(h).

 

“Software”
means computer software, applications and databases, together with, as applicable, object code, source code, firmware and embedded
versions thereof and documentation related thereto.

 

“Sold Pro
Rata Share” has the meaning set forth in Section 1.01.

 

“Stock of
the Company” means the shares of stock of the Company, par value of $0.01 per share.

 

“Target Working
Capital” has the meaning set forth in Section 2.04(a).

 

“Tax”
or “Taxes” includes (1) any federal, state, local or foreign income, capital, franchise, import, value added,
estimated, alternative minimum, sales, use, transfer, registration, excise, stamp, windfall profit, customs, duties, real property,
personal property, capital stock, social security, unemployment, disability, payroll, unclaimed property, escheat or other tax
of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing,
and (2) any liability for the payment of any amounts of the type described in (1) as a result of being a member of a consolidated,
combined, unitary or aggregate group for any taxable period.

 

“Tax Proceedings”
means any audit, claim for refund or contest or defense against any assessment, notice of deficiency, or other proposed adjustment
relating to any and all Taxes of the Company.

 

    42

     

    

 

“Tax Returns”
means returns, declarations, reports, claims for refund, information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection
of any Taxes of any party.

 

“Territory”
has the meaning set forth in Section 7.03(a).

 

“Third Party
Claim” has the meaning set forth in Section 8.05(a).

 

“Transitioned
Employees” has the meaning set forth in Section 7.05.

 

“Widely Varying Value”
has the meaning set forth in Section 3.01(f)(ii).

 

Section
9.02       Other
Definitional Provisions.

 

(a)              
“Hereof,” etc. The terms “hereof,” “herein” and “hereunder” and terms
of similar import are references to this Agreement as a whole and not to any particular provision of this Agreement unless otherwise
explicitly specified. Section, clause, schedule and exhibit references contained in this Agreement are references to “, clauses,
schedules and exhibits in or to this Agreement, unless otherwise explicitly specified.

 

(b)              
“Including,” etc. The term “including” shall mean “including but not limited to.”

 

(c)              
Gender. Any reference in this Agreement to gender shall include all genders.

 

(d)              
Reference to a Person in a particular capacity excludes such Person in any other capacity or individually.

 

(e)              
Reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified
and in effect from time to time in accordance with the terms thereof.

 

(f)               
Reference to any Law for purposes of a post-Closing covenant under this Agreement means such Law as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect as of the time for performance of such covenant, including
rules and regulations promulgated thereunder;

 

(g)              
“Or” is used in the inclusive sense of “and/or”.

 

(h)              
References to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits, schedules,
or amendments thereto as then in effect.

 

    43

     

    

 

ARTICLE
X

MISCELLANEOUS

 

Section
10.01   Press Releases
and Communications. Any public announcement, press release or similar publicity with respect to this Agreement or the contemplated
transactions will be issued, if at all, at such time and in such manner as the Buyer determines with the approval of the Sellers,
such approval to not be unreasonably withheld or delayed, except that such approval shall not be required to the extent such public
announcement and its content is required of the Buyer by applicable Law or by The Nasdaq Stock Market rules. Sellers and Buyer
will consult with each other concerning the means by which the Company’s employees, customers, suppliers and others having
dealings with the Company will be informed of this Agreement and the contemplated transactions, and Buyer and Sellers will have
the right to be present for any such communication.

 

Section
10.02   Expenses. Except
as otherwise expressly provided herein, all fees, costs and expenses (including fees, costs and expenses of legal counsel, accountants,
investment bankers, brokers or other representatives and consultants) incurred in connection with the negotiation of this Agreement
and the other agreements contemplated hereby, the performance of this Agreement and the other agreements contemplated hereby, shall
be paid by the party incurring such expense.

 

Section
10.03   Notices. Except as
otherwise expressly provided herein, all notices, demands and other communications to be given or delivered under or by reason
of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when personally delivered, (b)
first Business Day after being transmitted via Email if the sender on the same day sends a confirming copy of such notice by a
recognized overnight delivery service (charges prepaid), (c) the day following the day (except if not a Business Day, then the
next Business Day) on which the same has been delivered prepaid to a reputable national overnight air courier service or (d) the
third (3rd) Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at the address set forth below, or at such other address
as such party may specify by written notice to the other party hereto:

 

Notices to the Buyer:

 

Consolidated Water U.S. Holdings, Inc.

Attn: Frederick W. McTaggart, President

5810 Coral Ridge Drive, Suite 220

Coral Springs, Florida 33076

Telephone: (954) 509-8280

Email: rmctaggart@cwco.com

  

With a copy to:

 

Duane Morris LLP

Attn: Driscoll R. Ugarte

1875 NW Corporate Boulevard, Suite 300

Boca Raton, FL 33431-8561

Telephone: (561) 962-2139

Email: drugarte@duanemorris.com

 

    44

     

    

 

Notices to the Sellers:

 

Johan Perslow

4079 Skyline Road

Carlsbad, CA 92008

Telephone: 714 514-8820

Email: Jperslow@percwater.com

 

The Krebs Living Trust Established February 8, 2002

Attn: Mark Krebs

4092 Ondine Circle

Huntington Beach, CA 92649

Telephone: 714 514-8822

Email: mkrebs@pacewater.com

 

Robert J Nespeca

10 Dion

Laguna Niguel, CA 92677

Telephone: 714 514-8873

Email: bnespeca@percwater.com

 

Steven D. Owen

1604 E Yalecrest

Avenue Salt Lake City, UT 84105

Telephone: 714 514-8877

Email: sowen@percwater.com

 

Karen T. Sayles

46 Via Joaquin

Rancho Santa Margarita, CA 92688

Telephone: 949 677-3855

Email: ksayles@percwater.com

 

2006 Severson Family Trust dated March 6, 2006

Attn: Cory Severson

227 18th Street

Huntington Beach, CA 92648

Telephone: 714 514-8821

Email cseverson@pacificaquascape.com

 

    45

     

    

 

Nathan Owen

56 Via Armilla

San Clemente, CA 92673

Telephone:714 514-8883

Email: nowen@percwater.com

 

with a copy (which shall not constitute notice) to:

 

Fabian VanCott

Attn: Nora Brunelle

215 S. State Street, 12th Floor

Salt Lake City, UT 84111

Telephone: 801-323-2220

Email: nbrunelle@fabianvancott.com

 

Section
10.04   Assignment. This
Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns, except that neither this Agreement nor any of the rights, interests or obligations hereunder
may be assigned or delegated by the Buyer, on the one hand, and the Sellers, on the other hand, without the prior written consent
of the other party.

 

Section
10.05   Severability. Whenever
possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions
of this Agreement. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited
or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. The parties
further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

 

Section
10.06   Construction.
The headings of the sections and paragraphs of this Agreement have been inserted for convenience of reference only and shall
in no way restrict or otherwise modify any of the terms or provisions hereof. The specification of any dollar amount or the
inclusion of any item in the representations and warranties contained in this Agreement, the Disclosure Schedules or the
attached exhibits is not intended to imply that the items so included, or other items, are or are not required to be
disclosed (including whether such amounts or items are required to be disclosed as material or threatened) or are within or
outside of the ordinary course of business, and no party shall use the fact of the inclusion of any item in this Agreement,
the Disclosure Schedules or exhibits in any dispute or controversy between the parties as to whether any obligation, item or
matter not set forth or included in this Agreement, the Disclosure Schedules or exhibits is or is not required to be
disclosed (including whether the items are required to be disclosed as material or threatened) or is within or outside of the
ordinary course of business for purposes of this Agreement. In addition, matters reflected in the Disclosure Schedules are
not necessarily limited to matters required by this Agreement to be reflected in the Disclosure Schedules. Such additional
matters are set forth for informational purposes only and do not necessarily include other matters of a similar nature. The
information contained in this Agreement, in the Disclosure Schedules and exhibits hereto is disclosed solely for purposes of
this Agreement, and no information contained herein or therein shall be deemed to be an admission by any party hereto to any
third-party of any matter whatsoever (including any violation of law or breach of contract).

 

    46

     

    

 

Section
10.07    Specific Performance.
The parties agree that irreparable damage would occur in the event that any of the provisions of Section 7.03 of this Agreement
were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the parties shall be
entitled to specific performance of the terms thereof, including an injunction or injunctions to prevent breaches of Section
7.03 of this Agreement and to enforce specifically the terms and provisions of Section 7.03 of this Agreement in any
federal or state court contemplated by Section 10.13. Each of the parties hereby further waives any defense in any action
for specific performance that a remedy at law would be adequate regarding such Section 7.03.

 

Section
10.08   Amendment and Waiver.
Except as provided herein, and subject to applicable Law, any provision of this Agreement or the Disclosure Schedules or exhibits
hereto may be amended or waived only in a writing signed by the Buyer and the Sellers. No waiver of any provision hereunder or
any breach or default thereof shall extend to or affect in any way any other provision or prior or subsequent breach or default.

 

Section
10.09   Complete Agreement.
This Agreement and the other agreements, instruments and documents executed in connection herewith (including the Other Transaction
Documents) contain the complete agreement between the parties hereto and supersede any prior understandings, agreements or representations
by or between the parties, written or oral, which may have related to the subject matter hereof in any way.

 

Section
10.10   Third-Party Beneficiaries.
Except as otherwise expressly provided herein, nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement
or any provision of this Agreement.

 

Section
10.11   Counterparts. This
Agreement may be executed in multiple counterparts, any one of which need not contain the signature of more than one party, but
all such counterparts taken together shall constitute one and the same instrument. Any executed counterpart may be delivered by
electronic transmission and such counterpart shall be deemed an original.

 

Section
10.12   Governing Law and
Waiver of Jury Trial. All issues and questions concerning the construction, validity, interpretation and
enforceability of this Agreement or the transactions contemplated hereby and the exhibits and schedules hereto, and all
claims and disputes arising hereunder or in connection herewith, whether purporting to sound in contract or tort, or at law
or in equity, shall be governed by, and construed in accordance with, the laws of the State of California, without giving
effect to any choice of law or conflict of law rules or provisions (whether of the State of California or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. EACH OF
THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDINGS OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

    47

     

    

 

Section
10.13   Venue and Jurisdiction.
The parties agree that any action arising out of this Agreement shall be venued in the federal, state or local courts located in
Orange County, California and the parties hereby consent to personal jurisdiction in such courts and waive any objection based
on the defense of an inconvenient forum and any objection to jurisdiction or venue of any action instituted hereunder. Each party
hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding
by the mailing of copies thereof by registered or certified mail, postage prepaid, to the addresses set forth in Section 10.03.

 

Section
10.14   Attorney’s Fees.
If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement or any of the Other Transaction
Documents, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition
to any other relief to which such party may be entitled.

 

Section
10.15   No Presumption Against Drafting
Party. Each of the Buyer, the Company and the Sellers acknowledges that each party to this Agreement has been represented
by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law
or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party
has no application and is expressly waived.

