PERC Water Company Overview 2013

P u r e G e n i u s

2013 Company Overview

PERC Water Corporation

PERC WATER COMPANY OVERVIEW

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TABLE OF CONTENTS

1.0 Company Overview ................................................................................................................... Section 1 1.1 PERC Water Corporation ....................................................................................................... 1-1 1.3 Why PERC Water? ................................................................................................................. 1-2 1.4 History ................................................................................................................................... 1-5 1.5 Target Markets & Business Segments .................................................................................. 1-6 1.7 Awards .................................................................................................................................. 1-8

2.0 Water Infrastructure Solutions ................................................................................................. Section 2 2.1 Greenfield Concessions ......................................................................................................... 2-1 2.2 Brownfield Concessions ........................................................................................................ 2-4 2.3 Engineering Services, Automation and Central PERC™ ........................................................ 2-5

3.0 Company Experience ................................................................................................................ Section 3 3.1 Facility Case Studies .............................................................................................................. 3-1 3.2 Project Summary ................................................................................................................... 3-3

4.0 Company Management & Advisors .......................................................................................... Section 4

Company Overview

P u r e G e n i u s

SECTION 1 – COMPANY OVERVIEW

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1.1 PERC WATER CORPORATION

Johan Perslow, P.E., PERC Water’s founder, made our purpose clear from the start:

“We don’t use water, we just borrow it.”

PERC Water Corporation is an innovative water infrastructure company that develops, designs, builds, operates and manages water infrastructure throughout the United States. We have designed 60 water infrastructure projects over the past 14 years, 21 of which we have built and placed into operation. Our unique project approach results in certainty of cost, schedule and water quality for our clients. PERC Water can uniquely provide such certainty at an early stage of a project life by leveraging our Customized Design Report (CDR™) program as further described in this Company Overview. For more information, please refer to our website at www.percwater.com.

PERC Water’s Office and Project Locations

http://www.percwater.com/


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1.3 WHY PERC WATER?

Certainty of Cost, Schedule and Performance

As a result of PERC Water’s experience and predictable design, the company provides certainty of cost, schedule and asset performance to its clients, and can offer such certainty at the early conceptual design stage of an infrastructure development project. Unlike the traditional development process where cost, schedule and performance are unknown until the end of a project often resulting in cost overruns, unfavorable surprises and potential litigation, our integrated delivery methods, previous experience and trademarked design allow us to provide such certainty in such an uncertain market. The result is a low risk and certain outcome that avoids the pitfalls of a traditional design-bid-build approach.

Refer to Section 2 for more information regarding allocation of risk and the certainty provided by our alternative delivery methods.

Experience

PERC Water has a proven track record of compliant water recycling facilities across the southwest US. We have designed 60 facilities, 21 of which we successfully constructed and put into operation. Each facility utilizes our trademark design and has demonstrated successful long-term life cycle performance. As demonstrated by the reference letters included in the Appendix, our clients are satisfied with the projects we have developed, and the certainty we offer. In addition, we have a track record of long-standing strategic partnerships with other industry experts and successful companies who have provided additional reference letters included in the Appendix. The result of this experience is our ability to continue offering clients certainty of cost, schedule and performance.

Refer to Section 3 for a complete list of our project experience and case studies on specific facilities.

Total Solution®

Our trademarked Total Solution approach enables us to perform every aspect of the development of a water recycling facility from initial conceptual design through full operation of the facility. This is in stark contrast with the traditional project development approaches that typically involves at least seven principal parties and three separate contracts. Our Total Solution approach is proven to result in cost-saving construction techniques and a more economical design, which reduces life-cycle cost and limits our clients’ risk.

Refer to Section 2 for an overview of our trademarked Total Solution and PPP Delivery Methods.


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Efficient Design

PERC Water’s trademarked and award-winning design allows for an efficient and environmentally-sensitive solution to water recycling. Our trademarked design reduces a client’s environmental footprint by approximately 70%, as the design requires only a fraction of the property typically set aside for traditional campus-style treatment plants. All process tanks are concealed underground, allowing for an odorless and noise-free surrounding environment. The operations building, which is constructed atop the underground tanks, is unobtrusive, aesthetically-pleasing and designed to complement the surrounding community. Our modular, scalable trademarked design can be tailored and phased for any capacity or environment and its compact design requires less overall facility management as a result of four key design features:

1. Process tanks utilize common wall construction methods

2. Process tanks are constructed underground

3. Process tanks are covered with a concrete slab

4. Operations Buildings are constructed above the process tanks

Refer to Section 2 for an overview of our unique trademarked design.

Project Financing

PERC Water is considered an industry expert in the utilization of public-private partnerships, and in particular we developed the first 100% privately funded water recycling facility in the US. We have developed strategic partnerships with prominent infrastructure investment firms who are seeking mission critical infrastructure investments with a low risk profile, such as water and wastewater related assets. In the current market, private financing sources are readily available to be deployed, typically without the timing constraints that are required for State Revolving Fund and/or municipal bond financing arrangements, and can accelerate the timing of a new project launch and completion.

The key advantage of utilizing project financing is that these investors focus on lifecycle perspective, whereby they invest up front in design and construction costs necessary to deliver the appropriate level of service over the life of the project and remove the uncertainty of project financing and future capital expenditures from clients.

Refer to Section 2 for an overview of our approach to project delivery.


