Exhibit 10.26


 


WESTERN SLOPE CONVERSION AND NOTE MODIFICATION
AGREEMENT


 


This Conversion Agreement (this “Agreement”)
is made and entered into as of March 28, 2014 by and between Armada Water Assets, Inc., a Nevada corporation (“Issuer”),
and the person or entity whose name is set forth on the signature page attached hereto (“Holder”).


 


Recitals


 


WHEREAS, in connection with the acquisition
(the “Western Slope Acquisition”) by Issuer of Western Slope Acquisition Corporation (“Western Slope”),
Issuer issued a promissory note in favor of the Holder, as restated or otherwise, in the principal amount set forth on the signature
page attached hereto (the “Note”),


 


WHEREAS, prior to the Western Slope Acquisition,
and in connection with the acquisition by Western Slope of Harley Dome I, LLC (“Harley Dome”), Western Slope
granted to Holder certain earn-out rights providing Holder with the right to receive certain contingent payments based on the performance
of Harley Dome after the acquisition (the “Earn-Out”), which Earn-Out remains an indirect obligation of Issuer;


 


WHEREAS, upon the terms and subject to the
conditions hereof, Holder wishes to (i) convert that portion of the Note for cancellation, to the extent set forth on the signature
page hereof, and (ii) cancel the Earn-Out and all payments due thereunder (if any) in consideration for which Issuer has agreed
to issue to Holder that number of shares of Series C Preferred Stock, $0.0001 par value per share (the “Preferred Stock”),
as set forth on the signature page hereof, which class of Preferred Stock is further described in the Certificate of Designation
of Series C Preferred Stock attached hereto as Exhibit A;


 


WHEREAS, the shares of Preferred Stock issued
hereunder are being issued without registration under the Securities Act of 1933, as amended (the “Securities Act”),
in reliance on the exemption provided by Section 4(a)(2) of the Securities Act; and


 


WHEREAS, the parties hereto desire to make
certain representations, warranties, covenants and other agreements in connection with the transactions contemplated hereby.


 


NOW, THEREFORE, in consideration of the
covenants, promises and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:


 




    	 



    	 



    

 


ARTICLE
I

CONVERSION OF SECURITIES


 


Section 1.1.          Conversion
of Note Upon the terms and subject to the conditions of this Agreement, at the Closing, (a) Holder will convert and deem
satisfied that portion of the Note, to the extent set forth on the signature page hereof (the “Conversion Amount”),
which Conversion Amount shall constitute an “Optional Prepayment” under Section 2.3 of the Note, and in consideration
therefor (b) Issuer will issue and deliver to Holder, and Holder will receive from Issuer, the number of shares of Preferred
Stock set forth on the signature page hereof. Upon delivery of the shares of Preferred Stock to Holder, (i) any and all present
and future Earn-Out obligations shall be terminated and of no further force and effect, and no amounts shall be payable in connection
therewith, and (ii) that portion of the Note being converted will be deemed satisfied as if applying the Conversion Amount as an
Optional Prepayment, and the balance thereunder shall remain due and owing and in full force and effect.


 


Section 1.2.          Closing
The closing of the transactions contemplated by this Agreement (the “Closing”) will take place upon the execution
of this Agreement by both parties hereto and the satisfaction of the following closing conditions:


 


(a)          Issuer
will deliver to Holder or such other person as directed by Holder certificates representing the shares of Preferred Stock for conversion
of the Note in accordance with Section 1.1, within up to ten (10) days thereafter.


 