 

Section
10.16   Further Assurances.
Following the Closing, each of the Parties will, and will cause their respective Affiliates to, execute and deliver such additional
documents, instruments, conveyances, and assurances, and take such further actions, as may be reasonably required to carry out
the provisions of this Agreement and give effect to the transactions contemplated by this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

    48

     

    

 

IN WITNESS WHEREOF,
the parties hereto have executed this Stock Purchase Agreement on the day and year first above written.

 

	 	COMPANY:
	 	 
	 	PERC WATER CORPORATION
	 	 
	 	By:	/s/ Nathan Owen
	 	Name:  	Nathan Owen
	 	Title:	President
	 	 	 
	 	SELLERS:
	 	 
	 	/s/ Johan Perslow
	 	
        Johan Perslow

         

        /s/ Steven Owen

	 	
        Steven Owen

         

        /s/ Robert Nespeca

	 	
        Robert Nespeca

         

        /s/ Nathan Owen

	 	
        Nathan Owen

         

        /s/ Karen Sayles

	 	Karen Sayles
	 	 
	 	2006 Severson Family Trust dated March 6, 2006
	 	 
	 	By:	/s/ Cory Severson
	 	Name:	Cory M. Severson
	 	Title:	Trustee
	 	 
	 	The Krebs Living Trust Established February 8, 2002
	 	 
	 	By:	/s/ Mark Krebs
	 	Name:	Mark E. Krebs
	 	Title:	Trustee
	 	 
	 	BUYER:
	 	 
	 	Consolidated Water U.S. Holdings, Inc.
	 	 
	 	By:	/s/ Frederick W. McTaggart
	 	Name:	Frederick W. McTaggart
	 	Title:	President

 

[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

 

    

     

    

 

EXHIBITS

 

	Exhibit A	Wire Instructions
	 	 
	Exhibit B	Shareholders’ Agreement
	 	 
	Exhibit C	Service Agreement 

 

SCHEDULES

 

	Schedule A	Purchased Shares / Pro Rata Share
	 	 
	Schedule 4.01(b)	Business Jurisdictions
	 	 
	Schedule 4.01(c)	Consents/Notices
	 	 
	Schedule 4.03(b)	Minute Books
	 	 
	Schedule 4.04	Capitalization
	 	 
	Schedule 4.05(a)	Financial Statements
	 	 
	Schedule 4.05(b)	Commitments
	 	 
	Schedule 4.05(d)	Indebtedness
	 	 
	Schedule 4.05(e)	Accounts Receivable
	 	 
	Schedule 4.06	Certain Developments since Latest Balance Sheet
	 	 
	Schedule 4.07	Real Property
	 	 
	Schedule 4.08	Tax Matters
	 	 
	Schedule 4.09	Contracts and Commitments
	 	 
	Schedule 4.09(b)	Potential Contract Issues
	 	 
	Schedule 4.09(c)	Non-Arm’s Length/Affiliate Contracts
	 	 
	Schedule 4.10	Intellectual Property
	 	 
	Schedule 4.11	Litigation
	 	 
	Schedule 4.12	Employee Benefit Plans
	 	 
	Schedule 4.13	Insurance
	 	 
	Schedule 4.14	Environmental

 

    

     

    

 

	Schedule 4.15(a)	Permits
	 	 
	Schedule 4.15(c)	Payments
	 	 
	Schedule 4.18(a)	Labor and Employment Matters
	 	 
	Schedule 4.18(b)	Employee Information
	 	 
	Schedule 4.18(d)	Non-At-Will Employees
	 	 
	Schedule 4.18(e)	Wages and Commissions
	 	 
	Schedule 4.18(f)	Consulting Arrangements
	 	 
	Schedule 4.18(g)	Employee Classification
	 	 
	Schedule 4.19(a)	Related Party Transactions—Interests and Claims
	 	 
	Schedule 4.19(b)	Related Party Transactions—Debts
	 	 
	Schedule 4.19(c)	Related Party Contracts
	 	 
	Schedule 4.20(a)	Major Customers
	 	 
	Schedule 4.20(b)	Major Suppliers
	 	 
	Schedule 4.21	Inventory
	 	 
	Schedule 4.22	Warranties and Claims
	 	 
	Schedule 4.24	Names
	 	 
	Schedule 4.25	Accounts

 

    2

     

    

 

EXHIBIT A

 

Wire Instructions

 

{see attached}

 

    

     

    

 

 

EXHIBIT B

 

Shareholders’ Agreement

 

{see attached}

 

    

     

    

 

EXECUTION VERSION

 

SHAREHOLDERS’
AGREEMENT

 

THIS SHAREHOLDERS’
AGREEMENT (“Agreement”) is entered into as of October 24, 2019 by and among PERC Water Corporation, a California
corporation (the “Company”), and the Persons named in Schedule A hereto (collectively, the “Holders”).

 

RECITALS

 

A.       The
Holders own all of the shares of Capital Stock of the Company; and

 

B.         The
Holders are entering into this Agreement in order to make provisions for the future disposition of such shares, the governance
of the Company and other related matters.

 

NOW, THEREFORE, in
consideration of the mutual promises and covenants hereinafter set forth, the parties hereto agree as follows:

 

Article
1

 

DEFINITIONS

 

As used herein in this
Agreement, the following terms shall have the following respective meanings:

 

“Affiliate”
of any particular Person means (a) any Person, other than an individual, owning directly, or indirectly controlling, at least fifty
percent (50%) of the stock entitled to vote for election of directors of the subject Person, (b) any Person, other than an individual,
owned or directly controlled by the subject Person through ownership of at least fifty percent (50%) of the stock entitled to vote
for election of directors or any other entity actually controlled by the subject Person, (c) any Person (other than the subject
Person) owned or directly controlled by the Person mentioned in (a) above, through ownership of at least fifty percent (50%) of
the stock entitled to vote for election of directors and (d) in the case of a specified Person who is an individual, any Family
Members of such Person.

 

“Agreement”
has the meaning specified in the preamble to this agreement.

 

“Board”
means the Company’s board of directors.

 

“Budget”
has the meaning specified in Section 5.1(d).

 

“Capital Stock”
means, as to any Person that is a corporation, the authorized shares of such Person’s capital stock, including all classes
and series of common, preferred, voting and nonvoting capital stock, and, as to any partnership, limited liability company or other
non-corporate entity, the ownership interests in such Person, including, without limitation, the right to share in profits and
losses, the right to receive distributions of cash and property, and the right to receive allocations of items of income, gain,
loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights.

  

    

     

    

 

“Cash Available
for Distribution” means all monies available for distribution to the shareholders, as reasonably determined from time
to time by the Board, after the Company has paid, or made due provision by providing reserves with respect to, all reasonable capital
needs and all liabilities to creditors of the Company for operating expenses, contingent liabilities and debt payments (whether
such monies arise from operations, refinancings or a sale of all or any portion of the Company’s assets) as determined from
time to time by the Board.

 

“Common Equivalents”
means, with respect to a Holder, at any time the sum of (x) the number of issued and outstanding shares of Company Stock held by
such Holder plus (y) with respect to Capital Stock other than Company Stock, the number of shares of Company Stock into which such
outstanding shares of Capital Stock are convertible at such time (or, if not convertible into Company Stock, then the number of
such shares of such Capital Stock) plus (z) the total number of shares of Company Stock, whether or not vested, issuable upon the
exercise or conversion of all Convertible Securities issued and outstanding at such time.

 

“Company”
has the meaning specified in the preamble to the Agreement.

 

“Company Stock”
means the stock, par value $0.01 per share, of the Company.

 

“Company Securities”
means any Capital Stock or Convertible Securities of the Company.

 

“Convertible
Securities” means securities, contract rights, notes, obligations, options, warrants, or other rights that are directly
or indirectly exercisable for, convertible into, or exchangeable for shares of Company Stock or other Capital Stock of the
Company, but expressly excluding Capital Stock from such definition of Convertible Securities.

 

“Disqualification
Event” has the meaning specified in Section 2.1(f).

 

“Disqualified
Designee” has the meaning specified in Section 2.1(f).

 

“Excluded
Securities” means any Capital Stock or other equity securities issued in connection with: (a) a grant to any existing
or prospective consultants, employees, officers or directors pursuant to any stock option, employee stock purchase or similar equity-based
plans or other compensation agreement; (b) the exercise or conversion of options to purchase shares of Capital Stock, or shares
of Capital Stock issued to any existing or prospective consultants, employees, officers or directors pursuant to any stock option,
employee stock purchase or similar equity-based plans or any other compensation agreement; (c) any acquisition by the Company of
the stock, assets, properties or business of any Person; or (d) any merger, consolidation or other business combination involving
the Company, in each case, approved in accordance with the terms of this Agreement.

 

“Exercising
Shareholder” has the meaning specified in Section 3.1(a).1(d).

 

“Existing
Shareholders” has the meaning specified in Section 2.1(b)(i).

 

“Existing
Shareholders Designees” has the meaning specified in Section 2.1(b)(i).

 

    2

     

    

 

“Family Member”
means, as applied to any individual, such individual’s spouse, children (including stepchildren or adopted children), grandchildren,
parents or siblings, and any trust or other estate planning vehicle created for the primary benefit of the individual or any one
or more of the persons described above.

 

“Holder”
means any Person listed on Schedule A and any Person to whom such Person Transfers Company Securities in compliance
with this Agreement.

 

“Issuance
Notice” has the meaning specified in Section 3.1(a).1(b).

 

“Majority
of Holders” means, with respect to a given time, the holder(s) of a majority of the Common Equivalents held by all Holders.

 

“New Securities”
has the meaning specified in Section 3.1(a).1(a).

 

“Non-Exercising
Shareholder” has the meaning specified in Section 3.1(a).1(d).

 

“Offered Shares”
has the meaning specified in Section 3.2(a).

 

“Offering
Shareholder” has the meaning specified in Section 3.1(a).1(d).

 

“Offering
Shareholder Notice” has the meaning specified in Section 3.2(b).

 

“Over-allotment
Exercise Period” has the meaning specified in Section 3.1(a).1(d).

 

“Over-allotment
New Securities” has the meaning specified in Section 3.1(a).1(d).

 

“Over-allotment
Notice” has the meaning specified in Section 3.1(a).1(d).

 

“Permitted
Transferee” has the meaning specified in Section 3.1(b).

 

“Person”
or “person” means an individual, partnership, corporation, association, trust, joint venture, unincorporated
organization and any government, governmental department or agency or political subdivision thereof.

 

“Pre-emptive
Shareholder” has the meaning specified in Section 3.1(a).1(a).

 

“Pre-emptive
Pro Rata Portion” has the meaning specified in Section 3.1(a).1(c).

 

“Prohibited
Transfer” has the meaning specified in Section 3.1(a).

 

“Purchasing
Shareholder” has the meaning specified in Section 3.1(a)(i).

 

“ROFO Offer
Details” has the meaning specified in Section 3.1(b)(i).

 

“ROFO Offer
Notice” has the meaning specified in Section 3.1(b)(i).

