Document:

MEMBER INTEREST PURCHASE AGREEMENT

 

BY AND AMONG

 

ARMADA WATER ASSETS, INC.,

 

BARSTOW PRODUCTION WATER SOLUTIONS, LLC,

 

AND 

 

THE MEMBERS OF BARSTOW PRODUCTION WATER
SOLUTIONS, LLC

 

FEBRUARY 1, 2013

 

    	 

    	 

    

 

TABLE OF CONTENTS

 

 

	 	 	Page
	 	 	 
	1.	Purchase and Sale of Membership Interests.	1
	 	 	 
	 	(a)	Basic Transaction.	1
	 	(b)	Purchase Price.	1
	 	(c)	The Closing.	1
	 	(d)	Deliveries at the Closing.	1
	 	(e)	Earn-Out.	3
	 	 	 
	2.	Representations and Warranties of Armada.	3
	 	 	 
	 	(a)	Organization.	3
	 	(b)	Authorization of Transaction.	3
	 	(c)	Capitalization.	3
	 	(d)	Business and Assets of Armada.	4
	 	(e)	Noncontravention.	4
	 	(f)	Investment.	4
	 	(g)	Disclosure.	4
	 	 	 
	3.	Representations and Warranties of the Members.	4
	 	 	 
	 	(a)	Organization of BelPhil.	4
	 	(b)	Authorization of Transaction.	4
	 	(c)	Noncontravention.	5
	 	(d)	Brokers’ Fees.	5
	 	(e)	Investment.	5
	 	(f)	Barstow Interests.	6
	 	 	 
	4.	Representations and Warranties Concerning Barstow.	6
	 	 	 
	 	(a)	Organization, Qualification, and Corporate Power.	6
	 	(b)	Authorization of Transaction.	6
	 	(c)	Capitalization.	7
	 	(d)	Noncontravention.	7
	 	(e)	Title to Assets.	7
	 	(f)	Legal Compliance.	7
	 	(g)	Tax Matters.	8
	 	(h)	Real Property.	8
	 	(i)	Contracts.	9
	 	(j)	Litigation.	9
	 	(k)	Environmental, Health, and Safety Matters.	9
	 	(l)	Disclosure.	10
	 	 	 
	5.	Indemnification.	10
	 	 	 
	 	(a)	Survival of Representations and Warranties.	10
	 	(b)	Indemnification Provisions for Benefit of Armada	10

 

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	 	(c)	Indemnification Provisions for Benefit of the Members.	11
	 	(d)	Matters Involving Third Parties.	11
	 	(e)	Determination of Adverse Consequences.	12
	 	(f)	Set-Off.	12
	 	(g)	Other Indemnification Provisions.	12
	 	 	 
	6.	Tax Matters.	12
	 	 	 
	 	(a)	Tax Returns.	12
	 	(b)	Cooperation on Tax Matters.	13
	 	(c)	Certain Taxes.	13
	 	(d)	Tax Purchase Price Allocation.	14
	 	 	 
	7.	Miscellaneous.	14
	 	 	 
	 	(a)	Definitions.	14
	 	(b)	Restrictions on Transfer.	17
	 	(c)	No Third-Party Beneficiaries.	18
	 	(d)	Entire Agreement.	18
	 	(e)	Succession and Assignment.	18
	 	(f)	Counterparts.	18
	 	(g)	Headings.	18
	 	(h)	Notices.	18
	 	(i)	Governing Law.	19
	 	(j)	Amendments and Waivers.	19
	 	(k)	Severability.	20
	 	(l)	Expenses.	20
	 	(m)	Construction.	20
	 	(n)	Incorporation of Exhibits, Annexes, and Schedules.	20
	 	(o)	Release and Discharge.	20

 

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SCHEDULES AND EXHIBITS

 

	Exhibit A	Certificate of Designation of Armada Series A Preferred Stock
	Exhibit B	Form of Promissory Note
	Exhibit C	Form of Assignment of Membership Interest
	Exhibit D	Settlement and Release Agreement with Brian Mader
	 	 
	Armada Disclosure Schedule	Exceptions to Representations and Warranties of Armada
	 	 
	Barstow Disclosure Schedule	Exceptions to Representations and Warranties of Barstow

 

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MEMBER
INTEREST PURCHASE AGREEMENT

 

Agreement entered into as of February 1,
2013, by and among Armada Water Assets, Inc., a Nevada corporation (“Armada”), Barstow Production Water Solutions,
LLC, a Texas limited liability company (“Barstow”), BelPhil Investment Partners, LLC., a Delaware limited liability
company (“BelPhil”), Arnold Huerta, an individual (“Huerta”), and D. Lee Washington, an individual
(“Washington”). BelPhil, Huerta and Washington are referred to herein collectively as the “Members,”
and individually as a “Member.” Each of Armada, Barstow and the Members are referred to herein individually as a “Party”
and collectively as the “Parties.” Certain other capitalized terms used herein have the meanings ascribed to
them in Section 7(a) of this Agreement.

 

Now, therefore, in consideration of the
premises and the mutual promises herein made, and in consideration of the representations, warranties and covenants herein contained,
the Parties agree as follows:

 

1.          Purchase
and Sale of Membership Interests.

 

(a)          Basic
Transaction. On and subject to the terms and conditions of this Agreement, Armada agrees to purchase from the Members, and
the Members agree to sell to Armada, all of Members’ Barstow Interests for the consideration specified below in this Section
1.

 

(b)          Purchase
Price. The purchase price (the “Purchase Price”) for all of the Members’ Barstow Interests will be
$4,000,000 plus the earn-out amount pursuant to Section 1(e), if any. The $4,000,000 will be paid by delivery to the Members
at the Closing of : (i) 3,000,000 Armada Shares (the “Share Consideration”):1,500,000 shares of which shall
be issued to BelPhil, 750,000 shares of which shall be issued to Huerta and 750,000 shares of which shall be issued to Washington;
and (ii) promissory notes in the aggregate principal amount of $1,000,000, $800,000 of which shall be issued to BelPhil, $100,000
of which shall be issued to Huerta, and $100,000 of which shall be issued to Washington, in each case substantially in the form
of the Promissory Note attached hereto as Exhibit B, with all blanks appropriately completed (the “Promissory Notes”).

 

(c)          The
Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) is taking place
at the offices of Fox Rothschild, LLP, 2000 Market Street, 20th Floor, Philadelphia, Pennsylvania 19103, on the date hereof (the
“Closing Date”) concurrent with the execution of this Agreement.

 

(d)          Deliveries
at the Closing. At the Closing:

 

(i)          Deliveries
by the Members. The Members will deliver to Armada the following:

 

(A)         an
Assignment of Membership Interests in the form attached hereto as Exhibit C representing all of its Barstow Interests;

 

    	 

    	 

    

 

(B)         lien
searches, title searches and judgment searches with respect to Barstow and its properties, reflecting no liens, levies or Liabilities
other than as identified within the Barstow Disclosure Schedule;

 

(C)         a
certificate from the Operating Members to the effect (i) that all third party consents specified in Section 4(b) of the Barstow
Disclosure Schedule have been obtained, (ii) that all covenants of the Members in this Agreement and any Related Document have
been complied with, and (iii) that all limited liability company and other actions necessary to consummate the transactions hereby
and thereby shall have been taken;

 

(D)         certificates,
if any, representing the Barstow Interests;

 

(E)         a
Settlement and Release Agreement (the “Settlement and Release Agreement”) from Brian Mader releasing any profits
interest in Barstow in the Form of Exhibit D.

 

(F)         a
certificate of existence or good standing from its jurisdiction of organization dated as of a recent date; and

 

(G)         affidavits
of the Members, in form satisfactory to Armada, stating, under penalties of perjury, the Members’ United States taxpayer
identification number and that such Members are not foreign persons for purposes of Section 1445 of the Code.

