Exhibit 10.1
 
SUBSCRIPTION AGREEMENT
 
SUBSCRIPTION AGREEMENT (this “Agreement”) made as of the last date set forth on
the signature page hereof between STW RESOURCES HOLDING CORP., a Nevada
corporation (the “Company”), and the undersigned (the “Subscriber”).
 
W I T N E S S E T H:
 
WHEREAS, the Company is offering to sell (the “Offering”) new 14% Convertible
Notes (the “Notes”) and a 2 year Warrant (as defined below), pursuant to Section
4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule
506 promulgated thereunder; and
 
WHEREAS, the Subscriber desires to subscribe for that number of Notes and
Warrant set forth on the signature page hereof, and the Company desires to issue
such Notes and Warrant to the Subscriber, on the terms and subject to the
conditions set forth herein; and
 
WHEREAS, for each Note received pursuant to this Offering, Subscriber will
receive a warrant to purchase such number of shares of common stock (the “Common
Stock”) of the Company equal to one-half of the aggregate face amount of their
Note divided by the Exercise Price of the Warrant (the “Warrant” and
collectively with the Note, the “Securities”).
 
NOW, THEREFORE, in consideration of the premises and the mutual representations
and covenants hereinafter set forth, the parties hereto do hereby agree as
follows:
 
I.  
SUBSCRIPTION FOR SHARES AND REPRESENTATIONS AND COVENANTS BY SUBSCRIBER

 
1.1 Subject to the terms and conditions hereinafter set forth, the Subscriber
hereby irrevocably subscribes for and agrees to purchase from the Company, and
the Company agrees to sell to the Subscriber, such aggregate face amount of the
Notes as is set forth on the signature page hereof.  The purchase price is
payable by wire transfer, to be sent directly to the Company:
 
STW Resources Holding Corp.
619 West Texas Avenue, Suite 126
Midland, TX 79701

Bank:                                           Bank of America
Account Name:                         STW Resources Holding Corp
Account Number:                     
ABA Routing Number:            026009593

1.2 Offering Period; This Offering will be open until December 31, 2012 (the
“Termination Date”).
 
1.3 Closing.  The Company may hold closings with respect to any Securities at
any time prior to the Termination Date as determined by the Company, with
respect to subscriptions accepted prior to the Termination Date (each such
closing being referred to as a “Closing”).  The last Closing of the Offering,
occurring on or prior to the Termination Date, shall be referred to as the
“Final Closing”.  Any subscription documents received after the Final Closing
will be returned, without interest or deduction.
 
1.4 The Subscriber recognizes that the purchase of the Securities involves a
high degree of risk including, but not limited to, the following: (a) the
Company has limited operating history and requires substantial funds in addition
to the proceeds of the Offering; (b) an investment in the Company is highly
speculative, and only investors who can afford the loss of their entire
investment should consider investing in the Company and the Securities; (c) the
Subscriber may not be able to liquidate its investment; (d) transferability of
the Securities is extremely limited; (e) in the event of a disposition, the
Subscriber could sustain the loss of its entire investment; and (f) the Company
has not paid any dividends since its inception and does not anticipate paying
any dividends.  Without limiting the generality of the representations set forth
in Section 1.5 below, the Subscriber represents that the Subscriber has
carefully reviewed the Company’s public filings including “Risk Factors.”

 
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1.5 The Subscriber represents that the Subscriber is an “accredited investor” as
such term is defined in Rule 501 of Regulation D (“Regulation D”) promulgated
under the Securities Act, as indicated by the Subscriber’s responses to the
questions contained in Article VII hereof, and that the Subscriber is able to
bear the economic risk of an investment in the Securities.
 
