Exhibit 10.12
BOARD OF DIRECTORS APPOINTMENT AGREEMENT

THIS BOARD OF DIRECTORS APPOINTMENT AGREEMENT (the “Agreement”) is dated as of
the 24h day of October, 2013.

BETWEEN R.H. (Tibaut) Bowman, N. Frost Building, 1250 N.E. Loop 410, Suite 900,
San Antonio, TX 78209 (the "Director")
AND STW Resources Holding Corp., a Nevada corporation having a business office
at 619 West Texas Avenue, Suite 126, Midland, Texas 79701 (the "Company").

WHEREAS, The Company desires to retain the services of Director on the Company’s
Board of Directors to provide primarily general advice on current standard
practices and trends in Director’s area of expertise and from time-to-time in a
consulting capacity with respect to certain activities or specific projects as
described in this Agreement, and Director is willing so to act.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements herein contained the parties hereto agree as follows:

1.           INTERPRETATION

1.1           Where used herein the following terms shall have the meanings set
out below:
 
(a)
"Directory Board" means the group of individuals appointed by the Company to act
as Directors to the Board;

 
(b)
"Directory Services" means the Directory and consulting services to be provided
by the Director to the Company as set out herein;

(c)           "Board" means the board of directors of the Company;

 
(d)
"Business Material" means any financial, market and technical information,
methods and plans, trade secrets, know-how, technical expertise and other
information relating to the Company's business and operations;

 
(e)
"Term" has the meaning given to it in subsection 2.1.

1.2           Governing Law.  This Agreement shall be governed by and be
construed in accordance with the laws of Texas applicable therein.

 
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1.3           Severability.  If any one or more of the provisions contained in
this Agreement should be determined to be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.

2.           TERM

2.1           Term.

(a)           This Agreement shall continue for a period of one (1) year from
the Effective Date and shall continue thereafter for as long as Director is
re-elected as a Director of the Company at the Company’s Annual Meeting of the
Shareholders.

 (b)            Notwithstanding the foregoing and provided that Director has
neither voluntarily resigned nor been terminated for "cause" as defined in
Section 5 of this Agreement, Company agrees to use its best efforts to reelect
Director to the Board for a period of two (2) years at the 2014 Annual Meeting
of the Shareholders.

3.           DIRECTORY SERVICES

3.1           Directory Services.  The Company hereby appoints and retains the
Director, on a non-exclusive basis, during the Term to serve as a member of the
Directory Board and provide the Directory Services as requested by the Company
from time to time, and the Director hereby accepts such appointment to the
Directory Board and agrees to provide diligently the Directory Services.  The
Director shall perform such duties and responsibilities as are normally related
to such position in accordance with Company's bylaws and applicable law, and
Director hereby agrees to use his best efforts to provide the Services. Director
shall not allow any other person or entity to perform any of the Services for or
instead of Director. Director shall comply with the statutes, rules, regulations
and orders of any governmental or quasi-governmental authority, which are
applicable to the performance of the Directory Services, and Company's rules,
regulations, and practices as they may from time-to-time be adopted or modified
In providing the Directory Services, the Director will conform to and abide by
the following:
 
 
(a)
Duties and Expectations of a Director of STW Resources Holding Corp., attached
as Exhibit “A” to this Agreement, and as amended from time to time.; and

 
(b)
Statement of Roles and Responsibilities of the Board of Directors of STW
Resources Holding Corp., attached as Exhibit “B” to this Agreement, and as
amended from time to time.

 
 

3.2           Time Commitment.  Director agrees to attend quarterly meetings of
the Company’s Directory Board and spend one day per quarter in person at the
Company’s headquarters or such other place that the Company may reasonably
request acting as a consultant on such matters as the Company may reasonably
request.  Including the foregoing time commitments, the Director will devote up
to eight (8) days in total annually to providing the Directory Services and the
consulting services to the Company pursuant to this Agreement.

 
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3.3           Board and Director to Act Independently.  The Board and the
Director shall diligently and responsibly receive all advice from other
directors, officers of the company, Advisory Board Members, and consultants, and
the Board and the Director will use independent judgment before acting upon such
advice.

3.4           Remuneration.  In consideration of the provision of the Directory
Services, the Company shall compensate the Director as follows:
 
(a)           Issuance of 0 shares of the Company’s common stock upon the
executionof this Agreement.
 