 

(ii)         Deliveries
by Armada. Armada will deliver to the Members the following:

 

(A)         Certificates
representing the Share Consideration;

 

(B)         Certificate
for 200,000 Armada Shares registered in the name of Brian Mader representing the consideration for the Settlement and Release Agreement;

 

(C)         the
Promissory Notes;

 

(D)         a
certificate from an officer of Armada to the effect (i) that all covenants of Armada in this Agreement and any Related Document
have been complied with, and (ii) that all corporate and other actions necessary to consummate the transactions hereby and thereby
shall have been taken; and

 

(E)         a
certificate of existence or good standing from its jurisdiction of organization dated as of a recent date.

 

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(e)          Earn-Out.

 

For a period of five (5) years following
the Closing Date, if and when the annual Barstow EBITDA exceeds $2,000,000 (the “EBITDA Target”), then Armada
will pay quarterly to the Members in accordance with their Percentage Interest an amount (the “Additional Purchase Price
Payment”) equal to (i) twenty percent (20%) of (ii) the amount by which the cumulative Barstow EBITDA during the year
in question exceeds the EBITDA Target, less any prior Additional Purchase Price Payments during the year. For the sake of clarity,
it is expressly agreed that any deficit in the Barstow EBITDA shall not be carried forward from one year to any subsequent year.
At the request of the Members, Armada will prepare or cause to be prepared a statement setting forth the Barstow EBITDA from the
beginning of the fiscal year to the end of such fiscal quarter.

 

The Additional Purchase Price Payment, if
any, will be paid by Armada on or before the sixtieth (60th) day following the end of the quarter in cash (by wire transfer
in accordance with the written instructions of the Members given to Armada or delivery of other immediately available funds). To
the extent that the calculation of the Additional Purchase Price Payment during a quarter results in a negative number, at the
option of Armada, the Members will either repay to Armada the negative Additional Purchase Price Payment in accordance with their
Percentage Interest or Armada will have the right to set off by such negative amount the Additional Purchase Price Payments that
would otherwise be due and owing..

 

2.          Representations
and Warranties of Armada. Armada represents and warrants to the Members that the statements contained in this Section 2 are
correct and complete as of the date of this Agreement.

 

(a)          Organization.
Armada is a corporation validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted. Armada
is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is
required. Armada has full corporate power and authority and all licenses, permits, and authorizations necessary to carry on the
businesses in which it is engaged and to own and use the properties owned and used by it.

 

(b)          Authorization
of Transaction. Armada has full power and authority (including full corporate power and authority) to execute and deliver this
Agreement and all other agreements, documents, certificates and instruments required to be executed and delivered pursuant hereto
(collectively, the “Related Documents”) and to perform its obligations hereunder and thereunder. This Agreement and
each Related Document constitutes the valid and legally binding obligation of Armada, enforceable in accordance with its terms.
Other than filings required by the Nevada Revised Statutes and filings pursuant to the Blue Sky Laws, Armada need not give any
notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement and the Related Documents.

 

(c)          Capitalization.
The entire authorized capital stock of Armada consists of 125,000,000 shares, of which 100,000,000 shares are designated as common
stock, par value $0.0001 per share, of which 6,750,000 shares are issued and outstanding, and of which 50,000,000 shares are designated
as preferred stock, par value $0.0001 per share, none of which are issued and outstanding, 4,000,000 shares of which have been
designated as Series A Preferred Stock. All of the outstanding shares of capital stock are duly authorized, validly issued, fully
paid and nonassessable and are not subject to any preemptive rights. All Armada Shares issuable pursuant to Section 1 will be,
when so issued, duly authorized, validly issued, fully paid and nonassessable and not subject to any preemptive rights.

 

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(d)          Business
and Assets of Armada.  Armada is newly-organized for the purpose of entering into the transactions contemplated by this
Agreement and the Related Documents and has engaged in no business other than that incidental to its formation. With the exception
of the costs and expenses of its organization and the preparation of this Agreement and the Related Documents, and the transactions
contemplated hereby and thereby, Armada has no Liabilities.

 

(e)          Noncontravention.
Neither the execution and the delivery of this Agreement or the Related Documents, nor the consummation of the transactions contemplated
hereby and thereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or court to which Armada is subject or any provision of the
Related Documents or its certificate of incorporation or bylaws or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any
notice under, any agreement, contract, lease, license, instrument, or other arrangement to which Armada is a party or by which
it is bound or to which any of its assets is subject (or result in the imposition of any Security Interest on any of its assets),
excluding from the foregoing clauses (i) and (ii) violations or conflicts that, individually or in the aggregate, would not have
an Armada Material Adverse Effect. Other than in connection with the provisions of the Nevada Revised Statutes, the Securities
Act, and the state securities laws, Armada need not give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this
Agreement.

 

(f)          Investment.
Armada is not acquiring the Barstow Interests with a view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.

 

(g)          Disclosure.
The representations and warranties contained in this Section 2 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and information contained in this Section 2 not misleading.

 

3.          Representations
and Warranties of the Members. Each Member, severally and not jointly, represents and warrants to Armada, with respect to itself
or himself only, that the statements contained in this Section 3 are correct and complete as of the date of this Agreement.

 

(a)          Organization
of BelPhil. BelPhil is a limited liability company, duly organized, validly existing, and in good standing under the laws of
Delaware.

 

(b)          Authorization
of Transaction. The Member has full power and authority to execute and deliver this Agreement and the Related Documents and
to perform its or his obligations hereunder and thereunder. This Agreement and each Related Document to which the Member is a Party
constitutes the valid and legally binding obligation of the Member, enforceable in accordance with its terms. The Member need not
give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency
in order to consummate the transactions contemplated by this Agreement and the Related Documents.

 

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(c)          Noncontravention.
Neither the execution and the delivery of this Agreement or the Related Documents, nor the consummation of the transactions contemplated
hereby or thereby, nor compliance by the Member with any of the provisions hereof or thereof will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental
agency, or court to which the Member is subject or any provision of the Related Documents, or, in the case of BelPhil, its operating
agreement or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any notice under, any agreement, contract, lease, license,
instrument, or other arrangement to which the Member is a party or by which he or it is bound or to which any of his or its assets
is subject, except for such violations, breaches, defaults, or rights of termination, cancellation, acceleration, creation, imposition,
suspension, revocation or modification as to which requisite waivers or consents have been obtained prior to Closing and copies
of which have been delivered to Armada.

 

(d)          Brokers’
Fees. The Member has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which Armada or Barstow could become liable or obligated.

 

(e)          Investment.
The Member (i) understands that the Armada Shares constituting the Share Consideration have not been, and will not be, registered
under the Securities Act or under any Blue Sky Laws and are being offered and sold in reliance on Federal and state exemptions
for transactions not involving any public offering; (ii) represents that any Armada Shares acquired pursuant to this Agreement
are being acquired solely for its own account for investment purposes, and not with a view to the distribution thereof; (iii) is
a sophisticated investor with knowledge and experience in business and financial matters; (iv) has received certain information
concerning Armada and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the
risks inherent in owning and holding Armada Shares; (v) is able to bear the economic risk and lack of liquidity inherent in
owning and holding any Armada Shares acquired pursuant to this Agreement; (vi) is an “Accredited Investor” within
the definition set forth in Rule 501(a) under the Securities Act; (vii) was not formed for the purpose of the transactions
contemplated by this Agreement; and (viii) understands that any Armada Shares issued to the Member pursuant to this Agreement
will be imprinted with a legend in substantially the following form:

 

“The shares represented by this certificate have
not been registered under the Securities Act of 1933, as amended. Said shares cannot be sold, transferred, disposed of, pledged
or hypothecated in any manner whatsoever in the absence of an effective registration statement for the shares under said Act, or
in the opinion reasonably satisfactory to the Company in form and of counsel, an exemption from the registration requirements is
in fact applicable to said shares.”

 

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(f)          Barstow
Interests. The Member holds of record and owns beneficially the Barstow Interests being transferred, free and clear of any
restrictions on transfer (other than any restrictions under the Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, equities, claims and demands. The Member is not a party to any option,
warrant, purchase right or other contract or commitment that could require the Member to sell, transfer or otherwise dispose of
any Barstow Interest (other than this Agreement). The Member is not a party to any voting trust, proxy or other agreement or understanding
with respect to the voting of any Barstow Interest.