1.6 The Subscriber hereby acknowledges and represents that (a) the Subscriber
has knowledge and experience in business and financial matters, prior investment
experience, including investment in securities that are non-listed, unregistered
and/or not traded on a national securities exchange nor on the National
Association of Securities Dealers, Inc. automated quotation system (“NASDAQ”),
or the Subscriber has employed the services of a “purchaser representative” (as
defined in Rule 501 of Regulation D), attorney and/or accountant to read all of
the documents furnished or made available by the Company both to the Subscriber
and to all other prospective investors in the Securities to evaluate the merits
and risks of such an investment on the Subscriber’s behalf; (b) the Subscriber
recognizes the highly speculative nature of this investment; and (c) the
Subscriber is able to bear the economic risk that the Subscriber hereby assumes.
 
1.7 The Subscriber hereby acknowledges receipt and careful review of this
Agreement, a review of all relevant public filings (which includes the “Risk
Factors”), including the Warrant and the Note and all other exhibits thereto,
and any documents which may have been made available upon request as reflected
therein (collectively referred to as the “Offering Materials”) and hereby
represents that the Subscriber has been furnished by the Company during the
course of the Offering with all information regarding the Company in addition to
all publicly available documents, the terms and conditions of the Offering and
any additional information that the Subscriber has requested or desired to know,
and has been afforded the opportunity to ask questions of and receive answers
from duly authorized officers or other representatives of the Company concerning
the Company and the terms and conditions of the Offering.
 
1.8 (a)           In making the decision to invest in the Securities the
Subscriber has relied solely upon the information provided by the Company in the
Offering Materials.  To the extent necessary, the Subscriber has retained, at
its own expense, and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement and the
purchase of the Securities hereunder.  The Subscriber disclaims reliance on any
statements made or information provided by any person or entity in the course of
Subscriber’s consideration of an investment in the Securities other than the
Offering Materials.
 
(b)           The Subscriber represents that (i) the Subscriber was contacted
regarding the sale of the Securities by the Company (or an authorized agent or
representative thereof) with whom the Subscriber had a prior substantial
pre-existing relationship and (ii) no Securities were offered or sold to it by
means of any form of general solicitation or general advertising, and in
connection therewith, the Subscriber did not (A) receive or review any
advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio, whether
closed circuit, or generally available; or (B) attend any seminar meeting or
industry investor conference whose attendees were invited by any general
solicitation or general advertising.
 
1.9 The Subscriber hereby represents that the Subscriber, either by reason of
the Subscriber’s business or financial experience or the business or financial
experience of the Subscriber’s professional advisors (who are unaffiliated with
and not compensated by the Company or any affiliate or selling agent of the
Company, directly or indirectly), has the capacity to protect the Subscriber’s
own interests in connection with the transaction contemplated hereby.
 
1.10 The Subscriber hereby acknowledges that the Offering has not been reviewed
by the United States Securities and Exchange Commission (the “SEC”) nor any
state regulatory authority since the Offering is intended to be exempt from the
registration requirements of Section 5 of the Securities Act, pursuant to
Regulation D.  The Subscriber understands that the Securities have not been
registered under the Securities Act or under any state securities or “blue sky”
laws and agrees not to sell, pledge, assign or otherwise transfer or dispose of
the Securities unless they are registered under the Securities Act and under any
applicable state securities or “blue sky” laws or unless an exemption from such
registration is available.

 
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1.11 The Subscriber understands that the Securities have not been registered
under the Securities Act by reason of a claimed exemption under the provisions
of the Securities Act that depends, in part, upon the Subscriber’s investment
intention.  In this connection, the Subscriber hereby represents that the
Subscriber is purchasing the Securities for the Subscriber’s own account for
investment and not with a view toward the resale or distribution to others.  The
Subscriber, if an entity, further represents that it was not formed for the
purpose of purchasing the Securities.
 
1.12 The Subscriber understands that the Common Stock issuable upon conversion
of the Notes (the “Conversion Shares”) and upon exercise of the Warrants (the
“Warrant Shares” and collectively with the Conversion Shares, the “Common
Shares”) are subject to Rule 144 (“Rule 144”) promulgated under the Securities
Act requires for non-affiliates, among other conditions, a holding period prior
to the resale (subject to certain limitations) of securities acquired in a
non-public offering without having to satisfy the registration requirements
under the Securities Act.  The Subscriber understands and hereby acknowledges
that the Company is under no obligation to register any of the Securities or the
Common Shares under the Securities Act or any state securities or “blue sky”
laws.
 
