SETTLEMENT AGREEMENT

This Settlement Agreement (the “Agreement”) is made the 31st day of August 2010
(the “Execution Date”) by and between GE Ionics, Inc., 3006 Northup Way, Suite
200, Bellevue, WA 98004, a Massachusetts corporation (“GE”), and STW Resources
Holding Corporation, 619 West Texas Ave, Suite 126, Midland TX  a Nevada
corporation  (“STW”) (each a “Party” and collectively the “Parties”).

WITNESSETH:

WHEREAS, STW Resources, Inc., a Nevada corporation, was merged into and is now a
wholly owned subsidiary of STW.

WHEREAS, on or about May 22, 2008, STW Resources, Inc. and GE entered into a
Teaming Agreement as may subsequently have been amended by documents,
correspondence and e-mails between the Parties (together the “Teaming
Agreement”);

WHEREAS on or about April 4, 2008 the STW Resources, Inc. and GE entered into a
Purchase Order as may subsequently have been amended by documents,
correspondence and e-mails between the Parties (together the “Purchase Order”);

WHEREAS, under the Purchase Order, there exists and is due and unpaid a debt by
STW Resources, Inc. to GE, including principal, accrued interest as at August 31
2010 and late fees of $11,239,437.00 (the “Original Debt”).

WHEREAS, STW has assumed the rights and obligations of STW Resources, Inc. under
the original Purchase Order (including the Original Debt) and Teaming Agreement,
such that all releases contained in the Agreement between the Parties shall run
in favor of both entities;

WHEREAS, the Parties to this Agreement now desire to resolve all disputes
existing between them; and,

NOW, THEREFORE, in consideration of the mutual promises, releases, and payments
provided for herein, the Parties hereto agree as follows:
 
1. Obligations Among the Contractual Parties. By the Parties executing this
Agreement, GE shall allow STW to substitute for STW Resources, Inc. as to all
rights and obligations under the Purchase Order (including the Original Debt)
and Teaming Agreement, for which STW represents to GE that STW is authorized to
assume.  Accordingly, to fully discharge STW Resources, Inc.’s financial
obligations to GE under the Purchase Order, STW shall pay GE $1,400,000.00
pursuant to the note annexed hereto as set forth on Exhibit A (the “Note”).
 
 
 

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A.           Under the terms of the Note, STW will have thirteen (13) months
from the date of the Note to pay off the $1,400,000.00, plus interest accrued
under the Note in accordance with its terms.  After execution of this Agreement
and the Note, upon the consummation and closing of a debt or equity financing,
STW will pay GE thirty percent (30%) of any and all Tranches (“Tranches” being
defined as the cash receipts of the proceeds of any equity investments in or
loans to STW or any affiliated entity by third parties, but excluding any
conversions of pre-existing debt to equity by any of STW’s current convertible
note holders or creditors) until the Note is paid in full, with accrued interest
on the Note.  STW must inform GE within three (3) business days whenever a
Tranche is received, noting the date and amount received.  Payment of the thirty
percent (30%) shall be made to GE within the earlier to expire of (i) ten (10)
business days from STW’s receipt of GE’s invoice (by e-mail or facsimile
transmission) or (ii) ninety days from STW’s receipt of the relevant
Tranche..  STW’s obligation to pay the Note and accrued interest to GE is
unconditional and not conditioned on the level of Tranches received by STW.
 
B.           Upon timely payment in full of the Note plus accrued interest, GE
will release STW from its Original Debt to GE.  Should STW default on the Note,
any prior payments on the Note will be applied first to interest due on the Note
and any previously paid principal payments on the note will be applied on a
dollar-for-dollar basis to STW’s undiscounted Original Debt to GE.
 