 

“ROFO Notice
Period” has the meaning specified in Section 3.1(b)(ii).

 

    3

     

    

 

“ROFO Transfer
Period” has the meaning specified in Section 3.1(b)(i).

 

“Sale of the
Company” means any of the following: (a) a merger or consolidation of the Company into or with any other Person or Persons,
or a Transfer of Company Securities in a single transaction or a series of transactions, in which, in any case, the shareholders
of the Company immediately prior to such merger, consolidation or Transfer, or first of such series of transactions, possess less
than a majority of the voting power of the Company or any successor entity’s issued and outstanding Capital Stock immediately
after such transaction (provided that the Company’s issuance for its own account of its Company Securities in a transaction
having such an effect shall not be a “Sale of the Company”); or (b) a single transaction or series of transactions,
pursuant to which a Person or Persons who are not direct or indirect wholly-owned subsidiaries of the Company acquire all or substantially
all of the Company’s assets determined on a consolidated basis.

 

“Securities
Act” means the United States Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations
of the SEC thereunder, all as the same shall be in effect at the time.

 

“Securities
Laws” means the Securities Act, the Securities Exchange Act of 1934, as amended, applicable state securities laws and
all rules and regulations promulgated under all such laws.

 

“Subsidiary”
means any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by the Company
or one of more of the other Subsidiaries of the Company or a combination thereof, or (ii) if a partnership, limited liability company,
association or other business entity, a majority of the ownership interests therein is at the time owned or controlled, directly
or indirectly, by the Company or one or more Subsidiaries of the Company or a combination thereof. For purposes hereof, the Company
shall be deemed to have a majority ownership interest in a partnership, limited liability company, association or other business
entity if the Company shall be allocated a majority of partnership, association or other business entity gains or losses or shall
be or control the managing general partner of such partnership, association or other business entity or a manager of such limited
liability company.

 

“Third Party”
means any Person who, immediately prior to the contemplated transaction, is not a Holder or an Affiliate of a Holder and is not
a Person who directly or indirectly has the right to acquire any Capital Stock or an Affiliate of any such Person.

 

“Transfer”
means, with respect to the Company Securities, any transfer, sale, gift, exchange, assignment, pledge, hypothecation, or other
disposition by a Holder or any agreement by such Holder restricting such Holder’s voting or disposition (including by operation
of law) of Company Securities, and in the case of a Holder that is not an individual, a Transfer of any Company Securities held
by such Holder shall be deemed to have been made if any equity interest in such Holder is directly or indirectly transferred, sold,
given, exchanged, assigned, pledged or otherwise disposed of (including by operation of law) to any other Person.

 

    4

     

    

 

Article
2

 

AFFIRMATIVE COVENANTS OF THE COMPANY
AND THE SHAREHOLDERS

 

2.1          
Board of Directors.

 

(a)           
Size of the Board. Each Holder agrees to vote, or cause to be voted, all Capital Stock of the Company owned
by such Holder, or over which such Holder has voting control, from time to time and at all times, in whatever manner as shall be
necessary to ensure that the size of the Board shall be set and remain at five (5) directors.

 

(b)           
Board Composition. Each Holder agrees to vote, or cause to be voted, all Capital Stock of the Company owned
by such Holder, or over which such Holder has voting control, from time to time and at all times, in whatever manner as shall be
necessary to ensure that at each annual or special meeting of shareholders at which an election of directors is held or pursuant
to any written consent of the shareholders, the following persons shall be elected to the Board:

 

(i)                
Two individuals (collectively, the “Existing Shareholders Designees,” and each, an “Existing
Shareholders Designee”) designated by Johan Perslow, Nathan Owen, and Steven Owen (collectively, the “Existing
Shareholders, and each, an “Existing Shareholder”) and their Affiliates, by majority vote based upon the
total number of shares of Capital Stock then owned by the Existing Shareholders and their Affiliates, which individuals shall initially
be Nathan Owen and Johan Perslow, for so long as the Existing Shareholders and their Affiliates continue to collectively own at
least 25% of the issued and outstanding shares of Capital Stock of the Company; and

 

(ii)              
Three individuals designated by Consolidated Water U.S. Holdings, Inc. (“CW Holdings”), which
individuals shall initially be Frederick W. McTaggart, Wilmer F. Pergande, and David W. Sasnett, for so long as such Holder and
its Affiliates continue to collectively own at least 25% of the issued and outstanding shares of Capital Stock of the Company.

 

To the extent that
any of clauses (a) or (b) above shall not be applicable, any member of the Board who would otherwise have been designated in accordance
with the terms thereof shall instead be voted upon by all the shareholders of the Company entitled to vote thereon in accordance
with, and pursuant to, the Company’s Articles of Incorporation and Bylaws.

 

(c)           
Failure to Designate a Board Member. In the absence of any designation from the Persons or groups with the
right to designate a director as specified above, the director previously designated by them and then serving shall be reelected
if still eligible to serve as provided herein.

 

(d)           
Removal of Board Members. Each Holder also agrees to vote, or cause to be voted, all Capital Stock of the
Company owned by such Holder, or over which such Holder has voting control, from time to time and at all times, in whatever manner
as shall be necessary to ensure that:

 

    5

     

    

 

(i)                 
no director elected pursuant to Sections 2.1(b)(i) or 2.1(b)(ii) of this Agreement may be removed
from office unless (i) such removal is directed or approved by the affirmative vote of the Person, or of the holders of at least
a majority of the shares of stock, entitled under Section 2.1(b) to designate that director; or (ii) the Person(s)
originally entitled to designate or approve such director pursuant to Section 2.1(b) is no longer so entitled to designate
or approve such director;

 

(ii)               
any vacancies created by the resignation, removal or death of a director elected pursuant to Sections 2.1(b)(i)
or 2.1(b)(ii) shall be filled pursuant to the provisions of this Section 2.1; and

 

(iii)              
upon the request of any party entitled to designate a director as provided in Section 2.1(b)(i) or 2.1(b)(ii)
to remove such director, such director shall be removed.

 

All Holders agree to
execute any written consents required to perform the obligations of this Agreement, and the Company agrees at the request of any
party entitled to designate directors to call a special meeting of shareholders for the purpose of electing directors.

 

(e)            
No Liability for Election of Recommended Directors. No Holder, nor any Affiliate of any Holder, shall have
any liability as a result of designating a person for election as a director for any act or omission by such designated person
in his or her capacity as a director of the Company, nor shall any Holder have any liability as a result of voting for any such
designee in accordance with the provisions of this Agreement.

 

(f)            
No “Bad Actor” Designees. Each Person with the right to designate or participate in the designation
of a director as specified above hereby represents and warrants to the Company that, to such Person’s knowledge, none of
the “bad actor” disqualifying events described in Rule 506(d)(1)(i)-(viii) promulgated under the Securities Act (each,
a “Disqualification Event”), is applicable to such Person’s initial designee named above except, if applicable,
for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable. Any director designee to whom any
Disqualification Event is applicable, except for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is
applicable, is hereinafter referred to as a “Disqualified Designee”. Each Person with the right to designate
or participate in the designation of a director as specified above hereby covenants and agrees (A) not to designate or participate
in the designation of any director designee who, to such Person’s knowledge, is a Disqualified Designee and (B) that in the
event such Person becomes aware that any individual previously designated by any such Person is or has become a Disqualified Designee,
such Person shall as promptly as practicable take such actions as are necessary to remove such Disqualified Designee from the Board
and designate a replacement designee who is not a Disqualified Designee.

 

2.2           
Board Matters Requiring Existing Shareholders Designee Approval. So long as the Existing Shareholders and/or
their Affiliates are entitled to designate the Existing Shareholders Designees, the Company hereby covenants and agrees with each
of the Holders that it shall not, without approval of the Board, which approval must include the affirmative vote of at least one
of the Existing Shareholders Designees:

 

    6

     

    

 

(a)           
approve an annual Budget;

 

(b)          
make any loan or advance to, or own any stock or other securities of, any Subsidiary or other corporation, partnership,
or other entity;

 

(c)          
make any loan or advance to any Person, including, any employee or director, except advances and similar expenditures
in the ordinary course of business that do not exceed $25,000;

 

(d)           
make any capital expenditure in any year in excess of $50,000 that is not already included in a Budget approved by
the Board;

 

(e)          
sell, assign, license, pledge or encumber material technology or intellectual property, other than licenses granted
in the ordinary course of business; or

 

(f)           
sell, assign, license, pledge or encumber any asset, other than assets sold or licensed in the ordinary course of
business.

 

2.3           
Holder Matters Requiring Existing Shareholders Designee Approval. So long as the Existing Shareholders and/or
their Affiliates are entitled to designate the Existing Shareholders Designees, the Company hereby covenants and agrees with each
of the Holders that it shall not, without written approval of the Existing Shareholders and their Affiliates holding at least a
majority of the issued and outstanding Capital Stock of the Company then collectively held by the Existing Shareholders and/or
their Affiliates, engage in any of the following activities:

 

(a)           
liquidate, dissolve or wind-up the affairs of the Company;

 

(b)          
effect any merger, consolidation, corporate reorganization or restructuring involving the Company;

 

(c)          
amend, alter, or repeal any provision of the Articles of Incorporation, Bylaws or any other corporate governance
documents of the Company;

 

(d)          
purchase or redeem any Capital Stock of the Company, other than stock repurchased from former employees or consultants
in connection with the cessation of their employment/services, at fair market value or lower as approved by the Board, including
the approval of at least one of the Existing Shareholders Designees;

 

(e)           
create, authorize the creation of, or issue any Company Securities;

 

(f)           
create or authorize the creation of any debt security other than equipment leases, bank lines of credit or working
capital loans from Consolidated Water U.S. Holdings, Inc. or its Affiliates;

 

(g)           
create any Subsidiary;

 

(h)           
increase or decrease the size of the Board; or

 

    7

     

    

 

(i)            
change the line business of the Company, excluding the expansion of the existing business

 

Article
3

 

RESTRICTIONS ON TRANSFER

3.1           
Transfer Restrictions.

 

(a)           
Except as specifically set forth in this Article 3, no Holder shall be permitted at any time to Transfer,
directly or indirectly, to any Person any Company Securities without the prior written approval of the other Holders. If any Transfer
is made or attempted contrary to the provisions of this Article 3 (a “Prohibited Transfer”), such purported
Transfer shall be void ab initio; the Company and the other parties hereto shall have, in addition to any other legal or
equitable remedies which they may have, the right to enforce the provisions of this Agreement by actions for specific performance
(to the extent permitted by law); and the Company shall have the right to refuse to recognize any transferee of a Prohibited Transfer
as one of its shareholders for any purpose.