(b)
In consideration of the services to be rendered under this Agreement, Company
shall pay Director a fee at the rate of Seventy-Five Thousand Dollars ($75,000)
per year, which shall be paid solely at the Company’s discretion in cash or in
shares of the Company’s stock, in accordance with Company's regularly
established practices regarding the payment of Directors' fees, but in no event
later than 12 months after the Effective Date of this Agreement and each of its
subsequent anniversaries, if any.

 
(c)
Payment of $1,000.00, in cash, for each day of attendance at Directory Board
meetings or any other meeting called by the Company and attended by Director.

 
(d)
All reasonable costs of travel, lodging, and entertainment reasonably necessary
for Director to carry out his duties shall be paid or reimbursed by the Company,
so long as any such expense in excess of $100.00 is approved, in advance, by the
Company.

3.5           Disclosure of Director.  During the Term, the Director shall:
 
 
(a)
disclose to the Company all of his interests in any transaction or agreement
contemplated by the Company or any matter which may taint the Director's
objectivity when performing his role as an Director hereunder;

 
(b)
inform the Company of any business opportunities made available to the Director
as a result of the Director's involvement with the Company or otherwise through
the performance of the Directory Services; and

 
(c)
not serve as an Director, or consent to an appointment as a member of the board
of directors, of a company which competes, directly or indirectly, with the
Company.

 
(d)
Conform to and abide by the STW Resources Holding Corp. Board of Directors
Conflict of Interest Policy, attached as Exhibit “C” to this Agreement, and as
amended from time to time.

4.           CONFIDENTIAL INFORMATION

4.1           Confidentiality Obligation.  The Director recognizes and agrees
that any Business Material furnished or to be furnished to him by the Company is
to be used only for the purpose of providing the Directory Services hereunder
and that such Business Material will be kept confidential by the Director
provided, however, that any such Business Material may be disclosed:
 
 
(a)
if specifically consented to in writing by the Company; or

 
(b)
if required by applicable law or by an order of a court of competent
jurisdiction.

 
 
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4.2           Exceptions.  The provisions of Section 4.1 shall not apply to:
 
 
(a)
information which becomes generally available to the public other than as a
result of a disclosure by the Director;

 
(b)
information which is generally known to knowledgeable business people involved
in the business conducted by the Company other than as a result of a disclosure
by the Director in violation of this part;

 
(c)
information that was available to the Director on a non-confidential basis prior
to its disclosure to the Director by the Company; or

 
(d)
information that becomes available to the Director on a non-confidential basis
from a person or entity other than the Company, unless such disclosure by that
person is itself in breach of a confidentiality commitment made directly or
indirectly to the Company;

 
and provided that nothing in this Agreement shall prevent the Director from
using his expertise and knowledge in the conduct of other business for its own
account or as a consultant to others.

4.3           License and Assignment of Rights. Director acknowledges that all
inventions, original works of authorship, developments, concepts, know-how,
improvements or trade secrets which are made by Director (solely or jointly with
others) within the scope of and as part of Director’s consultancy with the
Company (collectively referred to herein as “Inventions”) are “works made for
hire” (to the greatest extent permitted by applicable law) and are compensated
by such amounts paid to Director under this Agreement, unless regulated
otherwise by the mandatory law of the state of Texas. To the extent that
Director owns or controls intellectual property rights of any kind in any
pre-existing works which are subsequently incorporated by Director in any
Inventions without the express written permission of the Company, Director
hereby grants the Company a royalty-free, irrevocable, world-wide, perpetual,
non-exclusive license (with the right to sublicense) to make, have made, copy,
modify, make derivative works of, use, sell, license, disclose, publish, or
otherwise disseminate or transfer such subject matter. Director also agrees and
warrants that Director will not use or incorporate third party proprietary
materials into Inventions or disclose third party proprietary information to
Company.

4.4           Non-Compete; Nonsolicitation. During the term of Director’s
consultancy and for one (1) year thereafter, Director will not, without the
Company’s prior written consent,

 
(a)
directly work on any products or services, or indirectly work on any commercial
products or services, that are competitive with products or services

 
(i)
being commercially developed or exploited by the Company during Director’s
consultancy and

 
(ii)
on which Director worked or about which Director learned Proprietary Information
during Director’s consultancy with the Company; or

 
(b)
solicit the employment of any employee of the Company with whom Director has had
contact in connection with the relationship arising under this Agreement.