C.           GE will retain all monies paid to date by STW under the Purchase
Order and the Note, as well as the equipment (thermal evaporator) ordered and
fabricated (partially or fully) under the Purchase Order.  Once the Note has
been paid in full prior to the expiration of the thirteen (13) month period, STW
Resources, Inc. and STW shall have no further financial obligations to GE.  If,
for any reason, STW defaults under the Note and GE chooses to enforce the
Original Debt, this Agreement shall not affect any defenses which would be
available to STW as a “buyer” under the UCC with respect to goods which are
subsequently sold to a third party.  Provided, however, that STW may not assert
any such defenses to its obligation of to pay the $1,400,000 and accrued
interest and costs under the Note.  By GE entering into this Agreement, and the
related Note, GE is not prejudiced from its right to claim the Original Debt
from STW or any other right or remedy that may be available to GE under the UCC
or otherwise at law.  In the event of any default hereunder, GE shall be
entitled to recover under both this Agreement and/or the Note up to a total
equal to the Original Debt plus accrued interest at the interest rate specified
in the original Purchase Order.
 
D.           Upon execution of this Agreement, GE and STW confirm the
termination of the Teaming Agreement and the Purchase Order, except for any
post-termination obligations contained in said agreements, including, but not
limited to STW’s Original Debt obligation to GE until said obligation is
discharged by STW’s timely performance under the Note or, if said Note is in
default, until the Original Debt is paid in full. For the avoidance of doubt, GE
shall have no post-termination obligations of exclusivity to STW in respect of
the Teaming Agreement.
 
 
 

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E.           Publicity:  Under this Agreement, STW has a continuing obligation
to keep its website and publicity materials free from any references to GE,
other than material which has been pre-approved by GE in writing.  In addition,
STW shall not make any public statements concerning this settlement between STW
and GE without GE's prior approval in writing.  GE shall not unreasonably
withhold STW's requests for approval of publicity regarding GE and this
settlement with GE, and upon receipt of a publicity approval request(s) by STW,
shall have five (5) business days to approve, reject, or suggest modifications
to said request(s).
 
2. Releases: Except for STW’s Original Debt to GE which will not be released
until STW’s timely payment in full to GE of the Note and accrued interest
thereon, the Parties hereby mutually release each other from and against any and
all claims, choses in action and from any and all debts, obligations, claims,
and causes of action either of them may have against the other and against the
other‘s respective agents, representatives, employees, predecessors, successors,
officers, directors, shareholders, partners, subsidiaries (including STW’s
subsidiary, STW Resources, Inc.), parents, or affiliates, whether such debts,
obligations, claims, or causes of action are accrued or unaccrued, or known or
unknown, all as at the date hereof,.  This release includes but is not limited
to any and all claims relating to any interest, penalties or fees resulting from
the Teaming Agreement and the Purchase Order.  STW’s release of GE pursuant to
this paragraph shall also be considered a release by STW Resources, Inc.  None
of the releases under this paragraph act to release the Parties’ obligations set
forth in this Agreement or STW’s obligations to GE under the Note.
 
3. No Admission of Liability: No party admits any default, error, liability, or
wrongdoing by entering into this Agreement.  Neither shall any party hereto
portray this Agreement or any act taken under or in connection with it as an
explicit or implicit statement or admission of the strength or weakness of any
position taken by any party.  Instead, the Parties enter into this Agreement to
constructively resolve disputes between them and to avoid litigation.
 
4. No Oral Modifications: This Agreement and the Note set forth the entire
agreement between the Parties and supersedes in its entirety any and all prior
agreements, understandings or representations relating to the subject matter
hereof and may not be changed or terminated orally.  The Parties represent that
in entering this Agreement they do not rely on any statement or fact not set
forth herein.
 