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Customized Design Report (CDR™)

PERC Water’s unique trademarked CDR program includes a comprehensive plan for any given project that results in certainty for our clients. In contrast to traditional design-bid-build, which provides no certainty to Owner’s the CDR is geared towards outlining all expectations for project team members at the outset of a project. PERC Water can submit a CDR within 90 days that will include the following critical components:

30% level design certainty of life-cycle cost certainty of construction schedule certainty of water quality certainty of energy consumption certainty of project financings certainty of facility performance

PERC Water has prepared 60 CDRs in the last 14 years, which has resulted in the development of 21 recycling facilities in the Southwest US. The CDR is the foundation of every PERC Water project and is intended to clearly align the expectations of the Owner and PERC Water.

Advanced Water Solutions, Automation and Software Solutions

PERC Water’s integrated engineering and operations teams provide a comprehensive approach to water recycling facility performance and operation from the initial design stages through facility long-term operation. As a result of this in-house team, we have developed a number of innovative approaches, technological tools and experienced-based methodologies that further add to our industry leading efficient approach to water infrastructure. We have integrated, adapted and developed additional technology and tools that increase the efficiency and operational capability of our facilities that further reduces risk, and provides visibility to mission critical operating assets.

PERC Water has developed Central PERC™, a web application utilized to centralize all underlying operational databases such as SCADA, maintenance databases, laboratory records, energy tracking and other critical databases. Central PERC is accessible on iPad, iPhone and other similar smart devices.

Refer to Section 2 for an overview of our additional engineering services and an overview of Central PERC.


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Water Rights Trading

PERC Water’s facilities are considered both treatment and production assets. Recycled water produced from the facilities has proved to be a resource that adds quantifiable value in alternative uses to utilizing potable water. This produced recycled water can be traded or recharged to groundwater supplies to generate new revenues that in certain regions could fund the entire life-cycle cost of a new facility. Heavy focus on monetizing recycled water supplies in both Greenfield and Brownfield concessions further allows us to reduce treatment costs to clients.


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1.4 COMPANY HISTORY

Johan Perslow is the founder of PERC Water, which he formed in January 1998 as Pacific Environmental Resources Corp. (reincorporated in California as PERC Water Corporation in 2004). Mr. Perslow is a contractor and licensed civil engineer, and has been in the water sector for 40 years. He founded PERC Water to provide clients a guaranteed Total Solution™ for their water, wastewater treatment and water recycling facilities. The industry was fragmented and typically served by the traditional contracting method of design-bid-build. Mr. Perslow recognized an opportunity to provide clients with a Total Solution that included certainty of capital cost, operating costs, schedule and performance, all included in a high end, aesthetically pleasing facility, and most importantly returns water to nature in a condition better than was received.

Steve Owen had previously worked with Mr. Perslow for several years prior to the formation of PERC Water in 1998, and Mr. Owen was instrumental in developing the initial facilities that allowed PERC Water to establish itself as a reputable firm in the wastewater sector. Since 1995, Mr. Owen has been instrumental in developing all 20 PERC Water recycling facilities, including the award winning City of Santa Paula public-private partnership project.

Brian Cullen joined PERC Water in 2000 to manage the growth and operations of the company, and he quickly recognized the need to develop an Asset Management and Project Financing program. Up to this point, PERC Water was principally focused on Design/Build projects and had minimal Asset Management capabilities. A critical aspect in offering long-term certainty was for PERC Water to have long-term Asset Management contracts, therefore Mr. Cullen focused on establishing a strong presence in Asset Management. In addition, the company recognized the need to provide project financing as part of its offering, which became critical to secure long term asset management contracts.

To enhance the Asset Management program, PERC Water hired Bob Nespeca as Vice President of Asset Management in 2001. Mr. Nespeca came with over 20 years of extensive experience in operating, managing and maintaining water infrastructure. He rapidly developed a new Asset Management division within the company and retained a strong team of operations personnel, most of which are still employed with the company today. As of 2011, Mr. Nespeca assumed the role of Vice President, Infrastructure Concessions and dedicates most of his time to developing brownfield concession projects involving concessions of existing water infrastructure.

To provide focus on developing the PERC Water brand, protecting our competitive advantage, growing our Asset Management program, and effectively managing all risks, the company transitioned from a self-performing construction company prior to 2000 to a complete outsourcing of construction operations, although still under the control and direction of PERC Water. This change in operations resulted in about 50% of PERC Water’s projected capital project costs being performed by specialty trade contractors that are more equipped to perform such activities. This has proved to be effective and has permitted the PERC Water management to focus on developing its brand and long-term agreements.

In 2003, Juergen Nick joined the company to enhance our design and engineering capabilities and to support Mr. Perslow on future project designs. Mr. Nick is an electrical engineer with significant


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experience in electrical design and automation of water assets. Shortly after Mr. Nick joined the company, he focused his efforts on developing an internal automation division, which purpose was to have in-house software programming and control development of our facilities. This was a critical step in PERC Water’s progression, as it provided better control of the operations of facilities and assists in securing long term asset management contracts. Mr. Nick resigned from the company in 2013 to pursue independent engineering services, yet remains a shareholder and an Advisor to the company.

In 2006, Nate Owen joined the company to lead our construction operations. Recognizing the need to effectively manage the construction document preparation phase, and ensure quality bids from specialty contractors, Mr. Owen continued to develop a standard operating procedure for the construction division that has resulted in clear management of our own expectations for cost, schedule and quality. As of 2011, Mr. Owen assumed the role of Vice President and COO, and oversees all the day-to-day operations of PERC Water, with a main focus of project production including design, construction and operations.

PERC Water is 100% owned by its original founders and management, and there are presently 10 shareholders of PERC Water, with no outside investment.


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1.5 TARGET MARKETS AND BUSINESS SEGMENTS

Current and Target Geographic Markets

Greenfield Concessions

Greenfield projects are generally defined as projects that are new and lack constraints imposed by existing infrastructure. The term “greenfield” is generally referred to as a project that is brand new e.g. a new water recycling facility, and although it may be replacing existing infrastructure, the new facility is independent and intended to serve a new community or to replace an existing facility.