1.13 The Subscriber consents to the placement of a legend on any certificate or
other document evidencing the Securities and the Common Shares that such
securities have not been registered under the Securities Act or any state
securities or “blue sky” laws and setting forth or referring to the restrictions
on transferability and sale thereof contained in this Agreement.  The Subscriber
is aware that the Company will make a notation in its appropriate records with
respect to the restrictions on the transferability of such Securities. The
legend to be placed on each certificate shall be in form substantially similar
to the following:
 
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES OR
“BLUE SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”
 
1.14 It is agreed that the Company, at its sole discretion, reserves the
unrestricted right, without further documentation or agreement on the part of
the Subscriber, to reject or limit any subscription, to accept subscriptions for
fractional Shares and to close the Offering to the Subscriber at any time and
that the Company will issue stop transfer instructions to its transfer agent
with respect to such Securities.
 
1.15 The Subscriber hereby represents that the address of the Subscriber
furnished by Subscriber on the signature page hereof is the Subscriber’s
principal residence if Subscriber is an individual or its principal business
address if it is a corporation or other entity.
 
1.16 The Subscriber represents that the Subscriber has full power and authority
(corporate, statutory and otherwise) to execute and deliver this Agreement and
to purchase the Securities.  This Agreement constitutes the legal, valid and
binding obligation of the Subscriber, enforceable against the Subscriber in
accordance with its terms.
 
1.17 If the Subscriber is a corporation, partnership, limited liability company,
trust, employee benefit plan, individual retirement account, Keogh Plan, or
other tax-exempt entity, it is authorized and qualified to invest in the Company
and the person signing this Agreement on behalf of such entity has been duly
authorized by such entity to do so.
 
1.18 The Subscriber acknowledges that if he or she is a Registered
Representative of a FINRA member firm, he or she must give such firm the notice
required by the FINRA’s Rules of Fair Practice, receipt of which must be
acknowledged by such firm in Section 7.4 below.

 
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1.19 The Subscriber acknowledges that at such time, if ever, as the Securities
or the Common Shares are registered, sales of the Securities and the Common
Shares will be subject to state securities laws.
 
1.20 The Subscriber agrees not to issue any public statement with respect to the
Subscriber’s investment or proposed investment in the Company or the terms of
any agreement or covenant between them and the Company without the Company’s
prior written consent, except such disclosures as may be required under
applicable law or under any applicable order, rule or regulation.
 
1.21 The Subscriber agrees to hold the Company and its directors, officers,
employees, affiliates, controlling persons and agents and their respective
heirs, representatives, successors and assigns harmless and to indemnify them
against all liabilities, costs and expenses incurred by them as a result of (a)
any sale or distribution of the Securities by the Subscriber in violation of the
Securities Act or any applicable state securities or “blue sky” laws; or (b) any
false representation or warranty or any breach or failure by the Subscriber to
comply with any covenant made by the Subscriber in this Agreement (including the
Confidential Investor Questionnaire contained in Article VII herein) or any
other document furnished by the Subscriber to any of the foregoing in connection
with this Agreement.
 
           1.22  [Deleted].

II.  
REPRESENTATIONS BY AND COVENANTS OF THE COMPANY

 
The Company hereby represents and warrants to the Subscriber that:
 
2.1 Organization, Good Standing and Qualification.  The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has full corporate power and authority to own and use its
properties and its assets and conduct its business as currently conducted.  Each
of the Company’s subsidiaries (the “Subsidiaries”) is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation with the requisite corporate power and authority to own and use
its properties and assets and to conduct its business as currently conducted.
Neither the Company, nor any of its Subsidiaries is in violation of any of the
provisions of their respective articles of incorporation, by-laws or other
organizational or charter documents (as defined below). Each of the Company and
its Subsidiaries is duly qualified to conduct business and is in good standing
as a foreign corporation in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, would not result in a direct and/or indirect (i) material adverse effect on
the legality, validity or enforceability of any of the Securities and/or this
Agreement, (ii) material adverse effect on the results of operations, assets,
business or financial condition of the Company or its Subsidiaries, or (iii)
material adverse effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under this Agreement, the Warrants and
the Notes.
 