 
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4.3           Insider Trading.  Director acknowledges that he has read the
Company’s Insider Trading Policy, a copy of which is attached as Exhibit D, and
that he understands his obligations under, and the restrictions imposed upon him
by, such Policy.

5.           EXTENSION AND TERMINATION

5.1           Extension of Term by Company.  The Company, by the sole discretion
of the Board, may extend the term of this Agreement with the Director for
one-year periods beyond the expiration of the initial term of this Agreement.
 
 
5.2           Termination by the Company or Director.  The Company or the
Director may terminate this Agreement without cause at any time by giving 30
days written notice of termination of this Agreement to the other party.  Any
termination of this Agreement, either pursuant to this Section or otherwise,
will not affect the obligations under Section 4, which will survive such
termination.  In the event that this Agreement is terminated by the Company
without cause, the Company shall pay the Director the annual amount of
compensation accrued as of the date of termination and  any expenses incurred by
the Director up to the effective date of the termination to the extent such
expenses have not previously been reimbursed. Upon payment of such amounts, the
Director shall have no claim against the Company for damages or otherwise by
reason of such termination.  In the event of termination of this Agreement, the
Director shall, prior to the effective date of the termination, deliver to the
Company all books, records, or other information in his possession pertaining to
the Company's business.

6.           INDEMNITY AND LIMITATION OF LIABILITY

6.1           Indemnification by the Company. The Company shall indemnify and
hold harmless the Director against any and all losses, damages, suits,
judgments, costs and expenses arising under any such third party claim or action
provided however, that the Director provides the Company with:

 
(a)
written notice of such claim or action within 14 days of acquiring knowledge of
the event;

 
(b)
sole control and authority of the defense or settlement of such claim or action
(provided that the Company shall not enter into any settlement which materially
affects the Director's rights without the Director's prior written consent); and

 
(c)
proper and full information and reasonable assistance to defend and/or settle
any such claim or action.

6.2           No Liability for Acts of the Company.  The Director shall not be
liable for any act of the Company or any of its directors, officers or
employees.

 
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6.3           Limitation of Liability. UNDER NO CIRCUMSTANCES WILL EITHER PARTY
BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
EXEMPLARY OR PUNITIVE DAMAGES (EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES), ARISING FROM ANY PROVISION OF THIS AGREEMENT, SUCH
AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOSS OF
BUSINESS.

7.           GENERAL PROVISIONS

7.1           No Partnership or Agency.  The relationship between the Company
and the Director is that of independent contractor and nothing herein contained
shall be interpreted so as to create a partnership or agency relationship
between the parties.

7.2           Assignment.  Neither party may assign any rights or delegate any
obligations hereunder without the prior written consent of the other party.

7.3
Mediation and Arbitration.  Any dispute arising under this Agreement shall be
resolved through a mediation - arbitration approach. The parties agree to select
a mutually agreeable, neutral third party to help them mediate any dispute that
arises under the terms of this Agreement.  Costs and fees associated with the
mediation shall be shared equally by the parties.  If the mediation is
unsuccessful, the parties agree that the dispute shall be decided by a single
arbitrator by binding arbitration under the rules of the American Arbitration
Association in Dallas, Texas.  The decision of the arbitrator shall be final and
binding on the parties and may be entered and enforced in any court of competent
jurisdiction by either party.  The arbitrator is not authorized to award
punitive damages to either party.  The prevailing party in the arbitration
proceedings shall be awarded reasonable attorney fees, expert witness costs and
expenses, and all other costs and expenses incurred directly or indirectly in
connection with the proceedings, unless the arbitrator shall for good cause
determine otherwise.

7.4
Advice of Counsel.  EACH PARTY ACKNOWLEDGES THAT, IN EXECUTING

THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF
INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND
PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY
PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

7.5           Binding on Successors and Assigns.  This Agreement shall be
binding upon and shall inure to the benefit of the Company’s successors,
transferees, and assigns.

 
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7.6           Amendments.   Any amendment to this Agreement must be in writing
signed by Director and the Company. The Company and Director acknowledge that
any amendment of this Agreement (including, without limitation, any extension of
this Agreement or any change from the terms of Sections 3.3, 5.1, and 5.2 in the
consideration to be provided to Director and the term of the Agreement with
respect to services to be provided hereunder) or any departure from the terms or
conditions hereof with respect to Director’s consulting services for the Company
is subject to the Company’s and Director’s prior written approval.

7.7.           Entire Agreement.  This Agreement supersedes any prior consulting
or other similar agreements between Director and the Company with respect to the
subject matter hereof. There is no other agreement governing or affecting the
subject matter hereof.