 

4.          Representations
and Warranties Concerning Barstow. The Members, jointly and severally, represent and warrant to Armada that the statements
contained in this Section 4 are correct and complete as of the date of this Agreement. Nothing in the Barstow Disclosure Schedule
(referred to below) shall be deemed adequate to disclose an exception to a representation or warranty made herein unless the Disclosure
Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do
with the existence of the document or other item itself).

 

(a)          Organization,
Qualification, and Corporate Power. Barstow is a limited liability company, duly organized, validly existing, and in good standing
under the laws of the State of Texas. Except as disclosed in Section 4(a) of the Barstow Disclosure Schedule, Barstow is duly authorized
to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required. Barstow has
full limited liability company power and authority and all licenses, permits, and authorizations necessary to carry on the businesses
in which it is engaged and in which it currently proposes to engage and to own and use the properties owned and used by it. The
Members have delivered to Armada correct and complete copies, as applicable, of the organizational documents of Barstow (as amended
to date). Other than its organizational documents, Barstow does not have any membership interest books or records of meetings of
members, managers, the board of managers, or any committees of the board of managers. Barstow is not in default under or in violation
of any provision of its organizational documents.

 

(b)          Authorization
of Transaction. Barstow has full power and authority to execute and deliver this Agreement and the Related Documents and to
perform its obligations hereunder and thereunder. This Agreement and each Related Document to which Barstow is a party constitutes
the valid and legally binding obligation of Barstow, enforceable in accordance with its terms. Unless otherwise identified within
the Barstow Disclosure Schedule, Barstow need not give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency to consummate the transactions contemplated by this Agreement or the Related
Documents.

 

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(c)          Capitalization.
The Barstow Interests are owned in accordance with the Percentage Interests by the Members and constitute all of the issued and
outstanding Barstow Interests. All of the issued and outstanding Barstow Interests have been duly authorized, are validly issued,
fully paid, and nonassessable, and are held of record by the Members. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require
Barstow to issue, sell, or otherwise cause to become outstanding any of its Barstow Interests. Except for the profits interest
of Brian Mader, which is being released at Closing, there are no outstanding or authorized equity appreciation, phantom stock,
profit participation, or similar rights with respect to Barstow. There are no outstanding equity securities of Barstow other than
the Barstow Interests. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of
the Barstow Interests. None of the outstanding equity securities or other securities of the Barstow were issued in violation of
the Securities Act or any other applicable Federal, state or local laws, regulations, judgments, decrees, court orders or administrative
orders.

 

(d)          Noncontravention.
Neither the execution and the delivery of this Agreement or the Related Documents, nor the consummation of the transactions contemplated
hereby or thereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which Barstow is subject or any provision of, as applicable,
the organizational documents of Barstow or (ii) conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under, any agreement,
contract, lease, license, instrument, or other arrangement to which any of Barstow is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Security Interest upon any of its assets), excluding from the
foregoing clauses (i) and (ii) violations or conflicts that, individually or in the aggregate, would not have a Barstow Material
Adverse Effect. Barstow does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval
of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement
or the Related Documents.

 

(e)          Title
to Assets. Barstow has good title to, or a valid fee simple or leasehold interest in, the properties and assets used by it
or located on their premises, free and clear of all Security Interests, except where failure to have such valid interest, individually
or in the aggregate, would not have a Barstow Material Adverse Effect.

 

(f)          Legal
Compliance. Barstow has complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of Federal, state, local, and foreign governments (and all agencies thereof)
except where failure to comply with such laws would not, individually or in the aggregate, have a Barstow Material Adverse Effect,
and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply.

 

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(g)          Tax
Matters.

 

(i)          Except
as set forth on Schedule 4(g) of the Disclosure Schedule, Barstow has been taxed as a partnership for the purpose of any Income
Tax applicable to business entities since the date of its formation and has never made an election to be taxed as a corporation
for such purpose. Barstow has filed all Tax Returns that it was required to file. All such Tax Returns were correct and complete
in all material respects. All Taxes owed by Barstow as of and through the Closing Date have been paid. Barstow currently is not
the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an Authority in a
jurisdiction where Barstow does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of Barstow that arose in connection with any failure (or alleged failure) to pay any Tax.

 

(ii)         Barstow
has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, equity owner, or other third party.

 

(iii)        No
Member, manager, director or officer (or employee responsible for Tax matters) of Barstow has been informed formally or informally
or has any reason to believe any Authority may assess additional Taxes for any period for which Tax Returns have been filed or
is aware of any state of facts which could give rise to any claim, audit, action, suit, proceeding, or investigation which respect
to any Tax for which Barstow could be liable. No Tax Returns of Barstow have been audited or currently are the subject of audit.
Barstow has delivered to Armada correct and complete copies of all of its Income Tax Returns, examination reports, and statements
of deficiencies assessed against or agreed to by Barstow since its date of formation.

 

(iv)        Barstow
has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency.

 

(h)          Real
Property.

 

(i)          Except
as would not reasonably be expected to have, individually or in the aggregate, a Barstow Material Adverse Effect, Barstow has good
and marketable fee simple title to the owned real estate free and clear of any Liens other than Liens identified in Section 4(h)(i)
of the Barstow Disclosure Schedule. Section 4(h)(i) of the Barstow Disclosure Schedule contains a true and complete list (including,
without limitation, legal descriptions), as of the date hereof, of the owned real estate. As of the date hereof, Barstow does not
(i) currently lease all or any part of the owned real estate or (ii) has received written notice of any pending, and to the Knowledge
of Barstow there is no threatened, condemnation proceeding with respect to any of the owned real properties.

 

(ii)         Section
4(h)(ii) of the Barstow Disclosure Schedule lists and describes briefly all real property leased or subleased to Barstow. The Member
has delivered to Armada correct and complete copies of the leases and subleases listed in Section 4(m)(ii) of the Barstow
Disclosure Schedule (as amended to date). To the Knowledge of Barstow, with respect to each lease and sublease listed in Section
4(m)(ii) of the Barstow Disclosure Schedule: (A) such lease or sublease is legal, valid, binding, enforceable, and in full
force and effect; (B) no party to such lease or sublease is in breach or default, and no event has occurred which, with notice
or lapse of time, or both, would constitute a breach or default or permit termination, modification, or acceleration thereunder;
and (C) there are no disputes, oral agreements, or forbearance programs in effect as to such lease or sublease.

 

    	-8-

    	 

    

 

(i)          Contracts.
Except as executed in connection with the transactions contemplated herein, Section 4(i) of the Barstow Disclosure Schedule
identifies all contracts and other agreements to which Barstow is a party which were entered into other than in the Ordinary Course
of Business, agreements relating to confidentiality or non-competition or involve aggregate payments in excess of $50,000.

 

The Members have delivered to Armada a correct and complete
copy of each agreement listed in Section 4(i) of the Barstow Disclosure Schedule. With respect to each such agreement: (A) such
agreement is legal, valid, binding, enforceable, and in full force and effect; (B) such agreement will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated
hereby; (C) no party is in breach or default, and no event has occurred which with notice or lapse of time, or both, would
constitute a breach or default, or permit termination, modification, or acceleration, under such agreement; and (D) no party
has repudiated any provision of such agreement.

 

(j)          Litigation.
Section 4(j) of the Barstow Disclosure Schedule sets forth each instance in which Barstow or any of its directors, managers or
officers in their capacity as such (i) (A) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge
or (B) is a party or, to the Knowledge of Barstow, is threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator; and (ii) identifies if such instance, including associated litigation costs, is covered by insurance.
None of the actions, suits, proceedings, hearings and investigations set forth in Section 4(j) of the Disclosure Schedule could
result in a Barstow Material Adverse Effect. None of the Members nor any of the directors and officers (and employees with responsibility
for litigation matters) of Barstow has any reason to believe that any such action, suit, proceeding, hearing, nor investigation
may be brought or threatened against Barstow.