2.2 Capitalization and Voting Rights.  The authorized, issued and outstanding
capital stock of the Company is as set forth below:
 
Authorized:              100,000,000
Outstanding:            96,139,848
Issued:                      49,636,848   (as of June 5, 2012)

 
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2.3 Authorization; Enforceability.  The Company has all corporate right, power
and authority to enter into, execute and deliver this Agreement and each other
agreement, document, instrument and certificate to be executed by the Company in
connection with the consummation of the transactions contemplated hereby,
including, but not limited to the Offering Materials and to perform fully its
obligations hereunder and thereunder.  All corporate action on the part of the
Company, its directors and stockholders necessary for the (a) authorization
execution, delivery and performance of this Agreement and the Offering Materials
by the Company; and (b) authorization, sale, issuance and delivery of the
Securities and the Common Shares contemplated hereby and the performance of the
Company’s obligations under this Agreement and the Offering Materials has been
taken.  This Agreement and the Offering Materials have been duly executed and
delivered by the Company and each constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its respective terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies, and to
limitations of public policy.  The Securities and Common Shares, when issued and
fully paid for in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable.  The issuance and sale of the Securities
and Common Shares contemplated hereby will not give rise to any preemptive
rights or rights of first refusal on behalf of any person.
 
2.4 No Conflict; Governmental Consents.
 
(a) The execution and delivery by the Company of this Agreement and the Offering
Materials and the consummation of the transactions contemplated hereby will not
(i) result in the violation of any material law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or governmental
authority to or by which the Company is bound, (ii) conflict with or violate any
provision of the Company’s Articles of Incorporation (the “Articles”), as
amended or the Bylaws, (and collectively with the Articles, the “Charter
Documents”) of the Company, and (iii) will not conflict with, or result in a
material breach or violation of, any of the terms or provisions of, or
constitute (with or without due notice or lapse of time or both) a default or
give to others any rights of termination, amendment, acceleration or
cancellation (with  or without due notice, lapse of time or both) under any
agreement, credit facility, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which the Company is a party
or by which it is bound or to which any of its properties or assets is subject,
nor result in the creation or imposition of any lien upon any of the properties
or assets of the Company.
 
(b) No approval by the holders of Common Stock, or other equity securities of
the Company is required to be obtained by the Company in connection with the
authorization, execution and delivery of this Agreement or the Offering
Materials or in connection with the authorization, issue and sale of the
Securities, except as has been previously obtained,
 
(c) No consent, approval, authorization or other order of any governmental
authority is required to be obtained by the Company in connection with the
authorization, execution and delivery of this Agreement or the Transaction
Documents or in connection with the authorization, issue and sale of the
Securities, except such filings as may be required to be made with the SEC,
FINRA, NASDAQ and with any state or foreign blue sky or securities regulatory
authority.
 
2.5 Privacy.  The Company agrees not to disclose the names, addresses or any
other information about the Subscribers, except as required by law.
 
2.6 No Additional Agreements.  The Company does not have any agreement or
understanding with any Subscribers with respect to the transactions contemplated
by this Agreement other than as specified in this Agreement.

 
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III.  
TERMS OF SUBSCRIPTION

 
3.1 All funds shall be submitted directly to the Company’s account identified in
Section 1.1 hereof.
 
3.2 The Notes and Warrants purchased by the Subscriber pursuant to this
Agreement will be prepared for delivery to the Subscriber as soon as practicable
following the Closing at which such purchase takes place. The Subscriber hereby
authorizes and directs the Company to deliver the Notes and Warrants purchased
by the Subscriber pursuant to this Agreement directly to the Subscriber’s
residential or business or brokerage house address indicated on the signature
page hereto.
 