7.8           Notices.  All notices hereunder shall be deemed to have been
given, if made in writing, when mailed, postage prepaid, to the parties at the
addresses set forth above, or to such other
addresses as a party shall specify to the other.

7.9           Multiple Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.  Facsimile transmitted
signatures shall be considered the same as original signatures.

AS EVIDENCE OF THEIR AGREEMENT this Agreement has been executed by the parties
hereto as of the date first above written.

DIRECTOR

________________________
R.H. (Tibaut) Bowman

STW RESOURCES HOLDING CORP.

_________________________
By: Stanley T. Weiner
Its CEO

 
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Duties and Expectations of a Director of STW Resources Holding Corp.

Purpose

STW Resources Holding Corp. (“STW”) is committed to ensuring that it achieves
standards of excellence in the quality of its governance and has adopted this
policy describing the duties and expectations of its Directors.

Application

This policy applies to all elected and ex-officio Directors and is provided to
Directors before they are recruited for appointment to the Board. A Director who
wishes to serve on the Board must confirm in writing that he or she will abide
by this policy.

Position Description

As a member of the Board, and in contributing to the collective achievement of
the role of the Board, the individual Director is responsible for the following:

Fiduciary Duties

Each Director is responsible to act honestly, in good faith and in the best
interests of STW and in so doing, to support STW in fulfilling its mission and
discharging its accountabilities.  A Director shall apply the level of skill and
judgment that may reasonably be expected of a person with his or her knowledge
and experience. Directors with special skill and knowledge are expected to apply
that skill and knowledge to matters that come before the Board.

Accountability

A Director’s fiduciary duties are owed to the corporation. A Director is not
solely accountable to any special group or interest and shall act and make
decisions that are in the best interest of STW, as a whole. A Director shall be
knowledgeable of the stakeholders to whom STW is accountable and shall
appropriately take into account the interests of such stakeholders when making
decisions as a Director, but shall not prefer the interests of any one group if
to do so would not be in the best interests of STW.

Education

A Director shall be knowledgeable about:

–
The operations of STW;

–
The duties and expectations of a Director;

–
The Board’s governance role, governance structure and processes;

–
The Board’ adopted governance policies; and

–
STW’s By-Laws

A Director will participate in a Board orientation session, orientation to
committees, Board retreats, and may apply for Board educational opportunities.

Board Policies and STW Policies

A Director shall be knowledgeable of and comply with the Board and STW policies
that are applicable to the Board including:

–
The Board’s Conflict of Interest Policy; and

–
The Board’s Confidentiality Policy

 
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Teamwork

A Director shall develop and maintain sound relations and work co-operatively
and respectfully with the Board Chair, members of the Board and senior
management.

Community Representation and Support

A Director shall represent the Board and STW in the community when asked to do
so by the Board Chair.

Time and Commitment

A Director is expected to commit the time required to perform Board and
committee
duties.  The Board formally meets approximately four times a year, and a
Director is expected to
adhere to the Board’s attendance policy.

Contribution to Governance

Directors are expected to make a contribution to the governance role of the
Board through:

–
Reading materials in advance of meetings and coming prepared to contribute to
discussions;

–
Offering constructive contributions to Board and committee discussions;

–
Contributing his or her special expertise and skill;

–
Respecting the views of other members of the Board;

–
Voicing conflicting opinions during Board and committee meetings but respecting
the decision of the majority even when a Director does not agree with it;

–
Respecting the role of the Chair;

–
Respecting the role and Terms of Reference of Board committees; and

–
Participating in Board evaluations and annual performance reviews.

Continuous Improvement

A Director shall commit to be responsible for continuous self-improvement. A
Director shall receive and act upon the results of Board evaluations in a
positive and constructive manner.

Term and Renewal

Terms and renewals will be applied as outlined in the STW By-Laws and/or the
Director’s Appointment Agreement.

Amendment

This policy may be amended by the Board at any time for any purpose.

Approval Date: April 09, 2010

Last Review Date: October 23, 2013

 
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Statement of the Roles and Responsibilities of the Board of Directors
of STW Resources Holding Corp.

Purpose

To ensure that the Board has a shared understanding of its governance role, the
Board has adopted this statement of the Roles and Responsibilities of the Board.

Responsibilities of the Board

–
The Board is responsible for the overall governance of the affairs of STW.