Brownfield Concessions

Brownfield projects are generally defined as projects that include existing infrastructure whereby firms will improve efficiency and make needed investments to rehabilitate or expand existing infrastructure. To the extent efficiencies can be realized, it is possible to monetize such efficiencies into new investments of initial cash funding to the client for alternative uses. Brownfield concessions are not a new concept, as they have been well utilized in Europe, Canada and Australia for transportation, toll roads and other infrastructure projects.

Engineering Services, Automation, Central PERC™, PERC Energy and Regulatory Permitting

PERC Water’s engineering and operations teams provide a comprehensive approach to water recycling facility performance and operation from the initial design stages through facility long-term operation. As a result of this in-house team, we have developed a number of innovative approaches, technological tools and experienced-based methodologies that further add to our efficient approach to water infrastructure.


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1.7 AWARDS

National Council for Public-Private Partnerships

2011 Public-Private Partnership Award for Innovation

PERC Water, Alinda Capital and the City of Santa Paula were honored by the NCPPP with the 2011 Award for Innovation for the Santa Paula Water Recycling Facility. This award recognizes projects developed through a public agency and private company partnership

that demonstrated a significant new advancement in the field of public-private partnerships.

Design-Build Institute of America

Western Pacific - Top Tier Water Award 2011

PERC Water was awarded the top level 2011 DBIA Western Pacific “Best Project – Water” Regional Award for implementing “interdisciplinary teamwork, innovation, and problem solving” for the Santa Paula Water Recycling Facility. The Santa Paula Facility

was recognized for its ground breaking approach to developing water recycling infrastructure, both in its utilization of the Design – Build – Operate - Finance (DBOF) delivery method and its innovative design.

Best Project – Top Tier Water Award 2009

Our SPA 3 facility in Surprise, Arizona was honored with the “Best Project-Water” Regional Award from the DBIA Western Pacific Region in honor of it exemplifying “the principles of interdisciplinary teamwork, innovation and problem solving that characterize design-build delivery.” PERC Water’s utilization of the design-build-operate delivery approach created a fast-track infrastructure solution for the city of Surprise, one of Arizona’s fastest growing cities.

Best Project 2008

Our Mountain House facility near Tracy, California received the “Best Project – Developer Design-Build” award in 2008 from the Design-Build Institute of America (DBIA). This facility was selected as result of its “unique design whereby all treatment of wastewater occurs in below ground tanks that are covered with 14,000 square feet of operations building constructed above the tanks.”

2010 Business Achievement Award - Project Merit

For the second year in a row, the EBJ selected PERC Water as a 2010 Award Recipient, this year in the Project Merit category for "the design, construction, and operation of the Santa Paula Water Recycling Facility." According to the EBJ, this projects accomplishments include: 100% private funding in a challenging financial environment, completion seven months heads of mandated deadline, no up-front capital costs for the City, power consumption costs are 35% lower than expected, small footprint and virtually no odor or noise as a result of underground process tanks, etc.


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2009 Business Achievement Award - Sustainability & Resource Protection

The EBJ selected PERC Water as a 2009 Sustainability and Resource Protection Award recipient as a result of our efforts to deploy "energy-saving technology" at the Santa Paula, California Water Recycling Facility. They stated our innovative lighting, membrane scouring and aeration, and SCADA system designs will save up to 15% in wastewater treatment power consumption costs while maintaining quality and efficiency.

Association of Corporate Growth

Nominates PERC Water for 2010 Private Emerging Growth Award

Each year the Association for Corporate Growth, Orange County Chapter (ACG OC), selects several Orange County based companies to honor in a variety of categories for their outstanding dedication, leadership and accomplishments. PERC Water was nominated in the "Private Emerging Growth Award" category.

Water Deal of the Year 2009, Award of Distinction

PERC Water was presented the Global Water Awards’ 2009 “Water Deal of the Year” Award of Distinction for our utilization of public-private partnerships in our contract to design, build, operate and finance the Santa Paula Water Recycling Facility. Al Gore, former Vice President of the United States and Nobel laureate, presented the award at a banquet in Zurich, Switzerland hosted by Global Water Intelligence (GWI), one of the premier international news magazines for professionals in the water sector. The Water Deal of the Year award recognizes deals that have made the biggest contribution to the advancement of public-private partnerships in the international water sector in 2008. GWI stated the decision made by the city of Santa Paula to use private sector funding demonstrates a “bold new direction in the financing of US water infrastructure” and described the deal as a “ground-breaking transaction which can be emulated across the United States.”

Water/Wastewater Project of the Year 2006

Our Mountain House facility was also the recipient of the “Highly Commended Award” from Global Water Intelligence’s “Water/Wastewater Project of the Year” in 2006 as part of the top four treatment facilities in the world. GWI called the facility “clever because it offers nearly six times the capacity of the original plant using just one tenth of the land,” adding that “…One day all wastewater treatment plants will be built with this degree of concern for the environment.” It was commended as one of the first chemical-free treatment facilities in the United States.

Valley Forward Association

Environmental Excellence Awards 2003

Our Sundance facility in Buckeye, Arizona was the recipient of an “Award of Merit” from the Valley Forward Association for Environmental Technologies due to its ability

to produce AZ Class A+ effluent without chemical additives.


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Environmental Excellence Awards 2002

Our Palm Valley facility in Goodyear, Arizona was honored by Valley Forward Association in 2002 with the “Environmental Excellence Award” for its outstanding contribution to its physical environment. The facility was praised for its “high quality, usable effluent,” considered a “rare and previous resource to all of Arizona,” and for its innovative technology which creates “no offsite odor” and “the smallest footprint in the industry,” making “it possible to locate the facility essentially in the center of (the) community.”