IV.  
CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBERS

 
4.1 The Subscriber’s obligation to purchase the Securities at the Closing at
which such purchase is to be consummated is subject to the fulfillment on or
prior to such Closing of the following conditions, which conditions may be
waived at the option of each Subscriber to the extent permitted by law:
 
(a) Covenants.  All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the date of such Closing
shall have been performed or complied with in all material respects.
 
(b) No Legal Order Pending.  There shall not then be in effect any legal or
other order enjoining or restraining the transactions contemplated by this
Agreement.
 
(c) No Law Prohibiting or Restricting Such Sale.  There shall not be in effect
any law, rule or regulation prohibiting or restricting such sale or requiring
any consent or approval of any person, which shall not have been obtained, to
issue the Securities (except as otherwise provided in this Agreement).
 
(d) Adverse Changes.  Since the date of execution of this Agreement, no event or
series of events shall have occurred that reasonably could have or result in a
material adverse effect.
 
(e) Blue Sky.  The Company shall have completed qualification for the Securities
and the Common Shares under applicable Blue Sky laws.

V.  
COVENANTS OF THE COMPANY

 
5.1  Integration.  The Company shall not, and shall ensure that no affiliate of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the sale
of the Securities to the Subscribers, or that would be integrated with the offer
or sale of the Securities for purposes of the rules and regulations of any
trading market in a manner that would require stockholder approval of the sale
of the securities to the Subscribers.
 
5.2 Reservation of Shares.  The Company shall at all times while the Securities
are outstanding maintain a reserve from its duly authorized shares of Common
Stock of a number of shares of Common Stock sufficient to allow for the issuance
of all Conversion Shares and Warrant Shares.
 
5.3 Conversion and Exercise Procedures.  The conversion procedures described in
and the form of Notice of Conversion included in the Notes set forth the
totality of the procedures required by the Subscribers in order to convert the
Shares.  The exercise procedures described in and the form of Form of
Subscription included in the Warrant set forth the totality of the procedures
required by the Subscribers in order to exercise the warrants.  The Company
shall honor conversions of Shares and exercises of Warrants and shall deliver
Common Stock in accordance with the terms, conditions and time periods set forth
in this Agreement and the Certificate of Designation or Warrant (as applicable).

 
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5.4 Rescission and Withdrawal Right.  Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) this Agreement,
whenever any Subscriber exercises a right, election, demand or option under this
Agreement and the Company does not timely perform its related obligations within
the periods therein provided, then such Subscriber may rescind or withdraw, in
its sole discretion from time to time upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.
 
5.5 Replacement of Securities.  If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.  If a replacement
certificate or instrument evidencing any Securities is requested due to a
mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
 
5.6 Indemnification.
 
(a) The Company agrees to indemnify and hold harmless the Subscriber, its
affiliates and their respective officers, directors, employees, agents and
controlling persons (collectively, the “Indemnified Parties”) from and against ,
any and all loss, liability, damage or deficiency suffered or incurred by any
Indemnified Party by reason of any misrepresentation or breach of warranty by
the Company or nonfulfillment of any covenant or agreement to be performed or
complied with by the Company under this Agreement, the Transaction Documents;
and will promptly reimburse the Indemnified Parties for all expenses (including
reasonable fees and expenses of legal counsel) as incurred in connection with
the investigation of, preparation for or defense of any pending or threatened
claim related to or arising in any manner out of any of the foregoing, or any
action or proceeding arising therefrom (collectively, “Proceedings”), whether or
not such Indemnified Party is a formal party to any such Proceeding.