 

(k)          Environmental,
Health, and Safety Matters. To the Knowledge of Barstow, each of Barstow and its predecessors and Affiliates has complied and
is in compliance with all Environmental, Health, and Safety Requirements. Without limiting the generality of the foregoing, Barstow
and its Affiliates has obtained and complied with, and is in compliance with, all permits, licenses and other authorizations that
are required pursuant to Environmental, Health, and Safety Requirements for the occupation of its facilities and the operation
of its business, except where such compliance, individually or in the aggregate, would not have a Barstow Material Adverse Effect.
Neither Barstow nor its predecessors or Affiliates has received any written or oral notice, report or other information regarding
any actual or alleged violation of Environmental, Health, and Safety Requirements, or any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise), including any investigatory, remedial or corrective obligations,
relating to any of its facilities arising under Environmental, Health, and Safety Requirements.

 

    	-9-

    	 

    

 

(l)          Disclosure.
None of the representations and warranties contained in this Section 4, any other portion of this Agreement, the Exhibits, Annexes
and Schedules to this Agreement or any report, certificate or instrument furnished to Armada or its representatives in connection
with the transactions contemplated by this Agreement, contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements and information contained herein or therein not misleading. To the Knowledge
of Barstow, there is no information or fact that has or would have a Barstow Material Adverse Effect that has not been disclosed
to Armada either verbally or in writing.

 

5.            Indemnification.

 

(a)          Survival
of Representations and Warranties.  All representations and warranties of the Parties contained in this Agreement
or any other agreement, schedule, certificate, instrument or other writing delivered by Armada or the Members in connection with
this transaction shall survive for two (2) years after the Closing Date. If a Party hereto determines that there has been a breach
by any other Party hereto of any such representation or warranty and notifies the breaching Party in writing reasonably promptly
after learning of such breach, such representation or warranty and liability therefor shall survive with respect to the specified
breach until such breach has been resolved, but no Party shall have any liability after such two (2) year period for any matters
not specified in a writing delivered within such two (2) year period. Notwithstanding any term in this Section 5(a) the applicable
statute of limitations shall be the survival period for any matter relating to (a) fraud or willful misrepresentation or omission,
or (b) any violation of the representations and warranties made in any of the following sections of this Agreement: Sections 2(c),
3(f), 4(g) and 4(k) (collectively, the “Fundamental Representations”).

 

(b)          Indemnification
Provisions for Benefit of Armada. In the event any Member breaches (or in the event any third party alleges facts that, if
true, would mean the Member has breached) any of their respective representations, warranties or covenants contained herein and,
if there is an applicable survival period pursuant to Section 5(a), provided that Armada makes a written claim for indemnification
against the Member pursuant to Section 7(h) within such survival period, then the Members agree to indemnify Armada from and against
the entirety of any Adverse Consequences Armada may suffer through and after the date of the claim for indemnification (including
any Adverse Consequences Armada may suffer after the end of any applicable survival period) resulting from, arising out of, relating
to, in the nature of, or caused by such breach (or the alleged breach). Notwithstanding the foregoing, in no event shall any Member’s
liability for indemnification exceed the Purchase Price received by such Member.

 

    	-10-

    	 

    

  

(c)          Indemnification
Provisions for Benefit of the Members. In the event Armada breaches (or in the event any third party alleges facts that, if
true, would mean Armada has breached) any of its representations, warranties, covenants contained herein, and, if there is an applicable
survival period pursuant to Section 5(a), provided that a Member makes a written claim for indemnification against Armada pursuant
to Section 7(h) within such survival period, then Armada agrees to indemnify the Members from and against the entirety of any Adverse
Consequences the Member may suffer through and after the date of the claim for indemnification (including any Adverse Consequences
the Members may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature
of, or caused by such breach (or the alleged breach).

 

(d)          Matters
Involving Third Parties.

 

(i)          If
any third party shall notify any Party (the “Indemnified Party”) with respect to any matter (a “Third
Party Claim”) which may give rise to a claim for indemnification against any other Party (the “Indemnifying
Party”) under this Section 7, then the Indemnified Party shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party is actually
prejudiced by such delay.

 

(ii)         Any
Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party as long as (A) the Indemnifying Party notifies the Indemnified Party in writing
not later than fifteen (15) days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party
will indemnify the Indemnified Party from and against the entirety of any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim, (B) the Indemnifying Party provides
the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder, (C) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable relief, (D) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential
custom or practice materially adverse to the continuing business interests of the Indemnified Party, and (E) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.

 

(iii)        As
long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 5(d)(ii) above, (A)
the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party
Claim, (B) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not to be withheld unreasonably).

 

(iv)        In
the event any of the conditions in Section 5(d)(ii) above is or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner
it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying
Party in connection therewith), (B) the Indemnifying Parties will reimburse the Indemnified Party promptly and periodically for
the costs of defending against the Third Party Claim (including reasonable attorneys’ fees and expenses and the amount paid
in settlement), and (C) the Indemnifying Parties will remain responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest extent
provided in this Section 7.

 

    	-11-

    	 

    

 

(e)          Determination
of Adverse Consequences. All indemnification payments under this Section 7 shall be deemed adjustments to the Purchase Price.

 

(f)          Set-Off.
Subject to and in accordance with the terms of this Section 7, any claim of Armada for indemnification under this Section 5 or
under any other provision of this Agreement may be satisfied, at Armada’s sole discretion, by:

 

(i)          Cancellation
of the Armada Shares, or any common stock into which the Armada Shares have been converted;

 

(ii)         the
exercise of Armada’s set-off right against the unpaid Additional Purchase Price Payment, if any;

 

(iii)        any
combination of (i) and (ii) above.

 

For purposes of determining the number of Armada Shares that
shall be released to Armada pursuant to this Section 5 (f), each Armada Share shall be valued at liquidation preference thereof,
and if any Armada Shares have been converted into shares of common stock, then if such common stock is listed on a national securities
exchange or on an automated interdealer quotation system, the shares of common stock shall be valued at the volume weighted average
trading price reported by Bloomberg for the twenty trading days prior to the date of set off, and if not so listed or quoted, at
the fair value thereof determined in good faith by the Board of Directors of Armada.

 

(g)          Other
Indemnification Provisions. The foregoing indemnification provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy (including without limitation any such remedy arising under Environmental, Health, and Safety Requirements)
any Party may have with respect to any other Party or the transactions contemplated by this Agreement. The Members hereby agree
that they will not make any claim for indemnification against Barstow, nor shall the Members have any right of contribution against
Barstow for any breach of representation, warranty, covenant or agreement of the Members under this Agreement, or for any claim
amount for which the Members may be responsible to indemnify Armada.

 

6.          Tax
Matters. The following provisions shall govern the allocation of responsibility as between Armada and the Members for certain
tax matters following the Closing Date:

 

    	-12-

    	 

    

 

(a)          Tax
Returns. The Members shall prepare or cause to be prepared at their own expense all Income Tax Returns of Barstow for Tax periods
ending on or prior to the Closing Date (“pre-Closing Periods”), for all purposes, including Income Tax Returns
for jurisdictions that do not impose Taxes on Barstow at the business entity level (i.e. those jurisdictions that tax Barstow as
a pass through entity) for pre-Closing Periods, the due date of which Tax Returns is on or after the Closing Date. The items of
income, gain, loss, deduction and credit of Barstow shall be allocated between any pre-Closing Period and any Tax period ending
after the Closing Date in accordance with the closing-of-the-books method so long as such method is consistent with the Code and
all applicable Treasury Regulations. The Members shall afford Armada a reasonable opportunity to review and comment upon such Tax
Returns prior to their filing. Armada shall prepare or cause to be prepared and file or cause to be filed all other Tax Returns
of Barstow, the due date of which Tax Returns is after the Closing Date.

 

(b)          Cooperation
on Tax Matters.