–
The Board is responsible for ensuring it operates in accordance with its
By-laws.

–
Each Director is responsible to act honestly, in good faith and in the best
interest of STW and in so doing, to support the organization in fulfilling its
mission and discharging its accountabilities.

Strategic Planning, Mission, Vision and Values

–
The Board participates in the formulation and adoption of STW’s mission, vision
and values.

–
The Board ensures that STW develops and adopts a strategic plan that is
consistent with its mission, vision and values, which will enable the
organization to realize its vision.

–
The Board participates in the development of and ultimately approves the
strategic plan.

–
The Board oversees STW operations for consistency with the strategic plan and
strategic directions.

–
The Board receives regular briefings or progress reports on implementation of
the strategic directions and imperatives.

–
The Board ensures that its decisions are consistent with the strategic plan and
STW’s vision, mission and values.

–
The Board annually conducts a review of the strategic plan as part of a regular
annual planning cycle.

Quality and Performance Measurement and Monitoring

–
The Board is responsible for establishing a process and a schedule for
monitoring and assessing performance in areas of Board responsibility including:

 
 
 
–
Fulfillment of the strategic directions in a manner consistent with the mission,
vision and values;

 
–
Oversight of management performance;

 
–
Quality of the delivery of STW services;

 
–
Financial conditions; and

 
–
Board’s own effectiveness

  –
The Board ensures that management has identified appropriate measures of
performance.

–
The Board monitors STW performance against Board approved performance goals and
objectives.

–
The Board ensures that management has plans in place to address variances from
performance standards, and the Board oversees implementation of remediation
plans.

Financial Oversight

–
The Board is responsible for stewardship of financial resources including
ensuring availability of, and overseeing allocation of, financial resources.

–
The Board approves policies for financial planning and approves the annual
operating, capital and project budgets.

–
The Board monitors financial performance against budgets.

–
The Board approves investment policies and monitors compliance.

–
The Board ensures the accuracy of financial information through oversight of
management.

–
The Board ensures management has put measures in place to ensure the integrity
of internal controls.

 
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Oversight of Management Including Selection, Supervision and Succession Planning
for
the Chief Executive Officer of the Company (CEO)

–
The Board recruits and supervises the CEO by:

 
–
Developing and approving the CEO’s job description;

 
–
Undertaking a CEO recruitment process and selection of the CEO, as required;

 
–
Reviewing and approving the CEO’s annual performance goals; and

 
–
Reviewing CEO performance and determining CEO compensation

Risk Identification and Oversight
 
 
–
The Board is responsible to be knowledgeable about risks inherent to the
organization and ensure that appropriate risk analysis is performed as part of
Board decision-making.

–
The Board ensures that appropriate programs and processes are in place to
protect against risk.

–
The Board is responsible for identifying unusual risks to the organization for
ensuring that there are plans in place to prevent and manage such risks.

Shareholder Communication and Accountability

–
The Board identities STW Shareholders and understands Shareholder
accountability.

–
The Board ensures the organization appropriately communicates with Shareholders
in a manner consistent with accountability to Shareholders.

–
The Board contributes to the maintenance of strong Shareholder relationships.

–
The Board performs advocacy on behalf of the organization with Shareholders
where required in support of the mission, vision and values and strategic
directions of STW.

 
Governance

–
The Board is responsible for the quality of its own governance.

–
The Board establishes governance structures to facilitate the performance of the
Board’s role and enhance individual director performance.

–
The Board is responsible for the recruitment of a skilled, experienced and
qualified Board.

–
The Board ensures ongoing Board training and education.

–
The Board periodically assesses and reviews its governance through periodically
evaluating Board structures including Board recruitment processes and Board
composition and size, number of committees and their Terms of Reference,
processes for appointment of committee chairs, processes for appointment of
Board officers and other governance processes and structures.

Legal Compliance

–
The Board ensures that appropriate processes are in place to ensure compliance
with the laws and regulations of the state of incorporation, states of
operation, and the federal laws and regulations of the United States.

Amendment

–
This statement may be amended by the Board at any time.

Approval Date: April 09, 2010
Last Review Date: 10/23/2013
 
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STW Resources Holding Corp. Board of Directors Conflict of Interest Policy

Statement of Conflict of Interest Policy:

No member of the STW Board of Directors or committees shall derive any personal
profit or gain, directly or indirectly, by reason of his or her participation
with STW.  Each individual shall
disclose to STW any personal interest which s/he may have in any matter pending
with STW and shall refrain from participation in all decisions on such matter.