Section 1.3.          Release.
In consideration of the promises and covenants set forth in this Agreement and for other good and valuable consideration, Holder
for itself and on behalf of its subsidiaries, directors, officers, shareholders, members, partners, affiliates, employees, agents,
attorneys, accountants, successors, heirs and assigns, does hereby fully and irrevocably remise, release and forever discharge
each of Issuer, its subsidiaries, affiliates, officers, directors, employees, shareholders, agents, representatives, attorneys,
predecessors, successors and assigns (the “Released Parties”) of and from any and all manner of claims, actions, causes
of action, grievances, liabilities, obligations, promises, damages, agreements, rights, debts and expenses (including claims for
attorneys' fees and costs), of every kind, either in law or in equity, whether contingent, mature, known or unknown, or suspected
or unsuspected, including, without limitation, any claims arising under any federal, state, provincial, local or municipal law,
common law or statute, whether arising in contract or in tort, and any claims arising under any other laws or regulations of any
nature whatsoever, that Holder ever had, now has or may have, for or by reason of any cause, matter or thing whatsoever, from the
beginning of the world to the date hereof, solely as it relates to the Note, to the extent surrendered for conversion, and the
Earn-Out. Holder represents, warrants and covenants that it has not sold, assigned, transferred, or otherwise conveyed to any other
person or entity all or any portion of its rights, claims, demands, actions, or causes of action herein released. Holder further
agrees and covenants not to sue or to bring, or assign to any third person, any claims or charges against any of the Released Parties
with respect to any matter covered by the release set forth herein and not to assert against any of the Released Parties any action,
grievance, suit, litigation or proceeding for any matter covered by the release set forth herein.


 


Section 1.4.          Note
Modification: Sections 2.1 and 2.2 of the Note are hereby deleted in their entirety and replaced with the following:


 


2.1           Interest
and Principal Payments. The aggregate unpaid principal amount of the Loan, all accrued and unpaid interest and all other amounts
payable under this Note shall be due and payable on the Maturity Date.


 




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2.2           Mandatory
Prepayments. The Borrower shall make mandatory prepayments equal to Noteholder's Pro Rata Share of eighteen and 75/100 (18.75%)
percent of the net offering proceeds (i.e. gross offering proceeds minus all direct placement and/or brokerage costs and expenses
of completing the offering) realized by the Borrower above $2 million from any one or more private placement equity financings
or the initial public offering of the Borrower's common stock, that is completed after the date hereof. If the Borrower does not
complete the foregoing equity financings or initial public offering on or before the Maturity Date, then Borrower shall pay all
amounts payable under this Note in accordance with Section 2.1. Noteholder's “Pro Rata Share” equals [___] percent
([___]%) (i.e. the remaining principal amount of this Note ($[_____] divided by the aggregate remaining principal amount of all
of the Purchase Money Notes ($500,000.00).


 


ARTICLE
II

REPRESENTATIONS AND WARRANTIES OF HOLDER


 


Holder represents and warrants to Issuer
as follows:


 


Section 2.1.          Ownership
of Note Holder is the sole record and beneficial owner of the Note. The Note is not subject to any encumbrances, and Holder
has not granted any rights to purchase the Note to any other person or entity. Holder has the sole right to transfer the Note to
Issuer.


 


Section 2.2.          Organization
of Holder Holder is duly formed, validly existing and in good standing under the laws of its jurisdiction of organization and
has all necessary power and authority to conduct its business in the manner in which its business is currently being conducted.


 


Section 2.3.          Authority;
Non-Contravention 


 


(a)          Holder
has all requisite power and authority to execute, deliver and perform its obligations under this Agreement. This Agreement has
been duly and validly authorized, executed and delivered by Holder and constitutes the valid and legally binding obligation of
Holder, enforceable in accordance with its terms and conditions, subject to bankruptcy, insolvency, fraudulent transfer, moratorium
or similar laws relating to or affecting creditors’ rights generally and to general principles of equity.


 


(b)          The
execution, delivery and performance of this Agreement by Holder and the consummation of the transactions contemplated hereby will
not (i) conflict with or result in a material breach or violation of any of the terms or provisions of, impose any lien, charge
or encumbrance upon any material property or assets of Holder, or constitute a default under, any material indenture, mortgage,
deed of trust, loan agreement, license or other material agreement or instrument to which Holder is a party or by which Holder
is bound or to which any of the material property or assets of Holder is subject, (ii) result in any violation of the provisions
of the governing instruments of Holder or (iii) result in any violation of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over Holder or any of its properties or assets, except where such
violation will not, individually or in the aggregate, have a material adverse effect on the condition (financial or otherwise),
results of operations, stockholders’ equity, properties or business of Issuer and its subsidiaries taken as a whole.