 

(b)           
Notwithstanding anything to the contrary contained in this Article 3, each Holder shall be permitted to Transfer
Company Securities (i) to the Company upon the Company’s repurchase of any unvested Company Securities pursuant to the terms
of restricted stock agreement or similar agreement approved by the Board, (ii) in the case of the Holders who are individuals,
to Family Members of such persons or in the case of death, to their estates and to the beneficiaries of their estates, or to any
limited liability company that is wholly-owned by such Holder (such persons set forth in clauses (i) and (ii), individually the
 “Permitted Transferee” and collectively the “Permitted Transferees”); provided that
in each case the Permitted Transferee(s) who are Family Members, estates or beneficiaries of estates or limited liability companies
shall hold such Company Securities subject to the same restrictions that are applicable hereunder to its transferor, shall agree
in writing to be bound by the terms of this Agreement prior to any such Transfer.

 

(c)           
Notwithstanding anything to the contrary contained in this Article 3, no Holder shall be permitted at any
time to Transfer to any Person any Company Securities if (i) such Transfer would not be in compliance with applicable Securities
Laws, (ii) if such Transfer constitutes an event of default under the terms of any indebtedness outstanding or other material contractual
obligations of the Company, or (iii) such Company Securities remain subject to vesting or similar restrictions.

 

3.2           
Right of First Offer.

 

(a)           Right
of First Offer. Subject to the terms and conditions specified in this Section 3.2, each Holder shall have a right
of first offer if any of the other Holders (the “Offering Shareholder”) proposes to Transfer any Capital
Stock (the “Offered Shares”) owned by it to any Third Party, other than where (i) the Company receives a
bona fide offer by a Third Party to purchase all of the issued and outstanding Capital Stock or (ii) an Offering
Shareholder decides to invite offers to purchase all of its Capital Stock in the Company (provided that the other Holders are
also invited to participate at the same time or before all other invitees and allowed to participate in any related process
on at least as favorable terms as all other participants). Each time the Offering Shareholder proposes to Transfer any
Offered Shares (other than Transfers permitted pursuant to Section 3.1(b)), the Offering Shareholder shall first have
made an offering of the Offered Shares to the other Holders in accordance with the following provisions of this Section
3.2, and the Offering Shareholder shall be entitled to make such an offering notwithstanding that no Third Party may yet
have been identified by the Offering Shareholder as a prospective purchaser.

 

    8

     

    

 

(b)            
Offer Notice.

 

(i)               
The Offering Shareholder shall give written notice (the “Offering Shareholder Notice”) to the
Company and the other Holders stating its bona fide intention to Transfer the Offered Shares and specifying the number of Offered
Shares the Offering Shareholder proposes to Transfer. In the Offering Shareholder Notice, the Offering Shareholder may elect to
require any ROFO Offer Notice to include a detailed term sheet and a statement detailing the source and availability of funds or
other consideration for the offer (the “ROFO Offer Details”).

 

(ii)              
The Offering Shareholder Notice shall constitute the Offering Shareholder’s offer to Transfer the Offered Shares
to the other Holder, which offer shall be irrevocable for a period of 30 days (the “ROFO Notice Period”).

 

(iii)              
By delivering the Offering Shareholder Notice, the Offering Shareholder represents and warrants to the Company and
the other Holders that (A) the Offering Shareholder has full right, title and interest in and to the Offered Shares, (B) the Offering
Shareholder has all the necessary power and authority and has taken all necessary action to sell such Offered Shares as contemplated
by this Section 3.2 and (C) the Offered Shares will be Transferred free and clear of any and all liens other than those
arising as a result of or under the terms of this Agreement.

 

(c)           
Exercise of Right of First Offer.

 

(i)                
Upon its receipt of the Offering Shareholder Notice, the applicable Holder shall have until the end of the ROFO Notice
Period to offer to purchase all (but not less than all) of the Offered Shares by delivering a written notice (a “ROFO
Offer Notice”) to the Offering Shareholder and the Company stating that it offers to purchase such Offered Shares on
the terms specified therein, and if applicable including the ROFO Offer Details. The proposed consideration to be transferred in
exchange for the Offered Shares under such a ROFO Offer Notice shall be limited to cash. Any ROFO Offer Notice so delivered shall
be binding upon delivery and irrevocable by such Holder (the “Purchasing Shareholder”).

 

(ii)               
If no Holder delivers a ROFO Offer Notice during the ROFO Notice Period, then the Holders shall be deemed to have
waived all of their rights to purchase the Offered Shares under this Section 3.2, and the Offering Shareholder shall thereafter
be free to Transfer the Offered Shares to any Third Party without any further obligation to the other Holders pursuant to this
Section 3.2, subject to the other provisions of this Agreement.

 

    9

     

    

 

(d)           
Consummation of Sale.

 

(i)                
If no Holder delivers a ROFO Offer Notice in accordance with Section 3.2(c), the Offering Shareholder may,
during the 60 days following the expiration of the ROFO Notice Period (the “ROFO Transfer Period”), Transfer
all of the Offered Shares to a Third Party. If the Offering Shareholder does not Transfer the Offered Shares within the ROFO Transfer
Period, or if such Transfer is not consummated within such period, the rights provided hereunder shall be deemed to be revived
and the Offered Shares shall not be offered or otherwise Transferred to any Third Party unless first re-offered to the other Holders
in accordance with this Section 3.2.

 

(ii)               
If any Holder delivers a ROFO Offer Notice in accordance with Section 3.2(c), the Offering Shareholder may
(A) accept the Purchasing Shareholder’s offer with terms that, in the Offering Shareholder’s reasonable, good faith
determination (having due regard to price, conditions precedent and other terms), are more favorable to the Offering Shareholder
than the terms of each other offer made by a Purchasing Shareholder or (B) Transfer all of the Offered Shares to a Third Party
on terms that, in the Offering Shareholder’s reasonable, good faith determination (having due regard to price, conditions
precedent and other terms), are more favorable to the Offering Shareholder than the terms of the offers made by the Purchasing
Shareholders. If the Offering Shareholder does not Transfer the Offered Shares within the ROFO Transfer Period, or if such Transfer
is not consummated within the such period, the rights provided hereunder shall be deemed to be revived and the Offered Shares shall
not be offered or otherwise Transferred to any Third Party unless first re-offered to the other Holders in accordance with this
Section 3.2.

 

(e)          
Cooperation. Each Holder shall take all actions as may be reasonably necessary to consummate the sale contemplated
by this Section 3.2 including entering into agreements and delivering notarial deeds and instruments and consents as may
be reasonably deemed necessary or appropriate.

 

Article
4

 

PRE-EMPTIVE RIGHTS

4.1           
Pre-emptive Right.

 

(a)           
So long as the Existing Shareholders and their Affiliates continue to collectively own at least 25% of the issued and outstanding
shares of Capital Stock of the Company, each Existing Shareholder and their Affiliates then holding Capital Stock (each, a “Pre-emptive
Shareholder”) has the right to purchase its pro rata portion of any new Company Securities (other than any Excluded Securities)
(the “New Securities”) that the Company may from time to time propose to issue or sell to any party, as set
forth in this Section 4.1.

 

(b)          
The Company shall give written notice (an “Issuance Notice”) of any proposed issuance or sale described
in subsection (a) above to the Pre-emptive Shareholders within ten (10) days following any meeting of the Board at which any such
issuance or sale is approved. The Issuance Notice shall set forth the material terms and conditions of the proposed issuance,
including:

 

    10

     

    

 

(i)                
the number of New Securities proposed to be issued and the percentage of the Company’s outstanding Capital Stock,
on a fully diluted basis, that such issuance would represent;

 

(ii)               
the proposed issuance date, which shall be at least 20 days from the date of the Issuance Notice; and

 

(iii)             
the proposed purchase price per share.

 

(c)           
Each Pre-emptive Shareholder shall for a period of 15 days following the receipt of an Issuance Notice (the “Exercise
Period”) have the right to elect irrevocably to purchase, at the purchase price set forth in the Issuance Notice, the
amount of New Securities equal to the product of (x) the total number of New Securities to be issued by the Company on the issuance
date and (y) a fraction determined by dividing (A) the number of shares of Capital Stock owned by such Pre-emptive Shareholder
immediately prior to such issuance by (B) the total number of shares of Capital Stock outstanding on such date immediately prior
to such issuance (the “Pre-emptive Pro Rata Portion”) by delivering a written notice to the Company. Such Pre-emptive
Shareholder’s election to purchase New Securities shall be binding and irrevocable.

 

(d)           
No later than five (5) days following the expiration of the Exercise Period, the Company shall notify each Pre-emptive Shareholder
in writing of the number of New Securities that each Pre-emptive Shareholder has agreed to purchase (including, for the avoidance
of doubt, where such number is zero) (the “Over-allotment Notice”). Each Pre-emptive Shareholder exercising
its right to purchase its Pre-emptive Pro Rata Portion of the New Securities in full (an “Exercising Shareholder”)
shall have a right of over-allotment such that if any other Pre-emptive Shareholder fails to exercise its right under this Error!
Reference source not found. to purchase its Pre-emptive Pro Rata Portion of the New Securities (each, a “Non-Exercising
Shareholder”), such Exercising Shareholder may purchase all or any portion of such Non-Exercising Shareholder’s
allotment (the “Over-allotment New Securities”) by giving written notice to the Company setting forth the number
of Over-allotment New Securities that such Exercising Shareholder is willing to purchase within five days of receipt of the Over-allotment
Notice (the “Over-allotment Exercise Period”). Such Exercising Shareholder’s election to purchase Over-allotment
New Securities shall be binding and irrevocable. If more than one Exercising Shareholder elects to exercise its right of over-allotment,
each Exercising Shareholder shall have the right to purchase the number of Over-allotment New Securities it elected to purchase
in its written notice; provided, that if the over-allotment New Securities are over-subscribed, each Exercising Shareholder
shall purchase its pro rata portion of the available Over-allotment New Securities based upon the relative Pre-emptive Pro Rata
Portions of the Exercising Shareholders.

 

    11

     

    

 

(e)           
The Company shall be free to complete the proposed issuance or sale of New Securities described in the Issuance Notice
with respect to any New Securities not elected to be purchased pursuant to Section 1.01(c) and Section 1.01(d) above
in accordance with the terms and conditions set forth in the Issuance Notice (except that the amount of New Securities to be issued
or sold by the Company may be reduced) so long as such issuance or sale is closed within 30 days after the expiration of the Over-allotment
Exercise Period (subject to the extension of such 30 day period for a reasonable time not to exceed 60 days to the extent reasonably
necessary to obtain any required consents or approvals). In the event the Company has not sold such New Securities within such
time period, the Company shall not thereafter issue or sell any New Securities without first again offering such securities to
the Existing Shareholders in accordance with the procedures set forth in this Section 4.1.

 

(f)            
Upon the consummation of the issuance of any New Securities in accordance with this Section 4.1, the Company shall
deliver to each Exercising Shareholder certificates (if any) evidencing the New Securities, which New Securities shall be issued
free and clear of any liens (other than those arising hereunder and those attributable to the actions of the purchasers thereof),
and the Company shall so represent and warrant to the purchasers thereof, and further represent and warrant to such purchasers
that such New Securities shall be, upon issuance thereof to the Exercising Shareholders and after payment therefor, duly authorized,
validly issued, fully paid and non-assessable. Each Exercising Shareholder shall deliver to the Company the purchase price for
the New Securities purchased by it by certified or official bank check or wire transfer of immediately available funds. Each party
to the purchase and sale of New Securities shall take all such other actions as may be reasonably necessary to consummate the purchase
and sale including entering into such additional agreements as may be necessary or appropriate.