 

(i)          Armada,
Barstow and the Members shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with
the filing of Tax Returns pursuant to this Section and any audit, litigation or other proceeding with respect to Taxes. 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 audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. Barstow and the Members agree (A) to retain all books
and records with respect to Tax matters pertinent to Barstow relating to any Tax period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent notified by Armada or the Members, any extensions thereof) of
the respective Tax periods, and to abide by all record retention agreements entered into with any Authority, and (B) to give the
other Party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other
Party so requests, Barstow and or the Members, as the case may be, shall allow the other Party to take possession of such books
and records.

 

(ii)         Armada
and the Members further agree, upon request, to use their best efforts to obtain any certificate or other document from any Authority
or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).

 

(c)          Certain
Taxes. All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by the Members when due, and the Members will, at its or his
own expense, file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees, and, if required by applicable law, Armada will, and will cause its affiliates to,
join in the execution of any such Tax Returns and other documentation.

 

    	-13-

    	 

    

 

(d)          Tax
Purchase Price Allocation. The purchase of the Barstow Interests shall be treated as a sale of the assets of Barstow for federal
Income Tax purposes and for the purposes of any other Income Tax that treats any of Barstow as an entity disregarded from its owner.
The Tax Purchase Price shall be allocated among the assets of Barstow in accordance with the requirements of the Code (the “Allocation”).
The Allocation shall be prepared by Armada for the review and approval of Members within ninety (90) business days after the Closing
Date. If within thirty (30) days after delivery of the Allocation, Members notify Armada in writing that the Members object to
the allocation set forth in the Allocation, Armada and Members shall use commercially reasonable efforts to resolve such dispute
within twenty (20) business days. In the event the Parties are unable to resolve any such dispute within the twenty (20) business
day period, the Parties will engage a Neutral Accounting Firm to resolve such dispute as promptly as practicable in accordance
with rules to be established by Armada, the Members and the Neutral Accounting Firm. The Neutral Accounting Firm’s decision
shall be final, non-appealable and binding on Armada and the Members, and the fees and expenses of the Neutral Accounting shall
be paid one-half by Armada and one-half by the Members. The Members, Barstow, and Armada agree to report, pursuant to Section 1060
of the Code and the regulations promulgated thereunder or any other similar provision under state, local or foreign law, as and
when required, the Allocation of the Purchase Price (including subsequent adjustments, if any), among the assets of Barstow in
a manner entirely consistent with such Allocation in the preparation and filing of all Tax Returns (including IRS Form 8594 and
any amendment thereto). Neither Armada nor the Member shall take any position (whether in audits, Tax Returns, or otherwise) that
is inconsistent with such Allocation unless required to do so by applicable law.

 

7.          Miscellaneous.

 

(a)          Definitions.

 

“Additional Purchase Price Payment”
has the meaning set forth in Section 1(f) below.

 

“Adverse Consequences”
means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes,
liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses associated with the
foregoing, net of any insurance proceeds actually realized by the Party claiming indemnification resulting from, arising out of,
relating to or caused by the applicable breach.

 

“Affiliate” has the meaning set
forth in Rule 12b-2 of the regulations promulgated under the Exchange Act.

 

“Allocation” has the meaning set
forth in Section 6(d) above.

 

“Armada” has the meaning set forth
in the preface above.

 

“Armada Material Adverse Effect”
means an adverse effect on: (i) the business, operations, results of operations, properties (including intangible properties),
conditions (financial or otherwise), assets or liabilities (including contingent liabilities) of Armada, which would have an economic
impact of more than $50,000; or (ii) the ability of Armada to perform its obligations under this Agreement and each other agreement
contemplated by this Agreement.

 

    	-14-

    	 

    

 

“Armada Share” means a share of
Series A Preferred Stock, $.0001 par value per share, of Armada, with the designation, rights and privileges set forth in the certificate
of designation attached as Exhibit A.

 

“Authority” means any Federal,
state, local or foreign, court, governmental bureau, commission, board, agency or instrumentality.

 

“Barstow” has the meaning set
forth in the preface above.

 

“Barstow EBITDA” means the net
income before interest, income taxes, depreciation and amortization of Barstow for such period, determined in accordance with GAAP
subject to the following adjustments:

 

(a)          For
so long as the current business operations of Barstow as of the Closing Date are conducted in Barstow or a separate subsidiary
of Armada, the Barstow EBITDA shall be calculated based on the unconsolidated financial statements of Barstow or such subsidiary,
less an allocation of Armada’s parent-level selling, general and administrative expense based upon the percentage of Barstow’s
or such subsidiary’s revenue bears to the total revenue of Armada; and

 

(b)          If
the current business operations of Barstow are combined with Armada or another business, the Barstow EBITDA shall be calculated
on a pro forma basis as if it were a separate business based upon the current business of Barstow at the time of such combination,
less an allocation of all indirect expenses based upon the percentage the revenue the Barstow business bears to the total revenue
of Armada.

 

“Barstow Interest” means any membership
interest in Barstow.

 

“Barstow Material Adverse Effect”
means an adverse effect on or change to: (i) the business, operations, results of operations, properties (including intangible
properties), conditions (financial or otherwise), assets or liabilities (including contingent liabilities) of Barstow, which would
have an economic impact of more than $50,000; or (ii) the ability of Barstow to perform its obligations under this Agreement and
each other agreement contemplated by this Agreement.

 

“Blue Sky Laws” means the laws
of any state, the District of Columbia, or any territory or other jurisdiction in the United States governing the offer and/or
sale of securities in such jurisdiction.

 

“Closing” has the meaning set
forth in Section 2(c) below.

 

“Closing Date” has the meaning
set forth in Section 2(c) below.

 

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

 

“Nevada Revised Statutes” means
Article 78 of the Nevada Revised Statutes.

 

    	-15-

    	 

    

 

“EBITDA Target” has the meaning
set forth in Section 1(f)(ii).

 

“Environmental, Health, and Safety Requirements”
shall mean all Federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect
of law, all judicial and administrative orders and determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those
relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or hereafter in effect.

 

“Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

“GAAP” means generally accepted
accounting principles as in effect from time to time in the United States of America.

 

“Income Tax” means any Tax imposed
on net income.

 

“Knowledge” means, as to Barstow,
the actual knowledge of the Members of Barstow.

 

“Liability” means any liability
(whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

 

“Member” has the meaning set forth
in the preface above.

 

“Neutral Accounting Firm” means
an accounting firm selected by Armada which is acceptable to the Members.

 

“Operating Members” means Huerta
and Washington.

 

“Ordinary Course of Business”
means, with respect to a Person, the conduct of business consistent with past custom and practice (including with respect to quantity
and frequency) of such Person.

 

“Party” has the meaning set forth
in the preface above.

 

“Percentage Interest” means, with
respect to BelPhil, 50%, Huerta 25%, and Washington 25%.

 

“Person” means an individual,
a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision thereof).

 

    	-16-

    	 

    

 

“Promissory Notes” has the meaning
set forth in Section 1(b).

 

“Purchase Price” has the meaning
set forth in Section 1(b).

 

“Related Documents” has the meaning
set forth in Section 2(b).

 

“SEC” means the Securities and
Exchange Commission.

 

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

 

“Security Interest” means any
mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (i) mechanic’s, materialmen’s,
and similar liens, (ii) liens for Taxes not yet due and payable, and (iii) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.

 

“Settlement and Release Agreement”
has the meaning given to such term in Section 1(d).

 

“Share Consideration” has the
meaning set forth in Section 1(b).

 

“Tax” or “Taxes” means
any Federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.

 

“Tax Purchase Price” means the
sum of the Purchase Price and the Liabilities of Barstow immediately after the Closing.

 

“Tax Return” means any return,
declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.

 

“Third Party Claim” has the meaning
set forth in Section 5(d)(i).

 

(b)          Restrictions
on Transfer.

 

(i) The Armada Shares, and the shares of
common stock into which they may be converted, shall not be sold for 18 months from Closing unless such shares are listed on a
national securities exchange and the common stock is trading in excess of $6 per share (subject to adjustment for stock splits,
recapitalizations and the like) for a period of thirty consecutive trading days.