Any member of the STW Board or committees who is also a member of a Board, staff
or committee of, or has a personal interest in, any organization that might
provide or be the recipient of services and/or sales to or from STW shall
identify his or her affiliation with such organization; further, in connection
with any actions specifically directed to that organization, the member shall
not participate in any decisions respecting that organization.

Directors on the STW Board will avoid conflict of interest transactions and
refrain from activity which could compromise the independence of the STW
organization.  A transaction in which a Director of the corporation has a
conflict of interest may be approved if the material facts of the transaction
and the Director’s interest were disclosed or known to the Board of Directors or
a committee of the Board and the Board or committee of the Board authorized,
approved or ratified the transaction. A conflict of interest transaction is
authorized, approved or ratified, if it receives the affirmative vote of a
majority of the Directors on the Board or on the committee, who have no direct
or indirect interest in the transaction.

The By-Laws or a resolution of the Board may impose additional requirements on
conflict of interest.

Amendment:

This policy may be amended by the Board.

Approval Date: April 09, 2010
Last Review: October 23, 2013
 
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STW RESOURCES HOLDING CORP.

2013 INSIDER TRADING POLICY

I. INTRODUCTION

“Insider trading” refers generally to buying or selling a security, in breach of
a fiduciary duty or other relationship of trust and confidence, while in
possession of material, nonpublic information about the security. Insider
trading violations may also include “tipping” such information, securities
trading by the person “tipped,” and securities trading by those who
misappropriate such information.

The scope of insider trading violations can be wide reaching. The Securities and
Exchange Commission (the “SEC”) has brought insider trading cases against
corporate officers, directors, and employees who traded the corporation’s
securities after learning of significant, confidential corporate developments;
friends, business associates, family members, and other “tippees” of such
officers, directors, and employees who traded the securities after receiving
such information; employees of law, banking, brokerage, and printing firms who
were given such information in order to provide services to the corporation
whose securities they traded; government employees who learned of such
information because of their employment by the government; and other persons who
misappropriated, and took advantage of, confidential information from their
employers.

Consequently, an “insider” can include officers, directors, major stockholders
and employees of an entity whose securities are publicly traded. In general, an
insider must not trade for personal gain in the securities of that entity if
that person possesses material, nonpublic information about the entity. In
addition, an insider who is aware of material, nonpublic information must not
disclose such information to family, friends, business or social acquaintances,
employees or independent contractors of the entity (unless such employees or
independent contractors have a position within the entity giving them a clear
right and need to know), and other third parties. An insider is responsible for
assuring that his or her family members comply with insider trading laws. An
insider may make trades in the market or discuss material information only after
the material information has been made public.

II. PENALTIES; SANCTIONS

General. Violation of the prohibition on insider trading can result in a prison
sentence and civil and criminal fines for the individuals who commit the
violation, and civil and criminal fines for the entities that commit the
violation.

STW RESOURCES HOLDING CORP. (the “Company”) can be subject to a civil monetary
penalty even if the directors, officers or employees who committed the violation
concealed their activities from the Company.

Criminal Penalties. The maximum prison sentence for an insider trading violation
is now 20 years. The maximum criminal fine for individuals is now $5,000,000,
and the maximum fine for non-natural persons (such as an entity whose securities
are publicly traded) is now $25,000,000.

Civil Sanctions. Persons who violate insider trading laws may become subject to
an injunction and may be forced to disgorge any profits gained or losses
avoided. The civil penalty for a violator may be an amount up to three times the
profit gained or loss avoided as a result of the insider trading violation.
 
 
The Company (as well as other natural or non-natural persons who are deemed to
be controlling persons of the violator) faces a civil penalty not to exceed the
greater of $1,000,000 or three times the profit gained or loss avoided as a
result of the violation if the Company knew or recklessly disregarded the fact
that the controlled person was likely to engage in the acts constituting the
insider trading violation and failed to take appropriate steps to prevent the
acts before they occurred.

In addition, persons who traded contemporaneously with, and on the other side
of, the insider trading violator may sue the violator and the controlling
persons of the violator to recover the profit gained or loss avoided by the
violator.

Bounties. The SEC is offering bounties to persons who provide information
leading to the imposition of the civil penalty.