 

Article
5

 

INFORMATION AND OBSERVER RIGHTS

 

5.1          
Delivery of Financial Statements. So long as the Existing Shareholders and their Affiliates continue to collectively
own at least 25% of the issued and outstanding shares of Capital Stock of the Company, the Company shall deliver to each Existing
Shareholder and such Affiliates then holding Capital Stock:

 

(a)          
as soon as practicable, but in any event within ninety (90) days after the end of each fiscal year of the Company,
statements of income for such year, and a balance sheet as of the end of such year, all
such financial statements prepared in accordance with GAAP;

 

(b)          
as soon as practicable, but in any event within sixty (60) days after the end of each of the first three (3) quarters
of each fiscal year of the Company, unaudited statements of income for such fiscal quarter, and an unaudited balance sheet as of
the end of such fiscal quarter, prepared in accordance with GAAP
(except that such financial statements may be subject to normal year-end adjustments); 

 

(c)          
as soon as practicable, but in any event within forty-five (45) days of the end of each month, an unaudited income
statement for such month, prepared in accordance with GAAP (except
that such income statement may be subject to normal year-end adjustments); and

 

    12

     

    

 

(d)          
as soon as practicable, but in any event before the end of each fiscal year, a budget for the next fiscal year (the
 “Budget”) showing the Company’s revenues, expenses, and capital expenditures.

 

If, for any period, the
Company has any Subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial
statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the
Company and all such consolidated subsidiaries.

 

5.2          
[Intentionally Omitted].

 

5.3          
Confidentiality. Each Holder agrees that such Holder will keep confidential and will not disclose, divulge,
or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company
pursuant to the terms of this Agreement, unless such confidential information (a) is known or becomes known to the public in general
(other than as a result of a breach of this Section 5.3 by such Holder), (b) is or has been independently developed or conceived
by the Holder without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the
Holder by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided,
however, that a Holder may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals
to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any Affiliate,
partner, member, stockholder, or wholly owned Subsidiary of such Holder in the ordinary course of business, provided
that such Holder informs such Person that such information is confidential and directs such Person to maintain the confidentiality
of such information; or (iii) as may otherwise be required by law, provided that the Holder promptly notifies the
Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

Article
6

 

DIVIDENDS

 

6.1             
Restriction on Dividends. Notwithstanding any other provision of this Agreement, no dividend may be paid by
the Company to any shareholder in violation of the California Corporation Code or the Company’s covenants with its lender(s),
if any. In addition, the Company shall not pay a dividend to a shareholder to the extent that, at the time of the dividend, after
giving effect to the dividend, all liabilities of the Company, other than liabilities for which recourse of creditors is limited
to specified property of the Company, exceed the fair market value of the assets of the Company, except that the fair market value
of property that is subject to a liability for which the recourse of creditors is limited shall be included in the assets of the
Company only to the extent that the fair value of such property exceeds such liability.

 

    13

     

    

 

Article
7

 

MISCELLANEOUS

 

7.1           
No Employment. Each Holder agrees that this Agreement does not create an obligation of the Company or any
other Person to employ such Holder, nor does it give rise to any right or expectancy with respect thereto.

 

7.2          
Transferees. Subject to Section 3.1, each and every transferee or assignee of Company Securities from
any Holder (other than pursuant to a Sale of the Company) shall be bound by and subject to all the terms and conditions of this
Agreement and shall be a Holder under this Agreement. So long as this Agreement is in effect, the Company shall require, as a condition
precedent to the transfer of any Company Securities by any Holder that the transferee agrees in writing to be bound by, and subject
to, the terms and conditions of this Agreement and to ensure that such transferees’ transferees shall be likewise bound.

 

7.3          
Legends. The Company and the Holders agree that, so long as this Agreement is in effect all Company Securities
now or hereafter held by any Holder will be stamped or otherwise imprinted with a legend in substantially the following form:

 

THE SECURITIES
EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AGREEMENTS, COVENANTS AND RESTRICTIONS PROVIDED IN THE SHAREHOLDERS’ AGREEMENT
DATED OCTOBER 24, 2019, AS AMENDED FROM TIME TO TIME, BY AND AMONG PERC WATER CORPORATION AND THE PERSONS NAMED THEREIN. A COPY
OF SUCH AGREEMENT MAY BE OBTAINED BY ANY SHAREHOLDER OF THE COMPANY UPON REQUEST WITHOUT CHARGE FROM THE SECRETARY OF THE COMPANY
AT THE PRINCIPAL OFFICE OF THE COMPANY.

 

THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
IN COMPLIANCE WITH SUCH ACT AND SUCH STATE SECURITIES LAWS. ABSENT AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH
STATE SECURITIES LAWS COVERING THESE SECURITIES, THE COMPANY MAY, IN ITS REASONABLE DISCRETION, REQUIRE AN OPINION OF COUNSEL,
IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO IT, AS A CONDITION TO ANY SUCH SALE, TRANSFER OR DISPOSITION.

 

7.4          
Waivers and Amendments. The obligations of the Company and the Holders hereunder may be waived (either generally
or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely)
or amended only if such waiver or amendment is consented to in writing by the Company, the Existing Stockholders and CW Holdings.

 

    14

     

    

 

7.5          
Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

 

7.6          
Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and supersedes in their entirety all other or prior agreements between or among the Company
and any of the Holders regarding the subjects hereof.

 

7.7          
Notices. All demands, notices, requests, consents and other communications required or permitted under this
Agreement shall be in writing and shall be personally delivered or sent by commercial (including FedEx) or U.S. Postal Service
overnight delivery service, or, deposited with the U.S. Postal Service mailed first class, registered or certified mail, postage
prepaid, as set forth below:

 

If to the Company,
addressed to:

 

PERC Water Corporation

959 S. Coast Drive, #
315

Costa Mesa, CA 92626

Attention: President

 

If to the Holders,
to the address set forth on Schedule A.

 

Notices shall be deemed
given upon the earlier to occur of (i) receipt by the party to whom such notice is directed; (ii) on the first business day (other
than a Saturday, Sunday or legal holiday in the jurisdiction to which such notice is directed) following the day the same is deposited
with the commercial carrier if sent by commercial overnight delivery service; or (iii) the fifth day (other than a Saturday, Sunday
or legal holiday in the jurisdiction to which such notice is directed) following deposit thereof with the U.S. Postal Service as
aforesaid. Each party, by notice duly given in accordance therewith may specify a different address for the giving of any notice
hereunder.

 

7.8           
Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.

 

7.9          
Titles and Subtitles. The titles of the sections of this Agreement are for convenience of reference only and
are not to be considered in construing this Agreement.

 

7.10         
Counterparts. Counterparts of this Agreement (or applicable signature pages hereof) that are manually signed
and delivered by electronic transmission by portable data format (pdf) file via electronic mail shall be deemed to constitute signed
original counterparts hereof and shall bind the parties signing and delivering in such manner.

 

    15

     

    

 

7.11         
Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the state
of California (without giving effect to any conflicts or choice of laws provisions thereof that would cause the application of
the domestic substantive laws of any other jurisdiction).

 

7.12         
CONSENT TO JURISDICTION.

 

(a)        
EACH OF THE PARTIES HERETO HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA
AND FEDERAL COURTS LOCATED IN ORANGE COUNTY, CALIFORNIA, AS WELL AS TO THE JURISDICTION OF ALL COURTS TO WHICH AN APPEAL MAY BE
TAKEN FROM SUCH COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT
OR ANY OF THE RELATED AGREEMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING, WITHOUT LIMITATION, ANY
PROCEEDING RELATING TO ANCILLARY MEASURES IN AID OF ARBITRATION, PROVISIONAL REMEDIES AND INTERIM RELIEF, OR ANY PROCEEDING TO
ENFORCE ANY ARBITRAL DECISION OR AWARD.

 

(b)        
EACH PARTY HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS TO BRING ANY SUIT, ACTION OR OTHER PROCEEDING IN OR BEFORE
ANY COURT OR TRIBUNAL OTHER THAN THE COURTS LOCATED IN ORANGE COUNTY, CALIFORNIA AND COVENANTS THAT IT SHALL NOT SEEK IN ANY MANNER
TO RESOLVE ANY DISPUTE OTHER THAN AS SET FORTH IN THIS SECTION 7.12 OR TO CHALLENGE OR SET ASIDE ANY DECISION, AWARD OR JUDGMENT
OBTAINED IN ACCORDANCE WITH THE PROVISIONS HEREOF.

 

(c)           
EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE TO VENUE, INCLUDING, WITHOUT
LIMITATION, THE INCONVENIENCE OF SUCH FORUM, IN ANY OF SUCH COURTS. IN ADDITION, EACH OF THE PARTIES CONSENTS TO THE SERVICE OF
PROCESS BY PERSONAL SERVICE OR ANY MANNER IN WHICH NOTICES MAY BE DELIVERED HEREUNDER IN ACCORDANCE WITH SECTION 7.7 OF THIS
AGREEMENT (OTHER THAN BY ELECTRONIC MAIL).

 

7.13         
Remedies.

 

(a)           
The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other
rights the parties may have at law or in equity.

 

(b)          
Without limitation of the foregoing, the parties hereto agree that irreparable harm would occur in the event that
any of the agreements and provisions of this Agreement were not performed fully by the parties hereto in accordance with their
specific terms or were otherwise breached, and that money damages are an inadequate remedy for breach of the Agreement because
of the difficulty of ascertaining and quantifying the amount of damage that will be suffered by the parties hereto in the event
that this Agreement is not performed in accordance with its terms or is otherwise breached. It is accordingly hereby agreed that
the parties hereto shall be entitled to an injunction or injunctions to restrain, enjoin and prevent breaches of this Agreement
by the other parties and to enforce specifically such terms and provisions of this Agreement, without the need to post any bond
or other security such remedy being in addition to and not in lieu of, any other rights and remedies to which the other parties
are entitled to at law or in equity.

 

    16

     

    

 

(c)           
Except where a time period is otherwise specified, no delay on the part of any party in the exercise of any right,
power, privilege or remedy hereunder shall operate as a waiver thereof, nor shall any exercise or partial exercise of any such
right, power, privilege or remedy preclude any further exercise thereof or the exercise of any right, power, privilege or remedy.

 

7.14         
Waiver of Jury Trial.

 

7.15.
         EACH OF THE PARTIES HERETO HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR OTHER PROCEEDING BROUGHT
IN CONNECTION WITH THIS AGREEMENT, ANY OF THE RELATED AGREEMENTS, DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

 

7.16         
No Third Party Beneficiary. There are no third party beneficiaries of this Agreement.

 

7.17         
Term and Termination. This Agreement shall be valid and continue in full force and effect until a Sale of
the Company.