(b) If for any reason (other than a final non-appealable judgment finding any
Indemnified Party liable for losses, claims, damages, liabilities or expenses
for its gross negligence or willful misconduct) the foregoing indemnity is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless, then the Company shall contribute to the amount paid or payable by an
Indemnified Party as a result of such loss, claim, damage, liability or expense
in such proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and the Advisor on the other, but also
the relative fault by the Company and the Indemnified Party, as well as any
relevant equitable considerations.
 
VI.  
MISCELLANEOUS

 
6.1 Ascendiant Capital Markets LLC (“Ascendiant”) is acting as the placement
agent for this Offering and shall be paid a commission of 10% cash of the gross
proceeds and 10% warrant coverage upon the successful placement of the Units.
Certain employees of Ascendiant at various times have owned, continue to own, or
shall own shares of the Company stock.
 
6.2 Mr. Paul DiFrancesco, a director of the Company, is also an employee of
Ascendiant. Mr. DiFrancesco is also a shareholder of the Company.

 
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6.3 Any notice or other communication given hereunder shall be deemed sufficient
if in writing and sent by registered or certified mail, return receipt
requested, or delivered by hand against written receipt therefore, addressed as
follows:
 
if to the Company, to it at:
STW RESOURCES HOLDING CORP.
619 West Texas Avenue Suite 126
Midland, Texas  79701
Attn:  Stan Weiner, CEO

if to the Subscriber, to the Subscriber’s address indicated on the signature
page of this Agreement.
 
Notices shall be deemed to have been given or delivered on the date of receipt.
 
6.4 No provision of this Agreement may be waived, modified, supplemented or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchasers holding at least 50% in interest of the
Securities then outstanding or, in the case of a waiver, by the party against
whom enforcement of any such waived provision is sought.  No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right
 
6.5 This Agreement shall be binding upon and inure to the benefit of the parties
hereto and to their respective heirs, legal representatives, successors and
assigns.  This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes
all prior discussions, agreements and understandings of any and every nature
among them.
 
6.6 Upon the execution and delivery of this Agreement by the Subscriber and the
Company, this Agreement shall become a binding obligation of the Subscriber with
respect to the purchase of Securities as herein provided, subject, however, to
the right hereby reserved by the Company to enter into the same agreements with
other subscribers and to reject any subscription, in whole or in part, provided
the Company returns to Subscriber any funds paid by Subscriber with respect to
such rejected subscription or portion thereof, without interest or deduction.
 
6.7 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE
PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS
HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS WITHOUT REGARD TO SUCH STATE’S PRINCIPLES OF CONFLICTS OF
LAW.  IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR
RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE COURTS
STATE OF TEXAS IN AND FOR THE COUNTY OF TEXAS OR THE FEDERAL COURTS FOR SUCH
STATE AND COUNTY, AND ALL RELATED APPELLATE COURTS, THE PARTIES HEREBY
IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.
IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY
AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE
GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY
 
6.8 In order to discourage frivolous claims the parties agree that unless a
claimant in any proceeding arising out of this Agreement succeeds in
establishing his claim and recovering a judgment against another party
(regardless of whether such claimant succeeds against one of the other parties
to the action), then the other party shall be entitled to recover from such
claimant all of its/their reasonable legal costs and expenses relating to such
proceeding and/or incurred in preparation therefor.

 
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6.9 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.  If
any provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.
 
6.10 The Company agrees to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
 
6.11 Nothing in this Agreement shall create or be deemed to create any rights in
any person or entity not a party to this Agreement, except for the holders of
Registrable Securities.
 
6.12   In addition to being entitled to exercise all rights provided herein or
granted by law, including recovery of damages, each of the Subscribers and the
Company will be entitled to specific performance under this Agreement.  The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.
 