WaterInfrastructure

Solutions

P u r e G e n i u s

SECTION 2 – WATER INFRASTRUCTURE SOLUTIONS

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2.1 GREENFIELD CONCESSIONS

Greenfield projects are generally defined as projects that are new and lack constraints imposed by

existing infrastructure. The term “greenfield” is generally referred to as a project that is brand new e.g. a

new water recycling facility, and although it may be replacing existing infrastructure, the new facility is

independent and intended to serve a new community or to replace an existing facility.

Public-Private Partnership Delivery Methods

In response to the traditional Design-Bid-Build project approach with significant uncertainties with respect

to cost, schedule and performance, PERC Water offers a single, unified design, construction and

operations team through the Design-Build, Design-Build-Operate and Design-Build-Operate-Finance

delivery approaches. These integrated approaches are proven to result in cost-saving construction

techniques and a more economical design, which reduces life-cycle cost and limits the client’s risk.

The following risk allocation table delineates the transfer of risk according to the delivery method:

Design-Bid-Build (DBB)

Design-Build (DB)

Design-Build-Operate

(DBO)

Design-Build-Operate-Finance

(DBOF)

Design/ Build

Capital Cost Owner DB Entity DBO Entity DBOF Entity

Schedule/Completion Owner DB Entity DBO Entity DBOF Entity

Construction Warranties Owner DB Entity DBO Entity DBOF Entity

Asset Mgt

Water Quality Performance Owner Owner DBO Entity DBOF Entity

Capital Replacement Owner Owner DBO Entity DBOF Entity

Power Consumption Owner Owner DBO Entity DBOF Entity

Biosolids Owner Owner DBO Entity DBOF Entity

Life Cycle Costs Owner Owner DBO Entity DBOF Entity

Operation & Maintenance Owner Owner DBO Entity DBOF Entity

Finance Long-Term Financing Owner Owner Owner DBOF Entity

Interest Rate Owner Owner Owner DBOF Entity

Design/Build

Design/Build is a project delivery method whereby an Owner contracts with a single entity for design and construction of a given project through a single contract with the Owner. Generally, DB is utilized to reduce the risk to Owners, and reduce project schedule with a “fast-track” approach. DB is sometimes referred to as the “master builder” approach, one of the oldest forms of construction procedures. The Master Builder system for designing and building construction projects was the dominant project delivery system in the construction industry during the early part of the 20th century, and has since developed into the Design/Build project delivery approach.


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Design/Build/Operate

Design/Build/Operate is a project delivery method whereby an Owner contracts with a single entity for design, construction and operations of a given project. Generally, DBO is utilized to reduce the long-term risk to Owners, and reduce project schedule with a “fast-track” approach. DBO is an extension of DB whereby the DBO Entity will perform Operations following completion of the construction of an asset.

Design/Build/Operate/Finance or PPP

Design/Build/Operate/Finance or PPP is a project delivery method whereby an Owner contracts with a single entity for design, construction, operations and finance of a given project. Generally, DBOF is utilized to reduce the long-term operational and limit financial risk to Owners, and reduce project schedule with a “fast-track” approach. DBOF is an extension of DBO whereby the DBOF Entity will fund the initial capital cost of construction and fund future capital replacements during the Operations period. A major distinction between DBO and DBOF is that the DBOF Entity retains ownership of the asset until transfer at the end of the DBOF contract. The DBOF delivery the method is “going beyond the transaction and adopting a life-cycle perspective”.

PERC Water has extensive experience with these alternative delivery methods. Since 1998, PERC Water has completed 21 DB, DBO, and DBOF projects, including the Santa Paula Water Recycling Facility, the first 100% privately funded water-recycling facility in the US.

Customized Design Report (CDR™)

PERC Water’s unique trademarked CDR program includes a comprehensive plan for any given project that

results in certainty for our clients. In contrast to traditional design-bid-build which provides no certainty

to Owner’s the CDR is geared towards outlining all expectations for project team members at the outset

of a project. PERC Water can submit a CDR within 90 days that will include the following critical

components:

30% level design

certainty of life-cycle cost

certainty of construction schedule

certainty of water quality

certainty of energy consumption

certainty of project financings

certainty of facility performance

PERC Water has prepared 60 CDRs in the last 15 years, that has resulted in the development of 21

recycling facilities in the Southwest US. The CDR is the foundation of every PERC Water project and is

intended to clearly align the expectations of the Owner and PERC Water.


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Innovative Design and Intellectual Property

PERC Water’s trademarked design allows for an efficient and environmentally-sensitive solution to water

recycling. The PERC Water ASP® design guarantees:

Highest water quality guaranteed to meet

or exceed permits

Fixed capital cost, operating cost and a

delivery schedule

Water quality that will meet or exceed the

applicable regulatory requirements for

such facility consistent with the design of

such facility

A small environmental footprint where all

treatment takes place underground

Covered process tanks allow for maximum

odor control and noise reduction

Cost-sensitive design features like common wall construction and less yard piping/conduits

Scalability

We have formulated and trademarked eight of our water infrastructure designs and solutions:

ASP PERC Pure Genius Total Solution

CDR PERC Water TAP Logo globe design

We are in the provisional stages with a ninth: Central PERC.

In addition, we are in the process of patenting three of our process designs and other technologies that

allow for our energy efficient and cost effective facilities:

Membrane Bioreactor

Remote Access for Water Infrastructure Management (Central PERC)

Odor Control System and Method


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2.2 BROWNFIELD CONCESSIONS

Brownfield projects are generally defined as projects that include existing infrastructure whereby firms

will improve efficiency and make needed investments to rehabilitate or expand existing infrastructure. To

the extent efficiencies can be realized, it is possible to monetize such efficiencies into new investments of

initial cash funding to the client for alternative uses. Brownfield concessions are not a new concept, as

they have been well utilized in Europe, Canada and Australia for transportation, toll roads and other

infrastructure projects.