 




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(c)          No
consent, approval, authorization or order of, or filing or registration with, any court or governmental agency or body having jurisdiction
over Holder or any of its properties or assets is required for the execution, delivery and performance of this Agreement by Holder
or the consummation of the transactions contemplated hereby.


 


Section 2.4.          Restrictive
Legend Holder acknowledges that the Preferred Stock to be issued by Issuer to Holder hereunder has not been registered under
the Securities Act and therefore cannot be sold unless subsequently registered under the Securities Act or an exemption from such
registration is available in the opinion of counsel reasonably acceptable to Issuer. Holder acknowledges that the certificate representing
the Preferred Stock to be issued by Issuer to Holder hereunder will bear the following legend:


 


THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, REGISTRATION UNDER SAID
ACT IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO ISSUER.


 


Section 2.5.          Accredited
Investor. Holder is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the
Securities Act.


 


Section 2.6.          No
General Solicitation. Holder is unaware of, and in deciding to acquire the Shares is in no way relying upon, and did not become
aware of the conversion of the Notes through or as a result of, any form of general solicitation or general advertising including,
without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media,
or broadcast over television or radio or the internet, in connection with such conversion.


 


Section 2.7.          Placement
and Finder’s Fees. No agent, broker, investment banker, finder, financial advisor or other person acting on behalf of
Holder or under its authority is or will be entitled to any broker’s or finder’s fee or any other commission or similar
fee, directly or indirectly, in connection with this Agreement, and no person is entitled to any fee or commission or like payment
in respect thereof based in any way on agreements, arrangements or understanding made by or on behalf of Holder.


 


Section 2.8.          Investment
Intent. The Preferred Stock to be issued and issuer to Holder is being acquired for the Holder’s own account for investment
purposes only, not as a nominee or agent and not with a view to the resale or distribution of any part thereof, and Holder has
no present intention of selling, granting any participation in or otherwise distributing the same. By executing this Agreement,
Holder further represents that Holder does not have any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or third person with respect to any of the Preferred Stock to be issued by Issuer
to Holder.


 




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Section 2.9.          Investment
Risk. Holder has substantial experience in evaluating and investing in private placement transactions of securities in companies
similar to Issuer so that it is capable of evaluating the merits and risks of its investment in Issuer. Holder acknowledges that
an investment in the Shares involves a high degree of risk as Issuer remains in the early stage of its development, having only
recently commenced the operations of its various business units. Thus, Issuer and its subsidiaries have only a very brief history
of operations, and it is uncertain how these business units will operate on a combined basis and whether these various business
units can be operated at a profit. Holder understands that it must bear the economic risk of this investment until the Shares are
sold pursuant to: (i) an effective registration statement under the Securities Act; or (ii) an exemption from registration is available
with respect to such sale.


 


Section 2.10.         Access
to Information. In making its decision to acquire the Shares, Holder confirms that it has carefully reviewed all information
regarding Issuer as it has deemed necessary in order to make an informed investment decision with respect to an investment in the
Shares; that it has had the opportunity to ask representatives of Issuer certain questions and request certain additional information
regarding the terms and conditions of such investment and the finances, operations, business and prospects of Issuer and has had
any and all such questions and requests answered to its satisfaction; and that it understands the risks and other considerations
relating to such investment. Holder specifically acknowledges that it has been provided with and reviewed to its satisfaction,
information regarding Issuer’s finances, management team, capitalization, material acquisitions, description of outstanding
securities, plan of operations, material business risks and the like.


 


ARTICLE
III

REPRESENTATIONS AND WARRANTIES OF ISSUER


 


Issuer represents and warrants to Holder
as follows:


 


Section 3.1.          Organization
of Issuer Issuer has been duly incorporated and is validly existing and in good standing as a corporation under the laws of
its jurisdiction of incorporation, with all corporate power and authority necessary to conduct the business in which it is engaged
and Issuer is duly qualified or licensed to do business and in good standing as a foreign corporation in each jurisdiction in which
its ownership or lease of its properties or assets or the conduct of its businesses requires such qualification or license, except
where the failure to be so qualified or be so licensed or in good standing would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), results of operations, stockholders’ equity, properties
or business of Issuer and its subsidiaries taken as a whole.