 

7.18         
Construction and Interpretation. The parties acknowledge that each party and its counsel have jointly reviewed
and drafted this document, and agree that the rule of construction and interpretation that drafting ambiguities are to be resolved
against the drafting party shall not be employed.

 

7.19        
Proportionate Adjustments on Stock Splits. In the event a stock split, stock dividend, combination, reorganization,
capitalization, reclassification or other similar event involving Company Securities occurs after the date of this Agreement, the
provisions of this Agreement referring to a number of shares or price per share shall be subject to proportionate adjustment to
reflect such event.

 

7.20         
Interpretation. This Agreement is the product of negotiation, and expressly waive any rules of interpretation
of a writing against the drafter.

 

  

    17

     

    

  

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the day and year first above written.

 

	 	COMPANY:
	 	 
	 	PERC WATER CORPORATION
	 	 
	 	By:	 
	 	 	Name:	 
	 	 	Title:	 
	 	 
	 	HOLDERS:
	 	 
	 	Consolidated Water U.S. Holdings, Inc.
	 	 
	 	By:	 
	 	 	Name:	 
	 	 	Title:	 
	 	 
	 	 
	 	Johan Perslow
	 	 
	 	 
	 	Nathan Owen
	 	 
	 	 
	 	Steven Owen
	 	 
	 	 
	 	Colton Schmidt

 

[SIGNATURE PAGE TO
SHAREHOLDERS AGREEMENT]

 

    

     

    

 

SCHEDULE A

 

Names and Addresses of Holders

 

Consolidated Water U.S. Holdings, Inc.

5810 Coral Ridge Drive, Suite # 220

Coral Springs, Florida 33076

Facsimile: (954) 509-8637

Email: rmctaggart@cwco.com

 

Johan Perslow

4079 Skyline Road

Carlsbad, CA 92008

Telephone: 714 514-8820

Email: Jperslow@percwater.com

 

Steven D. Owen

1604 E Yalecrest Avenue

Salt Lake City, UT 84105

Telephone: 714 514-8877

Email: sowen@percwater.com

 

Nate Owen

56 Via Armilla

San Clemente, CA 92673

Telephone: 714 514-8883

Email: nowen@percwater.com

 

Colton Schmidt

4079 Skyline Rd

Carlsbad, CA 92008

Telephone: 760-822-2505

Email: Coltonschmidt92@gmail.com

            cschmidt@percwater.com

 

    

     

    

 

EXHIBIT C

 

Services Agreement

 

{see attached}

 

    

     

    

 

EXECUTION VERSION

 

SERVICES AGREEMENT

 

This Services Agreement
(this “Agreement”), dated as of October 24, 2019 (the “Effective Date”), is entered into
by and between Aquilex, Inc., a Florida corporation, with offices located at 5810 Coral Ridge Drive, Suite 220, Coral Springs,
Florida 33076 (the “Service Provider”) and PERC Water Corporation, a California corporation, with offices located
at 959 S. Coast Drive, # 315, Costa Mesa, CA 92626 (“PERC”).

 

WHEREAS, PERC desires
to retain Service Provider to provide certain administrative, engineering, purchasing, sales, accounting, information technology,
finance and other services upon the terms and conditions hereinafter set forth, and Service Provider is willing to perform such
services.

 

In consideration of
the mutual covenants and agreements hereinafter set forth, the parties agree as follows:

 

Article
I

 

Definitions

 

“Action” means
any claim, suit, action or proceeding.

 

“Affiliate”
of any particular Person means (1) any Person, other than an individual, owning directly, or indirectly controlling, at least fifty
percent (50%) of the stock entitled to vote for election of directors of the subject Person, (2) any Person, other than an individual,
owned or directly controlled by the subject Person through ownership of at least fifty percent (50%) of the stock entitled to vote
for election of directors or any other entity actually controlled by the subject Person, or (3) any Person (other than the subject
Person) owned or directly controlled by the Person mentioned in (1) above, through ownership of at least fifty percent (50%) of
the stock entitled to vote for election of directors.

 

“Agreement” has
the meaning set forth in the preamble.

 

“Confidential
Information” means any information that is treated as confidential by a party, including, without limitation, trade
secrets, technology, information pertaining to business operations and strategies, and information pertaining to customers, pricing,
and marketing. Confidential Information shall not include information that: (a) is already known to the Receiving Party without
restriction on use or disclosure prior to receipt of such information from the Disclosing Party; (b) is or becomes generally known
by the public other than by breach of this Agreement by, or other wrongful act of, the Receiving Party; (c) is developed by the
Receiving Party independently of, and without reference to, any Confidential Information of the Disclosing Party as shown by tangible
evidence; or (d) is received by the Receiving Party from a third party who is not under any obligation to the Disclosing Party
to maintain the confidentiality of such information.

 

“Deliverables” means
all documents, work product and other materials that are delivered to PERC hereunder or prepared by or on behalf of Service Provider
in the course of performing the Services.

 

    

     

    

 

“Disclosing
Party” means a party that discloses Confidential Information under this Agreement.

 

“Force Majeure
Event” has the meaning set forth in Section 14.01.

 

“Initial Term” has
the meaning set forth in Article V.

 

“Intellectual
Property Rights” means all (a) patents, patent disclosures and inventions (whether patentable or not), (b) trademarks,
service marks, trade dress, trade names, logos, corporate names and domain names, together with all of the goodwill associated
therewith, (c) copyrights and copyrightable works (including computer programs), and rights in data and databases, (d) trade secrets,
know-how and other confidential information, and (e) all other intellectual property rights, in each case whether registered or
unregistered and including all applications for, and renewals or extensions of, such rights, and all similar or equivalent rights
or forms of protection in any part of the world.

 

“Law” means
any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement
or rule of law of any federal, state, local or foreign government or political subdivision thereof, or any arbitrator, court or
tribunal of competent jurisdiction.

 

“Losses” mean
all losses, damages, liabilities, deficiencies, actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever
kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost
of pursuing any insurance providers.

 

“PERC” has
the meaning set forth in the preamble.

 

“PERC Contract
Manager” has the meaning set forth in Section 4.01(a)

 

“PERC Materials” any
documents, data, know-how, methodologies, software and other materials provided to Service Provider by PERC, including computer
programs, reports and specifications.

 

“Person” means
an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization,
trust, association or other entity.

 

“Pre-Existing
Materials” means the pre-existing materials in all documents, data, know-how, methodologies, software and other
materials, including computer programs, reports and specifications, provided by or used by Service Provider in connection with
performing the Services, in each case developed or acquired by the Service Provider prior to the commencement or independently
of this Agreement.

 

“Receiving
Party” means a party that receives or acquires Confidential Information directly or indirectly under this Agreement.

 

“Renewal Term” has
the meaning set forth in Article V.

 

    2

     

    

 

“Service Provider” has
the meaning set forth in the preamble.

 

“Service Provider
Contract Manager” has the meaning set forth in Section 3.01(a)(i).

 

“Service Provider
Equipment” means any equipment, systems, cabling or facilities provided by or on behalf of Service Provider and
used directly or indirectly in the provision of the Services.

 

“Service Provider
Personnel” means all employees and contractors, if any, engaged by Service Provider to perform the Services.

 

“Services” mean
any services to be provided by Service Provider under this agreement, as described in more detail in Exhibit A, and
Service Provider’s obligations under this Agreement.

 

“Term” has
the meaning set forth in Article V.

 

Article
II

 

Services

 

Section
2.01       Service Provider shall provide the Services
to PERC as described in more detail in Exhibit A in accordance with the terms and conditions of this Agreement.

 

Article
III

 

Service
Provider’s Obligations

 

Section
3.01       The Service Provider shall:

 

(a)          
appoint:

 

(i)              
a Service Provider employee to serve as a primary contact with respect to this Agreement and who will have the authority
to act on behalf of Service Provider in connection with matters pertaining to this Agreement (the “Service Provider Contract
Manager”); and

 

(ii)             
Service Provider Personnel, who shall be suitably skilled, experienced and qualified to perform the Services.

 

(b)           provide
the Services in a timely, professional, and workmanlike manner in accordance with the level of professional care customarily observed
by skilled professionals rendering similar services;

 

(c)          
before the date on which the Services are to start, obtain, and at all times during the Term of this Agreement maintain,
all necessary licenses and consents and comply with all relevant Laws applicable to the provision of the Services;

 

(d)          
prior to any Service Provider Personnel performing any Services hereunder ensure that such Service Provider Personnel have
the legal right to work in the United States;

 

    3

     

    

 

(e)           comply
with, and ensure that all Service Provider Personnel comply with, all rules, regulations and policies of PERC including security
procedures concerning systems and data and remote access thereto, building security procedures and general health and safety practices
and procedures; and

 

(f)           
maintain complete and accurate records relating to the provision of the Services under this Agreement.

 

Section
3.02       Service Provider is responsible for all
Service Provider Personnel and for the payment of their compensation, including, if applicable, withholding of income taxes, and
the payment and withholding of social security and other payroll taxes, unemployment insurance, workers’ compensation insurance
payments and disability benefits.

 

Section
3.03       Service Provider acknowledges that time
is of the essence with respect to Service Provider’s obligations hereunder and that prompt and timely performance of all
such obligations is required.

 

Article
IV

 

PERC’s
Obligations

 

Section
4.01       PERC shall:

 

(a)           cooperate
with Service Provider in all matters relating to the Services and appoint a PERC employee to serve as the primary contact with
respect to this Agreement and who will have the authority to act on behalf of PERC with respect to matters pertaining to this
Agreement (the “PERC Contract Manager”);

 

(b)          
provide, subject to Section 3.01(e), such access to PERC’s premises, and such office accommodation and other
facilities as may reasonably be requested by Service Provider, for the purposes of performing the Services;

 

(c)            respond
promptly to any Service Provider request to provide direction, information, approvals, authorizations or decisions that are reasonably
necessary for Service Provider to perform Services in accordance with the requirements of this Agreement;

 

(d)           provide
such PERC Materials as Service Provider may reasonably request, in order to carry out the Services, in a timely manner, and ensure
that they are complete and accurate in all material respects;

 

Section
4.02       If Service Provider’s performance
of its obligations under this Agreement is materially prevented or delayed by any act or omission of PERC or its agents, subcontractors,
consultants or employees, Service Provider shall not be deemed in breach of its obligations under this Agreement or otherwise liable
for any Losses sustained or incurred by PERC, in each case, to the extent arising directly or indirectly from such prevention or
delay.

 

    4

     

    

 

Article
V

 

Term

 

This Agreement shall
commence as of the Effective Date and shall continue thereafter for a period of five (5) years, unless sooner terminated pursuant
to Article XII (the “Initial Term”). The Term of this Agreement automatically shall renew for successive
one (1) year terms (subject to earlier termination as provided in Article XII) (each a “Renewal Term”),
at the end of the Initial Term and each Renewal Term. The Initial Term and the Renewal Terms shall be referred to together as the
 “Term.”