It is important to note that the focus of brownfield concessions should be all about leveraging operational

efficiencies, as opposed to increasing residential rates. The firm should not justify concession funding by

burdening existing ratepayers, unless it is absolutely necessary to increase rates to implement compliance

requirements.

The purpose of PERC Water’s Asset Management Team is to minimize the client’s total cost to own and

operate the facility, increase the overall efficiency of the facility and to deliver the highest level of service

to each and every client. We also offer a program designed to assist water infrastructure owners in

restructuring their operations to bring a facility into compliance. As part of this program, we provide our

clients with PERC Water's proprietary Turn Around Plan (TAP™) that includes a comprehensive evaluation

of the existing facility, an energy consumption assessment and an evaluation of operational approaches to

maintain long-term compliance.

PERC Water also provides a Concession contract as part of their Asset Management service offering. By

improving the facility’s efficiency, it is possible to monetize such efficiencies into new investments of

initial cash funding to the client for alternative uses. Brownfield concessions are not a new concept, as

they have been well utilized in Europe, Canada and Australia for transportation, toll roads and other

infrastructure projects.


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2.3 ENGINEERING SERVICES, AUTOMATION AND CENTRAL PERC™

Central PERC™

In an effort to increase the efficiency of the facilities we

operate, PERC Water developed Central PERC™, a web

application where all the current and historical data necessary

to operate and manage water and wastewater infrastructure is

centrally hosted and integrated within one platform that can be

accessed and controlled wirelessly from anywhere in the world

from an iPad, iPhone or any web-capable device. We leveraged

years of data from our underlying design, construction and

operations systems and team to create a dashboard that

illustrates the whole picture of a facility’s health in a friendly

and intuitive setting without going through SCADA or other

complex programs. This increased information availability

makes any authorized user a better strategic decision maker.

PERC Automation

PERC Automation provides Electrical Engineering

services, control panel design, PLC programming

services, SCADA design and radio communication

systems for water and wastewater systems. Our team

has more than 50 years of combined system design and

control experience in the water, wastewater and

industrial applications.

PERC Energy

PERC Energy’s strategic alliances allow us to provide systems sized from a few kW to multi-megawatt

utility scale. Our team has relationships with leading energy firms, and can implement a program that will

provide efficient and technologically advanced turnkey services for a variety of systems. We can utilize

technologies such as:

Turbine capture of kinetic energy in gravity flows

Waste to energy (using treated biosolids and/or influent screenings)

Photovoltaic (PV) and concentrated photovoltaic (CPV)

Energy efficiency improvements to capture the elusive nega-watt

PERC Energy will complete planning, design, permitting, contracts for Power Purchase Agreements and

installation. In addition, we are up to date on available rebates and incentive offerings in California and

Arizona and have successfully completed the process for our current clients.


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We perform energy audits to reveal possible energy savings in existing facilities. In addition to mechanical

systems, an energy audit would take into account items such as lighting, HVAC systems, building envelope

and IT systems. We have successfully acquired rebates for qualified energy upgrades from the Savings by

Design program offered by electric utilities.

Regulatory Permitting

We are proud of our relationships with California Regional Boards, the Arizona Department of Environmental Quality and numerous federal agencies. PERC Water representatives are highly regarded as the consistent provider of professional asset management services for our efforts to bring underperforming facilities into compliance and our experience in guiding clients through the often-complex permitting processes at municipal, state and federal levels.

Our unique position as a group that permits and abides by permits allows us to create submittals that favor real world conditions over design anticipations. Our permitting resume includes successful examples of:

National Pollutant Discharge Elimination System (NPDES) Reuse (Title 22 and Class A+) Air quality Stormwater All forms of local reviews (building permits, traffic control, hazardous materials, planning and

zoning, conditional use etc.) Waters of the U.S. (dredging, utility placement, outfall construction, etc.)

We operate facilities all over the southwestern U.S. and we remain involved in projects long term. This allows us stay up to date on new developments and regulatory changes. We also make great use of project contacts and professional societies to interpret current regulatory environments and serve the needs of our clients.

CompanyExperience

P u r e G e n i u s

SECTION 3 – COMPANY EXPERIENCE

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3.1 FACLITY CASE STUDIES

PERC Water has successfully designed, constructed and operated water recycling facilities across the United States. The following is an overview of some PERC Water’s facilities.

Santa Paula Water Recycling Facility

PERC Water and its financial partner Alinda Capital were contracted to Design/Build/Operate/Finance (DBOF) a 3.4 MGD (expandable to 4.2 MGD) PERC Water ASP® MBR for the City of Santa Paula, California. The project is the first of its type under California Government Code Section 5956-5956.10, allowing for a DBOF delivery method. They were awarded the DBOF contract in May 2008, broke ground in July 2008 and construction was completed in December 2009. The new Facility was been treating 100% of the City’s wastewater beginning May 13, 2010, seven months earlier than the compliance date issues by the Regional Board.

PERC Water utilized more than 85% local labor for the construction (more than 141,000 total man hours) and invested more than $4.5 million in the local economy (not including the local sales tax revenue).

PERC Water operates the new Facility under a 30-year asset management service agreement. The Facility utilizes advanced treatment process technologies incorporating MBR (membrane bio-reactors), aerobic sludge digestion, and UV (ultraviolet) disinfection that produce CA Title 22 compliant effluent. The Facility has approximately 11,600 square feet of above tank buildings that include 3,100 square feet of finished office space.