 


Section 3.2.          Duly
Issued Shares The shares of Preferred Stock to be issued by Issuer to Holder hereunder have been duly authorized and, upon
delivery in accordance with this Agreement, (a) will be validly issued, fully paid and non-assessable, and (b) will not be subject
to any encumbrances, other than those imposed by Holder or under applicable federal and state securities laws.


 




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Section 3.3.          Authority;
Non-Contravention. 


 


(a)          Issuer
has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. This Agreement
has been duly and validly (i) authorized by Issuer, and (ii) executed and delivered by Issuer. This Agreement constitutes the valid
and legally binding obligation of Issuer, enforceable in accordance with its terms and conditions, subject to bankruptcy, insolvency,
fraudulent transfer, moratorium or similar laws relating to or affecting creditors’ rights generally and to general principles
of equity.


 


(b)          The
execution, delivery and performance of this Agreement by Issuer and the consummation of the transactions contemplated hereby will
not (i) conflict with or result in a material breach or violation of any of the terms or provisions of, impose any lien, charge
or encumbrance upon any material property or assets of Issuer, or constitute a default under, any material indenture, mortgage,
deed of trust, loan agreement, license or other material agreement or instrument to which Issuer or any of its subsidiaries is
a party or by which Issuer or any of its subsidiaries is bound or to which any of the material property or assets of Issuer or
any of its subsidiaries is subject, (ii) result in any violation of the provisions of the governing instruments of Issuer
or any of its subsidiaries or (iii) result in any violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over Issuer or any of its properties or assets, except where such violation will
not, individually or in the aggregate, have a material adverse effect on the condition (financial or otherwise), results of operations,
stockholders’ equity, properties or business of Issuer and its subsidiaries taken as a whole.


 


(c)          No
consent, approval, authorization or order of, or filing or registration with, any court or governmental agency or body having jurisdiction
over Issuer or any of its subsidiaries or any of their properties or assets is required for the execution, delivery and performance
of this Agreement by Issuer or the consummation of the transactions contemplated hereby.


 


(d)          The
issuance of the shares of Preferred Stock by Issuer to Holder pursuant to this Agreement does not require registration under the
Securities Act.


 


ARTICLE
IV

GENERAL PROVISIONS


 


Section 4.1.          General
Each of the parties will use commercially reasonable efforts to take or cause to be taken all actions and to do or cause to be
done, as soon as possible, all things necessary, proper or advisable (subject to any applicable laws) to consummate the Closing
and the other transactions contemplated by this Agreement. In the event that at any time after the Closing any further action is
reasonably necessary to carry out the purposes of this Agreement, each of the parties will take such further action (including
the execution and delivery of such further instruments and documents) as the other party may reasonably request, at the sole cost
and expense of the requesting party.


 


Section 4.2.          Survival.
(a) The representations and warranties contained in Articles II and III will survive the Closing and continue
in full force and effect indefinitely, and (b) any covenants or agreements contained in this Agreement, which by their terms have
any remaining obligation to be performed or observed following the occurrence of the Closing will survive and continue in full
force and effect until fully performed or observed in accordance with their terms.


 




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Section 4.3.          Additional
Covenants. Holder covenants and agrees with Issuer as follows:


 


(a)          Holder
agrees that it will not disclose, and will not include in any public announcement, the name of Issuer, unless expressly agreed
to by Issuer or unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such
requirement.


 


(b)          Holder
agrees not to effect any sales in the shares of Issuer’s Preferred Stock, or any share of common stock into which the Preferred
Stock may convert, while in possession of material, non-public information regarding Issuer if such sales would violate applicable
securities laws.


 


(c)          Holder
agrees in connection with an initial public offering that occurs after the Closing, that unless waived in writing by the managing
underwriter, not to sell or transfer any shares of Preferred Stock of Issuer or any common stock of Issuer into which the Preferred
Stock may convert, for a period of up to 180 days from the completion of any such initial public offering, plus up to an additional
20 days to the extent necessary to comply with applicable regulatory requirements following such public offering.