 

    	-17-

    	 

    

 

(ii) At the request of Armada, each Member
shall execute a Market Standoff Agreement pursuant to which such Member will agree, if so requested by Armada or any underwriter's
representative in connection with the first two public offerings of Armada’s Common Stock, not to sell or otherwise transfer
any securities of Armada during a period of up to 180 days following the effective date of the applicable registration statements.
Armada agrees that future purchasers of stock prior to Armada’s initial public offering will execute such a Market Standoff
Agreement.

 

(c)          No
Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.

 

(d)          Entire
Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior or contemporaneous understandings, agreements, or representations by or among the Parties, written or oral,
to the extent they related in any way to the subject matter hereof.

 

(e)          Succession
and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or any of his or its rights, interests, or obligations
hereunder without the prior written approval of Armada and the Member; provided, however, that Armada may: (i) assign
any or all of its rights and interests hereunder to one or more of its Affiliates; (ii) designate one or more of its Affiliates
to perform its obligations hereunder (in any or all of which cases Armada nonetheless shall remain responsible for the performance
of all of its obligations hereunder); and (iii) assign any or all of its rights and interests hereunder to any Person with which
or into which Armada may be merged or which may succeed to its assets or business.

 

(f)          Counterparts.
This Agreement may be executed in one or more counterparts and/or by facsimile, each of which shall be deemed an original but all
of which together will constitute one and the same instrument.

 

(g)          Headings.
The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.

 

(h)          Notices.
All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

 

    	-18-

    	 

    

 

	If to Barstow:	
        Barstow Production Water

        Solutions, LLC

	 	 
	Copy to:	 
	 	 
	If to BelPhil:	BelPhil Investment Partners, LLC
	 	
        630 W Germantown Pike, Suite 180

        Plymouth Meeting, PA  19462

	 	 
	Copy to:	 
	 	 
	If to Armada	Armada Water Assets, Inc.
	 	
        1716 E. Lincoln Avenue

        Fort Collins, CO 80524

	 	 
	Copy to:	 
	 	 
	If to Huerta:	Arnold Huerta
	 	
        114 South Texas Avenue

        Odessa, Texas 79761

	 	 
	Copy to:	 
	 	 
	If to Washington:	D. Lee Washington
	 	
        114 South Texas Avenue

        Odessa, Texas 79761

	 	 
	Copy to:	 

 

Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are
to be delivered by giving the other Parties notice in the manner herein set forth.

 

(i)          Governing
Law. This Agreement shall be governed by and construed in accordance with laws of the State of Nevada without giving effect
to any choice or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than
the State of Nevada.

 

(j)          Amendments
and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed
by Armada and the Members. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty
or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

    	-19-

    	 

    

 

(k)          Severability.
Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.

 

(l)          Expenses.
Each of the Members and Armada will bear its own costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby. The Members agree to bear any and all of the Barstow transaction
costs and expenses.

 

(m)          Construction.
The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation.
The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any
Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which
the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation,
warranty, or covenant.

 

(n)          Incorporation
of Exhibits, Annexes, and Schedules. The Exhibits, Annexes, and Schedules identified in this Agreement are incorporated herein
by reference and made a part hereof.

 

(o)          Release
and Discharge.

 

BY VIRTUE OF THEIR
EXECUTION AND DELIVERY OF THIS AGREEMENT, AS OF THE CLOSING AND THEREAFTER, THE MEMBERS, FOR AND ON BEHALF OF THEIR HEIRS, ASSIGNS,
BENEFICIARIES, EXECUTORS AND ADMINISTRATORS DO: (i) HEREBY FULLY AND IRREVOCABLY REMISE, RELEASE AND FOREVER DISCHARGE BARSTOW
, AND ITS SUBSIDIARIES, DIRECTORS, OFFICERS, MEMBERS, MANAGERS, AFFILIATES, EMPLOYEES, AGENTS, ATTORNEYS, ACCOUNTANTS, SUCCESSORS
AND ASSIGNS 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, 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 SUCH MEMBERS 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; AND (ii) UPON
THE CLOSING DO HEREBY AGREE TO TERMINATE ANY AND ALL OPERATING AGREEMENTS OR OTHER SIMILAR AGREEMENTS AMONG THE MEMBERS. .

 

    	-20-

    	 

    

 

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

 

	 	ARMADA WATER ASSETS, INC.
	 	 
	 	/s/ Mitch Burroughs
	 	By:	 
	 	Name: Mitch Burroughs
	 	Title: President
	 	 
	 	BARSTOW PRODUCTION WATER
	 	SOLUTIONS, LLC,
	 	 
	 	/s/ Don Lee Washington
	 	By:	 
	 	Name: Don Lee Washington
	 	Title: President
	 	 
	 	BELPHIL INVESTMENT PARTNERS, LLC.
	 	 
	 	/s/ Kyung Won Lee
	 	By:	 
	 	Name: Kyung Won Lee
	 	Title: President
	 	 
	 	/s/ Arnold Huerta
	 	Arnold Huerta
	 	 
	 	/s/ Don Lee Washington
	 	D. Lee Washington

 

    	-21-FORM OF PROMISSORY NOTE

 

FOR VALUE RECEIVED, and subject to the
terms and conditions set forth herein, Armada Water Assets, Inc., a Nevada corporation (the "Borrower"),
hereby unconditionally promises to pay to the order of [payee] or its assigns (the "Noteholder",
and together with the Borrower, the "Parties"), the principal amount of [amount]
Dollars ($[amount]) (the "Loan"), together with all accrued interest thereon,
as provided in this Promissory Note (the "Note").

 

1.     Definitions.
Capitalized terms used herein shall have the meanings set forth in this Section 1.

 

"Applicable
Rate" means the rate equal to ten percent (10%) per annum.

 

"Borrower" has
the meaning set forth in the introductory paragraph.

 

"Business
Day" means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are
authorized or required by law to close.

 

“Cash Flow” shall mean
the Borrower’s net income, plus depreciation, amortization, and other non-cash charges, determined in accordance with GAAP.

 

"Default" means
any of the events specified in Section 8 which constitutes an Event of Default or which, upon the giving of notice, the lapse of
time, or both pursuant to Section 8 would, unless cured or waived, become an Event of Default.

 

"Default
Rate" means, at any time, the Applicable Rate plus 3%.

 

"Event
of Default" has the meaning set forth in Section 8.

 

"GAAP" means
generally accepted accounting principles in the United States of America as in effect from time to time.

 

"Governmental
Authority" means the government of any nation or any political subdivision thereof, whether at the national,
state, territorial, provincial, municipal or any other level, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions
of, or pertaining to, government (including any supranational bodies such as the European Union or the European Central Bank).

 

    	 

    	 

    

 

"Law" as
to any Person, means any law (including common law), statute, ordinance, treaty, rule, regulation, policy or requirement of any
Governmental Authority and authoritative interpretations thereon, whether now or hereafter in effect, in each case, applicable
to or binding on such Person or any of its properties or to which such Person or any of its properties is subject.

 

"Lien" means
any mortgage, pledge, hypothecation, encumbrance, lien (statutory or other), charge or other security interest.

 

"Loan" has
the meaning set forth in the introductory paragraph.

 

"Material
Adverse Effect" means a material adverse effect on (a) the business, assets, properties, liabilities (actual
or contingent), operations /or condition (financial or otherwise) of the Borrower; (b) the validity or enforceability of the Note;
(c) the rights or remedies of the Noteholder hereunder; or (d) the Borrower's ability to perform any of its material obligations
hereunder.

 

"Maturity
Date" means the earlier of (a) February 1, 2016 and (b) the date on which all amounts under this Note shall
become due and payable pursuant to Section 8.

 

"Note" has
the meaning set forth in the introductory paragraph.

 

"Noteholder" has
the meaning set forth in the introductory paragraph.