SPA 3 Water Recycling Facility

PERC Water is currently under contract to provide Design/Build/Operate services for a Regional WRF for Special Planning Area Three (SPA 3) located in the City of Surprise, Arizona. Phase 1 was completed in September 2008 and will provide a 1.8 MGD treatment capacity. Present design allows for future capacity to 3.6 MGD on the existing site. The facility construction is presently complete although start up has been delayed due to the lack of residential growth. PERC Water is contracted to provide operation and maintenance services when wastewater becomes available.


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Palm Valley Water Recycling Facility

PERC Water provided Design/Build/Operate services for a WRF servicing the Palm Valley Master Planned Community located in Litchfield Park, Arizona. The Phase I facility was completed in April 2002 providing a capacity of 4.1 MGD producing effluent to exceed Arizona Class A+. Projected future phases will allow for an ultimate capacity of 8.2 MGD. The design/build/operate approach allowed the developers and the city to implement ADEQ Class A+ treatment in less than 18 months from start to finish.

Mountain House Water Recycling Facility

PERC Water provided Design/Build/Operate services for a WRF expansion servicing the Mountain House Master Planned Community. The Phase II PERC Water ASP® facility was designed to replace the existing Phase I facility which was nearing capacity. The Phase II facility provides 3.0 MGD treatment capacity and was completed in July 2005. Projected future phases will allow for an ultimate capacity of 5.4MGD. The Mountain House WRF is among the first facilities in the United States utilizing a UV Disinfection System certified under NWRI to meet California Title 22 requirements.

Sundance Water Recycling Facility

PERC Water provided Design/Build/Operate services for a WRF for the Sundance residential master-planned community. PERC Water’s unique Customized Design Report (CDR™) approach allowed the owner to obtain a guaranteed fixed capital cost, guaranteed operating cost and a guaranteed delivery schedule based on a conceptual design at a very early stage of the project. Phase 1 was completed in 2002 with a 1.2 MGD capacity. PERC Water completed the expansion to 3.6 MGD in 2009. PERC Water has been operating and maintaining the facility since initial start up in 2002. The Sundance WRF has been designed to accommodate future expansion to an ultimate capacity of 7.8 MGD.


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City of Adelanto Water Recycling Facility

Adelanto, California is located approximately 50 miles north of Riverside with a population of 31,000. Due to a steady stream of new residents, Adelanto began an expansion of their original wastewater treatment facility in 2007 however progress remained at a standstill four years later, resulting in a Cease and Desist Order from the Regional Water Quality Control Board. Without the necessary capacity, the City had to divert a significant portion of their wastewater flow to a regional facility. As a result, the City was under the threat of having a connection ban imposed. With an integrated design-build-operate team, PERC Water presented a series of 11 improvements to increase capacity at the City’s facility. The proposal described a concurrent design build approach to allow the project to move forward quickly. Most importantly, the proposal supplied enough information for PERC Water’s team to make guarantees for cost, schedule and water quality. PERC Water operators have been intensely involved in the design process. Initially all specialties worked together (i.e. operators, engineers, estimators and construction managers) to put together the list of 11 suggested improvements and document them. Now that PERC Water has taken over Asset Management, you’ll find the operations group playing a critical role in construction management. As committed future users of the upgrades they have a vested interest in ensuring the quality of the work. They go beyond the normal scope of work to measure progress and suggest improvements that will increase performance and assure our ability to deliver the guaranteed final effluent quality. The Adelanto facility is on track to be completed in July 2013.


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3.2 PROJECT SUMMARY

PERC Water has designed 60 facilities – 21 of which have been designed, built and operated by PERC Water. We have commissioned and operated all of the completed facilities following construction, and continue to offer support services to clients that have assumed the operations of our facilities.

Project Name Client Location MGD CDR Built

Adelanto City of Adelanto Adelanto, CA 4.00

Alicante Vineyards Madera Cty / Wellington Corp Madera Cty, CA 0.30

Apache Gold San Carlos Apache Indians Globe, AZ 0.11

Avimor Ada Cty / SunCor Development Boise, ID 0.26

Barona Barona Band of Mission Indians Lakeside, CA 0.75

Cielo Grande Ranch Monterey Cty / Wellington Corp Monterey Cty, CA 0.35

City of Colusa City of Colusa Colusa, CA 1.20

Cole Farms City of Coolidge / Omega Management Coolidge, AZ 1.20

Colusa Industrial Colusa Industrial Properties Colusa Cty, CA 0.10

Cordevalle Lion's Gate CSD / Santa Clara Cty San Martin, CA 0.04

Dyer Mountain Dyer Mountain Assoc / Plumas Cty Westwood, CA 0.10

El Mirage City of El Mirage El Mirage, AZ 3.60

Four Corners Santa Clara Development Corp Espanola, NM 0.08

Grizzly Ranch Grizzly Ranch CSD / Plumas Cty Portola, CA 0.08

Haymount Haymount / Caroline Cty, VA Haymount, VA 0.33

Ione City of Ione Ione, CA 0.53

Lathrop I City of Lathop / Richland Communities Lathrop, CA 3.00

Lathrop II City of Lathrop / Richland Communities Lathrop, CA 3.00

Los Gatos Coalinga / Wellington Corp Coalinga, CA 0.45

Morro-Cayucos Morro Bay / Cayucos SD Morro Bay, CA 1.50

Mountain House 1 Trimark / MHCSD Mountain House, CA 3.00

Mountain House 2 Trimark / MHCSD Mountain House, CA 3.00

N.E. Fairview City of Hollister / Stone Creek Partners Hollister, CA 0.33

Palm Valley 1 LPSCo / City of Goodyear Goodyear, AZ 4.10

Palm Valley 2 LPSCo / City of Goodyear Goodyear, AZ 4.10


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Placer SMD1 Placer County Placer Cty, CA 4.20