 


Section 4.4.          Notices
Any notice, request, instruction or other communication to be given hereunder will be in writing and delivered personally or sent
by reputable, overnight courier service (charges prepaid), or by facsimile, according to the instructions set forth below. Such
notices will be deemed given (a) at the time delivered by hand, if personally delivered, (b) on the day of delivery if during normal
business hours (or on the following business day if not sent during normal business hours), if sent by reputable, overnight courier
service, and (c) at the time when confirmation of successful transmission is received by the sending facsimile machine, if sent
by facsimile. Such notices, demands and other communications will be sent to Issuer and Holder, as the case may be at the addresses
indicated below:


 


if to Issuer:


 


Armada Water Assets, Inc.


2425 Fountain View Drive, Suite 300


Houston, Texas 77057


Facsimile: (832) 262-4606


Attention: Sami Ahmad, CFO


 


with a copy to (which will not constitute notice to
Issuer):


 


Fox Rothschild LLP


2000 Market Street, 20th Floor


Philadelphia, Pennsylvania 19103


Facsimile: (215) 299-2150 


Attention: Stephen M. Cohen, Esq.


 




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if to Holder:


 


To such address indicated on the signature page hereof


 


Section 4.5.          Counterparts
This Agreement may be executed in any number of counterparts and each of such counterparts will for all purposes be deemed to be
an original, and all such counterparts will together constitute but one and the same instrument. Facsimiles or other electronic
copies of signatures will be deemed to be originals.


 


Section 4.6.          Governing
Law This Agreement will be deemed to be a contract made under the laws of the State of Nevada and for all purposes will be
governed by and construed in accordance with the internal laws of said State. The parties hereto irrevocably consent to the jurisdiction
of the state and federal courts sitting in the City of Philadelphia, Pennsylvania in connection with any action, suit or proceeding
arising out of or relating to this Agreement.


 


Section 4.7.          Entire
Agreement This Agreement constitutes the entire agreement of Issuer and Holder with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, between Issuer and Holder with respect to the subject
matter hereof.


 


Section 4.8.          Amendment
and Waiver This Agreement may be amended, modified or supplemented, and any of the provisions hereof may be waived, provided
that the same are in writing and signed by Issuer and Holder.


 


Section 4.9.          Assignment.


 


Neither this Agreement nor any of the rights, interests or obligations provided by this Agreement will be assigned by either party
(whether by operation of law or otherwise) without the prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted
assigns.


 


Section 4.10.        Counsel
Review.


 


Holder acknowledges that he has read and understands the contents of this Agreement. Holder acknowledges that he has
been specifically advised by the Issuer: (i) that this Agreement has been prepared by Fox Rothschild LLP specifically on behalf
of the Issuer; and (ii) to consult with an attorney before signing it. Holder further acknowledges that this Agreement was reached
after negotiation in which Holder was advised to be, and afforded the opportunity to be, represented by counsel. Holder acknowledges
that he has executed this Agreement voluntarily and of his own free will, without coercion and with full knowledge of what it means
to do so.


 


[Signature page follows]


 




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IN WITNESS WHEREOF, Issuer and Holder have
caused this Agreement to be signed, all as of the date first written above.


 


	 	ISSUER: ARMADA WATER ASSETS, INC.
	 	 	 
	 	By	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	HOLDER:
	 	 	 
	 	By	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	Phone:	 
	 	Address:
	 	 
	 	 
	 	 
	 	 	 
	 	Social Security or Tax Id No.:
	 	 
	 	 
	 	Principal Amount/Date of Issuance of Note:
	 	 
	 	 
	 	Amount Currently Outstanding:
	 	 
	 	 
	 	Amount to be Converted:
	 	 
	 	 
	 	New Principal Amount of Note (after conversion)
	 	 
	 	 
	 	No. of Shares of Preferred Stock Issuable:
	 	 
	 	 
	 	Delivery Instructions (if different than address)
	 	 
	 	 
	 	 


 


[Signature Page to Conversion Agreement]


 




    	 



    	 



    

 


 


Exhibit A


 


Certificate of Designation


 


[see attached]