 
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III. POLICY STATEMENT

Illegal insider trading is against the policy of the Company. Such trading can
cause significant harm to the reputation for integrity and ethical conduct of
the Company. Individuals who fail to comply with the requirements of this
Insider Trading Policy are subject to disciplinary action, at the sole
discretion of the Company, including dismissal for cause.

IV. WHAT IS MATERIAL, NONPUBLIC INFORMATION?

Nonpublic, or inside, information about the Company that is not known to the
investing public may include, among other things, strategic plans; significant
capital investment plans; negotiations concerning acquisitions or dispositions;
major new contracts (or the loss of a major contract); other favorable or
unfavorable business or financial developments, projections or prospects; a
change in control or a significant change in management; impending securities
splits, securities dividends or changes in dividends to be paid; a call of
securities for redemption; and, most frequently, financial results.

All information about the Company is considered nonpublic information until it
is disseminated in a manner calculated to reach the securities marketplace
through recognized channels of distribution and public investors have had a
reasonable period of time to react to the information. Generally, information
which has not been available to the investing public for at least two (2) full
business days is considered to be nonpublic. Recognized channels of distribution
include annual reports, prospectuses, press releases, marketing materials, and
publication of information in prominent financial publications, such as The Wall
Street Journal.

Nonpublic information is material if it might reasonably be expected to affect
the market value of the securities and/or influence investor decisions to buy,
sell or hold securities. If a person feels the information is material, it
probably is. Moreover, it should be remembered that plaintiffs who challenge and
judges who rule on particular transactions have the benefit of hindsight.

If a person is in doubt as to whether information is public or material, that
person should wait until the information becomes public, or should refer
questions to Grant Seabolt, who has been designated to act as the Compliance
Officer (herein so called).

V. HANDLING OF INFORMATION

The Company’s records must always be treated as confidential. Items such as
interim and annual financial statements, managed assets information and similar
information are proprietary (that is, information pertaining to and used
exclusively by the Company), and proprietary information must not be disclosed
or used for any purpose other than for Company business. All Company policies
and procedures designed to preserve and protect confidential information must be
strictly followed at all times.

No director, advisory board member, officer or employee of the Company shall at
any time make any recommendation or express any opinion as to trading in the
Company’s securities.

Information learned about other entities in a special relationship with the
Company, such as acquisition negotiations, is confidential and must not be given
to outside persons without proper authorization.

All confidential information in the possession of a director, officer or
employee is to be returned to the Company at the termination his or her
relationship with the Company.

 
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VI. TRADING IN THE COMPANY AND OTHER SECURITIES

General Rule. Directors, advisory board members, officers and employees of the
Company shall not effect any transaction in the Company’s securities if they
possess material, nonpublic information about the Company. This restriction
generally does not apply to the exercise of stock options under the Company’s
stock option or deferred compensation plans, but would apply to the sale of any
shares acquired under such plans. The provisions set forth in this Paragraph VI
and all other provisions of this Insider Trading Policy shall equally apply to
the directors, officers and employees of any subsidiary of the Company, except
as noted in the “Trading Window Periods” paragraph below.

Pre-Clearance by Compliance Officer. Every director, officer or employee of the
Company shall advise the Compliance Officer before he or she effects any
transaction in the Company’s securities. This shall be done by submitting a
completed Trading Approval Form, attached as Exhibit A, to the Compliance
Officer. The Compliance Officer shall advise such director, officer or employee
whether the proposed transaction is permissible under this Insider Trading
Policy by making the appropriate indication and countersigning the Trading
Approval Form.
 
Trading Window Periods. Investment by the Company’s directors, officers or
employees in Company securities is encouraged, so long as such persons do not
purchase or sell such securities in violation of this Insider Trading Policy. In
furtherance of the goals underlying the Company’s Insider Trading Policy, the
Company’s directors, officers (those required to make filings under Section 16
of the Securities Exchange Act of 1934) and all employees at the Vice President
level and above, as well as all employees in the accounting group are prohibited
from buying or selling Company securities at all times, except during the period
extending from the third (3rd) through the thirteenth (13th) business day
following the release of the Company’s earnings for the immediately preceding
fiscal period to the public (the “Trading Window Period”). The prohibition on
trading in Company securities by such persons at all times other than the
Trading Window Period is designed to prevent any inadvertent trading by such
persons in the Company’s securities during times when there may be material
financial information about the Company that has not been publicly disclosed.
The grant or exercise of stock options to purchase the Company’s stock is
permitted outside Trading Window Periods (although any sale of such stock
outside Trading Window Periods is prohibited unless such sale is made pursuant
to an approved Rule 10b5-1 Trading Plan, as discussed below).