 

Article
VI

 

Fees
and Expenses; Payment Terms

 

Section
6.01       In consideration of the provision of the
Services by the Service Provider and the rights granted to PERC under this Agreement, PERC shall pay the fees set forth on Exhibit
A. Payment to Service Provider of such fees and the reimbursement of approved expenses pursuant to this Article VI
shall constitute payment in full for the performance of the Services, and, PERC shall not be responsible for paying any other fees,
costs or expenses.

 

Section
6.02       Where the Services are provided on a time
and materials basis:

 

(a)          
the fees payable for the Services shall be calculated in accordance with Service Provider’s daily fee rates for the
Service Provider Personnel set forth in Exhibit A; and

 

(b)         
Service Provider shall issue invoices to PERC monthly in arrears for its fees for time for the immediately preceding month,
calculated as provided in this Section 6.02, together with a detailed breakdown of any approved expenses for such month
incurred in accordance with Section 6.04.

 

Section
6.03       Where Services are provided for a fixed
price, the total fees for the Services shall be the amount set out on Exhibit A. The total price shall be paid to
Service Provider in installments, as set out on Exhibit A, and Service Provider shall issue invoices monthly to PERC
for the fees that are then payable, together with a detailed breakdown of any expenses incurred in accordance with Section 6.04.

 

Section
6.04       PERC agrees to reimburse Service Provider
for all actual, documented and reasonable out-of-pocket expenses incurred by Service Provider in connection with the performance
of the Services, provided that such expenses have been approved in writing (which shall include email) by PERC prior to such expenses
being incurred.

 

Section
6.05       The parties agree that after the Initial
Term, Service Provider may increase its standard fee rates specified on Exhibit A upon written notice to PERC; provided,
that:

 

(a)          
Service Provider provides PERC written notice of such increase at least 30 days prior to the effective date of such increase;

 

(b)         
such increases occur no more frequently than once per contract year of the Term; and

 

    5

     

    

 

(c)          
the amount of such increase (calculated on a per item or per service basis) shall not exceed the lesser of:

 

(i)              
the percentage rate of increase for the immediately preceding 12-month period in the Consumer Price Index, All Urban Consumers,
United States, All Items (1982 - 1984 = 100), as published by the Bureau of Labor Statistics of the United States Department of
Labor or, if such index is not available, such other index as the parties may agree most closely resembles such index; or

 

(ii)             
fifteen percent (15%).

 

Section
6.06       Service Provider shall issue invoices
to PERC only in accordance with the terms of this Section, and PERC shall pay all properly invoiced amounts due to Service Provider
within 30 days after PERC’s receipt of such invoice, except for any amounts disputed by PERC in good faith. All payments
hereunder shall be made by check or wire transfer.

 

Section
6.07       PERC shall be responsible for all sales,
use and excise taxes, and any other similar taxes, duties and charges of any kind imposed by any federal, state or local governmental
entity on any amounts payable by PERC hereunder; provided, that, in no event shall PERC pay or be responsible for any taxes
imposed on, or with respect to, Service Provider’s income, revenues, gross receipts, personnel or real or personal property
or other assets.

 

Article
VII

 

Intellectual
Property Rights; Ownership

 

Section
7.01       Except as set forth in Section 7.03,
PERC is, and shall be, the sole and exclusive owner of all right, title and interest in and to the Deliverables, including all
Intellectual Property Rights therein. Service Provider agrees, and will cause its Service Provider Personnel to agree, that with
respect to any Deliverables that may qualify as “work made for hire” as defined in 17 U.S.C. §101, such Deliverables
are hereby deemed a “work made for hire” for PERC. To the extent that any of the Deliverables do not constitute a “work
made for hire”, Service Provider hereby irrevocably assigns, and shall cause the Service Provider Personnel to irrevocably
assign to PERC, in each case without additional consideration, all right, title and interest throughout the world in and to the
Deliverables, including all Intellectual Property Rights therein. The Service Provider shall cause the Service Provider Personnel
to irrevocably waive, to the extent permitted by applicable Law, any and all claims such Service Provider Personnel may now or
hereafter have in any jurisdiction to so-called “moral rights” or rights of droit moral with respect to the Deliverables.

 

Section
7.02       Upon the reasonable request of PERC, Service
Provider shall, and shall cause the Service Provider Personnel to, promptly take such further actions, including execution and
delivery of all appropriate instruments of conveyance, as may be necessary to assist PERC to prosecute, register, perfect or record
its rights in or to any Deliverables.

 

    6

     

    

 

Section
7.03       Service Provider and its licensors are,
and shall remain, the sole and exclusive owners of all right, title and interest in and to the Pre-Existing Materials, including
all Intellectual Property Rights therein. Service Provider hereby grants PERC a limited, irrevocable, perpetual, fully paid-up
(except as otherwise sect forth on Exhibit A), royalty-free, non-transferable (except in accordance with Section
15.07), non-sublicenseable, worldwide license to use, perform, display, execute, reproduce, distribute, transmit, modify (including
to create derivative works), import, make, have made, sell, offer to sell and otherwise exploit any Pre-Existing Materials to
the extent incorporated in, combined with or otherwise necessary for the use of the Deliverables solely to the extent reasonably
required in connection with PERC’s receipt or use of the Services and Deliverables. All other rights in and to the Pre-Existing
Materials are expressly reserved by Service Provider.

 

Section
7.04       PERC and its licensors are, and shall
remain, the sole and exclusive owner of all right, title and interest in and to the PERC Materials, including all Intellectual
Property Rights therein. Service Provider shall have no right or license to use any PERC Materials except solely during the Term
of the Agreement to the extent necessary to provide the Services to PERC. All other rights in and to the PERC Materials are expressly
reserved by PERC.

 

Article
VIII

 

Confidential
Information

 

Section
8.01       The Receiving Party agrees:

 

(a)          
not to disclose or otherwise make available Confidential Information of the Disclosing Party to any third party without
the prior written consent of the Disclosing Party; provided, however, that the Receiving Party may disclose the Confidential
Information of the Disclosing Party to its Affiliates, and their officers, employees, consultants and legal advisors who have a
 “need to know”, who have been apprised of this restriction and who are themselves bound by nondisclosure obligations
at least as restrictive as those set forth in this Article VIII;

 

(b)          
to use the Confidential Information of the Disclosing Party only for the purposes of performing its obligations under the
Agreement or, in the case of PERC, to make use of the Services and Deliverables; and

 

(c)          
 to promptly notify the Disclosing Party in the event it becomes aware of any loss or disclosure of any of the Confidential
Information of Disclosing Party.

 

Section
8.02       If the Receiving Party becomes legally
compelled to disclose any Confidential Information, the Receiving Party shall provide:

 

(a)          
prompt written notice of such requirement so that the Disclosing Party may seek, at its sole cost and expense, a protective
order or other remedy; and

 

(b)         
reasonable assistance, at the Disclosing Party’s sole cost and expense, in opposing such disclosure or seeking a protective
order or other limitations on disclosure.

 

If, after providing such notice and assistance
as required herein, the Receiving Party remains required by Law to disclose any Confidential Information, the Receiving Party
shall disclose no more than that portion of the Confidential Information which, on the advice of the Receiving Party’s legal
counsel, the Receiving Party is legally required to disclose and shall use commercially reasonable efforts to obtain assurances
from the applicable court or agency that such Confidential Information will be afforded confidential treatment.

 

    7

     

    

 

Section
8.03       Nothing in this Agreement shall prevent
either party from using any general methodologies or know-how contained in the unaided memory of such party’s personnel or
those of its Affiliates developed or disclosed under this Agreement, provided that in doing so it is not in breach of its obligations
of confidentiality under this Section or using any Intellectual Property Rights of the other party or any of its Affiliates.

 

Article
IX

 

Representations
and Warranties

 

Section
9.01       Each party represents and warrants to
the other party that:

 

(a)          
it is duly organized, validly existing and in good standing as a corporation under the Laws of its jurisdiction of incorporation;

 

(b)           it
has the full right, power and authority to enter into this Agreement, to grant the rights and licenses granted hereunder and to
perform its obligations hereunder;

 

(c)          
the execution of this Agreement by its representative whose signature is set forth at the end hereof has been duly authorized
by all necessary corporate action of the party; and

 

(d)           when
executed and delivered by such party, this Agreement will constitute the legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms.

 

Section
9.02       Service Provider represents and warrants
to PERC that:

 

(a)          
it shall perform the Services using personnel of required skill, experience and qualifications and in a professional and
workmanlike manner in accordance with commercially reasonable industry standards for similar services and shall devote adequate
resources to meet its obligations under this Agreement;

 

(b)           it
is in compliance with, and shall perform the Services in compliance with, all applicable Laws, and it is not infringing upon or
misappropriating any third party intellectual property rights and will not infringe upon or misappropriate any third party intellectual
property rights in performing the Services;

 

Section
9.03        EXCEPT FOR THE EXPRESS WARRANTIES IN
THIS Article IX, (A) EACH PARTY HEREBY DISCLAIMS ALL WARRANTIES, EITHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE UNDER
THIS AGREEMENT, AND (B) SERVICE PROVIDER SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, TITLE AND NON-INFRINGEMENT.

 

    8

     

    

 

Article
X

 

Indemnification

 

Section
10.01   Service Provider shall defend, indemnify and hold harmless PERC
and its officers, directors, employees, agents, successors and permitted assigns (each, a “PERC Indemnitee”)
from and against all Losses arising out of or resulting from:

 

(a)           bodily
injury, death of any person or damage to real or tangible, personal property resulting from the performance of the Services or
any damages arising from the willful, fraudulent or negligent acts or omissions of Service Provider or Service Provider Personnel;
and

 

(b)          
Service Provider’s breach of this Agreement or any material representation or warranty set forth herein.

 

Section
10.02   Service Provider shall defend, indemnify and hold harmless the
PERC Indemnitees from and against all Losses incurred by an PERC Indemnitee based on a claim that any of the Services or
Deliverables or PERC’s receipt or use thereof infringes any Intellectual Property Right of a third party arising under the
Laws of the United States; provided, however, that Service Provider shall have no obligations under this Section 10.02
with respect to claims to the extent arising out of:

 

(a)           any
PERC Materials or any instruction, information, designs, specifications or other materials provided by PERC in writing to Service
Provider;

 

(b)          
use of the Deliverables in combination with any materials or equipment not supplied to PERC or specified by Service Provider
in writing, if the infringement would have been avoided by the use of the Deliverables not so combined; or

 

(c)           any
modifications or changes made to the Deliverables by or on behalf of any Person other than Service Provider or Service Provider
Personnel.

 

Section
10.03   PERC shall defend, indemnify and hold harmless Service Provider
and Service Provider’s Affiliates and their officers, directors, employees, agents, successors and permitted assigns from
and against all Losses awarded against Service Provider arising out of or resulting from:

 

(a)          
bodily injury, death of any person or damage to real or tangible, personal property resulting from the negligent or willful
acts or omissions of PERC; and

 

(b)          
PERC’s breach of this Agreement.