Rancho El Dorado Palo Verde Utilities Maricopa, AZ 1.00

Rancho Viejo Phase 1 Ranchland Utilities - SunCor Dev Santa Fe, NM 0.12

Rancho Viejo Phase 2 Ranchland Utilities - SunCor Dev Santa Fe, NM 0.50

Red Rock Red Rock Utilities Marana, AZ 0.30

Rio Vista City of Rio Vista / Shea Homes Rio Vista, CA 1.00

San Pasqual Casino San Pasqual Indians / Resort & Casino Escondido, CA 0.04

Santa Nella Arnaudo Brothers Santa Nella, CA 1.50

Santa Paula SPW / City of Santa Paula Ventura, CA 4.20

Sky City Casino Pueblo of Acoma Acomita, NM 0.075

SPA 2 1 City of Surprise / Lennar Homes Surprise, AZ 1.20

SPA 2 2 City of Surprise / Lennar Homes Surprise, AZ 1.20

SPA 3 1 City of Surprise / Courtland Homes Surprise, AZ 1.20

SPA 3 2 City of Surprise / Courtland Homes Surprise, AZ 1.80

SPA 4 City of Surprise / Element Homes Surprise, AZ 1.20

SPA 5 City of Surprise / Elliott Homes Surprise, AZ 1.20

Spring Valley Spring Valley Group / Yuba Cty Gold River, CA 1.20

Stone Creek North City of Los Banos / Stone Creek Dev Los Banos, CA 1.00

Sundance 1 Town of Buckeye / Hancock Homes Buckeye, AZ 1.20



Sundance 2 (V2) Town of Buckeye / Pulte Homes Buckeye, AZ 2.40

Tartesso 1 Town of Buckeye / Stardust Dev Buckeye, AZ 1.20

Tartesso 2 Town of Buckeye / Stardust Dev Buckeye, AZ 1.20

Verano 1A Pima Cty / Diamond Ventures Inc Tucson, AZ 0.35

Verano 1B Pima Cty / Diamond Ventures Inc Tucson, AZ 0.60

Verano 2A Pima Cty / Diamond Ventures Inc Tucson, AZ 1.60

Verano 2B Pima Cty / Diamond Ventures Inc Tucson, AZ 2.00

Verano 3 Pima Cty / Diamond Ventures Inc Tucson, AZ 3.70




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Whetstone Ranch 1 Town of Benson - Ernie Benson, AZ 0.25

Whetstone Ranch 2 Town of Benson / Pulte Homes Benson, AZ 1.80

Whetstone Ranch 2 Town of Benson / Pulte Homes Benson, AZ 1.20

Total: 59 21

CompanyManagementand Advisors

P u r e G e n i u s

SECTION 4 – COMPANY MANAGEMENT & ADVISORS

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Johan Perslow, P.E. – Founder, Chairman & CEO

Over the last 40 years, Mr. Perslow has been the principal designer, consultant and construction manager for more than 700 projects, including lake and pumping systems, numerous state-of-the-art water-resource management systems, wastewater-effluent reuse systems, irrigation-optimization systems and tertiary wastewater treatment plants. He has also been involved with the structural design of numerous interstate highway bridges and other complex structures.

As a principal in the firm, Mr. Perslow is personally involved in every PERC Water project. He has acted as Principal-in-charge on multi-disciplined government and

private sector projects requiring Civil Engineering and water feature services for numerous parks and recreation facilities.

Brian D. Cullen – President

Mr. Cullen has worked in various senior management positions in the environmental, engineering and construction industry for the past 20 years and has worked for PERC Water since 2000. He has been instrumental in the development, negotiation, design and construction of 15 operating water infrastructure projects for PERC Water. Mr. Cullen was instrumental in the development and negotiation of the first 30-year privately financed wastewater greenfield project in the US, which has received numerous awards and in 2009 recently received the Award of Distinction for the Global Water Intelligence “Water Deal of the Year” presented by former Vice President Al Gore.

Mr. Cullen was born in Dublin, Ireland and resided there until graduating from college, subsequently moving to Newport Beach, California in 1990 by way of London. Mr. Cullen is certified through the Institute of Accounting Technicians in Ireland, and is also a Certified Management Accountant through the Institute of Management Accountants in the US.

Nathan Owen – Vice President & COO

With more than 15 years of experience in the construction industry, Mr. Owen joined PERC Water in 2006 and has led the construction of six PERC Water facilities. He is responsible for managing the construction division within the company and is directly involved in each project. Mr. Owen manages all aspects of the construction process from conceptual design through project close out including design, project buy-out, contract negotiations, budgets, scheduling, permitting and managing of subcontractors. Throughout project design and build, Mr. Owen manages the relationship between PERC Water and the client ensuring that all needs are met and fulfilled. In 2011, Mr. Owen transitioned into overseeing the operations and


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management of PERC Water’s operating service division. He has a BS in Technology Management/Building Construction from Utah Valley University in Utah.

Steven D. Owen – Vice President, Infrastructure Development

One of the initial PERC Water employees, Mr. Owen has been directly involved with the design of more than 55 water-recycling facilities, 21 of which have been built and operated by PERC Water. He has played a key role in providing innovative water recycling solutions utilizing public-private partnerships for both private and public organizations. Owen’s responsibilities include leading all aspects of the project procurement, oversight of project delivery approach, and structuring the project organization; facilitating and providing management direction to design engineers, construction sub-contractors and vendors; and coordinating PERC Water’s integrated DBO team from design through facility asset management.