6.13 The obligations of each Subscriber under this Agreement are several and not
joint with the obligations of any other Subscriber, and no Subscriber shall be
responsible in any way for the performance of the obligations of any other
Subscriber under this Agreement.  The decision of each Subscriber to purchase
Securities pursuant to this Agreement has been made by such Subscriber
independently of any other Subscriber.  Nothing contained herein, and no action
taken by any Subscriber pursuant thereto, shall be deemed to constitute the
Subscribers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Subscribers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated herein.  Each Subscriber acknowledges that no other Subscriber has
acted as agent for such Subscriber in connection with making its investment
hereunder and that no Subscriber will be acting as agent of such Subscriber in
connection with monitoring its investment in the Securities or enforcing its
rights under this Agreement.  Each Subscriber shall be entitled to independently
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Subscriber to
be joined as an additional party in any proceeding for such purpose.  The
Company acknowledges that each of the Subscribers has been provided with this
same Agreement for the purpose of closing a transaction with multiple
Subscribers and not because it was required or requested to do so by any
Subscriber.
 
6.12           The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise the Offering Materials
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Offering Materials or any amendments hereto.
 
6.13           Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate.
 
6.14           The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
 
6.15           This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.

 
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VII.  
CONFIDENTIAL INVESTOR QUESTIONNAIRE

 
7.1 The Subscriber represents and warrants that he, she or it comes within one
category marked below, and that for any category marked, he, she or it has
truthfully set forth, where applicable, the factual basis or reason the
Subscriber comes within that category.  ALL INFORMATION IN RESPONSE TO THIS
SECTION WILL BE KEPT STRICTLY CONFIDENTIAL.  The undersigned agrees to furnish
any additional information which the Company deems necessary in order to verify
the answers set forth below.
 
Category A  
The undersigned is an individual (not a partnership, corporation, etc.) whose
individual net worth, or joint net worth with his or her spouse, exclusive of
the value of his or their personal residence, presently exceeds $1,000,000.

Explanation.  In calculating net worth you may include equity in personal
property and real estate (but excluding your principal residence), cash,
short-term investments, stock and securities.  Equity in personal property and
real estate should be based on the fair market value of such property less debt
secured by such property.

Category B  
The undersigned is an individual (not a partnership, corporation, etc.) who had
an income in excess of $200,000 in each of the two most recent years, or joint
income with his or her spouse in excess of $300,000 in each of those years (in
each case including foreign income, tax exempt income and full amount of capital
gains and losses but excluding any income of other family members and any
unrealized capital appreciation) and has a reasonable expectation of reaching
the same income level in the current year.

Category C  
The undersigned is a director or executive officer of the Company which is
issuing and selling the Securities.

Category D  
The undersigned is a bank; a savings and loan association; insurance company;
registered investment company; registered business development company; licensed
small business investment company (“SBIC”); or employee benefit plan within the
meaning of Title 1 of ERISA and (a) the investment decision is made by a plan
fiduciary which is either a bank, savings and loan association, insurance
company or registered investment advisor, or (b) the plan has total assets in
excess of $5,000,000 or (c) is a self directed plan with investment decisions
made solely by persons that are accredited investors. (describe entity)

 
Category E  
The undersigned is a private business development company as defined in section
202(a)(22) of the Investment Advisors Act of 1940. (describe entity)

 
Category F  
The undersigned is either a corporation, partnership, Massachusetts business
trust, or non-profit organization within the meaning of Section 501(c)(3) of the
Internal Revenue Code, in each case not formed for the specific purpose of
acquiring the Securities and with total assets in excess of $5,000,000.
(describe entity)

 
Category G  
The undersigned is a trust with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Securities, where the purchase is
directed by a “sophisticated investor” as defined in Regulation 506(b)(2)(ii)
under the Act.

 
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Category H  
The undersigned is an entity (other than a trust) in which all of the equity
owners are “accredited investors” within one or more of the above
categories.  If relying upon this Category alone, each equity owner must
complete a separate copy of this Agreement.  (describe entity)

 
Category I  
The undersigned is not within any of the categories above and is therefore not
an accredited investor.

 
The undersigned agrees that the undersigned will notify the Company at any time
on or prior to the Closing in the event that the representations and warranties
in this Agreement shall cease to be true, accurate and complete.
 