 

Section
10.04   The party seeking indemnification hereunder shall promptly notify
the indemnifying party in writing of any Action and cooperate with the indemnifying party at the indemnifying party’s sole
cost and expense. The indemnifying party shall immediately take control of the defense and investigation of such Action and shall
employ counsel of its choice to handle and defend the same, at the indemnifying party’s sole cost and expense. The indemnifying
party shall not settle any Action in a manner that adversely affects the rights of the indemnified party without the indemnified
party’s prior written consent. The indemnified party’s failure to perform any obligations under this Section 10.04
shall not relieve the indemnifying party of its obligations under this Section 10.04 except to the extent that the
indemnifying party can demonstrate that it has been materially prejudiced as a result of such failure. The indemnified party may
participate in and observe the proceedings at its own cost and expense.

 

    9

     

    

 

Article
XI

[intentionally
Left Blank]

 

Article
XII

 

Termination;
Effect of Termination

 

Section
12.01   This Agreement shall not be terminated except upon the written
agreement of the parties or in accordance with this Section 12.01. The parties may mutually terminate this Agreement at
any time, with or without default, by the mutual written consent of both parties, and either party may terminate this Agreement,
effective upon written notice to the other party (the “Defaulting Party”), if the Defaulting Party:

 

(a)           
materially breaches this Agreement, and such breach is incapable of cure, or with respect to a material breach capable of
cure, the Defaulting Party does not cure such breach within thirty (30) days after receipt of written notice of such breach.

 

(b)          
(i) becomes insolvent or admits its inability to pay its debts generally as they become due; (ii) becomes subject, voluntarily
or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency law, which is not fully stayed within
10 days or is not dismissed or vacated within 60 days after filing; (iii) is dissolved or liquidated or takes any corporate action
for such purpose; (iv) makes a general assignment for the benefit of creditors; or (v) has a receiver, trustee, custodian or similar
agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property
or business.

 

Section
12.02   Upon expiration or termination of this Agreement for any reason:

 

(a)           Service
Provider shall (i) promptly deliver to PERC all Deliverables (whether complete or incomplete) for which PERC has paid and all
PERC Materials, (ii) promptly remove any Service Provider Equipment located at PERC’s premises, (iii) provide reasonable
cooperation and assistance to PERC upon PERC’s written request and at PERC’s expense in transitioning the Services
to an alternate Service Provider, and (iv) on a pro rata basis, repay all fees and expenses paid in advance for any Services or
Deliverables which have not been provided.

 

(b)           Each
party shall (i) return to the other party all documents and tangible materials (and any copies) containing, reflecting, incorporating
or based on the other party’s Confidential Information, (ii) permanently erase all of the other party’s Confidential
Information from its computer systems and (iii) certify in writing to the other party that it has complied with the requirements
of this clause; provided, however, that PERC may retain copies of any Confidential Information of Service Provider incorporated
in the Deliverables or to the extent necessary to allow it to make full use of the Services and any Deliverables.

 

    10

     

    

 

(c)           In
no event shall PERC be liable for any Service Provider Personnel termination costs arising from the expiration or termination
of this Agreement.

 

Section
12.03   The rights and obligations of the parties set forth in this Section
12.03 and Article I, Article VII, Article VIII, Article IX, Article XI, Section 12.02,
and Article XV, and any right or obligation of the parties in this Agreement which, by its nature, should survive termination
or expiration of this Agreement, will survive any such termination or expiration of this Agreement.

 

Article
XIII

 

Non-Exclusivity

 

The Service Provider
retains the right to perform the same or similar type of services for third parties during the Term of this Agreement, and PERC
retains the right to engage third parties to perform the same or similar type of services during the Term of this Agreement.

 

Article
XIV

 

Force
Majeure

 

Section
14.01   No party shall be liable or responsible to the other party, nor
be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any term of
this Agreement (except for any obligations to make payments to the other party hereunder), when and to the extent such failure
or delay is caused by or results from acts beyond the affected party’s reasonable control, including, without limitation:

 

(a)           
acts of God;

 

(b)          
flood, fire or explosion;

 

(c)          
war, invasion, riot or other civil unrest;

 

 (d)           actions, embargoes or blockades in effect on or after the date of this Agreement; or

 

(e)          
national or regional emergency;

 

(each of the foregoing,
a “Force Majeure Event”). A party whose performance is affected by a Force Majeure Event shall give notice to
the other party, stating the period of time the occurrence is expected to continue and shall use diligent efforts to end the failure
or delay and minimize the effects of such Force Majeure Event.

 

Article
XV

 

Miscellaneous

 

Section
15.01   Each party shall, upon the reasonable request of the other party,
execute such documents and perform such acts as may be necessary to give full effect to the terms of this Agreement.

 

    11

     

    

 

Section 15.02   The
relationship between the parties is that of independent contractors. Nothing contained in this Agreement shall be construed as
creating any agency, partnership, joint venture or other form of joint enterprise, employment or fiduciary relationship between
the parties, and neither party shall have authority to contract for or bind the other party in any manner whatsoever.

 

Section
15.03   Unless required by law, neither party shall issue or release
any announcement, statement, press release or other publicity or marketing materials relating to this Agreement, or otherwise use
the other party’s trademarks, service marks, trade names, logos, symbols or brand names, in each case, without the prior
written consent of the other party, which shall not be unreasonably withheld or delayed.

 

Section
15.04   All notices, requests, consents, claims, demands, waivers and
other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written
confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested);
(c) on the date sent by email (with confirmation of receipt by reply or read-receipt) if sent during normal business hours of the
recipient, and on the next business day if sent after normal business hours of the recipient or (d) on the third day after the
date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the
respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given
in accordance with this Section 15.04.

 

	If to Service Provider:	 	AQUILEX, INC.
	 	 	5810 Coral Ridge Drive, Suite 220   
	 	 	Coral Springs, Florida 33076
	 	 	Attention:     Controller
	 	 	Email:

 

	If to PERC:	 	PERC
    WATER CORPORATION
	 	 	959
    S. Coast Drive, # 315
	 	 	Costa
    Mesa, CA 92626
	 	 	Attention:
         President
	 	 	Email:
      nowen@percwater.com  

 

Section
15.05   For purposes of this Agreement, (a) the words “include,”
 “includes” and “including” shall be deemed to be followed by the words “without limitation”;
(b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,”
 “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references
herein: (x) to Sections and Exhibits refer to the Sections of, and Exhibits attached to, this Agreement; (y) to an agreement, instrument
or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to
the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes
any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard
to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument
to be drafted.

 

    12

     

    

 

The Exhibits referred to herein shall be
construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

 

Section
15.06   This Agreement, together with all Exhibits and any other documents
incorporated herein by reference, constitutes the sole and entire agreement of the parties to this Agreement with respect to the
subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral,
with respect to such subject matter.

 

Section
15.07   Neither party may assign, transfer or delegate any or all of
its rights or obligations under this Agreement, without the prior written consent of the other party; provided, that, upon
prior written notice to the other party, either party may assign the Agreement to an Affiliate of such party or to a successor
of all or substantially all of the assets of such party through merger, reorganization, consolidation or acquisition. No assignment
shall relieve the assigning party of any of its obligations hereunder. Any attempted assignment, transfer or other conveyance in
violation of the foregoing shall be null and void. This Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.

 

Section
15.08   This Agreement is for the sole benefit of the parties hereto
and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon
any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

 

Section
15.09   The headings in this Agreement are for reference only and shall
not affect the interpretation of this Agreement.

 

Section
15.10   This Agreement may only be amended, modified or supplemented
by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and signed by the party so waiving. Except as otherwise set forth in this Agreement, no
failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or
be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

Section
15.11   If any term or provision of this Agreement is invalid, illegal
or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision
of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination
that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order
that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

    13

     

    

 

Section
15.12   This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether
of the State of Florida or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those
of the State of Florida. Any legal suit, action or proceeding arising out of or related to this Agreement or the Services provided
hereunder shall be instituted exclusively in the federal courts of the United States or the courts of the State of Florida in
each case located in the county of Broward County, Florida, and each party irrevocably submits to the exclusive jurisdiction of
such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by mail to such party’s
address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court.

 

Section
15.13   EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

Section
15.14   Each party acknowledges that a breach by a party of Article
VII (Intellectual Property Rights; Ownership) or Article VIII (Confidentiality) may cause the non-breaching party irreparable
damages, for which an award of damages would not be adequate compensation and agrees that, in the event of such breach or threatened
breach, the non-breaching party will be entitled to seek equitable relief, including a restraining order, injunctive relief, specific
performance and any other relief that may be available from any court, without the necessity of proving actual damages or the posting
of a bond, in addition to any other remedy to which the non-breaching party may be entitled at law or in equity. Such remedies
shall not be deemed to be exclusive but shall be in addition to all other remedies available at law or in equity, subject to any
express exclusions or limitations in this Agreement to the contrary.

 

Section
15.15   In the event that any action, suit, or other legal or administrative
proceeding is instituted or commenced by either party hereto against the other party arising out of or related to this Agreement,
the prevailing party shall be entitled to recover its actual attorneys’ fees and court costs from the non-prevailing party
(including such fees and costs on appeal).

 

Section
15.16   This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this
Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect
as delivery of an original signed copy of this Agreement.

 

{signature page follows}

 

    14

     

    

 

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the date first above written.

 

	 	AQUILEX, INC.  

 

	 	By	 
	 	Name:	 
	 	Title:	 

 

	 	PERC WATER CORPORATION

 

	 	By	 
	 	Name:	 
	 	Title:	 

 

[SIGNATURE PAGE TO
SERVICES AGREEMENT]

 

    

     

    

 

EXHIBIT A

 

Accounting and Administration / Procurement
/ Information Technology Services 

 

	 	· 	Preparation of monthly, quarterly
    and annual financial statements and other internal and external financial reports.
	 	 	 
	 	· 	Provide the supporting documentation for, and
    approve the preparation by a qualified accounting firm or firms of, all federal, state and local tax filings and tax compliance
    matters (income taxes, sales taxes, property taxes, intangible taxes) for any tax reporting period that is open on or after
    the Effective Date of this Agreement or that arises during the Term.
	 	 	 
	 	· 	Cash management.
	 	 	 
	 	· 	Business insurance review, preparation and
    submission of renewals.
	 	 	 
	 	· 	Preparation, filing and mailing of Form 1099s.
	 	 	 
	 	· 	Materials/inventory procurement and logistics
    and related record-keeping.
	 	 	 
	 	· 	Desktop and server hardware and software deployment
    and support.
	 	 	 
	 	· 	Telecommunications management.
	 	 	
	 	· 	Network and internal communications maintenance
    and support (including LAN and firewall).
	 	 	 
	 	· 	Email and internet management.
	 	 	 
	 	· 	Web server design and hosting.
	 	 	 
	 	· 	IT applications access and maintenance.

 

The initial monthly fee for providing these
services shall be $6,000.00. Such monthly fee shall be subject to adjustment as set forth in Section 6.05 on each anniversary
date of this Agreement.

 

    A-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00301-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00301-of-00352.parquet"}]]