 

"Order" as
to any Person, means any order, decree, judgment, writ, injunction, settlement agreement, requirement or determination of an arbitrator
or a court or other Governmental Authority, in each case, applicable to or binding on such Person or any of its properties or to
which such Person or any of its properties is subject.

 

"Parties" has
the meaning set forth in the introductory paragraph.

 

"Person" means
any individual, corporation, limited liability company, trust, joint venture, association, company, limited or general partnership,
unincorporated organization, Governmental Authority or other entity.

 

2.    Interest
and Principal Payments; Mandatory Prepayments; Optional Prepayments.

 

2.1     Interest
and Principal Payments. During the term of this Note, Borrower shall make quarterly payments of principal and interest, on
May 14, August 14, November 14 and February 14, in an amount equal to one-third of the Borrower’s Cash Flow during the prior
fiscal quarter. 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.

 

    	2

    	 

    

 

2.2     Mandatory
Prepayments. The Borrower shall make mandatory prepayments equal to the proceeds of any subsequent debt or equity financings
after the date hereof by the Borrower to the extent aggregate cumulative proceeds thereof exceed $1,000,000.

 

2.3     Optional
Prepayment. The Borrower may prepay the Loan in whole or in part at any time or from time to time without penalty or premium
by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. No prepaid amount
may be reborrowed.

 

3.    Interest.

 

3.1     Interest
Rate. Except as otherwise provided herein, the outstanding principal amount of Loan made hereunder shall bear interest at the
Applicable Rate from the date hereof is paid in full, whether at maturity, upon acceleration, by prepayment or otherwise.

 

3.2     Default
Interest. If any amount payable hereunder is not paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such overdue amount shall bear interest at the Default Rate from the date of such
non-payment until such amount is paid in full.

 

3.3     Computation
of Interest. All computations of interest shall be made on the basis of a year of 360 days, and the actual number of days elapsed.

 

3.4     Interest
Rate Limitation. If at any time and for any reason whatsoever, the interest rate payable on the Loan shall exceed the maximum
rate of interest permitted to be charged by the Noteholder to the Borrower under applicable Law, such interest rate shall be reduced
automatically to the maximum rate of interest permitted to be charged under applicable Law/that portion of each sum paid attributable
to that portion of such interest rate that exceeds the maximum rate of interest permitted by applicable Law shall be deemed a voluntary
prepayment of principal.

 

4.    Payment
Mechanics.

 

4.1     Manner
of Payments. All payments of interest and principal shall be made in lawful money of the United States of America no later
than 12:00 PM on the date on which such payment is due by wire transfer of immediately available funds to the Noteholder's account
at a bank specified by the Noteholder in writing to the Borrower from time to time.

 

4.2     Application
of Payments. All payments made hereunder shall be applied first to the payment of any fees or charges outstanding hereunder,
second to accrued interest, and third to the payment of the principal amount outstanding under the Note.

 

    	3

    	 

    

 

4.3     Business
Day Convention. Whenever any payment to be made hereunder shall be due on a day that is not a Business Day, such payment shall
be made on the next succeeding Business Day and such extension will be taken into account in calculating the amount of interest
payable under this Note.

 

4.4     Evidence
of Debt. The Noteholder is authorized to record on the grid attached hereto as Exhibit A the Loan made to the Borrower and
each payment or prepayment thereof. The entries made by the Noteholder shall, to the extent permitted by applicable Law, be prima
facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that
the failure of the Noteholder to record such payments or prepayments, or any inaccuracy therein, shall not in any manner affect
the obligation of the Borrower to repay (with applicable interest) the Loan in accordance with the terms of this Note.

 

4.5     Rescission
of Payments. If at any time any payment made by the Borrower under this Note is rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, the Borrower's obligation to make such
payment shall be reinstated as though such payment had not been made.

 

5.    Representations
and Warranties. The Borrower hereby represents and warrants to the Noteholder on the date hereof as follows:

 

5.1     Existence;
Compliance With Laws. The Borrower is (a) a corporation duly incorporated, validly existing and in good standing under the
laws of the state of its jurisdiction of organization and has the requisite power and authority, and the legal right, to own, lease
and operate its properties and assets and to conduct its business as it is now being conducted and (b) in compliance with all Laws
and Orders except to the extent that the failure to comply therewith would not reasonably be expected to have a Material Adverse
Effect.

 

5.2     Power
and Authority. The Borrower has the power and authority, and the legal right, to execute and deliver this Note and to perform
its obligations hereunder.

 

5.3     Authorization;
Execution and Delivery. The execution and delivery of this Note by the Borrower and the performance of its obligations hereunder
have been duly authorized by all necessary corporate action in accordance with all applicable Laws. The Borrower has duly executed
and delivered this Note.

 

5.4     No
Approvals. No consent or authorization of, filing with, notice to or other act by, or in respect of, any Governmental Authority
or any other Person is required in order for the Borrower to execute, deliver, or perform any of its obligations under this Note.

 

    	4

    	 

    

 

5.5     No
Violations. The execution and delivery of this Note and the consummation by the Borrower of the transactions contemplated hereby
do not and will not (a) violate any provision of the Borrower's organizational documents; (b) violate any Law or Order applicable
to the Borrower or by which any of its properties or assets may be bound; or (c) constitute a default under any material agreement
or contract by which the Borrower may be bound.

 

5.6     Enforceability.
The Note is a valid, legal and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms.

 

5.7     No
Litigation. No action, suit, litigation, investigation or proceeding of, or before, any arbitrator or Governmental Authority
is pending or, to the knowledge of the Borrower, threatened by or against the Borrower or any of its property or assets (a) with
respect to the Note or any of the transactions contemplated hereby or (b) that could be expected to materially adversely affect
the Borrower's financial condition or the ability of the Borrower to perform its obligations under the Note.

 

6.    Affirmative
Covenants. Until all amounts outstanding in this Note have been paid in full, the Borrower shall:

 

6.1     Maintenance
of Existence. (a) Preserve, renew and maintain in full force and effect its corporate or organizational existence and (b) take
all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business,
except, in each case, where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

6.2     Compliance.
Comply with (a) all of the terms and provisions of its organizational documents; (b) its obligations under its material contracts
and agreements; and (c) all Laws and Orders applicable to it and its business, except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.

 

6.3     Payment
Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be,
all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings, and reserves in conformity with GAAP with respect thereto have been provided on its books.

 

6.4     Notice
of Events of Default. As soon as possible and in any event within two 2 Business Days after it becomes aware that a Default
or an Event of Default has occurred, notify the Noteholder in writing of the nature and extent of such Default or Event of Default
and the action, if any, it has taken or proposes to take with respect to such Default or Event of Default.

 

    	5

    	 

    

 

6.5     Further
Assurances. Upon the request of the Noteholder, promptly execute and deliver such further instruments and do or cause to be
done such further acts as may be necessary or advisable to carry out the intent and purposes of this Note.

 

7.    Negative
Covenants. Until all amounts outstanding under this Note have been paid in full, the Borrower shall not:

 

7.1     No
Dividends; No Redemption. Declare any dividend, pay or set aside for payment any dividend or other distribution, in cash, stock,
or other property, or make any payment to any related parties, including to any preferred stockholders, as a dividend, redemption,
or otherwise, other than the payment of salaries in the ordinary course of business.

 

7.2     Sale
of Assets, Dissolution, Etc. Transfer, sell, assign, lease or otherwise dispose of any of its properties or assets, or any
assets or properties necessary or desirable for the proper conduct of its business, or transfer, sell, assign or otherwise dispose
of any of its accounts, or contract rights to any person or entity, or change the nature of its business, wind-up, liquidate or
dissolve, or agree to any of the foregoing, other than in the ordinary course of business.

 

8.    Events
of Default. The occurrence and continuance of any of the following shall constitute an Event of Default hereunder:

 

8.1     Failure
to Pay. The Borrower fails to pay (a) any principal amount of the Loan when due or (b) interest or any other amount when due
and such failure continues for 5 days after written notice to the Borrower.