7.2 SUITABILITY (please answer each question)
 
(a)           For an individual Subscriber, please describe your current
employment, including the company by which you are employed and its principal
business:
 
(b)           For an individual Subscriber, please describe any college or
graduate degrees held by you:
 
(c)           For all Subscribers, please list types of prior investments:
 
(d)           For all Subscribers, please state whether you have participated in
other private placements before:
 
YES_______                                           NO_______
 
(e)           If your answer to question (d) above was “YES”, please indicate
frequency of such prior participation in private placements of:
 

 
 
Public
Companies
 
Private
Companies
Public or Private Companies
with no, or insignificant,
assets and operations
Frequently
     
Occasionally
     
Never
     

(f)           For individual Subscribers, do you expect your current level of
income to significantly decrease in the foreseeable future:
 
YES_______                                           NO_______
 
(g)           For trust, corporate, partnership and other institutional
Subscribers, do you expect your total assets to significantly decrease in the
foreseeable future:
 
YES_______                                           NO_______

 
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(h)           For all Subscribers, do you have any other investments or
contingent liabilities which you reasonably anticipate could cause you to need
sudden cash requirements in excess of cash readily available to you:
 
YES_______                                           NO_______
 
(i)           For all Subscribers, are you familiar with the risk aspects and
the non-liquidity of investments such as the securities for which you seek to
subscribe?
 
YES_______                                           NO_______
 
(j)            For all Subscribers, do you understand that there is no guarantee
of financial return on this investment and that you run the risk of losing your
entire investment?
 
YES_______                                           NO_______
 
7.3 MANNER IN WHICH TITLE IS TO BE HELD.  (circle one)
 
(a)           Individual Ownership
(b)           Common Share Property
(c)           Joint Tenant with Right of
Survivorship (both parties
must sign)
(d)           Partnership*
(e)           Tenants in Common
(f)           Company*
(g)           Trust*
(h)           Other*
*If Securities are being subscribed for by an entity, the attached Certificate
of Signatory must also be completed.
 
7.4 FINRA AFFILIATION.
 
Are you affiliated or associated with an FINRA member firm (please check one):
Yes _________                                           No __________
If Yes, please describe:
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

*If Subscriber is a Registered Representative with an FINRA member firm, have
the following acknowledgment signed by the appropriate party:
 
The undersigned FINRA member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
 
_________________________________
Name of NASD Member Firm

By: ______________________________
Authorized Officer

Date: ____________________________

7.5 The undersigned is informed of the significance to the Company of the
foregoing representations and answers contained in the Confidential Investor
Questionnaire contained in this Article VII and such answers have been provided
under the assumption that the Company will rely on them.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 
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AGGREGATE FACE AMOUNT OF THE NOTE = $­­­_____  (the “Purchase Price”)

 

      Signature   Signature (if purchasing jointly)       Name Typed or Printed
  Name Typed or Printed       Title (if Subscriber is an Entity)   Title (if
Subscriber is an Entity)       Entity Name (if applicable)   Entity Name (if
applicable             Address   Address       City, State and Zip Code   City,
State and Zip Code       Telephone-Business   Telephone-Business      
Telephone-Residence   Telephone-Residence       Facsimile-Business  
Facsimile-Business       Facsimile-Residence   Facsimile-Residence       Tax ID
# or Social Security #   Tax ID # or Social Security # Name in which securities
should be issued:    

 
Dated:  ____________________, 2012

This Subscription Agreement is agreed to and accepted as of ________________ ,
2012.
 
STW RESOURCES HOLDING CORP.

By:____________________________________
Name:
Title:

 
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CERTIFICATE OF SIGNATORY

(To be completed if Securities are
being subscribed for by an entity)

I, ____________________________, am the ____________________________ of
_______________________________________ (the “Entity”).

I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Subscription Agreement and to purchase and hold the
Notes, and certify further that the Subscription Agreement has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.

IN WITNESS WHEREOF, I have set my hand this ________ day of _________________,
2012

_______________________________________
(Signature)