Black-out Communications. In addition to the foregoing restrictions, the Company
reserves the right to issue “black-out notices” to specified persons when
material, nonpublic information exists. Any person who receives such a notice
shall treat the notice as confidential and shall not disclose its existence to
anyone else.

Trading in Securities of Other Entities. In addition, no director, officer or
employee of the Company shall effect any transaction in the securities of
another entity, the value of which is likely to be affected by actions of the
Company that have not yet been publicly disclosed. Please note that this
provision is in addition to the restrictions on trading in securities of other
entities set forth any Code of Ethics of the Company.

Applicability to Family Members. The foregoing restrictions on trading are also
applicable to family members’ accounts, accounts subject to the control of
personnel subject to this Insider Trading Policy or any family member, and
accounts in which personnel subject to this Insider Trading Policy or any family
member has any beneficial interest, except that the restrictions on trading do
not apply to accounts where investment decisions are made by an independent
investment manager in a fully discretionary account. Personnel subject to this
Insider Trading Policy are responsible for assuring that their family members
comply with the foregoing restrictions on trading. For purposes of this Policy,
“Family Members” include one’s spouse and all members of the family who reside
in one’s home.

Rule 10b5-1 Trading. Notwithstanding the restrictions stated in this Paragraph
VI, such restrictions shall not apply to purchases or sales of securities of the
Company made by the persons covered hereby who have entered into a written
trading plan that complies with Rule 10b5-1 of the Exchange Act and has been
approved by the Compliance Officer.

 
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VII. INVESTIGATIONS; SUPERVISION

If any person subject to this Insider Trading Policy has reason to believe that
material, nonpublic information of the Company has been disclosed to an outside
party without authorization, that person should report this to the Compliance
Officer immediately.

If any person subject to this Insider Trading Policy has reason to believe that
an insider of the Company or someone outside of the Company has acted, or
intends to act, on inside information, that person should report this to the
Compliance Officer immediately.

If it is determined that an individual maliciously and knowingly reports false
information to the Company with intent to do harm to another person or the
Company, appropriate disciplinary action will be taken according to the severity
of the charges, up to and including dismissal. All such disciplinary action will
be taken at the sole discretion of the Company.

VIII. LIABILITY OF THE COMPANY

The adoption, maintenance and enforcement of this Insider Trading Policy is not
intended to result in the imposition of liability upon the Company for any
insider trading violations where such liability would not exist in the absence
of this Insider Trading Policy.

Questions. All questions regarding this Insider Trading Policy should be
directed to Grant Seabolt, who has been designated to act as the Compliance
Officer.

This Policy pertains to the 2013 calendar year and supersedes any previous
policy of the Company concerning insider trading.
 
CONFIRMATION OF RECEIPT, READING, AND AGREEMENT WITH
THE COMPANY’S INSIDER TRADING POLICY

[To be signed by members of the Board of Directors, its Advisory Board Members,
and Company employees that are Vice President or above and accounting personnel]

I HEREBY ACKNOWLEDGE THAT I HAVE RECEIVED, HAVE READ AND UNDERSTAND THE
FOREGOING POLICIES OF THE COMPANY.

Date: ____________
Signature:
_______________________

 
 
 
Print Name:_______________________

 
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EXHIBIT A

Submitted Pursuant to:

STW RESOURCES HOLDING CORP. INSIDER TRADING POLICY

PRE-CLEARANCE TRADING APPROVAL FORM

I, ____________________________ (name), seek pre-clearance to engage in the
transaction described below:

Acquisition or Disposition (circle one)

Name: _____________________________________
 
 
Account Number: ____________________________

Date of Request: _____________________________

Amount or # of Shares: _______________________

Broker: ____________________________________
 
I hereby certify that, to the best of my knowledge, the transaction described
herein is not prohibited by the Insider Trading Policy.
 
Signature: ______________________
Print Name: _______________________

Approved or Disapproved (circle one)

Date of Approval: ______________
 
Signature: ____________________
Print Name: _______________________

Compliance Officer Approval:

Signature: ____________________
Print Name: _______________________

 
If approval is granted, you are authorized to proceed with this transaction for
immediate execution, but only within the current Trading Window Period for all
directors, advisory board members, officers (those required to make filings
under Section 16 of the Securities Exchange Act of 1934), employees that are
Vice President or above, and accounting personnel.