 

8.2     Breach
of Representations and Warranties. Any representation or warranty made or deemed made by the Borrower to the Noteholder herein
is incorrect in any material respect on the date as of which such representation or warranty was made or deemed made.

 

8.3     Breach
of Covenants. The Borrower fails to observe or perform (a) any covenant, condition or agreement contained in Section 6.4 or
(b) any other material covenant, obligation, condition or agreement contained in this Note other than those specified in clause
(a) and Section 8.1 and such failure continues for 30 days after written notice to the Borrower.

 

8.4     Cross-Defaults.
The Borrower fails to pay when due any of its indebtedness (other than trade payables arising in the ordinary course of business)
or any interest or premium thereon when due (whether by scheduled maturity, acceleration, demand or otherwise), or breaches in
any material respect the Membership Interest Purchase Agreement of even date herewith between the Borrower and the original Noteholder
and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such
Debt or Membership Interest Purchase Agreement.

 

    	6

    	 

    

 

8.5     Bankruptcy.
 

 

(a)      the
Borrower commences any case, proceeding or other action (i) under any existing or future Law relating to bankruptcy, insolvency,
reorganization, or other relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate
it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts or (ii) seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the Borrower makes a general assignment for the benefit
of its creditors;

 

(b)      there
is commenced against the Borrower any case, proceeding or other action of a nature referred to in Section 8.5(a) above which (i)
results in the entry of an order for relief or any such adjudication or appointment or (ii) remains undismissed, undischarged or
unbonded for a period of 30 days;

 

(c)      there
is commenced against the Borrower any case, proceeding or other action seeking issuance of a warrant of attachment, execution or
similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which
has not been vacated, discharged, or stayed or bonded pending appeal within 30 days from the entry thereof;

 

(d)      the
Borrower takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in Section 8.5(a), Section 8.5(b) or Section 8.5(c) above; or

 

(e)      the
Borrower is generally not, or shall be unable to, or admits in writing its inability to, pay its debts as they become due.

 

8.6     Judgments.
One or more judgments or decrees shall be entered against the Borrower and all of such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof.

 

9.    Remedies.
Upon the occurrence of any Event of Default and at any time thereafter during the continuance of such Event of Default, the Noteholder
may at its option, by written notice to the Borrower (a) declare the entire principal amount of this Note, together with all accrued
interest thereon and all other amounts payable hereunder, immediately due and payable; and/or (b) exercise any or all of its rights,
powers or remedies under applicable Law; provided, however that, if an Event of Default described in Section 8.5 shall
occur, the principal of and accrued interest on the Loan shall become immediately due and payable without any notice, declaration
or other act on the part of the Noteholder.

 

    	7

    	 

    

 

10.  Miscellaneous.

 

10.1   Notices.
 

 

(a)     All
notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing, in each
case to the address specified below or to such other address as such Party may from time to time specify in writing in compliance
with this provision:

 

(i)     If
to the Borrower:

Armada Water Assets, Inc.

1716 E. Lincoln Avenue

Fort Collins, CO 80524

 

(ii)    If
to the Noteholder:

BelPhil Investment Partners, LLC

630 W Germantown Pike, Suite 180

Plymouth Meeting, PA  19462

 

(b)     Notices
if (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when
received; (ii) sent by facsimile during the recipient's normal business hours shall be deemed to have been given when sent (and
if sent after normal business hours shall be deemed to have been given at the opening of the recipient's business on the next business
day); and (iii) sent by e-mail shall be deemed received upon the sender's receipt of an acknowledgment from the intended recipient
(such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgment).

 

10.2   Expenses.
The Borrower shall reimburse the Noteholder on demand for all reasonable out-of-pocket costs, expenses and fees (including reasonable
expenses and fees of its counsel incurred by the Noteholder in connection with the transactions contemplated hereby including the
negotiation, documentation and execution of this Note and the enforcement of the Noteholder's rights hereunder.

 

10.3   Governing
Law. This Note and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon,
arising out of or relating to this Note and the transactions contemplated hereby shall be governed by the laws of the State of
New York.

 

    	8

    	 

    

 

10.4   Submission
to Jurisdiction.

 

(a)    The
Borrower hereby irrevocably and unconditionally (i) agrees that any legal action, suit or proceeding arising out of or relating
to this Note may be brought in the courts of the State of New York or of the United States of America for the Southern District
of New York and (ii) submits to the jurisdiction of any such court in any such action, suit or proceeding. Final judgment against
the Borrower in any action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the
judgment.

 

(b)    Nothing
in this Section 10.4 shall affect the right of the Noteholder to (i) commence legal proceedings or otherwise sue the Borrower in
any other court having jurisdiction over the Borrower or (ii) serve process upon the Borrower in any manner authorized by the laws
of any such jurisdiction.

 

10.5   Venue.
The Borrower irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may
now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Note in any court referred
to in Section 10.4 and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such
court.

 

10.6   Waiver
of Jury Trial. THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY
WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY.

 

10.7   Counterparts;
Integration; Effectiveness. This Note and any amendments, waivers, consents or supplements hereto may be executed in counterparts,
each of which shall constitute an original, but all taken together shall constitute a single contract. This Note constitutes the
entire contract between the Parties with respect to the subject matter hereof and supersede all previous agreements and understandings,
oral or written, with respect thereto. Delivery of an executed counterpart of a signature page to this Note by facsimile or in
electronic (i.e., "pdf" or "tif") format shall be effective as delivery of a manually executed counterpart
of this Note.

 

10.8   Successors
and Assigns. This Note may be assigned or transferred by the Noteholder to any Person. The Borrower may not assign or transfer
this Note or any of its rights hereunder without the prior written consent of the Noteholder. This Note shall inure to the benefit
of, and be binding upon, the Parties and their permitted assigns.

 

    	9

    	 

    

 

10.9   Waiver
of Notice. The Borrower hereby waives demand for payment, presentment for payment, protest, notice of payment, notice of dishonor,
notice of nonpayment, notice of acceleration of maturity and diligence in taking any action to collect sums owing hereunder.

 

10.10       Interpretation.
For purposes of this Note (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 Note as a whole. The definitions
given for any defined terms in this Note shall apply equally to both the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Unless the context otherwise
requires, references herein: (x) to Schedules, Exhibits and Sections mean the Schedules, Exhibits and Sections of this Note; (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 Note 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.

 

10.11       Amendments
and Waivers. No term of this Note may be waived, modified or amended except by an instrument in writing signed by both of the
parties hereto. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.

 

10.12       Headings.
The headings of the various Sections and subsections herein are for reference only and shall not define, modify, expand or limit
any of the terms or provisions hereof.

 

10.13       No
Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising on the part of the Noteholder, of any right,
remedy, power or privilege hereunder shall operate 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. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.

 

10.14       Electronic
Execution. The words "execution," "signed," "signature," and words of similar import in the Note
shall be deemed to include electronic or digital signatures or the keeping of records in electronic form, each of which shall be
of the same effect, validity and enforceability as manually executed signatures or a paper-based recordkeeping system, as the case
may be, to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce
Act of 2000 (15 USC § 7001 et seq.), the Electronic Signatures and Records Act of 1999 (N.Y. State Tech. Law §§
301-309), or any other similar state laws based on the Uniform Electronic Transactions Act.

 

    	10

    	 

    

 

10.15       Severability.
If any term or provision of this Note is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Note 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 Note 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.

 

IN WITNESS WHEREOF, the Borrower has executed
this Note as of February 1, 2013.

 

	 	ARMADA WATER ASSETS, INC.
	 	
	 	By	/s/ Mitch Burroughs
	 	 
	 	Name: Mitch Burroughs
	 	Title: President

 

    	11

    	 

    

 

Exhibit
A

 

Advances
and Payments on the Loan

 

	Date of

Advance	 	Amount
    of
 Advance	 	 	Amount of

Principal Paid	 	 	Unpaid

Principal

Amount of

Note	 	 	Name of

Person Making

the Notation	 
	02/01/2013	 	$	800,000	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 

  

    	12

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