 
 

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5. Governing Law, Remedies, Venue and Jurisdiction: This Agreement shall be
governed exclusively by the Laws of the State of New York, and any actions,
claims or proceedings shall be subject to the exclusive venue and jurisdiction
of the state and Federal Courts in the Borough of Manhattan in the City of New
York. The Parties hereby waive any right to a jury trial. In the event of a
default by either Party, the other Party’s sole remedy shall be to enforce the
terms of this Agreement.  STW agrees to pay any and all expenses (including
attorneys’ fees and expenses) incurred by GE which are incurred in endeavoring
to collect any amounts payable under this Agreement and the related Note which
are not paid when due (whether by acceleration or otherwise) or in otherwise
enforcing any rights under this Note.  In the event a Party to this Agreement
must institute suit or a cause of action to enforce the terms of this Agreement,
the prevailing party will be entitled to fees and costs, including reasonable
attorney’s fees. This shall also include any attorney’s fees required for the
purposes of executing and collecting on the amounts due pursuant to the
Stipulated Judgment, the actual Judgment and the Security Interest.
 
 
6. Notices: All notices, requests, demands, claims, and other communications
hereunder shall be in writing and delivered via overnight courier.  Any notice,
request, demand, claim, or other communication hereunder shall be deemed duly
given as of the next business day.  Such notices shall be addressed to the
intended recipient(s) as set forth below:
 

 
If to STW:  
619 West Texas Ave, Suite 126,
Midland TX 79701
E-Mail: stw@stwresources.com
Attn: Stanley Weiner
   
With a Copy to:  
D. Grant Seabolt, Jr., Esq.
Underwood Perkins, PC
5420 Lyndon B. Johnson Fwy., Suite 1900
Dallas, TX 75240
(972) 788-3310 Phone
(972) 788-3360 Fax
E-Mail: gseabolt@uplawtx.com
   
If to GE Ionics: 
GE Ionics, Inc.,
3006 Northup Way, Suite 200,
Bellevue, WA 98004
Attn: William Heins
E-Mail: William.heins@ge.com
   

 
                                                   
 
 

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7. No Representations: Neither party has relied upon any representations or
statements made by the other party hereto which are not specifically set forth
in this Agreement.
 
8. Severability:  In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
 
9. Entire Agreement:  This Agreement and the Note represent the entire agreement
and understanding between the Parties concerning the termination of the Purchase
Order and Teaming Agreement (collectively the “Agreements”), and supersede and
replace any and all prior agreements and understandings concerning the
Agreements.
 
10. Binding Effect: This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective successors, assigns,
distributees, heirs, and grantees of any revocable trusts of a Party. No Party
may assign either this Agreement or any of its or his or her rights, interests,
or obligations hereunder without the prior written approval of the other
Parties.
 
11. 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.
 
12. Headings and Counterparts: 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. This Agreement may be executed in
counterparts, and each counterpart shall have the same force and effect as an
original and shall constitute an effective, binding agreement on the part of
each of the undersigned.  Facsimile and photocopies of this Agreement shall have
the same effect as originals.
 
13. Waivers: 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 and all waivers must be in writing,
signed by the waiving Party, to be effective.
 
14. Further Assurances: Each Party shall, at the reasonable request of any other
Party hereto, execute and deliver to such other Party all such further
instruments, assignments, assurances and other documents, and take such actions
as such other Party may reasonably request in connection with the carrying out
the terms and provisions of this Agreement.
 
 

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15. Voluntary Execution of Agreement:  This Agreement is executed voluntarily
and without any duress or undue influence on the part or behalf of the Parties
hereto, with the full intent of releasing all claims. The Parties acknowledge
that:

 
(a)
They have read this Agreement;

 
(b)
They have been represented in the preparation, negotiation, and execution of
this Agreement by legal counsel of their own choice or that they have
voluntarily declined to seek such counsel;

 
(c)
They understand the terms and consequences of this Agreement and of the releases
it contains;
        (d)
They are fully aware of the legal and binding effect of this Agreement; and
        (e)
Each signatory to this Agreement below represents that he/she has the requisite
authority and has been duly authorized by his/her respective corporation to
execute this Agreement.

 
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.

STW RESOURCES Holdings Corp.

By: ____________________________
Stanley T. Weiner, Its Chairman & CEO

Agreement Ratified and Approved by STW Resources, Inc.

By:                                _______________
Stanley T. Weiner, Its President

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GE Ionics, Inc.

By:  ____________________________
William Heins, its___________