Juergen T. Nick, P.E. – Shareholder and Advisor

Mr. Nick has been working in the international wastewater industry for more than 20 years and has been responsible for the design and continuous development of 11 PERC Water ASP® facilities, with a specific focus on the engineering oversight and responsibility for overall electrical design, plant control and system integration. Mr. Nick received his MS in Electrical Engineering from the University of Zuerich in Winterthur, Switzerland in 1986 and did Graduate Studies in Economics and Marketing from the University of St’ Gallen, Switzerland in 1991.

Robert J. Nespeca – Vice President, Infrastructure Concessions

Mr. Nespeca has more than 30 years of experience in the operation, maintenance, and management of water and wastewater treatment systems and collection systems and has provided Asset Management services for more than 20 PERC Water facilities. Career accomplishments include the startup and development of an operating services division offering out-sourced solutions to municipalities and industries for water and wastewater. Mr. Nespeca joined PERC Water in 2001 to manage and oversee PERC Water’s operating services division, including project management and development, QA / QC, regulatory compliance, budget and procurement, safety and training, staff development and customer relations. He

also provided management and direction to PERC Water’s onsite operating team, vendors and sub-contractors. In 2011, Mr. Nespeca began focusing solely on leading PERC Water’s Concession and Asset Management Business Development.


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Roberto Aragon, P.E. – Associate & Advisor

Mr. Aragon has 30 years of experience in strategic infrastructure planning, land use entitlements and comprehensive asset management. He advises both the public and private sector in practical and cost effective solutions in the delivery of sustainable land use and infrastructure applications. He partnered with PERC Water to develop practical and cost effective infrastructure solutions in Northern California. He is a licensed California Professional Civil Engineer and worked previously for an engineering, planning and surveying consulting firm. Mr. Aragon has a degree from California State University-Sacramento and is based in our Lincoln office.

Richard Rhoads – Director of Operations

Mr. Rhoads has more than 30 years of experience in the wastewater industry. Joining PERC Water in 2001, he manages and supervises our operating team, oversees the process control and regulatory compliance, and leads the startup and performance test compliance of our facilities. Mr. Rhoads has an Arizona Grade IV Wastewater Treatment and Collection System Operator Certification and a California Grade III Wastewater Treatment Certification. He is based in our Phoenix office.

Larry Johnson – Director of Technical Services

Mr. Johnson joined PERC Water in 2002 and has more than 30 years experience in the wastewater industry. He assists in the construction completion of our facilities including testing equipment, QA/QC, control system functionality, and performance compliance testing. He has a Grade IV Wastewater Treatment Operator Certification in Arizona, California, and New Mexico. He is based in the Phoenix office.

Karen T. Sayles – Director of Finance

Ms. Sayles joined PERC Water in 2006 having worked for more than 13 years at a multi-office environmental consulting firm that serviced over 200 clients. She has extensive experience with revenue recognition and process documentation, and implementation within the project accounting realm. Ms. Sayles has a BS in Business Administration-Marketing from Cal State University of Long Beach and is based in our Costa Mesa office.


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Erin Hubbard, P.E. – Senior Engineering Project Manager

Ms. Hubbard has more than a decade of experience in the environmental water and wastewater industry. She joined PERC Water in 2011 and has experience working as a project manager engineer and environmental business analyst. Ms. Hubbard has BS in Civil Engineering from the University of Wisconsin and an MBA from University of Minnesota. She is based in our Costa Mesa office.

Marian C. Clark – Marketing Consultant

Ms. Clark has more than a decade of experience in the marketing industry and joined PERC Water in 2008. She is responsible for the company’s public relations, marketing and brand management. Ms. Clark has a BS from Brigham Young University and an MA from the University of Utah. She is based in our Costa Mesa office.

Floyd E. Wicks - Advisor

Floyd E. Wicks was formerly Vice Chairman of American States Water Company (NYSE: AWR) and former President & Chief Executive Officer, which he held from 1992 through 2008. In 2010, Wicks was named as President and CEO of Southwest Water Company and left the firm in 2011 to form his own business known as H2Options, Inc. Wicks is a graduate of Ohio State University where he earned his Bachelor’s Degree in Civil Engineering and his Master’s Degree in Water Resources Engineering. Wicks was an instrumental force in gathering support for the passage of the Paul Simon Water for the Poor Act of 2005 and its subsequent $300 million

funding in 2008 by the U. S. Congress, which will provide funds to non-profits who help third-world communities worldwide develop sustainable drinking water resources and sanitation facilities.

Craig S.J. Johns - Advisor

Craig Johns is the President of California Resource Strategies, Inc., a lobbying and consulting firm in Sacramento, California specializing in water quality, supply and recycling issues. Mr. Johns has been a major advocate for advancing the rights of municipal wastewater agencies to gain more dominion and control over their treated recycled water. These efforts peaked in 2011 when Governor Jerry Brown signed AB


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134 (Dickinson), a measure that would enable one of his municipal clients to seek an appropriative water right equal in volume to the amount of treated wastewater discharged by the agency. Mr. Johns served for nearly eight years on the San Francisco Bay Regional Water Quality Control Board where he also served as Vice-Chair and Chairman of the Board. Mr. Johns received his undergraduate degree from UCLA, and a law degree from UC Davis School of Law. He was a member and partner in the San Francisco office of Crosby, Heafey, Roach & May (now ReedSmith LLP) from 1988 – 1999, where his practice focused on environmental, water quality, land use and real estate matters. He currently lives in Granite Bay with his wife and four children.

PERC Water Corporation959 South Coast Drive, Suite 315Costa Mesa, California 92626Phone 714-352-7750Fax 714-352-7765percwater.com

Documents

PERC Water Company Overview 2013